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TMI Blog2016 (8) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... akimuddin Behmat would file the confirmation to enable to the AO to make proper investigation. The request made by the ld. Counsel for the assessee in this regard is therefore rejected. As far as the cash deposits in the bank account of S.D.Dugar and M.K.Dugar & Sons HUF is concerned, we are of the view that the AO ought to have summoned and examined those two persons with regard to the cash deposits in their bank account prior to issue of cheques to the assessee. We therefore accept the prayer for remanding the issue to the AO in so far as the two creditors are concerned. The AO will examine those two aforesaid parties and decide the issue in accordance with law. Expenditure towards interest on cash credit loan of SBI - Held that:- From the details given to us it appears that the assessee had deposited a sum of ₹ 26,00,000/- in his bank account in which the credit facility in question was availed by the assessee. There are two questions that need to be answered before accepting the claim of the assessee namely what is the outstanding amount of interest and whether the sum of ₹ 26,00,000/- paid would cover the interest of ₹ 8,86,927/- which was claimed as deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter referring to the opportunities afforded to the Assessee, observed that the assessee failed to comply with the directions of the AO and accordingly a sum of ₹ 31,42,138/- was added to the total income of the assessee as unexplained credit u/s 68 of the Act. 5. Before CIT(A)the assessee explained that it could not comply with the directions of the AO in the course of assessment proceedings and requested for an opportunity to produce evidences that was called for by the AO. The CIT() allowed opportunities to the assessee to produce such evidence and called upon the AO to examine the evidence and file a remand report. In the remand proceedings, the AO called for certain details which are listed in paragraph 3 of the CIT(A) s order in sub-paragraph 4.4. AO in the remand report further submitted that the assessee had filed only the copy of its own bank statement in support of its claim but did not file any evidence in respect of identity of the creditor, creditworthiness and genuineness of the transaction. The CIT(A) after considering the remand report of the AO came to the conclusion that the assessee failed to prove the genuineness of the transaction, identity and creditwo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 100000/- received as unsecured loan as un explained cash credit u/s68 of the income tax act 1961. 11. The assessee during the previous year received unsecured loans totalling ₹ 10,00,000/- from the following three parties :- (a) S.D.Dugar : ₹ 75,000/- (b) Hakimuddin Bemat : Rs.8,00,000/- (c) M.K.Dugar Sons HUF : Rs.1,25,000/- Rs.10,00,000/- The AO requested the assessee to explain such claim by furnishing (i) Confirmations of such loans. (ii) The following evidences in support of genuineness of loan and creditworthiness of loan creditors :- (a) Bank statement of Loan Creditors (b) Cash flow statement of Loan creditors (c) PAN, copy of I.T. Acknowledgement, P/L Account and Balance Sheet of Loan creditors, For the relevant period. 12. In the order of assessment, the AO in paragraph 4.2 has set out the opportunities afforded to the assessee to explain the aforesaid unsecured loans and the failure of the assessee to comply with the request of the AO. The AO had afforded about 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore the explanations offered by the assessee could not be accepted as satisfactory. The CIT(A) therefore held that the sum of ₹ 1000000 credited in the account of the assessee was rightly added to the total income of the assessee firm for the AY 09-10 as unexplained credit u/s 68 of the Act. 16. Before us the ld. Counsel for the assessee submitted that Mr.Hakimuddin Behmat, one of the loan creditors, who had given a sum of ₹ 8,00,000/- had not responded to the summons issued by the AO owing to strained personal relationship. It was submitted by him that the aforesaid party was now willing to extend necessary cooperation. He therefore prayed that one more opportunity may be afforded to the assessee to satisfactorily explain the unsecured loans received from Mr.Hakimuddin Behmat. As far as the other two unsecured loan creditors are concerned S.D.Dugar and M.K.Dugar Sons, HUF the ld. Counsel submitted that the AO was always at liberty to examine the aforesaid parties but did not do so. It was submitted by him that the cash deposit of ₹ 45,000/- in the bank account of M.K.Dugar sons HUF before issuing of cheques to the assessee and the deposit of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of interest but noticed that there was a settlement between the assessee and the bank during the previous year 2010-11 and the assessee obtained benefit of ₹ 3,48,806/- by way of such settlement with the bank and the same was offered to tax as income in that year. The AO also referred to Explanation 3C and 3D to section 43B of the Act which provides that even if interest payable on loans or advances from a scheduled bank is converted into a loan or advance that will not be the actual payment of interest. The AO accordingly added a sum of ₹ 8,86,927/- to the total income of the assessee. 21. On appeal by the assessee CIT(A) confirmed the order of AO. Aggrieved by the order of CIT(A) the assessee raised ground no.3 before the Tribunal. 22. At the time of hearing it was pointed out by the ld.counsel for the assessee that the following is the details of the bank transactions in the cash credit account of the assessee.:- Details of Bank transactions of S.B.I. Martinier Branch, Kolkata A/c No.00000011187485784 O.D.Balance on 01.04.2008 Rs.8,786,087.21 Less : Deposits Rs.2,600,000.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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