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TMI Blog2024 (11) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... ve explained their operation of the business and the extent of their turnover and the funds in the balance sheet. Thus, the onus which lied upon the assessee was duly discharged at the assessment stage. The entire premise of the ld. AO is based on Investigation report in the case of Bhanwarlal Jain and nothing has been brought on record by him that any particular information or material was found relating to the assessee that assessee was beneficiary of accommodation entry of loan or advance from any of the group concerns of Bhanwarlal Jain. Once AO himself has carried out his enquiry and nothing adverse has been found, then simply relying upon the investigation report cannot justify the addition. Disallowance of interest especially on the loan taken in the earlier year by the assessee and the said party has duly confirmed that it has given loan and has given all the details then, there is no question of disallowing any interest. Once, the loans have been accepted to be genuine, then disallowance and interest made by the ld.AO is deleted. Appeal of the Revenue is dismissed. - Shri Amit Shukla, Judicial Member And Smt Renu Jauhri, Accountant Member For the Assessee : Shri Bhupendr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Investigation Wing. 4. Ld. AO then asked for the details like copy of acknowledgement of income tax returns, copy of balance sheet and profit and loss account for the year, copy of ledger account, copy of bank statement in case of the creditors to prove the transaction made during the year by these parties with the assessee. He had asked all these information directly from the creditors u/s. 133(6). In response to notice u/s. 133(6), both the parties who had given the loan to the assessee in this year and also one party to which assessee had paid interest on the loan taken earlier duly responded and filed all the details as required by the ld. AO. From the details filed and replies in response to notice u/s. 133(6), AO noted following facts:- i) All the three entities had carried out business of trading Polishing of diamonds. ii) They have filed belated returns le beyond due date of filling of return. iii) On verification of record submitted in response to notice U/s 133(6) of I.T. Act, certain characteristic features were observed in their businesses which are not possible in normal business. The same are as below: a) High Turn Over. b) Major Portion of assets in the balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd to Bhupendra Singh, proprietor Nice Diamonds, stated that he was engaged in the business of trading of rough diamonds and polished diamonds and admitted that he has given unsecured loan to the assessee in earlier year at Rs. 2,50,00,000/-. Again when confronted with regard to Bhanwarlal Jain in search action, he stated that he is not aware of any search action. He has also provided the details of his business. 6. The assessee also in response to show-cause notice has given all the relevant documents and explanation before the AO proving the genuineness and creditworthiness with all the details as required by the AO. However, the same has been rejected by the AO including the statements and the documents submitted by these parties in response to u/s. 133(6) solely based on the outcome of certain findings of Investigation Wing in the Bhanwarlal Jain group. Accordingly, he has treated the unsecured loan aggregating to Rs. 1,50,00,000/- u/s. 68. He also disallowed the interest paid to Nice Diamonds and to M/s. Mehul Gems Pvt. Ltd. and and M/s. White Stone paid on unsecured loan of Rs. 28,90,574/-. 7. Before the ld. CIT (A) assessee filed all the documents like copy of ledger account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat AO did not point out any specific instances or any infirmity in the statement recorded by the Investigation Wing in the case of Bhanwarlal Jain group which reveals alleged involvement of the assessee in taking accommodation entries. Once the assessee has filed all the documents and he himself carried out enquiry then, he could not have made the addition simply based on his own presumption. Accordingly, the addition made by the AO was deleted. 9. Similarly, with regard to interest payment also he held that since the loan has been found to be genuine and therefore, interest has to be allowed and in the case of Nice Diamond, the loan was taken in the earlier year and the partner of the firm admitted during the course of assessment proceedings, he has given loan to the assessment. 10. Before us ld. DR submitted that in view of the investigation and search carried out in the case of Bhanwarlal Jain, it was categorically found that he was providing accommodation entries of bogus purchases and loans to various Benami concerns and Mehul Gems Pvt. Ltd. was one of the concerns of Bhanwarlal Jain. In the case of Bhanwarlal Jain, the Tribunal has upheld commission income on account of prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted the said addition. 13. We have heard the rival submissions and perused the relevant material placed on record and the findings given in the assessment order as well as ld. CIT (A). Here in this case in so far as the loans aggregating to Rs. 1,50,00,000/- taken from the aforementioned two parties, the assessee had furnished copy of ledger account, bank statement of the creditors reflecting the loan transaction, income tax returns and their audited financial statements wherein they have shown the source of giving the loans and were regularly assessed the tax. Not only that, ld.AO himself carried out his own enquiry and issued notice u/s. 133(6) and in response these parties had given the entire details as required by the ld.AO. Once these parties have confirmed the source of their loan, which is out of their own funds from the balance sheet, then the creditworthiness stands proved and ld. AO has not further brought anything on record that such source of funds are fictitious. Then again, when ld. AO summoned all the three parties, two of them personally appeared before him and have given their statement on oath and they have categorically admitted of giving of loan; have explaine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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