9911796707
TMI Blog2024 (7) TMI 1574X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and thereafter should have satisfied himself of escapement of income. Reopening is not permissible on the basis of borrowed satisfaction of the Assessing Officer. Therefore, reopening of the assessment in this case is held as bad in law. Addition u/s 68 - As in the assessment order, AO has merely relied on the report of the Investigation Wing. That the AO has not discussed a single evidence/document furnished by the assessee and has not pointed out any defect or discrepancy in the evidence furnished by the assessee to prove the identity, creditworthiness and genuineness of the transaction. The ld. counsel for the assessee has duly demonstrated from the record that all the creditors had sufficient net worth to give loan to the assessee. counsel has duly demonstrated that the entire loan was repaid during the subsequent assessment years. As noted, the loan duly carried interest, TDS was duly deducted on the interest expenditure, the interest income has been accounted by lender and the same forms part of the income of the lender. Interestingly, the Assessing Officer has not made any disallowance in respect of interest expenditure incurred by the assessee on the aforesaid loan amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- from three companies i.e. Vanilla Tieup (P) Ltd. (Rs. 10,00,000/-), Popular Vintrade (P) Ltd. (Rs. 20,00,000/-) and Anmol Commerce (P) Ltd. (Rs. 50,00,000/-). That all the three shell companies were having common directors. He, therefore, formed the belief that the assessee had routed his own unaccounted money through the aforesaid shell companies. He accordingly reopened the assessment u/s 147 of the Act. Further, the Assessing Officer referred to the information of Investigation Wing and also reproduced a chart of cash trail and observed that the amount was routed through various companies, which ultimately received into the accounts of the beneficiaries including the assessee. The assessee furnished various documents to prove the identity, creditworthiness and genuineness of the transaction such as loan confirmation from the creditors, documents to prove their creditworthiness and further submitted that the amount was received through banking channel. The assessee further pleaded that the total amount received of Rs. 80,00,000/- was a loan from the aforesaid three creditor companies, which was repaid during subsequent assessment years. However, the Assessing Officer reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the Assessing Officer has not discussed about a single document furnished by the assessee to prove the identity and creditworthiness of the creditors and genuineness of the transaction. He has submitted that the Assessing Officer has made the addition in a mechanical manner by simply relying upon the report of the Investigation Wing without any discussion on merits of the documents and evidences furnished by the assessee and without pointing out any defect or discrepancy in the same. The ld. counsel has further referred to the various documents placed in the paper-book. He in this respect has referred to page 9 of the paper-book to submit that in response to notice issued u/s 142(1) of the Act, the assessee had duly furnished the copy of ITR, Audited Balance Sheet and Profit Loss account for the year under consideration along with Tax Audit Report of proprietorship concern of assessee namely M/s Deep Steels, and further that the details of unsecured loan in desired format including details of interest paid and TDS deducted thereupon along with loan confirmations from the creditors were furnished and also the details of bank accounts of the proprietorship concern were fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer. The ld. counsel referring to the said assessment order has submitted that though the said assessment order was relating to the assessment year 2012-13 but the credit entries in the said year were duly examined by the Assessing Officer and the credibility of the M/s Anmol Commerce Pvt. Ltd. was admitted by the Assessing Officer in the said case. The ld. counsel has further referred to the assessment order to submit that the Assessing Officer has mentioned that the said M/s Anmol Commerce Pvt. Ltd. had received a sum of Rs. 2,00,000/- from Vanilla Tieup P Ltd. which has also been mentioned as conduit company in the case of the assessee. The Ld. Counsel has submitted that the Return Of Income of the said Anmol Commerce Pvt. Ltd. having been accepted after scrutiny assessment u/s 147/143(3) of the Act for the subsequent year despite the fact that the reopening has been made on the identical allegations, proves that the allegation of the Assessing Officer that M/s Anmol Commerce Pvt. Ltd. was a shell company, were wrong and false. That the said company was an active compliant company and regular income tax assessee. The ld. counsel has further submitted that even the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other facts of the case and thereafter should have satisfied himself of escapement of income. Reopening is not permissible on the basis of borrowed satisfaction of the Assessing Officer. Therefore, reopening of the assessment in this case is held as bad in law. Reliance in this respect can be placed on the decision of Hon ble Supreme Court in the case of ITO vs. Lakhmani Mewal Das reported in (1976) 103 ITR 437 (SC), of the Hon ble Delhi High Court in the case of PCIT Vs. Meenakshi Overseas Ltd. reported in 395 ITR 677 (Del.) and in the case of CIT vs. Atul Jain reported in [2008] 299 ITR 383 (Delhi), further of the Hon ble Punjab and Haryana High Court in the case of CIT vs. Paramjit Kaur reported in (2009) 311 ITR 38 (P H). 7.1. Even on merits, in the assessment order, the Assessing Officer has merely relied on the report of the Investigation Wing. That the Assessing Officer has not discussed a single evidence/document furnished by the assessee and has not pointed out any defect or discrepancy in the evidence furnished by the assessee to prove the identity, creditworthiness and genuineness of the transaction. The ld. counsel for the assessee has duly demonstrated from the record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action. Neither the Assessing Officer, in our view, nor the ld. CIT(A) has pointed out any defect or discrepancy in the evidence furnished by the assessee. The additions have been made solely on the basis of unsubstantiated information received from the Investigation Wing and the said uncorroborated information has been duly rebutted by the assessee by producing the sufficient evidences on the file. 7.2. The ld. counsel has placed reliance in the decision of the Coordinate Bench of the Tribunal in the case of Poddar Realtors vs. ITO in ITA No. 265/Kol/2023 decided on 22.06.2023, in which further, reliance has been placed on the various other decisions including the decision of the Jurisdictional Calcutta High Court in the case of PCIT vs. Sree Leathers Pvt. Ltd. reported in 448 ITR 332 and of the Hon ble Gujarat High Court in the case of PCIT vs. Ambe Tradecorp Pvt. Ltd. reported in 145 taxmann.com 27. The relevant part of the order of the Tribunal in the case of Poddar Realtors vs. ITO is reproduced as under: 8. In view of the above facts, the reliance placed by the Ld. Counsel for the assessee on the decision of the jurisdictional Calcutta High Court in the case of Pr.CIT vs. Sre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very casual manner had stated that merely filing the permanent account number details, and balance sheet did not absolve the assessee from his responsibility of proving the nature of the transaction. There was no discussion by the Assessing Officer on the correctness of the stand taken by the assessee. Thus, going by the records placed by the assessee, it could be safely held that the assessee had discharged his initial burden and the burden shifted onto the Assessing Officer to enquire further into the matter which he failed to do. In more than one place the Assessing Officer used the expression money laundering . Such usage was uncalled for as the allegation of money laundering is a very serious allegation and the effect of a case of money laundering under the relevant Act is markedly different. The order passed by the Assessing Officer was utterly perverse and had been rightly set aside by the Commissioner (Appeals). The Tribunal had rightly deleted the additions under section 68. 9. As noted earlier, the loan was repaid in 2014-15 and, therefore, the allegation of the AO that assessee was a beneficiary of the loan cannot be sustained on these facts and is liable to be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer received from the Investigation Wing that the money was routed to the accounts of various beneficiaries through shell companies. As per the information, the assessee received funds amounting to Rs. 35,00,000/- during the year from three shell companies namely M/s Anmol Commerce Pvt. Ltd., Avenue Dealcom Pvt. Ltd. and Mangalam Trade Fin Pvt. Ltd. having the same directors. The Assessing Officer observed that as per the information received, the amount was routed through various shell companies and the pattern of transactions indicated that there was possibility of routing unlawful money after getting used in the same account and probably with the intention of converting black money into white. On the basis of the said information, the Assessing Officer reopened the assessment in the case of the assessee u/s 147 of the Act. However, during the assessment proceedings, it was found that the amount of Rs. 35,00,000/- was received by the assessee from one company only namely M/s Mangalam Tradefin Pvt. Ltd. The Assessing Officer observed that the said M/s Mangalam Tradefin Pvt. Ltd. had negligible income. He further referred to the information of Investigation Wing and also reprod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid information with the accounts/records of the assessee and that the assessment has been reopened on the basis of borrowed satisfaction. He, therefore, has pleaded that the reopening in this case was bad in law. 12.1. The ld. counsel has further referred to the various documents placed in the paper-book. He in this respect has referred to page 9 of the paper-book to submit that in response to notice issued u/s 142(1) of the Act, the assessee had duly furnished the copy of ITR, Audited Balance Sheet and Profit Loss account of the proprietorship concern i.e. M/s Deep Steels and further the details of unsecured loan in desired format including details of interest paid and TDS deducted thereon along with loan confirmations from the creditors were filed and also the details of bank accounts of the proprietorship concern were also furnished. The ld. counsel has further referred to page 10 of the paper-book to submit that vide letter dated 21.08.2017, the necessary documents/evidences pertaining to the loan creditor i.e. M/s Mangalam Trade Fin Pvt. Ltd., were furnished to th4e Assessing Officer which included loan confirmations from the said creditor, return filing acknowledgement for A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade merely on suspicion and solely on the basis of report of Investigation Wing by the Assessing Officer without correlating the said information with the accounts/assessment records of the assessee. The Assessing Officer himself has mentioned in the reasons recorded that the pattern of the transaction indicated that there was a possibility of routing of unlawful money and probability of converting black money into white money. Even the assessing Officer has mentioned the name of three companies from whom the assessee allegedly received funds, whereas there was only a single loan creditor. The reasons recorded and discrepancies pointed out therein in the present case are identical to that has been discussed above in the assessee s appeal ITA No. 1170/2023 . In view of our discussion made and findings given in para 7 above, the reopening of the assessment is held as bad in law. 13.1. Even on merits, in the assessment order, the Assessing Officer has merely relied on the report of the Investigation Wing. That the Assessing Officer has not discussed a single evidence/document furnished by the assessee and has not pointed out any defect or discrepancy in the evidence furnished by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns indicated that there was possibility of routing unlawful money after getting used in the same account and probably with the intention of converting black money into white. On the basis of the said information, the Assessing Officer reopened the assessment in the case of the assessee u/s 147 of the Act. However, during the assessment proceedings, it was found that the amount of Rs. 1,10,00,000/- was received by the assessee from one company only namely M/s Anmol Commerce Pvt. Ltd. The Assessing Officer observed that the said M/s Anmol Commerce Pvt. Ltd. had negligible income. He further referred to the information of Investigation Wing and also reproduced a chart of cash trail and observed that the amount was routed through various companies, which ultimately reached to the accounts of the assessee. The assessee further pleaded that the amount of Rs. 1,10,00,000/- was unsecured loans received from M/s Anmol Commerce Pvt. Ltd., which was repaid during subsequent assessment years. The assessee furnished various documents to prove the identity, creditworthiness and genuineness of the transaction such as loan confirmation from the creditor and also submitted the documents to prove th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 14 of the paperbook, which is a reply to the show-cause notice, wherein, it has been stated that apart from asking the assessee to furnish the relevant documents, the Assessing Officer has directly communicated with the creditor to verify the loan transaction. It has also been mentioned in the said reply that the aforesaid loans have been repaid to the creditors in subsequent years along with interest after deduction of tax at source u/s 194A of the Act. The ld. counsel thereafter has relied upon the various documents which were furnished before the Assessing Officer to prove the identity, creditworthiness of the transaction. The ld. counsel in this respect has also referred to pages 71 of the paper-book, which is the copy of balance sheet of M/s Anmol Commerce Pvt. Ltd. to show that as per the balance sheet, there was a share capital of Rs. 18.10 crore and reserves surplus amounting to Rs. 283.919 crore. That the short-term loans and advances were amounting to Rs. 176.09 crore only, out of which an amount of Rs. 1,10,00,000/- was given to the assessee. He, therefore, had submitted that the creditworthiness of the said share subscriber was proved beyond doubt. The ld. counsel ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. To be more particular about the relevant documents for the assessment year under consideration, the ld. counsel has referred to page 9 of the paperbook to submit that in response to notice issued u/s 142(1) of the Act, the assessee had duly furnished the copy of ITR, Audited Balance Sheet and Profit Loss account of the proprietorship concern i.e. M/s Deep Steels and further the details of unsecured loan in desired format including details of interest paid and TDS deducted thereon along with loan confirmations from the creditors were filed and also the details of bank accounts of the proprietorship concern were also furnished. The ld. counsel has further referred to page 10 of the paper-book to submit that vide letter dated 21.08.2017, the necessary documents/evidences pertaining to the loan creditor i.e. M/s Anmol Commerce Pvt. Ltd., which included loan confirmations from the said creditor, return filing acknowledgement for A.Y 2015-16, audited annual accounts, bank statement and declaration about source of loan payments. The ld. counsel has further referred to page 14 of the paper-book, which is a reply to the show-cause notice, wherein, it has been stated that apart from askin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
