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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
These Cross appeals are arising out of the order of the Commissioner of Income Tax (Appeals)]-29, Mumbai, [in short CIT(A)], in dated 19.09.2018. The assessment was framed by the Income Tax Officer, Ward-19(1)(1), Mumbai (in short ITO/ AO) for the A.Y. 2010-11 vide order dated 21.012.2016 under section 147 read with section 143(3) of the Income- tax Act, 1961 (hereinafter ‘the Act’).
The first issue in this appeal of Revenue is against the order of CIT(A) deleting the addition made by Assessing Officer treating the loan transaction as unexplained under section 68 of the Act. For this, Revenue has raised the following ground No.1: -
1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in holding that mere establishing of the identities of the lenders of loan together with the fact that the transactions were made through cheques could be itself establish the genuineness of the transactions.”
Brief facts are that the Assessing Officer during the course of assessment proceedings on examination of tax audit report noted that during the year under consideration the assessee has received “4.3.1 During the appellate proceedings, the appellant has submitted loan Confirmations, copies of the Bank Statements and Copies of Income Tax Return of the loan creditors, etc. If the above referred principles are applied to the fact of the case under consideration, it can be seen that the identity of the creditors has been established as they are having PAN and they are regularly filing return of income. The genuineness of the transaction is established from the fact that both the acceptance and repayment of loan 4.3.11. The three criteria required for establishing the, genuineness of the loans are identity of the creditor, credit worthiness of the creditor and the genuineness of the transaction. All the 3 criteria have been fulfilled in this case. The party is existing and has confirmed giving the loan. They are also assessed to income tax regularly and transactions have been made.4hrough banking channels.
43.12. In view of the facts and circumstances mentioned above, in my opinion, the appellant has submitted sufficient documents to prove the genuineness of the loan Aggrieved, now Revenue came in appeal before Tribunal.
We have heard the rival contentions and gone through the fact and circumstances of the case. The assessee has complied with the basic conditions of the provision of 68 by submitting the confirmations of loan, copies of the Bank Statements and Copies of Income Tax Return of these four loan creditors. We noted from the assessment order that although the Assessing Officer has written a very elaborate order but he has missed the basic three ingredients of the provision of section 68 of the Act. Hence, not carried any enquiry qua these three conditions rather he mainly relied on the search conducted in the case of Bhawarlal Jain Group of cases. It is also not clear from the assessment order whether these loan parties are genuine or non-genuine and the amount received are unexplained but how. It is a fact that the assessee has discharged its primary onus by filing all these documents which the Assessing Officer
Coming to another two issues, i.e. deletion of addition by CIT(A) of commission paid at the rate of 3% on the above loans and also deleting the addition of interest on the above loan transactions as non-genuine. For this Revenue has raised the flowing ground No. 2 and 3:-
“2. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs.,6,67,500/- and added under section 69C on account of commission paid @3% on account of loan received.
3. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has not erred in allowing the interest of Rs.8,74,134/- paid to the lender when the loan transaction was not genuine.”