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TMI Blog2025 (5) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... enuine. * Thirdly, disallowance of expenses under 14A r.w.r. 8D of Rs. 38,82,962/-; and * Lastly, Ld. CIT (A) erred in considering the loss incurred in the previous year in the partnership firm of Rs. 71,04,282/- as income of the assessee. 4. The brief facts qua the issue are that the assessee is engaged in the business of real estate development. It has filed return of income on 01/11/2017 claiming loss of Rs. 5,08,36,642/-. Earlier a search action was conducted in the case of Rajesh Lifespaces Group on 10/03/2016. During the course of search, it was found that assessee has taken accommodation entries in the form of loan from various parties and name of four such parties were Calmo Estates Private Limited, Dotch Sales Private Limited, Penguin Trading & Agencies Limited and Seagold Mercantiles Private Limited had also cropped up. The opening balance of such loans from the above mentioned parties aggregated to Rs. 7,56,88,000/-. The ld. AO found that during the year assessee has taken loan amounting to Rs. 1,30,00,000/- from Dutch Sales Pvt. Ltd. 5. Apart from that assessee has claimed interest paid to these four parties on account of loan taken in the earlier year for Rs. 1,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of of accommodation entries and other loans were held to be genuine. Apart from that, the assessee before the ld. AO had filed ledger confirmation of the parties including that of Dotch Sales Private Limited from 01/04/2015 to 31/03/2017, bank statement, audited financial statement of the parties and acknowledgement of income tax returns. He pointed out that Dotch Sales had huge funds and creditworthiness was proved beyond doubt and pointed out that the Revenue disclosed in the audited accounts were Rs. 135.71 Crores and the profit during the year was Rs. 6.64 Crores. Apart from that he submitted that the loans given to the assessee in the earlier year as well as in this year have been duly disclosed by the lender companies' alongwith income tax returns, bank statements etc., Thus, the genuineness and creditworthiness stands duly discharged before the ld. AO as well as ld. CIT (A). He submitted that the ld. AO has mixed up the loan taken from some other parties which assessee has admitted before the Settlement Commission, however, qua these parties, the Settlement Commission has found that these loans were genuine after calling for the report from the ld. AO. In so far as disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Patel in his statement has admitted that loans taken of Rs. 53,28,50,000/- in the various group concerns are in the nature of accommodation entries and he agreed the same as undisclosed income of the group which was included in the total disclosure made u/s 132(4) of the Act of Rs. 202,10,27,143/- However, in application before Commission, loans only to the extent of Rs. 12,98,50,000/- were admitted in the nature of accommodation entries and that too representing application of part of income of Rs. 17,33,12,782/- admitted in the Settlement applications. The Department in Rule 9 report however, submitted that entire unsecured loans as admitted during the course of search as non-genuine, ought to have been offered by the applicant. It is further submitted by the Department in Rule 9 Report that survey was authorized in the case of four so called creditors but except in the case of M/s. Fossil Tradelinks Pvt. Ltd., in other three cases survey authorization could not be executed as the entities were not found at the addresses mentioned in the return of income. Shri Pankaj Vora, Director of M/s. Fossil Tradelinks Pvt. Ltd in his statement, recorded u/s. 131 of the Act, has admitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) M/s Dotch Sales Pvt. Ltd., (d) M/s Faithful Vanijya Pvt. Ltd. and (e) M/s. Fossil Tradelinks Pvt. Ltd. respectively appeared before AO (whereas Shri Soumen Karmakar appeared on 20.03.2019 others appeared on 22.03.3019) This fact was admitted by the Ld CIT(DR) as well as by the AO also present during the hearing but they did not examine or record the statements of these persons on the ground that they had not brought with them the required details. It is however not clarified as to which further details were required especially when copy of bank account, PAN and financials of most of them is already with the Department. Thus the applicants have discharged not only primary onus of proving genuineness of the loans by submitting confirmation, PAN, bank accounts of the parties and financials of such companies/creditors but also produced most of them in whose names in total more than Rs 35 crore unsecured loan is reflected Even Shri Pankaj Vora, Director of M/s Fossil Tradelinks Pvt. Ltd. also appeared before the AO who has initially admitted the loan as non-genuine and subsequently retracted from this statement on the ground that it was taken under pressure and duress. But AO has fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the earlier years, then there is no question of any disallowance of interest in this year. Even in the case of Dotch Sales Private Limited, apart from the fact that Settlement Commission has held the loan taken from Dotch Sales Private Limited to be genuine, we find that documents furnished before us clearly prove the identity, genuineness and creditworthiness of the parties and without any enquiry by the ld. AO, loan taken from such parties cannot be held to be non-genuine. Accordingly, the addition of Rs. 1,30,00,000/- on account of loan and addition of Rs. 1,42,28,127/- on account of interest is deleted. 12. In so far as the disallowance of Section 14A under Rule 8D of Rs. 38,82,962/- which has been made by the ld. AO on gain of investment made in the partnership firm. It is seen that there was a loss incurred in the previous year from the partnership firm of Rs. 23,04,282/-. Once the assessee has not earned any exempt income during the year, then there is no question of any disallowance of 14A. Accordingly, disallowance made u/s.14A on r.w.r 8D is deleted. In the result, appeal of the assessee is allowed. 13. In so far as appeal filed u/s.154 for the A.Y. 2017-18, it has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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