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TMI Blog2021 (6) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... urce. Loan have been duly repaid, some part has been repaid even in the present assessment year. In these circumstances, in our considered opinion assessee has discharged the onus. AO has not brought on record any cogent material to make the addition as unproved cash credit. Hence, the addition made by the assessing officer is not sustainable. No infirmity in the order of Ld.CIT(A) regarding deletion of addition on account of loan. Accordingly, we are uphold the same. Addition on account of deduction claimed by the assessee for interest payment on unexplained unsecured loan from dubious lenders - Since, we have already held that addition of loan as unexplained credit is not sustainable, the disallowances of interest thereon, on the same reasoning is liable to be deleted. Hence, we uphold the order of the Ld.CIT(A) on the issue also. Revenue appeal dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... al 13,87,50,000 82,72,911 4. The assessee has furnished the documents supporting the transactions, but the Assessing Officer was not satisfied with the same. He had issued notices u/s. 133(6) of the Income Tax Act to the parties advancing the loans to the assessee with a request to furnish the details of the unsecured loan along with confirmation and interest details, copy of the bank statement highlighting the payments made, copy of the return of income alongwith the audited balance sheet, profit and loss account alongwith annexures. All the parties have complied with the notices and furnished the details called for by the Ld.AO. The AO noted that assessee's explanation that the assessee being a borrower is not in control of the income and expenses of the lender. That the interest paid by the assessee to the lenders has been duly confirmed and credited to their respective profit and loss account. That the companies are assessed to tax which is sufficient evidence of availability of sources of their assets, income and expenditure. That the financial statements of the investors clearly indicates substantial position of funds available with them for giving loans. That the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Hence, the identity of the persons is completely established. GENUINENESS OF TRANSACTION With respect to the genuineness of the transaction, we wish to submit that the loans are utilized in course of business of residential project. The said loans have been received by account payee cheques. The bank statements of lenders clearly reflect the amounts paid to Appellant company. The transactions have been duly confirmed by them through the Appellant as well as directly to AO in their response to notice u/s 133(6). Thus, the genuineness of the transaction is also proved beyond doubt. CREDITWORTHINESS OF LENDERS With respect to the issue of creditworthiness, we wish to submit that the audited financial statements of all lender companies have been called on record. The same reflects volumes about the creditworthiness of the lenders in terms of their ability to lend to the appellant company. The creditworthiness can be best judged from the following: a) Net worth (assets minus liabilities) b) Fixed Asset holdings c) Investments and stock in hand d) Bank Balance as date of balance sheet e) Peak balance of the month in which amount lent to Appellant company. f) Turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) held as under : "5.4 The submissions of the learned Counsel have been considered carefully alongwith the assessment order. It is the learned Counsel's contention that the assessee has discharged the primary onus cast on it by providing necessary documentary evidences to prove the three criteria i.e, identity, creditworthiness of the lender and the genuineness of the transaction. The Assessing Officer had also independently issued notices u/s.133 (6) to all the parties who have complied with the same and provided the Ld.AO with the required evidences. In a few cases, where the balancesheet of the lender party was not enclosed by the party, the assessee had obtained the same creditor and genuineness of the transaction. All the lenders are income-tax assessees and have filed Returns of income. The transactions have taken place through banking channels. The bank account statements of all the lender parties have been furnished to the Ld.AO which did not evidence any cash deposits or anything abnormal. The Assessing Officer states that there are certain abnormal features noticed by him which are high turnover and high sundry creditors. High turnover and high sundry creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption. An addition based only on the basis of suspicion and presumptions in the absence of any adverse finding cannot be sustained. The Ld.AO is directed to delete the addition of ₹ 13,10,50,000/- made u/s. 68." 9. Learned CIT(A) further deleted the addition of alleged interest paid as under : "The second ground of appeal is against the disallowance of interest expenditure of ₹ 69,10,197/- by treating the same as not laid out or expended for the purpose of business. As discussed in the preceding paras the assessee had taken loans of ₹ 13,10,50,0007- during the year and made interest payment of ₹ 69,10,197/- on the same. Some of these loans have been repaid in the very subsequent year and the others in later years. The assessee has paid interest after deducting tax at source. The parties to whom interest has been paid have shown this amount as their income in the Returns of income filed by them. Further, the loans on which this interest has been paid have been considered genuine while deciding the first ground of appeal in the preceding para. Therefore, the interest paid on these loans on which TDS is also made and which has been shown as income by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to share application money and share capital. Hence, the addition made by the Assessing Officer was not at all justified. The ld. Counsel of the assessee submitted that in view of the enormous details submitted, there is no reason why these loans should be added as unproved cash credit. He placed reliance upon several case laws in this regard. 14. We have carefully considered the submissions. We note that assessing in this case has submitted the following documents. 1. Confirmation from the lenders 2. Bank statement of lenders 3. Financial statement of lenders 4 Copy of acknowledgement of Return of Income. 5. Download of company master data from the MCA website. 6. Statement of loan repayment. 15. The Assessing Officer has duly issued notice u/s 133(6) to the above said parties. All the necessary confirmation and compliances have been made. The assessing officer thereafter has not brought on record result of any further enquiry made. The AO's observation from the financials of lenders submitted are in the nature of AOs surmise, devoid of any cogent enquiry. 16. The documents mentioned above with regard to all the lenders are also submitted before us, by way of paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.Ummer Bava (supra), the issue was gift from NRI where the creditworthiness of the donor was not proved. In Shantananda Steels(P.) Ltd (supra), the issue was share capital and huge share premium from entry providers from Kolkatta. In NRA Iron & Steel(P.) Ltd (supra), the issue was non-existent share applicants. In Synergy Finlease(P.) Ltd(supra), the issue was share capital and improbable share premium from accommodation entry providers. In Blessings Commercial(p.) Ltd(supra), the issue was share capital and huge share premium, where the providers had minimum balance in their bank account. Accordingly, we note these case laws do not help the case of the revenue. 19. Accordingly, in the background of aforesaid discussion and precedents, we do not find any infirmity in the order of Ld.CIT(A) regarding deletion of addition on account of loan. Accordingly, we are uphold the same. 20. As regard, the issue of interest on unsecured loan, the addition was made by the AO by holding that since the loan have been held by him to be unexplained the interest, thereon cannot be said to be for business purpose. Since, we have already held that addition of loan as unexplained credit is not sust ..... X X X X Extracts X X X X X X X X Extracts X X X X
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