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TMI Blog2015 (1) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... order. Once the fact has been admitted after detailed inquiry and examination which is evident from the material placed on record, then there need not be any detailed discussion about acceptance of the loan.. Moreover, as submitted by the ld. counsel, these loans have been repaid to the creditors in the subsequent years, which fact, can be very well be verified by the AO. Thus, we do not find any merits in the grounds raised by the revenue and accordingly the same are dismissed.- Decided against revenue. Now coming to the grounds raised by the assessee in respect of three creditors, we find that there is a categorical finding by the AO as well as the ld. CIT(A), that creditworthiness of the said persons have not been proved by the assessee. Even before us, no documentary evidence has been filed to rebut the findings of the ld. CIT(A).- Decided against assessee. Disallowance of interest @ 8% on the addition for the loans - part relief by CIT(A) - Held that:- As said by CIT(A) the interest paid by the assessee was @ 8%. On the other hand, the assessee advanced loan of 38,53,285/- as per the Balance sheet of the assessee and collected interest of 1,99,972/- which works out to 5.1%. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench. Murnbai in the case of ITO, Wd-4(3), Thane vs Rajan Manhazi Aynoorkanot (2011) 15 taxman.corn 297 (Mum), CIT(A) was correct in not strictly following rule 46A when assessee neglected opportunity provided by AO during assessment proceedings. 4. On facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the addition under section 68 only related to three new depositors without appreciating the fact that in the remand report AO has not commented upon the other creditors. Thus, the addition in respect of other creditors should also have ought to be confirmed". Whereas in the assessee's appeal following grounds have been raised : "1. On the facts and in the circumstances of the case and in law, the CIT(A) was not justified in confirming the addition for the loans taken during course of business amounting to ₹ 2,50,000/- rejecting the claim of the appellant as genuine loans. a) loan from Mr. Mahadevlal Mahatto Rs.50,000/- b) loan from Mr. Prakash Butani Rs.50,000/- c) loan from Mr. Babulal L Shah Rs.1,50,000/- 2. On the facts and in the circumstances of the case and in law, the CIT(A), was not justified in confirming the disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase and sales and expenses which were incurred during the previous year relevant to the assessment year 2007-08. The ld.CIT(A) forwarded the entire additional evidences and information to the AO to submit his remand report not only on the admissibility of additional evidence but also to examine the details/additional evidence filed by the assessee, through his letter dated 14.7.2010. In response, the AO submitted his remand report dated 30.4.2012, the copy of which have been placed in the paper book at pages 83 to 87. The relevant contents of the remand report have also been incorporated by the ld. CIT(A) at pages 4 and 5 of the appellate order. In the remand proceedings, the AO examined the confirmation letters and the copy of accounts of all the 34 creditors and also books of account, bills and vouchers. The AO after examination of the evidences furnished, accepted the loan s in respects of 31 creditors and only in respect of 3 creditors he gave his adverse comments, which were in the following manner: "8. Loan Credits treated as income uls.68 of the I.T.Act - ₹ 96,30,000/- The assessee has now flied loan confirmations of ₹ 96,30,000/- before your good self for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redits aggregating of ₹ 3,50,000/- as received from three persons. Regarding interest also, after considering the remand report of the AO and the submissions of the assessee, he directed the AO to charge 8% of interest on the amount advanced and also on the amount of loan confirmed in respect of all the creditors. Regarding disallowance of loss, the ld. CIT(A) accepted the loss on the basis of remand report and also submissions made by the assessee. Against this, the department has not raised any ground. 4. Before us, the ld. DR submitted that, once the assessee was given ample opportunity by the AO, then the ld. CIT(A) should not have accepted the additional evidence without assigning any reason or admitting the additional evidence. Even, in the remand report, the AO has not given any specific finding for each and every creditor except in the case of three creditors for which he has given his adverse comments. The ld. CIT(A) was required to give proper findings with regard to each and every other creditors and should have come to his definite conclusion. He has relied upon the adverse findings of the AO given in the remand report for confirming the additions and for the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors. Otherwise also, all the creditors have confirmed that they have paid the loan amount through account payee cheques drawn from their bank account and have also confirmed the copy of the ledger account. All these details are appearing from pages 1 to 68 of the paper book. Thus, mere fact that the AO in the remand report has not mentioned about all the creditors after detailed examination, it cannot lead to any adverse inference with regard to the creditors which has been accepted by him. The ld.CIT(A), on the basis of report and also on the examination of the record filed before him, has accepted the majority of creditors and in respect of only three creditors upheld the observation and finding of the AO given in the remand report. The ld. CIT(A) has strictly followed the provisions of Rule 46A, by not only forwarding the entire evidence to the AO to submit the remand report but also, required the AO to give his comments with regard to admissibility of such evidences. Once the AO has admitted the additional evidence and has not objected to then it cannot be held that there is any violation of Rule 46A. Therefore, the decision relied upon by the ld.DR will not be applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee have left their job without any notice. Therefore, the assessee could not comply with the notices issued by the revenue and could not furnish details and evidences before the AO. The reasons stated by the assessee before the ld. CIT(A) was accepted by him and he sent all the additional evidences in the form of confirmation letters, confirmed copy of account and entire details of purchase and sales to the AO to give his comments, not only on the additional evidences and admissibility of additional evidences, but also to carry out the proper examination and inquiries of additional evidences. It appears that the AO took almost two years for submitting his remand report. From the perusal of the remand report, as appearing in the paper book, it is seen that the AO has noted the facts as to why the assessee could not furnish the confirmation and other details during the course of assessment proceedings. This, itself goes to show that he has no objection on the reasons stated by the assessee. In the remand proceedings the AO had called for entire details, explanation of the assessee and also sent summons u/s 131 to the loan creditors. He even noted that, 16 loan creditors could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. CIT(A), which are as under : "1. Shri Mahadevlal Mahatto - ₹ 50,000/- The A.O. mentioned that the assessee filed only confirmation letter. No other details furnished. Only reply the assessee submitted is that, the lender is an employee and he has paid by cheque. It is established law that merely because the payment is made by cheque does not satisfy all the conditions to be out of the purview of the provisions of section 68 of the I.T.Act. As the assessee failed to prove the creditworthiness of the lender, the credit can not be accepted as genuine. Thus, the AO's action is justified in adding ₹ 50,000/- u/s.68 accordingly the addition is upheld. 2. Shri Babulal L Shah - ₹ 1,50,000 In this case, the AO reported that that no information was furnished except copy of the death certificate of the lender who expired in April 2007. In this case also as no evidence has been produced by the assessee, the same cannot be treated as genuine loan. Further, the assessee could not establish the creditworthiness of the lender and genuineness of the transaction. The amount of ₹ 50,000/- has been rightly added by the AO. 3. Shri Babulal L Shah - ₹ 1,50,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned above, the interest paid by the assessee was @ 8%. On the other hand, the assessee advanced loan of ₹ 38,53,285/- as per the Balance sheet of the assessee and collected interest of ₹ 1,99,972/- which works out to 5.1%. It is to be mentioned that it did not prove that the amount of ₹ 38.53 lakhs was advanced for business purposes, To be reasonable, the assessee should also have collected 8% interest on ₹ 38,53,285/- which comes to ₹ 3,08,000/-. Secondly, the assessee's without prejudice submission that the issue of charging interest on loan advanced was not the case of the Assessing Officer is misplaced, for the reason when, in the assessment proceedings while charging interest @ 18% on the loans of ₹ 96,30,000/- the issue of charging difference in the interest rate did not arise. The verification of the details during remand proceedings reveals that majority of loans received are in order. Therefore, issue of charging interest and payment of interest comes to the fore. This issue has become relevant and the same has to be adjudicated. Accordingly, I direct the AO to charge interest @8% on ₹ 38,53,285/- on the amounts advanced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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