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TMI Blog2021 (10) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... e. despite the assessee failed to provide necessary evidences to prove the genuineness or transactions and creditworthiness of the persons giving advances. 2. Whether on the facts and in the circumstances or the case, Ld. CIT (A) is justified in deleting the additions of Rs. 1,59.30.060/- made u/s 68 of the I.T. Act in respect of unsecured loan from various persons, even though their creditworthiness was not proved. 3. Whether on the facts and in the circumstances of the case, , Ld. CIT (A) is justified in deleting the additions of Rs. 10,18.500/- on account or disallowances or interest on property claimed by the assessee by holding that similar claim made by the assessee was allowed in subsequent year. 4, Whether on the facts and in the circumstances or the case, Ld. CIT (A) is justified in deleting the additions of Rs. 9,15.600/- on account of disallowances or claimed of interest out of income from other sources. by holding that similar claim made by the assessee was allowed in subsequent year. 5. Whether on the facts and in the circumstances or the case Ld. CIT (A) is justified in holding that since the assessee was having agricultural land, he should have agricultural i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enged the action of the Assessing Officer before the ld. CIT(A) who called for the remand report and after having gone through the facts/circumstances, material and submissions thereof deleted the addition. The Operative part/findings recorded by the ld. CIT(A) are reproduced hereunder: "..........The appellant during the course of hearing filed copy of confirmation letter as filed before the assessing officer, copy of affidavit and copy of registry in respect of land actually sold and registered in the name of Shri Rakesh Agrawal. These papers were forwarded to the assessing officer but the assessing officer in his remand report re-iterated the same facts as stated in the assessment order. The appellant during the course of hearing furnished complete details in respect of advances as received by him against the sale of Agricultural land through cheques and also in cash, details of landsold to Shri Rakesh Agrawal including the registry as provided which was also made available to the assessing officer mentioning the details of cheques as actually received by the appellant and significant amount of cash which was adjusted in these two registry. The appellant has provided the PA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments filed during the course of appellate proceedings. The Assessing Officer submitted remand report dated 05-04-2017 which is filed on page nos. 187-193 of the paper book. On perusal of the remand report, the ld. CIT(A) found that the Assessing Officer did not comment on any of the documents filed by the assessee during the course of the appellate proceedings rather the Assessing Officer simply reiterated the findings of the then Assessing Officer. Thus, it is clear that the assessee filed ample documentary evidences to establish the identity and creditworthiness of Shri Rakesh Agrawal and genuineness of the transaction entered into with him. Therefore, we are of the view that ld. CIT(A) was right in recording that the Assessing Officer failed to controvert the genuineness of the transaction and identity as well as creditworthiness of the said party. Before us too, the ld. Counsel for the assessee filed the following documents in support of the action of the ld. CIT(A): S. No Description of documents Page No. of Paper Book 1 Copy of confirmation of accounts of Shri Rakesh Agrawal wherein he duly confirmed the amount of advances of Rs. 85,00,000/- and 1,07,51,000/- given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income of the assessee u/s 68 of the Income-Tax Act, 1961. So far as the case-laws cited by the Assessing Officer are concerned, we find that these are not applicable to the facts of the present case since the same deal with receiving of unsecured loan by an assessee and in the present case, no unsecured loan was received by the assessee from Shri Rakesh Agrawal rather the assessee received advance against sale of land from Shri Rakesh Agrawal which was subsequently adjusted against sales made to Shri Rakesh Agrawal and this fact was duly verifiable from the registered sale deeds executed subsequently. It is a settled position of law that no addition is called for u/s 68 of the Income-Tax Act, 1961 in respect of advances (cash credits) found recorded in the books of accounts which are subsequently adjusted against sales. It is also a well settled proposition of law that no addition is sustainable on account of advance received which stands duly reconciled against different sale deeds executed by the assessee in absence of any evidence to doubt the genuineness or correctness of registered sale deeds executed by the assessee. Our view finds support from the following judicial pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lex Group of Companies on 23.02.2006, which led to the notice being issued under Section 153A of the Act to the Assessee. In the course of search assessment proceedings, the Assessing Officer added the sum of Rs. 2.32 crores, which the Assessee claim towards trade credit. The CIT(Appeal) directed deletion of this amount after due verifications of the record by expressing his satisfaction that the credits claimed were genuine and in accord with the documents and the records produced by the Assessee. The CIT's findings are as follows :- "10.3 I have carefully considered the facts of the case, submissions made by the appellant and remand report submitted by the A.O. It is observed that the appellant could not file the confirmations from the trade customers from whom the advance against sale is received in this year and in the absence of confirmations, the A.O. treated the amount of Rs. 2,32,13,640/- as income of the appellant under Section 68 of the Act. It is observed from the details filed before the A.O. that the ledger accounts of the concerned parties were filed before the A.O. as well as during the remand proceedings. The trade customers as appearing in the list are the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 68 of the Income-Tax Act, 1961 were unjustifiable since the amount of advances received by the assessee were subsequently adjusted against the sales made by the assessee and the same was also verifiable from the registered sale deeds. Thus, the Assessing Officer was not justified in treating the amount of advance received by the assessee as his income as the Assessing Officer failed to consider the fact that the assessee had sold agricultural land belonging to him to Shri Rakesh Agrawal in lieu of consideration which included the amount of advance received from the said party. Accordingly, we are of the view that the additions of Rs. 85,00,000/- and Rs. 1,07,51,000/- made by the Assessing Officer were rightly deleted by the Ld CIT(A). We confirm the order of the ld. CIT(A) on this issue. Therefore, ground no.1 raised in the appeal of the Revenue is dismissed. 12. Second ground raised by the Revenue is with regard to deletion of the additions of Rs. 1,59,30,060/- made u/s 68 of the I.T. Act in respect of unsecured loan from various persons. Facts, in brief, as culled out from the orders of the Revenue Authorities are that the Assessing Officer noted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the appellant was duly reflected. On perusal of the bank account of the loan creditor, it is also clear that no cash was deposited prior to issuance of the cheques to the appellant. The appellant therefore discharged the onus lying on him and no contrary finding was given by the assessing officer on these documents even in remand proceeding. I, therefore, direct the assessing officer to delete the addition of Rs. 5,00,000/- as made to the total income of the appellant. 4.4.2] SMT MANISHA MAURYA OF Rs. 18,00,000/-. The appellant had received loan of Rs. 18,00,000/- from Smt Manisha Maurya during the course of assessment proceeding.Copy of her ledger account in the books of the appellant was filed. The amount was added to the total income of the appellant by stating that PA No and address of the loan creditor was not provided. The appellant has provided copy of confirmation letter, PA No and his bank account wherein the amount as received was duly credited. The documents as filed by the appellant were referred to the assessing officer for his comments but nothing new was submitted by him. The appellant filed copy of confirmation letter, copy of ledger of the loan creditor in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti Tradex P Limited with Bank of Baroda, Copy of computation of Income and audited final account. The documents as filed by the appellant were forwarded to the assessing officer but in the remand report nothing new was submitted by him. On perusal of the copy of account of the appellant in the book of that company it is clearly evident that an amount of Rs. 21,05,056/- was received at the beginning by the appellant but at the end an amount of Rs. 56,86,839/- was due to theappellant. The amount as due from M/s Shri Mangal Murtee Tradex P Limited was shown as loans & advances in the book of the appellant. The assessing officer added two cheques as received from this company by invoking the provision of section 68 of the Act. The appellant from the ample documents as filed has duly discharged the onus lying on it. Hence, the assessing officer was not justified in adding an amount of Rs. 18,60,060/- to the total income of the appellant. I, therefore, direct the assessing officer to delete the addition of Rs. 18,60,060/- made to the total income of the appellant. 4.4.5] SHRI VIJAY RAMAWAT OF Rs. 25,00,000/- The appellant had received loan of Rs. 25,00,000/- from Shri Vijay Ramawat, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant from the firm was added to the total income of the appellant which was neither proper nor correct to pick isolated one or two transactions from whole copy of account. The amount as issued in the name of the appellant was duly reflected in the bank account of that firm and source of the same is also clear from the Bank statement. The appellant from the ample documents as filed duly discharged onus lying on it. Hence, the assessing officer was not justified in adding an amount of Rs. 32,00,000/- to the total income of the appellant. I, therefore, direct the assessing officer to delete the addition of Rs. 32,00,000/- made to the total income of the appellant. 4.4.7]M/s JAIN INFRATECH , INDORE OF Rs. 29,70,000/- The assessing officer during the course of assessment proceeding added an amount of Rs. 29,70,000/- to the total income of the appellant by invoking the provision of section 68 of the Act by stating that only copy of ledger was filed without PAN. The appellant during the course of appellate proceeding filed copy of account of the appellant in the book of M/s Jain Infratech and contra account of M/s Jain Infratech in the book of the appellant, copy of final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee, reiterating the submissions made before Revenue Authorities, relied upon the order the ld. CIT(A) and submitted that the Assessing Officer made addition not only in respect of the amount of unsecured loans received during the year but also in respect of the amount received back during the year against the amount initially advanced to the group concerns which is unjustified. The Assessing Officer failed to appreciate the fact that the addition comprised of the amount received from unsecured loan creditors, amount received as advance against land and amount received from parties to whom loans and advances were given. The assessee filed various documentary evidences before ld. CIT(A) in support of this explanation and the ld. CIT(A) called for a remand report from the Assessing Officer on these documents filed during the course of appellate proceedings and on receipt of remand report, the ld. CIT(A) found that the Assessing Officer failed to controvert the genuineness of the transaction and identity as well as creditworthiness of the these parties. Thus, the ld. CIT(A) was right in deleting the addition. Further, ld. Counsel for the assessee also relied upon certain ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on these documents filed during the course of appellate proceedings. Thereafter, the Assessing Officer filed remand report dated 05-04- 2017 which is filed before us at page nos. 187-193 of the paper book. On perusal of the remand report, we find that the Assessing Officer did not comment on any of the documents filed by the assessee during the course of the appellate proceedings rather the Assessing Officer reiterated the findings of the then Assessing Officer. Thus, it is clear that the Assessing Officer failed to controvert the genuineness of the transaction and identity as well as creditworthiness of these parties. The following documents filed before the ld. CIT(A) and also available with the Assessing Officer were filed before us as under: S. No Description of documents Page No. of Paper Book 1 Anjana Bhachawat [PAN: ARQPB6739A] - Addition of Rs. 5,00,000/- 1.1 Copy of confirmation of accounts of the unsecured loan creditor 94 1.2 Copy of ledger account of the unsecured loan creditor in the books of the assessee 95 1.3 Copy of bank statement of the unsecured loan creditor duly highlighting the amount as advanced to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r account of the creditor in the books of the assessee 133-134 6.2 Copy of ledger account of the assessee in the books of the creditor 135-136 6.3 Copy of acknowledgment of income-tax return along with computation of income of the creditor for the Assessment Year 2010-11 137-139 6.4 Copy of final accounts of the creditor for the year ended 31st March, 2010 wherein the amount receivable from the assessee is duly reflected [Page No.142] 140-142 6.5 Copy of bank statement of the creditor duly highlighting the amount as advanced to the assessee 143-145 7 Jain Infratech [Prop. Deepak Jain] [PAN: ABBPJ7325B] - Addition of Rs. 29,70,000/- 7.1 Copy of ledger account of the assessee in the books of the unsecured loan creditor 146 7.2 Copy of ledger account of the unsecured loan creditor in the books of the assessee 147 7.3 Copy of acknowledgment of income-tax return along with computation of income of the unsecured loan creditor for the Assessment Year 2010-11 148-150 7.4 Copy of Balance Sheet and Profit and Loss account of the unsecured loan creditor for the year ended 31st Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions of Rs. 10,18,580/- made on account of disallowance of interest out of property income and Rs. 9,15,600/- made on account of disallowance of interest out of income from other source. Facts as culled out from the orders of Revenue Authorities are that the assessee took mortgage loan and home loan from ICICI Bank and State Bank of India which were used towards repayment of the loans taken earlier for purchase of the properties let-out by the assessee and also for the purpose of advancement of loan to other parties from whom interest income was earned. Thus, the assessee claimed deduction on account of interest paid against the income offered for tax under the head 'Income from House Property' and 'Income from Other Sources'. The assessee actually paid interest of Rs. 37,27,311/- during the year on the amount of loans / overdraft facility taken from banks and detail of the same is as summarised as under: S. No Particulars Amount of interest [in Rs.] 1 Loan from ICICI Bank Ltd. 14,75,006 2 Loan from State Bank of India 16,33,438 3 Overdraft facility from Bank of Baroda 6,18,867 Total 37,27,311 However, the assessee claimed deduction on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Description of the Property Cost of the Property Interest claimed Interest Disallowed 1 13-14, Dhenu Market 3892340 467080 467080 2 12, Dhenu Market 845890 101500 101500 3 103, Horizon Saket, Indore 2505000 300000 300000 4 SOP 150000 150000 1018580 5.4] The claim of interest of the assessee was legal and proper and the same was also accepted in the succeeding years by the assessing officer himself. Copy of assessment orders as passed for the Asst Years 2009-10 & 2012-13 are enclosed for your kind reference. 5.5] That in view of the above, the deduction of Interest as claimed by the assessee was legal and proper, the addition so made by the assessing officer was therefore not right, the same now requires to be deleted in full. 19. Ld. CIT-DR relied upon the order of the Assessing Officer. On the other hand, ld. Counsel for the assessee, reiterating the submissions made before Revenue Authorities, relied upon the order the ld. CIT(A). 20. We have heard rival contentions of both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds borrowed and advanced to the parties from whom interest income was earned. Accordingly, the Assessing Officer disallowed an amount of Rs. 9,15,600/- on account of interest claimed under the head 'Income from Other Sources'. The details of claimed deduction on account of interest paid on the borrowed funds only to the extent of interest income earned from the following parties and offered for tax under the head 'Income from Other Sources' is as under: S. No Name of the party Amount of interest income [in Rs.] 1 Jitendra Soni 6,08,000 2 Lunawat Management and Educational Services Limited 35,810 3 Lunawat Publications and Media Pvt. Ltd. 2,71,830 Total 9,15,640 22. Being aggrieved, the assessee challenged the action of the Assessing Officer before the ld. CIT(A) who having gone through the facts/circumstances, material and submissions thereof deleted the addition. The relevant portion of the order of the ld. CIT(A) are reproduced hereunder: "6] GROUND No 7 6.1] The assessee in this ground of appeal has claimed deduction for Interest of Rs. 9,15,640/-. 6.2] The assessee had paid interest of Rs. 35,67,618/-, deduction for Rs. 26,52,018/- was cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of interest paid against the income offered for tax under the head 'Income from Other Sources' was duly examined and allowed in the preceding as well as subsequent years. A comparative chart showing the amount of deduction claimed on account of interest against the income offered for tax under the head 'Income from Other Sources' in the preceding as well as subsequent years' is summarized as under: S. No Particulars Assessment Years 2009-10 2010-11 (Year in appeal) 2012-13 1 Type of assessment Regular assessment - Section 143(3) Regular assessment -Section 143(3) Regular assessment - Section 143(3) 2 Deduction claimed 7,44,657 9,15,600 17,95,623 3 Deduction allowed 7,44,657 NIL 16,95,623 4 Deduction disallowed NIL 9,15,600 1,00,000 On consideration of above facts and discussion, it is clear that the disallowance of Rs. 9,15,600/- made by the Assessing Officer was unjustified as the borrowed funds were utilized towards advancement of loan to the parties from whom interest income was earned and was duly offered for tax under the head 'Income from Other Sources' and more so when such deduction on account of interest was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral income to the tune of Rs. 5,00,000/-and the appellant accordingly get relief in this ground. This ground of appeal is partly allowed." Being aggrieved, both the parties are before this Tribunal. 27. Ld. CIT-DR relied upon the order of the Assessing Officer. On the other hand, ld. Counsel for the assessee, reiterating the submissions made before Revenue Authorities, relied upon the order the ld. CIT(A) to the extent of acceptance of agricultural income at Rs. 5 lacs. But, for non-acceptance of rest income i.e. Rs. 3,14,000/-, ld. Counsel for the assessee submitted that during the course of assessment and first appellate proceedings, the assessee explained that agricultural land owned by him was given on Batai and agricultural income earned therefrom was duly shown in the income-tax return and the Assessing Officer himself did not disbelieve the agricultural lands owned by the assessee. Therefore, the ld. CIT(A) was not justified in treating the rest agricultural income as income from other sources. 28. We have heard rival contentions of both the parties and perused material available on record. We find that the assessee had submitted before the Revenue Authorities that that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS on the amount of late payment charges as charged by M/s Arihant Capital Markets Limited. Facts, in brief, as culled out from the orders of the Revenue Authorities are that the Assessing Officer observed that the assessee claimed late payment charges of Rs. 18,99,796/- during the year under consideration out of which an amount of Rs. 18,24,447/- was paid to Arihant Capital Market Ltd. The Assessing Officer further observed that the assessee did not deduct TDS on the amount of late payment charges. Accordingly, the Assessing Officer disallowed an amount of Rs. 18,99,796/- under section 40(a)(ia) of the Income- Tax Act, 1961. 31. Being aggrieved, the assessee challenged the action of the Assessing Officer before the ld. CIT(A) who having gone through the facts/circumstances, material and submissions thereof deleted the addition. The relevant portion of the order of the ld. CIT(A) are reproduced hereunder: " Ground No 9 The appellant in this ground of appeal has challenged the disallowance of Rs. 18,99,796/- made on account of late payment charges as charged by M/s Arihant Capital Markets Limited by invoking the provision of section 40[a][ia] of the Act. It was claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961 on account of non-deduction of TDS on the amount of late payment charges. We find that the assessee furnished copy of certificate from the Chartered Accountant of the broker, Arihant Capital Market Ltd. during the course of first appellate proceedings wherein it was duly certified that the amount of late payment charges charged from the assessee were included in the total income of the broker and requisite amount of taxes due thereon were also paid and the ld. CIT(A) called for a remand report from the Assessing Officer in respect of this certificate filed during the course of appellate proceedings. The Assessing Officer filed remand report dated 05-04- 2017 which is filed on Page No. 187-193 of the paper book. On perusal of the remand report, we find that the Assessing Officer did not comment on the certificate filed by the assessee during the course of the appellate proceedings rather the Assessing Officer simply reiterated the findings of the then Assessing Officer. Further, the assessee has also filed copy of ledger accounts of the assessee in the books of accounts of the broker, Arihant Capital Markets Ltd. for the Financial Year 2009-10 and Financial Year 2010-11 at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal of the Revenue is dismissed. 35. Now, the only ground left is ground no.1 raised in the assessee's Cross-objection which is regarding the confirmation of addition of Rs. 2 lacs made by the Assessing Officer u/s 68 of the I.T. Act. Facts, in brief, as culled out from the orders of the Revenue Authorities are that the Assessing Officer made the addition of Rs. 2,00,000/- on account of amount received back against the amount advanced earlier to Shri Tarun Dassani as the Assessing Officer observed that the assessee failed to prove the identity and creditworthiness of the party and genuineness of the transaction as entered into with him. 32. Being aggrieved, the assessee challenged the action of the Assessing Officer before the ld. CIT(A) who having gone through the facts/circumstances, material and submissions confirmed the addition. The relevant portion of the order of the ld. CIT(A) are reproduced hereunder: "] Ground No 3 The appellant in this ground of appeal has challenged the addition of Rs. 2,00,000/- made to the total income of the appellant. The appellant had advanced an amount of Rs. 2,00,000/- to Shri Tarun Dasani and the said amount was received back from him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dded the amount of Rs. 2,00,000/- to the total income of the assessee. Since, the assessee did not receive any loan from Shri Tarun Dassani rather the amount of Rs. 2,00,000/- was initially advanced to Shri Tarun Dassani which was returned back by him on the very next day itself, there was no reason for adding the amount of Rs. 2,00,000/- to the total income of the assessee for want of supporting documentary evidences. We find that the ld. CIT(A) accepted the fact that the amount received by the assessee was nothing but the amount initially advanced by him, therefore, there was no reason for adding the same by invoking the provisions of section 68 of the Income-Tax Act, 1961. But, the ld. CIT(A) even after understanding the true nature of the transaction sustained the addition merely for the reason that complete postal address and PAN of the party was not provided, which, in our humble opinion, is not justified because non-furnishing of address and PAN of the party to whom amount is advanced cannot by any stretch of imagination of lead to an inference that such amount constitutes income of the assessee thereby warranting addition to the total income of the assessee. In our view, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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