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TMI Blog2018 (5) TMI 1862X X X X Extracts X X X X X X X X Extracts X X X X ..... Investigation) and statement of Shri Bhanwarlal Jain. But the fact remains that later Shri Bhanwarlal Jain has retracted his statement made u/s. 132(4) by filing an affidavit. Therefore, we are of the considered opinion that the Assessing Officer was incorrect in making the additions towards unsecured loans only on the basis of statement of Shri Bhanwarlal Jain when such statement has been retracted by the party. - Decided against revenue - ITA No. 6990/Mum/2016 - - - Dated:- 18-5-2018 - Shri Mahavir Singh, Judicial Member And Shri G Manjunatha, Accountant Member Appellant By : Shri V Vidhyadhar Respondent By : Shri R C Modi Ms Ketki Rajeshirke ORDER Per G Manjunatha, Accountant Member This appeal filed by the Revenue is directed against order of the CIT(A)-44, Mumbai, dated 09.09.2016, and it pertains to assessment year 2007-08. The Revenue has raised following grounds of appeal :- 1) On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition of ₹ 44,13,984/- made on account of unsecured loans and interest as the assessee has filed to prove the identify, creditworthiness and genuineness of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated as return filed in response to notice u/s. 148 of the Act. The case has been selected for scrutiny and notices u/s. 143(2) and 142(1) of the Act was issued. In response to the said notices, the learned Authorized Representative (AR) for the assessee appeared from time to time and filed necessary details as called for. During the course of assessment proceedings, the Assessing Officer observed that the assessee has taken bogus accommodation unsecured loan entries from M/s. A2 Jewels and Jewel Diam to the tune of ₹ 42,47,661/-. Therefore, he called upon the assessee to furnish necessary evidence to prove identity, genuineness of transactions and creditworthiness of the parties. In response to notice, the assessee has filed necessary details along with confirmation from parties to prove their identity. The assessee also filed bank statements and other details to prove the genuineness of the transactions and creditworthiness of the parties. In order to verify the genuineness of the lenders, the Assessing Officer issued notice u/s. 133(6) of the Income-tax Act 1961, and were asked to produce their financial statements along with Income Tax Return. However, the parties did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and relied upon certain judicial precedents including the decision in the case of ITO vs. Anant Shelters Pvt Ltd.(2012) 20 taxmann.com 153 and decision of Hon ble Bombay High Court in the case of M/s. Rushabh Enterprises vs. ACIT in W.P. 167 of 2015 dated 15.04.2015, observed that the assessee has filed necessary evidences to prove the identity, genuineness of transactions and creditworthiness of the parties, which is evident from the fact that the Assessing Officer has not disputed the identity of the parties. The Assessing Officer made additions merely on the basis of the admission of Shri Bhanwarlal Jain in the statement recorded u/s. 132(4), however, such admission has been retracted by Shri Bhanwarlal Jain. Therefore, there is no reason for the Assessing Officer to make additions only on the basis of statements of third party when the assessee has submitted enormous details to prove the loans taken from the above two parties. The relevant portion of the order of CIT(A) is extracted below: 4.3 I have carefully gone through the assessment order as well as the written submission of the AR. I have also perused the details filed by the AR. The AO has made addition u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the transaction is established from the fact that both the acceptance and repayment of loan has been through banking channels. Further tine interest paid against such loans have been subject to TDS, the details of which have been filed before the AO. The creditworthiness of the lenders can be established from the ledger a/c, bank statements and balance sheet of the lenders which were filed before the AO. In the assessment order, the AO mentioned that merely filing copies of account, bills, bank statements, does not establish that the transactions are genuine. The AO also stated that the assessee failed to produce the parties. (From a careful perusal of assessment order it is seen that the AO had issued notice u/s 133(6) to the lenders to verify the genuineness of the loans. The AO has not mentioned the outcome of the enquiry made u/s 133(6). However, AO has reproduced the reply of the assessee filed in response to the show cause wherein the assessee has mentioned that the parties have confirmed the genuineness of loans in response to notice u/s 133(6). The AO has not disputed this fact in the assessment order. As far as the issue of producing the lenders before the AO is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue's contention in the affidavit in reply has no merit. On the other hand, the loans appear to be taken in the regular course of business 4.8 After considering the totality of facts, the rival submissions, applicable and on the basis of discussions mentioned above I have come to a conclusion that nature and source of credit in the books of accounts of the appellant stands explained. Consequently, addition u/s. 68 cannot be sustained. The grounds of appeal nos. 2 3 are accordingly allowed and addition of ₹ 44,13,984/- is deleted. 5. The learned DR submitted that the learned CIT(A) erred in deleting the additions made by the Assessing Officer towards unsecured loans and interest received from Bhanwarlal Jain Group companies without appreciating the fact that Shri Bhanwarlal Jain had categorically admitted in statement before Investigation Wing that he was involved in providing accommodation entries. The learned DR further submitted that the CIT(A) failed to appreciate the fact that mere filing of confirmation letters along with bank statements would not be sufficient compliance to prove the credits found in the books of account. The Assessing Officer has br ..... X X X X Extracts X X X X X X X X Extracts X X X X
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