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TMI Blog2021 (10) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A) by dismissing the grounds of appeal raised by the Revenue. - ITA no.5345/Mum./2019 - - - Dated:- 27-9-2021 - Shri Saktijit Dey, Judicial Member And Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri Bhupendra Shah For the Revenue : Ms. Shreekala Pardeshi ORDER PER S. RIFAUR RAHMAN, A.M. The present appeal has been filed by the Revenue challenging the impugned order dated 28th February 2019, passed by the learned Commissioner of Income Tax (Appeals) 36, Mumbai, pertaining to the assessment year 2014 15. 2. The Revenue has filed this appeal on the following grounds: 1. Whether on the facts and circumstances of the case, and in law, the Ld. CIT(A) had erred in treating unsecured loan of ₹ 1,69,00,000/- as genuine, without appreciating the fact that the assessee had failed to establish the genuineness and creditworthiness of the lenders . 2. Whether on the facts and circumstances of the case, and in law, the Ld.CIT(A) had erred in treating unsecured loan o f ₹ 1,69,00,000/- as genuine, ignoring the fact that the Investigation Directorate of Kolkata had already proved that the lenders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, the Assessing Officer held that the creditworthiness of the loan lenders and the genuineness of the loan transactions have not been satisfactorily established, therefore, the unsecured loans of ₹ 1,69,00,000, was treated as assessee s income from unexplained sources. The assessee being aggrieved filed appeal before the first appellate authority. 4. Before the learned CIT(A), the assessee in support of its claim, submitted as under: 1) The Appellant has furnished the details and source of Unsecured Loans obtained by filing the confirmation, Bank statements, Return of Income and financial statements from lender companies. 2) The genuineness of transaction, identity and capacity ('creditworthiness ) of lenders has been fully substantiated and explained with evidences flied on record. The primary onus is thus discharged. 3) The criteria of testing creditworthiness from the Pro/It and Loss Account, based on low income / low tax is incorrect, but the creditworthiness is adjudged from the Balance Sheet reflecting Net Worth, sources and application of Funds available with the entity. 4) The Bank Statement of Lenders reflects substantial pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nders apart from their respective confirmations, bank statement and income tax return have been further established vide their respective balance sheets. It is also an important fact to note that the impugned loans have been duly repaid in the subsequent period before the completion of assessment proceedings before the AO. As to findings of the AO that the loan creditors did not appear in response to summons issued u/s 131 of the Ac, it was held in the case of CIT v. U.M. Shah, Proprietor Shrenik Trading Co. [1973] 90 ITR 396 (Born.) that if the parties had received the summons but did not appear, the assessee could not be blamed. Hence, in my opinion merely based on the statement of a third person without any corroborative evidence, transactions in question could not be held as non-genuine or bogus. As such, in the absence of any contrary evidence placed on record the impugned loan transactions could not be treated as bogus or paper transaction or an accommodation entry . 4.1.7 After considering the totality of the facts, the submissions, applicable law and on the basis of discussions mentioned above, I have come to the conclusion that the nature and source of credit in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he brought to our notice Page 50 of the paper book, Page 64 of the paper book, Page 88 of the paper book of the respective parties, financial statements to highlight the fact that these parties were incurring continuous losses and still they are lending loans to the other parties. Further, he brought to our notice Page 62, Page 77 and Page 89 O and Page 92 which are bank statements of the parties who have lent money to the assessee. By referring to the above bank statement, he submitted that these parties do not carry sufficient bank balance and highlighted the one day transaction in which the funds were credited and lent to the assessee. It clearly shows that these are all money routing companies where money comes in and goes out on the same day. He finally submitted that all the companies who were lent the money incurred continuous losses and still lends the money and he prayed that the addition made in the assessment order may be sustained. 7. The learned Authorised Representative for the assessee by relying on the findings of the learned CIT(A) submitted that the assessee has proved the required the ingredients to justify the transaction under section 68 of the Act i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an amount of ₹ 1.69 crore as unexplained cash credit and the fact remains that the assessee has filed confirmation of account balances and interest payments to the parties; acknowledgment of return of income filed, audited financial statements bank statements reflecting loans given to the assessee firm. The said loans have been received by the assessee by way of either account payee cheque or RTGS and the assessee has also paid interest to the creditor as well. The assessee has also cleared off by making repayment of the loans and advances received from the aforesaid four parties in the subsequent assessment year hence, in our view, the Assessing Officer was indeed not justified in making the addition on account of unsecured loan as unexplained under section 68 of the Act. We also notice from the aforesaid which becomes clear that the assessee has discharged the primary onus by proving the identity of the creditor, genuineness of the transaction as well as the creditworthiness of the creditors. The loan so obtained was not only reflected in the respective books of account and also bank statements. Thus, on overall consideration of facts and material on record, we are of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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