2015 (6) TMI 706

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..... cash credits u/s. 68 of the Act. 2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 16,20,242/- made by disallowing the interest paid on unsecured loan." 2. Briefly stated facts are that assessee is engaged in cloth trading business and return of income was filed on 29-09-2008 declaring total income of Rs. 4,29,518/-. Subsequently, the case was selected for scrutiny and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was framed vide order dated 23-12-2010. While framing the assessment, Assessing Officer made addition of unsecured loan u/s. 68 of the Act and disallowance of interest paid to various depositors. The assessee feeling aggrieved by this order filed appe .....

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..... e filed by copy of relevant bank account of the creditors, the bank account, complete address of the holder and clearing cheque of the creditors are available in the copies of such cash. The assessee had thus prima facie established that all three ingredients for proving the cash credit introduced. This finding is not controverted by the Revenue by placing any material to disproving the same. Since this issue is well settled by various judicial pronouncements in the case of cash credits, the assessee has to establish identity of the creditors, the creditworthiness of such creditor and the genuineness of the transaction. In this view of the matter, we do not find any infirmity into the order passed by Ld. CIT(A). Hence, this ground of Revenu .....

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..... sh credit has been given in the year of receipt of such loan or deposit. The amount of Rs. 1,15,00,000/- was the opening balance of loans taken from the financial year 2005-06 onwards and the same were never considered as unexplained credits u/s. 68 of the Act. The Assessing Officer was thus snot justified in disallowing the interest paid for the deposits taken in earlier years. As regards the disallowance of interest on the deposits of Rs. 7,50,000/- taken during the year under consideration, the same cannot be disallowed as the deposits have been considered as genuine and addition has been deleted. The disallowance of interest so made for Rs. 16,20,242/- is thereby deleted. The third ground of appeal is accordingly allowed." The fact tha .....

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