Vigneshwars Cement Pvt. Ltd., Kolkata V. D.C.I.T.,Circle-13(2), Kolkata

ITA 2359/KOL/2019

AI Insights

The case involves Vigneswara Cement Pvt. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-5, Kolkata, confirming the addition of Rs. 91,00,000 as unexplained cash credit. The addition was initially made by the AO, suspecting the transaction with M/s Ashok Investors Trust Ltd. as a sham. The Tribunal noted that the assessee had furnished all necessary details regarding the loan, including the lender's identity and financial transactions. Despite the lender's non-compliance with a notice under section 133(6), the Tribunal held that the assessee had discharged its burden of proof.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127389 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 24-10-2019
• Other Referred Cases: PCIT vs. NRA Iron & Steel Pvt. Ltd., CIT v. Orissa Corporation (P) Ltd
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Onus to prove
• Section: 68; 148; 142(1); 133(6)

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ “सी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA ी राजेश क ु मार, लेखा सद य एवं ी संजय शमा या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. No. 2359/Kol/2019 Assessment Year: 2011-12 Vigneswara Cement Pvt. Ltd. (PAN: AADCV 1149 F) Vs. DCIT, Circle-13(2), Kolkata Appellant / (अपीलाथ ) Respondent / ( !यथ ) Date of Hearing / स ु नवाई क$ त&थ 02.08.2023 Date of Pronouncement/ आदेश उ)घोषणा क$ त&थ 22.08.2023 For the Appellant/ नधा /रती क$ ओर से Shri S. M. Surana, Advocate For the Respondent/ राज व क$ ओर से Shri Sanjay Paul, Addl. CIT ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-5, Kolkata (hereinafter referred to as the Ld. CIT(A)”] dated 20.09.2019 for the AY 2011-12. 2. The only issue raised by the assessee in the various grounds of appeal is against the confirmation of addition of Rs. 91,00,000/- by the Ld. CIT(A) which was made by the AO on account of unexplained cash credit u/s 68 of the Act. 3. Facts in brief are that the assessee filed return of income on 14.09.2018 declaring a loss of Rs. 1,06,56,996/- in response to notice u/s 148 of the Act. 2 I.T.A. No.2359/Kol/2019 Assessment Year: 2011-12 Vigneswara Cement Pvt. Ltd. Thereafter the statutory notices were duly issued and served on the assessee. The AO issued notice u/s 142(1) dated 12.10.2018 calling upon the assessee to furnish the details of amount received to the tune of Rs. 91,00,000/- from M/s Ashok Investors Trust Ltd. and to explain the nature of transaction. The assessee replied the said notice dated 22.10.2018 by submitting all the details such as details of business activities, bank account, bank statements, audited accounts and computation etc. Thereafter the AO issued show cause notice on 15.11.2018 to the assessee to show cause as to why this amount of Rs. 91,00,000/- should not be treated as a sham expenditure in absence of proper explanation which was replied by the assessee by submitting that the assessee has received unsecured loan from M/s Ashok Investors Trust Ltd.. Thereafter the AO issued notice u/s 133(6) of the Act to M/s Ashok Investors Trust Ltd. calling for the requisite information however there was no compliance from the party and in Para 7 also ,the AO observed that transaction with M/s Vigneswara Cement Pvt. Ltd. is considered as sham transaction and added the same to the income of the assessee. 4. In the appellate proceedings, the Ld. CIT(A) confirmed the order of AO by simply dismissing the appeal of the assessee by observing that the lender has very meager income during AY 2012-13 and claimed refunds out of total tax paid and thereafter by following the decision of Hon’ble Apex Court in the case of PCIT vs. NRA Iron & Steel Pvt. Ltd. in [2019] 412 ITR 161 (SC) the appeal of the assessee was dismissed. 5. After hearing the rival contentions and perusing the material on record, we find that the assessee filed all the details in respect of loan creditor such as name, address, PAN, bank statement, audited annual accounts etc. However, the notice issued u/s 133(6) of the Act to the loan creditor was not complied with. We note that the none of the authorities below have carried out any further investigation on the basis of evidences furnished by the assessee. We even note that the loan was repaid also by the assessee. Further the assessee has paid interest on the said loan after deducting tax at source. Under the circumstances, we are not in a position to agree with the conclusion drawn by the Ld. CIT(A) that the assessee has failed to discharge its onus to prove the 3 I.T.A. No.2359/Kol/2019 Assessment Year: 2011-12 Vigneswara Cement Pvt. Ltd. transaction. In our opinion, the assessee has filed necessary documents qua the loan creditor as stated above and even the interest was paid after deduction of tax at source. The case of the assessee finds support from the decision of Hon’ble Supreme Court in the case of CIT v. Orissa Corporation (P) Ltd 159 ITR 78 (SC) wherein the Hon’ble Apex Court has held that where the assessee has filed all the documents then the AO is in a position to proceed further in the matter and addition cannot be made on the ground that the assessee has not proved identity and creditworthiness of the investor and genuineness of the transaction. In this case, we note that Section 133(6) was also served on the lender company and is not the duty of the assessee to get the said notice responded from the lender company. Moreover, the decision cited before us by the revenue in the case of NRA Iron & Steel Pvt. Ltd. (supra) is not applicable as in that case whereabout of the lenders were not traceable and in that context the Hon’ble Apex Court has held that the assessee has failed to prove identity, creditworthiness of the lender and genuineness of the transaction. Besides, the case was decided ex-parte by the Hon’ble Apex Court when no one turns up for attending the hearing. In view of the facts and circumstances and also ratio laid down in Orissa Corporation Ltd. (supra) we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition. 6. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 22 nd August, 2023 Sd/- Sd/- (Sonjoy Sarma /संजय शमा ) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 22 nd August, 2023 SB, Sr. PS 4 I.T.A. No.2359/Kol/2019 Assessment Year: 2011-12 Vigneswara Cement Pvt. Ltd. Copy of the order forwarded to: 1. Appellant- Vigneswara Cement Pvt. Ltd. , 40, 5 th Floor, Strand Road, Space No. 3, Kolkata-700001 2. Respondent-DCIT, Circle-13(2), Kolkata 3. Ld. CIT(A)- 5, Kolkata 4. Ld. PCIT- 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata