TMI Blog2024 (4) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... the capacity of the promoter of the company. For that purpose, the assessee obtained financial support from lender firm [M/s Banwari Lal Naresh Kumar], with whom the assessee has close relationship for over 40 years. The proposed investment in the company was a step in forward integration of the business interests of the assessee. With regard to cash deposits made in the bank account of the lender firm, it is pertinent to note that partner of the lender firm was examined by the ld. AO u/s. 131(1A) who duly explained the sources of cash deposits made in the bank account of his partnership firm and confirmed the fact of advancing loan to the assessee. Since the statement was recorded on 28.12.2018 i.e. during the fag end of the proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said cash sales were deposited by the lender firm in its bank account in cash. That s why no additions were made in the hands of the firm by the ACIT, Circle 47(1), Delhi. Even though the case of the assessee was selected only for Limited Scrutiny in the hands of the lender, still if the Assessing Officer had found anything alarming, he could have converted the Limited Scrutiny into Complete Scrutiny by seeking permission from the competent authority in the manner known to law. This was admittedly not done in the case of the lender, which goes to prove that the ACIT, Circle 47(1), Delhi did not find anything alarming with regard to cash deposits made in the bank account of the lender firm and did not doubt about its sources. The scrutiny a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals) is against the law, facts and circumstances of the case and hence be quashed. 2. That the learned Commissioner of Income-tax (Appeals)-16, New Delhi erred in facts and law in confirming Rs. 36,00,000/- under Section 68 of the Income Tax Act, out of total addition of Rs. 50,00,000/-, (Rs. 26,00,000/- + Rs. 24,00,000/-) ignoring all the evidence, facts and documents available on record, which is against the law and hence must be quashed. 3. That by deleting only partial addition made under Section 68, the learned Commissioner of Income-tax has erred in confirming this addition, in spite of the fact that the creditability of the party had already been admitted by himself. In the above circumstances the part addition confirmed is absolute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said unsecured loan to prove the three necessary ingredients of section 68 of the Act viz identity of the lender, creditworthiness of the lender and genuineness of the transaction. Since there were cash deposits in the bank account of the lender, the ld. AO sought to disbelieve the loan given to the assessee in the sum of Rs 50 lacs u/s. 68 of the Act and consequentially disallowed the interest expense thereon to the tune of Rs 21,300/- in the assessment. 4. It is a fact that the lender firm which had advanced loan to the assessee is not a Non-Banking Finance Company (NBFC) and is engaged in the business of trading of pulses, while the assessee is a trader in cotton cloth. The ld. AO observed that there was absolutely no business connec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement was recorded on 28.12.2018 i.e. during the fag end of the proceedings, Shri Naresh Goel sought to answer all the questions that were posed by the ld. AO to him and also sought time for replying to certain questions to produce further evidence to support his statement. Since no details were called for in the summons issued u/s. 131(1A) of the Act by the ld. AO , Shri Naresh Goel had admittedly not carried any material with him while giving the deposition before the ld. AO. So he had to sought time obviously to furnish further evidences in support of his statement. We find that the ld. AO had merely overlooked all the relevant materials submitted by the assessee which also stood confirmed by the lender in the statement u/s. 131 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of the lender, still if the Assessing Officer had found anything alarming, he could have converted the Limited Scrutiny into Complete Scrutiny by seeking permission from the competent authority in the manner known to law. This was admittedly not done in the case of the lender, which goes to prove that the ACIT, Circle 47(1), Delhi did not find anything alarming with regard to cash deposits made in the bank account of the lender firm and did not doubt about its sources. The scrutiny assessment proceedings of the lender firm for the very same assessment year itself explains the creditworthiness of the lender and genuineness of the loan transaction with the assessee. Hence we have no hesitation to hold that assessee had duly prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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