AI Insights
The case involves an appeal by the Revenue against the decision of the CIT(A) which had deleted the addition made by the Assessing Officer (AO) regarding unexplained cash credits amounting to Rs. 4,50,00,000 and interest thereon. The AO had initially made the addition based on the suspicion that the loans taken by the assessee from various companies were accommodation entries provided by a known entry provider, Sharad Darak. The CIT(A) found that the assessee had provided sufficient evidence to prove the genuineness of the transactions, including bank statements, loan confirmations, and tax returns. The Tribunal agreed with the CIT(A)'s decision, citing similar precedents and the lack of cogent material from the AO to disprove the genuineness of the transactions.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 130470 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 2 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-05-2023
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
17-05-2023
Assessment Year
2013-2014
Appeal Filed On
02-03-2022
Judgement Text
Page 1 of 14 आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No.43/Ind/2022 (Assessment Year:2013-14) ACIT(Central)-1 Indore Vs. Shri Aakash Shukla 94, Banganga Main Road Indore (Appellant / Revenue) (Respondent/ Assessee) PAN: DAWPS 9613 A Revenue by Shri P.K. Mishra, CIT-DR Assessee by Shri Pankaj Shah & Soumya Bumb, ARs Date of Hearing 18.05.2023 Date of Pronouncement 31.05.2023 O R D E R Per Vijay Pal Rao, JM: This appeal by the Revenue is directed against the order dated 14.12.2021 of Ld. Commissioner of Income Tax(Appeals)-3 (in short Ld.CIT(A), for Assessment Year 2013-14. The revenue has raised following grounds of appeal: “1. Whether on the facts and in the circumstances of the case and in law the Ld.CIT(A) has erred in deleting the addition amounting to Rs. 4,50,00,000/- made by AO u/s 68 of IT Act, 1961 on account of unexplained cash credit and interest thereon amounting to Rs. 31,64,774/-" 2."Whether on the fact and in the circumstances of the case and in law, the Ld.CIT(A) has erred in not appreciating the findings of AO in the assessment order especially in light of documentary evidence ITA No.43/Ind/2022 Aakash Shukla Page 2 of 14 Page 2 of 14 found and seized during the course of search in case of Sharad Doshi group on 28.02.2014 as these documentary evidence clearly show that the assessee has taken accommodation entries in the form of unsecured loan from companies controlled by Sharad Darak, a known entry provider and invested in the firm M/s Amrit Reality and M/s MSD developers of Doshi group." 3."Whether on the fact and in the circumstances of the case and in law, the Ld.CIT(A) has erred in completely ignoring the statement of assessee's own father Shri Sanjay Shukla and statement of Sharak Darak, a known entry provider as well as ignored the documentary evidence seized and found during the course of search action. Further, LdCIT(A) ignored the fact that father of Shri Aakash Shukla in his statement, submitted that Aakash Shukla is a student and he(Sanjay Shukla) has knowledge about investment mode in the name of Akash Shukla." 4."Whether on the fact and in the circumstances of the case and in law, the Ld.CIT(A) has erred in holding that the assessee has discharged it onus of cash credit u/s 68 of IT Act especially when it was on record that accommodation entries were received from the companies controlled by Sharad Darak, a known entry provider." 5.Whether on the fact and in the circumstances of the case and in law, the Ld.CIT(A) has erred in holding that the AO has not made enquiry in regard to identity,creditworthiness and genuiness of transaction and also erred in holding that addition was made without any investigation and cogent material as only after giving opportunity to assessee, after making enquiries and in light of evidences on record as well as considering the enquiries by the department, the AO made the addition u/s 68 of the income of the assessee. 2. Ld. DR has submitted that a search and seizure action u/s 132(1) of the Act was conducted in Doshi Group of Indore. During the course of search proceedings various incriminating documents were found and seized from premises of the said group. During the post search enquiry, it was found that the assessee has taken unsecured loans from various companies and invested Rs.4,50,00,000/- in the firm M/s Amrit Reality and M/s. MSD Developers of Doshi Group, Indore. Subsequently, on perusal of the bank statements it was found that there were deposits of Rs.4,50,00,000/- on various dated during the financial year 2012-13 relevant to A.Y.2013-14 from various concerns. The AO noted that these credits shown in the name of four companies are nothing but accommodation entries. The father of the assessee Shri Sanjay Shukla ITA No.43/Ind/2022 Aakash Shukla Page 3 of 14 Page 3 of 14 stated in the statement recorded u/s 131 (1A) of the Act that assessee is a student and he was having knowledge about investment made by his son. Based on the above information the AO reopened the assessment after recording the reasons for reopening vide notice u/s 148 dated 30 th March 2018. These four companies from whom the assessee stated to have taken the loan are nothing but paper companies and providing accommodation entries as it was found during the course of investigation by the department. These companies are managed by one common director Shri Sharad Darak whose statement was also recorded on oath in various cases in which he accepted that these companies are paper companies and provide accommodation entries on commission basis. The AO has reproduced the statement of Shri Sharad Darak and found that Mr. Darak is a common director and admitted the transaction of providing accommodation entries through the bogus concerns. Based on the material available with the AO it was concluded that these loan creditors are nothing but paper companies providing accommodation entries. The AO accordingly made the addition of Rs.4,50,00,000/- as unexplained credit. The AO has relied upon judgment of Hon’ble Supreme Court in case of Pr. CIT vs. NRA Iron & Steel Pvt. Ltd. 412 ITR 161(SC). He has relied upon the order of the Assessing Officer. 3. On the other hand, Ld. AR of the assessee has submitted that the AO has made the addition only on suspicion without being having any material on record to show that loan transactions are bogus or not genuine. The assessee produced all relevant details and record including confirmation of loans, bank statements, copies of ITR, copies of audit Report and copies of the assessment orders of the loan creditor companies. All these records were not considered by the AO, therefore, this was again submitted before the Ld. CIT(A). Though the AO objected the filing of the record before the Ld. CIT(A) however, the Ld. CIT(A) after verification of the assessment record found that this is not an additional evidence but was also filed before the AO. Ld. AR has referred to the chronological dates and events and submitted that M/s. Jayant Securities ITA No.43/Ind/2022 Aakash Shukla Page 4 of 14 Page 4 of 14 and Finance ltd. is listed entity. He has further submitted that the assessee has repaid loan amount of Rs.1.2 crore through banking channels during the year under consideration itself. Therefore the entire amount cannot be treated as unexplained credit when it was already paid before end of the financial year. He has further submitted that Ld. CIT(A) has reproduced the details of the loan taken by the assessee from these companies and repayment of loan during the year under consideration at page no.8 of the impugned order. The assessee produced all the documentary evidence to prove the identity, creditworthiness of the creditors as well as genuineness of the transactions. The details have been reproduced by the CIT(A) at page 9 to 15 of the paper book. 4. He has further submitted that the additions made by the AO in case of Sharad Doshi Group, Shri Girish Tayal and Shri Sanjay Shukla (father of the assessee) have already been deleted by the Ld. CIT(A) as well as by this Tribunal similar additions were also made by the AO on the basis of the statement of Shri Sharad Darak but subsequently deleted by the CIT(A) and on further appeal this tribunal has confirmed the order of the Ld. CIT(A). He has relied upon the decision of this Tribunal in case of Shri Sanjay Shukla (father of the assessee) in ITANo.333/Ind/2020 & ITANo.49/Ind/2021 dated 15.03.3022. 5. In rejoinder the Ld. DR has submitted that in case of M/s Jayant Security and Finance Ltd. there was a SEBI investigation and order of ban against this company. The AO asked the assessee to produce the loan creditors for examination and to prove the claim of the assessee but assessee fails to discharge its onus to prove the identity, creditworthiness of the creditors and genuineness of the transactions. 6. We have considered the rival submission and relevant material on record. The Assessing Officer has made the addition on the basis of the statement recorded by the investigation wing of the department of one Shri Sharad Dharak in some other cases of search. Apart from the statement, the AO has not brought on record any material to show that ITA No.43/Ind/2022 Aakash Shukla Page 5 of 14 Page 5 of 14 these loans transactions are nothing but assessee’s own undisclosed income routing back through these loan creditors in the garb of unsecured loans. The Ld. CIT(A) has decided this issue in para 3.3.2 to 3.4 as under: 3.3.2 I have duly considered the above and found that the Ld. AO has concluded that the above unsecured loans had been received from the Companies controlled by Shri Sharad Darak who is a well known accommodation entry provider of Indore. The Ld. AO on the basis of findings of past actions of the various officers held that Shri Sharad Darak runs dummy companies through which he provides entries to needy persons. The L.d. AO has also relied upon statement of Shri Sanjay Shukla, father of the appellant, statement of Shri Sharad Darak, director of M/s Jayant Securities and Finance and M/s Jay Jyoti India Pvt Ltd. On perusal of assessment order, it has been found that the Ld. AO has not made any independent enquiry to disprove the identity, creditworthiness, genuineness of transaction. The Ld. AO has also not enquired into the nature and source of unsecured loans. The Ld. AO has only given emphasis on some enquiries conducted in the past and given a general findings and made additions. No specific finding about the companies proving the transactions done in the year under consideration bogus, has been given in the assessment order. The Ld. AO has also relied upon the statement u/s.131(1A) dated 14.03.2014 of Shri Sanjay Shukla, authorized speaker for the appellant and statement u/s.131(1) dated 15.03.2016 of Shri Sharad Darak and facts gathered in the case of Shri Girish Tayal. Sendhwa. These third party statement cannot be sole reason for the addition in the total income of the appellant. The appellant has filed ample information and documents to discharge its onus as envisaged in section 68 of the Act. It has been found that all loans had been received by the appellant from the companies under consideration through proper banking channel and the appellant has paid interest thereon after deducting TDS. Repayment of loans have been done and interest thereon has been paid and due TDS has also been made. The appellant has also shown interest received from M/s. Amrit Realty and M/s. MSD Developers as income in his return of income and paid due taxes on it. Major part of such loans has been repaid with interest. All transactions are done through banking channel. No investigation has been conducted to discredit such information or documents. The position of Share Capital, reserve and surplus and cash and balances of these companies as per audited balance sheet is as under: Name of the Company F.Y Share capital as on 31 March Reserve and surplus Inter corporate deposits/ Share application Cash and cash equivalent/bank as on 31 st march ITA No.43/Ind/2022 Aakash Shukla Page 6 of 14 Page 6 of 14 money as on 31ST March Jayant Security And Finance Ltd. 2012- 13 2.84,18,000 146,70,45,808/- 13.45.225/ M/s. Jay Jyoti 2012- 13 6,33,50,500/- 159,85,35,646/- 2,34,88,273 M/s Octagon Media Matrix P. Ltd. 2012- 13 25,13,000/- 6,85,59,352/- 25,423/- Trimurthi Finvest Ltd 2013- 14 12,78,77,500/- 1,61,71,26,058/- 2,10,42,648/- Regarding M/s. Somani Madhusudan Sawalram, HUF. amount of Rs.5,00,000/- has been given to the appellant out of bank balance. Further, the appellant has repaid the amount of Rs.7.47.287/- including interest on 26.12.2017. On perusal of the above, it is evident that the lender company/person had substantial funds available with it to advance money to the appellant. The appellant has also filed necessary documents to prove its identity, creditworthiness of these companies and also filed bank statement reflecting the transactions. In my opinion, nothing in form of cogent evidences has been brought on record by the Id. AO in support of his findings. The ld. A.O should have acted on the details furnished by the appellant, but he did not do so. Hon'ble Delhi High Court in the case of Oasis Hospitalities P. Ltd. reported in 333 ITR 119(2011) has held as under: ITA No.43/Ind/2022 Aakash Shukla Page 7 of 14 Page 7 of 14 "11. It is clear from the above that the initial burden is upon the assessee to explain the nature and source of the share application money received by the assessee. In order to discharge this burden, the assessee is required to prove: (a) Identity of shareholder: (b) Genuineness of transaction; and (c) Creditworthiness of shareholders. 12. In case the investor/shareholder is an individual, some documents will have to be filed or the said shareholder will have to be produced before the AO to prove his identity. If the creditor/subscriber is a company, then the details in the form of registered address or PAN identity, etc. can be furnished. 13. Genuineness of the transaction is to be demonstrated by showing that the assessee had, in fact, received money from the said shareholder and it came from the coffers from that very shareholder. The Division Bench held that when the money is received by cheque and is transmitted through banking or other indisputable channels, genuineness of transaction would be proved. Other documents showing the genuineness of transaction could be the copies of the shareholders register, share application forms, share transfer register, etc. 14. As far as creditworthiness or financial strength of the creditor/ subscriber is concerned, that can be proved by producing the bank statements of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. This judgment further holds that once these documents are produced, the assessee would have satisfactorily discharged the onus cast upon him. Thereafter, it is for the AO to scrutinize the same and in case he nurtures any doubt about the veracity of these documents to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the AO and he cannot go into the realm of suspicion. Considering the above decision, the appellant had discharged its onus by producing ample evidences. Without any investigation and cogent material, Id. AO treated the same as unexplained which is not sustainable in view of following judgments: (i). Divine Leasing & Finane Ltd. (2008) 299 ITR 268(Delhi). wherein it was held that: "16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of s. 68 of the IT Act. The assessee has to prima facie prove (1) the identity of the creditor/subscriber: 2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber: (4) if relevant details of the address or PAN ITA No.43/Ind/2022 Aakash Shukla Page 8 of 14 Page 8 of 14 identity of the creditor/subscriber are furnished to the Department along with copies of the shareholders register, share application forms, share transfer register, etc. it would constitute acceptable proof or acceptable explanation by the assessee: (5) the Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the AO take such repudiation at face value and construe it, without more, against the assessee; (7) the AO is duty bound to investigate the creditworthiness of the creditor/ subscriber, the genuineness of the transaction and the veracity of the repudiation. (ii). CIT v. Kamdhenu Steel & Alloys Limited and Other (2014) 361 ITR 220(Delhi) wherein it is held that: "38 Even in that instant case, it is projected by the Revenue that the Directorate of Income Tax (Investigation) had purportedly found such a racket of floating bogus companies with sole purpose of lending entries. But, it is unfortunate that all this exercise if going in vain as few more steps which should have been taken by the Revenue in order to find out causal connection between the case deposited in the bank accounts of the applicant banks and the assessee were not taken. It is necessary to link the assessee with the source when that link is missing, it is difficult to fasten the assessee with such a liability (iii). The decision of Hon'ble Apex Court in the case of NRA Iron & Steel Pvt. Ltd. (Arising out of SLP (Civil) No. 29855 of 2018) order dated 05.03.2019. the relevant paras of which are reproduced hereunder: 9. The Judgments cited hold that the Assessing Officer ought to conduct an independent enquiry to verify the genuineness of the credit entries. In the present case, the Assessing Officer made an independent and detailed enquiry, including survey of the so-called investor companies from Mumbai, Kolkata and Guwahati to verify the credit-worthiness of the parties, the source of funds invested, and the genuineness of the transactions. The field reports revealed that the share-holders were either non-existent, or lacked credit-worthiness." 11. The principles which emerge where sums of money are credited as Share Capital/Premium are:Assessee is under a legal obligation to prove the genuineness of the unson, the identity of the creditors, and credit-worthiness of theInvestors who should have the financial ITA No.43/Ind/2022 Aakash Shukla Page 9 of 14 Page 9 of 14 capacity to make the investment in question, to the satisfaction of the 40, as to discharge the primary onus. The Assessing Officer is duty beand to investigate the creditworthiness of the creditor subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary on contemplated by Section 68 of the Act. 12. In the present case, the A.0. had conducted detailed enquiry which revealed that There was no material on record to prove, or even remotely suggest, that the share application money was received from independent legal entities. The survey revealed that some of the Investor companies were non- existent, and had no office at the address mentioned by the assessee In view of the above judicial pronouncements, the AO is duty bound to investigate the issue once the assessee discharges its onus as per section 68 of the Act. Here, such efforts are absent. Further, the appellant has brought on record the decision of Hon'ble ITAT Indore in the case of Shri Pramod Kumar Sethi (ITA NO. 382 and 383/Ind/2014, dated 06.11.2018) wherein various companies of Sharad Darak Group held as genuine companies In another decision in the case of M/s. Radhishwari Developers Pvt. Ltd. (ITA No. 493/Ind/2018 dated 20.07.2021) Hon'ble ITAT Indore has held that M/s. Jayant Securities and Finance Ltd. is regularly assessed to tax for last many years and scrutiny proceedings u/s.143(3) of the Act were completed in this company. This company is regularly filing appeal before the judicial forums which show that this company is not a dummy company. Considering the above findings of the Hon'ble ITAT, above companies cannot be declared as dummy company. I find that the said companies are regularly assessed with tax and they also filing appeals at different forums. Thus, identity, creditworthiness, genuineness of transactions can not be doubted here. The appellant has also brought on record following decisions wherein Ms Jayant Securities and Finance Ltd. has been treated as a genuine entity Sr. No. Judicial Pronouncements Tribunal Citation 1 Radhishwari ITAT Indore ITA No.493/Ind/2018 ITA No.43/Ind/2022 Aakash Shukla Page 10 of 14 Page 10 of 14 Developers P. Lad 2 M's Admamum Finance Ltd. ITAT Indore ITA No.331/Ind/2018 3 Tirupen Construction ITAT Indore ITA No. 522/Ind/2014 4 KK Patel Finance Ltd ITAT Indore ITA No.440/led/2010 5 Jayant Security & Finance Ltd ITAT, Ahmedabad ITA No.753/Ahd/2012 Regarding M/s. Jay Jyoti (India) Pvt. Ltd, the appellant has submitted following decisions wherein it has been held that the unsecured loans advanced by Jay Jyoti India Pvt. Ltd. was genuine (1. Decision of Hon'ble ITAT Indore in the case of M/s. Radhishwari Developers Pvt. Ltd. (supra) for A.Y 2013-14 (ii). The CIT(A)-III, Indore in the case of Hilink City homes Pvt. Ltd. (Appeal No.IT-151/15-16 order Dated 26.08.20) iii. The CIT(A)-III. Indore in the case of Sanjay Shukla for A.Y2013-14 (IT-10340/16-17dated 22.09.2020) Regarding M/s. Trimurthi Finvest Ltd, the appellant has submitted following Judicial Pronouncements wherein it has been held that the unsecured loans advanced by M/s. Trimurthi Finvest Ltd. was genuine. Sr. No. Judicial Pronouncements Tribunal Citation 1 Pramod Kumar Sethi ITAT, Indore ITANo.382 & ITA No.43/Ind/2022 Aakash Shukla Page 11 of 14 Page 11 of 14 383/Ind/14 2 Girish Kumar Sharda ITAT, Indore ITANos.30 to 33/Ind/2012 3 Modern Laboraties ITAT, Indore ITANo.277 & CO 16/Ind/2014 3.3.3 In view of the above discussion, the detailed submissions made by the appellant and various binding decisions of jurisdictional ITAT, it is not justified to held the lender companies as dummy entities and the loans given to the appellant by these companies are non-genuine. Therefore, the additions made by the ld. AO are not sustainable. 3.3.4 In view of discussion made in para 3.2 to 3.3.3 above, addition of Rs.4,50,00,000/- in A.Y. 2013-14 and Rs.75,00,000/- in A.Y. 2014- 15 on account of unexplained cash credit u/s. 68 of the Act are hereby deleted. Therefore, appeal on this ground is allowed. 3.4 Ground No. 2 of A.Ys. 2013-14 & 2014-15:- Through these grounds appeal, the appellant has challenged the addition made on account of interest paid on unsecured loans amounting to Rs.4,50,00,000/- in A.Y. 203-14 and Rs.75,00,000/- in A.Y. 2014-15. In view of discussion made in para 3.2 & 3.3 above, additions of interest expenses being paid for the above amount of unsecured loans amounting to Rs. 31.61.774/- in AY 2013-14 and Rs. 20,72,666/- in AY 2014-15 are also not sustainable and hence, the same are deleted. Therefore, appeal on this ground is allowed. 7. We further note that this tribunal in the case of the father of the assessee Shri Sanjay Shukla vs. ACIT (Supra) has considered the identical issue of unsecured loans as under: 12.3 We have heard rival contentions, perused the records placed before us. Through ground No.1 revenue has challenged the finding of Ld. CIT(A) deleting the addition of Rs. 3,86,23,218/- made for unexplained unsecured loan and interest paid thereon taken from following parties: S. No. Name of Party Loan Received during the year Interest paid on the loan amount 1 Jayant Securities and Rs.1,25,00,000 Rs.8,79,041/- ITA No.43/Ind/2022 Aakash Shukla Page 12 of 14 Page 12 of 14 Finance Ltd. Vadodara 2 Jay Jyoti India Pvt. Ltd. Mumbai Rs.1,25,00,000 Rs.8,69,794/- 3 Manas Realtors Pvt. Ltd. New Delhi Rs.50,00,000 Rs.3,41,507/- 4 Shri Sushil Kumar Ratan Lal Khowal, Akola Rs.50,00,000 Rs.3,32,876/- 5 Chandumal Govindram, Indore Rs.12,00,000 ---- Total Rs.3,62,00,000 Rs.24,23,218/- 12.4 We find that Ld. CIT(A) has dealt with this issue elaborately taking note of all the relevant documents filed by the assessee and the settled judicial precedence on the issue of unexplained unsecured loan of Rs.445 laksh and interest paid thereon Rs.29,82,575/- and Ld. CIT(A) has partly allowed assessee’s ground by sustaining the addition only with regard to loan taken from M/s KCL Infra Projects Private Limited at Rs.83 laks and interest paid thereon at Rs.5,59,357/- and deleting the remaining addition as observed in the finding given in para 4 to 11 at page no.13 to 56 of the impugned order. 12.5. As regards the loan taken from Jayant Security and Finance Ltd. Badodara at Rs. 1.25 crores and interest paid thereon at Rs.8,79,041/-, we find that the alleged cash creditor is a limited company, Permanent Account No. and address has been provided. Loan taken through proper banking channel Confirmation of account is on record. Jayant Security and Finance Ltd. is a non-banking financial company having experience of 26 years. This company is regularly assessed to tax and has also been subjected to scrutiny assessment and the additions made thereon have traveled before Coordinate Bench Ahmedabad in the case of M/s. Jayant Security and Finance Ltd. in ITANo.753/Ahd/2012. We also find that the loan taken from alleged company has been treated as genuine and the additions made in the hands of other loan receivers have been deleted by this Tribunal in the case of M/s Tirupati Construction ITANo.533/Ind/2014 and M/s K.K. Patel Finance Ltd. ITANo.440/Ind/2010. We, therefore, find no reason to doubt the genuineness and creditworthiness of Jayant Security and Finance Ltd. and identity is well proved which has been rightly appreciated by Ld. CIT(A) in order to delete the addition made u/s 68 of the Act at Rs.1.25 cr and interest disallowance at Rs.8,79,041/-. ITA No.43/Ind/2022 Aakash Shukla Page 13 of 14 Page 13 of 14 12.6. As regards the cash creditor namely M/s Jay Jyoti India Pvt. Ltd. Mumbai we find that this company was incorporated in 1999. As on 31.03.2013 it had share capital of Rs. 6,33,50,500/- and net reserves and surplus of Rs.1,08,62,25,646/-. Bank statement, confirmation of account, ledger statement, audited financial statement, Memorandum of Association and tax deducted at source certificate are placed on record which in totality are sufficient to prove identity of this company, genuineness of the transaction and creditworthiness of this company It is further proved with the fact that it had merely advanced 0.75% of the funds which it was capable of i.e. it had financial capacity of advancing 133 times more than the loan given to the assessee company. Thus, Ld. CIT(A) has rightly appreciated these facts for deleting addition for made u/s 68 of the Act as well as the interest disallowance. 12.7. As regards unsecured loan of Rs.50 lakhs taken from Manas Realtors Pvt. Ltd. and Rs. 50 lakhs Shri Sushil Kumar Ratanlal Khowal from perusal of the documentary evidences filed by the assessee, we notice that Manas Realtors Pvt. Ltd. is stated to be a Real Estate Consultant Company and genuine loan has been advanced to the assessee company. Similarly Shri Sushil Kumar Ratanlal Khowal is also regularly assessed to tax and has declared income of Rs.6.49 crores for the year under appeal which in itself is sufficient to explain the source of loan of Rs.50 lakhs given to assessee. Even the case of Shri Sushil Kumar Ratanlal Khowal has reached before the Coordinate Bench Nagpur in ITANo. 463/NAG/2013 dated 25.03.2019 wherein appeal of the revenue was dismissed. We therefore, find no infirmity in the finding of Ld. CIT(A) deleting addition made for loan taken from Manas Realtors Pvt. Ltd at Rs.50 lakhs and shri Sushil Kumar Ratanlal Khowal at Rs.50 lakhs and also deleting the disallowance of interest paid at Rs.7,41,507/- and Rs.3,32,876/- respectively. 12.8. Lastly as regards Rs.12 lakhs taken from Chandoomal Govindram Indore we find that it is a partnership firm and book profit for the relevant assessment year is Rs.14,31,429/-. This firm is regularly assessed to tax and in its own case the issue of addition made by the Ld. AO reached to this Tribunal in ITANo.862/Ind/1999 dated 24.04.2006 wherein this tribunal dismissed the revenue’s appeal. Thus, looking to the fact that this partnership firm regularly assessed to tax, bank statement has been filed, confirmation account duly signed leaves no room for Ld. AO for making addition u/s 68 of the Act and thus rightly deleted by the Ld. CIT(A). 12.9. We also find merit in the finding of Ld. CIT(A) referring to various decisions including decision of this Tribunal in the case of Sumati Kumar KasliwaL & OTHERS ITANo.181, 472/Ind/2017 and others. Judgment of Hon'ble jurisdictional High Court in the case of Pr. CIT vs. M/s Chain House International (P) Ltd. ITANo.111/2018 dated 07.08.2018 and also decision of this Tribunal in the case of ITA No.43/Ind/2022 Aakash Shukla Page 14 of 14 Page 14 of 14 M/s Tirupati Consturction (supra) and M/s K.K. Patel Finance Ltd. (supra) wherein similar issue and almost identical facts has been examined and decided in favour of the assessee and additions made u/s 68 of the Act were deleted. We, therefore, find no infirmity in the finding of Ld. CIT(A) deleting the addition for unexplained loan and interest paid thereon at Rs.3,86,23,218/-. Thus ground no.1 raised by the revenue is dismissed. 8. Accordingly in the facts and in the circumstances of the case and following the decision of this Tribunal in the case of father of the assesse, we do not find any error or illegality in the impugned order of CIT(A) qua this issue. 9. In the result, appeal of revenue is dismissed. Order pronounced in the open court on 31.05.2023. Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore, 31.05.2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
Other Referred Cases
Pr. CIT vs. NRA Iron & Steel Pvt. Ltd. 412 ITR 161(SC), Oasis Hospitalities P. Ltd. 333 ITR 119(2011), Divine Leasing & Finance Ltd. 299 ITR 268(Delhi), CIT v. Kamdhenu Steel & Alloys Limited and Other 361 ITR 220(Delhi), NRA Iron & Steel Pvt. Ltd. (Arising out of SLP (Civil) No. 29855 of 2018), Shri Sanjay Shukla vs. ACIT, M/s Jayant Securities and Finance Ltd. ITA No.753/Ahd/2012, M/s Radhishwari Developers Pvt. Ltd. ITA No. 493/Ind/2018, M/s Tirupati Construction ITA No. 522/Ind/2014, KK Patel Finance Ltd ITA No.440/led/2010, M/s. Jay Jyoti (India) Pvt. Ltd, M/s. Trimurthi Finvest Ltd, Shri Pramod Kumar Sethi ITA NO. 382 and 383/Ind/2014, Girish Kumar Sharda ITA No.30 to 33/Ind/2012, Modern Laboratories ITA No.277 & CO 16/Ind/2014, Shri Sanjay Shukla for A.Y2013-14 (IT-10340/16-17), Hilink City Homes Pvt. Ltd. (Appeal No.IT-151/15-16 order Dated 26.08.20)
Laws Referred To
Income Tax Act, 1961
Consultation on Entity Formation
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Tax Holiday Secrets for Startups
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Guide to Charitable Trusts: Formation, Benefits, and Compliance
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Form AOC-2 - Disclosure of Related Party Transaction
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No Objection Letter for Use of Property – Partnership Firm
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