SURAJ MANOHAR SAMAT, MUMBAI V. ACIT 19 (3), MUMBAI

ITA 625/MUM/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9552 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-10-2022
• Assessment Year: 2007-2008
• Appeal Filed On: 05-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KHUSHIRAM JADHWANI
• Keywords: Unexplained cash credit; Accommodation entries; Bogus loan
• Section: 68; 148; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘SMC‘ BENCH MUMBAI BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER ITA No.625/Mum/2022 (Asse ssment Year :2007-08) Suraj Manohar Samat Unit No.206, Kamla Spaces, Near HDFC Bank, Khira Nagar, S.V Road, Mumbai-400054 Vs. ACIT – 19(3), Mumbai. Flat no. 1101, 11 th floor, Nav palmyra Society, Bandra West, Mumbai-400050 PAN/GIR No.AMXPS7585H (Appellant) .. (Respondent) Assessee by Khushiram Jadhwani Revenue by Pratap narayan Sharma Date of Hearing 26/10/2022 Date of Pronouncement 28/10/2022 आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in ITA No. 625/Mum/2022 for A.Y.2007-08 arises out of the order by the ld. Commissioner of Income Tax (Appeals)- CIT(A) 49, Mumbai in appeal No.CIT(A), Mumbai-34/10189/2014-15 dated 04/02/2022 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3)of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 19/09/2014 by the ld. Asstt. Commissioner of Income-Tax (hereinafter referred to as ld. AO). 2. At the outset, I find that there is a delay in filing of appeal by one day by the assessee. I have gone through the condonation petition and I am ITA No. 625/Mum/2022 Suraj Manohar Samat 2 convinced with the reasons adduced thereon. Hence, the delay in filing of appeal is hereby condoned and appeal is admitted for adjudication. 3. Ground No. 1 raised by the assessee challenging the validity of reassessment was stated to be not pressed by ld.AR at the time of hearing. The same is reckoned as a statement made from the Bar and hence, dismissed as not pressed. 4. The Ground Nos. 2-5 raised by the assessee for challenging the addition made u/s.68 of the Act in respect of unsecured loan received by the assessee from M/s. Kunal Gems in the sum of Rs. 21,00,000/-. 5. We have heard the rival submissions and perused the materials available on record. The assessee is an individual deriving income from salary, income from house property and income from other sources. The return of income for the A.Y. 2007-08 was filed by the assessee on 03/07/2008 declaring total income of Rs. 2,14,066/- . No scrutiny assessment was framed on this return. Subsequently, this assessment was sought to be reopened by issuing notice u/s. 148 of the Act dated 24/03/2014 on the ground that assessee had taken accommodation entries from M/s. Kunal Gems through bogus loans amounting to Rs. 21,00,000/-. The main grievance of the revenue is that the assessee had borrowed unsecured loans from entity allegedly belonging to Shri. Pravin Jain. Accordingly, the ld.AO sought to examine the veracity of receipt of unsecured loan of Rs. 21,00,000/- by the assessee from M/s. Kunal Gems in the reassessment proceedings. The assessee furnished the confirmation from M/s. Kunal Gems, bank statements of M/s. Kunal Gems which prove sufficient credit worthiness for M/s. Kunal Gems to advance loans to assessee, Income-tax return of the lender for A.Y. 2007-08 ITA No. 625/Mum/2022 Suraj Manohar Samat 3 together with the ledger account of M/s. Kunal Gems as appearing in the books of the assessee. The assessee also furnished the bank book of the assessee to prove that the loan has been received through regular banking channels. The assessee also submitted that he had paid interest of Rs. 15,016/- to M/s. Kunal Gems on the loan borrowed by him. This interest of Rs. 15,016/- is claimed as deduction by the assessee in the return of income. This interest of Rs. 15,016/- is included in the total interest claim made by the assessee at Rs. 30,424/- . For the sake of convenience, the breakup of interest claimed by the assessee in the return amounting to Rs. 30,424/- is given below: Name of Party Interest amount Rs. Santogen Textiles Mills Ltd. 3,945/- Raman R. Jain 2,860/- Kunal Gems 15,016/- Neeta Samant 8,603/- 6. The ld.AO thereafter issued notice u/s. 133(6) of the Act on 16/07/2014 to M/s. Kunal Gems. The said notice returned unserved. Thereafter vide order sheet noting dated 5/08/2014, the assessee was asked to prove the genuineness of transaction with Kunal Gems. The assessee apart from refurnishing the aforesaid documents submitted that the loan has been repaid to M/s. Kunal Gems in AY.2009-10 & AY.2011- 12 . Since assessee could not produce the lender for examination before the ld.AO, the ld.AO proceeded to treat the unsecured loan of Rs. 21,00,000/- as unexplained cash credit u/s. 68 of the Act on the ground that assessee could not prove the genuineness of transaction. This action of the ld.AO was upheld by the ld.CIT(A). ITA No. 625/Mum/2022 Suraj Manohar Samat 4 7. I find that assessee had borrowed loan of Rs. 21,00,000/- from M/s. Kunal Gems in A.Y. 2007-08 through regular banking channels. The assessee has claimed interest payment of Rs. 15,016/- to M/s. Kunal Gems as deduction in A.Y. 2007-08 which has been allowed by the ld.AO. I find that assessee has furnished the bank book, bank statements of the lender duly highlighting the loan transactions with the assessee which sufficiently proves the credit worthiness of the lender, Income-tax return acknowledgement of the lender for AY. 2007-08, ledger confirmation from the lender confirming the fact of having advanced loans to assessee. None of these documents were found to be false by the ld.AO. I find that assessee had repaid the unsecured loan to the lender on the following dates by account payee cheques :- Date Amount 16/03/2009 5,00,000/- 17/03/2009 5,00,000/- 25/03/2009 5,00,000/- 30/03/2009 5,00,000/- 28/08/2010 4,52,000/- 28/08/2010 6,48,000/- Total 31,00,000/- 7.1 I further find that assessee has borrowed 31,00,000/- from M/s. Kunal Gems as under:- Date Amount 20/02/2007 10,00,000/- 01/03/2007 21,00,000/- ITA No. 625/Mum/2022 Suraj Manohar Samat 5 8. I find that the revenue has accepted the receipt of loan of Rs. 10,00,000/- on 22/02/2007 from M/s. Kunal Gems as genuine. There is absolutely no reason to disbelieve the next loan transaction of Rs. 21,00,000/- from the same party. The entire loan has been repaid by the assessee in A.Y.2011-12. The search in the case of Pravin Jain happened in Oct. 2013 wherein it transpired that he was engaged in providing accommodation entries through various entities and one such entity was M/s. Kunal Gems. The transaction of receipt of loan and repayment of loan had happened prior to the search action in the case of Pravin Jain. Once the loan transactions are settled, the assessee obviously will not have the latest address of the lender that to after a gap of few years. It is not the case of the revenue that the assessee is having regular transactions with M/s. Kunal Gems. Hence, merely because the notice issued u/s. 133(6) of the Act to M/s. Kunal Gems by the ld.AO had returned unserved, the genuine loan transaction like this carried out by the assessee cannot be doubted and disbelieved. Hence, I hold that assessee had duly proved all the three ingredients of section 68 of the Act Viz. Identity of lender, credit worthiness of the lender and genuineness of transaction. Moreover, the interest claimed by the assessee in the sum of Rs. 15,016/- on the said loan has been allowed as deduction by the revenue in A.Y.2007-08. Hence, I have no hesitation to direct the ld.AO the delete the addition made u/s. 68 of the Act in the sum of Rs. 21,00,000/-. Accordingly, the grounds raised by the assessee are allowed. 9. In the result, the appeal of the assessee is allowed. Order pronounced on 28/10/2022 by way of proper mentioning in the notice board. (M.BALAGANESH) ACCOUNTANT MEMBER ITA No. 625/Mum/2022 Suraj Manohar Samat 6 Mumbai; Dated 28/10/2022 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary / Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy//