ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE -7.1, KOLKATA, KOLKATA V. APEX ENERGY RESOURCES PRIVATE LIMITED, KOLKATA

ITA 60/KOL/2024

AI Insights

The case involves the Assistant Commissioner of Income Tax, Cir-7(1)/Kol as the appellant and APEX Energy Resources Private Limited as the respondent. The Revenue appealed against the order of the CIT(A) which had partly allowed the assessee's appeal, resulting in the deletion of additions made under Section 68 and related interest disallowances. The original assessment was reopened based on information from DDIT (Investigation) regarding accommodation entries in the form of unsecured loans. The Tribunal examined the compliance with procedural requirements and the substantive evidence provided by the assessee, ultimately dismissing the Revenue's appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 28885 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-11-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 06-01-2024
• Other Referred Cases: CIT vs. Precision Finance Pvt. Ltd., CIT vs. United Commercial and Industrial Co. Pvt. Ltd., CIT vs. Biju Patnaik, NRA Iron and Steels Pvt. Ltd., PCIT vs. Ambe Tradecorp (P.) Ltd., Sandip Kumar Gupta vs. DCIT, Circle-47, Kolkata, CIT vs. S.C.Ghosal
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANINDYA KUMAR BANDOPADHYAY
• Assessee Lawyers: S. JHAJHARIA
• Keywords: Question of law; Unexplained cash credit; TDS; Accommodation entries; Bogus loan; Bogus
• Section: 147; 148; 142(1); 250; 132; 139(1); 68; 208; 133(6); 20

Judgement Text

" आयकर अपीलीय अधिकरण न्यायपीठ, कोलकाता । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI ANIKESH BANERJEE, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No. 60/KOL/2024 Assessment Year: 2013-14 Asst. Commissioner of Income Tax, Cir-7(1)/Kol Aaykar Bhavan, P-7, Chowringhee Square, West Bengal-700 069 Vs APEX Energy Resources Private Limited Room No. 302, 3rd Floor, OM Towers, 32 Jawaharlal Nehru Road, Chowringhee, West Bengal-700 071 [PAN : AAECA7503R] अपीलार्थी/ (Appellant) प्रत्‍ यर्थी/ (Respondent) Assessee by : Shri S. Jhajharia, AR Revenue by : Shri Anindya Kumar Bandopadhyay, DR सुनवाई की तारीख/Date of Hearing : 04.11.2024 घोषणा की तारीख /Date of Pronouncement : 05.11.2024 आदेश/O R D E R PER ANIKESH BANERJEE, JUDICIAL MEMBER: Instant appeal of the Revenue was filed against the order of the National Faceless Appeal Centre, Delhi [in brevity ‘the learned CIT (A)’], order passed under Section 250 of the Income-tax Act, 1961 (in brevity, ‘the Act’) for A.Y. 2013-14, date of order 8th November 2023. The impugned order was emanated from the order of the learned National Faceless Assessment Centre, Delhi (in brevity, ‘the learned AO’), order passed under Section 147 read with section 144B of the Act, date of order 29th September 2021. 2. The Revenue has raised following grounds of appeal:- “1. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made u/s. 68 of the act Page | 2 ITA No.60/KOL/2024 Apex Energy Resources pvt. Ltd; A.Y. 2013-14 for Rs. 4.80 crore and interest on the alleged unsecured loan of Rs. 70,50,500/- ignoring the ratio laid down in the case of CIT vs. Precision Finance Pvt. Ltd. (208 ITR 465 (CAL)) CIT vs. United Commercial and Industrial Co. Pvt. Ltd. (187 ITR 596) (CAL) CIT vs. Biju Patnaik 160 ITR 674 (SC) and in the case of NRA Iron and Steels Pvt. Ltd. (SC). 2. That on the facts and circumstances of the case Ld. CIT(A) has erred in law by allowing appeal of the assessee company in respect of the addition made on account of bogus loan without appreciating the facts that the assessee company has failed to prove identity, creditworthiness and genuineness of the transactions. 3. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing relief to the assessee company on account of bogus loan when documents found during the course of search operation u/s. 132 of the Act in the premises of related persons shows that the loan was actually accommodation entries.” 3. The brief facts of the case is that the assessee is filed the return u/s 139(1) of the Act. After receiving the information from DDIT (Investigation), Unit-3(1), Kolkata, the case was reopened u/s 148 of the Act in relation to the receiving of accommodation entries in nature of unsecured loans from M/s Khusboo Complex Pvt. Ltd. and other companies also. Verification was carried out by the ld. AO out of 50 loan creditors the 20 loan creditors remained non- complied the notice issued u/s 133(6) of the Act. The assessment was completed by additions of loan and interest amounts of ₹4,80,00,000/- and ₹1,73,90,910/-, respectively. 4. Aggrieved assessee preferred the appeal before the ld. CIT (A), who accepted the documents submitted by the assessee and the appeal order is partly allowed. Being aggrieved on the appellate order, the revenue has filed an appeal before us. 5. The ld. DR vehemently argued and fully relied on the impugned assessment order. The ld. DR in argument stated that the genuinity, creditworthy and transactions of the loan-creditors Page | 3 ITA No.60/KOL/2024 Apex Energy Resources pvt. Ltd; A.Y. 2013-14 are in question and the entire addition was made as per the information from the investigation wing. So the ld. DR prayed to uphold the assessment order. 6. The ld. Authorised Representative (in short the ld. AR) Vehemently argued and first invited our attention in appeal order page no.4. The relevant paragraphs are reproduced as below:- “5. In response to such notice U/s. 142(1) of the Income Tax Act on 20.03.2021, it was categorically stated that during the course of original assessment proceedings, while complying with notice u/s. 142 (1) of the Income Tax Act, 1961, all unimpeachable evidences had been filed before the Assessing officer and all the transactions were supported by proper documentary evidences. During the course of original assessment proceedings, books of accounts and documents were also produced before the AO, thus it is clearly understood that the AO has examined all the issues. This is also evident from the language of the Order U/s. 143 (3) dated 24.02.2015. Hence the allegation of information not available at the time of original assessment has no iota of truth. In this manner, the assessee company had objected on the validity of issuance of notice U/s. 148 after the expiry of 4 years from the end of relevant assessment year on the ground that since the income tax return of AY 2013-14 had been assessed earlier U/s. 143 (3), there was no failure on part of assessee to disclose all material facts necessary for the assessment and thus the notice issued U/s. 148 after the expiry of 4 years from the end of relevant assessment year is bad in law and deserved to be quashed. 6. However, the AO vide letter dated 24.03.2021 had rejected the objections filed by the assessee against reasons recorded for issuing the notice U/s. 148 of the Income Tax Act, 1961. A rebuttal was also filed by the assessee against such disposal order on 06.04.2021 but no heed was paid to it. All the notices issued pursuant to such income escaping assessment were duly complied with. 7. The ld. AR further argued that the out of 50 loan creditors, for 20 loan creditors the ld. AO issued notices u/s 133(6) of the Act but all the notices were remained non-complied. The assessee has no control over the parties. He further stated that the except only Page | 4 ITA No.60/KOL/2024 Apex Energy Resources pvt. Ltd; A.Y. 2013-14 one loan creditors all the amounts are repaid during the impugned assessment year, so there is no question about the absence of the identity, creditworthiness and genuinity of the party. The list of the impugned loan creditors are duly reproduced as below:- SL No. Name of the Party Receipt of Unsecured Loan during the year (₹) Interest Expenses debited to Profit & Loss A/c (₹) 01. Allshan Estate Pvt. Ltd. 7,49,692/- 02. Basukulnath commosales pvt. ld. 71,876 03. Black Pearl Enterprises Pvt. Ltd. 3,00,00,000 10,38,903 04. D.D. computers Pvt. Ld. 5,14,931 05. Fabritech Tradelink Pvt. Ltd. 849270 06. Fortis Securities Pvt. Ltd. 25,00,000 1,13,151 07. Harinkhola Ic & Cold Storage Ltd. 25,00,000 63,014 08. Jayton Tradign Pvt. Ltd. 3,66,458 09. JPS Enterprises Pvt. Ltd. 74,427 010. Khusboo Complex Pvt. Ltd. 1,17,230 011. Kunal Finance & Credit Pvt. Ld. 2,30,137 012. Madhuvan Agro Services Pvt. Ld. 50,00,000 4,60,274 013. N.M. Finance & Investment Consultancy Ltd. 30,00,000 1,60,274 014. Planner Merchandising Pvt. Ltd. 3,04,384 015. Ramvar Distributors Pvt. Ltd. 12,86,700 016. Sharma Hire Purchase Ltd. 2,23,233 017. SRG Exim Pvt. Ltd. 25,00,000 1,11,233 018. Synergy Commosales pvt. Ltd. 25,00,000 98,630 019. Umang Vincom Pvt. Ltd. 21,61,170 020. Walden Barter Pvt. Ltd 2,88,493 Total (A) 4,80,00,000/- 92,83,480/- 8. Only in case of SRG Exim Pvt. Ltd. TDS amount of ₹ 11,123/- is outstanding during this assessment year. So in any case, the addition cannot be sustained. He fully relied on the order of the Hon'ble Gujarat High Court in case of PCIT vs. Ambe Tradecorp (P.) Ltd. [2022] 145 taxmann.com 27 (Guj), held, Page | 5 ITA No.60/KOL/2024 Apex Energy Resources pvt. Ltd; A.Y. 2013-14 “3.4 When the revenue preferred appeal before the Appellate Tribunal, the Tribunal confirmed the findings recorded by the Appellate Authority. The Tribunal referred to the decision of Durga Prasad More (82) ITR 540 and also in Sumati Dayal (214) ITR 801, to further record on the basis of the facts that the assessee had furnished the details such as copy of ledger account, bank statements, income tax returns, balance sheet etc. It was also recorded that notice under Section 133(6) of the Act was issued to the said parties which were duly responded by them. The identity of the parties could not be, therefore disputed, recorded the tribunal. The aspect was also noticed that the assessee was not beneficiary of the loan received by it and the loan was repaid by the assessee in the subsequent year. It led to unacceptable conclusion that the impugned transaction was a business transaction between the assessee and the loan parties and that they could not be doubted for their genuineness. 3.5 While the revenue has tried to put up a case that the transactions were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported by any factual data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine. 4. Learned advocate for the appellant attempted to emphasize that for the purpose of application of Section 68 of the Act, three ingredients were necessary. Firstly identity of the parties to the transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were satisfied. 5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied. 6. The Tribunal rightly recorded in para 29 of the judgment, \"Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld.CIT-A. \" Page | 6 ITA No.60/KOL/2024 Apex Energy Resources pvt. Ltd; A.Y. 2013-14 7. For the reasons recorded above, no question of law muchless substantial questions arises in this appeal. It stands meritless and accordingly dismissed.” 9. The ld. AR argued on the addition interest amount to ₹1,73,90,910/-. The ld. AR stated that out of total addition of interest payment the amount of ₹93,40,801/- was already deleted by the order of the co-ordinate Bench of ITAT Kolkata in assessee’s own case bearing ITA No.33/KOL/2024 dated 10th May, 2024, The co-ordinate bench observed that the interest was related to earlier years and the loan of the earlier years are never be doubted by the revenue. Accordingly, the addition has no relevance in impugned assessment order considering the order of the co- ordinate Bench of ITAT-Kolkata. In relation to interest amount of ₹80,50,100/-, the ld. AR stated that the loan interest amount to ₹20,45,479/- pertains to loan amount to ₹4.80 Crore which was paid during the year and the balance amount to ₹60,04,620/- is related to the loan of earlier years and repaid during impugned financial year. For loan related earlier years was never be treated as bogus and respectfully relied on the order of the coordinate bench of ITAT-Kolkata in assessee’s own case (supra). He further mentioned that the revenue in ground of appeal wrongly mentioned the interest amount of ₹70,50,500/-, instead of interest amount of ₹80,50,100/-. He further relied on the order of the co-ordinate Bench of ITAT Kolkata in case of Sandip Kumar Gupta vs. DCIT, Circle-47, Kolkata, ITA No. 1170 to 1173/KOL/2023 date of order 02/07/2024, the bench observed that repayment of loan during financial year is not attracted the addition. 10. In argument the ld. AR confirmed that all relevant documents for complying the Section 68 of the Act was duly filed during assessment proceeding. The ld. CIT(A) in impugned appellate order Page | 7 ITA No.60/KOL/2024 Apex Energy Resources pvt. Ltd; A.Y. 2013-14 noted the compliance of the assessee. The relevant paragraphs of the page 58 of the impugned appellate order are reproduced as below: - “(v) The AO has accepted the books of accounts and the tax audit report. The AO has also not addressed the issue that the loan transactions with respect six out of seven parties were fully squared up during the year under consideration and the loan was partly repaid with respect to the seventh party. (vi) As regards the interest disallowance of Rs.70,50,500/-, it is stated that the corresponding loans taken in the preceding years have been accepted whereas corresponding interest has been disallowed during the year under consideration and moreover, applicable interest has also been allowed in the earlier years. The interest paid to these parties has no relation at all with the accommodation entry parties and are also not part of the reasons recorded. 20. After considering the all facts and circumstances of the case under consideration and the above discussion, I am of the considered opinion that the AO has erred in adding the above said amount of Rs.4,80,00,000/- u/s. 68 of the Act and further the AO has also erred in disallowing the interest to the extent of Rs.70,50,500/-. In the result, the addition of Rs.4,80,00,000/- u/s. 68 is hereby deleted; Further, out of the total disallowance of interest of Rs.1,73,90,910/-, interest disallowance to the extent of Rs.70,50,500/- is hereby deleted. As stated earlier in this order, out of the total disallowance of interest of Rs.1,73,90,910/-, interest disallowance to the extent of Rs.93,40,810/- has been confirmed and as per this paragraph, interest to the extent of Rs.70,50,500/- is deleted. Accordingly, the related grounds of appeal with respect to the addition of Rs.4,80,00,000/- is allowed and related grounds of appeal with respect to the disallowance of interest are partly allowed.” 11. We have heard the rival contentions and considered the documents available on record. The revenue has agitated in the grounds, the judgements which are in favour of the revenue but in argument, the ld. AR placed that the cases are factually distinguishable. The revenue relied on the case of CIT vs. Precision Finance Pvt. Ltd. 208 ITR 465 (CAL) where the Page | 8 ITA No.60/KOL/2024 Apex Energy Resources pvt. Ltd; A.Y. 2013-14 Hon’ble Jurisdictional High Court ruled in favour of the revenue, holding that Precision Finance Pvt. Ltd. had failed to provide a satisfactory explanation for the cash credits. As a result, these unexplained cash credits were rightly treated as the company’s income under Section 68, and the additions made by the tax authorities were upheld. This case reinforces the importance of providing substantial evidence regarding the source of any cash credits. The said order is distinguishable in the case of assessee. 12. We respectfully relied on the orders of the Ambe Tradecorp (P.) Ltd (supra) and Sandip Kumar Gupta (supra) which deleted the addition of loan if repaid during the financial year. The same observation is upheld by the order of the Hon’ble High Court at Calcutta in the case of the CIT vs. S.C.Ghosal (1977) 106 ITR 980 (Cal). 13. The ld. DR had not rebutted any contrary decisions against the submissions of the ld. AR. We find that the loan amount of ₹4.80 crores was duly paid during the impugned assessment year. There is no balance for the assessee related to this loan amount. The assessee is not the beneficial owner of the loan during the impugned assessment year. The assessee filed evidence during assessment proceeding which is acknowledged by the ld. CIT(A) in the impugned appellate order. So, the contravention of Section 68 related identity, creditworthiness and transaction trough banking channel are ruled out. Related to interest the amount of ₹90,40,180/- squarely covered by the order of ITAT, Kolkata Bench in assessee’s own case (supra). For rest of the interest was pertained to loan of earlier years and the part of interest of loan where the loan was repaid during the impugned assessment year are also followed the same principle laid down by the orders Page | 9 ITA No.60/KOL/2024 Apex Energy Resources pvt. Ltd; A.Y. 2013-14 mentioned above. We do not find any reason to interfere in the impugned appeal order. The grounds of the revenue are dismissed. 14. Accordingly, the appeal of the revenue in ITA No. 60/KOL/2024 is dismissed. Order pronounced in the Court on 5th November, 2024 at Kolkata. Sd/- Sd/- (RAKESH MISHRA) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Kolkata, Dated 05.11.2024 *SS, Sr.Ps आदेश की प्रतततिति अग्रेतषत/Copy of the Order forwarded to : 1. अिीिार्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. संबंतित आयकर आयुक्त / Concerned Pr. CIT 4. आयकर आयुक्त ( अिीि ) / The CIT(A)- 5. तवभागीय प्रतततनति , अतिकरण अिीिीय आयकर , कोिकाता/DR,ITAT, Kolkata, 6. गार्ड फाईि / Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Sr. PS/ Assistant Registrar आयकर अिीिीय अतिकरण ITAT, Kolkata "