DEPUTY COMMISSIONER OF INCOME TAX 3(3)(2), MUMBAI V. M/S.UDAIPUR PROPERTIES AND FINANCE LIMITED , MUMBAI

ITA 6449/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2655 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 02-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: GAURAV BANSAL A RS
• Keywords: Unexplained cash credit; Source of fund; Retrospective amendment; Accommodation entries
• Section: 143(3); 115JB; 68

Judgement Text

P A G E | 1 ITA NO. 6449/MUM/2017 A.Y. 2010-11 DY. COMMISSIONER OF INCOME TAX VS. M/S UDAIPUR PROP ERTIES & FINANCE LTD. IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 6449/MUM/2017 (ASSESSMENT YEAR: 2010-11) DY. COMMISSIONER OF INCOME TAX - 3(3 )( 2), ROOM NO.609, 6 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD MUMBAI-400 020 VS. M/S UDAIPUR PROPERTIES & FINANCE LTD. 1010, MAKER CHAMBERS, V, NARIMAN POINT, MUMBAI-400 021 PAN AAACU7134N (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.K.JAIN, D.R RESPONDENT BY: SHRI VINOD KUMAR BINDAL & SHRI GAURAV BANSAL, A.RS DATE OF HEARING: 23.08.2018 DATE OF PRONOUNCEMENT: 09.11.2018 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTE D AGAINST THE ORDER PASSED BY THE CIT(A)-8, MUMBAI, DATED 18.08.2017, W HICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 29.03.2016. THE REVENUE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOW ING GROUNDS OF APPEAL: (I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.1,8 6,30,000/- MADE U/S 68 ALLOWING THE APPEAL OF THE ASSESSEE ON ACCOU NT OF LOANS RECEIVED FROM M/S. BASANT MARKETING PVT. LTD. WHEREAS THE COMPANY WAS FOUND BOGUS NOT ONLY BY THE DEPARTMENT BUT BY O THER AGENCIES ALSO. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF UN SECURED LOAN AMOUNTING TO RS.1,86,30,000/- MADE BY THE ASSESSING OFFICE U/S 6 8 OF THE I.T. ACT, 1961 WITHOUT APPRECIATING THAT IN CIT VS P MOHANKAL A (2007) 291 ITR 278 (SC), IT HAS BEEN HELD THAT THE ADDITIO N CAN BE MADE ON PROPER APPRECIATION OF MATERIAL ON RECORD IF THE AS SESSEE DOES NOT OFFER PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS WE LL AS THE DECISION OF THE SUPREME COURT IN KACHWALA GEMS VS. JCIT (2006) 206 P A G E | 2 ITA NO. 6449/MUM/2017 A.Y. 2010-11 DY. COMMISSIONER OF INCOME TAX VS. M/S UDAIPUR PROP ERTIES & FINANCE LTD. CTR (SC) 585, 281 ITR 10 (SC) WHEREIN IT HAS BEEN H ELD THAT THE SOLE FACTS OF SUPPLYING OF LOAN CONFIRMATION, DETAILS OF BANKING TRANSACTIONS BY THE ASSESSEE TO EVIDENCE THE TRANSACTION DOES NOT MEAN THAT THE ASSESSEE HAD OFFERED PROPER, REASONABLE AND ACCEPTA BLE EXPLANATION. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITI ON OF UNSECURED LOAN AMOUNTING TO RS.1,86,30 , 000/- WITHOUT APPRECIATING THE FACT THAT THOUGH THE IDENTITY OF M /S. BMPL HAS BEEN PROVED, THE GENUINENESS AND CREDITWORTHINESS OF M/S . BMPL HAS NOT BEEN PROVED DUE TO WHICH THE SOURCES OF FUNDS RECEI VED BY THE ASSESSEE CANNOT BE ESTABLISHED. (IV) THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER A NY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED, THE ASSESSEE COMPANY HAD FILED I TS RETURN OF INCOME FOR A.Y. 2010-11 ON 14.10.2014, DECLARING LOSS FOR THE YEAR AT RS.37,71,515/-. FURTHER, THE ASSESSEE HAD ALSO DECLARED BOOKS LOSS UNDER 115JB AT RS.30,37,515/-. SUBSEQUENTLY, THE LOSS OF THE ASSES SEE COMPANY WAS ASSESSED BY THE A.O VIDE HIS ORDER PASSED UNDER SEC . 143(3), DATED 11.03.2013 AT RS.1,45,340/-. THE CASE OF THE ASSESS EE WAS THEREAFTER REOPENED UNDER SEC.147 OF THE ACT. 3. INFORMATION WAS RECEIVED BY THE A.O FROM THE DCI T, CENTRAL CIRCLE- XXVIII, KOLKATA, THAT ONE OF THE GROUP COMPANIES BE LONGING TO DALMIA GROUP I.E M/S BASANT MARKETING PVT. LTD. (FOR SHORT BMPL) HAD INDULGED IN PROVIDING BOGUS/ACCOMMODATION ENTRIES. AS PER THE I NFORMATION THE ASSESSEE COMPANY VIZ. M/S UDAIPUR PROPERTIES AND FI NANCE LIMITED WAS ONE OF THE BENEFICIARIES OF SUCH BOGUS/ACCOMMODATION EN TRIES. IN THE BACKDROP OF THE FACT THAT BMPL WAS APPEARING IN THE ACCOUNTS OF THE ASSESSEE COMPANY AS A CREDITOR ON 31.03.2010 FOR AN AMOUNT O F RS. 2,79,03,000/- THE CONCLUDED ASSESSMENT OF THE ASSESSEE WAS REOPEN ED UNDER SEC. 147 OF THE ACT. 4. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O CALLED UPON THE ASSESSEE COMPANY TO FURNISH COMPLETE DETAILS PERTAI NING TO ITS TRANSACTIONS CARRIED OUT WITH BMPL. FURTHER, HAVING SERIOUS DOUB TS AS REGARDS THE AUTHENTICITY OF THE AFORESAID TRANSACTION THE A.O C ALLED UPON THE ASSESSEE TO PUT FORTH AN EXPLANATION AS TO WHY THE ALLEGED LOAN TRANSACTION TOTALLING TO RS.2,79,03,000/- ENTERED WITH BMPL MAY NOT BE TREAT ED AS BOGUS AND P A G E | 3 ITA NO. 6449/MUM/2017 A.Y. 2010-11 DY. COMMISSIONER OF INCOME TAX VS. M/S UDAIPUR PROP ERTIES & FINANCE LTD. THEREIN ADDED TO ITS TOTAL INCOME AS AN UNEXPLAINED CREDIT UNDER SEC.68 OF THE ACT. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT THE DCIT (CENTRAL CIRCLE-XXVIII), KOLKATA, HOLDING A CONVICTION THAT BMPL WAS INVOLVED IN PROVIDING BOGUS/ACCOMMODATION ENTRIES HAD FRAMED AS SESSMENT IN THE LATTERS CASE, VIDE HIS ORDER PASSED UNDER SEC.143(3 ), DATED 08.03.2013. ON THE BASIS OF THE ASSESSMENT FRAMED IN THE CASE OF B MPL, INFORMATION WAS PASSED TO THE A.O HAVING JURISDICTION OVER THE CASE OF THE ASSESSEE THAT BMPL WAS INVOLVED IN PROVIDING BOGUS/ACCOMMODATION ENTRIES, AND THE ASSESSEE WAS ONE OF THE BENEFICIARIES OF THE SAME. IT WAS SUBMITTED BY THE ASSESSEE THAT THE CIT(A)-20, KOLKATA HAD ALLOWED TH E APPEAL OF BMPL AND EXONERATED IT FROM THE CHARGE OF BEING INVOLVED IN PROVIDING BOGUS/ACCOMMODATION ENTRIES. FURTHER, IT WAS BROUGH T TO THE NOTICE OF THE A.O THAT THE ORDER OF THE CIT(A)-20, KOLKATA WAS AC CEPTED BY THE A.O OF BMPL AND NO FURTHER APPEAL WAS PREFERRED AGAINST TH E SAME. HOWEVER, THE A.O WAS NOT PERSUADED TO SUBSCRIBE TO THE AFORESAID CONTENTIONS OF THE ASSESSEE. IT WAS OBSERVED BY THE A.O THAT THE REVEN UE HAD ACCEPTED THE DECISION OF THE CIT(A)-20, KOLKATA ON MERITS AS WEL L AS OWING TO LOW TAX IMPLICATION. THE A.O WAS OF THE VIEW THAT THE ASSES SEE HAD NOT TAKEN ANY PAIN TO PLACE ON RECORD ANY MATERIAL EVIDENCE IN SU PPORT OF ITS CLAIM THAT THE TRANSACTIONS WITH BMPL WERE ACTUAL/REAL TRANSACTION S. FURTHER, IT WAS NOTICED BY THE A.O THAT THE ASSESSEE HAD ALSO FAILE D TO FURNISH ANY DOCUMENTARY EVIDENCE TO PROVE THE CREDITWORTHINESS OF BMPL OR THE REAL NATURE OF THE TRANSACTIONS WHICH WERE ENTERED INTO WITH THE SAID CONCERN. RATHER, THE A.O WAS OF THE VIEW THAT THE ONLY CONTE NTION OF THE ASSESSEE BEFORE HIM WAS THAT BMPL HAD BEEN DECLARED AS A GEN UINE ENTITY BY THE CIT(A)-20, KOLKATA. ON THE BASIS OF HIS AFORESAID O BSERVATIONS, THE A.O CONCLUDED THAT THE ASSESSEE HAD FAILED TO SUBSTANTI ATE EITHER THE CREDITWORTHINESS OR THE REAL NATURE OF THE TRANSACT IONS THAT WERE ENTERED BY IT WITH BMPL. THE A.O ON A PERUSAL OF FINANCIAL STA TEMENTS AND BANK ACCOUNT STATEMENTS OF BMPL FOR THE YEAR ENDED 31.03 .2010 WAS NOT IMPRESSED WITH THE SAME, AND HAD OBSERVED AS UNDER: - (A) COPY OF LEDGER ACCOUNT CONFIRMATION FROM THE P ARTY. THE SAME REFLECTS THAT THERE IS OPENING BALANCE OF RS.95,73,000/ AS ON 01 .04.2009 AND P A G E | 4 ITA NO. 6449/MUM/2017 A.Y. 2010-11 DY. COMMISSIONER OF INCOME TAX VS. M/S UDAIPUR PROP ERTIES & FINANCE LTD. DURING THE YEAR, THE ASSESSEE HAS BEEN GIVEN FURTHE R LOANS TO THE TUNE OF RS.2,82,03,000/-, OUT OF WHICH THE ASSESSEE HAS REPAID RS.3,00,000/- TO THE PARTY, LEAVING CLOSING BALANCE AT RS.2,79,03,000/-. FROM THE STATEMENT, IT IS EVIDENT THAT THE TRANSACTIONS WERE CONTINUING FROM PREVIOUS YEARS. (B) BMPL HAS FILED ITS RETURN OF INCOME ON 14.10.20 10 DECLARING LOSS FOR THE YEAR AT RS.4,00,970/-. (C) THE BALANCE SHEET REFLECTS THAT BMPL HAD TAKEN HUGE LOANS (UNSECURED) STANDING AT RS.16,20,70,335/- AS ON 31. 03.2010 AND HAS GIVEN ADVANCES TO THE TUNE OF RS.91,34,92,2 87/- WHEREAS NO INTEREST EXPENDITURE HAS EITHER BEEN BOOKED OR ANY INTEREST INCOME HAS BEEN EARNED ON LOANS GIVEN. (D) IT IS WORTH MENTIONING HERE THAT THIS COMPANY I S THE MAIN TOOL USED BY SHRI ARUN KUMAR DALMIA TO TRANSFER FUNDS TO VARI OUS CONCERNS FLOATED BY HIM AND THE ENTIRE TRANSACTIONS MADE BY THIS COMPANY ARE SUSPICIOUS. (E) THE FINANCIAL SHOW THAT THE CURRENT LIABILITIES OF THIS COMPANY STAND AT RS.180,41,07,992/- AS ON 31.03.2010 AND THE NET CURRENT ASSETS OF THE COMPANY IS A NEGATIVE FIGURE STANDING AT RS.46,49,62,174/-. SINCE NO INTEREST IS EITHER PAID OR CHARGED IT GIVES RISE TO SUSPICION AND ALL THE LOANS ARE CIRCU LATED AMONG THE GROUP COMPANIES, PURPOSE AND MOTIVE OF WHICH GIVES RISES TO FURTHER SUSPICION OF MONEY LAUNDERING AND HAWALA. (F) FURTHER, IT IS NOTEWORTHY THAT BANK STATEMENT. OF BMPL SHOW THAT BEFORE THE TRANSFER OF FUNDS TO A GROUP CONCERN, FU NDS WERE TRANSFERRED TO BMPL FROM OTHER GROUP CONCERN AND TH E CHAIN CONTINUES AMONG ALL THE GROUP CONCERNS, WITHOUT EFF ECTING THE PROFIT &. LOSS ACCOUNT OF THE PARTIES AS NO INTEREST IS E ITHER CHARGED OR PAID THE REAL MOTIVE OF THE SAME HAS NOT BEEN EXPLA INED BY THE ASSESSEE COMPANY OR THE BMPL. IN THE BACKDROP OF THE AFORESAID OBSERVATIONS THE A .O HELD THE AMOUNT OF LOAN OF RS. 1,86,30,000/- RECEIVED BY THE ASSESSEE DURING THE YEAR FROM BMPL AS AN UNEXPLAINED CREDIT UNDER SEC. 68 OF THE ACT. 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS AD VANCED BY THE ASSESSEE WAS PERSUADED TO ACCEPT THE SAME. IT WAS OBSERVED B Y THE CIT(A) THAT THE ASSESSEE HAD SUBMITTED PROOF OF IDENTITY AND CONFIR MATION OF BMPL, COPY OF ITS AUDITED ANNUAL ACCOUNTS, COPY OF ACKNOWLEDGMENT OF THE RETURN OF INCOME, COPY OF LEDGER ACCOUNT AND COPY OF BANK ACC OUNT DULY HIGHLIGHTING THE TRANSACTIONS FOR THE YEAR UNDER CONSIDERATION. IT WAS NOTICED BY HIM THAT THE AFORESAID DOCUMENTARY EVIDENCE WHICH HAD A MATE RIAL BEARING ON THE ISSUE UNDER CONSIDERATION WAS NOT DISCUSSED, MUCH T HE LESS DISPUTED BY THE P A G E | 5 ITA NO. 6449/MUM/2017 A.Y. 2010-11 DY. COMMISSIONER OF INCOME TAX VS. M/S UDAIPUR PROP ERTIES & FINANCE LTD. A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS . THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE COMPANY HAD BORROWED FUNDS F ROM BMPL. FURTHER, IT WAS NOTICED BY HIM THAT THE BORROWING AND LENDING O F THE FUNDS WERE DULY RECORDED IN THE AUDITED BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE AFOREMENTIONED LENDER VIZ. BMPL. IT WAS ALSO TAKEN NOTE OF BY THE CIT(A) THAT BMPL WAS REGULARLY FILING ITS RETURNS OF INCOM E AND THE TRANSACTIONS UNDER CONSIDERATION HAD TAKEN PLACE THROUGH BANKING CHANNELS. IN THE BACKDROP OF THE AFORESAID FACTS, THE CIT(A) WAS OF THE VIEW THAT THE CREDITWORTHINESS OF THE LENDER COMPANY VIZ. BMPL OR THE GENUINENESS OF THE TRANSACTIONS UNDER CONSIDERATION COULD NOT BE BROUG HT WITHIN THE MISCHIEF OF SEC.68 MERELY ON THE BASIS OF DOUBTS, SUSPICIONS AND CONJECTURES. ON THE BASIS OF HIS AFORESAID OBSERVATIONS, THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAD DULY DISCHARGED THE ONUS AS WAS CAST U PON IT AND HAD ESTABLISHED THE IDENTITY AND CREDITWORTHINESS OF TH E AFOREMENTIONED CONCERN VIZ. BMPL, AS WELL AS PROVED THE GENUINENESS OF THE TRANSACTION WITH THE SAID CONCERN. RATHER, THE CIT(A) HELD A CONVICTION THAT IN CASE IF THERE WERE ANY DOUBTS IN THE MIND OF THE A.O AS REGARDS THE SO URCE OF THE FUNDS OF THE CREDITOR COMPANY, THEN IT WAS FOR THE LATTER TO CON VINCE THE A.O AS REGARDS THE GENUINENESS OF ITS SOURCE OF FUNDS. IN THE BACK DROP OF HIS AFORESAID DELIBERATIONS, IT WAS ALSO TAKEN NOTE OF BY THE CIT (A) THAT THE LENDER PARTY VIZ. BMPL WAS ABSOLVED OF THE CHARGE OF BEING INVOL VED IN PROVIDING ACCOMMODATION ENTRIES BY THE CIT(A)-20, KOLKATA, WH ILE DISPOSING OFF ITS APPEAL FOR A.Y. 2010-11. ON THE BASIS OF HIS AFORES AID OBSERVATIONS THAT THE IDENTITY AND CREDITWORTHINESS OF BMPL AND THE GENUI NENESS OF THE TRANSACTIONS OF THE ASSESSEE WITH THE SAID CONCERN STOOD ESTABLISHED BEYOND DOUBT, THE CIT(A) VACATED THE ADDITION OF RS.1,86,3 0,000/- MADE BY THE A.O UNDER SEC.68. 6. THE REVENUE BEING AGGRIEVED WITH THE ORDER OF TH E CIT(A) HAS CARRIED THE MATTER IN APPEAL BEFORE US. THE LD. DEPARTMENTA L REPRESENTATIVE (FOR SHORT D.R) TAKING US THROUGH THE FACTS OF THE CAS E SUBMITTED, THAT AS THE SOURCE OF THE FUNDS HAD NOT BEEN PROVED TO THE HILT BY THE ASSESSEE, THUS THE ADDITION MADE BY THE A.O BY HOLDING THE SAME AS AN UNEXPLAINED CASH P A G E | 6 ITA NO. 6449/MUM/2017 A.Y. 2010-11 DY. COMMISSIONER OF INCOME TAX VS. M/S UDAIPUR PROP ERTIES & FINANCE LTD. CREDIT HAD WRONGLY BEEN DELETED BY THE CIT(A). THE LD. D.R REBUTTED THE SUPPORT DRAWN BY THE ASSESSEE FROM THE FACT THAT BM PL WAS ABSOLVED BY THE CIT(A)-20,KOLKATA OF THE CHARGE OF HAVING INDULGED IN PROVIDING BOGUS/ACCOMMODATION ENTRIES, WHICH AS PER THE LD. A .R NOT HAVING BEEN FURTHER CARRIED IN APPEAL BY THE REVENUE HAD ATTAIN ED FINALITY. THE LD. D.R TOOK US THROUGH A LETTER THAT WAS ADDRESSED BY THE A.O OF THE ASSESSEE COMPANY TO THE ITO, WARD-8(1), KOLKATA SEEKING INFO RMATION AS TO WHETHER THE APPEAL AGAINST THE ORDER OF THE CIT(A)-20, KOLK ATA WAS NOT PREFERRED BEFORE THE TRIBUNAL ON MERITS OR OWING TO LOW TAX I MPLICATION. IT WAS AVERRED BY THE LD. D.R THAT THE A.O OF BMPL HAD NO AUTHORIT Y TO CONCEDE THAT NO FURTHER APPEAL WAS BEING FILED ON MERITS. RATHER, I T WAS SUBMITTED BY THE LD. D.R THAT CONCRETE INFORMATION WAS RECEIVED FROM THE CENTRAL BUREAU OF INVESTIGATION (FOR SHORT CBI) THAT THE ASSESSEE C OMPANY WAS ONE OF THE BENEFICIARIES OF THE ACCOMMODATION ENTRIES WHICH WE RE PROVIDED BY THE GROUP COMPANIES FLOATED BY SHRI HARSH DALMIA AND SH RI ARUN DALMIA. ON THE BASIS OF THE AFORESAID CONTENTIONS, IT WAS SUBM ITTED BY THE LD. D.R THAT THE A.O HAD RIGHTLY HELD THE AMOUNT OF RS.1,86,30,0 00/- RECEIVED BY THE ASSESSEE DURING THE YEAR FROM BMPL AS AN UNEXPLAINE D CASH CREDIT UNDER SEC.68 OF THE ACT. 7. PER CONTRA, THE LD. AUTHORIZED REPRESENTATIVE (F OR SHORT A.R) RELIED ON THE ORDER OF THE CIT(A). THE LD. A.R TAKING US THRO UGH THE ORDER OF THE CIT(A) SUBMITTED, THAT THE LATTER DULY TAKING COGNIZANCE O F THE FACT THAT AS BMPL WAS EXONERATED OF THE CHARGE OF HAVING INDULGED IN PROVIDING BOGUS /ACCOMMODATION ENTRIES BY THE CIT(A)-20, KOLKATA, V IDE HIS ORDER PASSED IN ITS APPEAL FOR A.Y. 2010-11, THUS NO ADVERSE INFERE NCES ON THE SAID COUNT COULD ANY FURTHER BE DRAWN IN RESPECT OF THE LOAN R ECEIVED BY THE ASSESSEE FROM THE SAID CONCERN DURING THE YEAR UNDER CONSIDE RATION. FURTHER, IT WAS AVERRED BY THE LD. A.R THAT IT HAD RIGHTLY BEEN APP RECIATED BY THE CIT(A) THAT AS THE IDENTITY, CREDITWORTHINESS AND GENUINENESS O F THE TRANSACTIONS OF THE ASSESSEE WITH THE AFORESAID LENDER I.E. BMPL STOOD ESTABLISHED BEYOND ANY DOUBT, HENCE THERE REMAINED NO OCCASION FOR CHARACT ERISING THE AMOUNT OF RS.1,86,30,000/- AS AN UNEXPLAINED CASH CREDIT 68 O F THE ACT. P A G E | 7 ITA NO. 6449/MUM/2017 A.Y. 2010-11 DY. COMMISSIONER OF INCOME TAX VS. M/S UDAIPUR PROP ERTIES & FINANCE LTD. 8. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND SUBSTANTIAL FORCE IN THE CONTENTIONS ADVANCED BY THE LD. A.R. IT IS A MATTER OF RECORD, THAT THE ASSESSEE HAD DURING THE YEAR UNDER CONSIDERATION RAISED AN AMOUNT OF RS.1,86,30,000/- AS A LOAN FROM BMPL. THE AFORESAID BORROWING AND LENDING OF THE AMOUNT WAS FOUND DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE AFOREMENTIONED LENDER I.E BMPL. IN SO FAR, THE ALLEGATION THAT BMPL WAS INVOLVED IN PROVI DING BOGUS/ ACCOMMODATION ENTRIES, THE SAME DID NOT SURVIVE AFT ER IT WAS ABSOLVED OF THE SAID CHARGE BY THE CIT(A)-20, KOLKATA, WHILE DISPOS ING OFF ITS APPEAL FOR A.Y. 2010-11. INTERESTINGLY, THE REVENUE HAD CHOSEN TO A CCEPT THE AFORESAID ORDER OF THE CIT(A)-20, KOLKATA AND HAD NOT PREFERRED ANY FURTHER APPEAL AGAINST THE SAME, WHICH THUS HAD RESULTANTLY ATTAINED FINAL ITY. ON A PERUSAL OF THE COMMUNICATION RECEIVED FROM THE ITO, KOLKATA, IT EM ERGES THAT THE ORDER OF THE CIT(A)-20 WAS ACCEPTED BY THE REVENUE BOTH ON M ERITS AND LOW TAX IMPLICATION. IN SO FAR, THE IDENTITY OF THE LENDER PARTY IS CONCERNED, WE FIND OURSELVES AS BEING IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT THE SAME STANDS ESTABLISHED BEYOND DOUBT. IN RESPECT OF THE CREDITWORTHINESS OF LENDER VIZ. BMPL, IT EMERGES FROM THE ORDERS OF THE LOWER AUTHORITIES THAT BMPL HAD RECEIVED HUGE INFLOW OF FUNDS, WHICH FACT IS SUPPORTED BY ITS BANK STATEMENTS. IT IS OUT OF THE SAID FUNDS, THAT A LOA N OF RS. 1,86,30,000/- WAS ADVANCED TO THE ASSESSEE COMPANY BY BMPL. WE ARE PE RSUADED TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A), THAT N O ONUS WAS CAST UPON THE ASSESSEE COMPANY TO CONVINCE THE A.O ABOUT THE SOURCE OF FUNDS WHICH HAD EMANATED FROM ANOTHER GROUP COMPANY WHICH WAS A LREADY ASSESSED TO TAX ELSEWHERE, AND WHOSE BOOKS OF ACCOUNTS DULY R EFLECTED THE FUNDS THAT HAVE BEEN LOANED TO THE ASSESSEE. WE ARE OF THE CON SIDERED VIEW THAT PRIOR TO THE INSERTION OF FIRST PROVISO TO SEC.68 BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013, IT WAS NOT OBLIGATORY ON THE PART OF TH E ASSESSEE TO EXPLAIN THE SOURCE OF THE SOURCE OF A CREDIT APPEARING IN ITS BOOKS OF ACCOUNTS. OUR AFORESAID VIEW STANDS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF P A G E | 8 ITA NO. 6449/MUM/2017 A.Y. 2010-11 DY. COMMISSIONER OF INCOME TAX VS. M/S UDAIPUR PROP ERTIES & FINANCE LTD. BOMBAY IN THE CASE OF CIT VS. GAGANDEEP INFRASTRUCT URE PVT. LTD. (2017) 394 ITR 680 (BOM), WHEREIN IT WAS OBSERVED THAT IT WAS OBLIGATORY ON THE PART OF AN ASSESSEE TO PROVE THE SOURCE OF SOURCE O F A CASH CREDIT APPEARING IN ITS BOOKS OF ACCOUNTS ONLY SUBSEQUENT TO THE I NSERTION OF THE FIRST PROVISO TO SEC. 68, VIDE THE FINANCE ACT, 2012 W.E.F 01.04. 2013. IT WAS HELD BY THE HONBLE HIGH COURT, AS UNDER: (E) WE FIND THAT THE PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE ACT 2012 WITH EFFECT FROM 1 ST APRIL, 2013. THUS IT WOULD BE EFFECTIVE ONLY FROM THE ASSESSMENT YEAR 2013-14 ONWARDS AND N OT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT, BEFORE THE TRIBUNAL, IT W AS NOT EVEN THE CASE OF THE REVENUE THAT SECTION 68 OF THE ACT AS IN FORCE DURI NG THE SUBJECT YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED SUBS EQUENTLY EFFECTIVE ONLY FROM 1 ST APRIL, 2013 WAS ITS NORMAL MEANING. THE PARLIAMENT DID NOT INTRODUCE TO PROVISO TO SECTION 68 OF THE ACT WITH RETROSPECT IVE EFFECT NOR DOES THE PROVISO SO INTRODUCED STATES THAT IT WAS INTRODUCED FOR RE MOVAL OF DOUBTS OR THAT IT IS DECLARATORY. THEREFORE IT IS NOT OPEN TO GIVE IT RETROSPECTIVE EFFECT, BY PROCEEDING ON THE BASIS THAT THE ADDITION OF THE PR OVISO TO SECTION 68 OF THE ACT IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATIO N OF SECTION 68 OF THE ACT BOTH BEFORE AND AFTER THE ADDING OF THE PROVISO. IN ANY VIEW OF THE MATTER THE THREE ESSENTIAL TESTS WHILE CONFIRMING THE PRE-PROV ISO SECTION 68 OF THE ACT LAID DOWN BY THE COURTS NAMELY THE GENUINENESS OF THE TR ANSACTION, IDENTITY AND THE CAPACITY OF THE INVESTOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF THE TRIBUNAL AND ON FACTS IT WAS FOUND SATISFIED. F URTHER IT WAS A SUBMISSION ON BEHALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSPICION ON THE GENUINENESS (IDENTITY) OF THE S HAREHOLDERS I.E. THEY ARE BOGUS. THE APEX COURT IN LOVELY EXPORTS (P) LTD. (S UPRA) IN THE CONTEXT TO THE PRE-AMENDED SECTION 68 OF THE ACT HAS HELD THAT WHE RE THE REVENUE URGES THAT THE AMOUNT OF SHARE APPLICATION MONEY HAS BEEN RECEIVED FROM BOGUS SHAREHOLDERS THEN IT IS FOR THE INCOME TAX OFFICER TO PROCEED BY REOPENING THE ASSESSMENT OF SUCH SHAREHOLDERS AND ASSESSING THEM TO TAX IN ACCORDANCE WITH LAW. IT DOES NOT ENTITLE THE REVENUE TO ADD TH E SAME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT. FURTHER, A SIMILAR VIEW WAS ARRIVED AT BY THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT-13, MUMBAI VS. VEEDHAT A TOWER PVT. LTD.(2018) 403 ITR 415 (BOM). THE HONBLE HIGH COURT IN ITS SA ID JUDGMENT HAD OBSERVED THAT AS PER THE PRE-AMENDED SEC. 68, I.E P RIOR TO A.Y 2013-14, IT WAS NOT OBLIGATORY FOR THE ASSESSEE TO EXPLAIN THE SOURCE OF THE SOURCE OF A CREDIT APPEARING IN ITS BOOKS OF ACCOUNT. THE HONB LE HIGH COURT HAD HELD AS UNDER : 7. THE GRIEVANCE OF THE APPELLANT IS THAT, EVEN IN THE ABSENCE OF THE AMENDMENT TO SECTION 68 OF THE ACT, IT IS FOR THE R ESPONDENT-ASSESSEE TO EXPLAIN THE SOURCE OF THE SOURCE OF THE FUNDS RECEI VED BY AN ASSESSEE. IT IS P A G E | 9 ITA NO. 6449/MUM/2017 A.Y. 2010-11 DY. COMMISSIONER OF INCOME TAX VS. M/S UDAIPUR PROP ERTIES & FINANCE LTD. SUBMITTED THAT THE RESPONDENT HAS NOT ABLE TO EXPLA IN THE SOURCE OF THE FUNDS IN THE HANDS OF M/S. LFPL AND HTTP://ITATONLINE.ORG THEREFORE THIS APPEAL NEEDS TO BE ADMITTED. 8. THIS COURT IN COMMISSIONER OF INCOME TAX V/S. GA NGADEEP INFRASTRUCTURE PVT. LTD, 394 ITR 680 HAS HELD THAT THE PROVISO TO SECTION 68 OF THE ACT HAS BEEN INTRODUCED BY THE FINANCE ACT, 2012 W.E.F. 1ST APRIL, 2013 AND THEREFORE IT WOULD BE EFFECTIVE ONLY FROM ASSESSMENT YEAR 201 3-14 ONWARDS AND NOT FOR THE EARLIER ASSESSMENT YEARS. IN THE ABOVE DECISION , RELIANCE WAS PLACED UPON THE DECISION OF THE APEX COURT IN LOVELY EXPORTS (SUPRA) IN THE CONTEXT OF THE PRE-AMENDED SECTION 68 OF THE ACT. IN THE ABOVE CAS E, THE APEX COURT WHILE DISMISSING THE REVENUE'S APPEAL FROM THE DELHI HIGH COURT HAD OBSERVED THAT, WHERE THE REVENUE URGES THAT THE MONEY HAS BEEN REC EIVED FROM BOGUS SHAREHOLDERS THEN IT IS FOR THE REVENUE TO PROCEED AGAINST THEM IN ACCORDANCE WITH LAW. THIS WOULD NOT ENTITLE THE REVENUE TO INV OKE SECTION 68 OF THE ACT WHILE ASSESSING THE RESPONDENT FOR NOT EXPLAINING T HE SOURCE OF ITS SOURCE. IN ANY EVENT, THE IMPUGNED ORDER OF THE TRIBUNAL HAS R AISED A FINDING OF FACT THAT THE RESPONDENT HAD DISCHARGED THE ONUS WHICH IS CAS T UPON IT IN TERMS OF THE PRE-AMENDED SECTION 68 OF THE ACT BY FILING THE NEC ESSARY CONFIRMATION LETTERS OF THE CREDITORS, THEIR AFFIDAVITS, THEIR FULL ADDR ESS AND THEIR PAN. 9. THUS, THE TRIBUNAL HAS RENDERED A FINDING OF FAC T WHICH IS NOT SHOWN TO BE PERVERSE. IN ANY EVENT, THE QUESTION AS PROPOSED IN LAW OF THE OBLIGATION TO EXPLAIN THE SOURCE OF THE SOURCE PRIOR TO 1ST APRIL , 2013, ASSESSMENT YEAR 2013-14, STANDS CONCLUDED AGAINST THE REVENUE BY TH E DECISION OF THIS COURT IN GAGANDEEP INFRASTRUCTURE (SUPRA). FURTHER, A SIMILAR VIEW WAS ALSO TAKEN BY THE HONB LE HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. M/S S.D.B ESTATES PVT. LTD. (I TA NO. 1356 OF 2015; DATED 27.03.2018) (BOM). 9. WE ARE ALSO OF THE CONSIDERED VIEW THAT AS THE AMOUNT OF RS.1,86,30,000/- WAS ADVANCED BY BMPL TO THE ASSESS EE COMPANY THROUGH BANK TRANSACTIONS, THUS THE GENUINENESS OF THE LOAN TRANSACTION UNDER CONSIDERATION ALSO STANDS PROVED. 10. ON THE BASIS OF OUR AFORESAID OBSERVATIONS, WE ARE PERSUADED TO SUBSCRIBE TO THE VIEW TAKEN BY THE CIT(A) THAT AS T HE NATURE AND SOURCE OF THE CREDIT OF RS.1,86,30,000/- APPEARING IN THE BO OKS OF ACCOUNTS OF THE ASSESSEE COMPANY HAD BEEN ESTABLISHED BY THE ASSESS EE BEYOND DOUBT, THUS THE SAME COULD NOT HAVE BEEN HELD AS AN UNEXPLAINED CASH CREDIT UNDER SEC. 68. WE THUS FINDING NO INFIRMITY IN THE VIEW T AKEN BY THE CIT(A) THAT THE LOAN OF RS. 1,86,30,000/- RECEIVED BY THE ASSESSEE COMPANY FROM BMPL P A G E | 10 ITA NO. 6449/MUM/2017 A.Y. 2010-11 DY. COMMISSIONER OF INCOME TAX VS. M/S UDAIPUR PROP ERTIES & FINANCE LTD. COULD NOT BE HELD AS AN UNEXPLAINED CASH CREDIT UND ER SEC. 68 OF THE ACT, UPHOLD THE SAME. 11. THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.11.2018 SD/- SD/- ( B.R.BASKARAN) (RAVISH SOOD) ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI; 09 . 11.2018 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !' / GUARD FILE. $ //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI