The ITO, Ward-1(2)(1), Vadodara V. M/s. Meet Enterprises, Vadodara

ITA 1772/AHD/2019

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6022 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-04-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 28-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORTHEREVENUESUPPORTEDTHEORDER
• Keywords: TDS

Judgement Text

xplanation INTHEINCOMETAXAPPELLATETRIBUNAL AHMEDABAD“B”BENCH Before:Smt.AnnapurnaGupta,AccountantMember AndShriT.R.SenthilKumar,JudicialMember TheI.T.O, Ward-1(2)(1), Vadodara. (Appellant) Vs M/s.MeetEnterprises PlotNo.355-356 PorRamangamdi, GIDCEstate, Vadodara-391243. PAN:AAKFM0212C (Respondent) RevenueRepresented:MsNeejuGupta, Sr-DR AssesseeRepresented:ShriSanjayRShah,AR Dateofhearing:10-04-2024 Dateofpronouncement:05-07-2024 आदेश/ ORDER PERT.R.SENTHILKUMAR,JUDICIALMEMBER ThisappealisfiledbytheRevenueasagainsttheappellate orderdated03.09.2019passedbytheCommissionerofIncomeTax (Appeals-4)Vadodara,arisingoutoftheassessmentorderpassed undersection143(3)oftheIncome-taxAct,1961[hereinafter referredtoas‘theAct’]relatingtotheAsst.Year2013-14. 2.Thebrieffactsofthecasearethattheassesseeisafirm engagedinthebusinessoftradingofMetalscrap.Theassesseefiled itsReturnofIncomefortheAsstt.Year2013-14on21.09.2013, declaringtotalincomeofRs.6,65,020/-.Duringthecourseof assessmentproceedingtheAssessingofficer(AO)foundthatthe unsecuredloanamountingtoRs.2,40,00,000/-receivedbythe assesseefromM/s.PrabhavIndustriesLtd.wasnotgenuine,thereby ITANo.1772/Ahd/2019 AssessmentYear:2013-14 ITANo.1772/Ahd/2019 ITOVsM/s.MeetEnterprises Asst.Year2013-14PageNo.2 disallowedthesameu/s.68oftheActandalsodisallowedthe interestpaymentofRs.10,48,009/-ontheaboveunsecuredloanas wellasTDSontheaboveloanamountofRs.4,257/-.Thus,theAO madetheadditionofRs.2,15,52,266/-asagainstthereturned incomeanddemandedtaxthereon. 3.Aggrievedagainsttheassessmentorder,theassesseefiledan appealbeforetheLdCIT(A),whofollowedhispredecessororderin thecaseofJayeshRThakkar,DirectorofM/s.PrabhavIndustries whichhasgiventheaboveunsecuredloan,therebydeletedthe additionmadeu/s.68oftheActbyobservingasfollows: “...Ihaveconsideredthefactsofthecaseandgonethroughthe assessmentorderandsubmissionoftheappellant.Soledisputeis relatedtogenuinenessandcreditworthinessoftheunsecuredloan amountingtoRs2,40,00,000.Appellanthassubmittedcopyofledger forAY2010-11&AY2011-12showingbusinesstransactionwith M/sPrabhavIndustriesLtd.ARstatedthatappellanthasnotonly availedloanfromM/sPrabhavIndustriesbutalsopaidinterest thereon.EveninfactinterestincomewasdeclaredbyM/sPrabhav Industriesintheirreturnofincome.However,AOproceededtoadd entireamountofloanu/s68oftheAct.Remandreportwassought videletterdated27.09.2018.Appellantsubmittedalltherequired detailsbeforetheAO.However,thesaidremandReportreiterates additionu/s68basedonthestatementrecordedduringsurveyheld atthebusinesspremiseofShriShirishChandraShah,Mumbai.He hasnamedsomeofthecompaniesthoughwhichheusedtopass accommodationentryafterchargingcommissionfrom0.1%to1%. However,asperAR,appellant'snamedoesnotappearinthe statementrecordedneitherinthelistofshellcompaniesappellant's nameexists.AsperAO,appellantreceivedbogusunsecuredloan fromM/sPrabhavIndustriesLtdofRs.2,40,00,000/-Basisof termingtheun-servedloanasbogustransactionisthestatementof ShriShishirChandraShah. 6.1ARvehementlyarguedthatithastakenunsecuredloanof Rs.2,40,00,000/-fromM/sPrabhavIndustriesLtdinF.Y.2010-11. Undisputedly,P/LA/candbankstatementconfirmspaymentof interestonsuchunsecuredloan.AOhasalsoacceptedthatloanwas repaidtoM/s.PrabhavIndustriesLtdduringF.Y.2013-14. Appellant'sbooksisauditedandassuch,nodefecthasbeen ITANo.1772/Ahd/2019 ITOVsM/s.MeetEnterprises Asst.Year2013-14PageNo.3 identifiedbyAO.Bankstatementoftheappellantalsosupports correspondingdebitentryshowingloanwasreturnedalongwith interest. 6.2Onceloanistakenbybankingchannel,retunedbybanking channelalong-withinterestandalsothefactthatappellanthad businessconnectioninpreviousyearthentomyunderstanding,itis hardtobelievethatunsecuredloanwasbogus.Ifithadavailed bogusloanthenchancesofitsrepaymentbacktothelenderwould havebeenaremotepossibility.Bankstatementdoesnotshowcash deposit/withdrawaleitherpriororaftertheloanamountwas transacted. 6.3ModusoperandiasdiscussedbytheAOmightbehundred percenttruebutagainitremainstobeprovedonpaper.Transaction inbankstatementcanbeastartingpointforanAOtolaunchinquiry andproceedstepbystepforfurtherinquirysoastoprovetrail. Appellanthasprovedidentityandcreditworthinessofthelender. Genuinenessisprovedonrecordfromthefactsthatloanalongwith interestwasfullyrepaid.Mostimportantly,nameofappellantdoes notfindentryinthestatementofShriShirishCShahrelieduponby AO.EvenAOisbelievedthenalsoentirecashdepositcannotbe teemedunexplaineduntilandunlessthereisunearthingcashtrail.In thiscase,neitherinthestatementrecordedonoathnorthoughbank statementitisconsideringworththatloanwasbogus. 6.4IfindthatentirecaserevolvesaroundM/sPrabhavIndustries andstatementofShriShirishCShah.Onsimilarfactsofcase,vide appellateorderNo.CAB-5/-144/14-15dated03.09.2015,my predecessorhasallowedappealincaseofJayeshRThakkardirector ofM/sPrabhaavIndustries.Itisheldthatallthethreeingredientsviz. creditworthiness,genuinenessandidentityareproved...” 4.Aggrievedagainsttheappellateorder,theRevenueisinappeal beforeusraisingthesolitarygroundofappealasfollows: "Onthefactsandinthecircumstancesofthecaseandinlaw,the Ld.CIT(Appeals)erredindeletingtheadditionofRs.2,40,00,000/-u/s. 68oftheIncometaxAct,1961beingunsecuredloan,without appreciatingthefactthattheunsecuredloanisnothingbutmerelyan accommodationentry." 5.TheLd.Sr-DRappearingfortheRevenuesupportedtheorder passedbytheAOandrequestedtoupholdthesame. ITANo.1772/Ahd/2019 ITOVsM/s.MeetEnterprises Asst.Year2013-14PageNo.4 6.PerContra,theLd.CounselShriSanjayRShahappearingfor theassesseesubmittedthattheorderpassedinthecaseofJayesh RThakkar,directorofM/s.PrabhavIndustriesisbeingupheldby theCo-ordinateBenchofthisTribunalinITANo.3407/Ahd/2015 videorderdated16.10.2023whereintheCo-ordinateBenchhas deletedtheadditionmadeu/s.68oftheActbyobservingasfollows: 9.Wehaveheardtherivalcontentionsofboththepartiesand perusedthematerialsavailableonrecord.Undisputedly,the assesseeduringtheyearunderconsiderationhasshownreceiptsof unsecuredloanofRs.7,80,19,000/-fromthe15different companies/concernbasedinKolkataandMumbaiandotherplaces. Thedisputebeforeusiswithrespecttosumcreditedfrom13parties foranamountaggregatingtoRs.6,73,19,000/-only.Theissueon handhasbearingontheprovisionsofsection68oftheAct.The provisionofsection68oftheActsuggeststhatifthereisanysum creditedinbooksofaccountmaintainedfortheanypreviousyear thentheassesseeisrequiredtoofferproperandreasonable explanationregardingnatureandsourcesofsuchcredittothe satisfactionoftheAO.Thus,theprimaryonuslieswiththeassessee toexplainthesourceofcreditinthebooks.Overtheperiod,thecourts havelaiddownthattheassesseetodischargeitsonusisrequiredto furnishevidencewithrespecttoidentityofthecreditor,genuineness oftransactionandcreditworthinessofthecreditor.Iftheassessee failedtodischargetheprimaryonuscastortheexplanationand evidencesubmittedbytheassessee,arenotfoundsatisfactorybythe AOthenthesumcreditedinthebooksshallbedeemedasincomeof theassessee.TheHon'bleSupremeCourtincaseofCITvs.P. Mohanakalareportedin291ITR278whiledealingwithscopeof provisionofsection68oftheActheldthat"theopinionoftheAOthat theexplanationfurnishedbytheassesseeasnotsatisfactoryis requiredtobebasedonproperappreciationofmaterialsandother attendingcircumstancesavailableonrecord.Theopinionofthe AssessingOfficerisrequiredtobeformedobjectivelywithreferenceto thematerialavailableonrecord.Applicationofmindisthesinequa nonforformingtheopinion."Inotherwords,oncetheassessee submitstheprimaryevidencewithregardtoidentityandcredit worthinessofcreditorandthegenuinenessofthetransaction,the onusshiftsontheAOtoconsiderthematerialsprovidedandmake independentinquiryinordertofindoutgenuinenessoftheevidence orbringmaterialcontrarytofactsexplainedbytheassessee.TheAO ITANo.1772/Ahd/2019 ITOVsM/s.MeetEnterprises Asst.Year2013-14PageNo.5 cannotrejecttheprimaryevidencefurnishedbytheassesseewithout appreciatingthefactsavailableonrecordorwithoutbringingcontrary materialtoformthebeliefthatprimarydocumentorexplanation furnishedbytheassesseeisnotsatisfactory. 9.1Undeniably,theassesseeatthetimeofassessmentproceedings insupportofgenuinenessofcreditofinterestfreeunsecuredloanhas furnishedcertaindocumentaryevidencewhichatcostofrepetition areillustratedasunder: a.PANofallthecompanies. b.Acknowledgementsofreturnsfiledforassessmentyear 2011-12. c.Computationofincomeforassessmentyear2011-12and AuditedAnnualAccountsfortheyearunderconsideration. d.CopyofBankStatementofallthepartiesevidencingtohave advancedloantotheassessee. c.Confirmationsstatingthatmonieshavebeenadvancedtothe assessee. f.CopyofLedgerAccountsofalltheaboveparties. G.CopyofvariousROCDocumentsshowingtheexistenceand identityofthepartiesand h.AffidavitsofDirectorsofallthepartiestoproveIdentityand genuinenessoftheloan. 9.2Fromtheabove-mentionedlistofdocumentaryevidence,itis discernablethattheassesseehasprovidedsufficientdocumentssuch asPAN,copiesofITR-VandvariousROCformstoestablishthe identityofthecreditor.Similarly,theassesseealsoprovided sufficientdocumentsintheformofconfirmationletterfromcreditor, affidavitfromtheirdirector,bankstatementshowingamountdebited inthecreditor'sbankaccountandcreditedinassessee'sbank throughRTGStoestablishgenuinenessoftransaction.Likewise,the creditworthinessofthecreditorisalsodiscernablefromtheirbalance sheetandbankstatementsthoughtheyweredeclaringlowerincome intheITreturnbuthavefundintheformofsharecapitalreserveand loansliability. 9.5Basedontheabove,weholdthatthereportofthecommission cannotbetakenassacrosanct/gospeltruthfortakinganyadverse ITANo.1772/Ahd/2019 ITOVsM/s.MeetEnterprises Asst.Year2013-14PageNo.6 viewagainsttheassesseewithoutpointingoutanyspecificdefectin thedocumentaryevidencefurnishedbytheassesseeduringthe assessmentproceedingswhichhavebeenelaboratelydiscussedin theprecedingparagraph.Inourconsideredviewtheidentity, creditworthinessofthepartiesandgenuinenessofthe transactionwereestablishedbytheassesseebasedonthe documentaryevidencebuttherevenuewithoutpointingout anydefectinsuchdocumentshasdecidedtheissueagainst theassesseebasedonthecommissionreport.Assuchitisthe onusupontherevenuetodisprovethematerials/documents submittedbytheassesseeinsupportofthetransactionsin disputebasedoncogentreasons.Butthesamehasnotbeendone bytherevenueintheobjectivemanner.Likewise,itisalsoafacton recordsthattherevenuehastakensomestatementsfromthe3rd partywhichwerenotprovidedtotheassesseefortherebuttal.Itis thesettledlawthatthethird-partystatementcannotbeusedagainst theassesseeuntilandunlesstheopportunityofcross-examinationis affordedtotheassessee.Inviewoftheabovefactsandafter consideringthenecessarydetailsdiscussedabove,wedonotfind anyreasontointerfereinthefindingofthelearnedCIT-A.Hencethe groundofappealoftherevenueisherebydismissed. 7.TheLd.Counselfurtherrelieduponthevariouscaselaws includingtheJurisdictionalHighCourtinthecaseofCITvsAyachi ChandrashekharNarsangji[2014]42taxmann.com251wherein “therepaymentofloanwasmadebytheassesseeinthenext FinancialYearthenadditionmadeu/s.68oftheActbytheAOis liabletobedeleted”andalsoreliedonJurisdictionalHighCourtin thecaseofCITvs.RachodJivabhaiNakhava[2012]21 taxmann.com159whereinitwasheldthat“lenderswhoareall incometaxassesseewhosePANhasbeendisclosed,theAOcannot askassesseetofurtherprovethegenuineoftransactionwithoutfirst verifyingsuchfactfromtheIncomeTaxReturnofthelenders”.Thus, theLd.ARprayedtosustaintheorderpassedbyLd.CIT(A). 8.Wehavegivenourthoughtfulconsiderationandperusedthe materialsavailableonrecord.Undersection68oftheAct,primary onusisontheassesseetoprovideallnecessarydetailsand ITANo.1772/Ahd/2019 ITOVsM/s.MeetEnterprises Asst.Year2013-14PageNo.7 evidences.Inthiscase,theassesseehasprovidedcopyofledger accountofM/s.PrabhaavIndustriesLimited,bankstatementofthe assesseeforJuneandJuly2012,confirmationofaccountfrom PrabhavIndustries,copyofFormNo.201and201AoftheAct. However,theAOhasstronglyreliedonthestatementrecorded duringthesurvey/searchinthebusinesspremisesofShriShirish ChandraShah,Mumbaiandtreatedthisloantransactionasbogus andtaxedu/s.68oftheAct.Thus,inourconsideredopiniontheAO hasnotconsideredprimaryevidencesfurnishedbytheassessee. FurthertheLd.AOfailedtoappreciatethematerialevidences availableonrecordandalsonotrecordedhisdis-satisfactionofthe aboveloantransaction,whichweredonethroughbankingchannel andloanswererepaidwithinterestandwithapplicableTDS. WhereastheCo-ordinateBenchofthisTribunalinthecaseof JayeshRThakkar,DirectorofthePrabhavIndustriesLimited(cited Supra)haveconsideredindetailtheloantransactionsasgenuine anddeletedtheadditionmadeu/s.68oftheAct.Respectfully, followingthesameratio,thedeletionmadebytheLd.CIT(A),does notrequireanyinterference.Thus,thegroundraisedbythe Revenueisdevoidofmeritsandliabletobedismissed. 9.Intheresult,appealfiledbytheRevenueisdismissed. Orderpronouncedintheopencourton05/07/2024 Sd/-Sd/- (ANNAPURNAGUPTA)(T.R.SENTHILKUMAR) ACCOUNTANTMEMBERJUDICIALMEMBER (TrueCopy) Ahmedabad:Dated05/07/2024