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TMI Blog2021 (9) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... in the impugned order. - Decided against revenue. Addition u/s 68 on unsecured loans - availability of funds with the lenders at that point of time when it is claimed that such finance was transacted and transferred to the bank account of the appellant - HELD THAT:- Lenders transacted in sizeable amounts during the impugned assessment year and there was sufficient credit balance in their bank accounts to lend money to the appellant. The transactions have duly been confirmed by the lender and confirmatory affidavits have been placed on record. The additional documents furnished by the assessee were forwarded to Ld. AO and the same were verified in the remand proceedings - AO has not pointed out any discrepancy in the said documentary evidences. It is noteworthy that notices issued u/s 133(6) during remand proceedings were duly responded to by the lenders along with documentary evidences. Few of the lenders appeared before Ld. AO and confirmed the transactions. The interest was paid on loans after complying with TDS requirements - conclusion of Ld. CIT(A) that the assessee demonstrated fulfillment of primary ingredients viz. identity and creditworthiness of the loan creditors an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case and in law, the Ld. CIT (A) has erred in deleting addition made on account of bogus loans and interest claimed on it without appreciating the fact that Shri Lunkaran Kothari and Shri Bhanwarlal Jain has admitted before the investigation wing that they did not carry out any real business.? As evident the revenue is aggrieved by relief provided by Ld. CIT(A) on account of alleged bogus purchases and bogus loans. 2. The Ld. DR, drawing attention to the factual matrix, supported the assessment framed by Ld. AO. The Ld. DR referred to the decision of Hon ble Rajasthan High Court in Clarity Gold Private Ltd. V/s Pr. CIT (102 Taxmann.com 421) which has confirmed the addition made u/s 69A in respect of bogus purchases. The Ld. AR, on the other hand, submitted that inquiries were conducted by Ld. AO at the fag-end of assessment proceedings due to which the compliances could not be made by the assessee. However, due compliances were made during remand proceedings. 3. Having heard rival submissions and after careful consideration of material on record, our adjudication to the subject matter of appeal would be as given in succeeding paragraphs. Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Consequently, in terms of ratio of various judicial pronouncements, the unsecured loans of ₹ 795 Lacs as taken from seven entities were added to assessee s income u/s 68 as unexplained cash credit. The interest of ₹ 29.90 Lacs paid to these entities was also added back. Appellate Proceedings 5.1 During appellate proceeding, the assessee assailed the findings of Ld. AO by drawing attention to the documentary evidences supporting the purchase made by the assessee. It was stated that no purchases were made from M/s Marine Gems Pvt. Ltd. 5.2 Regarding unsecured loans, the assessee drew attention to the fact that during assessment proceedings account confirmation of loan parties, bank statement of the assessee was well as lenders, ITR acknowledgement of the lenders were filed and the transactions were genuine. It was submitted that the loans were repaid though banking channels during the year itself. The interest was paid on these loans after deduction tax at source. 5.3 The assessee submitted additional evidences in the shape of (i) affidavit of lenders and suppliers; (ii) audited financial statements of lenders; (iii) bank statements of purchase p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant as well as of the aforesaid loan creditors. I have observed that there are credit and debit entries in the bank statement of the appellant as well as in the bank statement of the afore-said parties during the financial year, 2013-14 relevant to the instant assessment year. Hence, these transactions are in the form of running accounts as depicted in the confirmation of ledger account. This indicates that appellant has taken funds from the said parties on several instances and repaid the same in installments during the same financial year. Hence, in the given facts and circumstances, in my opinion, the creditworthiness of the parties, cannot be based solely on the total income declared in the Income Tax Return. What is to be seen is the availability of funds with them to lend at that point of time when it is claimed that such finance was transacted and transferred to the bank account of the appellant. The bank statements show that the afore-said parties transacted in sizeable amounts during the impugned assessment year and there was sufficient credit balance in their bank accounts to lend money to the appellant. Before me, besides the ledger confirmation submitted to the AO du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant expressed inability to produce the parties who are based in Surat within such a short duration. Thus, the conclusion drawn by the AO that the genuineness of loan transaction, identity and creditworthiness of the loan creditors have not been established is not a sound footing in the absence of any corroborated material supporting the statement of third-party. 8.4.5 In view of the documentary evidences mentioned above, brought on record by the appellant during the assessment proceedings and in the appellate proceedings which were remanded to the AO, I find the view of the AO that the impugned loan creditors are mere entry providers and that the impugned loan entries have been obtained by the appellant against payments made to the said entry providers in cash is not sustainable. There is no specific material on record to pin-point that the aforementioned creditors are entry providers and that entries of the loan in question have been obtained against payments made by the appellant in cash outside the regular books of account. There is no material proof on record of payment of any commission or fee by the appellant to the alleged aforesaid parties. All this goes to support t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the burden cast on him and it would be for the revenue to prove that the transaction is not satisfactorily explained and provisions of section 68 of the Act are applicable. In the case before me, the record also shows that to prove the genuineness of the impugned loan entries from the 7 creditors, the appellant has furnished to the Assessing Officer the following details and the copies of which are also furnished before me. They are- I. PAN details of creditors II. Constitution and address of the creditors III. Particulars of income-tax returns filed by the creditors IV. Confirmatory letters given by the creditors V. Audited financial accounts (including balance sheets) of the creditors VI. Relevant bank statements of the creditors 8.4.8 In the case of ITO vs. Anant Shelters (P) Ltd. [2012] 051 SOT 0234, the Hon'ble ITAT (Mumbai) the Tribunal has held that in matters regarding cash credit the onus of proof was not a static one. As per the provisions of the section 68, the initial burden of proof lies on assessee. Amount appearing in books of accounts of the assessee was considered a proof against him. He can prove the identity of the creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he suppliers. The three suppliers were well in existence as on-going business concerns. Therefore, the assessee, in our considered opinion, had duly substantiated the purchases transactions and the additions have rightly been deleted by Ld. CIT(A) in the impugned order. The case law of Hon ble Rajasthan High Court in Clarity Gold Private Ltd. V/s Pr. CIT (102 Taxmann.com 421), as referred to by Ld. DR, deal with a search case and the additions were made on the basis of seized material. However, the same is not the case here. Ground Nos. A to E stand dismissed. 7. We find that similar is the position of unsecured loans. It could be gathered that the loans obtained by the assessee were already repaid during the year along with interest. The funds were borrowed for a short duration. This fact was duly certified by the Tax Auditor in the Audit Report. The transactions have taken place through banking channels. The transactions were in the form of running accounts as depicted in the confirmation of ledger account. The source of funds could not merely be the Income declared in the Income Tax Return. What is to be seen is the availability of funds with the lenders at that point of ti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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