M/S SHAKTI SPINNERS LTD.,LUDHIANA V. ACIT, CIRCLE-7, LUDHIANA

ITA 599/CHANDI/2022

AI Insights

The case involves M/s Shakti Spinners Ltd., which appealed against the order of the CIT(A) confirming additions made by the Assessing Officer (AO) regarding unsecured loans and disallowance of interest for the Assessment Year 2010-11. The company, engaged in manufacturing cloth, had undergone a survey where a substantial amount was surrendered as business income. The AO made additions alleging the unsecured loans were bogus and disallowed interest on certain advances. The CIT(A) upheld these additions, leading to the appeal before the ITAT. The ITAT found that the assessee had substantiated the genuineness of the loans and the business purpose of the advances, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107708 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Other Referred Cases: Esha Bhattacharya vs. Civil Appeal No. 8183-8184 of 2013, Gurfateh Films and Sippy Grewal Productions in TTA No. 92/Asr/2022, Punjab Agricultural University in TTA No. 661/CHD/2022, 492/CHD/2022, Chirag P. Thummar vs. Principal Commissioner of Income-tax, Manoj Ahuja (Minor) & ANR vs. Inspecting Assistant Commissioner, CG Paul & Co. vs. Income Tax Officer, Income Tax Officer vs. Meghalaya Bonded Warehouse, HP Cricket Association in TTA Nos. 110 & 11 l/CHD/2004, Sudeshan Auto & General Finance vs. Commissioner of Income Tax, Shri Mukesh Mittal vs. Dy. Commissioner of Income Tax, Chirag P. Thummar vs. Principal Commissioner of Income Tax, Sh. Chunni Lai vs. 211 ITR Statues Page 11, Sh. Sewa Ram in ITA No. 327/Chd/2011, Sh. Jawahar lal, Malerkotla in ITA No. 785/Chd/2015, Timple Kumar vs. ITO in ITA NO. 509/Chd/2013, Bright Enterprises Pvt. Ltd. in ITA No. 224/2013, Abhishek Industries in 286 ITR 1
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: SUDHIR SEHGAL; WAY OF DETAILED APPLICATION DATED
• Keywords: Condonation of delay; Business income; Additional evidence; Reasonable cause; Corroborative evidences; Bogus
• Section: 143(3); 263; 131; 22; 133(6); 13; 73

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी राजपाल यादव, उपाȯƗ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM आयकर अपील सं./ ITA No. 599/Chd/ 2022 िनधाŊरण वषŊ / Assessment Year : 2010-11 M/s Shakti Spinners Ltd. 5, Flower Dale Colony, Barewal Road, Ludhiana बनाम The Asst. CIT Circle-7, Ludhiana ˕ायी लेखा सं./PAN NO: AAFCS1138R अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राजˢ की ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 16/01/2025 उदघोषणा की तारीख/Date of Pronouncement : 11/04/2025 आदेश/Order PER KRINWANT SAHAY, AM: This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-3, dt. 25/09/2019 pertaining to Assessment Year 2010-11. 2. This is an appeal filed by the Assessee raising following grounds of appeal: That the Ld. CIT(A)-3, Ludhiana has erred in confirming the addition of unsecured loans as under:- i) Smt. Nitika Jasuja Rs. 4,800.00 ii). Sh. Nikhil Jasuja Rs. 1,200.00 iii). Smt. Neu Jasuja Rs.2700/- and Rs. 50,000/- iv). M/s Prince Sagar & Sons (HUF) Rs. 6300/- v). Sh. Prince Sagar Rs.5500/- and Rs.28,00,000/- vl). M/s Sunil Kumar & Sons (HUF) Rs. 2800/- vii). Sh. Kashish Jasuja Rs. 6200/- 2 viii). Sh. Amrit Jasuja Rs. 3100/- and Rs. 26,00,000/- ix). Sh. Sparsh Jasuja Rs. 7400/- 2. That the confirmation of addition in respect of above said parties in part is against the facts and circumstances of the case and without any basis. 3. That the Ld. CIT(A) has erred in confirming the addition of Rs. 7,43,234/on account of disallowance of interest u/s 36(1)((Hi). 4. That the confirmation of above addition is against the facts and circumstances of the case. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 3. Brief facts of the case are that the assessee is engaged in the business of manufacturing of cloths and the returns have been filed on the basis of the audited Books of accounts. During the year under consideration, a survey was carried out by the Department at the business premises of the assessee, wherein, an amount of Rs. 1.15 crore was surrendered as business income and the detail of the amount surrendered is as under: PARTICULARS AMOUNT(Rs.) Stock in Trade 80,05,000/- Cash in Hand 5,10,000/- Building under construction 15,00,000/- TOTAL 1.00.15.000/- 4. The appeal of the assessee has been filed late before the ITAT, for which, the assessee by way of detailed application dated 10.01.2025 filed on 13.01.2025 has given the reasons for delay and has also filed an affidavit by one of the director, Sh. Prince Sagar as under: Sub: Request for condonation of delay M/s Shakti Spinners Limited 5, Flower Dale Colony, Barewal Road, Ludhiana-141012, Punjab, Pan 3 AAFCS1138R ITA no. 599/CHANDI/2022 for A.Y 20102011 Fixed for Hearing: 16.01.2025 1. The assessee is limited Company engaged in the business of manufacturing of cloth and mink blankets. The company is owned by four brothers namely Sh. Sanjeev Jasuja, Prince Sagar Jasuja, Rajeev Jasuja and Sh. Sunil Kumar. During the F.Y 2009-10 a survey was conducted by the Income Tax Department at the business premises of the assessee on 10.03.2010 wherein, the assessee surrendered an amount of Rs. 1,00,15,000/-. The assesse filed its return of income after duly taking the effect of surrendered by the assessee. Thereafter, the case of the assessee was selected for scrutiny under compulsory scrutiny. During the course of assessment proceedings various notices were issued by the Ld. AO and the assessee filed detailed replies and duly complied with all the notices issued by the Ld. AO. 2. Subsequent thereto, the assessment in the case of the assesse was concluded and the assessment order dated 11.03.2013 was passed by the Ld. AO u/s 143(3) of the Act, 1961. In the assessment order, the Ld. AO without considering the replies filed by the assessee, assessed the total income of the assessee at Rs. 1,85,29,330/- as against the returned income of Rs. 79,22,100/-. Hence, the Ld AO made additions to the tune of Rs. 1,06,07,234/- out of the total addition Rs.98,64,000/-were on the allegation that the unsecured loans received by the assessee during the relevant A.Y are the bogus and the balance additions of Rs. 7,43,234/- were on the alleged application of Section 36(l)(iii) of the Income Tax Act, 1961. It is hereby pertinent to mention here that the said assessment order was received by the assessee on 21.03.2013, and aggrieved by the impugned order, one of the director of the assessee company filed appeal before the Worthy CIT(A) on 16.04.2013. 3. Thereafter, during the course of appellate proceedings, various submissions were made before the Worthy CTT(A) and detailed paper book including the relevant documents and details was dully filed during course on appellate proceedings. 4. It is hereby submitted that during the course of appellate proceedings, the case of the assessee was referred for remand proceedings and during the course of remand proceedings, various replies were filed before the 4 Ld. AO by the assessee. It is hereby pertinent to mention here that during the course of assessment proceedings as well as remand proceedings, the assessee has duly mentioned that there is a dispute between the family members. 5. However, the Worthy CIT-(A) without considering the detailed submission filed by the assessee and relying merely on the remand report of the Ld. AO, rejected the additional evidence filed by the assessee only on account that the said documents were filed by the assessee only after being pointed out by the Ld. AO and the said documents were filed during the remand proceedings. Hence Worthy CIT-(A) passed the appellate order in the case of the assessee on 25.09.2019 wherein, the additions made by the Ld. AO to the tune of Rs. 1,06,07,234/- were confirmed and no relief was given to the assessee. 6. Thereafter, against the appellate order of Worthy CIT(A), the assessee filed an appeal before the Hon'ble Bench of WAT on 17.08.2022. Sr. No Particulars Date 1. Passing of assessment order in the case of the assessee u/s 143(3) of the Income Tax Act, 1961. 11.03.2013 2. Receipt of assessment order u/s 143(3) of the Act Income Tax Act, 1961. 21.03.2013 3. Filing of appeal before the Worthy CIT-(A) within the due time. 16.04.2013 4. Passing of order of Worthy CIT(A) u/s 250(6) of the Income Tax Act, 1961 25.09.2019 5. Receipt of appellate order u/s 250(6) of the Income Tax Act, 1961 on Income Tax Portal. 25.09.2019 6. Due date of filing of appeal before the Hon'ble Bench of TTAT against the order of Worthy CIT(A). 24.11.2019 7. Actual date of filing of appeal before the Hon'ble ITAT Bench with a delay of 997 days. 17.08.2022. It is hereby submitted that in the case of the assessee, there is a delay of 997 days in filing of appeal before the Hon'ble Bench. In this regard, the period wise detail is tabulated as under: Sr. No. Particulars Period No of Days 5 1. A 24.11.2019-13.03.2020 110 days 2. B 14.03.2020-31.05.2022 (COVE) Period) 808 days 3. C 01.06.2022-17.08.2022 79 days Total 997 days 7. It is hereby submitted that in the case of the assessee, the detail as reported at serial no. B is of 808 days. It is hereby pertinent to mention here that the period mentioned in S. No. B deserves to be excluded and hence, there is delay of 189 days in the case of the assessee. 8. Now, with regard to the delay of 189 days, it is hereby submitted that a family dispute arose between the members of family and such dispute had taken very serious shape that the business of the assessee company came to a halt. Due to such dispute, the bank account of the company became NPA and the concerned Bank (SBI) had issued possession notice against the brothers of the family. The family dispute is evident from the copy of newspaper report dated 19.02.2013 placed in paper book-II at page no.1 , wherein a report had been published with respect to the dispute between the brothers i.e. directors. The copy of newspaper report (Page no. 1 of paper book-II) and the copy of the possession notice of State Bank of India (Page no. 2 of the paper book-II) 9. It is submitted that in fact, dispute has been there among the directors of the company since 2012 and even various FIR's were filed for the dispute (Copies of various FIR's filed is placed at page no. 3-18 of the paper book -II) and even the workers also filed police compliant for the violence (copy placed at page no. 19 of the paper book -II). Further, the directors had filed a civil suit against one another about the ownership of family business. Due to such serious dispute, they were not co- operating with each other but for some common matters relating to Income Tax, though, they were meeting such obligations upto the level of CTT(A) earlier but when the order of the CTT(A) was passed against the assessee, then situation worsened and none of the directors were on speaking terms even for the common matters and, as such, after the order of CTT(A) in the year 2019, none of the directors were co-operating with each other even with regard to the common matters and which is evident from the fact that civil suits and other issues of violence had arisen. 6 10. Then, there was a fire and heavy losses were there in the business premises of the erstwhile director who was actively engaged in the working of the assessee company and for this, the evidences are being furnished herewith in the Paper Book-II at page no. 20. Also one of the director namely Sh. Sunil Jasuja went into depression and, for which, the evidences (Page no. 21-30 of the of the paper book -II). However, finally the civil suit among the directors was finalized on 13.07.2022, Copy of the order is placed at page no. 31-46 of paper book -II and finally, the directors came into consensus and they agreed to take up the issue for filing the appeal before the Hon'ble TTAT, which was then filed on 17.08.2022 and copy of the order of civil suit dated 13.07.2022 is placed at page no. 31-46 of paper book -II. 11. We wish to place our reliance on the order of the Hon'ble Apex Court in the case of \"Esha Bhattacharya\" Civil Appeal No. 8183-8184 of 2013 in which it has been held that it has been opined that generally is preferring appeal, delay are required to be condoned in the interest of justice and the courts are not supposed to reject the condonation on technical ground as it is the duty of court to grant justice. 11. It is pertinent to mention here that the said judgment has been followed by the Amritsar Bench of ITAT in the case of Gurfateh Films and Sippy Grewal Productions in TTA No. 92/Asr/2022 dated 23.12.2021 in which the same principles have been followed. Copy of the order is placed at page no. 47-54 of paper book -27. 12. Even, the judgment of Apex Court in the case of \"Esha Bhattacharya' in Civil Appeal has been considered and followed by the Chandigarh Bench of the ITAT in the case of Punjab Agricultural University in TTA No. 661/CHD/2022, 492/CHD/2022, (Copy of the judgment is placed at page no. 55 to 73 of the paper book-II) in which, it has been held as under:- \"The expression 'sufficient cause' employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which sub serves the ends of justice, for that is the life-purpose of the existence of the institution of courts. The Ld. Judges emphasized on adoption of a liberal approach while dealing with the 7 applications for condonation of delay as ordinary a litigant does not stand to the benefit by lodging an appellate and refusal to condone delay can result in a meritorious matter being thrown out at the very threshold and the cause of justice being defeated.\" 13. Further, reliance is also placed on the judgment of Hon'ble ITAT Surat Bench in the case of Chirag P. Thummar vs. Principal Commissioner of Income-tax reported in [2024] 159 taxmann.com 1628 (Surat-Trib.) wherein, it has been held as under: \"Where assessee filed an appeal before Tribunal against order of Principal Commissioner passed under section 263 after a delay of 1740 days contending that there was a delay in filing appeal as income tax practitioner of assessee did not advise assessee to file appeal against order passed by Principal Commissioner under bona fide belief that order passed by Principal Commissioner was not appealable, mistake of lawyer or accountant was a good reason for condonation of delay, therefore, said delay of 1740 days was to be condoned\" 14. Further, the assessee also relies on the judgment of various courts in which following the judgment of the Apex Court, it has been held that the delay should be condoned where the assessee has a reasonable cause and also that if there is a mistake of the counsel that is a good reason for condonation of delay. Reliance in this regard has been placed on following judgments: • Manoj Ahuja (Minor) & ANR vs. Inspecting Assistant Commissioner reported in 150ITR 696. • CG Paul & Co. vs. Income Tax Officer, WAT Cochin Bench reported in 52ITD 276. • Income Tax Officer vs. Meghalaya Bonded Warehouse, TTAT Gauhati Bench reported in 60 ITD 219. • Judgment of TTAT Chandigarh Bench in the case of HP Cricket Association in TTA Nos. 110 & 11 l/CHD/2004. • Sudeshan Auto & General Finance vs. Commissioner of Income Tax, TTAT, Delhi B Bench reported in 60 ITD 177. • Shri Mukesh Mittal vs. Dy. Commissioner of Income Tax TTA Nos. 1187 & 1213/CHD/2018 (Chd.-Trib.) • Chirag P. Thummar vs. Principal Commissioner of Income Tax [2024] 159 taxmann.com 1628 (Surat-Trib.) 8 In light of our submissions as well as the judgments as quoted above, it is therefore very humbly requested that in view of the above said facts and circumstances, the delay as above may please be condoned. We hope our request will be acceded and oblige. The affidavit has also been filed of one of the Director and which is being is being reproduced as under: - \"AFFIDAVIT I, Prince Sagar S/o Sh. Ved Parkash Director in M/s Shakti Spinners Ltd. 5, Flower Dale Colony, Barewal Road, Ludhiana-141012 do hereby solemnly state and affirm as under:- 1. That I was a director in the company known as M/s Shakti Spinners Ltd. in Asstt. Year 2010-2011. 2. That against the order of CIT(A), the company had filed an appeal before the Hon'ble IT AT, Chandigarh Bench, Chandigarh on 17.08.2022, for which, the detail is as under:- Sr. No Particulars Date 1. Passing of assessment order in the case of the assessee u/s 143(3) of the Income Tax Act, 1961. 11.03.2013 2. Receipt of assessment order u/s 143(3) of the Act Income Tax Act, 1961. 21.03.2013 3. Filing of appeal before the Worthy CIT(A) within the due time. 16.04.2013 4. Passing of order of Worthy CIT(A) u/s 250(6) of the Income Tax Act, 1961 25.09.2019 5. Receipt of appellate order u/s 250(6) of the Income Tax Act, 1961 on Income Tax Portal. 25.09.2019 6. Due date of filing of appeal before the Hon'ble Bench of TTAT against the order of Worthy CIT(A). 24.11.2019 7. Actual date of filing of appeal before the Hon'ble ITAT Bench with a delay of 997 days. 17.08.2022. 3. That the delay in filing the appeal has occurred because of serious dispute among the directors, for which, there was a civil suit and also fire has broken up in the factory building and even the brothers were not in good terms, which is evident from the Newspaper's report and also that one of the director, who was looking into the matter had gone into 9 depression due to the above said reason of dispute and fire, for which, the evidences have been submitted in the paper book. 4. That though, the dispute has been running since long but due to intervention of certain elders and common friends, the matter regarding the Income tax were sort out for the time being and then due to worsened situation over a period of time after the receipt of the order of CTT (A) in September, 2019, none of the directors could involve in filing the appeal due to fear of repercussion against them. 5. Also, when after a very long time, the civil suit was decided by the Judicial Magistrate First Class on 13.07.2022 as per copy of the order being submitted and the matter had gone to the Police and the order shows the basic cause of serious dispute and even the cases were going on under Arms Act and there were injuries to the directors due to serious disputes and, as such, in the common matter everyone was scared to involve himself. 6. That it was only when the order of Civil Suit was passed and then due to the intervention of elders and relatives and friends, it was decided to take the interest in common matters regarding the appeal to be filed before the Hon'ble ITAT and, thus, the delay was occurred on account of the above said reasons and it is prayed that the same may, please, be condoned.\" 5. Along with the above, application and affidavit, supporting evidences in the form of 'paper book-2' have been submitted before us consisting 1 to 73 pages and it was argued before us that, there was serious dispute between the brothers, who were directors in the company and the same is evident from the newspaper report and even the FIR have been filed against one and another directors. The possession of the unit had been taken over by the 'State Bank of India' and the 'Civil Suit' about the ownership of the family business, was also filed. Though, initially one of the director, Sh. Prince Sagar was looking after the Income 10 Tax Matters, upto the proceedings before the CIT(A) but, the relations worsened and then there was fire in the independent unit of one of the Director, Sh. Prince Sagar on 17.12.2018. Thereafter, he went into acute depression due to shock and for which, evidences have been filed in the Paper Book. Further, it was argued that the 'Civil Suits' have been filed by the directors, against each other on account of the dispute and that 'Civil Suit' was finally, decided by way of order dated 13.07.2022 in the court of the 'Judicial Magistrate First Class', Ludhiana. Thereafter, on 17.08.2022, the appeal was filed before the ITAT. It was further argued that even during this intervening period, the bank account of the assessee company had become NPA and after excluding the \"COVID-19 period\", which came in between, the delay in filing of appeal is only 189 days. It was prayed that in view of the above said circumstances, the delay be condoned. The assessee relied upon the number of judgments as cited above, that the delay be condoned in the interest of justice and equity, as per the facts reproduced above. The Ld. DR argued, before us that the assessee could have filed the appeal in time and stated that the delay should not be condoned. 6. We have gone through the application of the assessee for condonation of delay along with the documentary evidences, as filed before us, and also the affidavit, of one of the director and find that there has been a serious dispute among the brothers, who had been the directors in the company, leading to the registration to the FIR, Civil Suits and their bank accounts had become NPA and Unit had been taken over by the State Bank of India and the dispute was finally settled on 13.07.2022, as per the 11 evidences filed before us and also that one of director, who was initially looking after the Income Tax Matters, the huge fire took place in his unit and due, to which, his entire business came to a halt and he went into depression as per the evidences filed before us. We have also taken note on the COVID-19 period, in between, and after considering the facts & circumstances as enumerated above, the delay in filing of appeal is condoned and the appeal is taken up for adjudication on merits. 7. Coming to the merits of the case, it was argued before us by the Ld. Counsel that the only ground of appeal is with regard to the addition on account of unsecured loans, from the directors and their family members and due to the dispute, complete confirmation from all the creditors could not be submitted, though, the ITRs and bank account statements of some of the lenders had been submitted, before the AO with complete address and PAN of the parties and interest had been paid to all such creditors. Such interest have been accounted for by the creditors in their return of income, for which, the computation of income had been filed before the Assessing Officer. It is borne out from the order of CIT(A) at page-6. It was also argued before us that the AO could have issued the summons u/s 131 to the remaining parties. But having not issued the summons to such parties wherein, the assessee had provided their PAN address and other particulars, no addition could be made, for which, the reliance was placed on case laws, as reproduced in the order of the Ld. CIT(A), at page no. 7 to 9 of his order. To prove the identity, genuineness and the creditworthiness of the remaining parties, were filed before the Ld. CIT(A). The Ld. CIT(A) forwarded the 12 same to the AO. concerned, for which, the remand report was received from the AO and that has been reproduced by the Ld. CIT(A) at para 3.4, page no. 10 to 12 of the order of the Ld. CIT(A). Again, after receiving the rejoinder of the appellant, the Assessing officer was directed by the CIT(A) to give comments on the merits of the submissions, made by the assessee on the basis of additional evidence, after due verification as per assessee's letter, dated 17.05.2016. 8. Another remand report was submitted by the Assessing officer as per para 3.6, page no. 12 & 13 of the order of Ld. CIT(A), for which the rejoinder was given by the assessee and it was brought to our attention from page no. 14, para 3 of the order of the Ld. CIT(A) that all the persons, who had advanced loan to the assessee were the family members. Brothers, had appeared in response to the summons u/s 131 issued by the AO and filed the copies of their respective income tax returns, copies of their bank account, showing that all the amount had been advanced through banking channels. During the course of hearing, the assessee further filed the copies of the bank accounts of some other amounts advanced by the family members and further pointed out that such evidences are borne out from the copies of the respective bank accounts of the lenders, it is clear that the amount has been cleared from their respective bank accounts as per submission, and the order of the Ld. CIT(A). It was further argued that each & every entry of the 'unsecured loan' is verifiable, for which, our attention was drawn from para 8 page 15 to 21 of the order of the Ld. CIT(A). 13 9. it was further argued before us that the Ld. CIT(A) has given the findings in his order and particularly from page 22 of the order, he has confirmed the part addition, despite the fact during the remand proceedings, sufficient and ample evidences with regard to the identity, genuineness and creditworthiness of the 'unsecured loan' had been given. All such persons are being assessed with the same Assessing Officer and their ITR copies, where even the interest received by creditor from the company had been disclosed in their respective returns, no omission have been pointed out, either by AO or by the Ld. CIT(A) to the documentary evidences furnished by the assessee before the AO and during remand proceedings. 10. The Ld. CIT(A) has dismissed the appeal only on the ground that the assessee had sufficient time to file the requisite information before the AO. The Ld. Counsel for the assessee argued that finding of the Ld. CIT(A) that the onus have not been discharged by the assessee is totally misplaced. The observation of the Ld. CIT(A) that merely furnishing of the PAN and confirmation and producing the financial statement is not enough, is not a correct observation, because as it is evident from the rejoinder to the remand report dated 04.08.2016 reproduced at page 14 of the order of the Ld. CIT(A) and in para 3, it has categorically been mentioned that in response to the summons issued by the AO during remand proceedings, all the persons had confirmed about the advancement of the loan to the company and filed the copies of their ITRs and also filed the copies of bank account statements of all the creditors through which, the cheques amounts advanced to the company had been cleared. 14 The Ld. AO also confirmed the same by obtaining information u/s 133(6) from State Bank of India, thus, under such circumstances, the findings of the Ld. CIT(A) is contradictory and against the evidences on record. The assessee relied upon the decision of the Hon'ble Apex Court in the case of 'Sh. Chunni Lai' reported in 211 ITR Statues Page 11 wherein, the Apex Court has held that the source of source cannot be questioned and also relied upon the decision of the Sh. Sewa Ram in ITA No. 327/Chd/2011 and the decision of Sh. Jawahar lal, Malerkotla in ITA No. 785/Chd/2015 and Timple Kumar vs. ITO in ITA NO. 509/Chd/2013 dated 16.07.2015 for the preposition, that where the assessee had furnished the details of the parties, who had advanced the unsecured loan, their names, addresses, PAN, confirmation and income tax returns have been filed, then under such circumstances, no addition could be made on account of the unsecured loans. 11. Regarding the second ground of appeal with regard to the disallowance of interest u/s 36(1)(iii) to the tune of Rs. 2,98,757/- on account of advance given for purchase of machinery and amount of Rs. 4,44,477/- on account of the amount given for the purchase of land totalling to Rs. 7,43,234/-, it was argued before us that the land was purchased adjoining to the factory premises of the assessee and it was being used for the purpose of the business. It was not meant for the personal use and, as regard the machinery was concerned, it was stated that the advance for machinery was given for the purchase of the new machinery for business purposes. It was further argued before us, that the assessee had sufficient interest free funds in the year under 15 consideration and also as on 31.03.2010, as per the following chart: Types of Funds As on 31.03.2010 (Rs. As on 31.03.2009 (Rs. in in Crores) Crores) Paid up share capital 5.06 5.06 Share Premium 1.71 1.71 Reserve and Surplus 0.78 0.78 TOTAL 7.55 7.55 The assessee relied upon the decision of the jurisdictional High Court in the case of 'Bright Enterprises Pvt. Ltd.' in ITA No. 224/2013 dated 15.10.2015, in which, the department appeal was dismissed by holding that the assessee's interest free funds were sufficient to cover, even interest free advances given to the sister concern. It was argued before us that in the present case, there was no such interest free advances, rather the amount have been utilized for the business purposes. Further it was submitted that the reliance has been placed by the Id. CIT(A) in the case of Abhishek Industries reported in 286 ITR 1 is misplaced, since that judgment was later on, over ruled in the case of 'Bright Enterprises' as cited above, and, thus, it was stated that under such circumstances, addition as sustained by the Ld. CIT(A) was not appropriate. 12. The Ld. DR relied upon the order of the Ld. AO and Ld. CIT(A) and also stated that onus was on the assessee to discharge its burden on account of the unsecured loan. Mere filing of confirmation 'with PAN' is not sufficient and sought, the confirmation of the part addition as sustained by the Ld. CIT(A). 13. We have considered the arguments of the Ld. Counsel and the Ld. DR and also the 'paper book' and 'case laws' relied upon by the assessee’s counsel. It is a fact that the complete evidences of the unsecured loan could not be submitted before the Ld. AO 16 during the assessment proceedings, due to the serious dispute amongst the brothers, who were the directors in the company and that was made good during the course of hearings before the Ld. CIT(A), for which, a remand report was called for on two occasions. The AO had even issued summons to the creditors and all such creditors presented before the AO. It is evident from the following submissions dated 04.08.2016 as reproduced by the Ld. CIT(A) in his order at page 14. The relevant part is being reproduced as under: 3. On the directions of Honorable CIT (A) - III, the AO had issued summons to all the persons who had provided unsecured loans to the appellant company to be present before him and file confirmations of accounts of unsecured loans given to the company. It is worth mentioning that all the persons have duly attended the summons and have presented themselves before the AO. All the persons have also submitted the confirmations of accounts of the unsecured loans given to the company. The copies of income tax returns and copies of bank statements of bank accounts maintained in State Bank of India through which the cheques of addition to unsecured loans have been issued have also been submitted Further, the original pass book of the bank account maintained in State Bank of India showing all the entries of clearance of cheques was duly produced before the AO for verification. All the persons have duly recorded their statements before the Ld. AO confirming the transactions with the company. Further, the Ld. AO has called the information under section 133(6) of the Income Tax Act, 1961 from State Bank of India, which has duly confirmed the transactions. Keeping in view the above, it is evident that the identity of the creditors, their creditworthiness and genuineness of the transactions has been duly established in the case and thus, the addition made of Rs. 9864000/- on this account is liable to deleted in toto. 14. Even in respect of three parties, certain further evidences were furnished in respect of the family members viz a viz their ITRs, 17 copies of bank account, from where, the relevant cheques had been cleared and the Ld. CIT(A) has not been able to pinpoint any omission/error in respect of such documentary evidences. Even a detailed chart has been submitted before the AO during the remand proceedings as reproduced in the order of the Ld. CIT(A) and no discrepancy have been pointed out by the Ld. CIT(A). Regarding part addition it is to be seen that further when during the remand proceedings, the creditors have appeared before the Ld. AO and confirmed having advanced the loan and submitted the documentary evidences. Later on also and all creditors had disclosed interest income as received from the company, there was no justification for upholding the part addition of 'unsecured loan'. Further, we may add here that as per the binding judgments, the 'source of source' cannot be questioned and the reliance by the Ld. Counsel on the judgments of the ITAT Chandigarh Bench as cited 'supra' are quite apt and the addition on account of unsecured loan as sustained by the Ld. CIT(A) is deleted. 15. Regarding the disallowance of interest which have been confirmed by the Ld. CIT(A) as pointed out by the Ld. Counsel of the assessee that the assessee have much more 'interest free funds' as per the chart reproduced above and further, the advance for machinery and purchase of land is for business purposes. As such, the disallowance of interest was not called for and further, the judgment of the 'Abhishek Industries' as cited by the Ld. CIT(A) has been overruled by later judgment of the Hon'ble Punjab & Haryana High Court in the case of 'Bright Enterprises', wherein it has been held that, in case, interest free funds are 18 much more than the interest fee advances, no disallowance of interest is called for, though, in the present case, the amount advanced is for purchase of machinery and land is for business purposes, hence the disallowance as made by the Ld. CIT(A) is hereby deleted. We have considered all the issues raised in grounds of appeal. We have also gone through the orders of authorities below and the arguments made by the Ld. DR. We find that the assessee has produced all the required relevant evidence before the Ld. CIT(A) who has got a detailed Remand Report from the AO. After going through all documents available on the record and, arguments as well as case laws cited by the Counsel of the Assessee, assessee’s appeal on different grounds in appeal before us are allowed. 16. In the result, Assessee’s appeal is allowed. Order pronounced in the open Court on 11/04/2025. Sd/- Sd/- राजपाल यादव क ृणवȶ सहाय (RAJPAL YADAV) (KRINWANT SAHAY) उपाȯƗ/VICE PRESIDENT लेखा सद˟/ ACCOUNTANT MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "