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TMI Blog2024 (8) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... the amended Sections 147 and 148 of the Act. The judicial principles laid down in the Saumya Construction case [ 2016 (7) TMI 911 - GUJARAT HIGH COURT] regarding the necessity of incriminating material for reassessment of completed assessments are still relevant. Therefore, the judgment in Saumya Construction Pvt. Ltd. (supra) retains its relevance and can be relied on to support the argument that reassessment post-search should be based on incriminating material, ensuring that the reassessment process is grounded in tangible evidence. Given the lack of incriminating material and the reliance on judicial precedents, the additions made by the AO are not sustainable and void ab initio. CIT(A) has provided a thorough analysis of the legal principles and factual background, leading to the conclusion that the additions cannot be sustained and directed AO to delete the additions made on account of fictitious commodity losses from respective assessment years. Thus, these grounds of appeal related to fictitious commodity losses by revenue for AYs 2009-10 to AY 2014-15 are dismissed. Unexplained Credit u/s 68 - AO and CIT(A) have not made any efforts to verify the source of source despite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter referred to as "the Act") and the Assessee is in Cross Objections for AYs 2009-10 to 2014-15. 2. At the outset, ld.AR submitted that though these appeals belong to different assessment years but the issues are identical except for the assessment years and amounts and, therefore, all these appeals heard together. Ld.CIT-DR did not object to the aforesaid submission made by the ld.AR. We, therefore, for the sake of convenience, proceed to dispose of all these appeals of the Revenue and Assessee as well as Cross Objections of the assessee by a consolidated order and for reference, we proceed with the facts for AY 2009-10 in Revenue's appeals. Facts of the case: 3. The assessee filed his original returns of income for respective years and the same were processed u/s 143(1) of the Act. A search u/s 132 of the Act was conducted in Ahmedabad Commodity Traders Group on 18-12-2014. The assessee was also covered u/s 132 of the Act. Therefore, notices u/s 153A were issued to the assessee for the A.Y. 2009-10 to A.Y. 2014-15 on 15-7-2015. The assessee furnished the return of income in response to the notice on 13-8-2015. The summary of all returns, addition by the AO a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the incriminating material found during the course of search u/s 132(1) of the Act, even though, there is no such stipulation in sec. 153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec. 153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years. This scheme of assessment or re-assessment of the total income of a person searched will become frivolous if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s. 158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, whereas, there is no such stipulation in sec. 153A and sec. 153C of the Act. 4. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .4/Ahd/2021 for AY 2010-11 "1 On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s. 153A has to be confined to the incriminating material found during the course of search u/s. 132(1) of the Act, even though, there is no such stipulation in sec. 153A of the Act. 2 On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec. 153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years. This scheme of assessment or re-assessment of the total income of a person searched will become frivolous if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3, On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s.158BB was to be made on the basis of evidence found as a result of search or requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as erred in deleting the disallowance of Rs. 11,89,915/- made u/s 14A r.w. Rule 8D of the Act. 10. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 11. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent." (c) In IT(SS)A No.3/Ahd/2021 for AY 2011-12 "1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s,132(1) of the Act, even though, there is no such stipulation in sec. 153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec. 153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years. This scheme of assessment or re-assessment of the total income of a person searched will become frivolous if no addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " (d) In IT(SS)A No.5/Ahd/2021 for AY 2012-13 "1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in holding that any addition during the assessment u/s.153A has to be confined to the incriminating material found during the course of search u/s.132(1) of the Act, even though, there is no such stipulation in sec. 153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec. 153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years. This scheme of assessment or re-assessment of the total income of a person searched will become frivolous if no addition is allowed to be made for those six assessment years in the absence of any seized Incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s.158BB was to be made on the basis of evidence found as a res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt u/s.153A has to be confined to the incriminating material found during the course of search u/s.132(1) of the Act, even though, there is no such stipulation in sec. 153A of the Act. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that sec. 153A requires a notice to be issued requiring the assessee to furnish his return of income in respect of each assessment year falling within six assessment years and to assess or re-assess the total income of those six assessment years. This scheme of assessment or re-assessment of the total income of a person searched will become frivolous if no addition is allowed to be made for those six assessment years in the absence of any seized incriminating material. 3. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in not appreciating that while computation of undisclosed income of the block period u/s. 158BB was to be made on the basis of evidence found as a result of search or requisition of books of accounts, whereas, there is no such stipulation in sec. 153A and sec. 153C of the Act. 4. On the facts and in the circumstances of the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2021 for AY 2014-15 "1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 4,43,10,925/- made on account of disallowance of fictitious commodity losses in respect of transactions made through NMCE platform. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the material facts and evidences brought on record by the AO as mentioned in the assessment order that the assessee was continuously booking losses from a single platform i.e NMCE in the last quarter of each year and said fictitious losses are set off with the profits earned from trading from other platforms. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent." 3.1. Grounds raised by the Assessee in his two-appeals are as under: (a) In IT(SS)A No.66/Ahd/2020 for AY 2014-15 "The Ld. CIT (A) has grossly erred in law and on facts in partly allowing the appeal. He ought to have allowed the appeal fully in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 251 (Gujarat) and Commissioner of Income-tax, Surat-1 v. Shri Mahavir Crimpers (2018) 95 taxmann.com 323 (Gujarat), is squarely applicable in the case of the appellant. (iv) The appellant humbly submits that the Ld. CIT(A) has not considered the written submission filed by the appellant as well as various judicial pronouncements of Hon'ble Jurisdictional Gujarat High Court, other High Courts and Tribunals relied upon by the appellant in a proper perspective. (v) The appellant humbly submits that the Ld. AO has not carried out any cross enquiry from 5 Parties and not examined them by recording the statements of 5 Parties u/s. 131 of the Act for alleged additions. (vi) The appellant humbly submits that the Ld. AO has not carried out any cross enquiry from 5 Parties and not examined them by recording statements of 5 Parties for alleged additions. (vii) The appellant humbly submit that the Ld. AO has not granted the opportunity of cross examination of 5 Parties and violated the principles of Natural Justice in view of Judicial Pronouncements of Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise, Kolkata - II [2015] 62 taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed by the Ld. CIT (A) may kindly be deleted. 2. The addition of Rs. 79,23,088/- being held by the Ld. AO as business income instead of claim of Long Term Capital Gain (LTCG) may kindly be deleted and the direction given by the Ld. CIT (A) to the AO be quashed. 3. Such and further relief as the nature and circumstances of the case may justify." (b) In ITA No.577/Ahd/2020 for AY 2015-16 "The Ld. CIT (A) has grossly erred in law and on facts in partly allowing the appeal. He ought to have allowed the appeal fully in accordance with the grounds of appeal raised by the appellant before him. 1(1). The Ld. CIT (A) has erred in law and on facts in confirming the addition on account of alleged unexplained credit of Rs. 36,80,676/- (after rectification order by the AO) by following the appellate order rendered for A.Y. 2014-15. (ii). The Ld. CIT (A) has erred in law and on facts in failing to appreciate the fact that in fact the appellant had received the unsecured loan during the year from 5 parties namely (i) Riddhi Siddhi Enterprises, (ii) Kiranben Pineshbhai Panchiwala, (iii) Rekhaben Devchand Panchiwala, (iv) Pinesh Devchand Panchiwala - HUF and (v) Devcahnd K. Panchi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2008, DCIT vs. Mahendra Ambalal Patel (2010) 40 DTR 243 (Guj.), Prarthana Construction Pvt. Ltd., Tax Appeal No. 79 of 2000 (Guj.). The appellant company also relied upon the decision of the Hon'ble High Court of Judicature for Rajasthan Bench at Jaipur in the case of CIT, Central, Jaipur vs. Smt. Sunita Dhadda and Others, Jaipur (Income tax Appeal No. 197/2012) dated 1.07.2017. The SLP filed against the said judgment has been dismissed by the Hon'ble Supreme Court in Special Leave Petition (CIVIL) Diary No (s). 9432/2018. The Hon'ble Rajasthan High Court in Para 6 of the judgment took the cognizance of the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commissioner of Central Excise Kolkata II (cited supra) and also taken the cognizance of the Hon'ble Supreme Court in the case of Common Cause (A Registered Society) and Ors vs. Union of India and Orsin 77 taxmann.com 245 (SC) (2017). The appellant has also relied upon the various other judicial pronouncements of the Hon'ble Supreme Court, jurisdictional Gujarat High Court and other High Courts. (vii) The appellant humbly submits that in the search proceedings in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2009-10 to AY 2013-14, no addition can be made during the proceedings u/s. 153A if there is no related incriminating material found during the search in view of the decision of the Hon'ble jurisdictional Gujarat High Court in the case of PCIT vs. Saumya Construction Pvt.Ltd 387 ITR 529 and Hon'ble Delhi High Court decision in the case of Commissioner of Income Tax (Central)- III vs. Kabul Chawla, [2015] 61 taxmann.com 412 (Delhi) as well as other judicial pronouncements relied upon by the appellant. 2. The Ld. CIT (A) has rightly held in Para 5.4 on Page 55 of the Appellate order that "from the perusal of the assessment order, it is seen that there is no specific mention of any incriminating material seized during the search in the case of the appellant and not even in the search of various concerns and individuals grouped as Ahmedabad Commodity Traders which might have been relied upon by the AO for the purpose of additions made including the additions on account of disallowance of loss claimed on the trading of commodities made on NMCE Platform, in the case of the appellant". The Ld.CIT(A) further observed in Par 5.7 of the appellate order that "It is seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disallowance of Rs. 3,25,18,059/- made by the AO on account of alleged fictitious commodity losses in respect of transactions made through NMC Platform. 4. The Ld.CIT(A) has rightly held in Para 5.19 on Page 64 of the appellate order that "The AO has not mentioned as to how and why he was not satisfied about the nature and source of credit/loan as stipulated u/s.68. The AO could not have made the addition unless he had examined the sources of funds in the hands of the lender and had made a conclusive case that the lender had no capacity to advance a loan of Rs. 71.05 Lakh to the appellant. Otherwise also in context of proceedings u/s. 153A and the AY being unabated the AO could not have made the addition without these being any related incriminating material found during the search. A general statement of the director of BCCL cannot be sole basis of denying the unsecured loan taken and treating it as undisclosed / deemed income. Under the circumstances the addition made by the AO does not stand the tests of law" and the Ld.CIT(A) has correctly deleted the addition of Rs. 71,50,000/- made by the Ld.AO on account of unexplained credit u/s. 68 of the Act. 5. The Ld.CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the appellate order rendered by him for A.Y. 2009-10 rightly held in Para 6.8 on Page 68 of the appellate order that the facts related to the additions of Rs. 53,00,000/- being unsecured loan treated as unexplained cash credits and of Rs. 2,54,547/- being disallowance of interest expenses thereon are same as those for AY 2009-10 and are not based on any incriminating material found during the search and following the decision made before", the Ld.CIT(A) has correctly deleted the additions of Rs. 53,00,000/- being unsecured loan treated as unexplained cash credits and addition of Rs. 2,54,547/- being disallowance of interest expenses thereon made by the AO. 3. The Ld.CIT(A) has rightly held in Para 6.9 on Page 68 of the appellate order that "while under normal circumstances the AO should have been directed to restrict the disallowance u/s.14A to the extent of exempt income by way of dividend of Rs. 7,06,519/-, but as the assessment is related to unabated AY and there is no incriminating material related to the issue, on legality the entire addition of Rs. 11,89,915/- made in the assessment order has to be deleted and the Ld.CIT(A) has rightly deleted the addition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is held that legally those additions could not have been made by the AO during the reassessment proceedings u/s.153A because there was no related incriminating material found during the course of the search and therefore the additions are void ab-initio and are to be quashed because the AY 2012-13 is also an unabated AY and the appellant is protected by various case laws including the decision of the jurisdictional ITAT of Ahmedabad and the jurisdictional HC of Gujarat in Saumaya Construction Pvt.Ltd. and host of other cases. Under the circumstances, the submissions made on the merits of the issues made by the appellate become mere academic and are not required to be gone through. However as apparently there was an element/allegation of scam made by the FMC in the dealings on NMCE platform, the addition related to disallowance of "fictitious commodity losses of transactions made through NMCE platform" have been carefully looked into and in view of the facts brought out by the appellant and failure of the AO to bring on record direct & cogent evidences in relation there to and relying upon various case laws cited in its support by the appellant, the disallowance of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y looked into and in view of the facts brought out by the appellant and failure of the AO to bring on record direct & cogent evidences in relation there to and relying upon various case laws cited in its support by the appellant, the disallowance of such loss has not been found sustainable and the Ld.CIT(A) has correctly deleted the addition of Rs. 24,35,387/- made by the AD on account of disallowance of alleged fictitious commodity losses of transactions made through NMCE Platform. 2. The Ld. CIT (A) after carefully considering the facts of the case, submission made by the appellant, various judicial pronouncements of the Hon'ble jurisdictional Gujarat High Court, other High Courts and Tribunals as well as following the Appellate Order rendered by the Ld. CIT (A) for A.Y. 2009-10, held in Para 9.8 on Page 75 of the appellate order that the facts related to the additions of Rs. 2,37,48,985/- being unsecured loan treated as unexplained cash credits are same as those for AY 2009-10, the additions are made without there being any related incriminating material found during the search and therefore, following the decision made there, these additions are directed to be deleted&quo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the appellant is adequately protected by the decision of the Hon'ble ITAT Jaipur in DCIT Circle-2 vs. M/s. Pyramid Tradelinks Pvt.Ltd. (supra). Furthermore it is also seen that in spite search conducted neither any asset was unearthed which could have been held to have been acquired out of undisclosed income represented by the losses in the commodities trading held to be bogus/ fictitious nor any evidence by way of documents/loss papers have been found which could have been even an iota of evidence as to those losses being fictitious or obtained by way of accommodation entries. Under the circumstances the disallowance of such loss cannot be sustained on the merits of the facts of the issue and the Ld.CIT(A) has rightly deleted the addition of Rs. 4,43,10,925/- made by the AO. 2. Your Respondent craves right to add, amend, alter, modify, substitute, delete or modify all or any of the above grounds of cross objection." On the common grounds of appeal - Related with Fictitious Commodity Losses 4. First, we deal with the common grounds, except for the quantum, of appeal filed by revenue and corresponding grounds of Cross Objection (CO) filed by assessee. Ground Nos. 1 to 6 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendra C. Thakkar (client of Divya Commodities), Shri Ramavtar Dhoot of Jet Air Agencies Pvt. Ltd, Ahri Amit Sharma, Senior manager, business development MCE were recorded showing the modus operandi for claiming such fictitious loss. 5.3. The Ld.DR placed reliance on the order of AO who observed that the assessee's brokers named AA Plus Commodity Pvt. Ltd. and Prabhu Commodities, were debarred /suspended for various defaults by the NMCE. The AO also observed that during the period F.Y. 2008-09 to 2011- 12, all transactions carried out by the assessee were in illiquid commodities and 87% of these transactions were executed within 60 seconds of the order given and the same were squared off within the same day. The AO further observed that for any given day across one year the assessee always had a cumulative loss at the end of day and almost each buy sell paid of transactions, invariably, resulted in loss alone. 5.4. The Ld.DR stated that AO made additions on the basis of FMC report and the trade data obtained from the assessee's computer during the search. He further submitted that the nature of transaction and the quantum of transactions were such that it would be very diffic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74 ITR 645 (Bombay High Court) before the Ld.CIT(A). 6.1. During the course of hearing before us, the Ld.AR placed reliance on the decision of Co-ordinate Bench in case of ACIT, Central Circle-2(3), Ahmedabad Vs M/s. Affluence Commodities Pvt. Ltd. IT(SS)A No.55 to 60/Ahd/2020 dated 25 November 2021, which deals with similar facts and circumstances. The Ld.AR also relied on the judgement of Hon'ble Supreme Court in case of Principal Commissioner of Income Tax, Central - 3 Vs. Abhisar Buildwell (P) Ltd. [2023] 149 taxmann.com 399 (SC). 6.2. The assessee's argument rested on several judicial precedents, primarily: (1) PCIT vs. Saumya Construction Pvt. Ltd. 387 ITR 529 (Gujarat High Court): The court held that in cases where no incriminating material is found during the search, the AO cannot make additions under Section 153A of the Act for assessment years where assessments have already been completed (unabated assessments). The Hon'ble Gujarat High Court emphasized that Section 153A does not give arbitrary powers to the AO to reopen assessments without any incriminating evidence discovered during the search. (2) CIT vs. Kabul Chawla 380 ITR 573 (Delhi High Court): The Court rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2013-14, the assessments were unabated as the time limit for issuing notice under Section 143(2) had expired. He also concluded that any addition made during the proceedings under Section 153A without incriminating material is illegal and void ab initio. While doing so he observed that the assessment order does not specifically mention any incriminating material seized during the search that would justify the additions, including the disallowance of losses from NMCE transactions. He further observed that the assessee's denial of discovery of any incriminating material and the AO's reliance on trade data and reports of third parties, not provided to the assessee for rebuttal are crucial factors in determining the legality of the additions. The Ld.CIT(A), after critically looking into the arguments of AO and the assessee, observed that there was no basis by way of cogent evidence, in spite of searches and surveys conducted, which also do not support addition on merit. 7.1. The Ld.CIT(A) also referred to the Hon'ble Supreme Court's dismissal of the SLPs filed by the Department against the decisions in Kabul Chawla and Saumya Construction, reinforcing the assessee's con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition's validity. 8.3. In case of argument of DR that judgments related to Section 147 of the Income Tax Act should be read in line with Section 153A of the Act due to the changes introduced by the Finance Act, 2021, has no merit. The principle that reassessment should be based on incriminating material is likely to hold, even under the new provisions, as the rationale behind requiring tangible material for reopening an assessment remains a cornerstone of the reassessment process. Hon'ble The Supreme Court in the case of CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 emphasized that the AO must have tangible material to justify the reopening of assessments. This principle continues to be relevant under the amended Sections 147 and 148 of the Act. The judicial principles laid down in the Saumya Construction case regarding the necessity of incriminating material for reassessment of completed assessments are still relevant. Therefore, the judgment in Saumya Construction Pvt. Ltd. (supra) retains its relevance and can be relied on to support the argument that reassessment post-search should be based on incriminating material, ensuring that the reassessment process is groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e table) stating that the director of Bhoomidev Credit Corporation Ltd. (BCCL) admitted that the company was indulged in providing accommodation entries. The AO also concluded that the assessee failed to satisfy all conditions cumulatively for the purpose section 68. 9.2. The Ld.CIT(A) deleted the additions of Rs. 71,50,000/- and Rs. 53,00,000/-for A.Y. 2009-10 and A.Y. 2010-11 respectively relating to unsecured loans received from BCCL. The Ld.CIT(A) also deleted additions on account of interest expenses relating to this loan. While doing so he stated that the AO has not pointed out whether any incriminating material was found during the search to treat the loans taken from BCCL to be fictitious or mere accommodation entry. The Ld.CIT(A) concluded that if the assessee has produced contra confirmations, copy of bank statement and copy of income tax returns of the parties, AO has no basis to hold that the tests laid down by the courts in the context of section 68 have not been satisfied. He also concluded that AO has not mentioned in his order as to how and why he was not satisfied about the nature and source of credit as stipulated u/s 68 of the Act. He also stated that the AO co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the A.Y. 2013-14 and A.Y. 2014-15. The AO, during the assessment proceedings, observed cash deposits in the bank accounts of the parties who advanced unsecured loan to the assessee and concluded that the transactions are not genuine. He also observed that these parties have filed return of income with meagre amounts and therefore the creditworthiness is also questionable. 11.1. Before the Ld.CIT(A), the assessee argued that the observation of AO about the meagre income of lenders is vague and general. He also argued that the genuineness of transaction has no direct nexus with return of income as it is not necessary that all receipts are taxable and stated that capital receipts such as bank loan, secured loans can also be used for investments. He also stated that assessee cannot have knowledge about the transactions carried out by the said party in his bank account. He placed reliance on decision of Hon'ble High Court of Delhi in case of CIT Vs. Vrindavan Farms (P.) Ltd. in ITA No. 71 of 2015 dated 12-8-2015 and decision of Allahabad Tribunal in case of Anand Prakash Agrawal reported in 6 DTR 191 (All-Trib). 11.2. The Ld.CIT(A) while deleting the addition of Rs. 2,37,48,985/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has repaid the unsecured loan along with interest to the depositor parties in subsequent year. The assessee received the unsecured loans by account payee cheques and also repaid the unsecured loans back to the lenders by account payee cheques which establish the genuineness of the transactions. 12.1. Upon perusal of the facts and records, it is evident that the Assessing Officer and the Commissioner of Income Tax (Appeals) have not adequately investigated the "source of source" concerning the loan received by the assessee. The assessee has furnished all necessary details regarding the creditor, including identity, creditworthiness, and genuineness of the transaction. In many judicial pronouncements, it was held that an addition under Section 68 of the Act is not justified if the assessee has provided all necessary information and no proper inquiry has been conducted by both AO and the Ld.CIT(A). It is also noted that the loans are repaid along with interest in subsequent years. 12.2. The Hon'ble High Court of Gujarat in the case of DCIT Vs. Rohini Builders (256 ITR 360) has dealt with similar fact and deleted the additions on account of unsecured loans u/s 68. For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e creditors and the assessee is not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source as held by the Bombay High Court in the case of Orient Trading Co. Ltd. v. CIT [1963] 49 ITR 723. The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee -from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed/paid in relation to these credits in the assessment year under consideration or even in the subsequent years, and tax deducted at source has been deducted out of the interest paid/credited to the creditors, we are of the opinion that the Departmental authorities were not justified in making the addition of Rs. 12,85,000 which is directed to be deleted. 11. In the result, the appeal is allowed." 12.3. Respectfully following the judgement of the Hon'ble High Court and noting that the AO and CIT(A) have not made any efforts to verify the "source of source" despite the assessee providing sufficient information, we are of the opinion that the addition cannot be sustained. Therefore, we direct the AO to delete the additions on account of both unsecured loans and interest thereon. The grounds of revenue are dismissed and that of assessee are allowed in case of all relevant assessment years. On the grounds relating to disallowance u/s 14A 13. Following disallowances u/s.14A of the Act are made by the AO and dealt with the Ld.CIT(A): A.Y. Amount disallowed by AO in Rs. Decision of CIT(A) Revenue's Ground No. Assessee's CO no. 2010-11 11,89,915/- Deleted the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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