Shree Samrudhhi Overseas Trading CO., Gandhidham V. The DCIT, Central Circle-2(3), Ahmedabad

ITA 909/AHD/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6366 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-04-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 11-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S SHUKLA
• Section: 143(3); 68

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD ( CONVENED THROUGH VIRTUAL COURT ) BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NOS. 909 & 910/AHD/2018 ( ASSESSMENT YEARS :2013-14 & 2014-15) SHREE SAMRUDDHI OVERSEAS TRADING CO. 25, SWAMINARAYAN BUILDING, SECTOR-9, GANDHIDHAM - 370201 / VS. THE DCIT / THE ACIT CENTRAL CIRCLE 2(3), AHMEDABAD ./ ./ PAN/GIR NO. : ABJFS8485P ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : ASTHA MANIAR, A.R. / RESPONDENT BY : SHRI S. S. SHUKLA, SR.DR DATE OF HEARING 30/03/2021 !'# / DATE OF PRONOUNCEMENT 19/04/2021 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEALS HAVE BEEN FILED AT THE INSTAN CE OF THE ASSESSEE AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-12, AHMEDABAD (CIT(A) IN SHORT), BOTH D ATED 13.03.2018 ARISING IN THE ASSESSMENT ORDERS DATED 22.02.2016 & 07.12.2016; RESPECTIVELY, PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AYS. 2013-14 & 2014- 15. ITA NOS. 909 & 910/AHD/18 (SHREE SAMRUDDHI OVERSEAS TRADING CO.) A.YS. 2013-14 & 2014-15 - 2 - 2. BOTH THE APPEALS ARE RELATED TO SAME ASSESSEE. ACCORDINGLY, BOTH THE APPEALS ARE BEING DISPOSED OF BY COMMON OR DER FOR THE SAKE OF CONVENIENCE. 3. WE SHALL FIRST TAKE THE FACTS CONCERNING AY 2013 -14 IN ITA NO. 909/AHD/2018 FOR ADJUDICATION PURPOSES. ITA NO. 909/AHD/2018-AY-2013-14 4. THE GROUND OF APPEAL RAISED BY THE ASSESSEE FOR AY 2013-14 IS REPRODUCED HEREUNDER: 1. THE LD. CIT(A)12, AHMEDABAD ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.11,36,454/- BEING THE DIFFERENCE IN CLOSING BALANCE AS PER THE BOOKS OF THE APPELLANT A ND M/S. PSL LIMITED. 5. BRIEFLY STATED, THE ASSESSEE IS A PARTNERSHIP FI RM ENGAGED IN THE BUSINESS OF TRADING IN MINERALS AND IRON ORES. THE RETURN FILED BY THE ASSESSEE FOR AY 2013-14 WAS SUBJECTED TO SCRUTINY A SSESSMENT. THE AO IN THE COURSE OF THE SCRUTINY ASSESSMENT INTER ALIA FOUND THAT THE NATURE AND SOURCE OF UNSECURED LOAN RECEIVED FROM ( I) KHEMKA UDYOG RS.1LAKH & (II) RAKESH SWADHYAY RS.10 LAKHS IS NOT FOUND TO BE SATISFACTORY ON THE TOUCHSTONE OF SECTION 68 OF THE ACT. THE AO, ACCORDINGLY, INTER ALIA ADDED THE AFORESAID SUM TO THE INCOME OF ASSESSEE. 6. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WITHOUT ANY SUCCESS. 7. FURTHER AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 8. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS ON THE CONTROVERSY AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IN IN APPEAL AGAINST THE RESPECTIVE ORDERS OF THE AO AND ITA NOS. 909 & 910/AHD/18 (SHREE SAMRUDDHI OVERSEAS TRADING CO.) A.YS. 2013-14 & 2014-15 - 3 - CIT(A) WHEREBY THE ADDITIONS OF RS.11,00,000/- MADE AND CONFIRMED BY INVOKING PROVISIONS OF SECTION 68 OF THE ACT IS UNDER CHALLENGE. 8.1 IT IS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE HAD TAKEN A TEMPORARY LOAN OF RS.8 LAKHS AND RS.2 LAKHS AGGREGATING RS.10,00,000/- IN THE MONTH OF JUNE 2012 FROM SHRI RAKESH VALLABHBHAI SWADIA. THE LOAN SO OBTAINED WAS ALSO REPAID IN THE MONTH OF SEPTEMBER 2012 AND THEREFORE LOAN WAS ULTI MATELY SQUARED OFF IN THE SAME YEAR. IT IS THE CASE OF THE ASSESS EE THAT ALL RELEVANT DETAILS LIKE; COPY OF CONFIRMATION OBTAINED FROM LE NDER, COPY OF RETURN OF INCOME AND RELEVANT BANK STATEMENTS OF THE PARTY WAS FURNISHED BEFORE THE LOWER AUTHORITIES. THE CREDITWORTHINESS OF THE LOAN RECEIVED STANDS PROVED BY THE RETURN OF INCOME WHER E GROSS TOTAL INCOME DECLARED BY THE LENDER IS STATED TO BE RS.13 .01 LAKHS. THE COPY OF BANK STATEMENT OF THE ASSESSEE AND ALSO OF LENDER WAS ALSO FURNISHED BEFORE THE LOWER AUTHORITIES TO SUPPORT T HE TRANSACTION. THE AO HAD ISSUED NOTICE UNDER S.133(6) OF THE ACT TO T HE LENDER AND OBSERVED FROM THE DETAILS FURNISHED BY THE LENDER ( RAKESH SWADIA) THAT AMOUNT OF RS.5 LAKHS IN CASH AND RS.3 LAKHS BY CHEQUE WERE DEPOSITED ON 15.06.2012 PRIOR TO THE TRANSFER OF RS .8 LAKHS TO THE ASSESSEE. THE AO ACCORDINGLY DOUBTED THE GENUINENE SS OF THE LOAN TRANSACTION HAVING REGARD TO THE CASH DEPOSITS. IN REBUTTAL, THE ATTENTION WAS ADVERTED ON BEHALF OF THE ASSESSEE TO THE FACT THAT THE ASSESSEE HAS EARLIER WITHDRAWN CASH AMOUNT OF RS.10 LAKHS ON 06.04.2021 OUT OF WHICH RS.5 LAKHS WERE DEPOSITED O N 15.06.2012 AND THEREFORE DEPOSIT OF CASH PRIOR TO ISSUE OF CHEQUE BY THE LENDER IS NOT OF SIGNIFICANCE IN VIEW OF CASH IN HAND. 8.2 WE FIND MERIT IN THE VARIOUS PLEA RAISED ON BEH ALF OF THE ASSESSEE TOWARDS BONAFIDES OF CREDITS RECEIVED FROM RAKESH SWADIA. THE CONFIRMATION, THE BANK STATEMENT OF THE ASSESSE AND LENDER SHOWING TRANSACTIONS THROUGH BANKING CHANNEL, THE R ETURN OF INCOME OF THE LENDER AND ALSO RE-PAYMENT OF LOAN IN A SPAN OF 3-4 MONTHS CLEARLY ITA NOS. 909 & 910/AHD/18 (SHREE SAMRUDDHI OVERSEAS TRADING CO.) A.YS. 2013-14 & 2014-15 - 4 - PROVES THE BONAFIDE OF THE LOAN WHEN SEEN IN TOTALI TY. THE LENDER HAS ALSO RESPONDED TO THE NOTICE OF THE AO UNDER S.133( 6) OF THE ACT. THE AO AFTER COLLECTING THE INFORMATION IN THE EVENT OF ANY DOUBT, COULD HAVE EXTENDED SUITABLE ENQUIRIES IF REQUIRED INSTEA D OF ENTERING INTO ARENA OF ASSUMPTIONS AND PRESUMPTIONS. EXCEPT FOR A DEPOSIT OF CASH OF RS.5 LAKHS, THERE IS NO OTHER COGENT CASE MADE T O DRAW THE ADVERSE INFERENCE AGAINST THE ASSESSEE. THE DEPOSIT OF CAS H OUT OF EARLIER WITHDRAWAL OF LARGE AMOUNT PROVIDES PLAUSIBLE EXPLA NATION TOWARDS SOURCE OF CASH DEPOSITS IN THE ABSENCE OF ANY ENQUI RY IN THIS REGARD BY THE REVENUE FROM THE LENDER. NEEDLESS TO SAY, THE BORROWER ASSESSEE COULD NOT BE SEEN TO HAVE ANY PERCEPTIBLE CONTROL O VER THE MANNER OF CARRYING TRANSACTIONS BY THE LENDER. THE REPAYMENT OF LOAN EXISTS AS A STRONG MITIGATING CIRCUMSTANCE AND TRANSCENDS ALL C ONSIDERATIONS. WE THUS FIND THAT THE DOCUMENTS PLACED BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES SUFFICIENTLY DISCHARGE THE ONUS TOWARDS THE IDENTITY AND GENUINENESS OF THE TRANSACTION AND CRE DITWORTHINESS OF THE LENDER CONTEMPLATED UNDER S.68 OF THE ACT. IN OUR VIEW, IN THE FACTS OF CASE, THE STATUTORY DISCRETION AVAILABLE TO AO UNDE R S.68 OF THE ACT OUGHT TO HAVE BEEN EXERCISED IN FAVOUR OF THE ASSES SEE. THE ACTION OF THE REVENUE AUTHORITIES THUS CANNOT BE COUNTENANCED HAVING REGARD TO THE EXTENUATING CIRCUMSTANCES EXISTING IN THE CASE. THE ADDITION MADE UNDER S.68 OF THE ACT ON CREDIT RECEIVED FROM RAKES H SWADIA THEREFORE DESERVES TO BE REVERSED AND CANCELLED. 8.3 AS REGARDS ANOTHER CREDIT OF RS.1 LAKH FROM KHE MKA UDYOG, IT IS THE CASE OF THE ASSESSEE THAT THE RELEVANT CONFI RMATION FROM THE LENDER TOWARDS REPAYMENT OF LOAN COULD NOT BE FURNI SHED DUE TO STRAINED RELATIONS CROPPED UP OWING TO SOME DISPUTE . THE ASSESSEE, HOWEVER, ADVERTED TO THE BANK STATEMENT OF THE ASSE SSEE TO SHOW THAT AN AMOUNT OF RS.51,070/- WAS PROMPTLY REPAID ON 30. 08.2012 AGAINST THE CREDIT RECEIVED ON 03.08.2012 WHICH PROVES THE BONAFIDES OF THE CREDIT RECEIVED FROM KHEMKA UDYOG. IT IS ALSO FAIR LY SUBMITTED THAT ITA NOS. 909 & 910/AHD/18 (SHREE SAMRUDDHI OVERSEAS TRADING CO.) A.YS. 2013-14 & 2014-15 - 5 - ADDITIONS MAY, AT BEST, BE RESTRICTED TO THE BALANC E AMOUNT REMAINING UNPAID. 9. HAVING REGARD TO THE FACT OF REPAYMENT OF CREDIT TO THE EXTENT OF RS.51,070/-, WE FIND MERIT IN THE PLEA OF THE ASSES SEE FOR CLAIM OF BONAFIDE TO THE EXTENT OF AT LEAST RS.51,070/-. TH E ADDITIONS ON THIS SCORE IS THEREFORE RESTRICTED TO RS.48,930/- AND TH E REMAINING AMOUNT OF ADDITION OF RS.51,070/- IS REVERSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR A Y 2013-14 IS PARTLY ALLOWED. ITA NO. 910/AHD/2018-AY-2014-15 11. THE SOLITARY ISSUE ARISING FROM THE ORDER OF TH E CIT(A) IS ADDITION OF RS.11,36,454/- ON ACCOUNT OF RECONCILIA TION DIFFERENCE IN THE CLOSING BALANCE AS PER THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THAT OF DEBTOR M/S. PSL LTD. 12. THE AO NOTICED THAT UNDER THE HEAD SUNDRY DEBT ORS THE ASSESSEE HAD INTER ALIA SHOWN RECEIVABLES OF RS.51,08,925/- IN THE NAME OF PSL LTD. HOWEVER, AS PER THE LETTER SUBMIT TED BY CHARTERED ACCOUNTANT FIRM (T R CHADHA & CO LLP) ON BEHALF OF PSL LTD. THE BALANCE STANDS AT RS.62,45,379/- AS ON 31.03.2014. THIS DIFFERENCE BETWEEN THE VERSION OF ASSESSEE AND THAT OF CORRESP ONDING PARTY TRIGGERED THE IMPUGNED ADDITIONS IN THE HANDS OF AS SESSEE. 13. IN THIS REGARD, WE FIND THE FOLLOWING CONTENTIO NS RAISED ON BEHALF OF THE ASSESSEE TO BE NOTEWORTHY: (I) NO COP Y OF LEDGER ACCOUNTS IN THE BOOKS OF DEBTOR (PSL LTD.) WAS COLLECTED BY THE AO WHILE RELYING UPON THE OUTSTANDING BALANCE DECLARED BY TH E CHARTERED ACCOUNTANT OF PSL LTD. THE CHARTERED ACCOUNTANT SH OWING CONFIRMATION WAS STATED TO BE MANDATED BY ICICI BAN K LTD. TO CARRY ITA NOS. 909 & 910/AHD/18 (SHREE SAMRUDDHI OVERSEAS TRADING CO.) A.YS. 2013-14 & 2014-15 - 6 - OUT SATISFACTORY AUDIT OF THE PSL LTD.; (II) NO TRA NSACTIONS HAVE BEEN CARRIED OUT DURING THE YEAR WITH PSL LTD. AND THE D IFFERENCE IN BALANCE, IF ANY, RELATES TO SOME EARLIER YEAR AND T HEREFORE NO EVENT HAS OCCURRED DURING THE YEAR FOR TAXATION PURPOSES; (II I) THE EXCESS BALANCE, IF ANY, WHEN RECEIVED FROM THE PARTY BY TH E ASSESSEE WOULD BE EVENTUALLY BECOME TAXABLE IN THE YEAR OF RECEIPT AN D THEREFORE THE ENTIRE EXERCISE IS, IN FACT, TAX NEUTRAL; (IV) THE CIT(A) BY WAY OF CRYPTIC AND NON-SPEAKING ORDER CONFIRMED THE STAND OF THE AO WITHOUT TAKING NOTE OF THE GLARING FACTS. FOR THE REASONS NOTED ABOVE, WE FIND GREAT FORCE IN THE PLEA OF THE ASSESSEE FOR REVERSA L OF ADDITIONS MADE ON ACCOUNT OF SO CALLED DIFFERENCE IN BALANCES. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR A Y 2014-15 IS ALLOWED. 14. IN THE COMBINED RESULT, ASSESSEES APPEAL FOR A Y 2013-14 IS PARTLY ALLOWED AND FOR AY 2014-15 IS ALLOWED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMAR K EDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 19/04/2021 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED ON 19/04/2021