2017 (12) TMI 1253 - AT - Income Tax

Unsecured loans unexplained - amount taken from Ghisubhai Jain and Vishal Jain HUF - Held that - Identity of these parties who were basically investors / customers of the project undertaken by the assessee are clearly proved and also genuineness of the total investment of ₹ 39 lakhs in the project of the assessee firm was proved. Under these circumstances, considering the totality of facts and circumstances of the case, we do not find any merit in the addition of ₹ 39,00,000/- so made with respect to the amount taken from Ghisubhai Jain and Vishal Jain HUF. In respect of loan payment from Pradeep Dharmesh Poddar, the assessee has filed confirmation dated 16/12/2010 and 09/08/2011. The full particulars and PAN Number of the loan creditor was also filed. Assessee has repaid loan of ₹ 7,00,000/- on 26/09/2009 and ₹ 8.81 Lakhs on 31/03/2010. We have considered rival contentions and found from record that in respect of Pradeep Dharmesh Poddar, the assessee has discharged its initial burden and also after filing confirmation has repaid the entire amount of loans on the dates discussed above, we accordingly do not find any merit for the addition of ₹ 15,81,000/- made in respect of Pradeep Dharmesh Poddar. Similarly , in respect of loan of ₹ 4,00,000/- taken from Shah Dhirajlal Harilal HUF and ₹ 1,50,000/- from Shah Dhirajlal Harilal HUF, the assessee has discharged its primary onus, accordingly, no addition is warranted. AO is directed to delete the addition in respect of above loan creditors. In respect of loan taken from Lala Ji, we found that assessee has not discharged its primary onus of proving the identity and genuineness of loan transaction. Accordingly, we confirm the same. - Decided partly in favour of assessee. Disallowance of brokerage paid to Mr.Jayesh Bhanshli - Held that - We found that the Ld. Assessing Officer merely relying upon the statement of Mr.Vijay Bhanushali, brother of Mr. Jayesh Bhanushali, in which he has stated that Mr. Jayesh Bhanushali has not rendered any services to M/s. Tirupati Construction had disallowed the same. However, Mr. Vijay Bhanushali does not have any rights or locus-standi to comment on the transactions of the assessee with the third parties and also, the same is not reliable. No merit for the disallowance of commission paid to Mr. Vijay Bhanushali on which TDS has also been deducted by the assessee at source. We direct accordingly.

Summary

Issues Involved:
1. Addition of unsecured loans as income.
2. Assumption of jurisdiction under section 143(3) read with section 153C.
3. Disallowance of brokerage expenses.

Detailed Analysis:

1. Addition of Unsecured Loans as Income:
The primary issue was the addition of unsecured loans amounting to ?1,45,27,334/- as income by the Assessing Officer (AO) due to insufficient confirmations. The CIT(A) deleted most additions but confirmed ?64,52,000/- for specific creditors. The assessee argued that the loans were genuine, providing confirmations and other documents. The Tribunal noted that the assessee had filed necessary confirmations, including names, addresses, PANs, and bank statements, and had repaid portions of the loans. The Tribunal also considered the High Court's decision, which indicated the civil nature of the disputes involving some creditors. The Tribunal concluded that the assessee had discharged its burden of proof for most creditors and deleted the addition of ?60,31,000/- but confirmed ?4,21,000/- due to insufficient evidence.

2. Assumption of Jurisdiction under Section 143(3) read with Section 153C:
The assessee challenged the AO's assumption of jurisdiction under section 143(3) read with section 153C. The Tribunal upheld the AO's jurisdiction, noting that the AO had correctly assumed jurisdiction. The addition of ?64,52,000/- was addressed in the first issue, with the Tribunal deleting ?60,31,000/- and confirming ?4,21,000/-.

3. Disallowance of Brokerage Expenses:
The assessee contested the disallowance of ?1,26,000/- paid as brokerage to Mr. Jayesh Bhanushali. The AO disallowed the expense based on a statement from Mr. Vijay Bhanushali, Jayesh's brother, claiming no services were rendered. The assessee provided comprehensive documentation, including income tax returns, audit reports, and TDS details, to substantiate the brokerage payment. The Tribunal found the documentary evidence credible and noted that Mr. Vijay Bhanushali's statement was unreliable for transactions involving third parties. Consequently, the Tribunal directed the deletion of the disallowance.

Conclusion:
The Tribunal provided a detailed analysis of each issue, considering the evidence and legal precedents. The final judgment allowed the assessee's appeal in part, deleting most of the additions related to unsecured loans and the disallowance of brokerage expenses, while confirming a minor portion of the loan addition due to insufficient evidence. The Tribunal's decision was pronounced in open court on 19/12/2017.