M/s. Rajmahal Quartz Sand & Kaolin Co., Kolkata V. ACIT, Circle - 36, Kolkata, Kolkata

ITA 1029/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6901 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 16-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANKAR HALDER
• Assessee Lawyers: ARVIND AGARWAL; RAJAT AGRWAL
• Keywords: Unexplained cash credit
• Section: 143(3); 133(6); 143(1); 131; 68; 27; 28

Judgement Text

1 ITA NO 1029/KOL/2018 M/S. RAJMAHAL QUARTZ SAND & KAOLIN CO. , AY-2014-15 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) BEFORE . . , /AND . , ) [BEFORE SHRI A. T. VARKEY, JM & SHRI M. BALAGANESH , AM] I.T.A. NO. 1029/KOL/2018 ASSESSMENT YEAR: 2014-15 M/S. RAJMAHAL QUARTZ SAND & KAOLIN CO. (PAN: AAEFR5525R) VS. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-36, KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 04.02.2019 DATE OF PRONOUNCEMENT 01.05.2019 FOR THE APPELLANT S/SHRI ARVIND AGARWAL, ADVOCATE & RAJAT AGRWAL, FCA FOR THE RESPONDENT SHRI SANKAR HALDER, JCIT, SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-10, KOLKATA DATED 20.02.2018 FOR AY. 2014-15. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST TH E ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF UNSECURED LOAN OF RS. 14 ,00,000/- AS ALLEGED UNEXPLAINED CASH CREDIT U/S. 68 OF THE INCOME-TAX ACT, 1961 (HEREINA FTER REFERRED TO AS THE ACT). 3. BRIEF FACTS OF THE CASE ARE THAT THE AO NOTED TH AT THE ASSESSEE HAS TAKEN UNSECURED LOAN DURING THE YEAR FROM M/S. A.B.M. FINLEASE PVT. LTD. (IN SHORT M/S. ABM) AND FROM OTHER THREE LENDERS WHICH THE AO NOTED THAT THESE U NSECURED LOANS WERE CARRIED FORWARD FROM PREVIOUS YEARS. THEREFORE, IN ORDER TO VERIFY THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LENDERS, NOTICES WERE ISSUED U/S . 133(6) OF THE ACT WHICH WAS RETURNED BACK WITH THE REMARK ADDRESS NOT KNOWN. SINCE TH E NOTICES U/S. 133(6) OF THE ACT AND SUMMONS U/S. 131 OF THE ACT COULD NOT BE SERVED, SH OW CAUSE NOTICE WAS ISSUED AGAINST THE 2 ITA NO 1029/KOL/2018 M/S. RAJMAHAL QUARTZ SAND & KAOLIN CO. , AY-2014-15 ASSESSEE AND THE ASSESSEE WAS ASKED TO PRODUCE THE DIRECTORS OF THE LENDER COMPANY BEFORE THE AO. THEREAFTER, THE AO ACKNOWLEDGES THAT THE AS SESSEE COULD PRODUCE BEFORE HIM ONLY ONE OF THE DIRECTORS SHRI JITENDRA KUMAR GOYAL OF M /S. ABM AND A STATEMENT WAS RECORDED U/S. 131 OF THE ACT. THE AO NOTED CERTAIN ANOMALIE S FROM THE STATEMENT OF THIS DIRECTOR OF M/S. ABM. THEREAFTER, IN THE ASSESSMENT ORDER THE AO GOES ON TO DESCRIBE THE MODUS OPERANDI OF PAPER COMPANIES LIKE ASSESSEE TO ROUTE THEIR OWN MONEY THROUGH JAMAKHARCHI/SHELL/PAPER COMPANIES WHICH THE AO REPR ODUCED FROM PAGES 3 TO 6 OF HIS ORDER AND, THEREAFTER RELYING ON FEW CASE LAWS ADDED THE AMOUNT OF RS.14 LACS WHICH THE ASSESSEE RECEIVED IN THIS ASSESSMENT YEAR U/S. 68 OF THE ACT . AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO CO NFIRM THE ORDER OF THE AO. AGGRIEVED, THE ASSESSEE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE AO AFTER TAKING NOTE THAT AS SESSEE HAD RECEIVED A LOAN OF RS. 14 LACS THIS YEAR FROM M/S. ABM, ADDED THE AMOUNT FINDING C ERTAIN DISCREPANCY IN THE STATEMENT RECORDED BY HIM U/S. 131 OF THE ACT OF ITS DIRECTOR MR. JITENDRA KUMAR GOYAL OF M/S. ABM. IT WAS BROUGHT TO OUR NOTICE THAT THE ASSESSEE HAS RECEIVED LOAN FROM THE SAID LOAN CREDITOR FROM FY 2009-10 AND SINCE THEN TILL FY 2014-15 IT HAD CONTINUED TO HAVE BUSINESS WITH IT. IT WAS ALSO BROUGHT TO OUR NOTICE THAT THOUGH THE A O SAYS THAT THE NOTICE U/S. 133(6) OF THE ACT WAS NOT SERVED, THE LD. AR DREW OUR ATTENTION T O COPY OF NOTICE AND ENVELOP DULY ANNEXED AT PAGES 19 AND 20 OF THE SECOND PAPER BOOK AND ALSO DREW OUR ATTENTION TO PAGES 10 AND 11 OF THE FIRST PAPER BOOK TO SHOW THAT THE SAID AVERMENT OF AO WAS FACTUALLY INCORRECT AND THE NOTICES WERE INFACT DULY SERVED, WHICH WE FIND TO BE CORRECT. THE LD. AR DREW OUR ATTENTION TO THE EXTRACT FROM THE DEPOSITI ON MADE BEFORE THE AO AND DREW OUR ATTENTION TO THE FACT THAT THE AO HAS CHERRY-PICKED SOME ANSWERS TO CERTAIN LEADING QUESTIONS WHICH WERE QUITE CONFUSING AND, THEREAFTE R, HAS FOUND FAULT WITH FEW ANSWERS WHICH, ACCORDING TO HIM, IS NOT RELEVANT TO MAKE AN Y ADVERSE INFERENCE AGAINST THE LENDER M/S. ABM. THE LD. AR DREW OUR ATTENTION TO THE LOA N CONFIRMATION WHICH IS PLACED AT PAGE 3 ITA NO 1029/KOL/2018 M/S. RAJMAHAL QUARTZ SAND & KAOLIN CO. , AY-2014-15 28 OF THE SECOND PAPER BOOK AND WE NOTE THAT THE PA YMENTS HAVE BEEN MADE THROUGH BANK TRANSACTION WHICH WE FIND PLACED AT PAGES 23 TO 27 OF THE SECOND PAPER BOOK. WE ALSO NOTE THAT THE LENDER IN QUESTION M/S. ABM HAS PROVIDED PAN CARD, AUDITED ACCOUNTS, ITR ACKNOWLEDGMENT, PROOF OF ADDRESS BEFORE THE AO WHIC H ARE PLACED AT PAGES 2 TO 22 OF SECOND PAPER BOOK. THE LD. AR DREW OUR ATTENTION T O THE ASSESSMENT ORDERS PASSED U/S. 143(3) OF THE ACT IN RESPECT OF M/S ABM FOR AYS 201 4-15 AND 2015-16 WHICH ARE PLACED AT PAGES 30 TO 39 OF THE SECOND PAPER BOOK. THUS, WE FIND THAT THERE CAN BE NO QUESTION RAISED AGAINST THE IDENTITY AND GENUINENESS OF THE TRANSAC TION. IN CASE THE AO HAD ANY DOUBT ABOUT THE CREDITWORTHINESS OF THE LOAN CREDITOR THEN IT W AS INCUMBENT UPON THE AO TO ENQUIRE FROM THE AO OF M/S. ABM THEN ONLY HE COULD HAVE DRAWN AN Y ADVERSE INFERENCE AGAINST M/S. ABM AS HELD BY THE HONBLE JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT VS. DATAWARE (P) LTD. ITA NO. 263 OF 2011 DATED 21.09.2011, WHEREIN THE HONBLE HIGH COURT HAS HELD THAT IN CASE IF THE AO HAS DOUBT REGARDING THE CREDITWOR THINESS OF THE LOAN CREDITOR, THEN THE AO IN TURN HAD TO SEEK REPORT FROM THE AO OF THE LOAN CREDITOR AND AFTER GETTING THE REPORT FROM THE SAID AO, THEREAFTER ONLY ADVERSE INFERENCE IF A NY CAN BE DRAWN AGAINST THE LOAN CREDITOR. THEREFORE, TAKING INTO ACCOUNT OF THIS FACT AS WELL AS AFTER PERUSAL OF THE DOCUMENTS DISCUSSED, SUPRA, WE ARE OF THE OPINION THAT ASSESS EE HAS DISCHARGED ITS ONUS CASTED U/S. 68 OF THE ACT IN RESPECT TO THE LOAN IT HAD TAKEN FROM M/S. ABM TO THE TUNE OF RS. 14 LACS AND, THEREFORE, ADDITION U/S. 68 OF THE ACT WAS NOT WARR ANTED AND THEREFORE, THE ADDITION MADE OF RS. 14 LAKHS IS DIRECTED TO BE DELETED. 5. COMING TO THE NEXT GROUND OF APPEAL OF THE ASSES SEE IS AGAINST THE ACTION OF THE LD. CIT(A) IN DISALLOWING INTEREST OF RS.8,28,399/- PAI D TO THE LOAN CREDITORS ON THE ALLEGED GROUND THAT EXPENSES WERE BOGUS. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE HAD MADE PAYMENT OF INTEREST TO (I) M/S. MRINAL VINIMAY PVT. LTD. TO THE TUNE OF RS.4,84,274/-, (II) M/S. M RINAL NIRMAL PVT. LTD. TO THE TUNE OF 4 ITA NO 1029/KOL/2018 M/S. RAJMAHAL QUARTZ SAND & KAOLIN CO. , AY-2014-15 RS.22,500/-, (III) M/S. SHREST DISTRIBUTORS PVT. LT D. TO THE TUNE OF RS.1,83,750/- AND M/S. ABM TO THE TUNE OF RS.1,37,875/-, THUS TOTAL AMOUNT OF RS.8,28,399/-. WE NOTE THAT SINCE WE HAVE ALREADY FOUND THAT M/S. ABM HAS PROVED ITS IDENTITY AND GENUINENESS AND FOR THE REASONS GIVEN SUPRA, AND WE HAVE HELD THAT NO ADVER SE VIEW BE TAKEN AGAINST THE LENDER, SO NO ADDITION WAS WARRANTED, THEREFORE, THE INTEREST COMPONENT AS EXPENDITURE FOR THE LOAN TAKEN BY THE ASSESSEE HAS TO BE ALLOWED AND, THEREF ORE, INTEREST DISALLOWED TO THE TUNE OF RS.1,37,875/- IS DIRECTED TO BE DELETED. 7. COMING TO M/S. MRINAL VINIMAY PVT. LTD., WE NOTE THAT THE ASSESSEE HAS NOT TAKEN ANY UNSECURED LOAN DURING THIS YEAR AND INTEREST TO THIS LENDER WAS TO THE TUNE OF RS.4,84,274/-. ACCORDING TO THE AO, THE NOTICES U/ S. 133(6) OF THE ACT AND 131 OF THE ACT COULD NOT BE SERVED UPON M/S. MRINAL VINIMAY PVT. L TD., SO HE DREW ADVERSE VIEW AGAINST THE SAID LENDER COMPANY. HOWEVER, THE LD. AR DREW OUR ATTENTION TO THE AFFIDAVIT GIVEN BY THE DIRECTOR OF THIS COMPANY THAT HE HAD IN FACT AP PEARED BEFORE THE AO BUT THE STATEMENT WAS NOT RECORDED AND IN ORDER TO PROVE THIS FACT TO OK US TO PAGE 14 OF THE PAPER BOOK FROM WHICH WE NOTE THAT THE DIRECTOR OF M/S. MRINAL VINI MAY PVT. LTD. WAS PRESENT BEFORE THE AO FROM 3 PM TO 7.30 PM ON 06.12.2016 BEFORE THE ACIT, CIRCLE-36, THE AO IN THIS CASE. MOREOVER, THE ASSESSEE IN ORDER TO PROVE THE IDENTI TY OF THE LOAN CREDITOR HAD PRODUCED THE ITR ACKNOWLEDGMENT, PROOF OF SERVICE OF NOTICE U/S. 131, VOTER ID OF DIRECTOR AND ALSO THE BANK STATEMENT SHOWING THAT THE LOAN WAS PAID TO TH E ASSESSEE THROUGH THE BANKING CHANNEL, AND THE LOAN CONFIRMATION HAS BEEN SUBMITTED BEFORE THE AO. THESE DOCUMENTS WE FOUND ARE PLACED AT PAGES 60 TO 64 OF THE SECOND PAPER B OOK. WE ALSO NOTE THAT THE INTIMATION IN RESPECT OF M/S. MRINAL VINIMAY PVT. LTD. U/S. 143( 1) IS PLACED AT PAGES 66 TO 73 IN THE SECOND PAPER BOOK. THUS, WE FIND THAT THE ASSESSEE HAS DISCHARGED ITS ONUS CASTED ON IT TO PROVE THE IDENTITY AND GENUINENESS OF THE TRANSACTI ON, THEREFORE, THERE WAS NO NECESSITY TO DISALLOW THE INTEREST EXPENDITURE ON THE LOANS THE ASSESSEE TOOK IN THE EARLIER YEARS, SO THE DISALLOWANCE OF RS.4,94,274/- WAS NOT WARRANTED AND SO DIRECTED TO BE DELETED. 5 ITA NO 1029/KOL/2018 M/S. RAJMAHAL QUARTZ SAND & KAOLIN CO. , AY-2014-15 8. COMING TO M/S. SHREST DISTRIBUTORS PVT. LTD., W E NOTE THAT THE ASSESSEE HAS NOT TAKEN ANY UNSECURED LOAN DURING THIS YEAR AND INTEREST TO THIS LENDER WAS TO THE TUNE OF RS.1,83,750/-. ACCORDING TO AO, THE NOTICE U/S. 13 3(6) OF THE ACT AND 131 OF THE ACT COULD NOT BE SERVED UPON M/S. SHREST DISTRIBUTORS PVT. LT D. SO HE DREW ADVERSE VIEW AGAINST THE SAID LENDER COMPANY. HOWEVER, THE LD. AR DREW OUR ATTENTION TO THE AFFIDAVIT GIVEN BY THE DIRECTOR OF THIS COMPANY THAT HE HAD IN FACT APPEAR ED BEFORE THE AO BUT THE STATEMENT WAS NOT RECORDED AND IN ORDER TO PROVE THIS FACT TOOK U S TO PAGE 15 OF THE PAPER BOOK FROM WHICH WE NOTE THAT THE DIRECTOR OF M/S. SHREST DISTRIBUTO RS PVT. LTD. WAS PRESENT BEFORE THE AO FROM 3 PM TO 7.30 PM ON 06.12.2016 BEFORE THE ACIT, CIRCLE-36, THE AO IN THIS CASE. IN ORDER TO PROVE THE IDENTITY OF THE LOAN CREDITOR, T HE ASSESSEE PRODUCED ITR ACKNOWLEDGMENT, PROOF OF SERVICE OF NOTICE U/S. 131, VOTER ID OF DI RECTOR AND ALSO THE BANK STATEMENT SHOWING THAT THE LOAN WAS PAID THROUGH THE BANKING CHANNEL AND THE LOAN CONFIRMATION HAS BEEN SUBMITTED BEFORE THE AO. THESE DOCUMENTS ARE FOUND PLACED AT PAGES 74 TO 97 OF THE SECOND PAPER BOOK. WE ALSO NOTE THAT THE INTIMATIO N U/S. 143(1) IS PLACED AT PAGES 99 TO 107 IN THE SECOND PAPER BOOK. THUS, WE FIND THAT T HE ASSESSEE HAS DISCHARGED ITS ONUS CASTED ON IT TO PROVE THE IDENTITY AND GENUINENESS OF THE TRANSACTION, THEREFORE, THERE WAS NO NECESSITY TO DISALLOW THE INTEREST EXPENDITURE ON T HE LOAN TAKEN ON EARLIER YEARS AND SO THE DISALLOWANCE OF INTEREST OF RS.1,83,750/- WAS NOT W ARRANTED AND SO DIRECTED TO BE DELETED. 9. COMING TO M/S. MRINAL NIRMAN PVT. LTD., WE NOTE THAT THE ASSESSEE HAS NOT TAKEN ANY UNSECURED LOAN DURING THIS YEAR AND THE INTEREST TO THIS LENDER COMPANY WAS TO THE TUNE OF RS.22,500/-. ACCORDING TO THE AO, NOTICE U/S. 133( 6) OF THE ACT AND 131 OF THE ACT COULD NOT BE SERVED UPON M/S. MRINAL NIRMAN PVT. LTD., SO HE DREW ADVERSE VIEW AGAINST THE SAID LENDER COMPANY. HOWEVER, THE LD. AR DREW OUR ATTEN TION TO THE AFFIDAVIT GIVEN BY THE DIRECTOR THAT HE HAD IN FACT APPEARED BEFORE THE AO BUT THE STATEMENT WAS NOT RECORDED AND IN ORDER TO PROVE THIS FACT TOOK US TO PAGE 13 OF T HE PAPER BOOK FROM WHICH WE NOTE THAT THE DIRECTOR OF M/S. MRINAL NIRMAL PVT. LTD. WAS PRESEN T BEFORE THE AO FROM 3 PM TO 7.30 PM ON 06.12.2016 BEFORE THE ACIT, CIRCLE-36, THE AO IN THIS CASE. IN ORDER TO PROVE THE 6 ITA NO 1029/KOL/2018 M/S. RAJMAHAL QUARTZ SAND & KAOLIN CO. , AY-2014-15 IDENTITY OF THE LOAN CREDITOR THE ASSESSEE PRODUCED , ITR ACKNOWLEDGMENT, PROOF OF SERVICE OF NOTICE U/S. 131, VOTER ID OF DIRECTOR AND ALSO T HE BANK STATEMENT SHOWING THE LOAN WAS PAID THROUGH THE BANKING CHANNEL AND THE LOAN CONFI RMATION HAS BEEN SUBMITTED BEFORE THE AO. THESE DOCUMENTS ARE FOUND PLACED AT PAGES 108 TO 134 OF THE SECOND PAPER BOOK. WE ALSO NOTE THAT THE INTIMATION U/S. 143(1) IS PLACE D AT PAGES 136 TO 143 IN THE SECOND PAPER BOOK. THUS, WE FIND THAT THE ASSESSEE HAS DISCHARG ED ITS ONUS CASTED ON IT TO PROVE THE IDENTITY AND GENUINENESS OF THE TRANSACTION, THEREF ORE, THERE WAS NO NECESSITY TO DISALLOW THE INTEREST EXPENDITURE OF RS.22,500/-, SO WE DIRECT I T TO BE DELETED. THEREFORE, THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED. 10. GROUND NO. 4 IS GENERAL IN NATURE SO DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 ST MAY, 2019. SD/- SD/- (M. BALAGANESH) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 ST MAY, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. RAJMAHAL QUARTZ SAND & KAOLIN C O., 1, NETAJI SUBHASH ROAD, 1 ST FLOOR, KOLKATA-700 001. 2 RESPONDENT ACIT, CIRCLE-36, KOLKATA. 3. 4. CIT(A)-10, KOLKATA (SENT THROUGH E-MAIL) CIT- , KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR