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TMI Blog2020 (10) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... cided in favour of assessee. - ITA No. 6051/MUM/2018 - - - Dated:- 10-9-2020 - Shri S. Rifaur Rahman (AM) And Shri Ram Lal Negi (JM) For the Assessee : Shri J P Bairagra (AR) For the Revenue : Shri Michael (DR) ORDER PER RAM LAL NEGI, JM This appeal has been filed by the revenue against the order dated 19.07.2018 passed by the Commissioner of Income Tax (for short the (CIT (A) 24, Mumbai, for the assessment year 2012-13, whereby the Ld. CIT A) has partly allowed the appeal filed by the assessee against the assessment order passed u/s 143 (3) r.w.s. 147 of the Income Tax Act, 1961 (for short the Act ). 2. Brief facts of the case are that the assessee company filed its return of income for the assessment year under consideration declaring total income of ₹ 6,33,150/- under the normal provisions of the Act and ₹ 7,53,865/- under section 115JB of the Act. Subsequently, on the basis of information received from the DGIT (Inv.), Mumbai to the effect that the assessee company had obtained bogus entries from M/s Shipra Fabrics Pvt. Ltd. amounting to ₹ 26,37,951/- and from M/s Victory Sales Pvt. Ltd. amounting to ₹ 51,82,213/-, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A), the revenue is in appeal before the Tribunal. 4. The revenue has challenged the order of the Ld. CIT (A) on the following effective grounds: 1. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in directing the Assessing Officer to delete the entire disallowance of ₹ 2,07,38,443/- made on account of alleged bogus unsecured loan, without appreciating the fact that the said creditors/parties were found to be accommodation entry provider/bogus entity as per findings given by the Investigation Wing, Income Tax Department, Mumbai. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in directing the Assessing Officer to delete the entire disallowance made on account of alleged unsecured loan, without appreciating the fact that the assessee had neither filed confirmation for loan nor produced any evidences/the ledger account register during the course of assessment proceedings, to substantiate its claim that the loans from alleged parties we actually availed for the business purpose . 5. Before us, the Ld. Departmental Representative (DR) submitted that the loans amounting to ₹ 2,07,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee which are alleged as unexplained cash credit to make addition by invoking section 68 of the Act, no addition can be made when such borrowings are repaid. 7. The Ld. counsel further submitted that this issue is covered by the decision of the Mumbai Bench of the Tribunal in group concern of assessee s company M/s Manba Finance Ltd., ITA No. 1448, 1449 and 1467/Mum/2007, wherein the Tribunal has decided the identical issue in assessee s favour and dismissed the revenue s appeal. The Ld. counsel further relied on the decision of Mumbai Tribunal in the case of ACIT vs. H.R. Pujara Builders, ITA No. 5307/Mum/2017, DCIT vs. Chetan R. Shah (HUF) ITA No. 5781/Mum/2017, DCIT vs. Marathon Fiscal Pvt. Ltd. ITA No. 5783/Mum/2017, ITO vs. M/s Mayuresh Logistics Pvt. Ltd. (2019) TIOL 1421 ITAT, Mumbai and ITO vs. Celebrity Lifespace Pvt. Ltd. ITA No. 6301/Mum/2017 to substantiate his contention. 8. We have heard the rival submissions of the parties and perused the material on record including the cases relied upon by the parties. The Ld. CIT (A) has deleted the addition made by the AO holding that the AO has not brought any fact on record to established that cash was introduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er requested that cross examination of Pravin Jain may be allowed. The assessee further submitted that Pravin Kumar Jain has retracted his earlier statement. So far as the loan amounting to ₹ 1,25,00,000/- from the other companies is concerned, the assessee submitted balance sheet of all the company to show that the lending companies has enough reserves and share capital. The assessee further submitted that it has furnished the confirmation from the parties. However, the AO rejecting the contention of the assessee made addition of the said amount to the income of the assessee. In the first appeal, the Ld. CIT (A) deleted the addition on legal ground as well as on merits. The revenue challenged the action of the Ld. CIT (A) before the ITAT. The coordinate Bench of the Tribunal upheld the findings of the Ld. CIT (A) holding as under:- 33. We have carefully considered the submissions and perused the records. We find that the first issue in this case relates to the addition of unsecured loan taken from corporate entities u/s. 68 of the Act. In this regard, it is noted that it is the claim of the assessee which has been found correct by the ld. CIT(A) that the assessee has du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne the deponent, if required by the assessee. In this regard, we note the submission that these amount to gross violation of natural justice and the assessment is vitiated as the assessment is bad in law and requires to be quashed in view of the following decisions: 1. Andaman Timber Industries v. C.C.E. (2015) 281 CTR 241 (SC) Wherein it is held: Not allowing the assessee to cross examine the witnesses by the Adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullify in as much as it amounted to violation of principles of Natural Justice because of which the assessee was adversely affected. The order was vacated. 2. Kishinchand Chellaram v. C.I.T. (1980) 1251TR 0713 (SC) 3. Ponkunnam Traders v. Addl. I.T.O. Anr. (1972)83ITR508(Ker) 4. ACIT v. Tristar Jewellery Exports Pvt. Ltd. ITA/7593/MUM/2011 (Mumbai ITAT) 36. As regards the merits of the addition, it is noted that the assessee had supplied the following in this regard: (i) Confirmation of the party who gave the loan. (ii) Copy of Return of Income filed by them alongwith PAN No. of the loanees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd has doubted the creditworthiness of the corporate entities on the ground that they have taken loans and share capital and share premium from other corporate entities. In this regard, it is also noted that the A.O. has referred to the provision of section 68 of the Act. Section 68 and proviso thereto reads as under: Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication of the respondent and invoked Section 68 of the Act to treat the amount of ₹ 7.53 crores i.e. the aggregate of the issue price and the premium on the shares issued as unexplained cash credit within the meaning of Section 68 of the Act. This addition was deleted by the CIT(A) and the Tribunal. Before the High Court, the department contended that the proviso to Section 68 of the Act which was introduced with effect from 1st April, 2013 would apply in the facts of the present case even for A.Y. 2008-09. The basis of the above submission was that the de hors the proviso also the requirements as set out therein would have to be satisfied. HELD by the High Court dismissing the appeal: (i) We find that the proviso to Section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds obtained by these corporate entities are bogus or they are assessee s own funds being circulated. In this regard, we note that in the identical situation, this tribunal in the case of Asst. CIT vs. Shri Dilip Chimanlal Gandhi (in I.T.A. No.7079/Mum/2016 vide order dated 01.08.2018) the ITAT has held as under: 22. Upon careful consideration we note that in support of the explanation of the unsecured loans, the assessee has submitted following details before the assessing officer: I. PAN details of creditors II. Constitution and address of the creditors III. Particulars of income-tax returns filed by the creditors. These show that the creditors are legitimate business entities, having the ability to advance the impugned loans to the appellant,] IV. Confirmatory letters given by the creditors V. Audited financial accounts (including balance sheets) of the creditors [These show that the loans are duly reflected in the books of account of the creditors.] VI. Relevant bank statements of the creditors [These show that the loan amounts were paid through legitimate banking channels. Further these bank statements do not reflect any movement of cash, es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Metal Pvt. Ltd. (2013) 96 DTR (Del) 200 and other decisions. In this connection, the ld. DR has relied upon the decision of the Hon ble Karnataka High Court in the case of Fidelity Business Services India Pvt. Ltd. (in ITA No. 512/2017 dated 23/07/2018) for the proposition that if there is some lack of investigation, the ITAT is competent to set aside the matters. 41. We have carefully considered this proposition. We note that the ld. Counsel of the assessee has referred to several case laws in this regard that when the assessee has supplied all the documents the onus is discharged. In this regard, the ld. Counsel of the assessee has placed reliance upon the several case laws including that from Hon'ble Delhi High Court in the case of Gangeshwari Metal Pvt. Ltd. (supra), CIT v. Varinder Rawley (2014) 366 ITR 232 (P H), Hon ble Gujarat High Court decision in the case of CIT v. Sachitel Communications P. Ltd. (2014) 227 Taxman 219 (Mag) and others. 42. In our considered opinion, these case laws duly support the proposition canvassed by the assessee. In our considered opinion, the A.O. has not brought on record any cogent, adverse material to rebut the credibility of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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