ITO - 6(2)(1), MUMBAI V. M/S CHANVIM ENGINEERING PVT. LTD, MUMBAI

ITA 3594/MUM/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 1738 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 23-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Accommodation entries; Onus to prove; Bogus loan; TDS
• Section: 68; 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE ABY T. VARKEY, JM AND SHRI GAGAN GOYAL, AM आयकर अपील सं/ I.T.A. No. 3594/Mum/2019 (निर्धारण वर्ा / Assessment Year: 2013-14) ITO-6(2)(1) 5 th Floor, Room No.513, Aayakar Bhavan, M. K. Road, Mumbai-400020. बिधम/ Vs. M/s. Chanvim Enginering (I) Pvt. Ltd. 3, Nanji Bldg, A.D. Marg, Sewree, Mumbai-400012. स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACC4729P (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) सुनवाई की तारीख / Date of Hearing: 09/05/2022 घोषणा की तारीख /Date of Pronouncement: 20/05/2022 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)- 12, Mumbai dated 25.02.2019 for assessment year 2013-14. 2. The main grievance of the revenue is against the action of the Ld. CIT(A) deleting the addition made by the AO u/s 68 of the Act of Rs.2,01,00,000/- (accommodation entry of loan) and deleting the addition of Rs.4,02,000/- u/s 69C of the Act (Commission). 3. The brief facts of the case are that the assessee filed the return of income declaring total income of Rs.28,43,280/-. The AO notes that the Assessee by: Shri M. Subramanian Revenue by: Shri R.A. Dhyani ITA No. 3594/Mum/2019 A.Y.2013-14 Chanvim Engg. (I) Pvt. Ltd. 2 assessee is engaged in the activity of Manufacturing Aluminium Roll Bond Evaporator Panel and assessee has shown the income from profit and gains from business and profession. The case was selected for scrutiny. According to the AO, he received an information from the office of Investigation Wing, Mumbai that the assessee has availed the accommodation entry from Bhanwarlal Jain Group who gives accommodation entry. 4. According to the AO the information from the Investigation Wing was that there was a search/survey action conducted in the premises of M/s Bhanwarlal Jain Group on 03.10.2013 from which it was evident that they were involved in providing in accommodation entry to beneficiary companies by providing cheque in lieu of cash. According to the AO, it has come to notice that the assessee company had availed unsecured loan from few companies, so he asked the assessee to provide the details. Pursuant to which the assessee filed the details before the AO and after going through the details submitted by the assessee and still not satisfied with the reply, the AO made the addition of Rs.2,01,00,000/- by holding as under: - “13 During the course of scrutiny proceedings, the assessee was asked to show the genuineness of alleged transaction with the entries controlled by or operated by or managed by Bhawarlal group. The assessee was given a chart of transaction as well which has already been tabulated above. In response the assessee vides his letter dated 04.03.2016 furnished that the following transaction from the above mentioned transaction pertains to the A.Y. 2014-15. ITA No. 3594/Mum/2019 A.Y.2013-14 Chanvim Engg. (I) Pvt. Ltd. 3 S. No. Name Particulars of Transactions (Financial Year and Amount) 1 Look At Me Retail Pvt. Ltd. 2012-13 1,19,99,100 2 Meridiann Jewellery Pvt. Ltd. 2012-13 81,04,725/- 3 Kothari & Co 2012-13 1,14,510/- 4 Rose Gems Pvt. Ltd. 2012-13 42,09,490/- Total 2,44,27,825/- In response to that, vide letter dated 07.03.2016, the DCIT, CC 1(3), Mumbai (Where the Shri Bhanwarlal Jain Group is centralized for assessment) was communicated about the facts produced by the assessee and requested to provide the ledger account of M/s Chanvim Engineering (India) Private Limited for A.Y. 2013-14 and A.Y. 2014- 15. The DCIT, CC 1(3), Mumbai, vide letter dated 08.03.2016, communicated the information and ledger account. On perusal of the information and documents, the contention of the assessee is found correct. Hence, the scrutiny assessment will be completed for the following financial transactions: - S. No. Name Particulars of Transactions (Financial Year and Amount) 1 Look At Me Retail Pvt. Ltd. 2012-13 1,11,00,000/- 2 Meridiann Jewellery Pvt. Ltd. 2012-13 50,00,000 3 Kothari & Co 2012-13 40,00,000 Total 2,01,00,000 13.2 Therefore by applying the ratios laid down in above cases, the facts and findings in the case and considering the assessee’s submissions in the matter, the amount brought in by assessee in its books as unsecured loan from the party stated above amounting to Rs. 2,01,00,000/is treated as unexplained credit within the meaning of section 68 of the Act and taxed as assessee’s income for the year under consideration. Penalty proceedings u/s.271(1)(c) are hereby initiated for furnished inaccurate particulars of its income on this issue. ITA No. 3594/Mum/2019 A.Y.2013-14 Chanvim Engg. (I) Pvt. Ltd. 4 5. Thereafter, the AO was of the opinion that the assessee might have given commission to these entries providers, which was estimated at Rs.4,02,000/- and treated as unsecured expenditure u/s 69C of the Act. Aggrieved the assessee preferred an appeal before the Ld. CIT(A) who was pleased to delete the same by observing as under: - “3.6 I have carefully gone through the assessment order, Remand Report of the AO as well as the written submissions filed and the rejoinder. AO in his assessment placed major reliance on the modus operandi of Banwarlal Jain group and came to the conclusion that the assessee entered into bogus loan transaction and added the amount of loan. However, the assessee submitted documents for the entire trail of the transaction, which the AO did not discuss and also could not point out anything wrong with the documents produced. AO simply reported that the transactions through banking channels, the fact of deduction tax(TDS) is not relevant because of statement of Sh. Banwarlal Jain during the search. It is undisputed fact that the loans was received through banking channel and the amount taken as loan was subsequently fully returned back along with interest through banking channels. The corresponding interest amount was offered as income by the lender parties and the department has on its record the trail of the income through TDS deducted and paid. The TDS payment is accepted by the Department which reflects that the interest payment is also accepted by the Department and therefore, the loan transaction cannot be alleged to be accommodation entries. The addition is merely on the basis of general information. There are no ITA No. 3594/Mum/2019 A.Y.2013-14 Chanvim Engg. (I) Pvt. Ltd. 5 specific findings on alleged involvement of the appellant in such accommodation transactions other than a general statement recorded during the search from Sh. Banwarlal Jain. It is on record that Sh. Banwarlal Jain retracted statement recorded. During the remand proceedings the assessee filed Affidavit of loan given and received back, ledger account, Income tax returns and Confirmation given by all the lenders to the assessee. AO has disproved any of the documents filed but gave a general unsubstantiated statement that the documents are not to be relied in view of the statement recorded. The AO has not carried out any investigation to prove that the appellant has actually taken accommodation entry from the aforesaid lenders. Even during the search the cash trail has not been identified to bring on record that the appellant gave cash which was deposited in some bank account, which in turn was routed into the accounts of the entities which gave loans to the assessee.” 6. Aggrieved by the aforesaid order of the Ld. CIT(A), the Revenue is before us. 7. We have heard both the parties and perused the record. We note that the Ld. CIT(A) in the impugned order acknowledges to have gone through the assessment order, submissions filed by assessee, Remand Report of the AO on it, and filed the rejoinder filed by assessee on the remand report. The Ld. CIT(A) has taken note of the fact that in order to mulct the additions the AO has placed much reliance on the modus operandi of Banwarlal Jain group and concluded that the assessee had entered into bogus loan transaction with them, and added ITA No. 3594/Mum/2019 A.Y.2013-14 Chanvim Engg. (I) Pvt. Ltd. 6 the amount of loan. The Ld. CIT(A) also took note of the fact that the assessee in order to prove the loan transactions had submitted before the AO, documents evidencing the entire trail of the transaction, which the AO ignored and has not found any infirmity in the documents produced by the assessee to support the genuineness of the loan. The Ld. CIT(A) noted that AO on the strength of the statement of Shri. Banwarlal Jain recorded during the search has brushed aside the relevant facts that the transaction in question (loan) happened through banking channel and TDS has been duly deducted on it. Further, the Ld. CIT(A) notes that the loans in question was subsequently fully returned back along with interest through banking channels. And that the lender parties has duly offered the same (interest) as income in their return of income (ROI). The Ld. CIT(A) took note that TDS remittance made has been accepted by the Department and therefore the interest payment has also been accepted by the Department, so he was of the opinion that the loan transaction in question cannot be alleged to be accommodation entries. 8. In the light of the uncontroverted aforesaid facts, the Ld. CIT(A) opined that the AO has made the additions of entire loan merely on the basis of general statement / information. The Ld. CIT(A) took note of the fact that there were no specific findings by the AO on alleged involvement of the assessee in such accommodation transactions other than the general statement recorded ITA No. 3594/Mum/2019 A.Y.2013-14 Chanvim Engg. (I) Pvt. Ltd. 7 during the search of Shri. Banwarlal Jain which has been retracted . The Ld. CIT(A) further noted that during the remand proceedings before the AO, the assessee had filed Affidavit in respect of loan given and received back, ledger account, Income tax returns and Confirmation given by all the lenders to the assessee. The Ld. CIT(A) notes that the AO could not find any fault/infirmity in respect of the said relevant evidences on the issue and has simply ignored the same by merely relying on the general statement. The Ld. CIT(A) has found that AO has not carried out any investigation to prove that the assessee has indulged in taking accommodation entry from the aforesaid lenders. The Ld. CIT(A) also took note that even during the search the cash trail has not been identified to bring on record that the assessee had given cash in lieu of the purported loan/accommodation transaction by exposing that the cash given by assessee was deposited in some bank account which was routed to the entities/lenders which gave loans to the assessee. On the aforesaid finding of relevant facts of the Ld. CIT(A), he gave relief to the assessee. 9. Before us, the revenue could not point out any error in the finding of fact discussed (supra). In the light of the uncontroverted finding of facts by the Ld CIT(A), according to us, the assessee had discharged the onus to prove the loan transaction which could not be rebutted by the AO. Based only on the retracted general statement of Shri Bhanwarlal Jain, without any incriminating oral testimony ITA No. 3594/Mum/2019 A.Y.2013-14 Chanvim Engg. (I) Pvt. Ltd. 8 against the assessee on this issue of loan, and in the light of the supporting evidence of the loan given by the assessee (which has been repaid & interest income taxed in the hands of the lenders) it would be unsafe to mulct any addition in the hands of the assessee. So the impugned action of the Ld. CIT(A) is confirmed. 10. In the light of the aforesaid discussion, we do not find any infirmity in the impugned order. Therefore, we confirm the same and dismiss the appeal of the revenue. 11. In the result, the appeal filed by the revenue is hereby dismissed. Order pronounced in the open court on 20/05/2022 Sd/- Sd/- (GAGAN GOYAL) (ABY T. VARKEY लेखध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 20/05/2022 Vijay Pal Singh, (Sr. PS) ITA No. 3594/Mum/2019 A.Y.2013-14 Chanvim Engg. (I) Pvt. Ltd. 9 आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधिक िंजीकधर /(Dy./Asstt. Registrar) आिकर अिीलीि अनर्करण, मुंबई / ITAT, Mumbai