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TMI Blog2023 (6) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... nse to notice issued u/s. 153A of the Act, the assessee filed its return of income on 25.08.2017 declaring loss of Rs. 3,49,55,515/-. In course of assessment proceedings, the Assessing Officer noticed that the assessee is engaged in the business of contractors, builders, town planners, renting of immovable properties. He further observed that in course of search and seizure operation, it was found that the assessee had received unsecured loan of Rs. 10.00 crores from M/s. Shashi Foods India Pvt. Ltd. Noticing this, the Assessing Officer called upon the assessee to furnish the details of loan availed and prove the identity and creditworthiness of the creditor as well as genuineness of the transaction. In response to the query raised, the assessee submitted the details called for and explained that the loan was taken for the purpose of business through banking channel. It was also submitted that the assessee is paying interest on such loan through banking channel and tax has been duly deducted at source on interest paid. After considering the submissions of the assessee, the Assessing Officer observed that in course of investigation, it was found that the assessee is availing accommo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a natural corollary, he disallowed the interest paid on such loan. Being aggrieved with the aforesaid additions, the assessee preferred an appeal before learned Commissioner (Appeals). After considering the submissions of the assessee in the context of facts and materials on record, learned Commissioner(Appeals) found that not only in the course of search and seizure operation, but in course of assessment proceedings as well, the creditor has confirmed of having advanced Rs. 10 crores at the interest rate of 9%. He observed, the creditor has also explained the source of fund and the loan transaction has been done through banking channel. Thus, he was of the view that once the assessee had discharged its liability of establishing the identity and creditworthiness of the creditor and genuineness of the transaction, the loan available cannot be treated as non-genuine. He observed, once, the assessee has proved the source of unsecured loan by furnishing confirmation of the creditor and has also established creditworthiness, he cannot be asked to explain the source of source. Thus, in the aforesaid premises, he held that unsecured loan availed by the assessee cannot be treated as unex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. He submitted, while making the addition, the Assessing Officer has utilized third party evidence, neither confronting such evidence to the assessee nor providing an opportunity to cross examine the persons whose statements were utilized. Thus, he submitted, when the assessee has discharged the initial onus of proving the genuineness of the loan transaction, the loan availed could not have been treated as unexplained cash credit in absence of any contrary evidence brought on record by the Assessing Officer to disprove assessee's claim. Thus, he submitted, the decision of ld. Commissioner (Appeals) should be upheld. 6. We have considered rival submissions and perused the materials on record. Undisputedly, in the year under consideration, the assessee had availed unsecured loan of Rs. 10 crores from M/s. Shashi Foods India Pvt. Ltd. The Assessing Officer has treated the unsecured loan as unexplained cash credit u/s. 68 of the Act. The primary reason for doing so is, as per the post search investigation carried out in case of M/s. Shashi Foods India Pvt. Ltd., it was found that the said entity has availed bogus purchase bills from some other entities controlled by Shri Dinesh Jain. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan was sourced from the amounts received on sales corresponding to the purchases, payment for which is outstanding. On scrutiny of the assessment order, we have not found any adverse observation of the Assessing Officer with regard to the sales effected by M/s. Shashi Foods India Pvt. Ltd. In fact, the Assessing Officer has not conducted any enquiry with regard to the sales made by M/s. Shashi Foods India Pvt. Ltd. as to whether they are genuine or not. It is also relevant to observe, on examining the balance sheet of M/s. Shashi Foods India Pvt. Ltd., the Assessing Officer has noticed outstanding trade creditors of more than Rs. 34 crores. Though, the Assessing Officer has observed that enquiry conducted could find only four creditors available in the given addresses, however, that does not conclusively prove that the rest of the trade creditors are non-existing. When the creditor has stated that unsecured loan was funded out of the sale proceeds available with it and there are outstanding trade creditors, without any contrary material brought on record by the Assessing Officer, such statement cannot be rejected merely on conjectures and surmises. More so, when the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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