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TMI Blog2012 (4) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to prove the identity of the loan creditors, genuineness of the transaction and their creditworthiness. 3. During the course of hearing, learned Departmental Representative relied on the order of the Assessing Officer, whereas learned A.R. of the assessee relied on the order of the CIT(A). 4. However, on perusal of the orders of the authorities below, we observe that the assessee had taken following fresh loans in the assessment year under consideration: Sl. No. Name of the loan creditor Loan amount(Rs.) 1. P. Nainmal Co. 5,00,000 2. Shaila Enterprises 15,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties is not established. Accordingly, the AO considered the said fresh loans as bogus and treated the income of the assessee under section 68 of the Income tax Act. It is relevant to state that the aggregate amount of loans comes to ₹ 35 lakhs. However, the AO made the addition of ₹ 30 lakhs in respect of the said loans. 6. Further, the assessee has shown the payment of interest of ₹ 2,10,000 to the above parties. Since the AO considered the said loans as bogus, he also treated the said interest of ₹ 2,10,000 as unexplained expenditure under section 69C of the Act. Thus, the AO made the addition of ₹ 32,10,000 though the correct amount should have been ₹ 37,10,000. 7. We observe that in the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties to the assessee were not reflected in their income tax return and, therefore, how the creditworthiness of the said loan creditors was established by the assessee. Ld A.R. submitted that he has no objection if the matter is restored to the file of the CIT(A) for fresh consideration and the assessee will, if necessary, produce the said parties before him to establish the identity to the satisfaction of the department. 9. Considering the above facts and observations of the authorities below, we are of the consideration view that the matter requires reconsideration by the CIT(A) to establish the genuineness, creditworthiness as well as identity of the loan creditors. Hence, we restore this issue to the file of the CIT(A) by setting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 82,95,347 12. The Assessing Officer has stated that the Inspector was deputed at the available address of these parties to verify as to whether the same were inexistent or not. However, the Inspector vide his report dated 27.12.2010, submitted that the parties are not existing at the given addresses. The AO has stated that vide order sheet dated 28.12.2010, the representative of the assessee was appraised of the above facts and was asked as to why the purchases shown in respect of above parties, should not be treated as bogus/inflated purchases. The AO stated that the representative of the assessee shown his inability to provide the details called for. The AO has further stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of the learned A.R. was drawn to the observations made by the AO that the assessee could not furnish any details before him to establish the genuineness of the parties even after the report of the Inspector are drawn to his notice that the said parties did not exist at the addresses given by the assessee, learned AR could not make any submissions save and except stating that adequate opportunity was not given by the AO to the assessee. He further conceded that the assessee filed new facts before the CIT(A) which were considered by him without giving opportunity of hearing to the AO. In view of above facts and considering the orders of the authorities below, we consider it prudent to set aside the order of the CIT(A) on this issue an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of hearing, learned D.R. relied on the order of the AO whereas the ld A.R. relied on the order of the CIT(A). 19. We have carefully considered the orders of the authorities below and submissions of the representatives of the parties. There is no dispute that the said amount of ₹ 42,03,426 has been paid by the assessee on account of delay in execution of civil contract entered into by the assessee with MCGM. Therefore, this amount was paid as damages on account of breach of contract. It is not a penalty for violation of any statutory provisions. Hon ble Kerala High Court in the case of Commissioner of Income-tax v. Grand Cashew Corporation, 182 ITR 216 held that the liability to pay damages on account of breach of contract is an all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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