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TMI Blog2024 (12) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... interest on the alleged unsecured loan of Rs. 70,50,500/- ignoring the ratio laid down in the case of CIT vs. Precision Finance Pvt. Ltd. (208 ITR 465 (CAL)) CIT vs. United Commercial and Industrial Co. Pvt. Ltd. (187 ITR 596) (CAL) CIT vs. Biju Patnaik 160 ITR 674 (SC) and in the case of NRA Iron and Steels Pvt. Ltd. (SC). 2. That on the facts and circumstances of the case Ld. CIT(A) has erred in law by allowing appeal of the assessee company in respect of the addition made on account of bogus loan without appreciating the facts that the assessee company has failed to prove identity, creditworthiness and genuineness of the transactions. 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing relief to the assessee company on account of bogus loan when documents found during the course of search operation u/s. 132 of the Act in the premises of related persons shows that the loan was actually accommodation entries." 3. The brief facts of the case is that the assessee is filed the return u/s 139(1) of the Act. After receiving the information from DDIT (Investigation), Unit-3(1), Kolkata, the case was reopened u/s 148 of the Act in rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of relevant assessment year is bad in law and deserved to be quashed. 6. However, the AO vide letter dated 24.03.2021 had rejected the objections filed by the assessee against reasons recorded for issuing the notice U/s. 148 of the Income Tax Act, 1961. A rebuttal was also filed by the assessee against such disposal order on 06.04.2021 but no heed was paid to it. All the notices issued pursuant to such income escaping assessment were duly complied with. 7. The ld. AR further argued that the out of 50 loan creditors, for 20 loan creditors the ld. AO issued notices u/s 133(6) of the Act but all the notices were remained non-complied. The assessee has no control over the parties. He further stated that the except only one loan creditors all the amounts are repaid during the impugned assessment year, so there is no question about the absence of the identity, creditworthiness and genuinity of the party. The list of the impugned loan creditors are duly reproduced as below:- SL No. Name of the Party Receipt of Unsecured Loan during the year (Rs. ) Interest Expenses debited to Profit & Loss A/c (Rs. ) 01. Allshan Estate Pvt. Ltd. 7,49,692/- 02. Basukulnath commosales pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case that the transactions were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported by any factual data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine. 4. Learned advocate for the appellant attempted to emphasize that for the purpose of application of Section 68 of the Act, three ingredients were necessary. Firstly identity of the parties to the transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were satisfied. 5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied. 6. The Tribunal rightly recorded in para 29 of the judgment, "Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration and the loan was partly repaid with respect to the seventh party. (vi) As regards the interest disallowance of Rs. 70,50,500/-, it is stated that the corresponding loans taken in the preceding years have been accepted whereas corresponding interest has been disallowed during the year under consideration and moreover, applicable interest has also been allowed in the earlier years. The interest paid to these parties has no relation at all with the accommodation entry parties and are also not part of the reasons recorded. 20. After considering the all facts and circumstances of the case under consideration and the above discussion, I am of the considered opinion that the AO has erred in adding the above said amount of Rs. 4,80,00,000/- u/s. 68 of the Act and further the AO has also erred in disallowing the interest to the extent of Rs. 70,50,500/-. In the result, the addition of Rs. 4,80,00,000/- u/s. 68 is hereby deleted; Further, out of the total disallowance of interest of Rs. 1,73,90,910/-, interest disallowance to the extent of Rs. 70,50,500/- is hereby deleted. As stated earlier in this order, out of the total disallowance of interest of Rs. 1,73,90,910/-, int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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