GARWARE SYNTHETICS LTD., THANE V. ACIT - 15(1)(2), MUMBAI

ITA 6139/MUM/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1805 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 17-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Accommodation entries; Bogus loan; Set aside
• Section: 143(3); 143(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.6139/M/2016 ASSESSMENT YEAR: 2012-13 M/S. GARWARE SYNTHETICS LTD., MANISH TEXTILES INDUSTRIES PREMISES, OPP. GOLDEN CHEMICAL, PENKAR PADA, POST MIRA, DIST. THANE- 401104 PAN: AAACG4208M VS. ASST. COMMISSIONER OF INCOME TAX-15(1)(2), MUMBAI - 401104 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI HARIDAS BHAT, A.R. REVENUE BY : SHRI CHAUDHARY ARUNKUMAR SINGH, D.R . SHRI AJIT PRATAP SINGH, D.R. DATE OF HEARING : 27.09.2019 DATE OF PRONOUNCEMENT :14.11.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 05.08.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE REVISED GROUNDS FILED BY THE ASSESSEE ARE AS UNDER: GROUND 1. THE ASSESSING OFFICER AND THE LEARNED CIT(A) ERRED IN MAKING THE ADDITION U/S 68 OF THE ACT, TOTALING TO RS.59,00,000/- LOANS TAKEN FRO M M/S SUMUKH COMMERCIAL PVT LTD RS.50,00,000/- AND M/S CASPER ENTERPRISES PVT. LTD. RS.9,00,000/- ALLEGING THAT THE SAID PARTIES ARE PART OF CONSORTIUM OF SHRI BHA NWARLAL JAIN, WHO HAS ADMITTED TO ISSUING BOGUS LOANS, BY NEITHER MAKING ANY INVESTIG ATION NOR GIVING ANY EVIDENCES TO THE ASSESSEE. ITA NO.6139/M/2016 M/S. GARWARE SYNTHETICS LTD. 2 GROUND 2. THE ASSESSING OFFICER AND THE LEARNED CIT(A) ERRED IN MAKING THE ADDITION OF RS.9,90,514/- U/S 36 (1)(VA) R.W.S. 2(24)(X) ON ACC OUNT OF DELAY IN PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PF AND ESIC DUES, IG NORING THE FACT THAT THE SAID DUES WERE PAID BEFORE THE DUE DATE OF FILING OF THE INCOME TAX RETURNS. 3. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE C ONFIRMATION OF ADDITION OF RS.59,00,000/- BY LD. CIT(A) COMPRIS ING LOANS FROM M/S. SUMUKH COMMERCIAL PVT. LTD. RS.50,00,000/ - AND M/S. CASPER ENTERPRISES PVT. LTD. RS.9,00,000/- ON THE GROUND THAT THESE CONCERNS WERE PART OF CONSORTIUM OF SHRI BHANWARLAL JAIN. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGA GED IN THE MANUFACTURING OF NYLON BRISTLES, NYLONG TUBING & NY LON RODS AND DURING THE YEAR FILED THE RETURN OF INCOME ON 2 6.09.2012 DECLARING INCOME AT NIL AFTER SETTING OF B/F LOSSE S OF RS.1,01,43,515/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS DUL Y ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, THE AO OBSERVED THAT ASSESSEE HAS UNSE CURED LOANS OUTSTANDING AS ON 31.03.2012 OF RS.1,44,00,00 0/-. IN THE MEANWHILE, THE AO ALSO RECEIVED INFORMATION FROM TH E INVESTIGATION OF THE IT DEPARTMENT THAT THE SAID CO MPANIES WERE RELATED CONCERNS OF BHANWARLAL JAIN GROUP AND ALSO MENTIONING THAT THE ASSESSEE HAS RECEIVED UNSECURED LOANS OF RS.1,44,00,000/- FROM THE SAID CONCERNS. ACCORDING LY, THE AO CALLED UPON THE ASSESSEE TO FURNISH THE DETAILS SUC H AS COPIES OF RETURNS, FINANCIAL STATEMENTS TO VERIFY THE IDENTIT Y, GENUINENESS AND CREDITWORTHINESS OF THE PERSONS WHICH WERE FILE D BY THE ASSESSEE AND WERE AVAILABLE ON RECORD. THE AO NOTE D THAT THE ITA NO.6139/M/2016 M/S. GARWARE SYNTHETICS LTD. 3 ASSESSEE HAS FILED THE ITRS OF THE SAID PARTIES ALO NG WITH LOAN CONFIRMATIONS, HOWEVER, THE BANK STATEMENT AND OTHE R EVIDENCES WERE NOT PRODUCED AND THUS THOUGH THE IDENTITY OF T HE LENDERS WERE PROVED ,HOWEVER, THE GENUINENESS OF THE TRANSA CTIONS AND CREDITWORTHINESS OF LENDER REMAINED UNESTABLISHED. THEREAFTER, THE AO NARRATED THE MODUS OPERANDI OF THE HAWALA RA CKET AND RELIED PRIMARILY ON THE FACT THAT SHRI BHANWARLAL J AIN HAD ADMITTED DURING THE COURSE OF SEARCH ON HIM AND ASS OCIATED CONCERNS THAT BOGUS ENTRIES IN THE FORM OF UNSECURE D LOANS WERE GIVEN AS ACCOMMODATION ENTRIES. THE AO ADDED RS.1,44,00,000/- TO THE INCOME OF THE ASSESSEE UNDE R SECTION 68 OF THE ACT IN THE ASSESSMENTS FRAMED UNDER SECTION 143(3) DATED 29.03.2015. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE BY DELETING THE ADDITION OF RS.85 LAKHS BEING UNSECURED LOAN FROM M/S. TYSON MARKETIN G PVT. LTD. WHEREAS ADDITIONS IN RESPECT OF TWO LOANS FROM TWO PARTIES M/S. SUMUKH COMMERCIAL PVT. LTD. RS.50 LAKHS AND M/S. CA SPER PVT. LTD. RS.9 LAKHS WAS CONFIRMED BY HOLDING THAT THEY WERE RELATED TO SHRI BHANWARLAL JAIN WHO ADMITTED DURING THE CO URSE OF SEARCH THAT HE AND HIS CONCERNS WERE PROVIDING ACCO MMODATION ENTRIES ONLY AND THUS THE SUBMISSIONS OF THE ASSESS EE AND EVIDENCES FILED ON RECORD WERE NOT ACCEPTED BY THE CIT(A). 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT ASSESSEE HAS SUBMITTED SUPP ORTING EVIDENCES TO ESTABLISH THE IDENTITY OF THE LENDERS, GENUINENESS AND CREDITWORTHINESS OF THE PARTIES BY FILING NAMES , ADDRESSES, ITRS, FINANCIAL STATEMENTS AND BANK STATEMENTS OF T HE PARTIES. ITA NO.6139/M/2016 M/S. GARWARE SYNTHETICS LTD. 4 WE OBSERVE THAT THE AO AND LD. CIT(A) HAVE PRIMARIL Y HARPED ON THE FACT THAT THESE PARTIES BELONG TO SHRI BHANWARL AL JAIN WHEREAS THE LD COUNSEL OF THE ASSESSEE THAT THE PAR TIES BELONGED TO PRAVIN KUMAR JAIN. WE FURTHER OBSERVE THAT THE AO HAS NOT MADE ANY INVESTIGATION ON THE EVIDENCES SUBMITTED B Y THE ASSESSEE EVEN AFTER ADMITTING THAT THE IDENTITIE S OF THE LOANEES WERE ESTABLISHED BY THE ASSESSEE. THE ASSESSEE HAS ALSO BROUGHT TO THE NOTICE OF THE AUTHORITIES BELOW THAT SHRI PRAVIN JAIN HAS RETRACTED THE STATEMENT GIVEN DURING SEARC H, A COPY OF WHICH IS ALSO PLACED ON RECORD. IN OUR OPINION, TH E LD. CIT(A) HAS ONLY CONFIRMED THE ADDITION ON THE BASIS THAT T HESE PARTIES BELONG TO THE CONSORTIUM OF SHRI BHANWARLAL JAIN WH EREAS AS A MATTER OF FACT THESE PARTIES RELATE TO SHRI PRAVIN KUMAR JAIN. THE CASE OF THE ASSESSEE IS SUPPORTED BY THE DECISI ON OF SANGHVI REALITY PVT. LTD. VS. DCIT (2017) 51 CCH 0041 MUMBA I TRI. (2017) 60 ITR (TRI) 0150 (MUMBAI) WHEREIN THE CO-OR DINATE BENCH OF THE TRIBUNAL HAS HELD THAT NO ADDITION CAN BE MADE UNDER SECTION 68 WHERE THE LOANS WERE ADVANCED BY B HANWARLAL JAIN GROUP WHERE NO INVESTIGATION IS CARRIED OUT. SIMILARLY, IN THE CASE OF ACIT VS. SHREEDHAM BUILDERS (2018) 53 C CH 0212 (MUM TRI.) THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS LAID DOWN THE SAME RATIO. ACCORDINGLY, IN OUR CONSIDERED VIE W THE ORDER OF LD. CIT(A) CAN NOT BE SUSTAINED AS PURELY BASED ON THE MERE CONJUNCTURES AND ASSUMPTIONS WITHOUT BRINGING ANY C ONCRETE MATERIALS RECORD. ACCORDINGLY, WE SET ASIDE THE O RDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS.59 LAKHS. 7. THE ISSUE RAISED IN 2 ND GROUND OF APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.9,91,514/- BY LD. CI T(A) AS MADE BY THE AO UNDER SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) ON ITA NO.6139/M/2016 M/S. GARWARE SYNTHETICS LTD. 5 ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION T OWARDS PF AND ESI DUES. 8. THE FACTS IN BRIEF ARE THAT THE AO OBSERVED FROM THE PERUSAL OF ANNEXURE B TO CLAUSE NO.21(B) OF THE TAX AUDIT R EPORT THAT THE EMPLOYEES CONTRIBUTION TOWARDS PF RS.8,47,971/- AN D ESI RS.1,42,543/- AGGREGATING TO RS.9,90,514/- WERE REM ITTED TO THE GOVERNMENT TREASURY AFTER THE DUE DATE AS PER THE P ROVISO TO SECTION 36(1)(VA) OF THE ACT AND ACCORDINGLY THE SA ME WERE ADDED TO THE INCOME OF THE ASSESSEE. 9. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DIS MISSED THE APPEAL OF THE ASSESSEE ON THIS GROUND BY HOLDING TH AT THE DECISION CITED BY THE LD. A.R. WERE RENDERED AFTER CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F CIT VS ALOM EXTRUSIONS LTD. 319 ITR 306 (SC) AND THE FACTS IN APEX COURT DECISION WERE DISTINGUISHED BY HONBLE GUJARA T HIGH COURT IN THE CASE OF CIT VS. GP ROAD TRANSPORT CORP ORATION LTD. IN ITA NO.637 OF 2013, 366 ITR 170 (GUJ). 10. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IN THIS CASE THE ASSESSEE H AS REMITTED THE DUES ON ACCOUNT OF PF AND ESI TO THE GOVERNMENT OF EXCHEQUER AFTER THE DUE DATE AS PER THE PROVISO TO SECTION 36(1)(VA) BUT BEFORE THE DUE DATE OF FILING THE RET URN. IN OUR OPINION, THE CASE OF THE ASSESSEE IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GHATGE PATIL TRANSPORTS LTD. 368 ITR 074 (BOM.) AND ALSO THE DECISION OF THE HONBLE APEX CO URT IN THE CASE ALOM EXTRUSIONS LTD. (SUPRA). ACCORDINGLY, WE ARE NOT IN ITA NO.6139/M/2016 M/S. GARWARE SYNTHETICS LTD. 6 AGREEMENT WITH THE DECISION OF THE LD. CIT(A) ON TH IS ISSUE AND THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.11.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED:14.11.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.