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TMI Blog2021 (10) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... the action of the ld. CIT(A) on this point. Addition on account of loans received - AO added the loan as received from the said society on the ground that directors of the assessee, their family members and friends are the office bearers/promoters of the society and further confirmation, ITR, Bank statement and PAN of the loan creditor was not provided - CIT-A deleted the addition - HELD THAT:- From the perusal of the copy of account of the society in the books of accounts of the assessee for the year under consideration and vice-versa and also for the subsequent year filed by the assessee reveals that the assessee had repaid entire amount of loan as taken from the society in the subsequent year. We find that the assessee had duly filed its copy of account in the books of the society which was also tallied with the copy of account of the society in the books of accounts of the assessee, therefore, the copy of account of the assessee in the books of the society is the confirmation itself which was filed by the assessee during the course of assessment proceedings AO was not justified in observing that confirmation was not filed by the assessee during the course of assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of loss by the assessee - AO after adjusting the other income disallowed the loss on the ground that the books of account have been rejected and profit has been estimated - CIT(A) deleted the addition - HELD THAT:- CIT(A) allowed the loss on the ground that the assessee had properly maintained its books of accounts and the same was also examined by the Assessing Officer himself as the assessing officer passed detailed order after considering the books of accounts produced before him. Hence, there was no justification for the Assessing Officer to further disallow loss as claimed by the assessee in its return of total income. Even before us, the Revenue could not controvert the finding of the ld. CIT(A) by bringing any contrary material on record. Therefore, we do not find any reason to interfere with the order of the ld. CIT(A). X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in allowing the claim of loss claimed by assessee of ₹ 2,84,555/- without considering the findings of the Assessing Officer. 2. Ground nos.1 to 3.1 relate to deletion of addition of ₹ 2,42,25,698/- on account of unexplained cash credits made by the Assessing Officer to the total income of the assessee company u/s 68 of the I.T. Act. Brief facts as culled out from the records are that the Assessing Officer added the following amounts as received from the directors of the assessee company: S.No Name of the loan creditors PA No Amount [in Rs] 1 Pramod Khandelwal ADUPK6514C 74,50,000 2 Satyendra Bhawasar ACIPB0657L 89,20,000 Total 1,63,70,000 The assessee was asked to justify the identity, creditworthiness and genuineness of the loan and in reply, the assessee filed the following details and documents:- "[i] the assessee has received entire amount of loan through account payee cheques. [ii] PA No of the loan creditors have also been provided. [iii] Confirmation of loan creditors have also been filed. [iv] Income tax return along with acknowledgement." However, the Assessing Officer made additon of ₹ 1,63,70,000/- in the income of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing officer was not justified in adding the loan amount to the income of the appellant more so when the loan was received from the directors of the company itself. I find merit in the submission of the appellant. 3.5 Further, if the assessing officer considered the bank statement as necessary, he could have directly called the same from the loan creditors but the assessing officer did not choose to do so. 3.6 In Para {vi} on Page No 9 of the assessment order, the assessing officer himself stated that in case of loan from outside parties the appellant need to file copy of confirmation only and in last line the assesssing officer himself stated that the assessing officer cannot ask the appellant to prove the source of source. Last line of Para [vi] of Page No 9 reproduced as under:- "[vi]........................................................... ........................... ................... ...... .... .... This has now been judicially established that the AO can not ask the appellant to prove the source of source. " 3.7 In Para [vii] on Page No 9 & 10, the assessing officer himself noted the contradictory version wherein it was stated that the assessing officer can i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee heavily relied on the finding of ld. CIT(A) and reiterated the submissions made before the Revenue Authorities. Reference was also made to the paper book and written submission/judicial pronouncements contending that ld. CIT(A) having appreciated the facts and material on record in the light of the relevant judicial pronouncements rightly deleted the addition. Learned Counsel for the assessee relied upon the following judicial pronouncements: Murlidhar Lahorimal vs CIT, 280 ITR 512 [Gujarat]; People General Hospital Limited, 09 ITJ 481 [Indore]; CIT vs Dwarkadhish Investment [P] Ltd, 45 DTR 281 [Delhi] CIT Vs Metachem Industries, 245 ITR 160 (MP) Ashok Pal Daga Vs CIT, 220 ITR 452 (MP) CIT Vs Barjatiya Children Trust 225 ITR 640 (MP) CIT vs Orissa Corporation (P) Ltd, 159 ITR 78 (SC) CIT V/s Creative World Telefilms Ltd, 333 ITR 100 (2011) (Bom), Sumer Chand Jain Vs CIT, 292 ITR 241 (MP) 7. We have heard rival contentions and perused the records placed before us and carefully gone through the decisions referred by the ld. CIT(A) in the impugned order. We find that the assessee filed PAN of the loan creditors, confirmation of loan creditors to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid documents in support of its claim and therefore the assessee had properly discharged onus lying on it. We further find that the assessee in addition to the aforessaid papers also filed the following documents: [i] Copy of account of the assessee in the books of the loan creditors and contra account in the books of the appellant. [ii] Copy of bank statement of Shri Satyendra Bhawsar with Standard Chartered Bank and with Punjab National Bank duly highlighting the entries related to the loan as taken by the assessee from the loan creditor. [iii] Copy of bank statement of Shri Pramod Khandelwal with Axis Bank Limited and with HDFC Bank duly highlighting the entries related to the loan as taken by the assessee from the loan creditor. [iv] Copy of personal balance sheet of the loan creditors wherein the amount as advanced to the assessee was properly reflected. In view of the above facts, we find that it is not the case that loan creditros refused to have advanced the amount of loan to the assessee rather the assessee through documentary evidences proved that the amount of loan was received through account payee cheques and income-tax returns of the loan creditors were a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctorily discharged. Whether that person is income-tax payer or not or from where he has brought this money is not the responsibility of the firm. The moment the firm gives satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be income of the firm for the purposes of income-tax. It is open for the AO to take appropriate action under s. 69 of the Act against the person who has not been able to explain the investment. In the present case, there is the concurrent finding of both the CIT(A) as well as of the Tribunal that the firm has satisfactorily explained the aforesaid entries. 6. We are, therefore, of the opinion that the view taken by the Tribunal is correct and the aforesaid question is answered against the Revenue and in favour of the assessee." 9. Hon'ble Jurisdictional High Court in the case of Ashok Pal Daga Vs CIT as reported in 220 ITR 452 has held as under: "7. As the applicant satisfied the authority as to the identity of the third party and also supplied the relevant evidence showing prima facie that the entries were not fictitious, the init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises." 12. Hon'ble Bombay High Court in the case of CIT V/s Creative World Telefilms Ltd as reported in 333 ITR 100 (2011) in an identical case held as under: "In the case in hand , it is not disputed that the assessee had given the details of name and address of the shareholder, their PAN/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and reach the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement "not traceable". In our considered view, the Assessing officer ought to have found out their details through PAN cards, bank account details or from their bankers so as to reach t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the assessee, their family members and friends are the office bearers/promoters of the society and further confirmation, ITR, Bank statement and PAN of the loan creditor was not provided. 16. Being aggrieved, the assessee challenged the action of the Assessing Officer before the ld. CIT(A). The ld. CIT(A) having gone through the facts, submissions and judicial pronouncements thereof deleted the addition. The relevant discussion made by ld. CIT(A) is reproduced hereunder: "4. This ground of appeal is with regard to the addition of ₹ 78,55,698/- made on account of loans received by the appellant from Satyamitra Vyaparik Suraksha Sahakari Sanstha Maryadit. The assessing officer has added the loan as received from the society for the following reasons:- 4.1 The appellant company maintianing is overdraft account with SMVSS [Satyamitra Vyaparik Suraksha Sahakari Sanstha Maryadit ] and limit of the appellant was of ₹ 80 Lacs. The appellant has submitted that it used its overdraft account with the society with regular intervals , withdrew cash and also deposited amount in case of surplus amount with the appellant company. The appellant has claimed that the copy of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire amount of loan as taken from the society. The assessing officer was not correct in saying that confirmaiton was not filed by the appellant during the course of assessment proceeding. However, the appellant had filed copy of account of the appellant in the book of the society and the same was also tallied. The copy of account of the appellant in the book of the society is the confirmation which was filed by the appellant. There was no set format for the confirmation but the account balance of the loan account was confirmed by the loan creditors in any mode called confirmation. In the present case copy of account of the appellant in the society is called confirmation." 4.3 The appellant also relied the decisions as referred below which were also relied upon in the Ground Nos 2 & 3:- Murlidhar Lahorimal vs CIT 280 ITR 512[ Gujarat] People General Hospital Limited 09 ITJ 481 [ Indore] CIT vs Dwarkadhish Investment[P]Ltd 45 DTR 281 [Delhi] 4.4 That in view of the above, it was submitted by the appellant that addition on account of overdraft loan as taken by the appellant made by the assessing officer was neither correct nor proper. I have carefully considered the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee because it is not the business of the assessee that the society is filing its income-tax return or not. We also find that the assessee during the course of assessment proceedings filed copy of confirmation of accounts in respect of amount as received by the assessee from that society. Thus, there was no justification for making addition to the total income of the assessee on account of loan taken from Satyamitra Vyaparik Suraksha Sahakari Sanstha Maryadit. We further find that befoer the ld. CIT(A), the assessee also filed copy of income-tax return along with the computation of income of the said society as filed for the assessment year 2011- 12 on 19-03-2012. Since, the said return had already been filed by the said society with the Revenue, the Assessing Officer should have collected the same from his counterpart. Further, we find that the society had many members and the said society was engaged in the business of accepting deposits from its members and also advancing funds to its members and the assessee was having a limit with the society of ₹ 80 lakhs and also entered into regular business transactions with that society. From the perusal of the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of closing WIP, bills were raised by the assessee in the subsequent years and income related to the same had also been offered for tax in those years. The income offered by the assessee was accepted in the Assessment Year 2013-14. The Assessing Officer observed that the assessee company has been contracted to develop the colony called Treasure Fantasy at Rau, Indore by constructing multistoried building and row houses. It was also observed that the assessee company is only developing the colony on the pre-determined rates and terms and conditions reached between it and Wander land Real Estate P. Ltd. (in short WREPL). In reply, the assessee explained that it is assigned work for construction of multistoried building only. The assessee is neither assigned the work for deveopment of colony nor construciton of raw houeses as observed by the Assessing Officer but the assessee was assigned work for construction of Multistoried flat only at pre-defined rate. The Assessing Officer further observed that the assessee company also engaged in its own construction activities i.e. development of another colony in its own name and also engaged in the construciton of the building and row ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 7,73,04,298/- as incurred by the assessee was for work contract or for its own contract and if the amount of expenditure claimed at ₹ 7,73,04,298/- includes expenditure on self project, the same is liable to be disallowed and directed to be capitalised. In reply, the assessee explained that the assessee company itself capitalised entire expenses as related either for work contract or for own project but billing for the same was not raised and the assessee has incurred cost of the material and labour to the tune of ₹ 7,73,04,298/- in the year under consideration and at the same time, closing WIP was calculated at ₹ 6,81,37,662/- and claimed revenue expenses of ₹ 92,47,336/- only agaisnt which bill of ₹ 1,05,89,210/- was raised in this year, therefore, the observation that expenses as incurred for own project was not capitalised was not correct. The Assessing Officer also observed that the assessee has incurrred development expenses of ₹ 7,73,04,298/- and bill was raised for ₹ 1,05,89,210/- only and therefore substantial receipt remains to be offered as income even when the assessee has followed mercantile system of accounting. In repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/-. 21. Being aggrieved, the assessee challenged the action of the Assessing Officer before the ld. CIT(A). The ld. CIT(A) having gone through the facts and submissions thereof deleted the addition. 22. Being aggrieved, the Revenue is in appeal before this Tribunal. Ld. Departmental Representative(DR) vehemently argued supporting the order of the Assessing Officer. 23. Per contra Ld. counsel for the assessee heavily relied on the finding of ld. CIT(A) and reiterated the submissions made before the Revenue Authorities. Reference was also made to the paper book and written submission contending that ld. CIT(A) having appreciated the facts and material on record rightly deleted the addition. 24. We have heard rival contentions and perused the records placed before us and carefully gone through the decisions referred by the ld. CIT(A) in the impugned order. Having gone through the aforesaid observations of the Assessing Officer and replies thereof by the assessee, a summary of expenses as incurred for own project of the assessee and expenses as incurred for construction contract are tabulised as under: S.No Description Own Project Work Contract Total [Rs] 1 Opening WIP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Facts as culled out from the orders of Revenue Authorities are that the assessee had shown loss of ₹ 4,41,259/- in the computation of total income. However, the Assessing Officer after adjusting the other income of ₹ 1,56,705/- disallowed the loss at ₹ 2,84,555/- on the ground that the books of account have been rejected and profit has been estimated. Being aggrieved, the assessee challenged the action of the Assessing Officer before the ld. CIT(A) and ld. CIT(A) deleted the addition considering the facts and submission thereof. 26. Being aggrieved, the Revenue is in appeal before this Tribunal. Ld. Departmental Representative(DR) vehemently argued supporting the order of the Assessing Officer. 27. Per contra Ld. counsel for the assessee heavily relied on the finding of ld. CIT(A) and reiterated the submissions made before the Revenue Authorities and submitted that ld. CIT(A) having appreciated the facts and material on record rightly deleted the addition. 28. We have heard rival contentions and perused the records placed before us. We find that ld. CIT(A) allowed the loss on the ground that the assessee had properly maintained its books of accounts an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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