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TMI Blog2024 (8) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... ry requirements, including the provision of confirmations, ID proofs, bank statements, and tax return details of the loan creditors. The repayment of loans in subsequent years further supports the genuineness of the transactions. The case of Ayachi Chandrashekhar Narsangji [ 2013 (12) TMI 372 - GUJARAT HIGH COURT] is appropriate, wherein the Hon ble Court held that no addition should be made, if the repayment of loans is accepted by the department in subsequent years. CIT(A) has rightly noted that the AO s remand report did not provide substantial adverse comments on the identity and genuineness of the transactions. AO's reliance on the principle of human probability without concrete evidence does not warrant the additions made under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an amounting to Rs. 55,05,27,020/- and paid interest thereon amounting to Rs. 3,94,15,139/-. The AO asked to furnish details along with confirmations and present address of the loan creditors. The assessee submitted the list of such parties and also provided the confirmations from the parties. In order to verify these parties notices were issued u/s.133(6) of the Act and to some parties summons u/s.131 of the Act were also issued through e-mail as well as speed post. These summonses were served by e-mail but could not be served by speed post. Notices could not be served as these companies were found to be non-existing on their addresses. Departmental Inspector was deputed to verify the existence of companies, who provided unsecured loan to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure u/s 69C of the Act. 3. The assessee preferred an appeal before the Ld.CIT(A), who deleted the additions by partly allowing the appeal of the assessee. While doing so, the Ld.CIT(A) dealt with the remand report called from the Assessing Officer, who recorded following main observations relating to M/s.Vrindavan Furnishing Pvt. Ltd. and M/s.Shanti Educational Initiatives Ltd.: - That, both the companies have no fixed assets except motor car. - That, the company earned Interest Income on its Finance business and almost 60% to 65% of its gross income was set off against trading losses in last 3 financial years. - As the company is trading in Cloths but no corresponding expenses like Godown Rent, Carriage and Transportation charges was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary formalities are under process. 3.2. During the course of appellate proceedings, the assessee furnished all necessary details relating to identity of the lenders, genuineness of the transactions and creditworthiness of the lenders. The assessee also stated that the AO has not relied on any concrete evidence or information to prove that the lender companies do not have creditworthiness to lend money. The assessee placed reliance on the decision of Hon ble High Court of Gujarat in the case of DCIT Vs. Rohini Builders 256 ITR 360(Guj.) and other judicial pronouncements. The assessee also rebutted the judicial pronouncements relied on by the AO. Regarding the disallowance of interest as unexplained expenditure, the assessee stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld.Departmental Representative (DR) stated that the loans are accommodation entries as concluded by the AO. The DR stated that the appeal is filed only against deletion of addition on account of two unsecured loans. One from M/s.Astha Commtrade Pvt. Ltd. and another from M/s.Gainwell Merchantile Pvt. Ltd. He pointed out that there was no compliance in response to notices under sections 133(3) and 131 of the Act during the course of assessment proceedings. He also pointed out that the companies are from Kolkata and, therefore, the genuineness is doubtful. The Ld.DR placed reliance on the order of the AO. 6. The Ld.Authorized Representative (AR) of the assessee explained the issue in detail and stated that the assessee is Non-Banking Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation, if necessary. The Hon ble High Court also discussed Section 68 of the Act highlighting that the unsatisfactoriness of the explanation does not automatically result in deeming the amount credited as the income of the assessee. 6.2. Upon careful consideration of the facts, submissions, and judicial precedents, we find that the assessee has provided substantial evidence to establish the identity, genuineness, and creditworthiness of the loan creditors. The AO's conclusions were largely based on assumptions and the principle of preponderance of human probability, without substantial evidence contradicting the assessee's claims. The assessee complied with statutory requirements, including the provision of confirmations, ID proof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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