ACIT 2(1)(1), MUMBAI V. AMR INVESTMENTS P.LTD, MUMBAI

ITA 7259/MUM/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6535 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Keywords: Unexplained cash credit; Business expenditure; Principle of natural justice; Proportionate interest; Question of law
• Section: 143(3); 133(6); 195; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 7259 / MUM/20 14 ( ASSESSMENT YEAR : 2010 - 11 ) ACIT - 2(1)(1) R.NO.561, 5 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020 VS. M/S. AMR INVESTMENTS PVT. LTD., 11/13, BOTAWALA BUILDING 3 RD FLOOR, OFFICE NO.4A NEAR HORNIMAN CIRCLE FORT, MUMBAI 400 023 PAN/GIR NO. AAGCA5492H APPELLANT ) .. RESPONDENT ) ITA NO. 561 /MUM/20 15 ( ASSESSMENT YEAR : 2010 - 11 ) M/S. AMR INVESTMENTS PVT. LTD., 11/13, BOTAWALA BUILDING 3 RD FLOOR, OFFICE NO.4A NEAR HORNIMAN CIRCLE FORT, MUMBAI 400 023 VS. DCIT - 2(1) AAYAKAR BHAVAN MUMBAI 400 020 PAN/GIR : AAGCA5492H APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI R.P. MEENA ASSESSEE BY SHRI VIMAL PUNMIYA DATE OF HEARING 16/11 /201 8 DATE OF PRONOUNCEMENT 18 / 01 /201 9 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS APPEALS FILED BY THE REVENUE AND ASSESSEE AGAINST THE ORDER OF CIT(A) - 4, MUMBAI DATED 16/09/2014 FOR A.Y.2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. ITA NO. 7259/MUM/2014 & ITA NO.561/MUM/2015 M/S. AMR INVESTMENTS PVT. LTD., 2 2. COMMON GRIEVANCE OF ASSESSEE AND REVENUE RELATES TO DISALLOWANCE OF PROPORTIONATE INTEREST EXPENDITURE DEBITED IN THE P & L ACCOUNT. 3. RIVAL CONTENTIONS HA VE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES AND IN HOUSING PROJECTS. DURING THE COURSE OF ASSESSMENT, THE AO HAS MADE AN ADDITION OF A SUM OF RS.16,04,99,250/ - AS UNE XPLAINED CASH CREDITS TO THE TOTAL INCOME OF THE ASSESSEE. THE AO HAS ADDED THE SAID CASH CREDITS OF RS.16,04,99,250/ - FOR THE REASON THAT THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF TRANSACTIONS WERE NOT PROVED BY THE ASSESSEE DUR ING ASSESSMENT PROCEEDINGS. DURING THE APPELLATE PROCEEDINGS, CIT(A) CALLED FOR A REMAND REPORT AND AFTER CONSIDERING THE SAME, RESTRICTED THE DISALLOWANCE OF INTEREST AFTER HAVING THE FOLLOWING OBSERVATION: - 5.1 I HAVE CAREFULLY AND DISPASSIONATELY CONSID ERED THE FACTS AND CIRCUMSTANCES OF THE CASE, STATEMENT OF FACTS, RELEVANT ASSESSMENT ORDER, WRITTEN SUBMISSIONS, REMAND REPORT, REJOINDER AND EVIDENCES FILED AND THE ARGUMENTS MADE BY THE LD.AR BEFORE THE UNDERSIGNED. BOTH GROUNDS ARE DECIDED AS UNDER : 5.2. GROUND OF APPEAL NO.1 (ADDITION OF RS. 16.04.99.250 AS UNEXPLAINED CASH CREDITS) 5.2.1. HAVING CAREFULLY AND DISPASSIONATELY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS NOTED THAT THE APPELLANT HAS FULLY DISCHARGED THE ONUS CAST UPON I T U/S. 68 OF THE ACT. IT IS NOT DISPUTED THAT THE APPELLANT HAS FURNISHED (I) COMPLETE IDENTITIES OF ALL CASH CREDITORS, INCLUDING INTER - ALIA, THEIR NAMES, COMPLETE POSTAL ADDRESSES, PANS, CONFIRMATION LETTERS; (II) CREDITWORTHINESS OF ALL CASH CREDITORS, INCLUDING INTER - ALIA, COPIES OF THEIR RELEVANT BANK ACCOUNTS, R ELEVANT BALANCE SHEETS, RELEVANT RETURNS OF INCOME AND CONFIRMED COPIES OF LEDGER ACCOUNTS OF THE APPELLANT IN THEIR BOOKS OF ACCOUNTS; (III) THE ITA NO. 7259/MUM/2014 & ITA NO.561/MUM/2015 M/S. AMR INVESTMENTS PVT. LTD., 3 APPELLANT HAS PROVED GENUINENESS OF ALL THESE T RANSACTIONS BEYOND DOUBT. SECONDLY, NOTICES U/S. 133(6) OF THE ACT HAVE BEEN ISSUED BY THE A.O. TO ALL CASH CREDITORS IN DECEMBER, 2012 AND PROPER AND CORRECT RESPONSES HAVE BEEN RECEIVED BY THE A.O. FROM ALL CASH CREDITORS CONFIRMING THE GENUINENESS OF AL L RELEVANT TRANSACTIONS. THIRDLY, THE A.O. HAS NOT MADE ANY FURTHER ENQUIRY BECAUSE HE WAS APPARENTLY SATISFIED WITH THE COMPLETE IDENTITIES, CREDITWORTHINESS OF AIL CASH CREDITORS AND GENUINENESS OF RELEVANT TRANSACTIONS. FOURTHLY, THE LAST SUBMISSIONS BY THE APPELLANT COMPANY BEFORE HE AO WERE MADE ON 12.11.2012. THE A.O., HOWEVER, PASSED THE DISPUTED ASSESSMENT ORDER ON 29.03.2013 (AFTER ABOUT 4 MONTHS FROM THE DATE OF LEST HEARING) GIVING ANY FURTHER OPPORTUNITY TO THE APPELLANT AND WITHOUT CONFRONTING WITH ANY EVIDENCES COLLECTED BY HIM, IF ANY. IT IS STRONGLY CONTENDED BY THE LD. A.R. THAT ALL PRINCIPLES OF NATURAL JUSTICE HAVE BEEN VIOLATED BY THE A.O. WHILE PASSING DISPUTED ASSESSMENT ORDER U/S. 143(3) OF THE ACT DATED 29.03.2013. HE H AS VEHEMENTLY ARGUED THAT THE A.O. HAS MADE IRREGULAR ADDITIONS OF RS. 16,04,99,2507 - ON INCORRECT APPRECIATION OF FACTS AND ALSO IN VIOLATION OF THE STATUTORY PROVISIONS OF SECTION 68OF THE ACT AND RELATED PROVISIONS OF THE ACT. HE DISTINGUISHED THE CASE LAWS RELIED UPON BY THE A.O. AND STATED THAT THEY WERE CLEARLY DISTINGUISHABLE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 5.2.2. ON THE OTHER HAND, THE A.O. HAS ALSO ADMITTED BEFORE THE UNDERSIGNED VIDE HIS REMAND REPORT LETTER NO. DCIT 2(L)/REMAND REPORT/AMR/2014 - 15 DATED 28.04.2014, WHICH HAS ALSO BEEN DULY FORWARDED BY THE JURISDICTIONAL ADDL. CIT, RG. 2(1), MUMBAI, VIDE LETTER NO. ADDL. CIT/RG.2(L)/REMAND/2014 - 15 DATED 30.04.2014. THE A.O. HAS VERIFIED ALL PANS OF ALL CASH CREDITORS F ROM THE ITD SYSTEM AND HE HAS CATEGORICALLY REPORTED THAT ALL PANS OF AIL CASH CREDITORS, AS GIVEN BY THE ASSESSEE, MATCHED WITH THE ITD SYSTEM. SECONDLY, HE HAS REPORTED THOSE NOTICES U/S. 133(6) WERE ISSUED INDEPENDENTLY TO THE CASH CREDITORS FOR WHICH T HE REPLIES RECEIVED FROM ALL PARTIES WHICH ARE THE SUBJECT OF THE PRESENT APPEAL. THIRDLY, HE HAS CATEGORICALLY REPORTED THAT THE REPLIES RECEIVED FROM THE CASH CREDITORS INCLUDED THE BANK STATEMENTS, COPIES OF ACKNOWLEDGEMENTS OF RETURN FILED, BALANCE SHE ET, PAL ACCOUNTS AND LEDGER ACCOUNT OF THE ASSESSEE IN THEIR BOOKS. 5.2.3. IN THIS CASE IT IS NOT DISPUTED THAT THE APPELLANT HAD FURNISHED COMPLETE PARTICULARS OF NAMES, COMPLETE ADDRESSES, PANS, CONFIRMATIONS, CHEQUE NUMBERS, COPIES OF BANK ACCOUNTS, CO PIES OF BALANCE SHEETS, COPIES OF INCOME TAX RETURNS OF INCOME AND COPIES OF PRESENT APPELLANT'S LEDGER ACCOUNT IN THEIR BOOKS OF ACCOUNT. WITH THESE DOCUMENTS, IT CAN BE SAID THAT THE APPELLANT HAS DISCHARGED ITS INITIAL ONUS. WITH THE SAID DETAILS, ALL C ASH CREDITORS IDENTITIES STAND ESTABLISHED, THE CASH CREDITORS WERE HAVING BANK ACCOUNTS, THEY HAD MADE THE PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. NO DOUBT WHAT ITA NO. 7259/MUM/2014 & ITA NO.561/MUM/2015 M/S. AMR INVESTMENTS PVT. LTD., 4 THE AO OBSERVED MAY MAKE HIM SUSPICIOUS ABOUT SUCH CASH CREDITORS, EITHER THEIR EXISTENCE, WHIC H MAY BE ONLY ON PAPERS AND / OR GENUINENESS OF THE TRANSACTIONS, WHEN HE FOUND THAT SOME OF THE CASH CREDITOR'S SHARED COMMON ADDRESSES OR THAT SOME OF THE CASH CREDITORS WERE FROM THE SAME PATEL FAMILY. SUBMISSION OF THE LD. AR THAT EVEN IN CASE THERE I S SOME DOUBT ABOUT THE COMMON ADDRESS OR COMMON FAMILY, IT WOULD NOT AUTOMATICALLY FOLLOW THAT THE SAID MONEY BELONGS TO THE APPELLANT AND BECOMES UNACCOUNTED MONEY, APPEARS TO BE LEGALLY AND FACTUALLY CORRECT ON THIS ASPECT. SOMETHING MORE WHICH WAS NECES SARY AND REQUIRED TO BE DONE BY THE A.O., WAS NOT DONE. THE AO FAILED TO CARRY HIS SUSPICION TO LOGICAL CONCLUSION BY FURTHER INVESTIGATION. AFTER THE REGISTERED LETTERS WERE SENT BY THE A.O., PROPER REPLIES HAVE BEEN RECEIVE BY THE A.O. FROM ALL CASH CRED ITORS. THERE IS HUNDRED PERCENT COMPLIANCE. THE AO DID NOT BOTHER TO FIND OUT FROM THE OFFICE OF THE REGISTRAR OF COMPANIES OR FROM THE JURISDICTIONAL AOS OF THE CASH CREDITORS ANY FURTHER DETAILS. IN SUPPORT OF THE CONCLUSION WHICH THE AO WANTED TO ARRIVE AT, THAT BY ITSELF CANNOT BE TREATED AS THE CONCLUSIVE FACTOR. AS POINTED OUT ABOVE, THESE CASH CREDITORS HAVE VALID PANS AND HAVE BEEN REGULARLY ASSESSED TO INCOME - TAX. NO EFFORT WAS MADE TO EXAMINE AS TO WHETHER THESE CASH CREDITORS WERE FILING THE IT R ETURNS AND IF THEY WERE FILING THE SAME, THEN WHAT KIND OF RETURNS THESE CASH CREDITORS WERE FILING. FURTHER, IF THE RETURNS WERE FILED AND SCRUTINY THEREOF REVEALS THAT SUCH RETURNS WERE FOR , THIS COULD YET ANOTHER BE CONTRIBUTING FACTOR IN THE DIRECTION AO WANTED TO GO. LIKEWISE, WHEN THE BANK STATEMENTS WERE FILED, THE AO COULD FIND OUT THE ADDRESS GIVEN BY THOSE CREDITORS IN THE BANK, WHO OPENED THE BANK ACCOUNTS AND ARE THE SIGNATORIES, WHO INTRODUCED THOSE BANK ACCOUNTS AND THE MANNER IN WHICH TRANSA CTIONS WERE CARRIED OUT AND THE BANK ACCOUNTS OPERATED. THIS KIND OF INQUIRY WOULD HAVE GIVEN SOME MORE MATERIAL TO THE AO TO FIND OUT AS TO WHETHER THE APPELLANT CAN BE CONVICTED WITH THE TRANSACTIONS WHICH WERE ALLEGEDLY BOGUS AND/OR COMPANIES WERE ALSO BOGUS AND WERE CREATED FOR NAMESAKE . NORMALLY SUCH KIND OF PRESUMPTION AGAINST THE APPELLANT CANNOT BE MADE AS PER THE LAW LAID DOWN IN VARIOUS JUDGMENTS. JUST BECAUSE SOME CASH CREDITORS SHARES COMMON ADDRESS OR WERE FROM THE SAME PATEL FAMILY, IT WOULD NOT GIVE THE AO A RIGHT TO INVOKE SECTION 68 OF THE ACT WITHOUT ANY ADDITIONAL MATERIAL TO SUPPORT SUCH ADDITION. STRONG RELIANCE IS PLACED ON THE FOLLOWING DECISIONS: - (I) CTR VS. DWARKADHISH INVESTMENT (P~) (2011) 239 CTR (DEL') 478 (II) CTR VS. DIVINE LE ASING & FINANCE (20081 299 CTR 268 (DEL) (III) CIT VS. KAMDHENU STEEL & ALLOYS (3014) 361 CTR 220 (D ELHI) ITA NO. 7259/MUM/2014 & ITA NO.561/MUM/2015 M/S. AMR INVESTMENTS PVT. LTD., 5 5.2.4. AS EARLIER STATED, IN THIS CASE THE APPELLANT HAD FURNISHED COMPLETE PARTICULARS OF NAMES, COMPLETE ADDRESSES, PANS, CONFIRMATIONS, CHEQUE NUMBERS, COPIES OF BANK ACCOUNTS, COPIES OF BALANCE SHEETS, COPIES OF INCOME TAX RETURNS OF INCOME AND COPIES OF PRESENT APPELLANT'S LEDGER ACCOUNT IN THEIR BOOKS OF ACCOUNT. ONCE THE AFORESAID THREE FACTS VIZ., IDENTITY OF THE CREDITOR, HIS CAPACITY TO ADVANCE THE LOAN AND THE GENUINENESS OF THE TRANSACTION ARE ESTABLISHED, THEN THE ONUS SHIFTS UPON THE DEPARTMENT FCIT VS. BAISHNAB CHARON MOHANTV (1995) 212 CTR 199 (ORO. CIT VS. KISHORIIAL SANTOSHILAL (1995) 129 CTR (RAJ) 450. CIT VS. SHREE (SOPAI & CO. (1994) 117 CTR (6AU) 357 AND CIT VS. UNITED COMMERCIAL AND INDUSTRIAL CO. (P) LTD (1991) 187 CTR 596 (CAL) ALSO BEDI & CO. PVT. LTD VS. CIT (1983) 144 CTR 352 (KARN)L. IN SUCH A CASE THE DEPARTMENTAL AUTHORITIES ARE ENTITLED TO PROBE FURTHER INTO THE MATTER AND INVESTIGATE THE MATERIALS AVAILABLE TO THEM TO COME TO AN INDEPENDENT AND UNBIASED FINDING AS TO THE GENUINENESS OF THE TRANSACTION THOUGH THEY SHOULD NOT REJECT THE ASSESSEE'S EXPLANATION SUMMARILY OR ARBITRARILY OR WITHOUT SUFFICIENT REASON. THE DUTY OF THE ASSESSING OFFICER IS TO EXAMINE ALL MATERIALS CAREFULLY AND OBJECTIVELY. BURDEN OF THE ASSESSEE TO PROVE THE GEN UINENESS OF THE TRANSACTIONS AS WELL AS OF THE CREDITOR IS CONFINED TO THE TRANSACTIONS WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITORS, AND IT IS NOT THE BURDEN OF THE ASSESSEE TO SHOW THE SOURCE(S) OF HIS CREDITOR OR TO PROVE THE CREDITWORT HINESS OF THE SOURCE(S) OF THE' SUB - CREDITORS. [ NEMI CHAND KOTHARI VS. CIT A ANR. (2003) 185 CTR (6AU) 6351. WHEN ASSESSEE HAD DISCLOSED NAME, ADDRESS AND INCOME - TAX FILE NUMBER OF CREDITOR, IT WAS THE DUTY OF AO TO TAKE STEPS TO EXAMINE HIM AND NO ADDITION COULD HAVE BEEN MADE WITHOUT TAKING STEPS TO EXAMINE HIM. [ PRITOM DAFTARY VS. CIT (2005) 195 CTR (CA L) [ 30 4] 5.2.5. THE QUESTION WHETHER SUCH ONUS HAS BEEN DULY DISCHARGED BY THE ASSESSEE OR HAS BEEN SHIFTED TO THE REVENUE CAN ONLY BE DETERMINED AFTER THE EVALUATION OF ALL THE SURROUNDING CIRCUMSTANCES. THE SURROUNDING CIRCUMSTANCES TO BE CONSIDERED MUST HOWEV ER BE OBJECTIVE FACTS, EVIDENCE ADDUCED BEFORE THE TAXING AUTHORITIES, PRESUMPTION OF FACTS BASED ON COMMON HUMAN EXPERIENCE IN LIFE AND REASONABLE CONCLUSIONS. IN HOLDING A PARTICULAR RECEI PT AS INCOME FROM UNDISCLOSED SOURCE, THE FATE OF THE ASSESSEE CAN NOT BE DECIDED BY THE REVE NUE ON THE BASIS OF SURMISES, SUSPICIONS OR PROBABILITIES [NORTHERN BENGAL JUTE TRADING CO. LTD, VS. CIT (1968) 70 ITR 407 (CAL)}. ONCE THE IDENTITY OF THE CREDITOR AND THE GENUINENESS OF THE DEPOSIT MADE BY HIM ARE ESTABLISHED BY SHOWING THAT THE DEPOSITOR IS IN OCCUPATION OF THE ASSESSEE'S PREMISES AND THE PAYMENT IS MADE BY CHEQUE/DRAFT AND IT IS DULY ACCOUNTED - IN THE BOOKS OF THE ASSESSES AS ALSO THE TENANT, THE BURDEN ON ASSESSEE UNDER S. 68 STANDS DISCHARGED. FCIT VS. NEVENDR AM AHUJA (2005) 197 CTR (MP) 4621. WHERE THERE IS POSITIVE EVIDENCE LIKE (I) THE EXISTENCE OF CREDITORS, (II) THEIR IT FILE NUMBERS, AND (III) THE CONFIRMATION LETTERS ISSUED BY SUCH CREDITORS, THE MERE ALLEGATION COULD NOT BE HELD AGAINST THE ASSESSEE. ITA NO. 7259/MUM/2014 & ITA NO.561/MUM/2015 M/S. AMR INVESTMENTS PVT. LTD., 6 WHERE THE CREDITORS GAVE LOANS TO THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES AND THE ASSESSEE FURNISHED DETAILS OF LOANS STATING THEIR NATURE AND THE MODE OF TRANSACTIONS AND ALSO PRODUCED THE CERTIFICATE FROM HIS BANKERS, THE ASSESSEE WAS HELD TO HAVE DIS CHARGED THE ONUS PLACED ON HIM [ADDL.CIT VS. BAHRI BROS. P. LTD. (1984) 42 RTR (PAT) 661. 5.2.6. HON'BLE SUPREME COURT DECISION IN THE CASE OF CIT VS. ORISSA CORPN. P. LTD. (1986) 159 ITR 78 (SC) : IN THE SAID CASE THE ASSESSEE PRODUCED BEFORE THE ASSESSI NG OFFICER, LETTERS OF CONFIRMATION BY CREDITORS, THE DISCHARGED HUNDIES AND PARTICULARS OF THE DIFFERENT CREDITORS WHOSE IT FILE NUMBERS WERE WITH THE DEPARTMENT. THE SUMMONS ISSUED TO THE CREDITORS BY THE ASSESSING OFFICER UNDER SECTION 131 AT THE ADDRES SES GIVEN BY THE ASSESSEE WERE RETURNED UNSERVED WITH THE ENDORSEMENT 'LEFT'. THOUGH THE CREDITORS MADE STATEMENTS BEFORE THEIR RESPECTIVE ASSESSING OFFICERS THAT THEY WERE ALLOWING THEIR NAMES TO BE LENT TO VARIOUS PERSONS, THE NAME OF THE ASSESSEE WAS NO T ONE OF THOSE FURNISHED BY SUCH CREDITORS. THE TRIBUNAL HELD THAT NO ADVERSE INFERENCE COULD BE DRAWN MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE THE CREDITORS AND DELETED THE ADDITION OF CASH CREDIT. HON'BLE SUPREME COURT OBSERVED THAT APART FROM ISSUI NG THE SUMMONS UNDER SECTION 131 AT THE INSTANCE OF THE ASSESSEE, THE REVENUE DID NOT PURSUE THE MATTER FURTHER, THOUGH IT HAD THEIR IT FILE NUMBERS AND IT DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID CREDITORS TO FIND OUT THEIR CREDIT - WORTHINESS AND I N THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANYTHING FURTHER. HON'BLE SUPREME COURT HELD THAT IN THOSE, PREMISES, THE TRIBUNAL'S CONCLUSION THAT THE ASSESSEE HAD DISCHARGED THE BURDEN THAT LAY ON HIM WAS NEITHER .. UNREASONABLE NOR PERVERSE, NOR BARED ON NO EVIDENCE AND HENCE NO QUESTION OF LAW AROSE FOR REFERENCE. AN ITO IS INDEED ENTITLED TO EXAMINE THE TRUTHFULNESS OF THE EXPLANATION. IN CASES WHERE CREDIT ENTRY RELATES TO THE ISSUE OF SHARE CAPITAL, THE ITO IS ALSO ENTITLED TO EXAMINE WHETHER THE ALLEGED SHAREHOLDERS DO IN FACT EXIST OR NOT. SUCH AN INQUIRY WAS CONDUCTED BY THE AO IN THE PRESENT CASE. IN THE COURSE OF THE SAID INQUIRY, THE ASSESSEE HAD DISCLOSED TO THE AO NOT ONLY THE NAMES AND THE PARTICULARS OF THE SUBSCRIBERS OF THE SHARES BUT A LSO THEIR BANK ACCOUNTS AND THE PAN ISSUED BY THE IT DEPARTMENT. SUPERADDED TO ALL THIS WAS THE FACT THAT THE AMOUNT RECEIVED BY THE COMPANY WAS ALL BY WAY OF CHEQUES. THIS MATERIAL WAS, IN THE OPINION OF THE TRIBUNAL, SUFFICIENT TO DISCHARGE THE ONUS THAT LAY UPON THE ASSESSEE. 5.2.7. HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, THE REMAND REPORT, THE REJOINDER AND EVIDENCES AVAILABLE IN THIS CASE AND IN THE LIGHT OF THE AFORESAID JUDICIAL DECISIONS, THE IMPUGNED ADDITION OF RS. 16,04,99,250/ - MA DE BY THE A.O. IS NOT SUSTAINABLE AND THEREFORE, NOT CONFIRMED. NEVERTHELESS, THE A.O. WILL VERIFY THE AFORESAID FACTS AS STATED BEFORE ME DURING THE COURSE OF APPEAL ITA NO. 7259/MUM/2014 & ITA NO.561/MUM/2015 M/S. AMR INVESTMENTS PVT. LTD., 7 PROCEEDINGS AND HE WILL REDUCE THE ADDITION AFTER PROPER VERIFICATION AND DUE DILIGENCE A T THE TIME OF GIVING APPEAL EFFECT. IN VIEW OF THE ABOVE, FIROUND OF APPEAL NO. 1 IS ALLOWED. 5.3. G ROUND OF APPEAL NO. 2 (DISALLOWANCE OF INTEREST ON L OANS) 5. 3.1 . I HAVE CAREFULLY AND DISPASSIONATELY CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND OF APPEAL NO. 2 PARTLY APPEARS AS A COROLLARY TO GROUND OF APPEAL NO. 1. 5.3.2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS NOTED THAT INTEREST AMOUNTING TO RS. 1,26,26,341/ - WAS PAYABLE/PAID ON THE AFORESAID LOANS/CASH CREDITORS OF RS, 16,04,99,250/ - . SINCE HE HAD ADDED THE SAID LOANS, AS A COROLLARY, HE ALSO DISALLOWED CORRESPONDING INTEREST OF RS. 1,26,26,341/ - VIDE PARAGRAPH NO. 4.27 OF THE RE LEVANT ASSESSMENT ORDER. 3.3. I HAVE ALREADY REDUCED THE ADDITION OF LOANS/CASH CREDITORS OF RS.3,04,99,250/ - VIDE PARAGRAPH NO. 5.2.7 OF THIS APPELLATE ORDER. THEREFORE, THE CORRESPONDING INTEREST CANNOT BE SAID TO BE BOGUS AND MUTATIS MUTANDIS, THE COROLLARY INTEREST OF RS. 1,26, 26 , 341/ - IS ALSO DELETED. 5.3.4. IT IS FURTHER NOTED THAT THE A.O. HAS ALSO MADE DISALLOWANCE OF PROPORTIONATE INTEREST OF RS. 1,22,56,038/ - ON WITHOUT PREJUDICE BASIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON PERUSAL OF THE PDL ACCOUNT OF THE APPELLANT COMPANY, IT WAS NOTICED BY THE A.O. THAT INTEREST EXPENDITURE OF RS. 1,26,26,341/ - HAS BEEN DEBITED IN CONNECTION WITH THE LOANS TAKEN. THE BALANCE SHEET OF THE APPELLANT COMPANY SHOWED THAT THE AP PELLANT HAD INVESTED THE SAME IN INVESTMENTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. ASKED THE APPELLANT COMPANY FOR THE JUSTIFICATION FOR CLAIM OF INTEREST PAID ON BORROWED CAPITAL AS BUSINESS EXPENDITURE, SO MUCH SO THAT IT HAS BEEN UTILIZ ED FOR OWN BUSINESS OR PROFESSION, TO PROVE THE NEXUS BETWEEN THE OWNED FUNDS AND INVESTMENTS. THE APPELLANT IN REPLY, SUBMITTED THAT THE ENTIRE INTEREST DEBITED IN THE P&L ACCOUNT WAS PAID IN RESPECT OF CAPITAL BORROWED FOR THE PURPOSE OF BUSINESS. THE AP PELLANT'S EXPLANATION WAS CONSIDERED BY THE A.O. BUT WAS NOT ACCEPTED BY THE A.O. SINCE T HE APPELLANT HAD HUGE INVESTMENTS. THE A.O. HAS CITED VARIOUS DECISIONS IN SUPPORT OF THE PROPOSITION THAT THE ONUS IS ON THE APPELLANT TO PROVE THAT BORROWED FUNDS WE RE NOT USED FOR PURPOSES OF INVESTMENTS. HE OBSERVED THAT JUST BECAUSE THE FLOW OF FUNDS CANNOT BE TRACED FROM THE BORROWED FUNDS TO THE INVESTMENTS IT WAS NOT CORRECT TO SAY THAT BORROWED FUND WAS NOT USED FOR INVESTMENTS. HE EXAMINED ALL EVIDENCES AVAILA BLE BEFORE HIM AND CAME TO A CONSIDERED CONCLUSION THAT THE INVESTMENTS MADE WERE OUT OF A MIXED BAG CREATED OUT OF INTEREST BEARING FUNDS AND NON INTEREST BEARING FINDS. HE THEREFORE, DISALLOWED PROPORTIONATE INTEREST OF ITA NO. 7259/MUM/2014 & ITA NO.561/MUM/2015 M/S. AMR INVESTMENTS PVT. LTD., 8 RS. 1,22,56,038/ - , O N PRO - RATA BASIS, AND AS PER THE CALCULATION DISCUSSED IN PARAGRAPH NO. 5.7 OF THE RELEVANT ASSESSMENT ORDER. NO ARGUMENTS NOR WRITTEN SUBMISSION HAVE BEEN MADE BY THE APPELLANT BEFORE ME ON THE AFORESAID, WITHOUT PREJUDICE, DISALLOWANCE OF RS. 1,22,56,03 8/ - . HAVING REGARD TO FACTS AND CIRCUMSTANCES OF THE CASE, THE WITHOUT PREJUDICE DISALLOWANCE OF RS. 1,22,56,038/ - MADE BY THE A.O. VIDE PARAGRAPH NO. 5.7 OF THE RELEVANT ASSESSMENT ORDER DATED 29.03.2013, IS CONFIRMED, SUBJECT TO VERIFICATION OF STATED FA CTS AT THE TIME OF GIVING APPEAL EFFECT. IN VIEW OF THE ABOVE, GROUND OF APPEAL NO. 2 IS PARTLY ALLOWED.' 5. AGAINST THE ABOVE ORDER OF CIT(A), BOTH ASSESSEE AND REVENUE ARE IN FURTHER APPEAL BEFORE US. 6. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. IN THIS CASE, ADDITION MADE ON ACCOUNT OF CASH CREDIT WAS DELETED BY CIT(A) AFTER CONSIDERING THE REMAND REPORT AND REJOINDER AND OTHER EVIDENCES FILED BEFORE THE AO. THE CIT(A) OBSERVED THAT THE ASSESS EE HAS FULLY DISCHARGED THE ONUS CAST UPON IT U/S. 68 OF THE ACT. IT IS NOT DISPUTED THAT THE ASSESSEE HAS FURNISHED (I) COMPLETE IDENTITIES OF ALL CASH CREDITORS, INCLUDING INTER - ALIA, THEIR NAMES, COMPLETE POSTAL ADDRESSES, PANS, CONFIRMATION LETTERS; (I I) CREDITWORTHINESS OF ALL CASH CREDITORS, INCLUDING INTER - ALIA, COPIES OF THEIR RELEVANT BANK ACCOUNTS, RELEVANT BALANCE SHEETS, RELEVANT RETURNS OF INCOME AND CONFIRMED COPIES OF LEDGER ACCOUNTS OF THE ASSESSEE IN THEIR BOOKS OF ACCOUNTS; (III) THE ASSES SEE HAS PROVED GENUINENESS OF ALL THESE TRANSACTIONS BEYOND DOUBT. SECONDLY, NOTICES U/S. 133(6) OF THE ACT HAVE BEEN ISSUED BY THE A.O. TO ALL CASH CREDITORS IN DECEMBER, 2012 AND PROPER AND CORRECT RESPONSES HAVE BEEN RECEIVED ITA NO. 7259/MUM/2014 & ITA NO.561/MUM/2015 M/S. AMR INVESTMENTS PVT. LTD., 9 BY THE A.O. FROM ALL CASH C REDITORS CONFIRMING THE GENUINENESS OF ALL RELEVANT TRANSACTIONS . 7. THE CIT(A) ALSO RECORD ED A FINDING TO THE EFFECT THAT I N THIS CASE IT IS NOT DISPUTED THAT THE ASSESSEE HAD FURNISHED COMPLETE PARTICULARS OF NAMES, COMPLETE ADDRESSES, PANS, CONFIRMATIONS, CHEQUE NUMBERS, COPIES OF BANK ACCOUNTS, COPIES OF BALANCE SHEETS, COPIES OF INCOME TAX RETURNS OF INCOME AND COPIES OF PRESENT ASSESSEE 'S LEDGER ACCOUNT IN THEIR BOOKS OF ACCOUNT. WITH THESE DOCUMENTS, IT CAN BE SAID THAT THE APPELLANT HAS DISCHARGED ITS INITIAL ONUS. WITH THE SAID DETAILS, ALL CASH CREDITORS IDENTITIES STAND ESTABLISHED, THE CASH CREDITORS WERE HAVING BANK ACCOUNTS, THEY HAD MADE THE PAYMENT THROUGH ACC OUNT PAYEE CHEQUES. AFTER CONSIDERING ALL THESE MATERIAL EVIDENCES, THE CIT(A) HAS DELETED THE DISALLOWANCE OF RS.1,22,56,038/ - AND HAS UPHELD ADDITION OF PROPORTIONATE DISALLOWANCE OF INTEREST. THE DETAILED FINDING SO RECORDED BY CIT(A) ARE AS PER MATERIA L ON RECORD WHICH HAS NOT BEEN CONTROVERTED BY LD. AR AND DR DURING THE COURSE OF HEARING BEFORE US. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) WHICH IS BEING UPHELD. 8. IN THE RESULT, BOTH THE APPEALS OF ASSESSEE AND REVENU E ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 / 01 /201 9 SD/ - ( AMARJIT SINGH ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 18 / 01 /201 9 KARUNA SR. PS ITA NO. 7259/MUM/2014 & ITA NO.561/MUM/2015 M/S. AMR INVESTMENTS PVT. LTD., 10 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( 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//