TMI Blog2020 (11) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... - Shri Rajesh Kumar, Accountant Member And Shri Amarjit Singh, Judicial Member For the Assessee : Ms. Ritu Kamal Kishor, A.R. For the Revenue : Ms. Kavita P. Kaushik, D.R. ORDER PER RAJESH KUMAR, ACCOUNTANT MEMBER: The above titled appeals have been preferred by the assessee against the orders dated 28.02.2018 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment years 2012-13 2013-14. ITA No.2953/M/2018 A.Y. 2012-13 2. The grounds taken by the assessee are as under: 1. On the facts and in the circumstances of the appellant's case and in law the Ld. CIT(A) erred in confirming the AO's action of disallowing notional interest amounting to ₹ 44.95,618/- on loans taken during the earlier years under the provisions of Income Tax Act. 2. On the facts and in the circumstances of the appellant's case and in law the Ld. CIT(A) erred in directing the AO to compute the alleged unaccounted commission expenses incurred on the alleged unaccounted loans resulting in enhancement of income without giving proper notice. 3. Without prejudice to ground no. 1 2 above, the Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain Group. 5. The facts in brief are that the case of the assessee was selected for scrutiny under CASS and statutory notices were duly issued and served upon the assessee. The assessee is engaged in the business of construction in the name and style of M/s. Neminath Construction and M/s. Neminath Homes and during the year declared total income of ₹ 1,37,58,510/-. The AO while completing the assessment for instant year observed that the assessee has introduced loans into the business in F.Y. 2010-11 relevant to A.Y. 2011-12 which is being reopened to consider the genuineness of the loans introduced during that year. The AO noted that since the loans have been borrowed in the earlier years, therefore no addition was required to be made in the subsequent years on account of these loans. During the current year, the only interest on the said loans was charged to the P L account and therefore the same is being disallowed as paid on the bogus unsecured loans which are subject to the verification whether the same are genuine or not. In the assessment year 2011-12, the AO accordingly added ₹ 44,95,618/- to the income of the assessee. 6. The Ld. CIT(A) affirmed the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to confirming the action of the AO in making notional addition on account of alleged commission by invoking section 69C of the Act. The AO has disallowed interest paid on unsecured loans on the ground that once loans have been treated as bogus accommodation entries, then any interest paid on such unsecured loans also needs to be treated as bogus and accordingly disallowed total interest paid on unsecured loans. Similarly, the AO has estimated 0.2% commission on total unsecured loans taken from companies on the basis of statement of Shri Bhanwarlal Jain where he had admitted that he charged 0.2% commission on all accommodation entries. We noted that the issue of unsecured loans has been decided in preceding paragraphs, where we held that the transactions between the parties are genuine which cannot be considered as unexplained cash credit u/s 68 of the Act, consequently, additions made towards disallowance of interest and estimation of commission on such unsecured loans is also needs to be considered in the light of discussions in the preceding paragraphs. Therefore, we are of the considered view that the AO as well as the Ld. CIT(A) was erred in making additions toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed by him or his Ld. Predecessor in the case of Bhanwarlal Jain Group for the purpose of confirming the additions made by the AO in the assessment order. 7. Without prejudice to the above grounds of appeal, the Ld. C1T(A) erred in not applying the theory of peak credit. 8. The appellant craves leave to add to, alter, amend and /or delete all or any of the foregoing grounds of appeal. 9. The appellant prays before the Hon ble Tribunal to delete the additions made by the AO. 13. The issue raised in ground No.1 is against the confirmation of addition of ₹ 50 lakhs by CIT(A) as made by the AO on account of unexplained cash credits which represented the loan borrowed by the assessee from Daksha Diamond a entity related to Bhanwarlal Jain Group. 14. At the outset, the Ld. Counsel of the assessee submitted that the issue is squarely covered by the decision of co-ordinate Bench in assessee s own case in ITA No.2641, 2480 2388/M/2018 A.Y 2010-11, 2011-12 2014-15 wherein the issue of raising unsecured loans from group entities of Bhanwarlal Jain Group were held to be genuine as the assessee has duly discharged his onus by filing all the necessary evidences before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: 16. Ground Nos. 2 to 5 are in relation to confirming the action of the AO in making notional addition on account of alleged commission by invoking section 69C of the Act. The AO has disallowed interest paid on unsecured loans on the ground that once loans have been treated as bogus accommodation entries, then any interest paid on such unsecured loans also needs to be treated as bogus and accordingly disallowed total interest paid on unsecured loans. Similarly, the AO has estimated 0.2% commission on total unsecured loans taken from companies on the basis of statement of Shri Bhanwarlal Jain where he had admitted that he charged 0.2% commission on all accommodation entries. We noted that the issue of unsecured loans has been decided in preceding paragraphs, where we held that the transactions between the parties are genuine which cannot be considered as unexplained cash credit u/s 68 of the Act, consequently, additions made towards disallowance of interest and estimation of commission on such unsecured loans is also needs to be considered in the light of discussions in the preceding paragraphs. Therefore, we are of the considered view that the AO as well as the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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