9911796707
TMI Blog2025 (2) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently, the case of assessee was selected for complete scrutiny through "CASS". Accordingly, statutory notices 143(2) and 143(1) are issued. After deliberations, the assessment came to became completed with certain additions: (i) Addition on account of unexplained cash credit u/s 68 for Rs. 9,06,15,711/- (ii) Addition u/s 40a(ia) for non-deduction of TDS for Rs. 58,000/- 3.1 After the aforesaid two additions, aggregating to Rs. 9,06,73,711/-, the assessed income of the assessee was determined at Rs. 19,39,90,490/-. 4. Aggrieved with aforesaid additions by the Ld. AO, assessee preferred an appeal before the Ld. CIT(A), wherein the contentions and explanation furnished by the assessee are contemplated to be convincing / satisfactory by the Ld. CIT(A), and therefore, the appeal of the assessee has been rendered as allowed. 5. Since the appeal of the assessee is allowed by the Ld. CIT(A) by deleting the aforesaid additions u/s 68 made by the Ld. AO, aggrieved thereby the revenue filed the present appeal assailing the order of Ld. CIT(A), in terms of ground of appeal extracted (supra). 6. The additions u/s 68 of the Act, are made on account of unexplained cash credit received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwarded to Ld. AO on 26.02.2024 for examination and remand report, a reminder was also further issued by the Ld. CIT(A) to Ld. AO on 03.04.2024, however, no remand report was submitted by the Ld. AO till passing of the appellate order by Ld. CIT(A). 8. Ld. CIT(A) have considered the grounds of appeal, statement of facts and submissions of the assessee from time to time including the additional evidence and then have deliberated upon the issue raised by the assessee assailing the order of Ld. AO qua the additions made u/s 68. 9. Party wise and issue wise adjudication, observations and conclusion by the Ld. CIT(A) on the additions made are extracted as under: 6.3 1 have carefully considered the grounds of appeal, statement of facts, submissions made from time to time and the details mentioned in the assessment order. Ground no. 2 and its various clauses challenges the addition of Rs. 9,06,15,711/- made u/s 68 and is first taken up for adjudication. Party-wise adjudication is given below: (a) Unsecured loan from related parties: (i) Rakesh Agrawal HUF Rs. 9,40,833/-: During the appeal proceedings, the appellant has submitted that the total outstanding from this party is Rs. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of the proprietorship concern which was taken over by the company during the present year. It is seen that the confirmation, copy of ITR and computation from this creditor was filed before the AO. The AO has doubted the genuineness of the loan amount as the relevant bank statement was not produced. The credit in the books of the company during the year is only a book entry and the loan was actually taken prior to 1.4.2017. The relevant documents in this regard have been perused. There is no justification for treating a loan taken prior to the AY under consideration as unexplained cash credit, which has appeared as 'new' credit in the books of the company during the year only on account of taking over the liabilities of the partnership firm during the relevant year. Reliance is also placed on the decision of the Hon'ble Calcutta High Court in the case of Jatia Investment Company [1994] 206 ITR 718 (Cal). Thus, the addition UIs 68 of Rs. 18,00,000/- is hereby directed to be deleted. (iv) Smt Shalu Agrawal Rs. 25,00,000/-: Smt. Shalu Agrawal is a director of the company. It is seen that the confirmation, copy of ITR and computation of income was filed before the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed loans from related parties as Rs. 5,78,42,443/-, which includes Rs. 2,14,35,772/- from Vitality Steel Pvt. Ltd. It is seen that the confirmation, copy of ITR and computation from this creditor was filed before the AO. The AO has doubted the genuineness of the loan amount as the relevant bank statement was not produced. The credit in the books of the company during the year is only a book entry and the loan was actually taken prior to 1.4.2017. The relevant documents in this regard have been perused. There is no justification for treating a loan taken prior to the AY under consideration as unexplained cash credit, which has appeared as 'new credit in the books of the company during the year only on account of taking over the liabilities of the partnership firm during the relevant year. Reliance is also placed on the decision of the Hon'ble Calcutta High Court in the case of Jatia Investment company [19941 206 ITR 718 (Cal). Thus, the addition u/s 68 of Rs. 2,14,35,772/- is hereby directed to be deleted. (c) Share capital increase: The increase in share capital of Rs. was added u/s 68 as proof of genuineness of transaction was not furnished. During the appeal proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee failed to substantiate the identity and creditworthiness of the lenders / investors and genuineness of transactions with corroborative evidence before the Ld. AO, therefore, the additions u/s 68 of the Act are made. It is further submitted that additional evidence produced by the assessee are admitted by the Ld. CIT(A), whereas ample opportunity was given by the Ld. AO to assessee, therefore, the additions are rightly made by the Ld. AO, accordingly, the order of Ld. CIT(A) is not acceptable on merits, the same is liable to be set aside and the additions made u/s 68 in the order by Ld. AO deserves to be restored. 11. Contradicting the aforesaid contentions of the revenue, Ld. AR Shri Ravi Agrawal, CA submitted that, under the compelling circumstances on account of pandemic due to which the lockdown was in operation in the city of Raipur from 09.04.2021 to 16.05.2021 and even thereafter the office of the assessee company could not function properly because of shortage of staff and many other health reasons under the distress and restrictions imposed by the Government. Under such circumstances, all the necessary evidence which could not be furnished before the Ld. AO are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Agrawal for Rs. 25,00,000/- : The assessee company had received an unsecured loan of Rs. 25,00,000/- on 31.03.2018 by way of a cheque from Shri Rakesh Agrawal, Director of the company. The cheque issued on 31.03.2018 was expired on 30.06.2018, in lieu of which a fresh cheque was issued bearing no. 086945, which were then released on 05.07.2018. In support of identity, creditworthiness of the lender and genuineness of transaction, assessee submitted copy of confirmation, ITR and computation of the lender. Also, to substantiate that the actual transaction has taken place, copy of bank statement of the lender showing such entry on 15.07.2018 is placed before us, relevant page no. 29 of APB. In view of such facts, Ld. CIT(A) had rightly observed that there is no justification to treat the aforesaid transaction as unexplained cash credit, therefore, the addition u/s 68 cannot be sustained, we, therefore, approve the view taken by Ld. CIT(A). (iii) Unsecured loan received from related party, R M Developers for Rs. 18,00,000/-: The facts of this addition are identical to the facts qua the addition on account of unsecured loan from Rakesh Agrawal HUF (Para (i) supra), therefore, our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apply mutatis mutandis on this addition also, consequently, we direct to delete the same. (vii) Increase in share capital- Rs. 64,70,000/-: During the year under consideration 6,47,000 shares having face value of Rs. 10/- and premium at Rs. 90 per share, were issued to Shri Rakesh Agrawal in lieu of part of shell consideration for taking over the running business of the proprietary concern, M/s Agrawal Infrastructure. As per agreement for takeover of business dated 01.04.2017 (page no. 62 to 66 of APB), at para 3, it is evident that the consideration for taking over of the proprietary concern was decided at Rs. 8,22,13,702/-, equivalent to the amount of Proprietor's Capital Account as on 31.03.2017, as per audited balance sheet (page 81 of APB). The consideration was decided to be settled by way of issuance of share capital for Rs. 6,47,00,000/- (647000 share @ Rs. 10+ premium Rs. 90). The remaining amount of Rs. 1,75,13,702/- to be paid by cash / bank in due course. As the increase in share capital was inconsequence to the take over of the business, therefore, the genuineness of transaction cannot be doubted, much less the identity and creditworthiness of the investor i.e., Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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