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TMI Blog2019 (9) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the evidences on record and reply of the assessee filed in response to the remand report. Therefore, we do not find any reason to disturb the order of the Ld. CIT(A) on this issue Sum representing the loans raised from two parties Daksh Diamond and Naman Export who were related to M/s. Bhanwarlal group, we observe that the assessee has filed all the evidences before the AO and the transactions were duly confirmed. The AO has only relied on the statement recorded during the course of search of Shri Bhanwarlal Jain under section 132(4) of the Act which also stood retracted by the said person and has no evidentiary value. In our opinion the Ld. CIT(A) has passed a very reasoned order citing various justifications and reasons for deleting the addition. Therefore we are inclined to uphold the order of ld CIT(A) by dismissing the ground no. 1 raised by the revenue. Addition u/s 36(1)(iii) - HELD THAT:- The facts in brief are that during the course of assessment proceedings no addition of 2,90,96,145/- was made under section 36(1)(iii) of the Act by the AO to the income of the assessee and therefore this ground is not arising out of the assessment order as pointed out by the Ld. A.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 4,87,52,408/- u/s14A. 5.The appellant prays that for these and other reasons it is submitted that the order of the Ld. CIT(A) on the above grounds be set aside and that of the A.O. be restored. 6. The appellant craves leave to amend add, amend or alter all or any of the grounds of appeal" 3. The issue raised in 1st ground of appeal is against the deletion of addition of ₹ 14,32,00,000/- & ₹ 2,50,00,000/- by Ld. CIT(A) as made by the AO on account of the unexplained cash credits under section 68 of the Act. 4. The facts in brief are that the assessee filed the return of income on 29.09.2012 declaring loss of ₹ 7,13,30,776/- under the normal provision of the Act while a book profit of ₹ 23,79,302/- was declared under section 115JB of the Act. The assessee e-filed its revised return of income on 31.03.2014 declaring loss of ₹ 8,52,55,660/- which was processed under section 143(1) of the Act. Thereafter, the case of the assessee was selected for scrutiny after issuing statutory notices which were duly served upon the assessee. The AO, during the course of assessment proceedings, found from the perusal of the tax audit report that assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The addition of ₹ 4,35,00,000 was made u/s.68 of the Act by the AO by treating the loans of ₹ 4,35,00,000 as unexplained credit in the hands of the assessee. 8. The AO also added ₹ 2,50,00,000/- raised by the assessee from Daksh Diamond ₹ 1,00,00,000/- and Naman Exports ₹ 1,50,00,000/- on the ground that these concerns were group concerns of M/s. Bhanwarlal Jain group and represented hawala entries in view of the fact that Shri Bhanwarlal Jain during the course of search admitted that he and his associates were engaged in providing the accommodation entries of purchases, unsecured loans and bogus share capital. According to the AO, the said entries were obtained by the assessee in lieu of undeclared cash and thus fall within the ambit of section 68 of the Act as unexplained credit and accordingly these two loans were added to the income of the assessee. 9. In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee after taking into consideration the contentions and submissions of the assessee. The Ld. CIT(A) has deleted the addition of Rs.₹ 14,32,000/- in respect of 11 parties by observing that the assessee has disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .No.286/2/2003-IT (INV investigation). The Ld. CIT(A) further observed that no addition can be made solely on the basis of statement under section 132(4) of the Act which was subsequently retracted as it has no evidentiary value as there was no corroborating evidences found. The Ld. CIT(A) also noted that AO was specifically requested vide letter dated 26.03.2015 to provide copy of statement recorded of Shri Bhanwarlal Jain whose statement was made the basis for the addition of ₹ 2,50,00,000/-. However, no such copy of the statement was either supplied or cross examination was allowed. The Ld. CIT(A) held that the non allowing of cross examination to the assessee is sufficient reason to delete the addition in view of the ratio laid down in the case of Andaman Timber Industries (Civil 11. The Ld. D.R. vehemently argued before us that the Ld. CIT(A) has not appreciated the facts as brought out by the AO to the effect that assessee has failed to prove the genuineness of the transactions and creditworthiness of the lenders in respect of first addition qua which notices were issued under section 133(6) of the Act comprising 7 parties. The Ld. D.R. submitted that though the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m whom ₹ 4,35,00,000/- were borrowed, the AO had made the addition by holding that the notices issued under section 133(6) of the Act remained unserved and thus the loans remained unexplained. The Ld. A.R. submitted that the conclusion drawn by the AO on the basis of documents submitted by the lenders is fallacious and wrong in view of the fact that the lenders have sufficient resources in their balance sheets. The ld AR submitted that these transactions were duly reflected in their books of accounts of the lenders. The ld. A.R. submitted that the said 7 parties from whom ₹ 9,97,00,000/- were borrowed have confirmed the transactions and therefore the addition made by the AO is wrong and has rightly been deleted by the Ld. CIT(A) by holding that the creditworthiness of the lenders and genuineness were proved. In respect of the remaining four parties who did not respond to the notice issued under section 133(6) from whom the assessee has borrowed ₹ 4,35,00,000/-, the assessee filed additional evidences in the course of appellate proceedings. These additional evidences were forwarded to the AO for verification and AO submitted the remand report vide letter dated 21.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in the case of CIT vs. Kishan Chand Challaram 125 ITR 713 (SC) wherein it was categorically held that unless materials are confronted to the assessee, no adverse inference could be drawn. The Ld. A.R. also relied on the decision of co-ordinate Bench in the case of ACIT vs. M/s. Gujarat Estates ITA No.3184/M/2017 A.Y. 2008-09 vide order dated 15.02.2019 wherein the co-ordinate bench has decided the issue in favour of the assessee by holding that where the assessee has filed all evidences qua the lenders and lenders have duly responded to the notices under section 133(6), then no addition can be made under section 68 of the Act in respect of loans taken from Shri Bhanwarlal Jain and related entities. The Ld. A.R. also filed a statement showing repayment of loans raised from various parties and thus submitted that all these loans stand repaid.Finally, the Ld. A.R. prayed before the Bench that the order of the Ld. CIT(A) has been passed after taking into consideration the legal as well as factual aspects of the matter and therefore deserved to be affirmed on this issue. 14. After hearing both the parties and perusing the material on record including the impugned order passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) of the Act which also stood retracted by the said person and has no evidentiary value. In our opinion the Ld. CIT(A) has passed a very reasoned order citing various justifications and reasons for deleting the addition. Therefore we are inclined to uphold the order of ld CIT(A) by dismissing the ground no. 1 raised by the revenue. 15. The issue raised in 2nd ground of appeal is against the disallowance of interest of ₹ 2,90,96,145/- by Ld. CIT(A) as made by the AO under section 36(1)(iii) of the Act. 16. The facts in brief are that during the course of assessment proceedings no addition of ₹ 2,90,96,145/- was made under section 36(1)(iii) of the Act by the AO to the income of the assessee and therefore this ground is not arising out of the assessment order as pointed out by the Ld. A.R. and candidly admitted by the Ld. A.R. and therefore the same is dismissed. 17. The issue raised in round No.3 is against the deletion of disallowance of interest of ₹ 46,50,257/- as made by the AO on the unsecured loans. 18. The facts in brief are that the assessee has claimed deduction of interest of ₹ 2,70,77,377/-. The AO treated part of the borrowings during th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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