SAVLA BUILDWELL LLP, MUMBAI V. NATIONAL FACELESS APPEAL CENTRE, DELHI

ITA 2066/MUM/2022

AI Insights

Savla Buildwell LLP appealed against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, which confirmed the addition of Rs. 75 lakhs as unsecured loan received from M/s. Rajat Diamonds. The Assessing Officer had initially made this addition under section 68 of the Income Tax Act, 1961, based on information that M/s. Rajat Diamonds was involved in providing accommodation entries. The Tribunal dismissed the appeal due to the assessee's failure to substantiate the genuineness and creditworthiness of the loan during the appellate proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299425 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 03-05-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 16-08-2022
• Other Referred Cases: Ms. Kanchwala Gems vs. JCIT, CIT vs. Korlay Trading Co. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Accommodation entries; Onus to prove
• Section: 68; 143(3); 143(1); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, AM AND MS. KAVITHA RAJAGOPAL, JM I TA N o. 206 6/ M u m / 20 22 ( A s s e ss me nt Y ea r: 20 1 3- 14 ) Savla Buildwell LLP D/69, Surjit Sangam Chawl, Mathuradas Road, Kandivali (W), Mumbai-400 067 V s. National Faceless Appeal Centre Delhi P A N / G I R N o. A B S F S 98 84 P (Appellant) : (Respondent) Assessee by : None Revenue by : Shri A. N. Bhalekar D a te o f H e a r i n g : 04.05.2023 D ate of P ro n ou n ce me n t : 09.05.2023 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2013-14. 2. The assessee has challenged the addition of Rs.75 lacs as unsecured loan received by the assessee from M/s. Rajat Diamonds as accommodation entry for unsecured loans. 3. It is observed that the appeal is said to be time barred by five days for which the assessee has filed an Affidavit to condone the delay of five days for the reason that the 2 ITA No. 2 0 6 6 / M u m / 2 0 2 2 ( A . Y . 2 0 1 3 - 1 4 ) Savla Buildwell LLP vs. NFAC assessee has sufficient cause for the said delay. We hereby condone the delay of five days. 4. As there was no representation on behalf of the assessee, we hereby proceed to decide the appeal by hearing the learned Departmental Representative (ld. DR for short) for the Revenue ad on perusal of the available materials on record. 5. The brief facts are that the assessee firm is an LLP engaged in the business of builders and developers. The assessee filed its return of income for the impugned year dated 31.08.2012, declaring loss of Rs.3,76,162/- and was processed u/s. 143(1) of the Act. The assessee’s case was reopened u/s.147 of the Act based on the information from DGIT (Invst.), Mumbai that the assessee was one of the beneficiaries of accommodation entries. The Assessing Officer (A.O. for short) observed that the assessee has availed unsecured loan amounting to Rs.75 lacs from M/s. Rajat Diamonds alleged to be one of the concerns managed/operated by Shri Gautam Jain & Others who is alleged to be an entry provider for bogus purchases and unsecured loans. The A.O. passed the assessment order dated 30.10.2017 u/s. 143(3) r.w.s. 147 of the Act by making an addition of Rs.75 lacs as unsecured cash credit u/s. 68 of the Act. 6. The assessee preferred an appeal before the ld. CIT(A), challenging the impugned addition. 7. The ld. CIT(A) confirmed the said addition made by the A.O. for the reason that the assessee has made no compliance before the first appellate authority and thereby failed to establish the genuineness/creditworthiness pertaining to the impugned transactions. 3 ITA No. 2 0 6 6 / M u m / 2 0 2 2 ( A . Y . 2 0 1 3 - 1 4 ) Savla Buildwell LLP vs. NFAC 8. Aggrieved, the assessee is in appeal before us challenging the order of the ld. CIT(A). 9. The ld. DR for the Revenue contended that the assessee has failed to prove the genuineness and creditworthiness of the impugned transactions before the lower authorities inspite of several opportunities given. The ld. DR stated that the assessee’s case was reopened based on the information received from the Investigation Wing of the Income Tax Department in the case of Shri Gautam Jain & Others who are involved in providing accommodation entries by way of bogus purchase bills and unsecured loan to various parties and M/s. Rajat Diamonds Exim P. Ltd. was said to be one such concerned. The ld. DR stated that the assessee has failed to discharge the onus casted upon it in proving the identity, creditworthiness and genuineness of the transaction. The ld. DR relied on the order of the lower authorities. 10. We have heard the ld. DR and perused the materials available on record. It is observed that the assessee is said to have received a loan of Rs.75 lacs from M/s. Rajat Diamonds and based on the information available with the department it is alleged to be a paper company without any actual business transaction. It is also observed that a search action was carried out in the case of Shri Gautam Jain & Others, wherein the directors/proprietors of the said concern have admitted on oath that they were providing accommodation entries in the nature of bogus purchases and unsecured loans. The A.O. contended that the assessee was one of the beneficiaries of such accommodation entire received from M/s. Rajat Diamonds and thereby made an addition of Rs.75 lacs u/s. 68 of the Act. The assessee in its submission before the ld. A.O. stated that the assessee M/s. 4 ITA No. 2 0 6 6 / M u m / 2 0 2 2 ( A . Y . 2 0 1 3 - 1 4 ) Savla Buildwell LLP vs. NFAC Rajat Diamonds was promoted by Shri Dharmendra Bel who was not concerned with Shri Gautam Jain & Others group. The assessee further stated that M/s. Rajat Diamonds was not involved in providing accommodation entries and further stated that the assessee has repaid the aforesaid loan in subsequent years through RTGS and the details of which has been submitted to the A.O. during the assessment proceedings. The assessee also stated that the assessee has furnished the confirmation letter from the parties during the assessment proceeding along with the bank statements showing the receipt and repayment of the impugned loan amounts. It is also observed that during the first appellate proceeding, the assessee has not complied with the notices despite several opportunities given. The assessee is also said to have not furnished any documentary evidences to substantiate its claim before the first appellate authority. 11. The ld. CIT(A) held that M/s. Rajat Diamonds was one of the group concerns operated by Shri Gautam as per the data available with the Investigation Wing. The ld. CIT(A) upheld the addition made by the A.O. on the ground that the assessee has failed to prove the creditworthiness and genuineness of the impugned transaction and had relied upon the decision of the co-ordinate bench in the case of Ms. Kanchwala Gems vs. JCIT (in ITA No. 134/JP/2002 vide order dated 10.12.2003) affirmed by the Hon'ble Apex Court wherein it was held that the payment made by account payee cheque will not be a conclusive evidence to prove genuinity or creditworthiness of a transaction. The ld. CIT(A) also relied on the decision of the Hon’ble Calcutta High Court in the case of CIT vs. Korlay Trading Co. Ltd. 232 ITR 820 (Cal) which held that the initial burden of proof to prove the genuineness of the transaction lies on the assessee. 5 ITA No. 2 0 6 6 / M u m / 2 0 2 2 ( A . Y . 2 0 1 3 - 1 4 ) Savla Buildwell LLP vs. NFAC 12. From the above observation, we are of the considered view that the assessee has failed to prove the identity, genuineness and creditworthiness of the impugned transaction to the satisfaction of the A.O. as per the provision of section 68 of the Act. The relevant extract of the said provision is cited hereunder for ease of reference: Cash credits. 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: 13. On a bare reading of the above provision, it is evident that the primary onus is casted upon the assessee to prove the genuineness of the transaction and the creditworthiness of the lenders which has to be to the satisfaction of the A.O. In the present case in hand the assessee has failed to prove the genuinety/creditworthiness of the transaction and the creditor. The assessee has also failed to furnish the documentary evidences to corroborate the fact that the impugned transaction is genuine and that M/s. Rajat Diamonds was not involved in bogus accommodation entries. The documents furnished by the assessee are not sufficed to prove the impugned transaction to be genuine. We find merit in the order of the ld. CIT(A) by holding that the assessee has failed to discharge the initial onus casted upon it and that mere transaction done through banking channel is not a conclusive prove to hold the transaction to be genuine. There are various decisions of the higher forums reiterating the said proposition. Hence, we find no infirmity in the order of the ld. CIT(A). 6 ITA No. 2 0 6 6 / M u m / 2 0 2 2 ( A . Y . 2 0 1 3 - 1 4 ) Savla Buildwell LLP vs. NFAC 14. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 09.05.2023 Sd/- Sd/- (Om Prakash Kant) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : 09.05.2023 Roshani , Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT - concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai