ASST CIT 18(3), MUMBAI V. RAKESH KUMAR JAIN, MUMBAI

ITA 739/MUM/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9854 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 02-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA S ANJARIA
• Keywords: Accommodation entries; Tax effect
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO S . 739 & 740 /MUM/2017 (ASSESSMENT YEAR S : 2007 - 08 & 2008 - 09 ) A C I T - 18(3) ROOM NO. 609, 6TH FLOOR EARNEST HOUSE NARIMAN POINT MUMBAI 400021 VS. SHRI RAKESH KUMAR JAIN SHOP NO. 7, NATHURAM PODDAR BUILDING 111/119, THAKURDWAR ROAD MUMBAI 400002 PAN AABPJ6488J APPELLANT RESPONDENT APPELLANT BY: SHRI CHAITANYA S. ANJARIA RESPONDENT BY: SHRI PRATEEK JAIN DATE OF HEARING: 17 .09.2018 DATE OF PRONOUNCEMENT: 24 .09.2018 O R D E R PER R.C. SHARMA, AM THESE APPEAL S FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - 29 , MUMBAI DATED 1 6. 11 .201 6 FOR ASSESSMENT YEARS 20 07 - 08 AND 2008 - 09 IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. IN BOTH THE APPEALS THE REVENUE IS AGGRIEVED FOR DELETING THE DISALLOWANCE MADE UNDER SECTION 68 OF THE ACT IN RESPECT OF UNSECURED LOANS. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND FOUND THAT THE ADDITION MADE BY AO UNDER SECTION 68 OF THE ACT IN THE A.Y.2007 - 08 WAS DELETED BY THE CIT(A) AFTER OBSERVING AS UNDER: - ITA NO S . 739 &740 /MUM/ 2017 SHRI RAKESH KUMAR JAIN 2 4.3. THE SUBMISSIONS OF THE LD. COUNSEL HAVE BEEN CAREFULLY CONSIDERED. THE LD. COUNSEL HAS TRIED TO PROVE THE GENUINENESS OF THE LOAN TRANSACTIONS BY PROVING THE IDENTITY, CREDIT .WORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. IDENTITY HAS BEEN PROVED BY WAY OF PRODUCING CONFIRMATION FROM THE PARTIES FURNISHIN G THEIR BANK' - ACCOUNT STATEMENT AND ALSO FILING THEIR INCOME TAX RETURNS COPY AND FINAL STATEMENTS. 'ALSO, FURNISHING OF INCOME - TAX RETURNS AND AFFIDAVIT - PROVE THE IDENTITY OF THE CREDITORS. THE FINANCIAL STATEMENTS AND BANK STATEMENTS PROVE THE GENUINEN ESS OF THE TRANSACTIONS AND THE CREDIT WORTHINESS OF THE CREDITOR. IF THE AO DISBELIEVES THE EVIDENCES FURNISHED BY THE APPELLANT, HE SHOULD HAVE ISSUED SUMMONS TO THE PARTIES. HE HAS NOT DONE THAT,' HE DID NOT GIVEN ANY CONCRETE REASON FOR DISBELIEVIN G THE INFORMATION AND THE EVIDENCE FURNISHED BY THE APPELLANT. HE PLACED HIS EN TIRE RELIANCE ON THE STATEMENT OF SHRI. BHANWARIA L JAIN WHICH HAS BEEN RETRACTED BY HIM. FURTHER, SHRI. BHANWARIAL JAIN HAS NO WHERE ADMITTED IN. THE STATEMENT THAT HE PROVIDED ENTRIES FOR LOANS. HE MERELY ADMITTED THAT HE PROVIDES ACCOMMODATION ENTRIES FOR PURCHASES. NEITHER SHRI. BHANWARLA L JAIN NOR THE LOAN CREDITORS HAVE MENTIONED THE NAME OF THE APPELLANT TO WHOM THE ACCOMMODATION ENTRY FOR LOAN HAS BEEN GIVEN. THE ADDITION MADE BY THE AO APPEARS TO BE MERELY ON THE BASIS OF SUSPICION AND PRESUMPTION. THE LOAN OF RS.50 LAKHS TAKEN BY THE APPELLANT ON 8.5.2007 - WAS BY CHEQUE WHICH HAS BEEN REPAID BY HIM ON 23.4.2007 ALSO BY CHEQUE. INTEREST ON TH E SAID LOAN HAS BEEN PAID TO THE LENDER AFTER DEDUCTING THE TAX. COPY OF THE BANK STATEMENT OF ALLEGED PARTIES REFLECTING THE RECEIPT AND REPAYMENT OF LOAN AND PAYMENT OF INTEREST AND FORM NO.L6A AS EVIDENCE FOR TDS HAVE BEEN FURNISHED BY THE APPELLANT. TH E LOAN OF RS.10 LAKHS FROM PA R VATI EXPORTS HAS BEEN RECEIVED ON 23.08.2005 BY CHEQUE AND REPAID ON 5.5.2007A L SO BY CHEQUE. INTEREST HAS BEEN PAID TO THE 'ENDER AFTER DEDUCTING TDS AND COPY OF FORM NO .ISA EVIDENCED THE TAX DEDUCTED IS ALSO FILED AND IS A PART OF THE RECORD. ALL THESE EVIDENCES CANNOT BE DISCREDITED MERELY RELYING ON THE STATEMENT GIVEN BY SHRI. BHANWARIAL JAIN WHICH HAS ALSO BEEN RETRACTED BY HIM. IN VIEW OF THE ABOVE, THE LOANS RECEIVED BY THE APPELLANT AND REPAID 'SUBSEQUENTLY ARE HELD TO BE GENUINE. THE ADDITION MADE BY THE AO IS DIRECTED TO BE DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED. 4. SIMILARLY ADDITION OF RS.4,07,890/ - MADE ON ACCOUNT OF INTEREST HAS BEEN DELETED BY CIT(A) AFTER HAVING FOLLOWING OBSERVATION: - THE APPELLANT HAS RECEIVED LOANS OF RS.50,00,000/ - FROM M/S. KOTHAN & CO. AND RS.10 ,00,000/ - FROM M/S. PARVATI EXPORTS DURING A.Y.2007 - 08. HE HAS PAID INTEREST ON THESE LOANS TO THESE TWO PARTIES. THE AO HAS IN THE A.Y.2007 - 08 DISA LLOWED THE LOAN AMOUNTS TREATING THEM AS ACCOMMODATION ENTRIES AND CONSEQUENTLY DISALLOWED THE INTEREST CLAIM TOO. AS ALREADY DISCUSSED VIDE ITA NO S . 739 &740 /MUM/ 2017 SHRI RAKESH KUMAR JAIN 3 PARA 4.3 MENTIONED SUPRA, THE LOANS TAKEN FROM M/S. KOTHARI & CO HAS BEEN REPAID ON 23.04.2007 AND THE LOAN TAKEN F ROM M/S. PARVATI EXPORTS HAS BEEN REPAID ON 5.5.2007. INTEREST HAS BEEN PAID THROUGH CHEQUE AND TDS ALSO HAS BEEN MADE. FORM NO.16A HAVE BEEN FURNISHED. FOR THE REASONS DISCUSSED IN THE PRECEDING PARAS, THE SAME ARE HELD TO BE GENUINE. IN VIEW OF THE FACTS DISCUSSED ABOVE, THE INTEREST PAID ON THESE LOANS ARE ALSO TO BE HELD AS GENUINE. THE AO IS DIRECTED TO DELETE THE ADDITION MADE. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. 5. THE DETAILED FINDING RECORDED BY THE CIT(A) HAS NOT BEEN CONTROVERTED BY LD. DR BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY COGENT REASON TO INTERFERE IN THE FINDINGS OF CIT(A). SIMILARLY IN A.Y. 2008 - 09 THE ADDITION OF RS. 50 LAKHS MADE BY THE AO UNDER SECTION 68 OF THE ACT WAS DELETED BY THE CI T(A) AFTER RECORDING HIS FINDING AT PARA 5.1, WHICH READS AS UNDER: - 5.1 THE APPELLANT HAS RECEIVED LOAN OF RS.50,00,000/ - FROM M/S. MOULI GEMS DURING A.Y. 2008 - 09. HE HAS PAID INTEREST OF RS.2,09,051/ - ON THIS LOAN TO THIS PARTY FOR THE A.Y. 2008 - 09. THE AO HAS DISALLOWED THE LOAN AMOUNT TREATING IT AS ACCOMMODATION ENTRY AND CONSEQUENTLY DISALLOWED THE INTEREST CLAIM TOO. AS ALREADY DISCUSSED VIDE PARA 4.3, MENTIONED SUPRA, THE LOAN TAKEN FROM M/S. MOUL I GEMS, HAS BEEN REPAID ON 3.2.2011. INTEREST, HAS BEEN PAID THROUGH CHEQUE AND TDS ALSO HAS B EEN MADE. FORM NO.1 6A HAS BEEN FURNIS HED. FOR THE REASONS DISCUSSED I N THE PRECEDING PARAS, THE LOAN IS HELD TO BE GENUINE. IN VIEW OF THE FACTS DISCUSSED ABOVE, THE INTEREST PAID ON THI S LOAN IS ALSO TO BE HELD AS GENUINE. AS THE LOAN HAS BEEN HEL D TO BE GENUINE, THE INTEREST ON THE SA ME FOR WHICH, PROOF OF PAYMENT HAS BEEN SUBMI TTED WITH DOCUMENTARY EVIDENCES IS ALSO HELD TO BE GENUINE. THEREFORE, THE AO IS DIRECTED TO DELETE THE ADDITION MADE. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. 6. THE DETAILED FINDINGS RECORDED BY THE CIT(A) H AS NOT BEEN CONTROVERTED BY THE LEARNED D.R. MOREOVER, WE FOUND THAT TAX EFFECT IN THE APPEAL FILED FOR A.Y. 2008 - 09 IS BELOW RS. 20,00,000/ - . KEEPING IN VIEW THE CBDT CIRCULAR NO. 3/2018 DATED 11.07.2018, WE DO NOT FIND ANY COGENT REASON FOR FILING THE APP EAL BY THE DEPARTMENT. ITA NO S . 739 &740 /MUM/ 2017 SHRI RAKESH KUMAR JAIN 4 7. IN THE RESULT, THE APPEAL S FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH SEPTEMBER, 2018. SD/ - SD/ - ( RAM LAL NEGI ) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24 TH SEPTEMBER, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) - 29 , MUMBAI 4. THE CIT - 18 , MUMBAI 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.