THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-5(1) , MUMBAI V. M/S SAKET INFRA PROJECTS PRIVATE LIMITED, MUMBAI

ITA 2783/MUM/2022

AI Insights

The case involves the revenue's appeal against the order of the Commissioner of Income Tax (Appeals)-53, Mumbai, which had deleted certain additions made by the Assessing Officer (A.O.) regarding alleged bogus purchases, job work and labor expenses, and unsecured loans. The assessee, M/s. Saket Infra Projects Pvt Ltd, engaged in civil contract works, had its income assessed for A.Y. 2013-14 following a search and seizure action under section 132 of the Income Tax Act. The A.O. had made additions based on the belief that the assessee had benefited from accommodation entries. The CIT(A) deleted these additions, leading to the revenue's appeal to the Tribunal. The Tribunal upheld the CIT(A)'s decision, agreeing that the assessee had substantiated the genuineness of the transactions and the creditworthiness of the lenders.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299395 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 05-02-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 30-10-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Unexplained cash credit; Search and seizure; Additional evidence
• Section: 143(3); 142(1); 250; 72

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI B R BASKARAN, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 2783/Mum/2022 (A.Y: 2013-14) The DCIT, Central Circle 5(1), Room No. 1928, 19 th Floor, AirIndiaBldg, Nariman Point, Mumbai-400021. Vs. M/s. Saket Infra Projects Pvt Ltd., L3-308,the Summit Bay, Service Road, WE Highway, Vile Parle (E) Mumbai –400057. PAN/GIR No. : AAKCS4532L Appellant .. Respondent Appellant by : Shri.Dr. Kishor Dhule CIT-DR & Smt. Neeraja Sharma.DR Respondent by : Shri. JP Bairagra, Shri Ashiskumar Bairagra & Shri Akhilesh Pevekar. AR Date of Hearing 06.02.2023 Date of Pronouncement 02.05.2023 आदेश / O R D E R PER BENCH: The revenue has filed the appeal against the order of Commissioner of Income Tax (Appeals)-53, Mumbai passed u/s 250 of the Act. The revenue has raised the following grounds of appeal: 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 36,447/- on account of bogus purchase ignoring the ITA Nos. 2783/Mum/2022 M/s Saket Infraprojects Pvt Ltd, Mumbai. - 2 - fact that the assessee failed to prove the genuineness of purchases, and any expenditure in respect of which payments by account payee cheques is not enough evidence to prove the genuineness of the transaction ?" 2 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of Rs. 9,50,514/- as alleged bogus jobwork and labour expenses ignoring the facts that the assessee failed to prove the genuineness of these expenses and to produce evidences to substantiate the genuineness ?" 3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 2,63,22,250/- u/s 68 of the Act in respect of unsecured loans ignoring the facts that the assessee has not proved the genuineness of the transaction, identities of most of the creditors and credit- worthiness of the parties to the satisfaction of the AO, so as to discharge the primary onus?" 4 "The appellant craves to leave, to add, to amend and / or to alter any of the ground of appeal if need be. 2. The brief facts of the case are that the assessee company is engaged in the business of civil contract works, construction of roads and buildings and undertakes BMC and Government contract works. The assessee has filed the return of income for the A.Y 2013-14 on 03.12.2013 disclosing a total income of Rs.5,97,72,620/- and the assessment u/sec143(3) of the Act was completed on 04.03.2016 determining ITA Nos. 2783/Mum/2022 M/s Saket Infraprojects Pvt Ltd, Mumbai. - 3 - the total income of Rs.6,05,97,370/-.There was search and seizure action U/sec132 of the Act carried out in the group of M/s RPS Infra Projects and related entities on 06.11.2019. Therefore the assessments relating to A.Y. 2014-15 to 2017-18 and subsequent years were covered and completed u/s 143(3) r.w.s 153A of the Act. The Assessing officer (A.O) found that the asssessee is a beneficiary of accommodation entries in the nature of purchases, subcontract labour charges and unsecured loans in the F.Y.2012- 13 and the A.O. has a reason to believe that the income has escaped the assesseement and issued notice U/sec148 of the Act. In compliance, the assessee has filed the return of income on 27.08.2021 disclosing a total income of Rs.5,97,72,720/- and the assessee was provided with the reasons for reopening and the asseessee has filed objections. The A.O. has disposed off the objections on 7.02.2022. 3. The A.O. has issued notice U/sec 142(1) of the Act calling for the details on the disputed issues. The assessee has filed the voluminous details substantiating the claims made in the Audited financial statements and the return of income filed. ITA Nos. 2783/Mum/2022 M/s Saket Infraprojects Pvt Ltd, Mumbai. - 4 - Whereas the A.O. in order to verify the geninuneness of the transactions has issued notice U/sec133(6) of the Act on the parties concerned with the purchases, subcontract labour and job works and unsecured loans. Since these entities have not provided the complete details, the A.O. has issued show cause notice referred at Para 5 of the order. In response to the notice, the assessee has submitted the details vide letter dated 25.03.2022 referred at page 7 to 47 of the order. The assessing officer dealt on the facts and submissions on expenditure on account of bogus purchases at Para 6 to 6.10 of the order and made disallowance of Rs.36,447/-. On the second disputed issue of expenditure on bogus job works & labour charges, the A.O. has dealt on the facts pertaining to the parties at page 56 to 71 of the order and made disallowance of payments made to two parties (i)Jaiswal transport Rs.24,000/- and (ii) Gem singh rathood Rs 9,50,514/- all aggregated to Rs9,50,514/-. And the on the Last disputed issue of unsecured loans and interest paid, the A.O. has considered the submissions and dealt at page 72 to 93 of the order and made addition of unsecured loans account ITA Nos. 2783/Mum/2022 M/s Saket Infraprojects Pvt Ltd, Mumbai. - 5 - balances including interest of Rs.1,08,22,250/- pertaining to thirteen loan creditors aggregating to Rs.2,63,22,250/-as unexplained cash credits u/sec68 of the Act. Finally the A.O. has assessed the total income of Rs 8,79,06,580/- and passed the order u/s 147 r.w.s154 of the Act. 4. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas, the CIT(A) has considered the grounds of appeal, submissions of the assessee, findings of the scrutiny assessment, remand report, provisions of law, judicial decisions and up held the validity of reasseement proceedings u/sec147 of the Act and granted relief in other grounds of appeal observing at page 8 Para 5 to 9 of the order read as under: 5. Ground No.2 is regarding disallowance of Rs.36,447/- as alleged bogus purchases. 5.1 For A.Y. 2013-14, the AO has disallowed purchases from Transcreek Engineers Pvt Ltd. of Rs.36,447/-The issue regarding disallowance of purchases from Transcreek Engineers Pvt. Ltd. has been discussed in Para 7 of the appellate order for A.Y. 2014-15. The facts of the case, findings of the AO in the assessment ITA Nos. 2783/Mum/2022 M/s Saket Infraprojects Pvt Ltd, Mumbai. - 6 - order and the submission made by the appellant are similar to that for A.Y. 2014-15. For A.Y. 2014-15, the disallowance made by the AO in respect of alleged bogus purchases from Transcreek Engineers Pvt. Ltd has been deleted Thus, following the decision taken on this issue in A.Y. 2014-15, the disallowance made by the AO in respect of bogus purchases in A.Y. 2013-14 is also deleted. Accordingly, Ground No.2 of the appeal is allowed. 6. Ground No.3 is regarding disallowance of Rs.9,50,514/- in respect of bogus Job work and labour charges. 6.1 For A.Y. 2013-14, the AO has disallowed bogus job work and labour expenses of Rs.24,000/- from Jaiswal Transport, Rs.9,26,514/- from Gem Singh Rathod. The issue regarding disallowance of bogus job work and labour expenses from Jaiswal Transport has been discussed in Para 9 of the appellate order for A.Y2014- 15 and that in the case of Gemsingh Rathod is discussed in Para 19 of the appellate order for A.Y2015-16The facts of the case, findings of the AO in the assessment order and the submission made by the appellant are similar to that for A.Y. 2014-15 and A.Y. 2015-16. Thus, following the appellate orders for A.Y.2014-15 & 2015-16, the disallowance of job work and labour expenses is also deleted for A.Y.2013-14. Accordingly, Ground No. 3 of the appeal is Allowed. 7. Ground No.4 is regarding addition of Rs.2,63,22,250/- u/s. 68 of the Act in respect of unsecured loans. 7.1 For A.Y2013-14, the AO has made addition of unsecured loans of Rs2,63,22,250/ During the ITA Nos. 2783/Mum/2022 M/s Saket Infraprojects Pvt Ltd, Mumbai. - 7 - appellate proceedings, the appellant has explained that during the A.Y.2013-14the appellant has taken unsecured loans of Rs.40,00,000/from Vardhan Diamonds Private Ltd, Rs.70,00,000/- from Antique Exim Private Limited, Rs.25,00,000/from Yogesh Construction and Rs.20,00,000/- from Chaitanya Gems Private Ltd totaling to Rs.1,55,00,000/-. Further, during the A.Y.2013-14, the appellant has paid interest on unsecured loan i.e. interest of Rs. 1,08,22,250/- paid to 13 parties. The issue regarding addition of unsecured loans from the said 4 parties has been discussed in Para 10 of the appellate order for A.Y2014-15. The facts of the case, findings of the AO in the assessment order and the submission made by the appellant are similar to that for A.Y. 2014-15. For A.Y2014-15, the addition made by the AO in respect of unsecured loans has been deletedThus, following the appellate order for A.Y2014- 15, the addition made by the AO in respect of unsecured loans received from these 4 parties in A.Y. 2013-14 is also deleted The appellant received fresh loans from 4 parties on which interest of Rs.22,26,500/- was paid and interest of Rs.85,95,750/- was paid on earlier loans taken from 9 parties. For A.Y.2013-14, the addition in respect of fresh unsecured loans received from these 4 parties have been deleted In respect of loans taken from 9 parties prior to A.Y2013-14the AO has not taken adverse view in respect of such loans taken prior to A.Y2013-14. Therefore the addition of interest in respect of unsecured loans for A.Y.2013-14 is deleted Accordingly, Ground No.4 of the appeal is Allowed. ITA Nos. 2783/Mum/2022 M/s Saket Infraprojects Pvt Ltd, Mumbai. - 8 - The CIT(A) has considered the submissions, details and relied on the similar findings and decision of the appellate authority in the subsequent assessment years and deleted the additions made in respect of bogus purchases, job works, and labour expenses, addition of unsecured loans and interest disallowance and partly allowed the assessee appeal. Aggrieved by the order of the CIT(A), the revenue has filed the appeal before the Honble Tribunal. 5. At the time of hearing, the Ld.DR submitted that the CIT(A) has erred in deleting bogus purchases expenses, bogus job work and labour expenses were the assessee has not substantiated the claim with the complete details and the CIT(A) has erred in deleting the unsecured loans and interest though the assessee has not proved the identity, genuineness and creditworthiness of the lender and the Ld.DR supported the order of the A.O and prayed for allowing the revenue. Per Contra, the Ld. AR supported the order of the CIT(A) and substantiated the submissions with the factual paper book, notes and judicial decisions. ITA Nos. 2783/Mum/2022 M/s Saket Infraprojects Pvt Ltd, Mumbai. - 9 - 6. We heard the rival submissions and perused the material on record. The grievance of the revenue that, the CIT(A) has erred in deleting the additions of the bogus purchases expenses, bogus job work & labour and unsecured loans and interest disallowance .The Ld.AR submitted that the assessee has cooperated in submitting the information in the assessment proceedings, whereas the A.O has ignored the information, evidences and Audited financial statements. The Ld. AR emphasized that the assessee has discharged its burden by submitting the details/information in the original assessment proceedings and in the remand proceedings. Whereas in respect of bogus purchases and job work&labour expenses, the assessee has submitted the details of PAN, income tax returns, copies of bills, ledger confirmation, bank statement. But the AO has made addition as the parties were not produced and the payments were not proved. In the appellate proceedings before the CIT(A), the assessee has filed additional evidence and CIT(A) has admitted the evidence and issued directions to the A.O. and called for the report. In the remand proceedings before the ITA Nos. 2783/Mum/2022 M/s Saket Infraprojects Pvt Ltd, Mumbai. - 10 - A.O, the parties have appeared and furnished the details and the A.O. has recorded the submissions. The third disputed issue with respect to unsecured loans and interest paid, the assessee has obtained loans from various parties during the year and the transactions were reflected in the financial statements. The assessee has submitted the documentary evidence with PAN number of lender, address, contact number, confirmation, Income tax returns, bank statement, audited balance sheet, MCA data and GST details. 7. The CIT(A) has called for the remand report from the AO on the additional evidence and in the remand proceedings the parties have appeared before the AO and the statement was recorded. Further the assessee also submitted the audited financial statements, confirmations, Bank statements, copy of the income tax return, Form no 16A to substantiate the genuineness and credit worthiness of loan creditors. The CIT(A) has considered the facts, circumstances and remand report and observed that the assessee prima-facie has complied the ingredients required u/s 68 of the Act of identity, genuineness and ITA Nos. 2783/Mum/2022 M/s Saket Infraprojects Pvt Ltd, Mumbai. - 11 - creditworthiness. Further, the CIT(A) relied on the judicial decisions and test checked the genuineness and creditworthiness of the lenders and the CIT(A) came to a reasonable conclusion that the assessee has discharged its burden on submitting the information. We considered the facts, circumstances and submissions as discussed above are of the view that the CIT(A) has passed a reasoned and conclusive order. Accordingly we do not find any infirmity in the order of the CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue. 8. In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 02.05.2023 Sd/- Sd/- (BR BASKARAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 02.05.2023 KRK, PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT (Judicial) ITA Nos. 2783/Mum/2022 M/s Saket Infraprojects Pvt Ltd, Mumbai. - 12 - 4. The PCIT 5. DR, ITAT, Mumbai 6. Guard File आदेशान ु सार/ BY ORDER, //True Copy//() 1. ( Asst. Registrar) ITAT, Mumbai ITAT, Mumbai