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TMI Blog2015 (2) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... upon assessee to furnish the details of all loan creditors along with their creditworthiness. In response to the query made, as noted by the A.O. in the assessment order, assessee furnished confirmation letters and copies of the bank account statements evidencing receipt of the amounts from the loan creditors. However, for verifying the genuineness of the loan transactions, the A.O. in course of hearing on 12.02.2013 called upon the assessee to produce the loan creditors based at Kolkata for examination between 25.02.2013 and 27.02.2013 at Income Tax Office, Kolkata. It is noted by the A.O., few of the loan creditors based at Kolkata responded to the summons issued and they were examined. He observed that many of the loan creditors did not appear and some of them were represented by their authorised representatives. A.O. observed that out of the total 78 creditors to whom summons were issued, 20 persons appeared either before him at Kolkata or before the concerned A.O. in Bombay. 24 creditors did not appear in person but were represented through their Authorised Representatives whereas, rest of the creditors never appeared. A.O. observed, the creditors who appeared before him conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is working as a Managing Director will be appearing before the A.O. as and when required. The learned A.R. submitted that after enquires were completed at Kolkata, the assessee personally attended before the A.O. at Hyderabad on 08.03.2013 and statement was recorded from him. It was submitted though, the assessee made repeated requests to furnish copy of the statement recorded but till date a copy of the statement was not made available to the assessee. Even in respect of enquiry conducted at Kolkata also, though, the assessee requested for copies of the information/material gathered by the A.O. which he intended to use against the assessee but no substantive information was made available to the assessee except copies of some bank accounts of certain loan creditors and some copies of the statements recorded from them. Learned A.R. submitted that the information given to the assessee by the A.O. in respect of the enquiry conducted by him is incomplete as it does not cover all the enquires made. Learned A.R. submitted that at the fag end of March, 2013 some more enquires were made at Jaipur, Mumbai and Delhi through local investigation wing and the A.O. on 22.03.2013 furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fund to advance the loan. Further, the learned A.R. submitted, the entire loan transaction was through regular banking channel and the repayment by the assessee is also through banking channel. It is also a fact that assessee has paid interest on the credits to the concerned creditors through banking channel. Under these circumstances, the genuineness of the loan transaction also cannot be doubted. 6. Learned A.R. submitted that the assumption of the A.O. that not a single loan transaction from any of the 78 creditors is genuine is totally absurd assumption. Learned A.R. submitted, the A.O. supplied to the assessee copies of some of the creditors statements but all statements relied upon by him to treat the loan transactions as unexplained were not given to the assessee. Therefore, assessee could not effectively offer his explanation in respect of the materials collected by the A.O. Learned A.R. submitted, though in the assessment order, A.O. observed that in number of cases enquiries reveal that no such company or person were in existence but the assessee could not furnish any explanation as he had no knowledge of the enquiry made by the A.O. Learned A.R. submitted, all the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered rival contentions and perused the orders of the revenue authorities as well as voluminous documents submitted before us in the form of paper books. At the outset, it is to be borne in mind, initial burden is on assessee to prove a particular loan transaction appearing in his books by establishing (a) identity of the creditor (b) their creditworthiness and (c) genuineness of the transaction. As is evident from the facts on record, the dispute is with regard to an amount of Rs. 24,51,59,299 representing unsecured loan from 78 creditors. Out of the 78 creditors, 72 creditors were from different places of West Bengal, one creditor each is from Jaipur, Delhi and Hyderabad and three are from Mumbai. While the A.O. in the assessment order has stated that in response to the summons issued by him 18 persons appeared before him at Kolkata and 2 creditors appeared before the A.O. at Bombay, whereas, 24 persons appeared before him at Kolkata through their authorised representative. However, learned A.R. has submitted before us that out of 78 creditors, 65 persons appeared before the A.O. and furnished necessary details/evidences with regard to loan transactions. Learned A.R. submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has not only credited interest to the creditors through banking channel but in many cases has also repaid the loan to the creditors through banking channel. Under these circumstances, when the entire transaction is through regular banking channel, the loan received by the assessee cannot be treated as unexplained credit merely on the assumption that the creditworthiness of the creditors are not proved. When the loan transaction is through banking channel to prove that it is not genuine, the A.O. has to make proper enquiry and establish it on record by bringing sufficient evidence that it is the assessee's money which has been routed back to him through the creditors. Unless this fact is proved through proper enquiry, it will not be proper to treat the loan transaction as not genuine on conjecture and surmises. Moreover, when many of the creditors are income tax assessees it has to be looked into as to whether the loan transaction has been reflected in their balance sheet/capital account and disclosed to the department. If the loan transaction has been accepted in their hand by the department, then, it cannot be held to be otherwise in case of the assessee. On perusal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Moreover, in course of hearing before us, learned A.R. submitted, those creditors who could not appear before the A.O. earlier, are ready to offer themselves for examination. Learned A.R. has also submitted before us financial statements of some creditors and requested for treating them as additional evidence. However, without giving opportunity to A.O. to verify them, we cannot take any decision on the basis of these evidences. There is also dispute as regards the number of creditors appearing in pursuance to summons issued by A.O. While the A.O. has stated that only 44 creditors appeared before him, the learned A.R. has submitted that 65 creditors appeared before A.O. Considering all these aspects, we are of the view it will be better to remit the issue to the A.O. as it will be difficult on the part of Ld. CIT(A) to decide it independently, without getting it verified by A.O. on remand. Accordingly, we set aside the impugned order of Ld. CIT(A) and remit the matter back to the A.O. for deciding afresh. It is open for the A.O. to conduct necessary enquiry as deemed necessary. He may call upon the assessee to furnish further information and if necessary may examine the concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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