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TMI Blog2019 (4) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... f the parties ignoring the other two aspects brought out by the AO including capacity of the parties to explain source of investments. According to the AO, none of the creditors had sufficient income to explain source, but there is no discussion in the order of the CIT(A) about this observation. Insofar as loan taken from Aditya Patel of ₹ 50 lakhs, the assessee, before the AO has claimed that he had accepted loan from the party for which assessment details have been filed. Before the Ld.CIT(A), the assessee has made an altogether different submission to argue that even though Aditya Patel is having minimum income in his return of income, but the source of credit was from loan for which details of company alongwith PAN was submitted to the AO. Before us, the asessees has come out with one more argument that this is an advance received from the party against sale of certain agricultural land which has been finally adjusted towards sale consideration of land - issue needs to be examined by the AO in light of the claim of the assessee that sufficient evidence has been filed in order to prove identity, genuineness of transaction and creditworthiness of the parties. Disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009 declaring total income of ₹ 23,88,230. The case was selected for scrutiny and notices u/s 143(2) and 142(1) of the Act were issued. In response, the authorised representative of the assessee appeared from time to time and filed various details. During the course of assessment proceedings, the AO noticed from the ITR details, that assessee has made huge investments of ₹ 7,01,32,021 in the units of mutual funds, bonds and debenture, etc. In order to ascertain the nature and source of investments, the AO called upon the assessee to file necessary details. In response, the assessee has submitted various details to prove source of investments in mutual funds and bonds. The AO, after considering relevant submissions of the assessee noticed that the assessee has availed unsecured loan from various parties amounting to ₹ 2,42,30,609; but failed to file complete details including identity, genuineness of transactions and creditworthiness of the parties. Therefore, made addition towards unsecured loan taken from various parties amounting to ₹ 2,42,30,609 u/s 68 of the I.T. Act, 1961. 3. Aggrieved by the assessment order, assessee preferred appeal before the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the parties have been filed, the AO failed to take note of those details; but, only compared the returned income of the creditors vis-a-vis loan amount to reach to a conclusion that they did not have sufficient income to establish creditworthiness of the parties. But fact remains that the parties have confirmed their transaction with the assessee and, therefore, once there is identity of the parties and also the capacity has been explained, merely for the reason that they have declared less income in their income-tax returns, addition could not be made. The Ld.CIT(A) has taken further facts to the effect that out of unsecured loan borrowed from various parties, the assessee has already repaid a sum of ₹ 1,50,27,500 in subsequent years. Therefore, there is no reason for the AO to doubt the genuineness of transaction. As regards loans / advances of ₹ 50 lakhs from Shri Aditya Patel which is not repaid as yet, the Ld.CIT(A) observed that the assessee has filed details of loan received from Shri Aditya Patel which was further accepted by the party from Sarthav Infrastructure Pvt Ltd and the assessee has also given PAN and address of the source of source. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings, the assessee could not file complete details of unsecured loans taken from various parties including confirmations and their addresses. It is also an admitted fact that the assessee has filed various details including confirmation from the parties in the form of additional evidences before the Ld.CIT(A). Although the Ld.CIT(A) given an opportunity to the AO to comment on additional evidence filed by the assessee, but, the AO has refused to admit additional evidence and also re-iterated his findings recorded in the assessment order about the creditworthiness of the parties to come to the conclusion that the assessee has failed to explain creditworthiness, therefore, no receipt could be given to the assessee on account of addition made towards unsecured loans. The Ld.CIT(A) has allowed relief to the assessee on the basis of additional evidence filed by the assessee including confirmations from the parties. On perusal of the details filed by the assessee before Ld.CIT(A), we find that the Ld.CIT(A) primarily commented on the admissibility of additional evidence without going into substance of the matter in light of observations made by the AO during assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards sale consideration of land. The assessee has taken divergent arguments at different stages of proceedings. Therefore, considering all these aspects, we are of the considered view that the issue needs to be examined by the AO in light of the claim of the assessee that sufficient evidence has been filed in order to prove identity, genuineness of transaction and creditworthiness of the parties. Hence, we set aside the issue to the file of the AO and direct him to verify additional evidence filed by the assessee with a reasonable opportunity of hearing to the assessee . 9. The next issue that came up for our consideration is disallowance of interest expenditure. The AO has disallowed expenses debited in the P L account including interest on the ground that interest claimed against interest income cannot be allowed as deduction. The AO further observed that the assessee has failed to co-relate interest expenses against interest income by filing necessary details; therefore, disallowed interest expenses and other expenses debited to the P L account. It is the contention of the assessee that it has earned interest income against which various expenses including interest paid o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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