TMI Blog2023 (12) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... by AO to show that the impugned loans are not genuine. Ld AO did not give any evidence to the assessee to show that loans are not genuine. When the assessee has discharged its initial onus, it is duty of AO to carry out necessary enquiries either [1] by issuing notice under Section 133(6) of the Act to the lenders, [2] by issuing summons to the parties, [3] by asking the assessee to produce parties or [4] by deputing the inspectors for verification, or [5] or carry out survey etc. at the premises of the lenders. AO has not conducted any enquiry with respect to all or any of the lenders. This is also when the assessee has made a written request to the ld AO to examine his evidences submitted and make inquiry. Despite this, LD AO did not conduct any inquiry. It merely stated that income shown by the parties from trading activities is a loss to offset interest income, etc. That may be the reasons for suspicion, the learned Assessing Officer should have conducted further enquiry to support his suspicion, and otherwise the suspicion merely remains suspicion. If it is without any evidence, it has no value. So We agree with the argument of the learned Authorized Representative t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing three grounds of appeal as under:- 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 9,00,00,000/- on account of unexplained cash credit u/s.68 of Income Tax Act, 1961, merely on the basis of details/documents submitted by the assessee without appreciating the fact that the mere submission of PAN, account number and books of accounts could not establish the creditworthiness of the parties. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance on account of interest on account of interest payment against such unsecured loans inspite of the fact that the creditworthiness of the lenders could not be established by the assessee. 3. Whether, on the facts and circumstances of the case and in law, the CIT(A) erred in restricting the disallowance u/s. 14A r.w.r. 8D to the extent of Rs. 9,60,000/- i.e. suo motto disallowance made by the assessee as against the disallowance of Rs. 3,93,53,012/-computed by the AO being expenses incurred in relation to the exempt income. 4. Whether, on the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d noted that the details submitted by the assessee are incomplete and none of the lenders is moneylenders or non-banking financial institutions. Further, almost all the parties have shown loss in their trading activities. Further, the bank statement of the lender is also of one page. The learned Assessing Officer also noted that the accommodation entry provider used to accept the cash from beneficiaries and in returned the same as bogus loans. As the accommodation entry provider has maintained the parallel books of accounts and these entities are controlled by him, the addition under Section 68 of the Act was made of ₹9 crores. 06. Further, the interest paid to those parties of ₹56,29,040/-, was also disallowed. Further, interest of ₹1,43,262/- on account of interest to 13 other parties were also disallowed for the reason that for A.Y. 2013-14, the loans of these parties were added under Section 68 of the Act. 07. The learned Assessing Officer further found that assessee has earned dividend income of ₹4,60,006/- and disallowance under Section 14A of the Act of ₹9,60,000/- was made, suo moto. The learned Assessing Officer show caused the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,066/- and it has exempt income earned of ₹4,66,066/- and suo moto disallowance of ₹9,60,000/- under Section 14A of the Act. Further, the disallowance cannot be made holding that the disallowance already offered by the assessee is more than exempt income. 012. Therefore, the learned Assessing Officer is aggrieved with the appellate order has preferred this appeal challenging the addition under Section 68 of the Act and disallowance of interest as well as deletion of disallowance u/s 14A of the Act. 013. The learned Departmental Representative on deletion of addition under Section 68 of the Act of ₹9 crores contended that all the 9 parties from whom the assessee has taken a loan which operated by the accommodation entry provider which is confirmed in their statements that these loans are operated by them for providing accommodation entries. Accordingly, it was submitted that the order passed by the learned Assessing Officer is correct. He submitted that the learned CIT (A) has followed the order of the co-ordinate Bench in assessee‟s own case for A.Y. 2012-13 that has been challenged by the learned Assessing Officer by filing of appeal under Section 260 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he details submitted, where the assessee has discharged its onus cast under Section 68 of the Act, the learned CIT [A] has correctly deleted the addition. 016. On interest disallowances deleted by the LD CIT [A] it was submitted that when the addition u/s 68 is deleted with respect to those parties, there is no reason that disallowance of interest can at all be made. He referred to the ITAT decision in case of assessee for Ay 2012-13 where in the addition u/s 68 is deleted with respect to those parties; interest paid to them is disallowed by the ld AO. 017. On disallowance u/s 14A rwr 8 D, He further submitted that disallowance offered by the assessee has been retained by the learned CIT (A), which is higher than the exempt income therefore; further addition made by the learned Assessing Officer has been correctly deleted. 018. We have carefully considered the rival contentions and perused the orders of the lower authorities. The brief facts of the case shows that the assessee company during the year had taken loan from nine parties amounting to ₹9 crores. These 9 parties are stated by the learned Assessing Officer being companies connected with an accommodation entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce‟ that the loans are not genuine. 023. However, we agree with the arguments of the learned Departmental Representative that mere repayment of the loans subsequently does not make the original acceptance of loan as genuine. Such an argument is against the language of the provision of section 68 of the act. Criteria of identity, creditworthiness and genuineness‟ are to be tested at the time of amount credited in the books of the assessee. All subsequent events are immaterial. 024. Further, the order of the co-ordinate Bench in assessee‟s own case for A.Y. 2012-13 on identical facts supports the case of the assessee, where deletion of addition of unsecured loans under Section 68 of the Act was confirmed by the ITAT. Though the learned Assessing Officer has preferred appeal before the Hon'ble High Court against that order of ITAT, however, until the order of the co-ordinate Bench is reversed/ upset by the Hon'ble High Court, it judicially binds us. 025. In view of this, we do not find any merit in the ground no.1 of the appeal of the learned Assessing Officer and confirmed the order of the CIT (A) in deleting the addition under Section 68 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng officer in this appeal are [1] deletion of the addition under section 68 of the income tax act of Rs 150 lakhs by admitting the additional evidences though assessee did not submit those documentary evidences before the assessing officer despite ample opportunity given by the learned AO during assessment proceedings, [2] deletion of the disallowance of interest of ₹ 7,643,849/ and [3] deletion of disallowance of ₹ 3,913,899/ under section 14 A of the act. 032. Fact shows that assessee filed its return of income on 6/11/2017 at loss of ₹ 367,59,450/ the return was picked up for scrutiny and culminated into the assessment order passed under section 143 (3) of the act on 27/12/2019. 033. The learned assessing officer in the assessment proceedings disallowed the interest expenditure of ₹ 7,643,849/ holding that this amount of interest has been paid by the assessee to the 9 parties which were added by the learned assessing officer under section 68 of the income tax act in earlier years. The learned AO was of the view that these loans are not genuine and therefore the interest paid on those loans are also non-genuine expenditure. When the issue travell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has taken loan in the financial year 2013 14 relevant to assessment year 2014 15 and therefore the addition cannot be made on the same loan in assessment year 2017 18. To support the contention of the assessee, the bank statement of the assessee was also produced. The learned assessing officer in the remand report stated that the additional evidences should not be admitted because the assessee was given ample opportunities during the course of assessment proceedings and further on verification of the additional evidence submitted the CIT A was requested to decide the appeal on merits. The learned CIT A as per paragraph number 6.3 officer order considered the various circumstances for admission of the additional evidences in terms of rule 40 6A of the income tax rules. He held that there is a reasonable cause to which the assessee could not find these evidence before the learned assessing officer as mentioned in paragraph number 5.2 of the order. Therefore such additional evidences were admitted following the decision of the honourable Bombay High Court in case of 231 ITR 01, honourable Kerala High Court in 265 ITR 217, and honourable Allahabad High Court in 104 ITR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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