Mohammed Saleem Abdulkader Kajalwala, Ahmedabad V. The Income Tax Officer, Ward-3(1)(3), Vadodara

ITA 536/AHD/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0310 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 17-06-2024
• Assessment Year: misc
• Appeal Filed On: 02-07-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; TDS
• Section: 68; 133(6); 143(1); 143(2)

Judgement Text

ITA No.536/Ahd/2023 Assessment Year: 2015-16 Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER ITA No.536/Ahd/2023 Assessment Year: 2015-16 Mohammed Saleem Abdulkader Kajalwala, Anil R. Shah (C.A.), Shreeji House, 4 th Floor, B/h. M.J. Library, Ellis Bridge, Ahmedabad – 380 006. [PAN – AAXPK 7544 C] Vs. The Income Tax Officer, Ward -3(1)(3), Vadodara – 390 007. (Appellant) (Respondent) Assessee by Ms. Kinjal Shah, AR Revenue by Shri Urjit Shah, Sr. DR D a t e o f H e a ri n g 18.06.2024 D a t e o f P ro n o u n c e m e n t 09.08.2024 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER: This appeal is filed by the Assessee against order dated 04.05.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2015-16. 2. The assessee has raised the following grounds of appeal :- “1. The CIT(A) has erred both in Law and in Fact in confirming by Assessing Officer invoking of Sec. 68 of the IT Act and thereby upholding addition of Rs.90 Lakhs made by him. 2. Your Appellant submits that on facts and circumstances of case Sec.68 does not apply and all the three depositors are known Identified persons are Credit Worthy the transaction is genuine backed by common and Business activities like the Loan/Advance returned in the same ITA No.536/Ahd/2023 Assessment Year: 2015-16 Page 2 of 5 accounting year and therefore the CIT(A) ought to have deleted the entire Addition. 3. Your Appellant further submits that Assessing Officer has gathered information and evidences at the back of your Appellant, copy of which was not supplied though fully relied in passing Assessment Order. The Assessing Officer also did not give a chance of abutting the data and or Cross Examining the witness such evidence relied, therefore the entire addition based on such evidence is against principle of natural justice and requires to be deleted as held by Supreme Court in case of Andaman Timber Industries vs. Comm. of Central Excise CA No.4228 of 2006. 4. Without prejudice and in the alternative your Appellant submits that if at all any addition is liable to be added u/s.68 then it being related and entirely connected with business of your Appellant only Net Profit is required to be added as held by several judgements.” It is therefore submitted that relief claimed above be allowed and the order of the Assessing Officer be modified accordingly. Your Appellant reserves right to add, alter, amend to withdraw any or all Ground of Appeal.” 3. The assessee is engaged in the business of trading in scrap products i.e. Paper (Pasti) in the name and style of “Mohammed Enterprise” during the year under consideration. The assessee filed return of income on 29.09.2015 showing income at Rs.21,03,970/-. The return of income was processed under Section 143(1) of the Income Tax Act, 1961. The case was selected for scrutiny by issuing notice under Section 143(2) on 19.09.2016 which was duly served. The Assessing Officer observed that the assessee has shown unsecured loan raised from various companies amounting to Rs.90,00,000/- in total. Notice under Section 133(6) of the Act was issued which was returned unserved with postal remark either “unknown” or “left without address”. The Assessing Officer further observed from the perusal of the return of income, balance sheet and bank statement submitted by these companies that they are filing either nil return or meagre income. The Assessing Officer noticed that all the companies have shown huge reserve and surplus on account of share premium and there is common Directors in all these three companies. The Assessing Officer issued show cause notice dated 19.12.2017. The assessee furnished written submission on 22.12.2017 thereby explaining that the companies issued their shares at premium is of no concern to the assessee and financial affairs of these companies ITA No.536/Ahd/2023 Assessment Year: 2015-16 Page 3 of 5 are not in the control of the assessee. The assessee further submitted that all the connected documentary evidences clearly set out the unsecured loans. After going through the submissions of the assessee, the Assessing Officer held that the unsecured loan of Rs.90,00,000/- and its explanation by the assessee is unsatisfactory and, therefore, made addition of Rs.90,00,000/- under Section 68 of the Act as unexplained cash credits. The Assessing Officer also levied special rate of tax under Section 115BBE of the Act. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the assessee has repaid the loan on 17.11.2014 as reflected in Paper Book page no.60. The Ld. AR further submitted that the assessee has established identity, creditworthiness and genuineness of the transaction more specifically the bank statements given to the Assessing Officer in respect of the lender company and the details of the assessee which are tallying. The Ld. AR submitted that the assessee has received huge order amounting to Rs.25 crores approximately for which the assessee required loan to complete the order. In fact, there is confirmation and PAN of these parties were available with the Revenue Authorities as the assessee has not only submitted these but also that of income tax return acknowledgement of these parties, bank statement and balance sheet of the lender companies. The Ld. AR further submitted that all the lenders are assessed to tax and unsecured loans were received through banking channel. The Ld. AR submitted that the finding of the Assessing Officer that these companies are Kolkata based and was not traced appears to be incorrect as from the Ministry of Corporate Affairs, the information of these companies clearly set out that these are active companies till today. Thus, the ld. AR submitted that the assessee has explained the identity, genuineness as well as credit worthiness of these companies and the same should have been taken into account by the Assessing Officer as well as by the CIT(A). 6. The Ld. DR submitted that whether these amounts were unsecured loans or that of having some other nomenclature does not explain the source of the lender companies. The Ld. DR further submitted that all these companies were found to be ITA No.536/Ahd/2023 Assessment Year: 2015-16 Page 4 of 5 reflected in the list of shell companies on which legal action having taken by Government of India. In fact, notice under Section 133(6) of the Income Tax Act (summons) were issued to these companies but the postal remark of its service reflects that either these companies are unknown or left without address. The Ld. DR further submitted that the Assessing Officer has categorically mentioned in respect of the genuineness of the transition that there was no commercial connection established by the lender and the recipient in the present assessee’s case. As regards to the creditworthiness, the Assessing Officer has rightly observed that they are merely account lender providing accommodation entry through their bank account on commission. As regards the identity, none of the companies or its Directors appeared before the Assessing Officer despite issuing notice under Section 133(6) of the Act and, therefore, identity is also not established by the assessee. Hence, the Assessing Officer as well as the CIT(A) has rightly made the addition under Section 68 of the Act thereby stating that the same is unexplained cash credit component. 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee is filing the chart showing details of loans accepted and the relevant basic sum of parties with bank statement in the Paper Book before us, but the bank statements cannot be the sole criteria for establishing the genuineness of the transaction. From the perusal of the income tax return and the confirmation filed by the assessee, it only envisages that there was a transaction between these parties with the assessee. Though the assessee described that the assessee has filed the ITR confirmation, it does not appear that the assessee has established the genuineness and credit worthiness of the transactions. Besides this, though the confirmation was filed and it is the submissions of the ld. AR that subsequently loan was repaid then also the component of explaining the cash purchases with its source was not fully established by the assessee before the Assessing Officer as well as before the CIT(A). The assessee has given the information of these three companies thereby stating that these are active companies but summons issued to these companies were returned unserved with postal remark either “unknown” or “left without address”. If these companies were actually having business relation with the assessee, these companies should have been found at the address given by the assessee or the assessee should have taken precaution to ITA No.536/Ahd/2023 Assessment Year: 2015-16 Page 5 of 5 submit the last known address to the Revenue but the assessee failed to do so. Further, it is seen that there was no payment of interest and no deduction of TDS. Thus, the Assessing Officer as well as the CIT(A) has rightly made the addition and confirmed the same as the assessee has not explained the component of cash purchase in respect of these three companies which are claimed as lenders and the repayment of the loan was also not brought on record. Hence, appeal of the assessee is dismissed. 8. In the result, appeal of the assessee is dismissed. Order pronounced in the open Court on this 9 th August, 2024. Sd/- Sd/- (NARENDRA PRASAD SINHA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 9 th August, 2024 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad