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TMI Blog2021 (11) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessee does not deserve any further relief over and above the impugned profit estimation @10%. Disallowing bad debts, interest expenses followed by un-explained cash credits - HELD THAT:- When there is no indication in the case file regarding the learned lower authorities to have specifically issued any show cause notice regarding verification of the instant twin claims of bad debts interest disallowances, we deem it appropriate to restore the same back to the Assessing Officer for his afresh adjudication as per law within three effective opportunities of hearing. Un-explained cash credits - HELD THAT:- Assessee during the course of hearing that assessee had not only submitted the list of the creditor parties but also their confirmations before the Assessing Officer and the sums in issue had come from the banking channel only. There can hardly be any dispute that it is the assessee's onus only to prove identity, genuineness and creditworthiness of such cash credits wherein she cannot simply take recourse to filing list thereof followed by mechanical confirmations. We therefore deem it appropriate to restore the install issue as well back to the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest. The disallowances are based on suspicion, surmise and conjectures, that there could not have been so many interest payments not liable to TDS. It is not their case that provisions of Sec. 40(a)(ia) are applicable. 5. (a) Learned CIT(A) and A.O are not justified in adding ₹ 50,42,125/- u/s. 68 of the I.T. Act. (b) The assessee has discharged its onus of proof by furnishing the identity the genuineness and credit worthiness of each of the creditors and also by further showing that the loans were repaid subsequently through banking channels. (c) The addition has been made by A.O and sustained by CIT(A) on suspicion, surmise and conjecture . 4. It next transpires that the assessee has filed her petition seeking to raise an additional ground as well alleging that the learned lower authorities have erred in law and on facts in making the impugned disallowances/additions as in case a complete scrutiny wherever it is an instance of limited scrutiny only. After vehemently arguing for some time, learned counsel stated very fairly that the assessee no more wishes to press for the instant additional ground(s) as it emerged from a perusal of the case file that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give any information about material provided to the appellant being subcontractor. (iv) Copy of measurement book was not furnished by the appellant. (v) Abstract note of M/s. PCL mentioned that ₹ 3,84,37,168/- has been debited as against material issued but no details of material like description, quantity and date of issue have been mentioned. 3.4 In view of the above and the fact that the appellant is a director in PCL, the AO held that it is apparent that cost of recovery material is nothing but a collusion to reduce the profit of the appellant and therefore there is no merit in appellant's submission that ₹ 3,84,37,168/- was recovered by the main contractor, hence profit should be estimated on the balance amount. 3.5 In view of the peculiar facts of the appellant, it was held by the AO that the case laws relied upon by the AR are not applicable. The AO accordingly rejected the books of account and estimated income at 10% of contract receipts amounting to 5,50,64,828/-. 3.6 The above action of the AO was contested in Ground No. 2 of appeal which is as under:- 2(a) The AO is not justified in estimating the income from the subcontra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee does not deserve any further relief over and above the impugned profit estimation @10%. Ordered accordingly. 7. The assessee's next substantive ground seeks to reverse both the lower authorities' action inter alia disallowing bad debts of ₹ 70,22,551/-, interest expenses of ₹ 99,73,337/- followed by un-explained cash credits of ₹ 50,42,125; respectively. Mr. Afzal's vehement arguments qua bad debts and interest disallowance(s) are that the assessee has been carrying money lending business and therefore both these claims have to be treated as allowable since incurred wholly and exclusively for the purpose of the foregoing business only. He sought to invite our attention to the fact that the Assessing Officer himself has treated the assessee's as carrying the money lending business in other assessment years; although involving Section 143(1) processing only. Faced with this situation, and more so when there is no indication in the case file regarding the learned lower authorities to have specifically issued any show cause notice regarding verification of the instant twin claims of bad debts interest disallowances, we deem it appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO held that the onus has not been discharged by the appellant in terms of provisions of Section 68 and added back the entire unsecured loans taken in the current year of ₹ 50,42,125/-. 8.3 The above action of the AO was contested in Ground No. 4 of appeal, which is as under:- a) The AO is not justified in assessing the amount of ₹ 5,42,125/- as unsecured loans from as many as 70 individuals. b) The assessee has discharged the burden of proof with respect of all the credits by giving the names of creditors, the addresses and their sources of income. c) The AO based the conclusions on suspicion, surmise and conjuncture without any verification of the voluminous evidence produced in the course of assessment proceedings. 9. Before me, the AR reiterated the submissions made before the AO. I have carefully considered the issue, submissions made by the AR and facts born on record. I have also gone through the photo copies of the confirmations of the loans furnished in Vol. 2 of Paper Book. A perusal of the said confirmations does not inspiring much confidence on the genuineness of the said evidence. When the AO doubted the genuineness of the loans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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