Sri Vinamra Daga, Kolkata V. DCIT, Circle - 6(1), Kolkata, Kolkata

ITA 2320/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2051 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 14-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH
• Assessee Lawyers: A KOCHAR
• Keywords: Accommodation entries; Bogus loan
• Section: 133(6); 37(1)

Judgement Text

1 ITA NO. 2320/KOL/2017 VINAMRA DAGA, AY 2014-15 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA ( ) BEFORE . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VA RKEY, JM] I.T.A. NO. 2320/KOL/2017 ASSESSMENT YEAR: 2014-15 SRI VINAMRA DAGA (PAN: ACQPD6902L) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-6(1), KOLKATA. APPELLANT RESPONDENT DATE OF HEARING 08.11.2018 DATE OF PRONOUNCEMENT 16.11.2018 FOR THE APPELLANT SHRI A. KOCHAR, ADVOCATE FOR THE RESPONDENT SHRI C. J. SINGH, SR. DR ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE ASSESSEE IS AGAINST TH E ORDER OF THE LD. CIT(A)-10, KOLKATA DATED 16.08.2017 FOR AY 2014-15. 2. THE MAIN GRIEVANCE OF THE ASSESSEE IS AGAINST TH E ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 40,00,000/- WHICH TH E ASSESSEE CLAIMED TO HAVE RECEIVED AS UNSECURED LOAN AND RS.4,22,531/- BEING THE INTEREST RELATED TO THE AFORESAID AMOUNT OF LOAN OF RS.40,00,000/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN ELECTRONICALLY ON 20.09.2014 DECLARING TOTAL INCOME OF RS.92,82,290/- . LATER THE CASE WAS SELECTED FOR SCRUTINY. THE AO NOTED THAT THE ASSESSEE HAS TAKEN UNSECURED LOAN TO THE TUNE OF RS.44,22,531/- FROM M/S. PASUPATI TRADE LINKS PVT. LTD. IN ORDER TO FIND OUT THE VERACITY OF THE LOAN, THE AO ISSUED NOTICE U/S. 133(6) OF THE I NCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WHICH THE AO NOTES TO HAVE RETURNE D UN-SERVED. HOWEVER THE AO 2 ITA NO. 2320/KOL/2017 VINAMRA DAGA, AY 2014-15 ACKNOWLEDGED THAT THE ASSESSEE PRODUCED (I) LOAN CO NFIRMATION, (II) BANK STATEMENT, (III) COPY OF ITR ACKNOWLEDGMENT, (IV) AUDITED BALANCE SH EET OF THE LENDER COMPANY TO PROVE THE UNSECURED LOAN. HOWEVER, THE AO WAS OF THE OPI NION THAT THE ASSESSEE HAS ROUTED ITS OWN MONEY THROUGH JAMAKHARCHI/SHELL/PAPER COMPANIES . THEREAFTER, THE AO MADE A GENERAL OBSERVATION OF THE MODUS OPERANDI ADOPTED BY SHELL/ PAPER COMPANIES WHICH PROVIDED ACCOMMODATION ENTRIES IN LIEU OF CASH AND THEREAFTE R MADE THE ADDITION OF RS.44,22,531/-. THE AO ALSO ADDED RS.4,22,531/- SEPARATELY (DISALLO WANCE U/S. 37(1) ON ACCOUNT OF BOGUS EXPENDITURE) AFTER TAKING NOTE THAT THE ASSESSEE HA D BOOKED INTEREST ON LOAN TO THE TUNE OF RS.4,22,531/- AND SINCE THE LOAN ITSELF HAS BEEN TR EATED BY HIM AS BOGUS, THEREFORE, THE INTEREST DEBITED IN RESPECT OF THE BOGUS LOAN WAS A LSO DISALLOWED. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO WAS P LEASED TO DISMISS THE APPEAL OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. IT WAS BROUGHT TO OUR NOTICE BY THE LD. AR T HAT THE UNSECURED LOAN TAKEN BY THE ASSESSEE IS ONLY TO THE TUNE OF RS. 40,00,000/- AND NOT RS.44,22,531/- AS NOTED BY THE AO AND THUS THE ADDITION MADE OF RS.44,22,531/- AS BOG US UNSECURED LOAN ITSELF IS PER SE ERRONEOUS BECAUSE THE UNSECURED LOAN WAS ONLY RS. 4 0,00,000/- AND THE INTEREST ON IT BOOKED BY ASSESSEE WAS RS.4,22,531/- AND, THEREFORE, THE A O ERRED IN MAKING AN ADDITION OF RS.44,22,531/- AS BOGUS UNSECURED LOAN. IT WAS ALS O BROUGHT TO OUR NOTICE THAT THE AO HAS MADE DOUBLE ADDITION OF THE INTEREST ELEMENT. ON ON E HAND HE HAS MADE THE ENTIRE ADDITION OF RS.44,22,531/- UNDER THE HEAD BOGUS UNSECURED LO AN WHEREIN THE LOAN AMOUNT OF RS.40,00,000/- + RS.4,22,531/- WAS ADDED AND THEREA FTER SEPARATELY DISALLOWED AN AMOUNT OF RS.4,22,531/- U/S. 37(1) OF THE ACT. ACCORDING TO LD. AR, THE DOUBLE DEDUCTION ITSELF EXPOSES THE PREJUDICE AND PRE-DETERMINED MIND OF TH E AO THAT THE LOAN IS AN ACCOMMODATION ENTRY. IT WAS BROUGHT TO OUR NOTICE T HAT THE ASSESSEE HAS ALREADY REPAID THE LOAN AMOUNT AND FOR THAT HE DREW OUR ATTENTION TO P AGE 31 OF THE PAPER BOOK WHICH IS THE LETTER WRITTEN BY THE ITO, WARD-5(2), KOLKATA WHO I S THE AO OF M/S. PASUPATI TRADELINK PVT. LTD. (THE LENDER COMPANY IN THIS CASE) WHEREIN THE ITO HAS ASKED FOR THE CONFIRMATION FROM THE ASSESSEE IN RESPECT TO THE AMOUNT REFUNDED/REPA ID BY HIM TO M/S. PASUPATI TRADELINK 3 ITA NO. 2320/KOL/2017 VINAMRA DAGA, AY 2014-15 WHICH THE ASSESSEE HAS TAKEN AS UNSECURED LOAN FROM THE LENDER M/S. PASUPATI TRADELINK PVT. LTD. THE LD. AR DREW OUR ATTENTION TO PAGE 31 OF T HE PAPER BOOK WHEREIN THE ASSESSEE HAS REPLIED TO THE NOTICE OF THE AO OF THE LENDER COMPA NY M/S. PASUPATI TRADELINK PVT. LTD. WHEREIN THE ASSESSEE HAD CONFIRMED TO HAVE REPAID T HE LOAN AMOUNT OF RS. 40,00,000/- AND FILED (I) DETAILS OF LOAN RECEIVED, (II) LOAN CONF IRMATION FOR THE PERIOD ENDING 31.03.2015, (III) BANK ACCOUNT DETAILS, (IV) COPY OF ITR ACKNOW LEDGEMENT FOR THE AY 2015-16, (V) AUDITED FINANCIAL STATEMENT BEING P&L ACCOUNT AND B ALANCE SHEET FOR AY 2015-16. THE LD. AR DREW OUR ATTENTION TO THE LOAN CONFIRMATION BY THE LENDER COMPANY M/S. PASUPATI TRADELINK PVT. LTD. WHICH IS PLACED AT PAGE 11 OF T HE PAPER BOOK AND THE LD. AR DREW OUR ATTENTION TO PAGE 12 FROM WHICH THE SOURCE OF THE A DVANCING AMOUNT TO THE ASSESSEE IS DESCRIBED FROM WHICH IT TRANSPIRES THAT THE LENDER M/S. PASUPATI TRADELINK PVT. LTD. HAD PAID TO THE VASUNDHAR INTERNATIONAL VIDE CHEQUE NO. 000 285 DATED 05.04.2013 FOR RS. 40 LAKHS AS LOAN AND THAT THE LENDER/CREDITOR HAD MADE THE S AID PAYMENT OUT OF OWN SOURCES GENERATED FROM THE RECEIPT OF RS. 40 LAKHS FROM THE FUND IT R ECEIVED FROM M/S. GODAVARI EXIM PVT. LTD. VIDE CHEQUE NO. 377304 DATED 05.04.2013. THE LD. AR DREW OUR ATTENTION TO PAGE 13 OF THE PAPER BOOK WHICH IS THE BANK STATEMENT OF TH E LENDER/CREDITOR M/S. PASUPATI TRADELINK PVT. LTD. FROM WHICH WE NOTE THAT M/S. PASUPATI TRA DELINK PVT. LTD. RECEIVED RS.40 LAKHS FROM M/S. GODAVARI EXIM PVT. LTD. ON 05.04.2013. T HE LD. AR DREW OUR ATTENTION TO THE AUDITED STATEMENT OF ACCOUNT OF THE LOAN CREDITOR W HICH IS PLACED AT PAGES 14 TO 29 OF THE PAPER BOOK AND THE ITR FOR AY 2014-15 OF THE LOAN C REDITOR IS FOUND PLACED AT PAGE 30 OF THE PAPER BOOK AND THUS HE PLEADED THAT THE ASSESSE E HAS DISCHARGED THE BURDEN CASTED UPON HIM TO PROVE THE IDENTITY, CREDITWORTHINESS AND GEN UINENESS OF THE UNSECURED LOAN TAKEN BY THE ASSESSEE FROM LENDER COMPANY M/S. PASUPATI TRAD ELINK PVT. LTD. SO HE PLEADED THAT ADDITION WAS UNJUSTIFIED AND WANT US TO DELETE THE ADDITION. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND D OES NOT WANT US TO INTERFERE IN THE IMPUGNED ORDER. 5. WE NOTE THAT THE ASSESSEE AN INDIVIDUAL IS CARR YING ON THE BUSINESS UNDER THE FOLLOWING TWO PROPRIETORSHIP CONCERNS (I) M/S. VASU NDHARA INTERNATIONAL AND (II) M/S. GLOBAL IMPEX. THE ASSESSEE WAS CONDUCTING TRADING OF FANS OF ORIENT BRAND AND WAS THE 4 ITA NO. 2320/KOL/2017 VINAMRA DAGA, AY 2014-15 DISTRIBUTOR OF IT IN THE STATE OF RAJASTHAN. WE NO TE THAT THE ASSESSEE HAD TAKEN A LOAN OF RS. 40 LAKHS FOR M/S. VASUNDHARA INTERNATIONAL ON 05.04 .2013 WHICH FACT HAS BEEN CONFIRMED BY THE CREDITOR/LENDER M/S. PASUPATI TRADELINK PVT. LT D. WHICH IS EVIDENT FROM PERUSAL OF PAGE 11 OF THE PAPER BOOK. THE SOURCE OF THE LENDER COM PANY GIVING LOAN TO THE ASSESSEE HAS ALSO BEEN EXPLAINED FROM THE CONTENTS OF PAGE 12 OF THE PAPER BOOK AND THIS FACT HAS BEEN CORROBORATED BY THE BANK STATEMENT OF THE LENDER/CR EDITOR M/S. PASUPATI TRADELINK PVT. LTD. WHICH IS PLACED AT PAGE 13 OF THE PAPER BOOK AND TH E LOAN HAS BEEN GIVEN TO ASSESSEE THROUGH BANK TRANSACTION. WE NOTE THAT THE LENDER COMPANY HAS PAN AAECP8702B AND IS AN INCOME TAX ASSESSEE AND A PERUSAL OF PAGE 30 OF THE PAPER BOOK REVEALS THAT THE LENDER HAD FILED ITS RETURN OF INCOME. FROM THE PERUSAL O F PAGES 31 AND 32 REVEALS THAT THE ASSESSEE HAD REFUNDED THE AMOUNT OF RS. 40 LAKHS TO M/S. PAS UPATI TRADELINK PVT. LTD. WHICH FACT IS CORROBORATED FROM THE QUERIES RAISED BY THE AO OF T HE LENDER COMPANY AS DISCUSSED ABOVE. THUS, THE ASSESSEE HAS BEEN ABLE TO DISCHARGE THE O NUS CASTED UPON IT TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN CREDIT OR. FOR TAKING SUCH A VIEW WE RELY ON THE ORDER OF THE HONBLE CALCUTTA HIGH COURT IN S. K. B OTHRA & SONS HUF VS. ITO 347 ITR 347 (CAL). FURTHER, WE NOTE THAT THE HONBLE CALCU TTA HIGH COURT IN CRYSTAL NETWORK (P) LTD. VS. CIT 353 ITR 171 (CAL) HAS OBSERVED THAT TH E CREDITORS CANNOT BE DISBELIEVED MERELY BECAUSE THEY DID NOT RESPOND TO SUMMONS WHE N ALL OTHER DOCUMENTS TO SUBSTANTIATE THE LOAN TRANSACTION HAS BEEN FILED BEFORE THE ASSE SSING AUTHORITY. THE HONBLE CALCUTTA HIGH COURT IN CIT VS. DATAWARE (P) LTD. ITA NO. 263 OF 2011 DATED 21.09.2011 HAS HELD THAT IN CASE IF THE AO HAS DOUBT REGARDING THE CRED ITWORTHINESS OF THE LOAN CREDITOR, THEN THE AO IN TURN HAD TO SEEK REPORT FROM THE AO OF THE LO AN CREDITOR AND THEREAFTER ONLY DRAW ADVERSE INFERENCE AGAINST THE LOAN CREDITOR. IN TH IS CASE, THE LOAN CREDITOR HAS EVEN SHOWN THE SOURCE OF THE LOAN DISBURSED TO THE ASSESSEE (F ROM FUNDS IT RECEIVED FROM M/S. GODAVARI EXIM PVT. LTD. AS DISCUSSED) AND WE NOTE THAT THE A O HAS NOT MADE ANY EXERCISE TO DISCREDIT THE LOAN CREDITOR IN ANY MANNER OTHER THAN MAKING C ERTAIN GENERAL OBSERVATIONS OF THE ACCOMMODATION ENTRY PROVIDERS WHICH CANNOT BE THE L EGAL BASIS FOR DISBELIEVING THE LOAN THE ASSESSEE RECEIVED FROM M/S. PASUPATI TRADELINK PVT. LTD. AND WHICH AMOUNT THE ASSESSEE HAS REPAID AS IS EVIDENT FROM THE CORRESPONDENCE BETWEE N THE ASSESSEE AND THE AO OF THE LENDER COMPANY AS DISCUSSED ABOVE. THE ASSESSEE HAS DISCHA RGED THE ONUS BY PLACING ALL THE 5 ITA NO. 2320/KOL/2017 VINAMRA DAGA, AY 2014-15 DOCUMENTS BEFORE THE AO/LD. CIT(A) AS DISCUSSED ABO VE. THEREFORE, THE LD. CIT(A) ERRED IN NOT GIVING CREDENCE TO THE AFORESAID DOCUMENTS F ILED BEFORE HIM WITHOUT ANY ADVERSE MATERIAL TO SUBSTANTIATE HIS STAND. HENCE, WE ARE INCLINED TO DELETE THE ADDITION OF RS. 40 LAKHS WHICH THE ASSESSEE HAS TAKEN AS LOAN AS WELL AS THE INTEREST WHICH THE ASSESSEE HAS GIVEN TO THE LENDER OF RS.4,22,531/-. THE ADDITION AL DISALLOWANCE U/S. 37(1) OF THE ACT OF RS.4,22,531/- IS ALSO DELETED. THUS, THE ASSESSEE G ETS RELIEF OF RS.44,22,531/- AND RS. 4,22,531/- U/S. 37(1) OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16/11/201 8 (J. SUDHAKAR REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16TH NOVEMBER, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 APPELLANT SHRI VINAMRA DAGA, C/O S. L. KOCHAR, AD VOCATE, 86, CANNING STREET, KOLKATA-700 001. 2 RESPONDENT DCIT, CIRCLE-6(1), KOLKATA. 3 4 5 CIT(A)-10, KOLKATA. (SENT THROUGH E-MAIL) CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY