DCIT CIRCLE-3, Ranchi V. M/s Srilab Neo Packs Pvt Ltd, Bokaro

ITA 124/RAN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1953 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 14-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MOHANTY JCITSR
• Assessee Lawyers: M K CHOUDHARY
• Section: 40A(3); 142(1)

Judgement Text

1 ITA NO. 124 /RAN/20 17 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S.SAINI , ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 124 / RAN/20 1 7 ASSESSMENT YEAR : 20 1 2 - 20 1 3 DCIT, CIRCLE - 3, RANCHI V S M/S SRILAB NEO PACKS PVT LTD., IND IAN EXPLOSIVE LIMITED, GOMIA, BOKARO - 829111 PAN/GIR NO. : A AHCS 3004 J (APPELLANT ) .. RESPONDENT REVENUE BY : SHRI A.K.MOHANTY, JCIT(SR. DR) ASSESSEE BY : SHRI M.K.CHOUDHARY, ADVOCATE DATE OF HEARING : 19 . 11 .201 8 DATE OF PRONOUNCEMENT : 20 . 11 .201 8 O R D E R PER PAVAN KUMAR GADALE, JM : TH E REVENUE HAS FI LED THIS APPEAL AGAINST THE ORDER OF CIT(A) , RANCHI , DATED 02.03.2017 FOR THE ASSESSMENT YEAR 2012 - 2013 ON THE FOLLOWING GROUNDS OF APPEAL : - 1. ASSESSMENT IN THIS CASE WAS COMPLETED AT AN ASSESSED INCOME OF RS.2,58,85,590/ - BY THE ASSESSING OFFICER AGAINST THE RETURNED INCOME OF RS.6,330/ - SHOWN BY THE ASSESSEE. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE CIT(A), RAN CHI. THE CIT(A), RANCHI VIDE APPEAL NO.29/RAN/CB. 15 - 16 DATED 02.03.2017 HAS PARTLY ALLOWED THE APPEAL IN RESPECT OF THE SECURITY PREMIUM, UNSECURED LOAN AND PAYMENTS MADE U/S 40A(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT HEREINAFTER' THE ACT'). 2. RE GARDING UNSECURED LOAN AMOUNTING TO RS.1,19,55,000/ - : THE ACTION OF THE CIT(A) IN DELETING AN ADDITION OF RS.1,19,55,000/ - 2 ITA NO. 124 /RAN/20 17 MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD UNSECURED LOANS IS BAD IN OATH LAW AND FACTS. DURING THE GIVEN F.YR. , THE ASSESSEE HAD RECEIVED AN UNSECURED LOAN OF RS.92,00,000/ - FROM MODERN PAPER PRODUCTS AND RS.27,55,000/ - FROM MR. S.B. FLEXIPACKS. BUT THERE IS NO SUFFICIENT MATERIAL OF RECORD TO PROVE BEYOND DOUBT THE SOURCE AND GENUINENESS OF THIS TRANSACTION, AND CREDITWORTHINESS OF THE LENDERS. THUS THE A.O. WAS JUSTIFIED IN DISALLOWING THE SAID AMOUNT AND TREATING THIS TO BE THE INCOME OF THE ASSESSEE COMPANY. 3. THAT THE OTHER AND FURTHER GROUNDS WILL BE URGED AT THE TIME OF HEARING. 2 . BR IEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 29.09.2012 FOR THE ASSESSMENT YEAR 2012 - 2013 WITH TOTAL INCOME OF RS.6,330/ - . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE. THEREAFTER THE AO ON EXAMINATION OF BOOKS OF ACCOUNTS OF THE ASSESSEE, MADE ADDITIONS ON ACCOUNT OF SECURITY PREMIUM RECEIVED AT RS.1,29,39,805/ - , UNSECURED LOAN RECEIVED AT RS.1,27,83,583/ - AND PAYMENT IN CASH OF RS.1,55,871/ - AND ASSESSED THE TOTAL INCOME OF RS. 2,58,85,590/ - AND PASSED THE ORDER U/S.143(3) OF THE ACT, DATED 10.03.2015 . 3 . AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE AR O F THE ASSESSEE APPEARED AND ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO . THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE FINDINGS OF AO, PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 3 ITA NO. 124 /RAN/20 17 4 . AGGRIEVED BY THE ORDER OF C IT(A), THE REVENUE HAS FILE D AN APPEAL BEFORE THE TRIBUNAL AND LD. AR RELIED ON THE CIT(A) ORDER. 5 . WHEREAS, L D. DR SUPPORTED THE ORDER AO AND PRAYED FOR ALLOWING THE APPEAL. 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE C ONTENTION S OF LD. D R IS THAT THE CIT(A) HAS NOT CONSIDERED THE FINDINGS OF AO IN RESPECT OF UNSECURED LOANS AND THE AO HAS WORKED OUT IN DETAIL S IN RESPECT OF UNSECURED LOANS. THE LD . AR SUBMITTED THAT LD. CIT(A) HAS CALLED FOR THE REMAND REPORT AND BASED ON THE REMAND REPORT FROM THE AO , THE LD. CIT(A) HAS GRANTED RELIEF IN RESPECT OF RECEIPT OF UNSECURED LOAN OF RS.1,27,83,583/ - AND THE ADDITION U/S.40A(3) OF THE ACT , WHEREAS IN THE REMAND REPORT THE AO HAS STATED THAT SINCE THE ABOVE LISTED PAYMENTS U/S.40A(3) OF THE ACT EXCEED ED RS.2 0 000 / - , THE TRANSACTION IS THROUGH ACCOUNT PAYEE BANK DRAFT, THUS THEY DO NOT FALL UNDER THE AMBIT OF SEC.40A(3) OF THE ACT, THEREFORE, THE ADDITION MADE UNDER THIS HEAD DOES NOT STAND THE TEST OF LAW. WE FOUND THAT THE CIT(A) ON THE ISSUE OF FIRST GROUND OF APPEAL ON T HE DISALLOWANCE U/S.40A(3) OF THE ACT, OBSERV ED THAT THE AO HAS SUBMITTED THE REMAND REPORT IN RESPECT OF EXPENDITURE OF THE ELECTRICITY CHARGES. LD. CIT(A) DEALT ON THE ISSUE AT PARA 9 TO 9.2 AND OBSERVED THAT BASED ON THE REMAND REPORT , THE PAYMENTS WERE MADE TO JHAR KHAND ELECTRICITY BOARD THROUGH ACCOUNT PAYEE DRAFT, THEREFORE, THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED. AS FAR AS SECOND GROUND OF APPEAL IS CONCERNED IN RESPECT OF UNSECURED LOAN OF RS.1,19,55,000/ - , WE 4 ITA NO. 124 /RAN/20 17 FOUND THAT THE ASSESSEE RECEIVED UNSECURED LOAN OF RS.1,27,83,583/ - . THE CIT(A) HAS CALLED FOR THE REMAND REPORT AND HAVING SATISFIED WITH THE SUBMISSIONS AND OBSERVATIONS OF THE AO, HAS GRANTED R ELIEF IN FAVOUR OF THE ASSESSEE . WE F OUND THAT THE ASSESSEE HAS RECEIVED UNSECURED LOAN OF RS.92 LAKHS FROM MODERN PAPER PRODUCTS AND RS.27.55 LAKHS FROM S.B.FLEXIPACKS AND THE SAID CONCERNS WERE GRANTED LOANS FROM WEST BENGAL FINANCE CORPORATION. THE OBSERV ATION OF THE CIT(A) AT PARA 8.9 AND 8.10 AS UNDER : - [8.9] AS REGARDS M/S. MODERN PAPER PRODUCTS IN THE ASSESSMENT ORDER ITSELF THE LD. ASSESSING OFFICER HAS GIVEN THE DETAILS OF THE BANK STATEMENT FROM WHICH IT IS APPARENT THAT MODERN PAPER PRODUCT HAD RECEIVED FINANCE FROM WEST BENGAL FINANCE CORPORATION. I HAVE GONE THROUGH THE LETTER OF THE CREDITOR DATED 14.02.2015 ADDRESSED TO THE LD. ASSESSING OFFICER ENCLOSING THE BANK STATEMENT. I H AVE ALSO PERUSED THE LETTER OF WEST BENGAL FINANCE CORPORATION DATED 07.02.2012 BY WHICH THE CREDITOR WAS EXTENDED FINAN CIAL ASSISTANCE OF RS. 2 CRORES UNDER EQUIPMENT REFINANCE SCHEME. THIS AMOUNT WAS CREDITED IN THE BANK OF MODERN PAPER ON 22.02.2012 AND ON THE SAME DATE RS. 1 CRORE WAS TRANSFERRED TO THE ACCOUNT OF THE APPELLANT. ON 24.02.2012 THE APPELLANT HAD RETURNED RS . 8.00,000/ - . THUS THE IDENTITY OF THE CREDITOR, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE CREDITOR STANDS PROVED. [8.10] AS REGARDS M/S. S.B. FLEXIPACKS, I FIND THAT THE CREDITOR HAD CONFIRMED THE TRANSACTION. THE CREDIT OR TOO WAS REFINANCED BY THE WEST BENGAL FINANCE CORPORATION TO THE TUNE OF RS.1.98 CRORE. AN AMOUNT OF RS.30,00,000/ - WAS GIVEN TO THE APPELLANT ON 04.04.2011 BY BANK OF INDIA CHEQUE. THE APPELLANT HAD PAID BACK RS.10,00,000/ - ON 07.10.2011 AND HAD BORROW ED SUMS OF RS.8,55,000/ - AND RS.4,00,000/ - ON 09.03.2012 AND 13.03.2012 RESPECTIVELY BY CHEQUE. THE BALANCE WAS RS.27,55,000/ - AS ON 31.03.2012. THUS THE IDENTITY OF THE CREDITOR, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE CREDITOR STANDS PROVED. 7 . DURING THE COURSE OF HEARING THE LD. DR HAS ONLY SUPPORTED THE ORDER OF ASSESSING OFFICER AND COULD NOT BRING ANY NEW COGENT EVIDENCE TO 5 ITA NO. 124 /RAN/20 17 CONTROVERT THE FINDINGS OF THE CIT(A) IN THIS REGARD. ACCORDINGLY, WE ARE OF THE OPINION TH AT HAVING CONSIDERED THE REMAND REPORT AND FINDINGS OF THE AO AND SUBMISSIONS OF THE ASSESSEE, THE CIT(A) HAS PASSED A REASONED ORDER, WHICH WE UPHOLD THE SAME AND DISMISS THE GROUNDS OF APPEAL OF REVENUE. 8 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 / 11 /2018 S D/ - SD/ - (N.S.SAINI) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER RANCHI , DATED 20 / 11 /2018 PRAKASH KUMAR MISHRA , SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, //TRUE COPY// SR.PS, IT AT, RANCHI 1. THE APPELLANT DCIT, CIRCLE - 3, RANCHI 2. THE RESPONDENT M/S SRILAB NEO PACKS PVT LTD., INDIAN EXPLOSIVE LIMITED, GOMIA, BOKARO - 829111 3. THE CIT(A) CONCERNED 4. CIT , CONCERNED 5. DR, ITAT, RANCHI 6. GUARD FILE.