Assistant Commissioner of Income Tax 4 (1), Indore V. M/s Vastu Developers, Indore

ITA 479/Ind/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4936 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 14-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHREYA JAIN CAS
• Keywords: Unexplained cash credit; Additional evidence
• Section: 133(6); 13; 131; 68

Judgement Text

P A GE 1 | 9 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE S/SHRI C.M. GARG, JUDICIAL MEMBER AND MANISH BORAD, ACCOUNTANT MEMBER ITA NO.479/IND/2017 ASSESSMENT YEAR : 2013-14 THE ASST. COMMISSIONER OF INCOME TAX 4(1), MAIN BUILDING, INDORE VS. M/S. VASTU DEVELOPERS, 475, JAWAHAR MARG, INDORE PAN/GIR NO.AAHFV 3957 E (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.K.SINGH, SR DR REVENUE BY : SHRI PRAKASH JAIN & MS SHREYA JAIN, C AS DATE OF HEARING : 27 /7/ 2021 DATE OF PRONOUNCEMENT : 29/ 09/2021 O R D E R PER BENCH THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-III, INDORE DATED 25.4.2017 FOR THE ASSESSM ENT YEAR 2013-14. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD CIT(A) IS JUSTIFIED IN ALLOWING THE ASSESSEES CLAI M BY DELETING THE ADDITION MADE U/S.68 IN RESPECT OF ALLEGED UNSECURE D LOANS TAKEN BY THE ASSESSEE AMOUNTING TO RS.1,50,00,000/-. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) IS JUSTIFIED IN ALLOWING THE ASSESSEES CLAI M OF HAVING MADE INTEREST PAYMENTS ON THE SAME UNSECURED LOANS AMOUN TING TO RS.14,08,759/-. ITA NO.479/IND/2017 ASSESSMENT YEAR : 2013-14 P A GE 2 | 9 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS RECEIVED LOAN OF RS.1 ,05,00,000/- FROM ACHIEVER CMMOTRADE PVT LTD., AND RS.45,00,000/- FRO M EXCELLENT INFRABUILD PVT LTD IN THE YEAR UNDER CONSIDERATION. THE ASSES SEE HAS ALSO SHOWN LOAN OF RS.1,00,00,000/- FROM M/S. CUBE INFRASTRUCTURE P VT LTD., AS OPENING LOAN. THE ASSESSING OFFICER ISSUED NOTICE U/S.133(6) OF T HE ACT TO THE ABOVE PARTIES AT THE ADDRESS GIVEN, HOWEVER THE NOTICES W ERE RETURNED BACK UNSERVED. THEREAFTER, THE AO ISSUED COMMISSION U/S .131(1)(D) OF THE ACT TO DDIT (INV)-II, KOLKATA, WHO ALSO REPORTED THAT NON E OF THE ABOVE COMPANIES WERE FOUND AT THE GIVEN ADDRESS. THE ADD RESS GIVEN BY TWO LOAN PROVIDERS IS BEING USED BY ANOTHER BOGUS COMPANY NA MELY BEAUTIFUL TRADELINK PVT LTD. HENCE, THESE COMPANIES ARE PAPE R COMPANY AND USED BY ENTRY OPERATOR SHRI NARENDRA KUMAR JAIN. ALTHOUGH THE ASSESSEE HAS FILED PAN NUMBER, INCOME TAX RETURN AND ASSESSMENT ORDER, THE AO OBSERVED THAT FROM THE ABOVE, THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS CANNOT BE ESTABLISHED. HENCE, THE AO TREATED THE LOAN AS UNEXPLAINED CASH CREDIT AND ADDED THE SAME TO THE I NCOME OF THE ASSESSEE U/S.68 OF THE ACT IN RESPECT OF LOAN OF RS.1,50,000 /-. HOWEVER, IN RESPECT OF LOAN OF RS.1,00,00,000/- FROM CUBE INFRASTRUCTURE P VT LTD., AS OPENING BALANCE, HE TREATED THE SAME AS UNEXPLAINED IN THE RELEVANT ASSESSMENT YEAR. THE AO FOUND THAT THE ASSESSEE HAS PAID INTE REST OF RS.2,55,539/- TO EXCELLENT INFRABUILD PVT LTD., RS.4,88,096/- TO ACH IEVER COMMOTRADE PVT ITA NO.479/IND/2017 ASSESSMENT YEAR : 2013-14 P A GE 3 | 9 LTD., AND RS.6,65,124/- TO CUBE INFRASTRUCTURE PVT LTD., TOTALING TO RS.14,08,759/-. AS THE LOANS WERE TREATED AS UNEXP LAINED, THEREFORE, THE INTEREST PAID OF RS.14,08,759/- ON THE UNSECURED L OAN WAS ALSO TREATED AS UNEXPLAINED AND ADDED THE SAME U/S.68 OF THE ACT. 4. ON APPEAL, THE LD CIT(A) OBSERVED THAT DURING TH E REMAND PROCEEDINGS, NOTICES U/S.133(6) WERE SENT TO ALL TH E THREE CREDITORS AT THE ADDRESSES PROVIDED BY THE ASSESSEE AND THE REPLIED HAVE BEEN RECEIVED. THE ASSESSEE HAS FURNISHED CONFIRMATION, BANK STATE MENT, COPY OF RETURN AND COPY OF THE LEDGER ACCOUNT. ON THE BASIS OF AB OVE DOCUMENTS, ESPECIALLY THE INCOME TAX RETURNS OF THREE CREDITOR S, THE AO DOUBTED THE CREDITWORTHINESS OF THE CREDITORS TO ADVANCE THE LO AN TO THE ASSESSEE AS THE AMOUNT SHOWN IN THE INCOME TAX RETURNS ARE NEGLIGIB LE IN COMPARISON TO THE LOAN ADVANCED TO THE ASSESSEE. THE LD CIT(A) THERE AFTER EMPHASIZED THE KEY FINANCIAL POSITION OF THE CREDITOR COMPANIES, A S UNDER: NAME OF THE COMPANY LOAN GIVEN INCOME AS PER I.T.RETURN AVAILABLE WITH AO SHARE CAPITAL & RESERVE SURPLUS AS PER AUDITED BALANCE SHEET AS ON 31.3.13 SHARE CAPITAL & RESERVE SURPLUS AS PER AUDITED BALANCE SHEET AS ON 31.3.12 CUBE INFRASTRUCTURE 1,00,00,000 (LOAN GIVEN IN P.Y) 13,77,610 10,62,70,276 10,48,81,724 ACHIEVER COMMOTRADE PTD LTD. 1,05,00,000 12,97,330 11,50,08,187 11,41,11,730 ITA NO.479/IND/2017 ASSESSMENT YEAR : 2013-14 P A GE 4 | 9 EXCELLENT INFRABUILD PVT LTD. 45,00,000 16,55,268 5,00,43,444 5,08,99,654 5. FROM THE ABOVE FINANCIAL DETAILS OF ABOVE THREE CREDITORS, THE LD CIT(A) OBSERVED THAT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS ARE NOT DOUBTED. HE ALSO NOTED THAT F ROM THE SIGNIFICANT INCOME RETURNS, AND RESERVES AND SURPLUS, IT IS AMP LE CLEAR THAT ALL CREDITORS HAVE SUFFICIENT FUNDS TO ADVANCE THE LOAN. HENCE, HE DELETED THE ADDITION OF RS.1,50,00,000/- MADE BY THE AO. AGGRIEVED BY TH E DELETION OF ADDITION, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD SR DR SUPPORTING THE ORDER OF THE ASSESSING O FFICER SUBMITTED THAT WHEN THE ASSESSING OFFICER ISSUED COMMISSION U/S.13 1(1)(D) TO THE DDIT 2(2), KOLKATA FOR CONDUCTING ENQUIRY, IT WAS REPORT ED THAT NONE OF THE COMPANIES WHO HAVE ADVANCED THE LOAN ARE NOT FOUND IN THE GIVEN ADDRESS. IT WAS SUBMITTED THAT ONE COMPANY CUBE INFRASTRUCTURE PVT LTD., IS IN IDENTIFIED PAPER COMPANY OF SHRI NARENDRA KUMAR JAI N WHO IS AN ACCOMMODATION ENTRY OF KOLKATA AND ALL THREE COMPAN IES HAVE BEEN CONTROLLED AND OPERATED BY NARENDRA KUMAR JAIN, ENT RY OPERATOR. AS THE ABOVE THREE COMPANIES ARE NOT FOUND IN THE ADDRESS GIVEN, THE LOAN TRANSACTION ARE BOGUS AND THE AO HAS RIGHTLY ADDED THE SAME TO THE INCOME OF THE ASSESSEE AND LD CIT (A) IS NOT JUSTIFIED IN DELETING THE ADDITION. HE ITA NO.479/IND/2017 ASSESSMENT YEAR : 2013-14 P A GE 5 | 9 SUBMITTED THAT THE LD CIT(A) IS ALSO NOT CORRECT IN DELETING THE ADDITION MADE IN RESPECT OF INTEREST AMOUNT OF RS.14,08,759/ -. 7. REPLYING TO ABOVE, LD A.R. OF THE ASSESSEE SUPPO RTED THE ORDER OF THE LD CIT(A). LD A.R. SUBMITTED THAT WHEN THE CREDITO RS HAVE SUFFICIENT RESERVES AND SURPLUS AS PER THE AUDITED BALANCE SHE ET, DOUBTING CREDITWORTHINESS OF THE LOAN CREDITORS IS UNJUSTIFI ED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS PLACED ON THE RECORD OF THE TRIBUNAL. WE HAVE ALSO PERUSED THE IMPUGNED ORDER OF THE LD CIT(A), WHEREIN, HE HAS DI SCUSSED THE ISSUE AT LENGTH WHILE DELETING THE ADDITION. THE RELEVANT P ORTION OF HIS FINDINGS IS AS UNDER: 4.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE APPELLANT'S CONTENTION. THE PARTY WISE DETAILS OF THE ADDITIONS MADE BY THE A.O. ARE AS UNDER:- NAME OF THE PARTY AMT OF LOAN RECEIVED DURING THE VEAR INTEREST PAID ACHIEVER COMMOTRADE (P) LTD 1,05,00,000 4,88,096 EXCELLENT INFRABUILD (P) LTD 45,00,000 2,83,932 CUBE INFRASTRUCTURE (P) LTD NIL 6,65,124 TOTAL 1,50,00,000 J 14,08,759 4.2 THE ASSESSING OFFICER ISSUED NOTICE U/S 133(6) TO THE ABOVE MENTIONED PARTIES AT THE ADDRESSES AS GIVEN ON MCA-21 SITE. A FTER THE NOTICES WERE RETURNED BACK UNSERVED THE AO ISSUED COMMISSION U/S 131 (L)(D) TO DDIT (INV.)-II, KOLKATA WHO ALSO REPORTED THAT NONE OF T HE ABOVE COMPANIES WERE FOUND AT THE GIVEN ADDRESSES. THE ASSESSING O FFICER RELIED ON THE REPORT OF THE DDIT THAT ONE OF THE COMPANY'S WHICH HAD GIVEN THE LOAN IN THE PREVIOUS YEAR IS A COMPANY OF SHRI NARENDRA KUM AR JAIN WHO IS AN ACCOMMODATION PROVIDER. FURTHER, THE ADDRESS OF THE OTHER TWO CREDITORS ACHIEVER COMMOTRADE (P) LTD AND EXCELLENT INFRABUIL D (P) LTD. 282, RABINDRA SARANI, 4 TH FLOOR, ROOM NO. 404, KOLKATA IS BEING USED BY ANOT HER ITA NO.479/IND/2017 ASSESSMENT YEAR : 2013-14 P A GE 6 | 9 BOGUS COMPANY BEAUTIFUL TRADELRNK PVT. LTD.. ANOTHE R COMPANY OF THE SAME ENTRY PROVIDER, 5HRI NARENDRA KUMAR JAIN. THE APPEL LANT HAS SUBMITTED THAT IN RESPONSE TO THE SHOW CAUSE NOTICE IT FILE COPY OF BALANCE SHEET, LOAN RMATION LETTER, IT RETURN ACKNOWLEDGMENT, 26AS STAT EMENT OF THE CREDITOR COMPANIES. 4.3 IN THE REMAND REPORT THE ASSESSING OFFICER HAS FIRST EMPHASIZED THAT APPELLANT'S APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE FILED UNDER RULE 46A SHOULD BE REJECTED AS SUFFICIENT OPPORTUNITIES WERE ALLOWED DURING THE ASSESSMENT PROCEEDINGS. AFTER PERUSING THE FACTS OF THE CASE I AM OF THE VIEW THAT THE APPELLANT, DID NOT HAVE SUFFICIENT TI ME DURING THE ASSESSMENT PROCEEDINGS. THE ENQUIRIES WERE MADE BY THE ASSESSI NG OFFICER AT THE ADDRESSES OBTAINED FROM THE MCA-21 SITE AND THE APP ELLANT WAS NOT LEFT WITH SUFFICIENT TIME TO PROVIDE THE CORRECT ADDRESS ES. 4.4 DURING THE REMAND PROCEEDINGS NOTICES U/S 13 3(6) WERE SENT TO ALL THE THREE CREDITORS AT THE ADDRESSES PROVIDED BY TH E APPELLANT AND THE REPLIES HAVE BEEN RECEIVED. THE CONFIRMATION OF AC COUNT, BANK STATEMENT, COPY OF RETURN AND COPY OF THE LEDGER ACCOUNT OF TH E APPELLANT HAVE BEEN SUBMITTED. 4.5 THE ASSESSING OFFICER HAS EMPHASIZE D THAT THE THREE CREDIT: COMPANIES HAD FILED RETURNS OF INCOME WHICH ARE NEGLIGIBLE IN COMPARISON ..O THE QUANTUM OF THE LOAN AND HAS THER EFORE SUBMITTED THAT THESE COMPANIES DO NOT HAVE SUFFICIENT CREDITWORTHI NESS TO LEND SUCH HUGE AMOUNTS. THE KEY FINANCIALS OF THE CREDITOR COMPANI ES ARE AS UNDER:- NAME OF THE COMPANY LOAN GIVEN INCOME AS PER INCOME TAX RETURN AVAILABLE WITH AO SHARE CAPITAL & RESERVE SURPLUS AS PER AUDITED BALANCE SHEET AS ON 31.3.13 SHARE CAPITAL & RESERVE SURPLUS AS PER AUDITED BALANCE SHEET AS ON 31.3.12 CUBE INFRASTRUCTURE 1,00,00,000 (LOAN GIVEN IN THE P.Y) 13,77,610 10,62,70,276 10,48,81,724 ACHIEVER COMMOTRADE PVT LTD. 1,05,00,000 12,97,330 11,50,08,187 11,41,11,730 EXCELLENT INFRABUILD PVT LTD. 45,00,000 16,55,268 5,00,43,444 5,08,99,654 4.6 IN THE ABSENCE OF ANY OTHER CORROBORATIVE EVIDE NCE BROUGHT ON RECORD BY THE ASSESSING OFFICER, THE CREDITWORTHINESS OF T HE THREE CREDITOR COMPANIES HAS TO BE ACCEPTED IN VIEW OF THE ABOVE F INANCIAL DETAILS. THE ITA NO.479/IND/2017 ASSESSMENT YEAR : 2013-14 P A GE 7 | 9 THREE COMPANIES HAVE DISCLOSED SIGNIFICANT INCOME I N THE RETURNS OF INCOME AND HAVE SUFFICIENT SHARE CAPITAL AND RESERVES AND SURPLUS. FURTHER, IT IS SEEN THAT SHRI NARENDRA KUMAR JAIN WHO HAS BEEN IDE NTIFIED AS AN ENTRY PROVIDER IN KOLKATA IS NOT A DIRECTOR OF THE THREE COMPANIES. 4.7 THE VARIOUS JUDICIAL RULINGS CITED BY THE A PPELLANT ALSO SUPPORT ITS CASE. 4.8 IN VIEW OF THE ABOVE, IT IS HELD THAT THE ADDIT ION OF RS. 1,50,00,000/- TREATED AS UNEXPLAINED CREDIT U/S 68 ON ACCOUNT OF UNSECURED LOAN OF RS. 0,000/- FROM M/S EXCELLENT INFRABUILD PVT. LTD. AND RS. 1,05,00,000/- FROM M/S ACHIEVER COMMO TRADE (P) LTD. IS NOT SUSTAINABL E. GROUND NOS. AND 2.4 ARE ALLOWED. 5. GROUND NO. 3 (ERRONEOUSLY WRITTEN AS GROUND NO. 4) THIS GROUND OF APPEAL IS REGARDING THE INTEREST OF RS. 14,08,759/- PAID TO FOLLOWING CREDITORS :- (I) M/S EXCELLENT INFRABUILD PVT. LTD : RS. 2,55,539 (II) M/S ACHEIVER COMMODTRADE P. LTD., : RS. 4 ,88,096/ (III) M/S CUBE INFRASTRUCTURE PVT. LTD `: RS. 6,65,124/- 5.1 THE ADDITION OF RS. 1,50,00,000/- ON ACCOUNT OF LOAN UNSECURED LOAN OF RS. 45,00,000/- FROM M/S EXCELLENT INFRABUILD PVT. LTD. AND RS. 1,05,00,000/- FROM M/S ACHIEVER COMMO TRADE (P) LTD . HAS BEEN DELETED AS DISCUSSED ABOVE AND THEREFORE, THE ADDITION ON A CCOUNT OF INTEREST PAID TO THESE CREDITORS IS ALSO DELETED. FURTHER, AS DIS CUSSED ABOVE, THERE IS NO JUSTIFICATION IN TREATING THE OPENING BALANCE OF LO AN OF RS. 1,00,00,000/- FROM M/S. CUBE INFRASTRUCTURE PVT LTD., AS UNEXPLAI NED AND, THEREFORE, THE ADDITION ON THE INTEREST PAID DURING THE YEAR ALSO DOES NOT SURVIVE. 9. LD SR. DR COULD NOT POINT OUT ANY SPECIFIC DEFEC TS IN THE ORDER OF THE LD CIT(A). FROM THE FINANCIAL STATUS AS ENUMERATED BY LD CIT(A) IN THE IMPUGNED ORDER, WE FIND THAT ALL THREE CREDITORS HA VE SUFFICIENT RESERVES AND SURPLUS AS REFLECTED IN THEIR AUDITED BALANCE SHEET , HENCE, THERE IS NO QUESTION TO DOUBT THEIR CREDITWORTHINESS TO ADVANCE THE LOAN TO THE ASSESSEE. IT IS ALSO NOTED BY LD CIT(A) HAS ACCEP TED THAT SHRI NARENDRA KUMAR JAIN IS AN ENTRY PROVIDER IN KOLKATA BUT HE I S NOT A DIRECTOR OF ABOVE ITA NO.479/IND/2017 ASSESSMENT YEAR : 2013-14 P A GE 8 | 9 THREE COMPANIES. BASED ON THE FACT THAT SHRI NAREN DRA KUMAR JAIN IS AN ENTRY PROVIDER, IT CANNOT BE ASSUMED THAT HE HAS MA NAGED TO ROUT THE MONEY FROM THE CREDITORS TO THE ASSESSEE. IN THE CI RCUMSTANCES, IN THE ABSENCE OF ANY SPECIFIC DEFECT BEING POINTED OUT IN THE ORDER OF THE CIT(A), WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND THE GROUNDS OF APPEAL OF THE R EVENUE ARE DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED U/S.34(4) OF I.T.RULES, 1963 ON 2 9 / 09/2021. SD/- SD/- ( MANISH BORAD) (CHABNDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEM BER INDORE ; DATED 29/ 09/2021 B.K.PARIDA, SPS (OS) COPY OF THE ORDER FORWARDED TO : BY ORDER SR.PVT.SECRETARY ITAT, CUTTACK 1. THE APPELLANT : THE ASST. COMMISSIONER OF INCOME TAX 4(1), MAIN BUILDING, INDORE 2. THE RESPONDENT. M/S. VASTU DEVELOPERS, 475, JAWAHAR MARG, INDORE 3. THE CIT(A)-III, INDORE 4. PR.CIT-III INDORE, 5. DR, ITAT, INDORE 6. GUARD FILE. //TRUE COPY//