Dy. Commissioner of Income Tax, Lucknow V. M/s Narain Sugar Industry, Barabanki

ITA 232/LKW/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1218 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 04-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Source of fund; Proportionate interest; Additional evidence; Non compliance; Revenue expenditure
• Section: 133(6); 68

Judgement Text

I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 DY.C.I.T., RANGE-V, LUCKNOW. VS. M/S NARAIN SUGAR INDUSTRY, S-247, TARA BHAWAN, SARANGI, BARABANKI. PAN:AAEFN 3925 D (APPELLANT) (RESPONDENT) O R D E R PER T. S. KAPOOR, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 22/02/2016. IN THIS APPEAL THE REVENUE HAS T AKEN THE FOLLOWING GROUNDS: 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION MADE BY ASSESSING OFFICER OF RS.57,00,000/ - ON ACCOUNT OF ADDITION TO CAPITAL ACCOUNT OF PARTNERS MADE U/S 68 IGNORING THE FACT THAT THE ASSESSEE FAILED TO PROVI DE THE EVIDENCE TO SUBSTANTIATE THE SOURCE OF CAPITAL INTR ODUCED. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION MADE BY ASSESSING OFFICER OF RS.4,12,724/- ON ACCOUNT OF PROPORTIONATE DISALLOWANCE OF INTEREST PAID ON C APITAL CONTRIBUTION BY NOT APPRECIATING THE FACT THAT THE DISALLOWANCE APPELLANT BY SHRI SHISHIR BAJPAI, C. A. RESPONDENT BY S MT. ALKA SINGH, D.R. DATE OF HEARING 07/12/2017 DATE OF PRONOUNCEMENT 09 / 01 /201 8 I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 2 WAS MADE IN THE ABSENCE OF THE EVIDENCE OF THE GENU INENESS OF THE CAPITAL INTRODUCED. 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN REST RICTING THE ADDITION TO RS.2,50,000/- AGAINST RS.90,54,000/- AN D RS.11,877/- AGAINST RS.3,96,569/- MADE ON ACCOUNT O F UNEXPLAINED CREDITS AND ON ACCOUNT OF DISALLOWANCE OF INTEREST ON UNEXPLAINED UNSECURED LOANS RESPECTIVELY IGNORIN G THE FACT THAT THE ADDITION WAS MADE IN THE ABSENCE OF COGENT EVIDENCE TO SUBSTANTIATE THE CREDITWORTHINESS OF THE PERSONS AND GENUINENESS OF THE TRANSACTION. 4. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.2,09,499/- MADE ON ACCOUNT OF DISALL OWANCE OF INTEREST ON TERM LOAN BY NOT APPRECIATING THE FACTS THAT THE ADDITION WAS MADE ON ACCOUNT OF DISALLOWABLE PRE OP ERATIONAL EXPENSES. 5. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE ADDITION OF RS.43,25,930/- MADE ON ACCOUNT OF UNEXP LAINED SUNDRY CREDITORS IGNORING THE FACT THAT THE TRANSAC TION WERE NOT SUBSTANTIATED BY THE CONCERNED PARTIES. 2. AT THE OUTSET, LEARNED D. R. SUBMITTED THAT CIT( A) HAS DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER IN VIEW OF SOME ADDITIONAL EVIDENCES FILED BY THE ASSESSEE. SHE HEAVILY PLACE D HER RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 3. ON THE OTHER HAND, LEARNED A. R. SUBMITTED THAT DURING THE REMAND PROCEEDINGS THE ASSESSEE HAD EXPLAINED EACH AND EVE RY ADDITION MADE BY THE ASSESSING OFFICER AND ASSESSING OFFICER HAD ALS O VERIFIED THE EVIDENCES AND IN MOST OF THE CASES HE HAD HELD THAT THE NECES SARY EVIDENCES WERE AVAILABLE AND IN A FEW CASES HE HAS ADVERSELY COMME NTED BUT ON A REJOINDER TO THE REMAND REPORT , THE ASSESSEE AGAIN EXPLAINED THE FACTS TO THE CIT(A) AND WHICH HE HAS RIGHTLY ACCEPTED. EXPLAINING THE FACTS OF THE CASE, LEARNED A. R. SUBMITTED THAT ASSESSING OFFICER HAD MADE ADDITIONS ON ACCOUNT OF CAPITAL INTRODUCED BY THE FIRM AS WELL A S ON ACCOUNT OF UNSECURED I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 3 LOANS INTRODUCED BY THE FIRM. THE NECESSARY EVIDEN CES WERE FILED AND OUR ATTENTION WAS INVITED TO COPY OF REMAND REPORT PLAC ED AT PAGES 5 TO 19 OF THE PAPER BOOK AND HE HEAVILY PLACED HIS RELIANCE O N THE ORDER OF THE CIT(A) AS REGARDS GROUND NO. 1 TO 3 ARE CONCERNED. 3.1 AS REGARDS GROUND NO. 4, LEARNED A. R. SUBMITTE D THAT ASSESSEE WAS ALREADY WORKING AS MANUFACTURING UNIT AND HAD INSTA LLED A NEW MACHINERY FOR WHICH THE ASSESSING OFFICER HAD DISALLOWED INTE REST AS PREOPERATIVE EXPENSES WHICH THE CIT(A) HAS RIGHTLY HELD THAT IN AN EXISTING UNIT, INSTALLATION OF NEW MACHINERY CANNOT TANTAMOUNT TO SETTING UP OF A NEW UNIT AND THEREFORE, HAS RIGHTLY DELETED THE ADDITION. 3.2 AS REGARDS GROUND NO. 5 REGARDING DELETION OF U NEXPLAINED SUNDRY CREDITORS, LEARNED A. R. SUBMITTED THAT DURING REMA ND PROCEEDINGS, OUT OF THREE CREDITORS, TWO CREDITORS HAD FILED THE CONFIR MATIONS AND THEREFORE, CIT(A) HAS RIGHTLY DELETED THE ADDITION. IN RESPEC T OF THIRD ADDITION AMOUNTING TO RS.1,61,885/-, LEARNED A. R. SUBMITTED THAT THE ASSESSEE HAD PURCHASED SOME PART OF PLANT & MACHINERY AND COPY O F BILL WAS ALSO PRODUCED AND PAYMENTS WERE MADE THROUGH CHEQUE AND THE BALANCE AMOUNT WAS PAID IN NEXT YEAR. IT WAS SUBMITTED THA T NON COMPLIANCE BY THIRD PARTY CANNOT LEAD TO ADDITION IN THE HANDS OF THE ASSESSEE THEREFORE, THE CIT(A) HAS RIGHTLY DELETED THE SAME. 4. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSING OFFICER H AD MADE AN ADDITION OF RS.57,00,000/- ON ACCOUNT OF CAPITAL CONTRIBUTED BY THE PARTNERS OF THE FIRM AND HAD ALSO DISALLOWED INTEREST PAID TO PARTNERS O N ACCOUNT OF THESE ADDITIONS. THE ADDITIONS MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF INTRODUCTION OF CAPITAL BY THE PARTNERS OF THE FIRM HAS BEEN DELETED BY CIT(A) ON THE BASIS OF REMAND REPORT AND ALSO ON TH E BASIS OF REJOINDER TO I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 4 THE REMAND REPORT. THE ASSESSING OFFICER HAD MADE ADDITIONS FOR ADDITIONS TO THE CAPITAL MADE BY VARIOUS PARTNERS BY HOLDING AS UNDER: I. SRI MAHESH KUMAR JAIN:- THE OPENING BALANCE OF CAPITAL IS RS.4,98,088/- AND THEREAFTER RS.75,000/- HAS BEEN C ONTRIBUTED ON 06.06.2006, RS.25,000/- HAS BEEN CONTRIBUTED ON 07.06.2006 AND RS.4,00,000/- HAS BEEN CONTRIBUTED ON 13.09.200 6. IT HAS BEEN STATED BY ASSESSEE THAT THE FUNDS WERE PROVIDE D BY HIM OUT OF WITHDRAWAL FROM HIS SB ACCOUNT NO.20012034 A ND 20834907181. COPIES OF BANK ACCOUNT HAVE BEEN EXAMINED. IT IS SE EN THAT ON 06.06.2006 ONLY RS.25,000/- IS WITHDRAWN FR OM BANK, AGAINST RS.75,000/- DEPOSITED IN CAPITAL ACCOUNT AN D THEREFORE REMAINING RS.50,000/- REMAINS UNEXPLAINED. REGARDIN G REST OF THE AMOUNT THE EXPLANATION OF ASSESSEE IS SUPPORTED BY ENTRIES IN BANK ACCOUNT AND THEREFORE THE BALANCE AMOUNT IS TREATED AS EXPLAINED. AS SUCH THE AMOUNT OF RS.50,000/- IS TRE ATED AS UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNTS OF ASSESSEE AND IS ADDED TO ITS TOTAL INCOME U/S 68 OF THE I.T. ACT 1961. SINCE THE ABOVE AMOUNT OF RS.50,000/- INTRODUCED AS CAPITAL ON 06.06.2006 HAS BEEN TREATED AS UNEXPLAIN ED, THEREFORE THE PROPORTIONATE INTEREST ON CAPITAL AMO UNTING TO RS.4,931/- IS ALSO DISALLOWED AND ADDED TO THE TOTA L INCOME OF ASSESSEE. II. SRI SURENDRA KUMAR:- THE OPENING BALANCE OF CAPITAL IS RS.3,58,219/- AND THEREAFTER RS.1,00,000/- HAS BEEN CONTRIBUTED ON 04.04.2006, RS.4,00,000/- HAS BEEN CONTRIBUTED O N 10.05.2006, RS.7,00,000/- HAS BEEN CONTRIBUTED ON 1 1.07.2006, RS.1,00,000/- HAS BEEN CONTRIVED ON 27.07.2006 AND RS.2,00,000/- HAS BEEN CONTRIBUTED ON 20.10.2006. I T HAS BEEN STATED BY ASSESSEE THAT THE FUNDS WERE PROVIDED BY HIM OUT OF WITHDRAWAL FROM HIS SB ACCOUNT NO.028000105407105 W ITH PUNJAB NATIONAL BANK AND SB ACCOUNT NO. 11106314020 WITH STATE BANK OF INDIA. WITH REGARD TO AMOUNT OF RS.1,00,000/- DEPOSITED ON 04.04.2006, IT HAS BEEN EXPLAINED THAT THIS AMOUNT WAS WITHDRAWN FROM FIRM ON 30.03.2006 AND HAS BEEN INTR ODUCED AGAIN ON 04.04.2006. THE REPLY OF ASSESSEE IS NOT A CCEPTABLE BECAUSE IF THE AMOUNT WAS TO BE INTRODUCED IN THE F IRM AS CAPITAL, IT SHOULD NOT HAVE BEEN WITHDRAWN. THERE I S APPARENTLY NO JUSTIFICATION FOR ITS WITHDRAWAL AND SUBSEQUENT DEPOSIT WITHIN I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 5 5 DAYS. AS SUCH THE AMOUNT OF RS.1,00,000/- IS TREA TED AS UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNTS OF ASSESSEE AND IS ADDED TO ITS TOTAL INCOME U/S 68 OF THE I.T. ACT 1961. REGARDING REST OF ENTRIES IT IS EXPLAINED THAT THE AMOUNT IS OUT OF .WITHDRAWAL FROM BANK ACCOUNT. EXPLANATION O F CREDIT ENTRIES OUT OF WHICH THE AMOUNT HAS BEEN PROVIDED T O FIRM HAS ALSO BEEN PROVIDED. IT IS HOWEVER SEEN THAT THE AMO UNT OF RS.7,00,000/- HAS BEEN PROVIDED BY SRI SURENDRA GUP TA ON 11.07.2006 AS CAPITAL TO FIRM. ON THE SAME DATE THE RE ARE THREE CREDIT ENTRIES IN HIS BANK ACCOUNT OF AMOUNTS RS.1, 00,000/-, RS.1,00,000/ AND RS.5,00,000/-. NO EXPLANATION OR DETAILS/DOCUMENTS IN RESPECT OF AMOUNT OF RS.5,00 ,000/- CREDITED ON 11.07.2006 HAS BEEN PROVIDED BY THE ASS ESSEE OR PARTNER. AS SUCH THE AMOUNT OF RS.5,00,000/- IS TRE ATED AS UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNTS OF ASSESSEE AND IS ADDED TO ITS TOTAL INCOME U/S 68 OF THE I.T. ACT 1961. THE REMAINING AMOUNTS ARE SATISFACTORILY EXPLAINED AND NO ADVERSE INFERENCE IS DRAWN. SINCE THE ABOVE AMOUNT OF RS.6,00,000/- INTRODUCED AS CAPITAL ON 04.04.2006/11.07.2006 HAS BEEN TREATED A S UNEXPLAINED, THEREFORE THE PROPORTIONATE INTEREST O N CAPITAL AMOUNTING TO RS.55,562/- IS ALSO DISALLOWED AND ADD ED TO THE TOTAL INCOME OF ASSESSEE. III. SMT. VIMLA DEVI:- THE OPENING BALANCE OF CAPITAL IS RS.1,54,312/-AND THEREAFTER RS.6,00,000/- HAS BEEN CONTRIBUTED ON 21.03.2007. IT HAS BEEN STATED BY ASSESSEE THAT THE FUNDS WERE PROVIDED BY HER OUT OF WITHDRAWAL FROM HER SB ACCOUNT NO.01190019508 WITH STATE BANK OF INDIA, LAKHIMPUR KHERI. A PERUSAL OF BANK ACCOUNT REVEALS THAT THERE IS CREDI T ENTRY OF RS.6,00,000/- IN THIS BANK ACCOUNT ON 21.03.2007. N O EXPLANATION OR DETAILS/DOCUMENTS IN RESPECT OF AMOU NT OF RS.6,00,000/- CREDITED ON 21.03.2007 HAS BEEN PROVI DED BY THE ASSESSEE OR PARTNER. AS SUCH THE AMOUNT OF RS.6,00, 000/- IS TREATED AS UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNTS OF ASSESSEE AND IS ADDED TO ITS TOTAL INCOME U/S 68 OF THE I.T. ACT 1961. SINCE THE ABOVE AMOUNT OF RS.6,00,000/- INTRODUCED AS CAPITAL ON 21.03.2007 HAS BEEN TREATED AS UNEXPLAIN ED, THEREFORE THE PROPORTIONATE INTEREST ON CAPITAL AMO UNTING TO RS.2,170/- IS ALSO DISALLOWED AND ADDED TO THE TOTA L INCOME OF ASSESSEE. I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 6 IV. SMT. RAM KUMARI: THE OPENING BALANCE OF CAPITAL IS RS.2,75,959/-AND THEREAFTER RS.8,00,000/- HAS BEEN CONTRIBUTED ON 21.03.2007. IT HAS BEEN STATED BY ASSESSEE THAT THE FUNDS WERE PROVIDED BY HER OUT OF WITHDRAWAL FROM HER SB ACCOUNT NO. 11106278943 WITH STATE BANK OF INDIA, LAKHIISPUR KH ERI. A PERUSAL OF BANK ACCOUNT REVEALS THAT THERE IS CREDI T ENTRY OF RS.8,00,000/- IN THIS BANK ACCOUNT ON 21.03.2007. N O EXPLANATION OR DETAILS/DOCUMENTS IN RESPECT OF AMOU NT OF RS.8,00,000/- CREDITED ON 21.03.2007 HAS BEEN PROVI DED BY THE ASSESSEE OR PARTNER. AS SUCH THE AMOUNT OF RS.8,00, 000/- IS TREATED AS UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNTS OF ASSESSEE AND IS ADDED TO ITS TOTAL INCOME U/S 68 OF THE I.T. ACT 1961. SINCE THE ABOVE AMOUNT OF RS.8,00,000/- INTRODUCED AS CAPITAL ON 21.03.2007 HAS BEEN TREATED AS UNEXPLAIN ED, THEREFORE THE PROPORTIONATE INTEREST ON CAPITAL AMO UNTING TO RS.2,893/- IS ALSO DISALLOWED AND ADDED TO THE TOTA L INCOME OF ASSESSEE. V. SMT. ANJU GUPTA:- THE OPENING BALANCE OF CAPITAL IS RS.5,03,576/-AND THEREAFTER RS.5,00,000/- HAS BEEN CONTRIBUTED ON 13.06.2006, RS.4,50,000/- HAS BEEN CONTRIBUTED O N 21.07.2006, RS.6,00,000/- HAS BEEN CONTRIBUTED ON 0 3.08.2006 AND RS.1,00,000/- HAS BEEN CONTRIBUTED ON 22.08.200 6. IT HAS BEEN STATED BY ASSESSEE THAT THE FUNDS WERE PROVIDE D BY HER OUT OF WITHDRAWAL FROM HER SB ACCOUNT NO. 111062771 88 WITH STATE BANK OF INDIA, LAKHIMPUR KHERI. THE TOTAL AMOUNT INTRODUCED BY HER IS RS.16,50,000/ -. REGARDING RS.7,00,000/- OUT OF IT, IT HAS BEEN EXPL AINED THAT THIS WAS LOAN TAKEN FROM SRI KANMAL, HIS CONFIRMATION AN D PAN HAS ALSO BEEN PROVIDED. ACCORDINGLY THIS AMOUNT OF RS.7 ,00,000/- IS TREATED AS EXPLAINED. NO EXPLANATION OR DETAILS/DOCUMENTS IN RESPECT OF B ALANCE AMOUNT OF RS.9,50,000/- CREDITED ON 13.06.2006/21.0 7.2006 HAS BEEN PROVIDED BY THE ASSESSEE OR PARTNER. AS SUCH T HE AMOUNT OF RS.9,50,000/- IS TREATED AS UNEXPLAINED CASH CRE DIT IN THE BOOKS OF ACCOUNTS OF ASSESSEE AND IS ADDED TO ITS T OTAL INCOME U/S 68 OF THE I.T. ACT 1961. SINCE THE ABOVE AMOUNT OF RS.9,50,000/- INTRODUCED AS CAPITAL ON 13.06.2006/21.07.2006 HAS BEEN TREATED A S UNEXPLAINED, THEREFORE THE PROPORTIONATE INTEREST O N CAPITAL AMOUNTING TO RS.85,726/- IS ALSO DISALLOWED AND ADD ED TO THE TOTAL INCOME OF ASSESSEE. I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 7 VI. SRI RAVINDRA NATH GUPTA:- THE OPENING BALANCE OF CAPITAL IS DEBIT BALANCE RS.8,27,264/- AND THEREAFTER RS.10 ,00,000/- HAS BEEN CONTRIBUTED ON 08.04.2006 AND RS.3,00,000/- HA S BEEN CONTRIBUTED ON 10.08.2006 FROM HIS SAVING BANK ACCO UNT WITH STATE BANK OF INDIA, LAKHIMPUR-KHERI SB ACCOUNT NO. 01190016430. WITH REGARD TO RS.10,00,000/- IT HAS BEEN STATED TH AT THIS WAS AMOUNT WITHDRAWN FROM M/S BAJRANG SUGAR INDUSTR Y. WITH REGARD TO RS.3,00,000/- IT HAS BEEN STATED THAT THI S WAS OUT OF LOANS OF RS.1,00,000/- EACH TAKEN FROM THREE PERSON S I.E. SRI HEMANT SINGH, SRI MANGAL SINGH AND SRI GURDEEP SING H. HOWEVER NO DETAILS/DOCUMENTS IN RESPECT OF THE ENTI RE AMOUNT OF RS.13,00,000/- HAS BEEN PROVIDED BY THE ASSESSEE OR PARTNER. AS SUCH THE AMOUNT OF RS.13,00,000/- IS TREATED AS UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNTS OF ASSESSEE AN D IS ADDED TO ITS TOTAL INCOME U/S 68 OF THE I.T. ACT 1961. SINCE THE ABOVE AMOUNT OF RS.13,00,000/- INTRODUCED AS CAPITAL ON 08.04.2006/10.08.2006 HAS BEEN TREATED A S UNEXPLAINED, THEREFORE THE PROPORTIONATE INTEREST O N CAPITAL AMOUNTING TO RS.1,40,777/- IS ALSO DISALLOWED AND A DDED TO THE TOTAL INCOME OF ASSESSEE. VII SMT. SHIKHA GUPTA:- THE OPENING BALANCE OF CAPITAL IS RS.44,293/-AND THEREAFTER RS.2,00,000/- HAS BEEN CO NTRIBUTED ON 23.08.2006. IT HAS BEEN STATED BY ASSESSEE THAT THE FUNDS WERE PROVIDED BY HER OUT OF WITHDRAWAL FROM HER SB ACCOUNT NO.101736 WITH URBAN COOPERATIVE BANK LTD., LAKHIMP UR KHERI. A PERUSAL OF PARTNERS CAPITAL ACCOUNT IN THE FIRM REVEALS THAT RS.2,00,000/- WAS DEPOSITED IN THE F IRM ON 14.08.2006 WHICH HAS BEEN RETURNED TO PARTNER ON 17 .08.2006. SUBSEQUENTLY RS.2,00,000/- HAS AGAIN BEEN DEPOSITED ON 23.08.2006. IN THE BANK ACCOUNT OF SMT. SHIKHA GUPT A ALSO CREDIT ENTRY OF RS.2,00,000/- IS SEEN ON 14.08.2006 WHICH HAS BEEN EXPLAINED AS LOAN TAKEN FROM SRI PANKAJ MITTAL . HIS CONFIRMATION HAS ALSO BEEN PROVIDED. HOWEVER, ANOTH ER CREDIT ENTRY OF RS.2,00,000/- IS SEEN IN THE BANK ACCOUNT ON 23.08.2006 FOR WHICH NO EXPLANATION OR DETAILS/DOCU MENTS HAVE BEEN PROVIDED. THIS AMOUNT OF RS.2,00,000/- HAS BEE N INTRODUCED AS CAPITAL IN THE FIRM AND HAS REMAINED UNEXPLAINED. ACCORDINGLY THIS AMOUNT OF RS.2,00,000/- IS TREATED AS UNEXPLAINED CASH CREDIT ENTRY IN THE BOOKS OF ASSES SEE AND IS ADDED TO ITS TOTAL INCOME U/S 68 OF THE I.T. ACT 19 61. I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 8 SINCE THE ABOVE AMOUNT OF RS.2,00,000/- INTRODUCED AS CAPITAL ON 23.08.2006 HAS BEEN TREATED AS UNEXPLAIN ED, THEREFORE THE PROPORTIONATE INTEREST ON CAPITAL AMO UNTING TO RS.14,729/- IS ALSO DISALLOWED AND ADDED TO THE TOT AL INCOME OF ASSESSEE. VIII. SMT. SHAHI GUPTA:- THE OPENING BALANCE OF CAPITAL IS RS.95,296/- AND THEREAFTER RS.10,00,000/- HAS BEEN CONTRIBUTED ON 15.05.2006 AND RS.2,00,000/- HAS BEEN CONTRIBUTE D ON 21.03.2007. IT HAS BEEN STATED BY ASSESSEE THAT THE FUNDS WERE PROVIDED BY HER OUT OF WITHDRAWAL FROM HER SB ACCOU NT NO.01190020310 WITH STATE BANK OF INDIA, LAKHIMPUR KHERI. A PERUSAL OF BANK ACCOUNT OF SHALU GUPTA REVEALS TH AT THERE IS A CREDIT ENTRY OF RS.10,00,000/- ON 12.05. 2006. THERE 4S A CREDIT ENTRY OF RS.2,00,000/- ON 21.03.2007 ALSO. BOTH THESE ENTRIES ARE IMMEDIATELY BEFORE THE ISSUE OF CHEQUE TO THE ASSESSEE M/S NARAIN SUGAR INDUSTRY. NO EXPLANATION OR DETAILS/DOCUMENTS IN RESPECT OF AMOUNT OF RS. 12,00 ,000/- CREDITED IN BANK ACCOUNT OF SHALU GUPTA HAS BEEN PR OVIDED BY THE ASSESSEE OR PARTNER. AS SUCH THE AMOUNT OF RS. 12,00,OOO/- IS TREATED AS UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNTS OF ASSESSEE AND IS ADDED TO ITS TOTAL INCOME U/S 68 OF THE I.T. ACT 1961. SINCE THE ABOVE AMOUNT OF RS.12,00,000/- INTRODUCED AS CAPITAL ON 15.05.2006/21.03.2007 HAS BEEN TREATED A S UNEXPLAINED, THEREFORE THE PROPORTIONATE INTEREST O N CAPITAL AMOUNTING TO RS.1,05,954/- IS ALSO DISALLOWED AND A DDED TO THE TOTAL INCOME OF ASSESSEE. 4.1 THE ASSESSING OFFICER DURING REMAND PROCEEDINGS HAD EXAMINED THE ADDITIONAL EVIDENCES AND HAS HELD IN FAVOUR OF THE ASSESSEE IN RESPECT OF FEW PARTNERS AND IN RESPECT OF SOME OF THEM HE HAS RECO MMENDED THE ADDITION. THE FINDING OF THE ASSESSING OFFICER IN THE REMAND REPORT IN RESPECT OF THESE PARTNERS IS REPRODUCED BELOW: I. SRI MAHESH KUMAR JAIN:- DURING THE ASSESSMENT PROCEEDINGS THE AO HAD ADDED RS.50,000/- AS UNEXPLAINED CAPITAL OF THE ASSESSEE AND INTEREST OF RS.4,931/- ON THE UNEXPLAINED CAPITAL. DURING THE HEARING IN REFERENCE TO REMAND CALLED FO R CIT(A) AND VERIFICATION OF BANK STATEMENT OF SHRI M AHESH I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 9 KUMAR JAIN IT IS FOUND THAT IN ACCOUNT NO. 20834907 181 THE AMOUNT OF RS.50000/- WAS WITHDRAWN BY SHRI MAHESH KUMAR JAIN ON 06.06.2006 IS REFLECTED. II. SRI SURENDRA KUMAR:- THE AO HAD ADDED RS.6,00,000/- AGAINST TOTAL CAPITA L INTRODUCED OF RS,15,00,000/- DURING THE YEAR AS UNE XPLAINED CAPITAL INTRODUCED BY SRI SURENDRA KUMAR AND INTERE ST OF RS.55,562/- WAS ALSO DISALLOWED ON THE UNEXPLAINED CAPITAL. NOW ASSESSEE HAS SUBMITTED FRESH EVIDENCES BEFORE CIT(A) AS WELL AS AO AND STATED THAT RS.5,00,000/- WERE WITHDRAWN FROM M/S BAJRANG SUGAR INDUSTRIES WHICH W AS EARLIER GIVEN AS A LOAN TO M/S BAJRANG SUGAR INDUSTRIES. IN THIS REGARD ASSESSEE HAD SUBMITTED COPY OF ACCOUNT OF SHRI SURE NDRA KUMAR IN THE BOOKS OF M/S BAJRANG SUGAR INDUSTRIES DURING THE ASSESSMENT PROCEEDINGS FOR VERIFICATION, BUT HAD FA ILED TO PRODUCE COPY OF BANK ACCOUNT OF M/S BAJRANG SUGAR I NDUSTRIES FOR CROSS VERIFICATION. NOW THE ASSESSEE HAS SUBMIT TED COMPLETE COPY OF BANK STATEMENT AND RELEVANT ENTRIES ARE REF LECTED IN THE ACCOUNT. FURTHER IN HIS REPLY SHRI SURENDRA GUPTA HAD STATED THAT RS.1,00,000/- WAS WITHDRAWN FROM FIRM WHICH WAS INT RODUCED AS A CAPITAL AND AGAIN DEPOSITED IN FIRM. THE STATEMENT OF THE SHRI SURENDRA KUMAR IS NOT CONVINCING REGARDING RS.1,00,000/- SINCE, THE AMOUN T WAS TO BE INTRODUCED IN THE FIRM AS A CAPITAL, IT SHOULD NOT HAVE BEEN WITHDRAWN. THE AO HAD RIGHTLY ADDED RS.1,00,000/- UNEXPLAINED CASH CREDIT U/S 68 OF THE I.T. ACT 1961 . III. SMT. VIMLA DEVI:- DURING THE ASSESSMENT PROCEEDINGS THE AO HAD ADDED RS.6,00,000/- AS UNEXPLAINED CAPITAL OF THE ASSESSE E AND CHARGE INTEREST OF RS.2170/- ON THE UNEXPLAINED CAP ITAL. NOW ASSESSEE HAS SUBMITTED ITS REPLY BEFORE CIT(A) AS WELL AS AO AND STATING THAT RS.6,00,000/- WERE WITH DRAWN FROM M/S BAJRANG SUGAR INDUSTRIES WHICH WAS GIVEN AS A L OAN TO M/S BAJRANG SUGAR INDUSTRIES. IN THIS REGARD ASSESSEE H AD SUBMITTED COPY OF ACCOUNT OF SMT. VIMLA DEVI IN THE BOOKS OF M/S BAJRANG SUGAR INDUSTRIES DURING THE ASSESSMENT PROCEEDINGS FOR VERIFICATION, BUT HAD FAILED TO PRO DUCE COPY OF BANK ACCOUNT OF M/S BAJRANG SUGAR INDUSTRIES FOR CR OSS I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 10 VERIFICATION. NOW THE ASSESSEE HAS SUBMITTED COMPLE TE COPY OF BANK STATEMENT. IV. SMT. RAM KUMARI:- DURING THE ASSESSMENT PROCEEDINGS THE AO HAD ADDED RS.8,00,000/- AS UNEXPLAINED CAPITAL OF THE ASSESSE E AND CHARGED INTEREST OF RS.2893/- ON THE UNEXPLAINED CA PITAL. NOW ASSESSEE HAS SUBMITTED HIS REPLY BEFORE C1T(A) AS WELL AS AO AND STATING THAT RS.8,00,000/- WERE WITH DRAWN FROM M/S BAJRANG SUGAR INDUSTRIES WHICH WAS GIVEN AS A L OAN TO M/S BAJRANG SUGAR INDUSTRIES. IN THIS REGARD ASSESSEE H AD SUBMITTED COPY OF!ACCOUNT OF SMT. RAM KUMARI IN THE BOOKS OF M/S BAJRANG SUGAR INDUSTRIES DURING THE ASSESSMENT PROCEEDINGS FOR VERIFICATION, BUT HAD FAILED TO PRO DUCE COPY OF BANK ACCOUNT OF M/S BAJRANG GAR INDUSTRIES FOR CROS S VERIFICATION. NOW THE ASSESSEE HAS SUBMITTED COMPLE TE COPY OF BANK STATEMENT. V. SMT. ANJU GUPTA:- DURING THE ASSESSMENT PROCEEDINGS THE AO HAD ADDED RS.9,50,000/- AS UNEXPLAINED CAPITAL OF THE ASSESSE E AND CHARGE INTEREST OF RS.85726/- ON THE UNEXPLAINED CA PITAL. NOW ASSESSEE HAS SUBMITTED HIS REPLY BEFORE CIT(A) AS WELL AS AO AND STATING THAT RS.5,00,000/- WERE WITH DRAWN FROM M/S BAJRANG SUGAR INDUSTRIES WHICH WAS GIVEN AS A L OAN TO M/S BAJRANG SUGAR INDUSTRIES. IN THIS REGARD ASSESSEE H AD SUBMITTED COPY OF ACCOUNT OF SMT. ANJU GUPTA IN THE BOOKS OF M/S BAJRANG SUGAR INDUSTRIES DURING THE ASSESSMENT PROCEEDINGS FOR VERIFICATION, BUT HAD FAILED TO PRO DUCED COPY OF BANK ACCOUNT OF M/S BAJRANG SUGAR INDUSTRIES FOR CR OSS VERIFICATION AT THE TIME OF ASSESSMENT. NOW THE ASS ESSEE HAS SUBMITTED COMPLETE COPY OF BANK STATEMENT. FURTHER SMT. ANJU GUPTA HAD STATED THAT RS.4,50,000 /- WAS INTRODUCED AS CAPITAL IN THE FIRM AND A CREDIT BALANCE OF RS.4,58,221/- WAS AVAILABLE ON 08.05.2006 IN HER BA NK ACCOUNT. IN THE SUPPORT OF HER CONTENTION COPY OF BANK ACCOU NT NO.01190014869 WAS SUBMITTED AT THE TIME OF ASSESSM ENT PROCEEDING. VI SRI RAVINDRA NATH GUPTA:- DURING THE ASSESSMENT PROCEEDINGS THE AO HAD ADDED RS.13,00,000/- AS UNEXPLAINED CAPITAL OF THE ASSESS EE AND CHARGE INTEREST OF RS.1,40,777/- ON THE UNEXPLAINED CAPITAL. I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 11 NOW ASSESSEE HAS SUBMITTED HIS REPLY BEFORE CIT(A) AS WELL AS AO AND STATED THAT CASH AMOUNT OF RS.10,00, 000/- WAS WITHDRAWN FROM FIRM M/S JAJRANG SUGAR INDUSTRIES IN WHICH SHRI RAVINDRA NATH GUPTA IS A PARTNER. IN THIS REGARD AS SESSEE HAD SUBMITTED COPY OF ACCOUNT OF SRI RAVINDRA NATH GUPT A IN THE BOOKS OF M/S BAJRAHG SUGAR INDUSTRIES DURING THE AS SESSMENT PROCEEDINGS FOR VERIFICATION, BUT HAD FAILED TO PRO DUCED COPY OF BANK ACCOUNT OF M/S BAJRANG SUGAR INDUSTRIES FOR'CR OSS VERIFICATION AT THE TIME OF ASSESSMENT. NOW THE ASS ESSEE HAS SUBMITTED COMPLETE COPY OF BANK STATEMENT FOR VERIF ICATION. FURTHER ASSESSEE HAS STATED IN ITS SUBMISSION BEFOR E THE APPELLATE AUTHORITY THAT SHRI RAVINDRA NATH GUPTA H AD TAKEN LOAN AMOUNTING TO RS.3,00,000/- FROM HIS FRIENDS SH RI HEMANT SINGH, SHRI MANGAL SINGH AND SHRI GURDEEP SINGH. ON VERIFICATION OF BANK STATEMENT OF SHRI RAVINDRA NAT H GUPTA IT IS FOUND THAT ONLY ONE CHEQUE BEARING SERIAL NO.S03300 4, AMOUNTING TO RS.3,00,000/- WAS DEPOSITED ON 05.08.2 006 AND SAME WAS TRANSFERRED TO NARAIN SUGAR INDUSTRIES. IT IS EVIDENT FROM REPLY THAT THE ASSESSEE WAS TRYING TO MISGUIDE THE AO WITH WRONG FACTS. THE ASSESSEE HAS FAILED TO PROVIDE THE REQUIRED DETAILS AND DOCUMENTS REGARDING THE INTRODUCTION OF CAPITAL OF RS.3,00,000/-. THE AO HAD RIGHTLY ADDED RS.3,00,000 /- IN HIS INCOME U/S OF IT ACT SINCE THE SUBMISSION OF THE AS SESSEE IS NOT ACCEPTABLE. VII. SMT. SHIKHA GUPTA: DURING THE ASSESSMENT PROCEEDINGS THE AO HAD ADDED RS.2,00,000/- AS UNEXPLAINED CAPITAL OF THE ASSESSE E AND CHARGE INTEREST OF RS. 1,40,777/- ON THE UNEXPLAINE D CAPITAL. A PERUSAL OF PARTNERS CAPITAL ACCOUNT IN THE FIRM R EVEALS THAT RS.2,00,000/- WAS DEPOSITED IN THE FIRM ON 14. 08.2006 WHICH HAS BEEN RETURNED TO PARTNER ON 17.08.2006. SUBSEQUENTLY RS.2,00,000/- HAS AGAIN BEEN DEPOSITED ON 23.08.2006. IN THE BANK ACCOUNT OF SMT. SHIKHA GUPT A ALSO CREDIT ENTRY OF RS.2,00,000/- IS SEEN ON 14.08.2006 WHICH HAS BEEN EXPLAINED AS LOAN TAKEN FROM SRI PANKAJ MITTAL . HIS CONFIRMATION HAS ALSO BEEN PROVIDED. HOWEVER ANOTHE R CREDIT ENTRY OF RS.2,00,000/- IS SEEN IN THE BANK ACCOUNT ON 23.08.2006 FOR WHICH NO EXPLANATION OR DETAILS/DOCU MENTS HAVE BEEN PROVIDED. ITHIS AMOUNT OF RS.2,00,000/- HAS BE EN INTRODUCED AS CAPITAL IN THE FIRM AND HAS REMAINED UNEXPLAINED. ACCORDINGLY AO HAD RIGHTLY TREATED THIS AMOUNT OF R S.2,00,000/- I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 12 IS AS UNEXPLAINED CASH CREDIT ENTRY IN THE BOOKS OF ASSESSEE AND IS ADDED TO ITS TOTAL INCOME U/S 68 OF THE I.T. ACT 1961. VIII. SHALU GUPTA: DURING THE ASSESSMENT PROCEEDINGS THE AO HAD ADDED RS.12,00,000/- AS UNEXPLAINED CAPITAL OF THE ASSESS EE AND CHARGE INTEREST OF RS.1,05,954/- ON THE UNEXPLAINED CAPITAL. NOW ASSESSEE HAS SUBMITTED BEFORE CIT(A) AS WELL AS AO THAT RS. 10,00,000/- WAS WITHDRAWN FROM M/S BAJRANG SUGAR INDUSTRIES WHICH WAS GIVEN AS A LOAN TO M/S BAJRANG SUGAR INDUSTRIES. IN THIS REGARD ASSESSEE HAD SUBMITTED C OPY OF ACCOUNT OF SRHL. SHALU GUPTA IN THE BOOKS OF M/S BA JRANG SUGAR INDUSTRIES DURING THE ASSESSMENT PROCEEDINGS FOR VE RIFICATION, BUT HAD FAILED TO PRODUCE COPY OF BANK ACCOUNT OF M /S BAJRANG SUGAR INDUSTRIES FOR CROSS VERIFICATION AT THE TIME OF ASSESSMENT. NOW THE ASSESSEE HAS SUBMITTED COMPLETE COPY OF BANK STATEMENT 1 FOR VERIFICATION. FURTHER ASSESSEE HAS STATED THAT REMAINING AMOUNT O F RS.2,00,000/-WAS INTRODUCED AS CAPITAL IN THE FIRM, WAS AVAILABLE IN THE BANK ACCOUNT OF SMT. SHALU GUPTA. IN THE SUPPORT OF THE CONTENTION A COPY OF BANK ACCOUNT NO.01190020310 WAS ALSO SUBMITTED AT THE TIME OF AS SESSMENT PROCEEDING. THE AO HAD RIGHTLY ADDED RS.2,00,000/- DUE TO THE ASSESSEE HAD FAILED TO PROVIDE EXPLANATION OR DETAI LS/DOCUMENTS IN RESPECT OF AMOUNT OF RS.2,00,000/- CREDITED IN B ANK ACCOUNT OF SHALU GUPTA. THE DETAILS HAVE NOT BEEN SUBMITTED BEFORE THE APPELLATE AUTHORITY AS WELL AS AO. HENCE THE . SUBM ISSION OF THE ASSESSEE IN THIS REGARD HAVE NO MERIT AND ARE L IABLE TO BE REJECTED. IN THIS REMAND REPORT THE ASSESSING OFFICER HAD MOS TLY ACCEPTED THE CONTENTION OF THE ASSESSEE AND THEREFORE THE CIT(A) HAS RIGHTLY DELETED THE ADDITIONS. HOWEVER, IN RESPECT OF SHRI SURENDRA KU MAR THE ASSESSING OFFICER HAS NOT ACCEPTED THE CONTENTION OF ASSESSEE THAT TH E AMOUNT OF RS.1,00,000/- WAS REINTRODUCED IN THE FIRM AFTER WI THDRAWING FROM THE FIRM IN THE EARLIER YEAR. HOWEVER, THE CIT(A) ON A REJO INDER FROM THE ASSESSEE HAS ACCEPTED THE CONTENTION OF ASSESSEE FOR THIS AM OUNT ALSO BY HOLDING AS UNDER: I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 13 THE APPELLANT EXPLAINED DURING APPELLATE PROCEEDIN GS THAT THE AMOUNT OF RS.5,00,000/- WAS WITHDRAWN FROM M/S BAJR ANG SUGAR INDUSTRIES AND RS.1,00,000/- IS A INTRODUCTIO N OF CAPITAL WITHDRAWN EARLIER. I FIND THAT THE OBJECTION OF THE AO AS REGARDS THE INTRODUCTION AFTER WITHDRAWAL IS NOT ACCEPTABLE AS THERE IS NO SUCH BAR UNDER THE ACT. THE IMPORTANT CONSIDERAT ION OF THE ISSUE IS THAT THE SOURCE OF RS.5,00,000/- AND RS.1, 00,000/- IS ADEQUATELY EXPLAINED AS BEING OUT OF WITHDRAWALS FR OM ACCOUNT WITH M/S BAJRANG SUGAR INDUSTRIES AND THE APPELLANT -FIRM. IN VIEW OF THE AFORESAID EXPLANATION FURNISHED BY THE APPELLANT THE ADDITIONS OF RS.6,00,000/- AND PROPORTIONATE DISALL OWANCE OF RS.55,562/- ON ACCOUNT OF INTEREST DOES NOT SURVIVE . THE ASSESSING OFFICER DURING REMAND PROCEEDINGS HAS ALSO RECOMMENDED ADDITION OF RS.3,00,000/- OUT OF RS.13,00,000/- IN THE CASE OF SHRI RAVINDRA NATH GUPTA, HOWEVER, CIT(A) HAS DELETED THE ENTIRE AMOUNT BY MAKING A FINDING OF FACT THAT THE AMOUNT OF RS.3,00,000/- AL SO STOOD EXPLAINED. THE RELEVANT FINDINGS OF THE CIT(A) ARE REPRODUCED BELO W: THE APPELLANT EXPLAINED DURING APPELLATE PROCEEDIN GS THAT THE AMOUNT OF RS.10,00,000/- WAS WITHDRAWN FROM M/S BAJ RANG SUGAR INDUSTRIES, WHICH HAS BEEN VERIFIED BY THE AO . THE OBJECTION OF THE AO IN REMAND REPORT THAT THERE IS ONE ENTRY OF RS.3,00,000/- WHICH DOES NOT EXPLAIN THE LOANS FROM FRIENDS IS NOT CORRECT SO FAR AS THERE ARE TWO ENTRIES IN THE BANK PASSBOOK ON 05.08.2006 FOR RS.2,00,000/- AND RS.1,00,000/- CORRESPONDING TO THREE CHEQUES DEPOSITED BY TWO PAY IN SLIPS. IN VIEW OF THE AFORESAID EXPLANATION FURNISHED BY T HE APPELLANT THE ADDITIONS OF RS.13,50,000/- AND PROPORTIONATE D ISALLOWANCE OF RS.1,40,777/- ON ACCOUNT OF INTEREST DOES NOT SU RVIVE. SIMILARLY, IN THE CASE OF SMT. SHIKHA GUPTA, THE AS SESSING OFFICER DURING REMAND PROCEEDINGS RECOMMENDED THE ADDITION OF RS.2 ,00,000/-, HOWEVER, CIT(A), AFTER CONSIDERING THE REJOINDER TO THE REMA ND REPORT, DELETED THE SAME BY HOLDING AS UNDER: I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 14 4(6)(VII) SMT SHIKHA GUPTA MADE A CONTRIBUTION OF RS.2,00,000/- ON 23.08.2006 OUT OF WITHDRAWAL FROM HER ACCOUNT NUMBER 101736 WITH URBAN COOPERATIVE BANK L TD., LAKHIMPUR KHERI. THE AO FOUND THAT RS.2,00,000/- DE POSITED IN THE FIRM ON 14.08.2006 WAS RETURNED TO PARTNER ON 1 7.08.2006. SUBSEQUENTLY RS.2,00,000/- WAS AGAIN DEPOSITED ON 23.08.2006. IN THE BANK ACCOUNT THE CREDIT ENTRY OF RS.2,00,000/- SEEN ON 14.08.2006 WAS EXPLAINED AS L OAN TAKEN FROM SHRI PANKAJ MITTAL. HOWEVER ANOTHER CREDIT ENT RY OF RS.2,00,000/- WAS SEEN IN THE BANK ACCOUNT ON 23.08 .2006 FOR WHICH NO EXPLANATION WAS PROVIDED. I FIND THAT THE AO HAS FAILED TO APPRECIATE THAT THE CHEQUE DEPOSITED ON 1 4.08.2006 BOUNCED AND THE SAME WAS AGAIN CREDITED ON 23.08.20 06. IN VIEW OF THE AFORESAID EXPLANATION FURNISHED BY THE APPELLANT THE ADDITIONS OF RS.2,00,000/- PROPORTIONATE DISALLOWAN CE OF RS.14,729/- ON ACCOUNT OF INTEREST DOES NOT SURVIVE . IN THE CASE OF SMT. SALU GUPTA, THE ASSESSING OFFIC ER DURING REMAND PROCEEDINGS ACCEPTED THE CLAIM OF CAPITAL TO THE EX TENT OF RS.10,00,000/- HOWEVER, RECOMMENDED THE ADDITION FOR RS.2,00,000/- WHICH AGAIN THE CIT(A) DELETED BY MAKING A FINDING OF FACT THAT THE AMOUNT OF RS.2,00,000/- WAS ALSO RAISED AS LOAN FROM M/S BAJRANG SUGAR INDU STRIES. THE RELEVANT FINDINGS OF CIT(A) ARE REPRODUCED BELOW: 4(6)(VIII) SMT. SHALU GUPTA MADE A CONTRIBUTION OF RS.10,00,000/- ON 15.05.2006 AND RS.2,00,000/- ON 2 1.03.2007 OUT OF WITHDRAWAL FROM HER ACCOUNT NO.01190020310 W ITH STATE BANK OF INDIA, LAKHIMPUR KHERI. THE AMOUNTS WERE TR EATED AS UNEXPLAINED AS THE CORRESPONDING CREDIT ENTRIES IN THE BANK ACCOUNT RESULTING IN CAPITAL CONTRIBUTION WERE NOT SATISFACTORILY EXPLAINED. THE APPELLANT EXPLAINED DURING APPELLATE PROCEEDINGS THAT THE AMOUNT OF RS.10,00,000/- WAS WITHDRAWN FRO M M/S BAJRANG SUGAR INDUSTRIES, WHICH HAS BEEN VERIFIED B Y THE AO. FURTHER, THE AMOUNT OF RS.2,00,000/- ON 21.03.2007 IS ALSO AGAINST LOAN FROM M/S BAJRANG SUGAR INDUSTRIES. IN VIEW OF THE AFORESAID EXPLANATION FURNISHED BY THE APPELLANT TH E ADDITIONS OF RS.12,00,000/- AND PROPORTIONATE DISALLOWANCE OF RS.1,05,954/- ON ACCOUNT OF INTEREST DOES NOT SURVI VE. I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 15 IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) AS REGARDS GROUND NO. 1 & 2 ARE CON CERNED. 4.2 AS REGARDS GROUND NO. 3, THE CIT(A) HAS CONFIRM ED THE ADDITION OF RS.2,50,000/- AGAINST RS.19,54,000/- ON ACCOUNT OF UNSECURED LOANS FROM VARIOUS PERSONS. DURING REMAND PROCEEDINGS THE ASS ESSING OFFICER AGAIN LOOKED INTO VARIOUS ADDITIONAL EVIDENCES AND RECOMM ENDED ADDITIONS IN RESPECT OF ALL THE PERSONS. HOWEVER, LEARNED CIT(A ) ALLOWED RELIEF FOR SUCH ADDITIONS BY HOLDING AS UNDER: 5(5) I HAVE EXAMINED THE FACTS AND CIRCUMSTANCES OF THE CASE. I HAVE CONSIDERED THE FINDINGS OF THE AO IN THE ASSES SMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO CONSID ERED THE OBSERVATIONS OF THE AO IN THE REMAND REPORT AND THE COMMENTS OF THE APPELLANT THEREON. I FIND THAT THE APPELLANT -FI RM HAS TAKEN UNSECURED LOANS OF RS.1,15,33,832/- OUT OF WHICH RS .90,54,000/- WAS TREATED AS UNEXPLAINED AND A FURTHER DISALLOWANCE O F INTEREST OF RS.3,96,569/- ON LOAN ON THE AMOUNT TREATED AS UNEX PLAINED AS MADE BY THE AO. BEFORE PROCEEDING TO EXAMINE THE IS SUE AT HAND THE DETAILS INVOLVED IN THE ISSUE ARE SUMMARIZED AS UND ER: S.NO. NAME OF CREDITOR LOAN (IN RS.) LOAN TREATED AS UNEXPLAINED (IN RS.) INTEREST DISALLOWED (IN RS.) 1 RAJENDRA NATH GUPTA HUF 10,16,584 / - - - 2 BREJENDRA NATH GUPTA HUF 86,358/- - - 3 SURENDRA KUMAR HUF 6,37,960/- - - 4 SIDDHARTHA GUPTA 2,75,612/ - 2,50,000 / - 28,521/ - 5 VIPUL JAIN 2,17,655/ - 2,00,000/ - 19,660/ - 6 ARVIND JAIN 1,50,000/- 1,50,000/- 7,126/- 7 . VIKAS JAIN 2,50,000/- 2,50,000/- 11,877/- 8 RAKESH GUPTA 2,68,747/- 2,50,000/- 20,877/- I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 16 9 YOGESH GANDHI 2,10,097/ - 2,00,000/ - 11,244/ - 10 PRADEEP MITTAL 3,15,145/ - 3,00,000/ - 16,866/ - 11 SURESH CHANDRA GUPTA 2,58,193/- 2,50,000/- 9423/- 12 NITIN GUPTA 3,09,477/- 3,00,000/- 10,553/- 13 SHRI KRISHNA MITTAL HUF 3,09,477/- 3,00,000/- 10,553/- 14 PANKAJ MITTAL 1,03,321/ - 1,00,000/ - 3,321/ - 15 NAVEEN GUPTA 82,078/ - - - 16 NIRUPMA GUPTA 1,82,900/- - - 17 VIJAY GUPTA 4,64,288/- 4,49,000/- 17,024/- 18 NEHA AGARWAL 3,09,123/ - 3,00,000/ - 10,159/ - 19 POONAM AGARWAL 1,03,221/ - 1,00,000/ - 3,321/ - 20 SWAPNI GUPTA 1,50,000/- - - 21 UMA GUPTA 1,00,395/- 1,00,000/- 395/- 22 PRACHI GUPTA 1,00,395/ - 1,00,000/ - 395/ - 23 KUMUD GUPTA 1,00,395/ - 1,00,000/ - 395/ - 24 M/S SHRI BAJRANG SUGAR INDUSTRY 52,07,310/- 50,30,000/- 1,99,719/- 25 M/SJAIN ENTERPRISES 3,25,000/- 3,25,000/- 15,440/- TOTAL 1,15,33,8327 - 90,54,000/ - 3,96,569/ - 5(6)(I) SHRI VIKAS JAIN (S. NO. 7): THE APPELLANT H AS TAKEN A LOAN OF RS. 2,50,000/- ON 16.06.2006. THE APPELLANT HAS PRO DUCED THE CONFIRMATION OF LENDER THROUGH SHRI NAV RATAN MAL, FATHER OF LATE SHRI VIKAS JAIN BUT FAILED TO PROVIDE THE BANK STAT EMENT AND OTHER DETAILS. THE APPELLANT HAS ALSO EXPRESSED ITS INABI LITY TO PROVIDE FURTHER DETAILS. IN ABSENCE OF BANK ACCOUNT THE GEN UINENESS OF TRANSACTION CANNOT BE PROVED. IN VIEW THEREOF THE U NSECURED LOAN OF RS. 2,50,000/- IS NOT SATISFACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 2,50,000/- IS CONFIRMED. THE AO IS ALSO JUSTIFIED IN DISALLOWING THE CORRESPONDING INTEREST OF RS. 11,87 7/- AS THE LOAN IS NOT EXPLAINED. 5(6)(IT)(A) SHRI RAKESH GUPTA (S. NO. 8) HAS GIVEN LOAN AMOUNTING TO RS.2,50,000/- TO THE APPELLANT ON 21.07.2006. ON VE RIFICATION OF BANK STATEMENT OF SHRI RAKESH GUPTA, IT WAS SEEN THAT TH E AVAILABLE BALANCE AS ON 07.06.2006 WAS RS. 1,66,029/. THEREAF TER TWO CHEQUES WERE DEPOSITED IN THIS BANK ACCOUNT AMOUNTING TO RS . 50,000/- AND RS. 57,000/- ON 07.06.2006 AND 07.07.2006 RESPECTIV ELY. THE I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 17 AMOUNT OF RS.1,07,000/- WAS EXPLAINED TO HAVE BEEN RECEIVED FROM FATHER. SHRI RAKESH GUPTA IS STATED TO BE RETIRED T EACHER HAVING PENSION INCOME. THE APPELLANT HAS FILED CONFIRMATIO N OF THE CREDITOR WHOSE PAN IS AGAPG6603M. 5(6)(II)(B) WHEN THE ASSESSEE HAS FILED CONFIRMATIO NS OF THE CASH CREDITORS, THE INITIAL BURDEN PLACED UPON THE ASSES SEE CAN BE SAID TO HAVE BEEN DISCHARGED AND IF THERE IS ANY DOUBT WITH REGARD TO THE CREDITWORTHINESS, THE ASSESSING OFFICER SHOULD HAVE DIRECTED THE ASSESSEE TO PRODUCE THE CREDITORS OR WOULD HAVE EXA MINED THE CREDITORS DIRECTLY AND IN THE ABSENCE OF TAKING SUC H RECOURSE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TAKING AN AD VERSE INFERENCE WITH REGARD TO THE CREDITWORTHINESS OF THE CREDITOR S. A REFERENCE IN THIS CONNECTION MAY BE MADE TO THE DECISION OF HON BLE THIRD MEMBER ITAT, LUCKNOW BENCH IN THE CASE OF VISHNU JA ISWAL VS ITO IN ITA NO. 336 (LKW.) OF 2011 DATED MAY 1, 2012 WHE REIN IT WAS LAID DOWN AS UNDER THE ASSESSING OFFICER SHOULD NOT HAVE COME TO ANY C ONCLUSION WITHOUT EXAMINING THE CASH CREDITORS. THE ASSESSEE CANNOT BE AWARE OF THE SOURCE OF CREDITORS, WHICH WOULD BE WITHIN T HE PERSONAL KNOWLEDGE OF THE CREDITORS. MERE DOUBT WITH REGARD TO THE CREDITWORTHINESS SHOULD NOT AUTOMATICALLY REFLECT I N DISBELIEVING THE CASE OF THE ASSESSEE TO MAKE ADDITION UNDER SECTION 68 WITHOUT SHOWING THAT THE ASSESSEE WOULD HAVE EARNED MORE IN COME FROM ANY SPECIFIC SOURCE, IN THE LIGHT OF THE EXPRESSION 'MA Y' USED IN SECTION 68. THE PROVISIONS OF SECTION 68 SHOULD BE READ IN CONJ UNCTION WITH SECTION 106 OF THE EVIDENCE ACT. IN THE PECULIAR FAC TS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE HAS DISCHAR GED THE INITIAL BURDEN OF PROVING IDENTITY, GENUINENESS OF TRANSACT IONS AND ALSO CREDITWORTHINESS OF THE THREE CREDITORS BY PRODUCIN G THEIR RESPECTIVE BANK ACCOUNTS. ENTRY IN THE PASS BOOK OF A THIRD PA RTY CAN BE TAKEN AS PRIMARY EVIDENCE IN PROOF OF THE FACT THAT LOAN WAS ADVANCED BY THIRD PARTY. THUS, THE INITIAL ONUS SHIFTS ONTO THE REVENUE TO PROVE THAT THE CREDITORS LACK CREDITWORTHINESS AND TO COM E TO SUCH CONCLUSION, THE ASSESSEE CANNOT BE ASKED PRODUCE AN Y EVIDENCE WHICH IS WITHIN THE KNOWLEDGE OF THE THIRD PARTY. IN THE INSTANT CASE, THE ASSESSING OFFICER DID NOT EXAMINE THE PARTIES A ND PROCEEDED ON THE ASSUMPTION THAT CREDITORS WOULD NOT HAVE SAVED ANY MONEY TO ADVANCE THE LOAN. IN THE CIRCUMSTANCES OF THE CASE, THE VIEW TAKEN BY THE ACCOUNTANT MEMBER IS IN ACCORDANCE WITH LAW. IN OTHER WORDS, IT IS NOT A FIT CASE TO MAKE ADDITION UNDER SECTION 68. I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 18 5(6)(II)(C) IN VIEW THEREOF THE UNSECURED LOAN OF R S. 2,50,000/- IS SATISFACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 2,50,000/- IS DELETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISAL LOWING THE CORRESPONDING INTEREST OF RS. 20,877/- AS THE LOAN IS EXPLAINED. THE APPELLANT GETS RELIEF OF RS. 2,50,000/- AND RS. 20, 8777-. 5(6)(III)(A) SHRI YOGESH GANDHI (S. NO. 9) DURING T HE ASSESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 2,00,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 11,24 4/-BECAUSE ON VERIFICATION OF BANK STATEMENT IT WAS FOUND THAT TH E CREDITOR HAD DEPOSITED CASH OF RS. 2,00,000/- ON 12.10.2006 AND THE SAME WAS TRANSFERRED TO THE APPELLANT ON NEXT DAY I.E. 13.10 .2006. SHRI YOGESH GANDHI (PAN NO. AGZPG0874B) HAS CONFIRMED HAVING GI VEN LOAN BY CHEQUE TO THE APPELLANT ON INTEREST OF 12%. THE AO HAS NOT ACCEPTED THE LOAN AS GENUINE FOR THE SOLE REASON TH AT CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE CREDITOR PRIOR TO ISSUE OF CHEQUE. 5(6)(III)(B) IN THE CASE OF DUSHIANT KUMAR VS. ITO {ITA NO. 468/2014, DATE OF PRONOUNCEMENT - 27.11.2015 } HON' BLE ITAT, AMRITSAR BENCH HELD THAT IT IS NOT THE RESPONSIBILI TY OF THE ASSESSEE TO PROVE THE SOURCE OF FUNDS IN THE HANDS OF LENDER SO LONG AS IT PRODUCES THE LENDER BEFORE THE AO WHO CONFIRM THE F ACT OF LENDING MONEY TO ASSESSEE. IN 'SAROGI CREDIT CORPORATION VS. -CIT, 103 ITR 344 (PATNA), IT HAS BEEN HELD THAT IT IS NOT FOR TH E ASSESSEE TO EXPLAIN FURTHER AS TO HOW THE OR IN WHAT CIRCUMSTANCES THE DEPOSITOR OBTAINED THE MONEY, OR HOW HE CAME TO MAKE AN ADVAN CE OF THE MONEY AS A LOAN TO THE ASSESSEE; THAT ONCE SUCH IDE NTITY IS ESTABLISHED AND THE CREDITORS, HAVE PLEDGED THEIR O ATH THAT THEY HAVE ADVANCED THE AMOUNTS IN QUESTION TO THE ASSESSEE, T HE BURDEN IMMEDIATELY SHIFTS ON TO THE DEPARTMENT TO SHOW AS TO WHY THE ASSESSEE'S CASE CANNOT BE ACCEPTED AND WHY SUCH DEP OSIT TO BE ASSESSED AS THE INCOME OF THE FROM A SUPPRESSED SOU RCE. FURTHER, IN THE CASE OF NIMIKCHAND KOTHARI VS.CIT 264 ITR 254, HON'BLE GAUHATI HIGH COURT HELD THAT BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS AS WELL AS CREDITWORTHINESS OF THE CREDITOR IS CONFINED TO THE TRANSACTIONS WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITORS, AND IT IS NOT THE B URDEN OF THE ASSESSEE TO SHOW THE SOURCE(S) OF HIS CREDITOR OR T O PROVE THE CREDITWORTHINESS OF THE SOURCE(S) OF THE SUB-CREDIT ORS. 5(6)(III)(C) IN THE PRESENT CASE, THE ASSESSEE HAS S UCCESSFULLY DISCHARGED HIS ONUS BUT THE DEPARTMENT HAS NOT BEEN ABLE TO GATHER ANY ADEQUATE MATERIAL, TO CONCLUDE THAT THE ENTRY I N QUESTION I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 19 REPRESENTED THE INCOME OF THE ASSESSEE FROM SUPPRES SED SOURCE. IN VIEW THEREOF AND RELYING ON CASE AUTHORITIES DISCUS SED SUPRA THE UNSECURED LOAN OF RS. 2,00,000/- IS SATISFACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 2,00,000/- IS DELETED . THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 11,244/-AS THE LOAN IS EXPLAINED. THE APPELLANT GET S RELIEF OF RS. 2,00,000/- AND RS. 11,244/-. 5(6)(IV)(A) M/S SHRI BAJRANG SUGAR INDUSTRY (S. NO 2 4} DURING THE ASSESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 50,30,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 1 ,99,719/- AS THERE WAS A DIFFERENCE OF RS. 2,00,000/- AS PER THE REPLY SUBMITTED BY THE ASSESSEE AND AS PER THE CONFIRMATORY LETTER OF THE LENDER. FURTHER THE CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE RETURN INCOME WAS RS. NIL. I FIND THAT THE AO HAS DOUBTED T HE CREDIT WORTHINESS ON THE GROUND THAT INCOME OF ASSESSEE WA S RS. NIL BUT THE AO HAS FAILED TO CONSIDER THE FACT THAT PROFIT IN LAST TWO YEARS AS PER THE PROFIT AND LOSS ACCOUNT WHICH WAS FILED IN APPELLATE PROCEEDINGS WAS RS. 3212680 AND THE RETURN OF INCOM E SHOWED TOTAL INCOME OF RS. NIL DUE TO BROUGHT FORWARD LOSSES OF E ARLIER YEARS. M/S SHRI BAJRANG SUGAR INDUSTRY IS ASSESSED TO TAX WITH INCOME TAX OFFICER, BARABANKI VIDE PAN NO. AADFS8786J AND HAS CONFIRMED HAVING ADVANCED LOAN ON INTEREST OF 12% TO THE APPE LLANT. 5(6)(IV)(B) IN THE FACTS OF THE PRESENT CASE, IT IS A MATTER OF RECORD THAT THE ASSESSEE HAS PRODUCED CONFIRMATION LETTERS IN RESPECT OF THE CREDITOR WHEREIN NOT ONLY THE IDENTITY OF THE CREDI TOR WITH ITS ADDRESS HAS BEEN FURNISHED BUT INCOME TAX PARTICULARS INCLU DING PAN HAS ALSO BEEN GIVEN. THEREFORE, THE IDENTITY OF THE CREDITOR REMAINS ESTABLISHED. ALSO, IT IS EVIDENT, THAT THE ENTIRE T RANSACTION HAS BEEN THROUGH PROPER BANKING CHANNEL. THEREFORE, AS FAR A S THE ASSESSEE IS CONCERNED, THE GENUINENESS OF THE TRANSACTION HAS B EEN ESTABLISHED AS NOT ONLY THE TRANSACTION IS THROUGH BANKING CHAN NEL BUT THE SOURCE OF SUCH CREDIT HAS ALSO BEEN PROVED BY THE ASSESSEE . NOW COMING TO THE THIRD INGREDIENT, THE CREDITWORTHINESS OF THE C REDITOR, IT IS TO BE NOTED THAT THE CREDITOR HAS NOT ONLY CONFIRMED OF H AVING ADVANCED THE MONEY TO THE ASSESSEE BUT HAVE ALSO STATED THAT IT IS OUT OF ITS OWN SOURCES, IT IS ALSO NOT DISPUTED THAT THE CREDI TOR IS INCOME TAX ASSESSEE' IN THE ROLE OF THE DEPARTMENT. IN VIEW TH EREOF AND RELYING ON CASE AUTHORITIES DISCUSSED SUPRA THE UNSECURED L OAN OF RS. 50,30,000/- IS SATISFACTORILY EXPLAINED AND THEREFO RE THE ADDITION OF RS. 50,30,000/- IS DELETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPONDING INTEREST OF RS. 1,99, 719/- AS THE LOAN IS EXPLAINED. THE APPELLANT GETS RELIEF OF RS, 50,30,0 00/-AND RS. 1,99,719/-. I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 20 5(6)(V) M/S JAIN ENTERPRISES (S. NO 25)(PAN NO. ABC PD0529N) DURING THE ASSESSMENT PROCEEDING THE AO MADE ADDITI ONS OF RS. 3,25,000/- AND PROPORTIONATE DISALLOWANCE OF INTERE ST OF RS. 15,440/- AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECA USE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. THE NECESSARY DOCUMENTS HAVE BEEN PROVIDED BY THE A PPELLANT IN REMAND PROCEEDINGS AND THE AO HAS NOT DRAWN ANY ADV ERSE INFERENCE ON THE LOAN TAKEN BY THE APPELLANT FROM M /S JAIN ENTERPRISES. IN VIEW THEREOF AND RELYING ON CASE AU THORITIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS. 3,25,000/- IS SATIS FACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 3,25,000/-IS DELE TED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 15,440/- AS THE LOAN IS EXPLAINED. THE APPELLANT GE TS RELIEF OF RS. 3,25,000/- AND RS. 15,440/-. 5(6)(VI) SHRI ARVIND JAIN (S. NO. 6} DURING THE ASS ESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 1,50,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 7,126 /- AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. THE AO HAS DOUBTED THE TRANSACTION IN THE REMAND PR OCEEDINGS AS THE BALANCE SHEETS OF THE CREDITOR FILED BY THE APP ELLANT WERE NOT SIGNED. I FIND THAT SHRI ARVIND JAIN (PAN NO. AGMPJ 7863L) HAS CONFIRMED HAVING GIVEN LOAN BY CHEQUE TO THE APPELL ANT ON INTEREST OF 12%. SIGNED COPIES HAVE ALSO BEEN FILED BY THE A PPELLANT. IN VIEW THEREOF AND RELYING ON CASE AUTHORITIES DISCUSSED S UPRA THE UNSECURED LOAN OF RS. 1,50,000/- IS SATISFACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 1,50,000/-IS DELETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 7,126/- AS THE LOAN IS EXPLAINED. THE APPELLANT GET S RELIEF OF RS. 1,50,000/- AND RS. 7,126/-. 5(6)(VII) SHRI SIDDHARTHA GUPTA (S. NO. 4) DURING T HE ASSESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 2,50,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 28,52 1/- AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. DURING REMAND PROCEEDINGS THE AO VERIFIED THE BANK ACCOUNT AND FOUND THAT THE OPENING BALANCE AS ON 01.04.2006 WAS RS. 2,33,736/- AND AN AMOUNT OF RS. 28,000/- WAS RECEIVED FROM HIS FATHER, WHICH WAS NOT SATISFACTORILY PROVED BY THE CREDITOR. I FIN D THAT SHRI SIDDHARTHA GUPTA (PAN NO. AJRPG7002Q) HAS CONFIRMED HAVING GIVEN LOAN BY CHEQUE TO THE APPELLANT ON INTEREST O F 12%. IN THE CASE OF HASTIMAL V. CIT (49 ITR 273)(MAD.) TOLARAM DAGA V. CIT (59 ITR 632)(ASSAM) NEMICHAND KOTHARI V. CIT (264 ITR 2 54) (GAU) IT HAS BEEN HELD THAT THE APPELLANT IS NOT EXPECTED TO PROVE THE SOURCE I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 21 OF SOURCE OF CREDITS. IN VIEW THEREOF AND RELYING O N CASE AUTHORITIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS. 2,50,000/ - IS SATISFACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 2,50,00 0/- IS DELETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CO RRESPONDING INTEREST OF RS. 28,521/- AS THE LOAN IS EXPLAINED. THE APPEL LANT GETS RELIEF OF RS. 2,50,000/- AND RS. 28,521/-. 5(6)(VIII) SHRI VIPUL JAIN (S. NO 5) DURING THE ASS ESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 2,00,000/- AND PROPORT IONATE DISALLOWANCE OF INTEREST OF RS. 19,660/- AS CREDITW ORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUPPORT OF THE CLAIM. THE NECE SSARY DOCUMENTS HAVE BEEN PROVIDED BY THE APPELLANT IN REMAND PROCE EDINGS AND THE AO HAS NOT DRAWN ANY ADVERSE INFERENCE ON THE LOAN TAKEN BY THE APPELLANT FROM SHRI VIPUL JAIN (PAN NO. AATPJ4567A) WHO HAS ALSO CONFIRMED THE LOAN. IN VIEW THEREOF AND RELYING ON C ASE AUTHORITIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS. 2,00,000/ - IS SATISFACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 2,00,00 0/- IS DELETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CO RRESPONDING INTEREST OF RS. 19,660/- AS THE LOAN IS EXPLAINED. THE APPEL LANT GETS RELIEF OF RS. 2,00,000/- AND RS. 19,660/-. 5(6)(IX) SHRI PRADEEP MITTAL (S. NO. 10) DURING THE ASSESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 3,00,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 16,86 6/- AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. DURING REMAND PROCEEDINGS ON VERIFICATION OF BANK S TATEMENT IT WAS FOUND THAT THE CREDITOR HAD DEPOSITED CASH OF RS. 3 ,00,000/- ON 12.10,2006 AND THE SAME WAS TRANSFERRED TO THE APPE LLANT ON NEXT DAY I.E. 13.10.2006. I FIND THAT SHRI PRADEEP MITTAL (PAN NO. AHWPM7303F) HAS CONFIRMED HAVING GIVEN LOAN BY CHEQ UE TO THE APPELLANT ON INTEREST OF 12%. THE AO HAS NOT EXAMIN ED THE CREDITOR AND HAS DOUBTED THE CREDIT WORTHINESS FOR THE SOLE REASON THAT CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT BEFORE ISSUE OF CHEQUE TO THE APPELLANT. THE CASE AUTHORITIES DISCUSSED ABOVE CLEANLY LAY DOWN THAT THE APPELLANT IS NOT EXPECTED TO PROVE THE SOU RCE OF SOURCE OF CREDITS. WHAT WOULD BE THE DEGREE OF THE ONUS AND W HAT SHOULD BE THE EXTENT OF EXPLANATION, IS SUCCINCTLY LAID DOWN IN THE DECISION IN CASE OF CIT V. PRAGATI CO-OPERATIVE BANK LTD. (2005 ) 278 ITR 170 (GUJ) AND MURLIDHAR LAHORIMAL VS. CIT (280 ITR 512) (GUJ). SUFFICE IT TO STATE THAT AN ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF CREDIT IN ITS BOOKS, BUT CANNOT BE ASKED TO PROVE THE SOUR CE OF THE SOURCE. IN VIEW THEREOF AND RELYING ON CASE AUTHORITIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS. 3,00,000/- IS SATISFACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 3,00,000/- IS DELETED . THE AO IS I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 22 THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 16,866/- AS THE LOAN IS EXPLAINED. THE APPELLANT GE TS RELIEF OF RS. 3,00,000/- AND RS. 16,866/-. 5(6)(X) SHRI VIJAY GUPTA (S. NO. 17) DURING THE ASS ESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 4,49,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 17,02 4/- AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. DURING REMAND PROCEEDINGS ON VERIFICATION OF BANK S TATEMENT IT WAS FOUND THAT THE CREDITOR HAD DEPOSITED CASH OF RS. 4 ,00,000/- ON 07.12.2006 AND THE SAME WAS TRANSFERRED TO THE APPE LLANT ON NEXT DAY I.E. 08.12.2006. . I FIND THAT SHRI VIJAY GUPTA (PAN NO. AEYPG2910D) HAS CONFIRMED HAVING GIVEN LOAN BY CHEQ UE TO THE APPELLANT ON INTEREST OF 12%. THE AO HAS NOT EXAMIN ED THE CREDITOR AND HAS DOUBTED THE CREDIT WORTHINESS FOR THE SOLE REASON THAT CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT BEFORE ISSUE OF CHEQUE TO THE APPELLANT. THE CASE AUTHORITIES DISCUSSED ABOVE CLEANLY LAY DOWN THAT THE APPELLANT IS NOT EXPECTED TO PROVE THE SOU RCE OF SOURCE OF CREDITS. IN VIEW THEREOF AND RELYING ON CASE AUTHORI TIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS. 4,49,000/- IS SATIS FACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 4,49,000/- IS DEL ETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 17,024/- AS THE LOAN IS EXPLAINED. THE APPELLANT GE TS RELIEF OF RS. 4,49,000/- AND RS. 17,024/-. 5(6)(XI) SHRI SURESH CHAND GUPTA (S. NO. 11) DURING THE ASSESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 2,50,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 9,123 /-AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. DURING REMAND PROCEEDINGS ON VERIFICATION OF BANK S TATEMENT IT WAS FOUND THAT THE CREDITOR HAD DEPOSITED CASH OF RS. 2 ,50,000/- ON 11.12.2006 AND THE SAME WAS TRANSFERRED TO THE APPE LLANT ON NEXT DAY I.E. 12.12.2006. . I FIND THAT SHRI SURESH CHAND GUPTA (PAN NO. ACEPG0210K) HAS CONFIRMED HAVING GIVEN LOAN BY CHEQ UE TO THE APPELLANT ON INTEREST OF 12%. THE AO HAS NOT EXAMIN ED THE CREDITOR AND HAS DOUBTED THE CREDIT WORTHINESS FOR THE SOLE REASON THAT CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT BEFORE ISSUE OF CHEQUE TO THE APPELLANT. THE CASE AUTHORITIES DISCUSSED ABOVE CLEANLY LAY DOWN THAT THE APPELLANT IS NOT EXPECTED TO PROVE THE SOU RCE OF SOURCE OF CREDITS. IN VIEW THEREOF AND RELYING ON CASE AUTHOR ITIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS. 2,50,000/- IS SATIS FACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 2,50,000/- IS DEL ETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 23 9,123/- AS THE LOAN IS EXPLAINED. THE APPELLANT GET S RELIEF OF RS. 2,50,000/- AND RS. 9,123/-. 5(6)(XII) SHRI NITIN GUPTA (S. NO 12) DURING THE AS SESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 3,00,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS.10,553 /- AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. DURING REMAND PROCEEDINGS ON VERIFICATION OF BANK S TATEMENT IT WAS FOUND THAT THE CREDITOR HAD DEPOSITED CASH OF RS. 3 ,00,000/- ON 15.12.2006 AND THE SAME WAS TRANSFERRED TO THE APPE LLANT ON NEXT DAY I.E. 16.12.2006. . I FIND THAT SHRI NITIN GUPTA (PAN NO. AGAPG6607R) HAS CONFIRMED HAVING GIVEN LOAN BY CHEQ UE TO THE APPELLANT ON INTEREST OF 12%. THE AO HAS NOT EXAMIN ED THE CREDITOR AND HAS DOUBTED THE CREDIT WORTHINESS FOR THE SOLE REASON THAT CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT BEFORE ISSUE OF CHEQUE TO THE APPELLANT. THE CASE AUTHORITIES DISCUSSED ABOVE CLEANLY LAY DOWN THAT THE APPELLANT IS NOT EXPECTED TO PROVE THE SOU RCE OF SOURCE OF CREDITS. IN VIEW THEREOF AND RELYING ON CASE AUTHOR ITIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS. 3,00,000/- IS SATIS FACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 3,00,000/- IS DEL ETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 10,553/- AS THE LOAN IS EXPLAINED. THE APPELLANT GE TS RELIEF OF RS. 3,00,000/- AND RS. 10,553/-. 5(6)(XIII) SHRI KRISHNA MITTAL, HUF (S. NO. 13) DUR ING THE ASSESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 3,00,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 10,55 3/-AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. THE NECESSARY DOCUMENTS HAVE BEEN PROVIDED BY THE A PPELLANT IN REMAND PROCEEDINGS AND THE AO HAS NOT DRAWN ANY ADV ERSE INFERENCE ON THE LOAN TAKEN BY THE APPELLANT FROM S HRI KRISHNA MITTAL, HUF (PAN NO. AARHS5435C), WHO HAS ALSO CONFIRMED TH E LOAN. IN VIEW THEREOF AND RELYING ON CASE AUTHORITIES DISCUS SED SUPRA THE UNSECURED LOAN OF RS. 3,00,000/- IS SATISFACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 3,00,000/- IS DELETED . THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 10,553/- AS THE LOAN IS EXPLAINED. THE APPELLANT GE TS RELIEF OF RS. 3,00,000/- AND RS. 10,553/-. 5(6)(XIV) SMT. NEHA AGARWAL (S. NO. 18) DURING THE ASSESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 3,00,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 10,35 9/- AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 24 DURING REMAND PROCEEDINGS ON VERIFICATION OF BANK S TATEMENT IT WAS FOUND THAT THE CREDITOR HAD DEPOSITED CASH OF RS. 3 ,00,000/- ON 03.12.2006 AND THE SAME WAS TRANSFERRED TO THE APPE LLANT ON NEXT DAY I.E. 09.12.2006.. I FIND THAT SHRI NEHA AGARWAL (PAN NO. AFNPA2690G) HAS CONFIRMED HAVING GIVEN LOAN BY CHEQ UE TO THE APPELLANT ON INTEREST OF 12%. THE AO HAS NOT EXAMIN ED THE CREDITOR AND HAS DOUBTED THE CREDIT WORTHINESS FOR THE SOLE REASON THAT CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT BEFORE ISSUE OF CHEQUE TO THE APPELLANT. THE CASE AUTHORITIES DISCUSSED ABOVE CLEANLY LAY DOWN THAT THE APPELLANT IS NOT EXPECTED TO PROVE THE SOU RCE OF SOURCE OF CREDITS. IN VIEW THEREOF AND RELYING ON CASE AUTHOR ITIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS. 3,00,000/- IS SATIS FACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 3,00,000/- IS DEL ETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 10,359/- AS THE LOAN IS EXPLAINED. THE APPELLANT GE TS RELIEF OF RS. 3,00,000/- AND RS. 10,359/-. 5(6)(XV) SHRI PANKAJ MITTAL (S. NO. 14) DURING THE ASSESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 1,00,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 3,321 /- AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. DURING REMAND PROCEEDINGS ON VERIFICATION OF BANK S TATEMENT IT WAS FOUND THAT THE CREDITOR HAD DEPOSITED CASH OF RS. 1 ,00,000/- ON 20.12.2006 AND THE SAME WAS TRANSFERRED TO THE APPE LLANT ON NEXT DAY I.E. 21.12.2006. . I FIND THAT SHRI PANKAJ MITT AL (PAN NO. AHWPM7304C) HAS CONFIRMED HAVING GIVEN LOAN BY CHEQ UE TO THE APPELLANT ON INTEREST OF 12%. THE AO HAS NOT EXAMIN ED THE CREDITOR AND HAS DOUBTED THE CREDIT WORTHINESS FOR THE SOLE REASON THAT CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT BEFORE ISSUE OF CHEQUE TO THE APPELLANT. THE CASE AUTHORITIES DISCUSSED ABOVE CLEANLY LAY DOWN THAT THE APPELLANT IS NOT EXPECTED TO PROVE THE SOU RCE OF SOURCE OF CREDITS. IN VIEW THEREOF AND RELYING ON CASE AUTHOR ITIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS. 1,00,000/- IS SATIS FACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 1,00,000/- IS DEL ETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 3,321/- AS THE LOAN IS EXPLAINED. THE APPELLANT GET S RELIEF OF RS. 1,00,000/- AND RS. 3,321/-. 5(6)(XVI) SMT. POONAM AGARWAL (S. NO. 19) DURING TH E ASSESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 1,00,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 3,321 /- AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. THE NECESSARY DOCUMENTS HAVE BEEN PROVIDED BY THE A PPELLANT IN REMAND PROCEEDINGS AND THE AO HAS NOT DRAWN ANY ADV ERSE K I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 25 INFERENCE ON THE LOAN TAKEN BY THE APPELLANT FROM S MT. POONAM AGARWAL (PAN NO. AFNPA4355E), WHO HAS ALSO CONFIRME D THE LOAN. IN VIEW THEREOF AND RELYING ON CASE AUTHORITIES DISC USSED SUPRA THE UNSECURED LOAN OF RS. 1,00,000/- IS SATISFACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 1,00,000/- IS DELETED . THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 3,321/- AS THE LOAN IS EXPLAINED. THE APPELLANT GET S RELIEF OF RS. 1,00,000/- AND RS. 3,321/-. 5(6)(XVII) SMT. UMA GUPTA (S. NO. 21) DURING THE AS SESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 1,00,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 395/- AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. THE AO HAS DOUBTED THE TRANSACTION IN THE REMAND PR OCEEDINGS AS THE BANK STATEMENT WAS NOT LEGIBLE. I FIND THAT SMT. UMA GUPTA (PAN NO. ADDPG5973G) HAS CONFIRMED HAVING GIVEN LOAN BY CHEQUE TO THE APPELLANT ON INTEREST OF 12%. LEGIBLE COPIES HAVE A LSO BEEN FILED BY THE APPELLANT. IN VIEW THEREOF AND RELYING ON CASE A UTHORITIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS. 1,00,000/ - IS SATISFACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 1,00,00 0/- IS DELETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CO RRESPONDING INTEREST OF RS. 395/- AS THE LOAN IS EXPLAINED. THE APPELLAN T GETS RELIEF OF RS. 1,00,000/- AND RS. 395/-. 5(6)(XVIII) SMT. PRACHI GUPTA (S. NO. 22) DURING TH E ASSESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 1,00,000/- AND PROPORTIONATE DISALLOWANCE 'OF INTEREST OF RS. 395/ - AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. DURING REMAND PROCEEDINGS ON VERIFICATION OF BANK S TATEMENT IT WAS FOUND THAT THE CREDITOR HAD DEPOSITED CASH OF RS. 1 ,00,000/- ON 20.03.2007 AND THE SAME WAS TRANSFERRED TO THE APPE LLANT ON NEXT DAY I.E. 21.03.2007. I FIND THAT SMT. PRACHI GUPTA ( PAN NO. AHMPG5937F) HAS CONFIRMED HAVING GIVEN LOAN BY CHEQ UE TO THE APPELLANT ON INTEREST OF 12%. THE AO HAS NOT EXAMIN ED THE CREDITOR AND HAS DOUBTED THE CREDIT WORTHINESS FOR THE SOLE REASON THAT CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT BEFORE ISSUE OF CHEQUE TO THE APPELLANT. THE CASE AUTHORITIES DISCUSSED ABOVE CLEANLY LAY DOWN THAT THE APPELLANT IS NOT EXPECTED TO PROVE THE SOU RCE OF SOURCE OF CREDITS. IN VIEW THEREOF AND RELYING ON CASE AUTHOR ITIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS. 1,00,000/- IS SATIS FACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 1,00,000/- IS DEL ETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 395/- AS THE LOAN IS EXPLAINED. THE APPELLANT GETS RELIEF OF RS. 1,00,000/- AND RS. 395/-. I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 26 5(6)(XIX) SMT. KUMUD GUPTA (S. NO. 23) DURING THE A SSESSMENT PROCEEDING THE AO MADE ADDITIONS OF RS. 1,00,000/- AND PROPORTIONATE DISALLOWANCE OF INTEREST OF RS. 395/- AS CREDITWORTHINESS OF THE LENDER WAS DOUBTFUL BECAUSE THE ASSESSEE HAD FAILED TO PROVIDE COPY OF BANK STATEMENT IN SUP PORT OF THE CLAIM. DURING REMAND PROCEEDINGS ON VERIFICATION OF BANK S TATEMENT IT WAS FOUND THAT THE CREDITOR HAD DEPOSITED CASH OF RS. 1 ,00,000/- ON 20.03.2007 AND THE SAME WAS TRANSFERRED TO THE APPE LLANT ON NEXT DAY I.E. 21.03.2007.. I FIND THAT SMT. KUMUD GUPTA (PAN NO. AHNPG7329N) HAS CONFIRMED HAVING GIVEN LOAN BY CHEQ UE TO THE APPELLANT ON INTEREST OF 12%. THE AO HAS NOT EXAMIN ED THE CREDITOR AND HAS DOUBTED THE CREDIT WORTHINESS FOR THE SOLE REASON THAT CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT BEFORE ISSUE OF CHEQUE TO THE APPELLANT. THE CASE AUTHORITIES DISCUSSED ABOVE CLEANLY LAY DOWN THAT THE APPELLANT IS NOT EXPECTED TO PROVE THE SOU RCE OF SOURCE OF CREDITS. IN VIEW THEREOF AND RELYING ON CASE AUTHOR ITIES DISCUSSED SUPRA THE UNSECURED LOAN OF RS.1,00,000/- IS SATISF ACTORILY EXPLAINED AND THEREFORE THE ADDITION OF RS. 1,00,000/- IS DEL ETED. THE AO IS THEREFORE NOT JUSTIFIED IN DISALLOWING THE CORRESPO NDING INTEREST OF RS. 395/- AS THE LOAN IS EXPLAINED. THE APPELLANT GETS RELIEF OF RS. 1,00,000/- AND RS. 395/-. 5(7) IN VIEW OF THE DISCUSSION IN THE FOREGOING PAR AGRAPHS AND RELYING ON THE CASE AUTHORITIES DISCUSSED IN FOREGO ING PARAGRAPHS, THE ADDITIONS OF RS. 90,54,000/- AND RS.3,96,569/- ARE RESTRICTED TO RS.2,50,000/- AND RS. 11,877/- GIVING CONSEQUENTIAL RELIEF TO THE APPELLANT. FROM THE ABOVE FINDINGS OF LEARNED CIT(A), WE FIND THAT HE HAS PASSED A SPEAKING AND DETAILED ORDER WHEREBY HE HAS DISCUSSE D THE EXPLANATIONS AND EVIDENCES IN RESPECT OF THEM WITH RESPECT TO VARIOU S PERSONS. THE LEARNED CIT(A) HAS MADE A FINDING OF FACT THAT THE CREDITOR S HAD ADVANCED MONEY TO THE ASSESSEE ON INTEREST @12% PER ANNUM AND ALL THE DEPOSITORS WERE HAVING PAN & HAD FILED CONFIRMATION AND THEREFORE, HAS RIGHTLY ARRIVED AT THE CONCLUSION THAT THE ADDITIONS WERE NOT SUSTAINABLE AND THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). IN VIEW OF THE ABOVE, GROUND NO. 3 IS ALSO REJECTED. I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 27 4.3 AS REGARDS GROUND NO. 4 REGARDING ADDITION OF R S.2,09,499/- ON ACCOUNT OF DISALLOWANCE OF INTEREST ON TERM LOAN, W E FIND THAT CIT(A) HAS MADE A FINDING OF FACT THAT THE ASSESSEE WAS ALREAD Y RUNNING A UNIT AND IT HAD INSTALLED A NEW MACHINERY AND INTEREST WAS PAID FOR THE LOAN TAKEN FOR THE NEW PLANT & MACHINERY INSTALLED IN ALREADY RUN NING UNIT AND THEREFORE, IT WAS NOT A NEW BUSINESS WHICH HAD COME INTO EXIST ENCE AND THEREFORE, PROPORTIONATE INTEREST RELATING TO THE PERIOD BEFOR E START OF MACHINERY WAS AN ALLOWABLE EXPENSE. THE RELEVANT FINDINGS OF CIT (A), AS CONTAINED IN PARA 6(3) AND 6(4), ARE REPRODUCED BELOW: 6(3) I HAVE EXAMINED THE FACTS AND CIRCUMSTANCES OF THE CASE. I HAVE CONSIDERED THE FINDINGS OF THE AO IN THE ASSES SMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO CONSI DERED THE OBSERVATIONS OF THE AO IN THE REMAND REPORT AND THE COMMENTS OF THE APPELLANT THEREON. THE APPELLANT CLAIMED INTEREST O F RS. 5,44,288/- ON TERM LOAN TAKEN FOR PURCHASE OF PLANT AND MACHINERY . THE MACHINERY AS PER REPORT OF INSPECTOR WAS PUT TO USE ON 01.02. 2007 WHEREAS AS PER AO THE PRODUCTION STARTED ON 19.02.2007. I FIN D THAT THE AO DISALLOWED PROPORTIONATE INTEREST OF RS. 2,09,499/- FOR THE PERIOD 01.02.2007 TO 19.02.2007 WITHOUT CONSIDERING THE FA CT THAT THE INTEREST WAS PAID FOR THE LOAN TAKEN FOR A NEW PLAN T AND MACHINERY INSTALLED IN ALREADY RUNNING UNIT. IT IS NOT A CASE WHERE A NEW BUSINESS HAS COME INTO EXISTENCE RATHER A CASE OF N EW PLANT AND MACHINERY (BOILER) INSTALLED IN AN ALREADY EXISTING BUSINESS. 6(4) HON'BLE SUPREME COURT IN CHALLAPALLI SUGARS LI MITED VS. COMMISSIONER OF INCOME-TAX, A.P. (1975) 98 ITR 167, HON'BLE MADRAS HIGH COURT IN INDIA CEMENTS LIMITED VS. COMM ISSIONER OF INCOME-TAX, MADRAS (1966) 60 ITR 52, LAY DOWN INTER ALIA, TO THE EFFECT THAT IT IS ONLY THE INTEREST INCURRED BEFORE THE COMMENCEMENT OF THE PRODUCTION, IN A SEPARATE AND DISTINCT UNIT WHI CH HAD NO CONNECTION WITH THE EXISTING BUSINESS WITH REFERENC E TO WHICH THE CAPITAL WAS BORROWED, THAT CAN BE CAPITALIZED AND A DDED TO THE COST OF THE FIXED ASSETS. HOWEVER, HON'BLE GUJARAT HIGH COURT AND HON'BLE DELHI HIGH COURT RESPECTIVELY IN COMMISSIONER OF IN COME-TAX, GUJARAT-LL VS. ALEMBIC GLASS INDUSTRIES LIMITED (19 76) 103 ITR 715 AND COMMISSIONER OF INCOME-TAX VS MODI INDUSTRIES L IMITED (NO. 3) (1993) 200 ITR 341, HAVE HELD THAT WHEN THE FUNDS A RE RAISED FOR EXPANSION/EXTENSION OF THE EXISTING BUSINESS, THE I NTEREST PAID ON SUCH BORROWING WAS ALLOWABLE AS REVENUE EXPENDITURE . THE APPELLANT WAS THEREFORE ENTITLED TO CLAIM DEDUCTION FOR THE S AID AMOUNT R OF INTEREST UNDER SECTION 36 OF THE ACT. THE DISALLOWA NCE OF INTEREST OF I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 28 RS. 2,09,499/- MADE BY THE AO IS DELETED GIVING REL IEF TO THE APPELLANT. THE ABOVE FINDINGS ARE IN ACCORDANCE WITH THE FACTS AND CIRCUMSTANCES OF THE CASE AND WE DO NOT FIND ANY INFIRMITY IN THAT. ACCORDINGLY, GROUND NO. 4 IS ALSO DISMISSED. 4.4 NOW COMING TO LAST GROUND RELATING TO DELETION OF ADDITION OF RS.43,25,930/-, THE ASSESSING OFFICER HAD MADE THIS ADDITION ON ACCOUNT OF SUNDRY CREDITORS CONSISTING OF THREE PARTIES. IN T HIS RESPECT, WE FIND THAT ASSESSING OFFICER DURING REMAND PROCEEDINGS HAD ACC EPTED THE EXPLANATION IN RESPECT OF TWO CREDITORS FOR WHICH NECESSARY CON FIRMATIONS WERE FILED AND IN RESPECT OF ONE CREDITOR AMOUNTING TO RS.1,61,885 /- HE HAS NOT ACCEPTED THE SAME AS THE NECESSARY CONFIRMATION WAS NOT FILE D AND THEREFORE, HE HAD RECOMMENDED THE ADDITION TO THE EXTENT OF RS.1,61,8 85/- ONLY. HOWEVER, LEARNED CIT(A) HAS DELETED THE SAME ALSO BY RELYING ON CERTAIN CASE LAWS WHICH STATES THAT ADDITION OF SUNDRY CREDITORS CANN OT BE MADE U/S 68 OF THE ACT. THE FINDINGS OF CIT(A) IN THIS RESPECT ARE RE PRODUCED BELOW: 7(1) GROUND OF APPEAL NUMBERS 10 TO 13 RELATE TO A N ADDITION OF RS.43,25,930/- MADE BY THE ASSESSING OFFICER. THE F INDING OF THE AO IN THE ASSESSMENT ORDER IS AS UNDER IN THE BALANCE SHEET AS ON 31.03.2007 THE ASSESSEE H AS SHOWN SEVERAL SUNDRY CREDITORS. NOTICES U/S 133(6) OF THE IT. ACT 1961 WERE ISSUED THOSE CREDITOR WHOSE CLOSING B ALANCES AT THE YEAR END WERE EXCEEDING RS.1,00,000/- ONLY ONE OUT OF FOUR SUCH CREDITORS HAS REPLIED TO THE NOTICE U/S 1 33(6) ISSUED FROM THIS OFFICE AND HAS CONFIRMED ITS TRANSACTIONS WITH THE ASSESSEE.THE REMAINING THREE CREDITORS, AS UNDER HA VE NOT FURNISHED ANY REPLY- I. SHRI GANESH BHANDAR RS. 4,30,640/- II. INVIRO SOLUTIONS RS. 37,33,402/- III. INDIA ENGINEERING WORKS RS. 1,61,885/- TOTAL RS. 43,25,930/- I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 29 EVEN THOUGH THE ASSESSEE HAS PROVIDED COPIES OF ACC OUNT OF THE ABOVE CREDITORS FOR THIS YEAR AS WELL AS FOR TH E NEXT YEAR, IT REMAINS UNSUBSTANTIATED BY THE CONCERNED PARTY. ACC ORDINGLY THE ABOVE AMOUNT OF RS.43,25,930/- IS DISALLOWED AN D ADDED TO THE TOTAL INCOME OF THE ASSESSEE FIRM AS UNEXPLA INED LIABILITY. 7(2) THE APPELLANT HAS FILED WRITTEN SUBMISSIONS ST ATING THEREIN THAT THE CREDITORS ADDED BY THE AO WERE BALANCES ON ACCO UNT OF SUPPLIERS OF MATERIAL OR PLANT AND MACHINERY WHICH WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS AND THAT THE NON-COMPLIANCE TO NO TICES UNDER SECTION 133(6) OF THE ACT BY THESE PARTIES COULD NO T LEAD TO ADDITIONS IN CASE OF THE ASSESSEE. RELIANCE HAS BEEN PLACED O N CASE AUTHORITIES CITED IN THE WRITTEN SUBMISSIONS PLACED ON RECORD. 7(3) I HAVE EXAMINED THE FACTS AND CIRCUMSTANCES OF THE CASE. I HAVE CONSIDERED THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO CONSIDERED THE OBSERVATIONS OF THE AO IN THE REMAND REPORT AND THE COMMENTS OF THE APPELLANT THEREON. I FIND THAT THE CREDIT BALANCE OF RS. 37,3 3,402/- IN RESPECT OF M/S ENVIRO SOLUTIONS, A UNIT OF M/S CHEMA BOILER S LIMITED IS IN RESPECT OF SUPPLY AND INSTALLATION OF A NEW BOILER. THE APPELLANT HAS TAKEN A LOAN FOR SUCH ACQUISITION AND PAID INTEREST THEREON, A PART OF WHICH WAS DISALLOWED BY THE AO AS DISCUSSED IN PARA GRAPH ABOVE. THE CREDIT BALANCE OF RS. 4,30,643/- IN THE NAME OF M/S SHRI GANESH BHANDAR IS IN RESPECT OF SUPPLY OF LIME INCLUDED IN PURCHASES AS CONSUMABLE STORES. FURTHER, THE CREDIT BALANCE OF R S. 1 , 61,882/- IN THE NAME OF M/S INDIA ENGINEERING WORKS IS IN RESPE CT OF SUPPLY OF PLANT AND MACHINERY IN RESPECT OF WHICH DEPRECIATIO N HAS BEEN CLAIMED AND ALLOWED BY THE AO AS PER THE BOOKS OF A CCOUNTS. 7(4) I FIND THAT THE CREDITORS ADDED BY THE AO ARE N OT CREDITORS FOR MONEY RATHER ARE TRADE CREDITORS FOR SUPPLY OF MATE RIAL OR PLANT AND MACHINERY WHICH HAVE BEEN CONSIDERED IN THE PROFIT AND LOSS ACCOUNTS IN FORM OF PURCHASES OR CLAIM OF DEPRECIAT ION ON ASSETS USED IN MANUFACTURING ACTIVITY. SIMILAR ISSUE HAD C OME UP BEFORE THE HON'BLE ITAT, ALLAHABAD BENCH IN THE CASE OF JOINT COMMISSIONER OF INCOME TAX VS. MATHURA PRASAD ASHOK KUMAR 101 TTJ 08 10 (ALL). IN THIS SIMILAR ADDITION ON ACCOUNT OF SUNDRY CREDITOR S WAS DELETED IN THE 1ST APPEAL AND WHEN THE REVENUE WENT UP TO TRIBUNAL AGAINST THE ORDER OF CIT, THE HON'BLE BENCH OF ITAT AT ALLAHABA D HAS UPHELD THE ORDER OF CIT BY HOLDING THAT AS THE PURCHASES HAVE BEEN HELD TO BE GENUINE AND ACCEPTED AS SUCH, THE CREDITS THAT REMA INED OUTSTANDING IN SUCH ACCOUNT CANNOT BE TREATED TO HAVE REMAINED UNEXPLAINED. THE BALANCE APPEARING IN THIS ACCOUNT, WHICH INCLUD ED THE DISPUTED ADDITION ALSO, IS THE SUM TOTAL OF PURCHASES THAT R EMAINED UNPAID AT I.T.A. NO.232/LKW/2016 ASSESSMENT YEAR:2007-08 30 THE END OF THE YEAR. AS THE GENUINENESS OF SUCH PUR CHASES HAS NOT BEEN DISPUTED, RATHER, THE SAME HAS BEEN ACCEPTED, THE CREDITS STAND FULLY EXPLAINED AND NO ADVERSE INFERENCE IS CALLED FOR, EITHER ON FACTS AND LAW.' FURTHER, IN THE CASE OF ANNAMARIA TRAVELS AND TOURS (P) LTD VS DEPUTY COMMISSIONER OF INCOME TAX, ITAT, DELHI 'F' B ENCH (2005) 95 TTJ 71 (DEL), IT HAS BEEN HELD THAT INCOME - CASH CREDIT - AMOUNT STANDING TO THE CREDIT OF SUNDRY CREDITORS FOR PURCHASES OF AIRLINE TICKETS - ADDITI ON MADE UNDER SECTION 68 ON THE GROUND THAT NO CONFIRMATION WAS FILED FROM AIRLINE COMPANIES - NOT JUSTIFIED - WHEN PAYME NTS TO CREDITORS WERE NOT DOUBTED AND COMMISSION INCOME IN RESPECT OF THOSE VERY TICKETS HAS BEEN ASSESSED AS INCOME O F ASSESSEE, AMOUNTS STANDING TO THE CREDITS OF AIRLIN ES TOWARDS PURCHASE OF TICKETS COULD NOT BE ADDED UNDER SECTIO N 68. 7(5) IN VIEW OF DISCUSSION ABOVE AND FINDING THAT T HE SUPPLY OF CONSUMABLE STORES OR PLANT AND MACHINERY HAS NOT BE EN DOUBTED BY THE AO, THE CORRESPONDING CREDITS STANDING IN THE N AME OF SUPPLIERS CANNOT BE ADDED TO INCOME UNDER SECTION 68 OF THE A CT. THE ADDITION OF RS. 43,25,930/- MADE BY THE AO IS DELETED GIVING RELIEF TO THE APPELLANT. THE ABOVE FINDINGS ARE QUITE EXHAUSTIVE AND DO NOT CALL FOR ANY INTERFERENCE AS THERE IS NO INFIRMITY IN THE SAME. THEREFORE, G ROUND NO. 5 IS ALSO REJECTED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 09/01/2018) SD/. SD/. (PARTHA SARATHI CHAUDHURY) ( T. S. KAPOOR ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED:09/01/2018 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. R EGISTRAR