Appeal details
Counselvise Citation
[2024] 101 COUNSELVISE.COM (IT) 6733 (ITAT-SURAT)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-05-2024
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
30-04-2024
Assessment Year
2015-2016
Appeal Filed On
04-01-2024
Judgement Text
आयकर अपीलीय अिधकरण, सुरत Ɋायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आ.अ.सं./ITA No.10/SRT/2024 (AY 2015-16) (Hearing in Physical Court) Mahavir Corporation 4-Bungalow No.5, Anand Nagar, Kailash Nagar, Sagarampura, Surat-395002 [PAN No. AARFM 7126 Q] Vs Income Tax Officer, Ward- 1(2)(3), Surat, Old Ward-1(2)(1) Aayakar Bhavan, Near Majura Gate, Opp. New Civil Hospital, Surat-395001 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri Rajesh M. Upadhayay, AR राजˢ की ओर से /Revenue by Shri Ritesh Mishra, CIT-DR अपील पंजीकरण/Appeals instituted on 05.01.2024 सुनवाई की तारीख/Date of hearing 01.05.2024 उद्घोषणा की तारीख/Date of pronouncement 31.05.2024 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi [ for short, “NFAC)/Ld. CIT(A)”] dated 13.12.2023 for the assessment year 2015-16, which in turn arises out of assessment order passed by Assessing Officer under section 144 of Income Tax Act, 1961 (‘the Act’) on 29.12.2017. The assessee has raised the following grounds of appeal: “1. The Ld. CIT(A), NFAC, Delhi has erred in law and on fact to upheld AO’s addition of Rs.1,42,85,813/- made on account of alleged unexplained cash credit u/s 68 of the IT Act.” 2. Brief facts of the case are that assessee filed its return of income for assessment year 2015-16 on 27.09.2015 declaring income at Rs.1,30,910/. The case was selected for “limited scrutiny” for reasons of mismatch in ITA No.10/SRT/2024 (A.Y 15-16) Mahavir Corporation 2 amount paid to related parties under section 40A(2)(b), reported in audit report and large increase of unsecured loan during the year. During assessment, the Assessing Officer noted that assessee had taken unsecured loan of Rs.4.96 crores. The assessee was issued show cause notice to prove the identity, creditworthiness in genuineness of transactions of unsecured loans. The Assessing Officer noted that assessee furnished reply and conformation, without furnishing any evidence establishing the identity creditworthiness and genuineness of such transactions. The Assessing Officer took his view that assessee failed to satisfy the three conditions to prove the genuineness of such unsecured loans. The Assessing Officer treated the said unsecured loan aggregating of Rs.4.96 crores and added under section 68 of the Act in his assessment order passed under section 144 of the Act on 29.12.2017. Aggrieved by the addition made in the assessment order as well as passing order under section 144, the assessee filed appeal before Ld.CIT(A). 3. Before Ld.CIT(A) assessee filed detailed written submission. In the submission, assessee stated that majority of loans were received in earlier years. The total amount of unsecured loan including balance of unsecured loan of Rs.3.496 crores as on 31.03.2015, majority of which are old loan, which was taken earlier years. The increase in loan balance is only on account of interest application. The assessee furnished bifurcation of old loan as outstanding on 31.03.2015 including of interest of Rs.3.53 crores as well as new loans taken during the year along with interest as on 31.03.2015 of Rs.1.42 crores. In order to prove the genuineness of loan, assessee ITA No.10/SRT/2024 (A.Y 15-16) Mahavir Corporation 3 furnished copy of ledger account for confirmation of various parties. The assessee stated that loans taken in earlier years cannot be added under section 68 of the Act in the year under consideration as all such loans are clearly evident in the audit report for assessment year 2013-14, which is already on record. Thus, the addition to the extent of Rs.3.53 crores is to be deleted. In respect of loan of Rs.1.42 crores, the assessee stated that these loans inclusive of interest amount and opening balance. The fresh loan during the year is only of Rs.1.22 crores, details of which, was furnished separately. Old loans were taken through account payee cheque. The assessee furnished confirmation, bank statement, ITR and balance-sheet of various lenders along with their reply dated 23.12.2017 before Assessing Officer. The Assessing Officer has not taken such submission on record and made addition. The assessee further filed copy of confirmation, bank statement, ITR etc., To support its contention, assessee relied on various case law. 4. The submission of assessee was forwarded to the Assessing Officer for his remand report. The Assessing Officer filed his remand report dated 17.07.2023 as recorded in para-6.2 of the order of Ld.CIT(A). In the remand report, the Assessing Officer reported that assessee filed its submission without any documentary evidence that outstanding loan as on 31.03.2015 could not be ascertained as the paper book filed by the assessee is not available in his office. The Assessing Officer reiterated that copy of ITR and confirmation of bank accounts of creditors were not furnished. The copy of remand report was furnished / supplied to the assessee for making his ITA No.10/SRT/2024 (A.Y 15-16) Mahavir Corporation 4 “comment”. The assessee filed its comment vide / reply rejoinder dated 11.12.2023. In rejoinder, the assessee has filed numerous documentary evidence during assessment proceedings as well as along with submission dated 10.08.2020 and 23.11.2023 respectively. The assessee stated that all such submissions and evidence were forwarded before Assessing Officer for furnishing remand report. Therefore, it is not correct to say that submission of assessee was without any evidence, neither the Assessing Officer nor the assessment unit called any further details or evidence during the course of remand proceedings. Even the documents available on assessment record was also ignored. The assessee reiterated that it also furnished repayment of new unsecured loan. Therefore, appeal of assessee may be decided. 5. The Ld.CIT(A) on considering the submission of assessee prepared a summary of unsecured loan from 25 parties as recorded on page-16 of his order. The Ld.CIT(A) prepared a summary of opening cash balance as on 01.04.2014, closing balance as on 31.03.2015 and new funds / loans received during the year. For appreciation of fact, summary prepared by Ld.CIT(A) is reproduced below: Sr. No. Name of lender Opening balance as on 01.04.14 Closing balance as on 331.03.15 New funds procured during the year 1 Ashok K Mehta 6,18,641 6,00,000 2 Babulal M Sanghavi HUF 4,30,536 4,00,000 3 Balvant S Thakur 5,36,247 10,23,632 4,00,000 4 Bhikha P Patel 2,20,594 2,00,000 5 Chhaya S Shah 21,82,860 20,00,000 6 Ganmal V Shah 8,50,360 8,00,000 7 Gita C Patel 3,19,085 3,00,000 8 Haresh L. Chaudhari 5,39,946 5,00,000 9 Hina a Nai 2,01,447 2,00,000 10 Jayesh N Shah 12,45,479 19,28,073 5,00,000 11 Jitendra H Mehta 5,50,597 5,00,000 12 Kalu Govindbhai 3,22,014 3,00,000 13 Kishor H Anjara 5,12,576 5,00,000 ITA No.10/SRT/2024 (A.Y 15-16) Mahavir Corporation 5 14 Mahendra H Sheth 3,14,469 3,00,000 15 Himmatlal C Mehta 5,47,786 5,00,000 16 Poojan Gems 53,436 50,000 17 Pradip S Prajapati 5,25,003 5,00,000 18 Sachin SParekh 7,41,424 7,00,000 19 Samkit V Sanghavi 2,67,310 2,50,000 20 Samkit V Sanghavi HUF 5,34,619 5,00,000 21 Silkesh R Parekh 5,08,877 5,00,000 22 Suresh H Sheth 8,01,677 14,385 7,00,000 23 Vajsurbhai R Bhukan 4,87,326 4,50,000 24 Varshaben H Chaudhari 3,20,327 3,00,000 25 Viken MSheth 2,70,490 2,50,000 Total 25,83,403 1,42,85,813 1,22,00,000 6. The Ld.CIT(A) on examination of aforesaid details noted that income of all the persons except, party No. 22, Suresh S Sheth is of Rs.2.50 lakh to Rs.3.00 lakhs on which no tax is payable as most of these creditors declared presumptive income. Most of the bank accounts have meagre opening balance in almost all cases the amounts were transferred in their bank account a few days prior to date of transfer or deposited just prior to transfer. All the persons are living nearby in Surat. Thus, assessee has not been able to satisfactory prove the genuineness of the transaction and creditworthiness of the creditors. The assessee has paid interest of Rs.20,85,403/- to the creditors. On the basis of aforesaid observation, the Ld.CIT(A) confirmed the addition to the extent of Rs.1.42 crores and remaining addition of Rs.3.35 crores, which was closing balance of loans were deleted. Further aggrieved, the assessee has filed present appeal before the Tribunal. 7. We have heard the submission of Ld. Authorized Representative (Ld.AR) for the assessee and Ld. Commissioner of Income Tax- Departmental- Representative (Ld. CIT-DR) for the Revenue and have gone through the ITA No.10/SRT/2024 (A.Y 15-16) Mahavir Corporation 6 order of lower authorities carefully. The ld AR for the assessee submits that majority of loans were received in earlier years. The total unsecured loan including balance of unsecured loan of Rs.3.496 crores as on 31.03.2015, majority of which are old loan, which was taken earlier years. The bifurcation of old loan as outstanding on 31.03.2015 including of interest of Rs.3.53 crores as well as new loans taken during the year along with interest as on 31.03.2015 of Rs.1.42 crores. The ld AR for the assesses submits that in order to prove the genuineness of loan, assessee furnished the address, PAN and copy of ledger account with confirmation of various parties. The loans taken in earlier years cannot be added under section 68 of the Act in the year under consideration as all such loans are clearly evident in the audit report for assessment year 2013-14, which is already on record. The ld CIT(A) on appreciation of such facts deleted the addition to the extent of Rs.3.53 Crore. With regards to loan of Rs.1.42 crores, the ld AR for the assessee argued that these loans inclusive of interest amount and opening balance. The fresh loan during the year is only of Rs.1.22 crores, details of which, was furnished separately. Old loans were taken through account payee cheque. The assessee furnished confirmation, bank statement, ITR and balance-sheet of various lenders along with their reply dated 23.12.2017 before Assessing Officer. Copy of confirmation, bank statement, ITR of the parties are filed on record. The ld AR for the assessee submits that the assessee discharged his primary onus in furnishing complete details about identity, creditworthy and genuineness of transaction, the onus shifts on the Assessing Officer to prove its otherwise by making independent ITA No.10/SRT/2024 (A.Y 15-16) Mahavir Corporation 7 investigation. No independent investigation was carried out by the Assessing Officer. The Assessing Officer made addition on the basis of surmise and conjecture and suspicion. The ld AR for assessee submits that in case of individual assessee he was not required to prove source of source. The ld AR for the assessee submits that entire loan was repaid in the next financial year, the details of which is filed at page No. 12 & 12A of the paper book (PB). The revenue has not disputed the repayment in next financial year. In support if his submissions the ld AR for the assessee relied on the following case laws; DCIT Vs Rohini Builders (256 ITR 230 Gujarat), CIT Vs Ranchod Jivabhai Nakahava (Tax Appeal No. 50 of 2011 dated 20.03.2012, CIT Vs Ayachi Chandrashekhar Narsangji (2014) 42 taxmann.com 251 (Guj) CIT Vs Dhooti Pearls & Investment Ltd (94 CCH 171 Delhi), CIT Vs Value Capitals (Tax Appeal No. 348 of 2008), CIT Vs Hanuman Agarwal (151 ITR 150 Patna), CIT Vs Orrisa Corporation (P) Ltd (1986) (52 CTR 138-SC), CIT Vs Daulatram Rawatmull (87 ITR 349-SC), CIT Vs Micro Melt (P) Ltd [2010] 327 ITR 70 (Guj), DCIT Vs Shri Asit Surendrabhai Shah (ITA No. 945/Ahd/2018), Nemichand Chand Kothari Vs CIT (264 ITR 254 Gau.). 8. On the other hand, the ld Sr DR for the revenue supported the order of ld. CIT(A). The ld Sr DR for revenue submits that the ld CIT(A) has already allowed relief with regard to loan which was taken in earlier year. The ld SR DR for the revenue submits that the assessee is not eligible for further relief as per the specific finding of ld CIT(A) on page 17 of his order that most of the lenders are showing the return of income ranging from Rs. 2.50 Lacs to ITA No.10/SRT/2024 (A.Y 15-16) Mahavir Corporation 8 Rs. 3.00 lacs. Thus, the lenders are not creditworthy. The ld CIT-DR for revenue prayed for dismissal of appeal. 9. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities carefully. We have also deliberated on various case laws relied by the ld. AR for the assessee. The AO made addition of unsecured loan of Rs. 4.59 Crore by taking view that such loan remained unexplained as the assessee has not furnished satisfactory evidences. We find that before ld CIT(A) the assessee submitted that total amount of unsecured loan including balance of unsecured loan of Rs.3.496 crores as on 31.03.2015 and that majority of which are old loan, which was taken earlier years. The increase in loan balance is only on account of interest application. The assessee furnished bifurcation of old loan as outstanding on 31.03.2015 including of interest of Rs.3.53 crores as well as new loans taken during the year along with interest as on 31.03.2015 of Rs.1.42 crores. The assessee also filed copy of ledger account for confirmation of various parties. The assessee stated that loans taken in earlier years cannot be added under section 68 of the Act in the year under consideration as all such loans are clearly evident in the audit report for assessment year 2013-14, which is already on record. It was the contention of assessee that the addition to the extent of Rs.3.53 crores is to be deleted. With regard to loan of Rs.1.42 crores, the assessee stated that these loans inclusive of interest amount and opening balance. The fresh loan during the year is only of Rs.1.22 crores, details of which, was furnished separately. Old loans were taken through account payee cheque. The assessee ITA No.10/SRT/2024 (A.Y 15-16) Mahavir Corporation 9 furnished confirmation, bank statement, ITR and balance-sheet of various lenders along with their reply dated 23.12.2017 before Assessing Officer. On the submissions of the assessee, the ld CIT(A) obtained remand report of the Assessing Officer. The contents of remand report is recorded in para 6.2 of order of ld CIT(A). We find that in the remand report the Assessing Officer objected about admission of evidences. Against the remand report the assessee filed its objections and objected against the report of Assessing officer. The assessee in its rejoinder dated 11.12.2023 contended that the assessee during assessment made detailed submissions during assessment as well as during remand proceedings. We find that ld CIT(A) on considering the submissions of assessee, assessment order and remand report furnished by the Assessing Officer prepared a summary of opening cash balance as on 01.04.2014, closing balance as on 31.03.2015 and new funds / loans received during the year, which we have reproduced in para-5 (supra). The ld CIT(A) confirmed the addition to the extent of Rs.1.42 crores and remaining addition of Rs.3.35 crores, which was closing balance of loans were deleted. 10. Before us the ld AR for the assessee vehemently argued that the entire loan amount has been repaid in subsequent assessment year. The assessee has also filed the details of repayment by way of banking channel alongwith the bank details and filed copy of the pass book or bank details. All the details are available on page No. 12 and 12A of paper book. On cross verification, we find that the details of repayments are correct. Even otherwise, such repayments are not controverted by the revenue, despite providing all the ITA No.10/SRT/2024 (A.Y 15-16) Mahavir Corporation 10 details in advance. We find that the Hon'ble Jurisdictional High Court in CIT Vs Ayachi Chandrashekhar Narsangji (supra) held that where the department has accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. We find that on the basis of such legal ratio, this bench in various cases including in ACIT Vs Naresh Nemchand Shah (2023) 146 taxmann.com 351 (ITAT Surat), Rajhans Construction (P) Ltd. (2022) 140 taxmann.com 370 (ITAT Surat) has taken a similar view. 11. The Hon'ble Jurisdictional High Court in CIT Vs. Amber Tradecorp (P) ltd. ((2022) 145 taxmann.com 27 (Guj) also held that where the assessee took loan from two parties and assessee has furnished requisite material showing identity of loan givers and that assessee was not beneficiary as loan was repaid in subsequent year, no addition under Section 68 could be made on account of such loan. The Hon'ble Gujarat High Court in the case of DCIT Vs Rohini Builders (supra) also held that when the assessee has discharged initial onus by providing identity of all creditors by giving their complete addresses, GIR numbers, PAN and copy of assessment orders wherever readily available and proved the capacity of creditors that amounts were paid through cheques. Repayment of loan and interest thereon was also made by cheques; the Assessing Officer was not justified. 12. The Hon'ble Delhi High Court in the case of CIT Vs. Usha Stud Agricultural Farms Ltd. (2008) 301 ITR 384 (Delhi), Allahabad High Court in CIT Vs Raghurai Argo Industries (P) Ltd. (2012) 349 ITR 260 (Allah) held that no addition under Section 68 of the Act can be made in respect of opening ITA No.10/SRT/2024 (A.Y 15-16) Mahavir Corporation 11 balance of the depositors/lender. Similar view was taken by Mumbai Tribunal in ITO Vs Shri Nasir Khan J. Mahadik ITA No.153/Mum/2010, Sooraj Leathers ITA No. 305/Mum/2016 and Delhi Tribunal in Surajbhan Bajaj Vs ITO (2008) 21 SOT 22. Thus, in view of the aforesaid factual and legal discussion, we find that once the assessee furnished complete details of lenders including repayment of unsecured loan, the ld CIT(A) was not justified in confirming the addition of such unsecured loan to the extent of Rs. 1.42 Crore. Thus, ground of appeal raised by assessee is allowed. 13. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 31/05/2024. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) [लेखा सद˟/ACCOUNTANT MEMBER] [Ɋाियक सद˟ JUDICIAL MEMBER] Surat, Dated: 31/05/2024 Dkp. Out Sourcing Sr. P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT(A) 4. CIT 5. DR 6. Guard File True copy/ By order Sr. Private Secretary /Private Secretary /Assistant Registrar, ITAT, Surat
