M/s. Rajhans Construction Pvt. Ltd., Surat V. The Asstt. Commissioner of Income Tax, Circle-2(1)(1), Surat

ITA 1450/AHD/2016

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2408 (ITAT-SURAT)
• Duration Of Justice: 5 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-02-2022
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPMA SINGLA
• Keywords: Unexplained cash credit; Search and seizure; Additional evidence; Accommodation entries; Retraction; Borrowed satisfaction; TDS
• Section: 147; 148; 132; 271(1)(c); 143(3); 251; 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No.1450/AHD/2016 (A.Y:- 2007-08) (Hearing in Virtual Court) Rajhans Construction Pvt. Ltd. 3 rd Floor, Rajhans House, Opp. Gitanjali Petrol Pump, Varachha Rd, Surat-395006. PAN: AACCR 8828 A Vs The ACIT, Circle-2(1)(1), Aayakar Bhawan Majura Gate, Surat. Appellant/ assessee Respondent/ Revenue Assessee by Shri Aditya Nemani-CA Revenue by Ms Anupma Singla- Sr-DR Date of hearing 28/02/2022 Date of pronouncement 14/03/2022 PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Assessee is directed against order of ld. Commissioner of Income Tax(Appeals)-II, (hereinafter referred as “ld.CIT(A)” Surat dated 04.03.2016 for the assessment year 2007- 08.The assessee raised following grounds of appeal:- “1.Ld. CIT (A) erred in law and on facts in confirming reassessment by AO u/s 147 r w s 143 (3) of the Act simply relying upon information from the investigation wing Mumbai from search action at a third party premises. Ld. CIT (A) ought to have quashed the order passed on change of opinion despite verification of all relevant documents during scrutiny proceedings. 2. Ld. CIT (A) erred in law and on facts in confirming action of AO treating unsecured loan of Rs. 1, 50, 00, 000/- received and returned with interest during the year as unexplained cash credit u/s 68 of the Act. Ld. CIT (A) ought to have deleted addition as appellant discharged primary onus filing complete details of Name/Address/PAN/Balance Sheet/ ROI of depositor. ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 2 3. Ld. CIT (A) erred in law and on facts confirming addition made by AO of loan simplicitor as an accommodation entry to facilitate money laundering. Ld. CIT (A) ought to have held transaction as genuine when the loan was repaid with interest deducting tax at source during the year itself. 4. Ld. CIT (A) erred in law and on facts in concurring with AO that retraction statements being after thoughts impugned loan transaction be treated as an accommodation entity only. Ld. CIT (A) failed to appreciate that identical loan transaction in the hands of the sister concerns were treated as genuine on the basis of retraction statement. 5. Ld. CIT (A) erred in law and on facts not following ratio laid down by the jurisdictional High Court that appellant is not obliged to explain source of the source once primary onus cast u/s 68 of the Act is discharged. Further actions if any should be taken in the hands of the depositor when PAN & IT details are on record. 6. Levy of interest u/s 234A/B/C&D of the Act is unjustified. 7. Initiation of penalty proceedings u/s 271(1)(c) of the Act is unjustified.” 2. Vide application dated 22.02.2022, the assessee filed revised/concise/additional grounds of appeal as under:- “1.The appellant company submits that the learned Commissioner of Income Tax Appeals erred in confirming the addition of Rs. 1,50,00,000/- made by the learned Assessing Officer by invoking the provisions of section 68 of the Act without appreciating the fact and circumstances of the case and position of law. 2. The Appellant Company submits that the Learned Assessing Officer erred in initiating and the Learned Commissioner of Income Tax Appeals erred in confirming the initiation of proceedings u/s 148 of the Act despite the fact that the said reopening was bad in law, being based on borrowed satisfaction, without appreciating the facts and circumstances of the case and position of law. ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 3 3. The Appellant Company submits that the Learned Assessing Officer erred in issuing notice u/s 148 of the Act after the expiry of the 4 years from the end of the relevant assessment year, despite the fact that assessment had been concluded in the present case u/s 143(3) of the act, without bringing out any issue as regards the income chargeable to tax had escaped assessment for said assessment year by reason of the failure on the part of the appellant to make disclosure of all the material facts truly and fully necessary for assessment. 4. The appellant company submits that the learned Commissioner of Income Tax Appeals erred in confirming the addition despite that opportunity for cross examination as per law was not provided to the appellant, thus, not appreciating the facts and circumstances of the case and position of law. 5. The appellant craves leave to add, amend, alter or delete the said ground of appeal.” 3. Brief facts of the case are that the assessee is a Private Limited Company, engaged in the business of builder and developer, drives its income from construction and development activity. The assessee filed its return of income for assessment year (A.Y.) 2007-08 on 31.10.2007, declaring total income of Rs. 86,00,790/-. The case was selected for scrutiny and assessment was completed under section 143(3) on 17.12.2009 accepting the return of income. 4. Subsequently, the case was reopened on the basis of information that a search and seizure action under section 132 of the Act was ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 4 carried out in case of Rajendra Jain Group, Sanjay Chaudhary Group and Dharmi Chand Jain by Investigation Wing, Mumbai on 03.10.2013. In the said search and seizure action various incriminating documentary evidences collected and seized. The statement of various people of this group was recorded. In the search, it was found that this group was indulging in providing accommodation entries pertaining to bogus sales, purchases and bogus unsecured loans to various parties. The list of beneficiaries, who availed such accommodation entry was forwarded to the Assessing Officer. As per list of person who availed bogus unsecured loan, it was found that the assessee is one of beneficiary of bogus unsecured loan of Rs. 1.50 Crores. On the basis of such information, the Assessing Officer after recording reasons of reopening issued notice under section 148 dated 28.03.2014 to the assessee. In response to notice under section 148, the assessee filed its reply dated 06.12.2014 on 08.12.2014, stating that return of income filed under section 139(1) be treated as return of income in response to notice under section 148 of the Act. The assessee also requested for copy of reasons recorded. The Assessing Officer recorded that reasons recorded were provided to the assessee. During the assessment, ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 5 the Assessing Officer recorded that assessee has available unsecured loan of Rs. 1.50 Crores from Avi Exports, the proprietorship of concern of Rajendra Jain Group. In response to show cause notice, the assessee furnished copy of confirmation from lender, acknowledgment of return of income of lender and bank statement showing that amount was received through banking channel by the assessee. The assessee contended that transaction is genuine and fully supported by documentary evidences. The loan was received and it was repaid during the year itself. The assessee prayed to drop the re-assessment proceedings. The Assessing Officer recorded that amount was received and repaid during the year (in para 7.1), however the reply of assessee was not accepted by taking view “that it is arrangement, which is found to be orchestrated and the whole thing has been admitted to be an arrangement to lauder unaccounted cash in a masqueraded in form of unsecured loan”. 5. The Assessing Officer further recorded that entry provider / the said operator has given a statement on oath about modus- operandi and whole transaction carried out at his premises. The statement of Rajendra Jain was provided to the assessee for its comments. The assessee further vide his reply dated 30.03.2015 ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 6 submitted that they have filed confirmation of M/s Avi Exports with address and PAN and stated that all the transactions of the said party are genuine made through banking channel. The case of assessee is reopened merely on the basis of information from Investigation Wing and said that transaction of assessee is genuine. The Assessing Officer held that lender never had any funds on his own and the money were just re-routed by the entry provider as clearly made out in the statement recorded under section 132(4). On the confirmation of the party, bank statement and copy of return, the Assessing Officer held that all falls flat in view of the admission of the entry provider and the dummy director and also the fact that there were no actual activities carried out from the addresses provided by the assessee. The investigation Wing find unambiguous and corroborative evidence which clearly established that the whole façade was created and facilitated money laundering by giving entries by showing as genuine transaction. The Assessing Officer held that all three parameters i.e. establishing the identity of the creditors, genuine of transaction and creditworthiness of the lender is not proved. Mere filing of financial statement and confirmation letter do not serve the purpose of onus cast on the assessee in discharging the ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 7 same. On the basis of his observation, the Assessing Officer made addition of Rs. 1.50 Crores to the income of assessee. In the assessment order passed under section 143(3) r.w.s 147 dated 21.03.52015. 6. Aggrieved by the addition in the assessment order, the assessee filed appeal before ld. CIT(A). Before learned CIT(A), the assessee challenged the validity of the addition under section 68 only. The assessee filed its detailed written submission. The submission of assessee is recorded in para 5 of order of ld. CIT(A). The assessee in sum and substance submitted that during the period under consideration, the assessee received Rs. 1.50 Crores from Avi Exports, a proprietorship concern of Rajendra Jain. The said loan was received on 16.10.2006 and was repaid on 06.02.2007, through banking channel. The assessee filed copy of PAN, return of income, confirmation and bank statement of lender, reflecting the unsecured loan received and paid during the year to prove identity, genuineness and creditworthiness and genuineness of transaction. The evidence was once gain filed before ld. CIT(A). The assessee further stated that statement of Rajendra Jain was recorded on 11.03.2015 during the course of reassessment proceedings of Rajhans Enterprises and Rajhans Developers, a ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 8 sister concerns of the assessee on similar issue, where the similar loan is taken and repaid by those assessee, wherein Rajendra Jain not only filed confirmation with the transaction but also explain source of loan given to the assessee. Rajendra Jain in answer to question no. 8, confirmed that loan of Rs. 50 lakhs was also given to Rajhans Developer and Rs. 70 lacks to Rajhans enterprises, sister concern of the assessee through his proprietary firm Avi Export on 16.10.2006 as interest bearing loan and the same was received back on 06.02.2007 through bank. The loan of Assessee Company was also received and repaid on the same date. In answer to question nos. 9 and 10 Rajendra Jain confirmed that he received interest on the loans and advances made by him and was offered to tax in return of income filed by him. In answer to question no. 12, he explained the source of loan giving i.e credit of Rs. 2.73 Crores immediately before giving the loan was the sale proceeds of sale made in the local market. The source of loan in assessee’s case is same as Rajhans Enterprises and Rajhans Developer. Rajendra Jain further stated in his statement recorded on 11.03.2015 is the true statement and his statement recorded on 03.10.2013 during search action has been retracted. ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 9 7. The assessee also submitted that statement of Rajendra Jain was not provided to the assessee in its assessment proceedings nor in the case of sister concern in Rajhans Developer and Rajhans enterprises and the same was provided after completion of the assessment orders. 8. The ld. CIT(A) after considering of submission of assessee asked the Assessing Officer to submit his remand report. The Assessing Officer furnished his remand report vide his letter dated 05.02.2016. The Assessing Officer in his remand report stated that Investigation Wing, Mumbai passed the information about Rajendra Jain about providing entries of bogus sales and unsecured loan. Search was carried out on Rajendra Jain Group, Sanjay Chaudhary and Dharmi Chand Jain Group on 03.10.2013. The Assessing Officer referred the post search investigation and the modus-operandi of Rajendra Jain Group and stated that Shri Rajendra Jain Group filed retraction before Assessing Officer only on 31.10.2014 after more than one year, no retraction was filed before Investigation Wing. The retraction statement of Rajendra Jain Group is invalid and he has failed to prove by any legally acceptable evidence that statement given ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 10 during search was not voluntary or under coercion or duress under misconception of fact. 9. The copy of remand report was provided to the assessee. The assessee filed its reply dated 26.02.2016 to the remand report. The assessee stated that the assessing officer has neither provided the statement of Rajendra Jain no his cross examination of any party on which he relied and presumed that the transaction is not genuine. The said statement has no evidentiary value in the eyes of law. The assessee further stated that statement of Shri Rajendra Jain was recorded during re- assessment proceedings in case of Rajhans Enterprises and Rajhans Developer, the sister concern of the assessee on similar issue, wherein loan is accepted and repaid on the same date. The Assessing Officer has not pointed out any adverse remarks in his remand report thus genuineness of transaction cannot be doubted. On the observation of Assessing Officer about retraction of statement of Rajendra Jain, the assessee stated that Assessing Officer presume retraction of Rajendra Jain is invalid on certain basis that it was filed after one year. However, the said retraction and statement given in re-assessment proceeding in case of assessee and its sister concern cannot be doubted. The ld. ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 11 CIT(A) admitted the additional facts as additional evidence under Rule 46A of Income-tax Rules by taking view that the same is crucial in deciding the issue. The ld CIT(A)after recording the modus-operandi of Rajendra Jain in providing accommodation entries, through benami concern held that the transaction of loan from Rajendra Jain was make believe arrangement through source of unaccounted funds through merely lender to look of genuine transaction. The whole arrangement of providing accommodation entries were established being doubt during the search proceedings is no evidence of sales and purchase of diamonds were found nor any stock were found. These evidences were admitted by Rajendra Jain himself. The income tax proceedings were not restricted by rules of evidence and not required to prove unambiguously. Evidence itself shows that loan were not genuine and addition made by Assessing Officer of Rs. 1.50 Crores was upheld by dismissing the appeal. Further aggrieved, the assessee has filed the present appeal before this Tribunal 10. We have heard the submission of ld. Authorized Representative (AR) of the assessee and Ld. Senior Departmental Representative (DR) for the Revenue and have gone through the entire material ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 12 placed before us. The ld. AR of the assessee besides making oral submission has placed on record his brief written submissions on all the grounds of appeal. 11. The ld. AR for the assessee submits that in additional ground No.3 of appeal the assessee has raised ground that reopening of assessment was after the expiry of the four years from the end of the relevant assessment year, is bad in law. The notice under section 148 is issued after the expiry of four years from the end of the relevant assessment year by the assessing officer merely acting mechanically on the information supplied by the Investigation wing about the accommodation entries provided to the assessee by certain entities without applying his own mind was in not justified. To support his submissions the ld AR for the assessee relied on the following decisions,  CIT v. Kamdhenu Steel & Alloys Ltd. (2012) 248 CTR 33 (Del)(HC),  CIT v. Multiplex Trading & Industrial Co Ltd (2015) 128 DTR 217 (Del)(HC),  Pr. CIT v G. Pharma India Ltd.[2017] 384 ITR 147 (Del) (HC),  CIT vs. Insecticides (India) Ltd. (2013) 357 ITR 300 (Del.)(HC), ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 13  CIT Vs Meenakshi Oversea’s Pvt Ltd (2017) 395 ITR 677(Del) (HC),  CIT vs. Fair Invest Ltd. (2013) 357 ITR 146 (Del.)(HC),  Sarthak Securities Co. (P.) Ltd. vs. ITO (2010) 329 ITR 110(Del.)(HC),  Pr. CIT vs. SNG Developers Ltd. [2018] 404 ITR 312 (Del.)(HC),  PCIT vs. Shodiman Investments Pvt. Ltd, (2018) 93 taxmann.com 153/ 167 DTR 290 (Bom.)(HC),  Sesa Sterlite Ltd. v. ACIT (2019) 417 ITR 334 / 267 Taxman 275 (Bom.)(HC),  NuPower Renewables (P.) Ltd. v. ACIT (2019) 264 Taxman 27.  Gateway Leasing (P.) Ltd vs. ACIT reported in 117 taxmann.com 442 12. The ld AR for the assessee submits that no opportunity for Cross examination of the witnesses on the basis of which the assessing officer made addition under section 68 was granted by the Ld. Assessing Officer or by ld CIT(A. Such statement of third party recorded at the back of the assessee cannot be relied and used against the assessee, without giving opportunity of corss examination to the assessee. To support his submission he relied on the following decisions; ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 14  Andaman Timber Industries v. Commissioner of Central Excise, Kolkata in (281 CTR 241) (Civil Appeal No.4228 of 2006 dt.02.09.2015),  H. R. Mehta vs. ACIT (387 ITR 561) (Bom. HC) C Vasantlal & Co. Vs CIT (45 ITR 206) (SC),  Kishinchand Chellaram Vs CIT (125 ITR 713) (SC) CIT vs. Ashish International (ITA No.4299 of 2009),  CIT vs. Ashwani Gupta (322 ITR 396) (Bom. HC) ,  State of M.P.Vs Chintaman Sadashiva Vaishampayan AIR 1961 SC 1623, 13. The ld AR for the assessee further submits that where AO has not disallowed the interest claimed in respect of credits, once interest payment is accepted, no addition under Section 68 of same credit is not justified. 14. On the merits of the additions made under section 68, the ld AR for the assessee submits that in DCIT v Rohini Builders [2002] 256 ITR 360 (Guj.) / [2003] 127 Taxman 523 (Guj), the Hon’ble Gujarat High Court held that when the assessee has primarily discharged the initial onus laid on him in terms of section 68 by providing details to establish genuineness of transaction, identity and creditworthiness of depositors then the assessee is not expected to prove genuineness of cash deposited in bank account of those creditors because under the law the assessee can be ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 15 asked to prove the source of credits in his books of accounts but not the source of source. 15. The assessing officer has not disallowed the interest claimed/paid in relation to these credits in the assessment year under consideration or even in the subsequent years, and TDS has been deducted out of the interest paid/credited to the creditors, we are of the opinion that the departmental authorities were not justified in making the addition. 16. The ld AR for the assessee further submits that the unsecured loan availed by the assessee was repaid during the same financial year that is within very short span of time. The assessee received Rs. 1.50 Crores from Avi Exports, a proprietorship concern of Rajendra Jain. The loan was received on 16.10.2006 and was repaid on 06. 02. 2007. The loan transaction was availed through banking channel. During assessment, the assessee filed copy of PAN, confirmation and bank statement of lender, reflecting the unsecured loan received and paid during the year to prove identity, genuineness and creditworthiness. All such evidences were again before ld. CIT(A). The ld AR submits that statement of Rajendra Jain was recorded by assessing officer in case of sister concern of assessee on 11.03.2015, in cases of Rajhans ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 16 Enterprises and Rajhans Developers, wherein Rajendra Jain not only filed confirmation about the transaction but also explain source of loan given to loan of Rs. 50 lakhs to Rajhans Developer and Rs. 70 lacks to Rajhans enterprises, sister concern of the assessee through his proprietary firm Avi Export. The assessee received interest bearing loan on 16.10.2006 as and the same was return back on 06.02.2007 through bank. The loan of Assessee sister concern of assessee -company was also received and repaid on the same date. In answer to question nos. 9 and 10 recorded in case of sister concern, Rajendra Jain confirmed that he received interest on the loans and advances made by him and was offered to tax in return of income filed by him. Rajendra Jain explained the source of loan giving i.e credit of Rs. 2.73 Crores and explained that it was the sale proceeds made in the local market. The source of loan in assessee’s case is same as Rajhans Enterprises and Rajhans Developer. Rajendra Jain further stated in his statement recorded on 11.03.2015 is the true statement and his statement recorded on 03.10.2013 during search action has been retracted. The ld AR for the assessee submits that similar additions under section 68 was made in cases of sister ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 17 concern of assessee, however, on appeal before ld CIT(A), the additions were deleted. 17. The ld AR for the assessee submits that the Hon’ble Gujarat High Court in case of Pr. CIT Vs. Skylark Build (ITA No. 616 of 2016 dated 24.10.2018) held that when amount borrowed by the assessee as unexplained cash credit to make the addition by provisions of section 68, no addition can be made when such borrowing was repaid. The ld AR also relied in case of CIT Vs Ayachi Chandrasekhar Narsangji ( 2014)41 taxmann.com 251 (Gujarat), wherein the Hon’ble High Court held that where the department has accepted repayment of loan in subsequent order, no addition was to be made in the current year for cash credit. 14. On the other hand, ld. Sr. DR for the Revenue supported the order of lower authorities. The ld. Sr. DR further submits that Investigation Wing, Mumbai carried out search and survey action of Shri Rajendra Jain Group, Sanjay Chaudhary Group and Dharmi Chand Jain Group. The statement of key person of the group was recorded by Investigation team during search action; huge incriminating was recovered and assessed. In the statement, the key persons of the group admitted that they were indulging in providing accommodation entries of sale and purchase, ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 18 unsecured loan export and import etc. They were not being any actual evidence. The entire transaction of Rajendra Jain Group was on providing accommodation entries only. The assessments of Rajendra Jain Group in the assessment of Rajendra Jain Group were assessed as entry provider. The Rajendra Jain in his statement recorded on 03.10.2014 clearly admitted that he was indulging in providing accommodation entry, so called retraction letter dated 21.10.2013 was for the first time was filed in October, 2014 before Assessing Officer. The assessee has not challenge the validity of reopening in his grounds of appeal before the ld. CIT(A). Thus such reopening attend finality. The grounds of appeal, which were raised before Assessing Officer before ld. CIT(A) which is mistake question, the assessee has raised ground which is best on mistake question of fact and law cannot be raised at this stage. Even, otherwise Hon’ble jurisdictional High Court in Peas Industrial Engineering vs. DCIT (73 taxmann.com 185 Guj) and in Pushpak Bullion Vs DCIT (84 taxmann.com 84 Guj), held that mere information about the entry provided by the bogus entry provider is sufficient to make reopening. On the objection of the assessee that cross examination of Rajendra Jain Group was not provided. The ld. Sr. DR submits copy of statement was provided ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 19 to the assessee. Even otherwise lender/entries provider was witness of assessee. He is not third party qua the transaction of assessee. On the cross examination of Anand Timber Vs Commissioner of Central Excise (supra), the ld. Sr. DR submitted that there is specific provision in Custom and Central Excise law, for providing cross examination of the person, however there is no such provision in the Income tax Act. Thus, the ratio of Anand Timber Industries Vs Commissioner of Central Excise (supra) is not applicable on the facts of the present case. On the submission of ld. AR of the assessee that unsecured loan paid within short time. It was obtained in October, 2006 and 2007 and was paid in further 2008. The ld. Sr.DR submits that even if the loan is repaid the transaction is not genuine and the addition made by Assessing officer is fully justified. The assessee was merely paper transaction. 15. We have considered the rival submissions of both the parties and perused the material available on record. We have also considered the written submissions filed by ld AR for the assessee as well as on various case laws relied by both the parties at the time of making their respective submissions. We have noted that the assessee in the original grounds of appeal has challenged the ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 20 validity of reopening under section 147 on the ground that it was based on information of investigation by search party on third, however, in revised grounds of appeal the assessee has raised altogether new grounds of appeal against re-opening in Ground No.2 & 3. On perusal of order of ld CIT(A) and the Form-35 [Appeal form for filing appeal before ld CIT(A) and grounds of appeal], we find that no such ground of appeal challenging the validity of reopening was raised. No application for raising such additional or legal grounds of appeal is filed before Tribunal. Therefore, raising of such revised or substituted grounds of appeal are not in order. However, we shall discuss such issue at later stage. 16. Now adverting to the main ground of appeal which relates to the addition under section 68. There is no dispute that during the relevant period under consideration, the assessee received unsecured loan of Rs. 1.50 Crores from Avi Export. It is further not in dispute that the assessee’s sister concern namely Rajhans Enterprises and Rajhans Developer also availed similar unsecured loan from the same entity. All three sister concern including of assessee return/refunded the unsecured loan within the same financial year. It has come on record that addition in case of sister concern of assessee was deleted by ld. CIT(A). However, in case of ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 21 assessee the addition was upheld at this stage on first appellate. The ld. AR of the assessee invited our attention on the bank statement of the assessee wherein the assessee and its sister concern refunded/repaid (at page 44 of the paper book), the entire loan amount through banking channel. The ld AR for the assessee at the time of making his submission took us through the statement of Rajendra Jain recorded during the assessment proceeding of sister concern of assessee, where said Rajendra Jain explained the source of credit, before lending money to the assessee and its sister concern. 16. We also find that assessee made the payment of interest after deducting the tax at source. This fact was also accepted by Rajendra Jain while making statement during assessment of sister concern namely Rajhans Enterprises and Rajhans Developer. These facts were brought to the notice of assessing officer as well as to ld CIT(A). The ld CIT(A) sought remand report of assessing officer. No adverse comment was made by assessing officer in his remand report dated 15.02.2016. It is also admitted fact that no disallowance of such payment of interest was made by Assessing Officer. The ld AR for the assessee vehemently argued before us that the entire loan amount was repaid by the assessee in the ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 22 same financial year within short span of period and due interest was paid to the lender. The Hon’ble Gujarat High Court in case of Pr.CITVs. Skylark Build (supra) held that when amount borrowed by the assessee as unexplained cash credit to make the addition by provisions of section 68, no addition can be made when such borrowing was repaid. Further, the Hon’ble Gujarat High Court in case of CIT v. Ayachi Chandrasekhar Narsangji (supra) also held that where the department has accepted repayment of loan in subsequent order, no addition was to be made in the current year for cash credit. We find that case of assessee is a better footing as the assessee received unsecured loan in the month of October and repaid the same in February, 2007 along with interest. Further, the Revenue has not disputed the payment of loan in the same assessment year. The Hon’ble jurisdictional High Court in case of DCIT Vs Rohini Builders (265 ITR 360) held that when the Assessing Officer has not disallowed the interest in relation to credit in the assessment year and the assessee as deducted tax at source for the interest paid to the creditors, the Department is not justified in making addition under section 68 of the Act. 17. In view of the aforesaid factual and legal discussion. We are of the view that when the unsecured loan has been paid within a short ITA No.1450/AHD/2016 M/s Rajhans Construction Pvt. Ltd. 23 span of time for which the assessee has paid interest and deducted tax thereon. Therefore, the Assessing Officer was not justified in making addition under section 68. Thus, substantial ground of appeal is allowed. 18. Considering the fact that we have deleted the addition on merit, therefore, considering various other submissions of ld. AR of the assessee and adjudication on legal issue raised by the assessee, without seeking leave of the Tribunal, have become academic. In the result, ground No. 2 raised in original ground of appeal is allowed. 19. In the result, the appeal of the assessee is allowed. Order announced on 14 th March, 2022, in the open Court and result was also placed on the notice board. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 14/03/2022 /SKM* Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR 6. Guard File By order // True Copy // Sr. Pvt. Secretary, ITAT, Surat