DCIT, Circle - 10(1), Kolkata , Kolkata V. M/s. Madhushree Sarees Pvt. Ltd., , Kolkata

ITA 1264/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7413 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-01-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 08-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHRUBAJYOTI ROY
• Assessee Lawyers: S M SURANA
• Keywords: Unexplained cash credit; Peak credit; Additional evidence; TDS
• Section: 143(3); 22; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1264 / KOL / 2018 ASSESSMENT YEAR :2013-14 DCIT, CIRCLE-10(1), AAYAKAR BHAWAN, 3 RD FLOOR, P-7, CHOWRNINGHEE SQUARE, KOLKATA-700 069 V/S . M/S MADHUSHREE SAREES PVT. LTD., 103, PARK STREET, 2 ND FLOOR, KOLKATA-700 071 [ PAN NO.AADCM 5024 C ] /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI DHRUBAJYOTI ROY, CIT-DR /BY RESPONDENT SHRI S.M. SURANA, ADVOCATE /DATE OF HEARING 13-01-2020 /DATE OF PRONOUNCEMENT 31-01-2020 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2013-14 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-4 KOLKATAS OR DER DATED 13.03.2018 PASSED IN CASE NO.79/CIT(A)-4/2016-17/KOL, INVOLVIN G PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUES FORMER SUBSTANTIVE GROUND PLEADS THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN REVERSING THE ASSESSIN G OFFICERS ACTION TREATING THE ASSESSEES UNSECURED LOANS OF 2,10,00,000/- AS UNEXPLAINED CASH CREDITS U/S. 68 OF THE ACT AND MORE PARTICULARLY, AFTER ADM ITTING ADDITIONAL EVIDENCE IN ITA NO.1264/KOL/2018 A.Y.2013-14 DCIT CIR-10(1), KOL. VS. M/S MADHUSHREE SAREES PVT. LTD. PAGE 2 VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 . THE CIT(A)S DETAILED DISCUSSION TO THIS EFFECT READS AS UNDER:- 3. IDENTITY : I HAVE PERUSED THE ASSESSMENT ORDER AND THE SUBMISS IONS OF THE LD. AR AND THE CASE LAWS ON THIS ISSUE. IT IS SEEN THAT THE ASSESS EE COMPANY HAS RECEIVED THESE LOANS FROM THIS COMPANY A PEAK OF SUCH UNSECURED LO ANS HAS BEEN TAKEN AS UNDER BY THE AO : SL.NO. NAME ADDRESSES AS PROVIDED BY ASSESSEE PEAK CREDIT IN THE NAME OF THE PARTIES PERIOD 01.04.12 TO 31.03.13 1 M/S GAGAN VANIJYA (P) LTD. 95A, PARK STREET, 3 RD FLOOR, SUIT NO.3A, KOLKATA-700 016 56,50,000/- 2 M/S MADHUSHREE HOUSING PVT. LTD. 20,00,000/- 3 M/S MADHUSHREE OVERSEAS PVT. LTD. 50,00,000/- 4 M/S MADHUSHREE PROJECTS PVT. LTD. 33,000,000/- 5 PROCTONO ENTERPRISE PVT. LTD. LORD SINHA ROAD, SHARMA HOUSE, KOLKTA-71 48,50,500/- 6 M/S MADHUSHREE VANIJYA 493/C/A, GT ROAD, VIVEK VIHAR HOWRAH 2,00,000/- TOTAL 2,10,00,000/- 3.1 IT IS ALSO AN UNCONTROVERTED FACT OF THESE SIX CONCERNS ARE GROUP CONCERNS OF THE ASSESSEE WITH THE FOLLOWING DIRECTORSHIP: FOLLOWING ARE THE DETAILS OF UNSECURED LOAN TAKEN BY THE ASSESSEE COMPANY FROM OTHER GROUP COMPANIES DURING THE FINANCIAL YEA R IN QUESTION :- NAME OF THE PARTIES OP. BAL. AS ON 01.04.12 ADD: LOAN TAKEN ADD: INTEREST LESS: TDS LESS: LOAN REFUND CL. BAL. AS ON 31.03.13 NAME OF THE DIRECTORS GAGAN VANIJYA PVT.LTD. 0 23400000 215248 21525 15493723 8100000 RAHUL CHOWDHARY RAJENDRA AGARWAL MADHUSHREE HOUSING PVT. LTD. 95A, PARK ST. KOL-16 1400000 2750000 148390 14839 2483551 1800000 BHAGWATI PRASAD CHOWDHARY RAHUL CHOUDHARY MADHUSHREE OVERSEEAS PVT. LTD., 95A, PARK ST. KOL-16 1800000 7400000 196299 19630 7576669 1800000 BHAGWATI PRASAD CHOWDHARY ARUNA CHOUDHARY MADHUSHREE PROJECTS PVT. LTD., 95A, PARK ST. KOL-16 1300000 6150000 131628 13163 6543465 1025000 BHAGWATI PRASAD CHOWDHARY ARUNA CHOUDHARY PROCTON ENTERPRISES PVT. LTD., LORD SINHA RD. KOL-71 1150000 8550000 145677 14568 6431109 3400000 BHAGWATI PRASAD CHOWDHARY RAJENDRA AGARWAL MADHUSHREE VANIJYA PVT. LTD., 493/C/A G.T.RD.,HOWRAH- 711102 0 300000 20108 2011 68097 250000 BHAGWATI PRASAD CHOWDHARY RAHULA CHOUDHARY WHILE SRI BHAGWATI PRASAD CHOWDHURY, SRI RAHUL CHOW DHARY AND SMT. ARUNA CHOWDHWDHARY HAPPEN TO BE DIRECTORS OF APPELLANT CO MPANY, THEY ARE ALSO HOLDING DIRECTORSHIP IN THE LENDING COMPANIES AND IN THAT S ENSE THE LENDING COMPANIES ARE ALL SAME GROUP COMPANIES. 3.2. SINCE ALL THE LENDING COMPANIES ARE FILING THE IR RETURN WITH ROC AND ALL OF THEM HAVE THE SAME DIRECTORS AS THE ASSESSEE COMPANY, TH EREFORE, THE DIRECTORS ARE ITA NO.1264/KOL/2018 A.Y.2013-14 DCIT CIR-10(1), KOL. VS. M/S MADHUSHREE SAREES PVT. LTD. PAGE 3 IDENTIFIABLE AND ARE REPUTED PEOPLE FROM THE BUSINE SS COMMUNITY OF KOLKATA, THEREFORE, MERELY BECAUSE THESE COMPANIES HAVE SHIF TED THEIR ADDRESSES FROM ONE PLACE TO ANOTHER AND NOBODY COULD BE FOUND ANY ONE AT THE ADDRESSES GIVEN, WOULD NOT MEAN THAT THE IDENTITY OF THESE COMPANIES IS NO T IN DOUBT. THEREFORE, IN MY OPINION, IDENTITY OF THESE LENDERS HAVE BEEN PROVED. 3.3 CAPACITY : THE SECOND QUESTION WOULD BE CAPACITY OF THE COMPANIES TO LEND IT IS SEEN FROM THE STATEMENT OF SHARE CAPITAL ( ANNEXURE A ) THAT ALL THESE SIX COMPANIES HAVE ADVANCED THE LOAN OUT OF THEIR SHARE CAPITAL AND RESERVES AND SURPLUS. FURTHER, FROM THE CHART AT ANNEXURE A, IT CAN BE SEEN THAT THE SHARE CAPITAL OF THESE SIX COMPANIES HAVE REMAINED STATIC SINCE L AST THREE YEARS. EVEN IF THE SOURCE OF CAPITAL IN THE HANDS OF LENDER COMPANIES WAS DUBIOUS THEN THE ADDITIONS SHOULD HAVE BEEN MADE IN THE HANDS OF THESE LENDER COMPANIES. FURTHER, THE ADDITIONS SHOULD HAVE BEEN MADE IN THE YEAR IN WHIC H THESE COMPANIES HAVE RAISED THE SHARE CAPITAL AND NOT IN THE ASSESSMENT YEAR 22 013-114, WHERE THESE LENDER COMPANIES HAVE NOT RAISED ANY CAPITAL. IN VIEW OF T HE ABOVE, THE ASSESSEE HAS PROVEN THAT THE LOANS HAVE COME OUT OF THE SHARE CA PITAL AND RESERVES AND SURPLUS OF THESE SIX COMPANIES. IT IS CLEAR THAT THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THE CAPACITY OF THE LENDERS TO LEND THE MONEY TO THE AS SESSEE COMPANY. 3.4 GENUINENESS : AS FAR AS GENUINENESS OF THE TRANSACTION IS CONCERNED THE LD. AR HAS SUBM ITTED THE DOCUMENTS TO SOW THAT ALL THE TRANSACTIONS HAVE BEE N DONE THROUGH BANKING CHANNELS. ALL THE LENDER COMPANIES HAVE THEIR INCOM E TAX RETURN UP TO DATE AND ALL THE COMPANIES ARE ROC COMPLIANT. FURTHER, MOST OF T HE LOANS WERE BROUGHT FORWARD LOAN FROM EARLIER YEARS AND NO ADDITIONS HAVE BEEN MADE IN THE EARLIER YEARS. THE LENDERS ARE BEING INCREASED AND REFUNDED FROM TIME TO TIME, THEREFORE, THERE IS CONTINUOUS TRANSACTIONS GOING ON WITH THESE ASSOCIA TE CONCERNS. IN VIEW OF THE ABOVE GENUINENESS OF THE TRANSACTION IS ALSO PROVED. 3.5 FOLLOWING THE CASE LAWS CITED BY THE LD. AR SUPPOR TS THE CASE OF THE ASSESSEE: THE MADRAS HIGH COURT IN THE CASE OF CIT V. MARK HOSPITALS PVT. LTD ., (2015) 373 ITR 115 (MAD) HELD THAT WHERE ASSESSEE DULY SUBMITTED ALL DETAILS OF CREDITORS FROM WHOM IT HAS OBTAINED UNSECURED LOANS AND EVIDENCE P RODUCED BY ASSESSEE PROVED CREDITWORTHINESS OF CREDITORS AND GENUINENESS OF TR ANSACTIONS, NO ADDITION U/S. 68 COULD BE MADE. THE DELHI HIGH COURT IN THE CASE OF ASSTT. CIT V. VIKRANT PURI (2016) 47 ITR (TRIB.) 708 (DEL) HELD THAT WHERE ASSESSEE HAD FURNISHED NAME, ADDR ESS AND PAN OF THE CREDITORS AND GENUINENESS OF TRANSACTION AND CREDIT WORTHINESS OF CREDITOR WAS ALSO FULLY ESTABLISHED, ADDITION MADE ON ACCOUNT OF LOA N TAKEN FROM SAID CREDITORS WAS TO BE DELETED . SIMILARLY, THE DELHI HIGH COURT IN THE CASE OF OBSE RVED THAT CIT V. LALIT KUMAR PODDAR (2015) 231 TAXMANN. 816 (DEL) WHERE IDENTITY AND CREDITWORTHINESS OF PARTIES HAD BEEN ESTABLISHED FROM WHOM ASSESSEE HAD TAKEN LOANS AND ADVANCES, NO ADDITION U/S. 68 COULD BE MADE. SIMILARLY ARE THE VIEWS TAKEN BY ITAT, MUMBAI ASST . CIT V. SANJAY M. JHAVERI (2015) 168 TTJ 751 (MUM) WHERE ASSESSEE HAD TAKEN UNSECURED LOANS AND DULY FIELD CONFIRMATION LETTERS OF CREDITORS, COPIES OF THEIR BANK ACCOUNTS AND ACKNOWLEDGEMENT OF RETURNS OF INCOME FILED BY THEM, SAME COULD NOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE. WHERE NO INCRI MINATING EVIDENCE RELATING TO ITA NO.1264/KOL/2018 A.Y.2013-14 DCIT CIR-10(1), KOL. VS. M/S MADHUSHREE SAREES PVT. LTD. PAGE 4 LOAN TRANSACTIONS WAS FOUND, THE LD. AO WAS NOT JUS TIFIED IN INVOKING SEC. 68 FOR THE PURPOSE OF MAKING ADDITION ON ACCOUNT OF LOAN RECEI VED. IN CHARINJIT SINGH V. ITO (2016) 52 ITR (TRIB.) 337 (CHD.) THE ITAT HELD WHERE THE CREDITORS HAD CONFIRMED HAVING GIVEN LOANS TO THE A SSESSEE, THEY HAD EXPLAINED SOURCE OF DEPOSITS AND TRANSACTIONS WERE THROUGH BA NKING CHANNELS, THERE, WAS NO JUSTIFICATION IN MAKING ADDITION OF THE SAID AMOUNT U/S. 68. ALSO LOIL OVERSEAS FOOD LTD. V. ITO (2017) 55 ITR (TRIB.) 544 (CHD.). 3.6. FINDIGS OF CIT(A) : IN VIEW OF THE ABOVE DISCUSSION AND THE CASE LAWS C ITED, SINCE THE ASSESSEE HAS BEEN ABLE TO PROVE THE IDENTITY OF THE LENDERS, CAP ACITY OF THE LENDERS TO LEND MONEY TO THE ASSESSEE COMPANY AND GENUINENESS OF THE TRAN SACTION, THEREFORE, THE ADDITION CANNOT BE SUSTAINED. THEREFORE, GROUND NO.1 IS ALLOWED . 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL PLEADINGS. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CONTENDED DU RING THE COURSE OF HEARING THAT THE ASSESSING OFFICER HAD RIGHTLY TREA TED THE ASSESSEES UNSECURED LOANS AS UNEXPLAINED CASH CREDITS IN THE EVENT OF LATTERS FAILURE IN PROVING IDENTITY, GENUINENESS AND CREDITWORTHINESS THEREOF. WE FIND NO MERIT IN REVENUES FOREGOING PLEADINGS. THE FACT REMAINS THA T AN ASSESSEE HAS AVAILED THE IMPUGNED UNSECURED LOANS FROM ITS EIGHT GROUP ENTITIES PARTIES HAVING COMMON DIRECTORS ENTITIES AND ALL OF THE SAI D PARTIES HAVE FILED THE RELEVANT EVIDENCE RIGHT FROM SCRUTINY IN ITS FAVOUR . LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO PIN-POINT ANY LACK OF GENUI NENESS OR CREDITWORTHINESS IN THE SAID PARTIES BANK STATEMENTS & OTHER RECORDS W HICH COULD SUBSTANTIATE THE FACT SOUGHT TO BE ALLEGED FROM THE DEPARTMENT SIDE THAT THEY HAD BEEN ACTING AS ACCOMMODATION ENTRY PROVIDERS. WE DO NOT SEE ANY ADDITIONAL EVIDENCE ADMITTED BY THE CIT(A) MUCH LESS IN VIOLATION OF RU LE 46A OF THE INCOME TAX RULES, IT IS THEREFORE HOLD THAT THE CIT(A) HAS RIG HTLY DELETED THE IMPUGNED UNEXPLAINED CASH CREDITS IN THE NATURE OF UNSECURED LOANS AVAILED FROM THE GROUP ENTITIES HAVING COMMON DIRECTORS. THE REVENUE S INSTANT FORMER SUBSTANTIVE GRIEVANCE FAILS ACCORDINGLY. 4. NEXT COMES THE LATTER SUBSTANTIVE ISSUE OF BOGUS COMMISSION EXPENDITURE AMOUNTING TO 9,58,999/-. WE NOTICE FROM THE CIT(A)S DISCUSSION UNDER CHALLENGE IN PARA-5 TO 5.3 I.E. HE HAS FOUND SHRI VASA, MOHIT KOCHAR TO ITA NO.1264/KOL/2018 A.Y.2013-14 DCIT CIR-10(1), KOL. VS. M/S MADHUSHREE SAREES PVT. LTD. PAGE 5 HAVE BEEN ACCEPTED AS PROVIDING COMMISSIONS SERVICE S TO THE ASSESSEE NOT ONLY IN THE IMPUGNED ASSESSMENT YEAR BUT ALSO IN PR ECEDING AND SUCCEEDING ASSESSMENT YEAR(S) DULY ACCEPTED BY THE ASSESSING O FFICER. HE HAS FURTHER RESTRICTED THE IMPUGNED DISALLOWANCE TO THAT @ 50% ONLY KEEPING IN MIND ALL THE RELEVANT FACTS AND CIRCUMSTANCES. WE HOLD THAT THE CIT(A)S ACTION UNDER CHALLENGE HOLDING THE IMPUGNED COMMISSION EXPENDITU RE ALLOWABLE @ 50% ONLY DOES NOT SUFFER FROM ANY ILLEGALITY AND IRREGU LARITY THEREFORE. 5. THIS REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 31/ 01/2020 SD/- SD/- ( &) (( &) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP )- 31 / 01 /20 20 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CIR-10(1), P-7, CHOWRINGHEE SQ. 3 RD FLOOR, KOLKATA-69 2. /RESPONDENT-M/S MADHUSHREE SAREES PVT. LTD., 103, P ARK STREET, 2 ND FL. KOLKATA-71 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. 8 ((4, 4, / DR, ITAT, KOLKATA 6. = / GUARD FILE. BY ORDER/ , /TRUE COPY/ 4,