COMMISSIONER OF INCOME TAX 1 V. APEX THERM PACKAGING P. LTD.

TAXAP/1070/2013

AI Insights

The case revolves around a dispute concerning the additions made by the Assessing Officer under Section 68 of the Income Tax Act, which pertained to unexplained cash credits amounting to Rs.33,55,011 and disallowed interest expenses of Rs.3,10,478. The assessee, APEX THERM PACKAGING P. LTD, had declared a 'NIL' income in its return and received unsecured loans from 17 lenders. The CIT(A) deleted the additions and disallowances, which was upheld by the ITAT. The Commissioner of Income Tax appealed to the Gujarat High Court, challenging the ITAT's decision. The High Court, after reviewing the submissions and evidence, agreed with the lower authorities' decisions, noting that the assessee had provided adequate documentation and that the loans were properly recorded in the financial statements.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 742828 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 20-12-2013
• Assessment Year: misc
• Other Referred Cases: Rohini Builders 256 ITR 360, Orissa Corporation Ltd. 153 ITR 78, N.R. Portfolio (Supra)
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: S UDHIR M EHTA
• Keywords: Assessing Officer; CIT(A); Income tax appellate tribunal; Interest expenses; Unexplained cash credits; Unsecured loans
• Section: 142(1); 68

Judgement Text

"O/TAXAP/1070/2013 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1070 of 2013 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.D.KOTHARI ====================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ====================================== COMMISSIONER OF INCOME TAX 1....Appellant(s) Versus APEX THERM PACKAGING P. LTD.....Opponent(s) ====================================== Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1 ====================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.D.KOTHARI Date : 20/12/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) Page 1 of 6 O/TAXAP/1070/2013 JUDGMENT 1. Being aggrieved and dissatisfied with the impugned judgment and order passed by the Income Tax Appellate Tribunal (hereinafter referred to as ‘ITAT’) dated 10/05/2013 in ITA No. 1151/AHD for the Assessment Year 2007-08, the revenue has preferred the present Tax Appeal with the following proposed questions of law; (a) Whether in facts and in law the tribunal was justified in confirming the action of CIT(A) in deleting the addition made on account of unexplained cash credits under Section 68 of the Income Tax Act of Rs.33,35,011/-? (b) Whether in facts and in law the tribunal was justified in confirming the action of CIT(A) in deleting the addition made on account of interest expenses of Rs.3,10,478/-? 2. The assessee filed the return of income for the year under consideration declaring the total income of ‘NIL’. In the return of income filed by the assessee-Company, it disclosed the receipt of new unsecured loans with respect to 17 lenders. The assessee-Company was asked to furnish the confirmation letter, copy of acknowledgment of lenders, their balance sheet and bank statement for the year under consideration vide notice under Section 142(1) of the Income Tax Act. It appears that the assessee-Company furnished the confirmation letter, details of assessability and balance sheet of most of the lenders, except in the case of two lenders. Despite the above, the Assessing Officer made the addition of Rs.33,55,011/- Page 2 of 6 O/TAXAP/1070/2013 JUDGMENT under Section 68 of the Income Tax Act and accordingly taxed the assessee. Consequently, the Assessing Officer disallowed the interest amount of Rs.3,10,478/-. 3. Being aggrieved and dissatisfied with the assessment order passed by the Assessing Officer directing to make the addition of Rs.33,55,011/- under Section 68 of the Income Tax Act and disallowance of Rs.3,10,478/- towards interest, the assessee preferred appeal before the CIT(A) and vide order dated 10/02/2010 CIT(A) allowed the said appeal and deleted the addition of Rs.33,55,011/- made under Section 68 of the Income Tax Act as well as deleted the disallowance of Rs.3,10,478/- towards interest. 4. Being aggrieved and dissatisfied with the order passed by the CIT(A), the revenue preferred appeal before the ITAT and by impugned judgment and order ITAT has dismissed the said appeal. Being aggrieved and dissatisfied with the impugned judgment and order passed by the ITAT, the revenue has preferred the present Tax Appeal to consider the aforesaid substantial questions of law. 5. Heard Shri Sudhir Mehta, learned advocate appearing on behalf of the revenue. At the outset, it is required to be noted that the Assessing Officer directed to make the addition of Rs.33,55,011/- under Section 68 of the Income Tax Act with respect to 17 lenders. However, it has been found that with respect to most of the lenders, except two, necessary documents, inclusive of confirmation with name, address and PAN Numbers, copy of the IT return and acknowledgment, balance sheet and profit and loss account and computation of Page 3 of 6 O/TAXAP/1070/2013 JUDGMENT total income in respect of all the parties, except two parties, were furnished before the Assessing Officer. Even with respect to the remaining two depositors the assessee filed the confirmation, address and PAN Numbers. Under the circumstances, when it was found that the assessee already discharged the initial onus cast upon him with respect to all the creditors and accordingly when the CIT(A) has deleted the addition of Rs.33,55,011/- made under Section 68 of the Income Tax Act and consequently deleted the disallowance of Rs.3,10,478/-, which was made with respect to interest and when the same has been confirmed by the ITAT, it cannot be said that ITAT has committed any error and/or illegality, which calls for the interference of this Court. In paragraph 11, ITAT has observed and held as under; “We have heard the rival submissions and perused the material on record. It is an undisputed fact that during the year the assessee had received loan from 17 parties aggregating to 33,35,011/-. The details of which are listed at page 2 of Assessing Officer order. CIT(A) while deleting the addition has given a finding that the assessee had filed before Assessing Officer the confirmations with name, address, PAN Number, copy of ledger account, copy of balance sheet and profit and loss account, copy of Income Tax returns and computation of total income in respect of all the parties except two depositors. With respect to the two depositors, the assessee had filed confirmation, address and PAN Numbers and hence the assessee had also discharged the initial onus cast upon the assessee with respect to Page 4 of 6 O/TAXAP/1070/2013 JUDGMENT the two creditors. He has further noted that the loans were received through cheques and the loan account were duly reflected in the balance sheet of lenders CIT(A) has further held once the onus was fulfilled by the assessee, it was for the Assessing Officer to examine and bring any material on record which may help in rebutting the onus of assessee. The Assessing Officer has not brought any material on record in its support CIT(A) while deleting the addition has also relied on the decision of the Hon’ble Gujarat High Court in the case of Rohini Builders 256 ITR 360 and the decision of Hon’ble Supreme Court, in the case of Orissa Corporation Ltd. 153 ITR 78. Before us, nothing has been brought on record by the revenue to controvert the findings of CIT(A). Revenue has relied on the decision of Hon’ble Delhi High Court in the case of N.R. Portfolio (Supra). We however find that the ratio of the aforesaid Delhi High Court decision are distinguishable on facts and therefore cannot be applied to the facts of the present case. In view of the aforesaid facts, we find no reason to interfere with the order of CIT(A) and thus dismiss this ground of revenue.” 6. We are in complete agreement with the reasoning given by the CIT(A) as well as the ITAT. When full particulars, inclusive of the confirmation with name, address and PAN Number, copy of the Income Tax Returns, balance sheet, profit and loss accounts and computation of the total income in respect of all the creditors/lender were furnished and when it has been found that the loans were received through cheques and the loan account were duly reflected in the balance sheet, Page 5 of 6 O/TAXAP/1070/2013 JUDGMENT the Assessing Officer was not justified in making the addition of Rs.33,55,011/-. Under the circumstances, no question of law, much less substantial question of law arises in the present Tax Appeal. Accordingly, the present Tax Appeal deserves to be dismissed and is accordingly dismissed. (M.R.SHAH, J.) (R.D.KOTHARI, J.) Siji Page 6 of 6 "