DCIT, CIR-1(2), KOLKATA, Kolkata V. M/s Sunnyrock Estate Developers (p) Ltd., Kolkata

ITA 1630/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1232 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANKAR HALDER
• Assessee Lawyers: SOUMITRA CHOUDHURY SHRI JOY
• Keywords: Principle of natural justice; Opportunity of cross examination; Source of fund; Corroborative evidences; Accommodation entries; Bogus loan
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI J.SUDHAKAR REDDY, AM & HONB LE SHRI S.S. VISWANETHRA RAVI, JM ] I.T.A NO. 1630/KOL/20 16 ASSESSMENT YEAR : 2012-1 3 DCIT, CIRCLE-1(2), KOLKATA -VS- M/S SUNNYROCK E STATE DEVELOPERS PVT. LTD. [PAN: AADCS 6898 J] (APPELLANT) ( RESPONDENT) FOR THE APPELLANT : SHRI SANKAR HALDER, ADDL. CIT SR. DR FOR THE REVENUE : SHRI SOUMITRA CHOUDHURY, ADVOCATE SHRI JOYDEEP CHAKRABORTY, ADVOCATE DATE OF HEARING : 08.11.2018 DATE OF PRONOUNCEMENT : 28.11.2018 ORDER PER J.SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE REVENUE FOR ASSESSM ENT YEAR 2012-13 DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS)-4, KOLKATA [IN SHORT LD. CIT(A)] PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. AFTER HEARING RIVAL SUBMISSIONS AND ON A CAREFU L CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, A PERUSAL OF PAPERS ON R ECORD AND ORDERS OF THE LOWER AUTHORITIES BELOW, AS WELL AS CASE LAW CITED, WE HO LD AS FOLLOWS. 2 ITA NO.1630/KOL/2016 M/S SUNNYROCK ESTATE DEVELOPERS PVT. LTD. A.YR .2012-13 2 3. THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF DEVELOPING OF PROPERTY. IT HAD FILED ITS RETURN OF INCOME ON 29.09.2012 DECLARING NIL INCOME. THE ASSESSING OFFICER COMPUTED INCOME OF RS. 98,83,110/-, INTER ALIA, MAK ING AN ADDITION OF RS. 70,00,000/- U/S 68 OF THE ACT. INTEREST ON THIS LOAN OF RS. 21, 46,304/- WAS CONSEQUENTLY DISALLOWED. ON APPEAL, THE FIRST APPELLATE AUTHORITY DELETED TH IS ADDITION. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING ADDITION OF BOGUS LOANS AS UNEXPL AINED CASH CREDIT. 2. THE REVENUE SHALL ALWAYS CRAVE FOR ADDING OR ALT ERING ANY GROUND ON OR BEFORE THE DATE OF HEARING. 3. WE HAVE HEARD RIVAL SUBMISSIONS. WE FIND THAT TH E LOAN IN QUESTION IS THE YEAR END NET AMOUNT OF THE RUNNING ACCOUNT BETWEEN THE PARTIES F OR MORE THAN FIVE YEARS. THE ASSESSEE HAS TAKEN THE LOAN FROM M/S SUNNY ROCKS ES TATES PVT. LTD. ON 22.03.2010, THERE WERE PERIODICAL RE-PAYMENTS AND ON 31.03.2013 THE OUTSTANDING AMOUNT WAS RS. 3,28,43,878/-. FOR THE FINANCIAL YEAR 2011-12 THE C LOSING BALANCE OF LOAN WAS RS. 2,76,31,674/-. THE LOAN IN QUESTION IS ACCEPTED AS GENUINE, BOTH THE PREVIOUS YEARS AS WELL AS THE SUBSEQUENT YEARS BY THE AO. THE ASSESSE E HAS FILED EVIDENCE THAT IT HAS REGULAR BUSINESS AND FREQUENT FINANCIAL TRANSACTION WITH THIS CREDITOR M/S SUNNY ROCKS ESTATES PVT. LTD. THE ASSESSEE HAS FILED DETAILS SU CH AS PAN, COPIES OF INCOME TAX RETURN FILED AND SOURCE OF FUNDS ETC. OF M/S SUNNY ROCKS E STATE PVT. LTD. RESPONDED DIRECTLY TO THE ASSESSING OFFICER AND FURNISHED INFORMATION AS SOUGHT FOR BY THE NOTICE U/S 133(6) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REFERENCE BY THE ASSESSING OFFICER TO THE STATEMENT OF THE EX-DIRECTOR OF THE COMPANY, MR. SURESH KEJRIWAL THAT THE ASSESSEE COMPANY PROVIDED ACCOMMODATION ENTRIES, I S OF NO RELEVANCE AS THIS PERSON WAS NOT IN THE BOARD OF DIRECTORS OF THE COMPANY AT THE TIME OF GIVING OF THE LOAN. FURTHER IT WAS SUBMITTED THAT THE PRESENT DIRECTOR MR. MANOJ KR. SINGH NOT ONLY FILED 3 ITA NO.1630/KOL/2016 M/S SUNNYROCK ESTATE DEVELOPERS PVT. LTD. A.YR .2012-13 3 CONFIRMATION REITERATING GENUINENESS OF THE TRANSA CTION, BUT ALSO FILED ONE AFFIDAVIT CONFIRMING THE TRANSACTIONS. HE ARGUED THAT MR. SUR ESH KEJRIWALS STATEMENT WAS NEITHER CONFRONTED TO THE ASSESSEE NOR AN OPPORTUNITY WAS G IVEN FOR CROSS-EXAMINATION HIM. THE LD. CIT(A) POINTED OUT THAT AN ADDITION CANNOT BE MADE MERELY BECAUSE OF NON- APPEARANCE OF DIRECTOR IN PERSON, BEFORE THE ASSES SING OFFICER AND FOR THIS PROPOSITION HE RELIED ON THE JUDGMENT OF HONBLE A BENCH OF THE TRIBUNAL IN THE CASE OF M/S DALIA INVESTMENT PVT. LTD. VS. DCIT I.T.A. NO. 2818/KOL/2 013 AND 04/KOL2014 ORDER DATED 27.04.2018. 4. THE LD. CIT(A) AT PARA 4.2 OF HIS ORDER HELD AS FOLLOWS: 4.2. I HAVE CONSIDERED THE SUBMISSION OF THE AR OF THE APPELLANT AND THE SUPPORTING DOCUMENTS FILED IN THE MATTER. THE SHORT ISSUE AT H AND FOR MY CONSIDERATION IS WHETHER THE IMPUGNED LOANS RECEIVED BY THE APPELLANT WOULD FALL UNDER THE MISCHIEF OF THE IMPLIED SECTION 68 OF THE ACT OR NOT. FROM THE ASSE SSMENT ORDER, I FIND THAT THE AO CAME TO THE CONCLUSION THAT THE IMPUGNED LOANS WERE BOGU S BASED ON TWO PREMISES I.E. (A) STATEMENT ON OATH TAKEN FROM MR. SURESH KEJRIWAL, T HE DIRECTOR OF MSS SAKET VINIMAY (P) LTD. ON 26.02.2010 IN WHICH HE CONFESSED TO PRO VIDING ACCOMMODATION ENTRIES IN THE GUISE OF PROVIDING UNSECURED LOANS AND (B) THE PRES ENT DIRECTOR OF THE SAID COMPANY MR. MANOJ KUMAR SINGH WAS NOT PRODUCED BEFORE THE A O FOR EXAMINATION, WHO HAD CONFIRMED ABOUT THE ACCOUNTS VIS-A-VIS THE APPELLAN T COMPANY BY WAY OF A DECLARATION. ON THESE TWO CRITERIA, THE AO CAME SHORT OF HIS CON CLUSION AND MADE THE IMPUGNED ADDITIONS. NOW DEALING WITH THESE TWO PREMISES, MY FINDINGS AND DECISIONS ARE AS FOLLOWS: (A) WITH REGARD TO THE STATEMENT RELIED UPON BY THE AO, I FIND THAT THIS STATEMENT OF MR. KEJRIWAL WAS TAKEN MUCH BEFORE THE TRANSACTIONS TOO K PLACE BETWEEN THE APPELLANT AND M/S SAKET VINIMAY (P) LTD. IT IS TRITE LAW THAT BAS ED ON A THIRD PARTY'S DEPOSITION, NO ADVERSE INFERENCE CAN BE DRAWN BY THE AO UNLESS THE RE ARE CORROBORATIVE EVIDENCES WHICH ARE BROUGHT ON RECORD TO SUBSTANTIATE THE ALL EGATION, WHICH THE AO HAS FAILED TO DO SO IN THE PRESENT CASE. THAT THE SAID MR. KEJRIW AL'S STATEMENT WAS NOT PROVIDED TO THE APPELLANT BY THE AO AND, THEREBY, NOT AFFORDING AN OPPORTUNITY OF CROSS EXAMINATION BY THE APPELLANT IN TUNE WITH THE CONCEPT OF LEGAL JUR ISPRUDENCE, TANTAMOUNT TO DENIAL OF NATURAL JUSTICE. MOREOVER, ALL TRANSACTIONS WERE DO NE THROUGH BANKING CHANNELS WHICH IS NOT A MATTER OF DISPUTE. (B) WITH REGARD TO THE DECLARATION MADE BY THE PRES ENT DIRECTOR OF M/S SAKET VINIMAY (P) LTD IN WHICH HE CONFIRMED ABOUT THE ACCOUNTS OF THE COMPANY WITH THAT OF THE APPELLANT COMPANY, I FIND THAT THE AO TOOK AN ADVER SE VIEW SOLELY FOR THE REASON THAT HE 4 ITA NO.1630/KOL/2016 M/S SUNNYROCK ESTATE DEVELOPERS PVT. LTD. A.YR .2012-13 4 WAS NOT PRODUCED BEFORE HIM FOR EXAMINATION. IN THI S RESPECT, I FIND THAT ALL DETAILS REGARDING THE NAME, ADDRESS, PAN, DECLARATION BY TH E DIRECTOR, LEDGER COPY OF THE TRANSACTIONS WERE PROVIDED BY THE APPELLANT TO. THE AO AND IT WAS SUFFICIENT COMPLIANCE TO ESTABLISH THE IDENTITY, CREDIT WORTHINESS OF THE LOAN CREDITOR AND ALSO THE GENUINENESS OF THE TRANSACTIONS. THE AO HAS NOT REBUTTED ANY OF THESE DOCUMENTARY EVIDENCES WITH ANY COGENT COUNTER MATERIAL TO JUSTIFY HIS ACTION I N MAKING THE IMPUGNED ADDITION. MERELY BECAUSE THE DIRECTOR OF THE COMPANY DID NOT APPEAR BEFORE THE AO CANNOT BE TAKEN AS A GROUND FOR INFERRING THAT THE LOAN TRANS ACTIONS WERE BOGUS IN NATURE. A PLETHORA OF CASE LAWS HAS BEEN CITED BY THE APPELLA NT IN THIS REGARD IN THE SUBMISSION MADE (SUPRA) WHICH IS NOT BEING REPEATED HERE AGAIN . I FIND THE APPELLANT HAD DISCHARGED ITS ONUS IN THE MATTER AND IT WAS FOR TH E AO TO GIVE A JUDICIOUS FINDING ON IT BASED ON THE MATERIALS ON RECORD, WHICH APPARENTLY HAS NOT BEEN THE CASE. 4.3. ON AN OVERALL ANALYSIS OF THE ISSUE, SINCE THE THREE CARDINAL CRITERIA OF IDENTITY, CREDITWORTHINESS OF THE LOAN CREDITOR AND THE GENUI NENESS OF THE TRANSACTIONS ARE ESTABLISHED WITH COGENT EVIDENTIARY DOCUMENTARY MAT ERIALS, I DO NOT FIND ANY MERIT IN THE ACTION OF THE AO IN MAKING THE IMPUGNED ADDITIO N / DISALLOWANCE FOR WHICH THE SAME ARE DIRECTED TO BE DELETED. WE FIND NO INFIRMITY IN THIS ORDER. IN OUR VIEW THE LD. CIT(A) HAS GIVEN COGENT REASONS AS TO WHY HE COULD NOT SUSTAIN THE ADDITIONS. THE L D. DR COULD NOT CONTROVERT THESE FINDINGS. 5. THUS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE , WE UPHOLD THE FINDINGS OF THE LD. FIRST APPELLATE AUTHORITY AND DISMISS THIS APPEAL O F THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 28.11.2018 SD/- SD/- [S.S.VISWANETHRA RAVI] [ J.SUDHAK AR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED : 28.11.2018 SB, SR. PS 5 ITA NO.1630/KOL/2016 M/S SUNNYROCK ESTATE DEVELOPERS PVT. LTD. A.YR .2012-13 5 COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-1(2), KOLKATA, AAYAKAR BHAWAN, P-7 , CHOWRINGHEE SQUARE, R. NO. 14, 7 TH FLOOR, KOLKATA-700069. 2. M/S SUNNYROCK ESTATE DEVELOPERS PVT. LTD., 17, C OLONEL BISWAS ROAD, KOLKATA- 700019. 3..C.I.T.(A)- , KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER A SSISTANT REGISTRAR ITAT , KOLKATA BENCHES