ITO WD 2(1), KOL, KOLKATA V. INFINITY HOUSING PROJECTS PRIVATE LIMITED, KOLKATA

ITA 2255/KOL/2024

AI Insights

The case involves an appeal by the Income Tax Officer, Ward-2(1), Kolkata against Infinity Housing Projects Pvt. Ltd. concerning the assessment year 2013-14. The primary issue was the deletion of an addition of Rs. 43,16,35,640 by the Ld. CIT(A), which was initially added by the Assessing Officer under section 68 of the Income Tax Act, 1961, treating the unsecured loans as unexplained cash credits. The Tribunal examined the merits of the case, focusing on the nature and source of the loans, and the creditworthiness of the lenders, which were all found to be satisfactory and in accordance with the law.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 35945 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Other Referred Cases: Akshat Pramod Kumar Gupta vs. DCIT, PCIT Vs. Sreeleather, PCIT vs. Overtop Marketing Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Reopening of assessment; Accommodation entries
• Section: 147; 148; 142(1); 153; 68

Judgement Text

"आयकर अपीलȣय अͬधकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA Įी राजेशक ुमार, लेखा सटèय एवं Įी Ĥदȣप क ुमार चौबे, ÛयाǓयक सदèय क े सम¢ [Before Shri Rajesh Kumar, Accountant Member &Shri Pradip Kumar Choubey, Judicial Member] I.T.A. No. 2255/Kol/2024 Assessment Year: 2013-14 ITO, Ward-2(1), Kolkata Vs. Infinity Housing Projects Pvt. Ltd. (PAN: AABCI 7965 C) Appellant / ) अपीलाथȸ ( Respondent / Ĥ×यथȸ Date of Hearing / सुनवाई कȧ Ǔतͬथ 08.01.2025 Date of Pronouncement/ आदेश उɮघोषणा कȧ Ǔतͬथ 07.03.2025 For the Appellant/ Ǔनधा[ǐरती कȧ ओर से Akkal Dudhwewala, FCA Ms. Vidhi Ladia, ACA For the Respondent/ राजèव कȧ ओर से S. Datta, CITDR ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the revenue against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 05.09.2024 for the AY 2013-14. 2. The only issue raised by the revenue in the various grounds of appeal is against the deletion of addition of Rs. 43,16,35,640/- by the Ld. CIT(A) as made by the AO u/s 68 in respect of unsecured loans taken by the assessee during the year. 2 I.T.A. No.2255/Kol/2024 Assessment Year: 2013-14 Infinity Housing Projects Pvt. Ltd. 3. At the outset we would like to mention that the ld CIT(A) has quashed the assessment order on legal issue which has attained finality as the revenue has not challenged the sais quashing of assessment order. Since the revenue has assailed the appellate order on merits which are decided in the following paras. 4. Facts in brief are that the assessee filed return of income on 05.09.2013 declaring total income at nil. Thereafter the AO upon receipt of information from ADIT(Inv.) Unit-1(3), Kolkata vide letter dated 14.02.2020 to the effect that in the bank account no. 00287 in the name of M/s Infinity Housing Projects Pvt. Ltd. with ICICI Bank, Salt Lake Branch, Kolkata that the said assessee company was beneficiary of accommodation entries to the tune of Rs. 43,16,35,640/-. Accordingly the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 on 20.03.2020 which was duly served upon the assessee. Thereafter the notice u/s 142(1) of the Act dated 08.09.2021 along with questionnaire was issued and served on the assessee. In compliance the assessee filed documents including balance sheet, profit and loss account for the relevant financial year . The AO in order to independently verify these transactions also issued notices u/s 133( 6) of the Act to those parties who have advanced money to the assessee which were duly replied by the loan creditors. Thereafter after issuing show cause notice to the assessee and after considering and rejecting the reply of the assessee filed in response to show cause , treated the said unsecured loans as unexplained cash credit for the reason that the huge loans were taken from the parties having no creditworthiness and that the assessee has failed to offer any explanation qua the said unsecured loans. 5. In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assesse after taking into consideration the reply/contentions of the assessee that these unsecured loans were taken from the holding company and other related entities of the assessee by observing and holding as under: 7.2 In the case of Akshat Pramod Kumar Gupta vs. DCIT 153 taxmann.com 25 “it was held by the Hon. Gujarat High Court held that reopening of assessment based on information from investigation division is legally valid”. In light of these facts, the assessing officer’s action of reopening the assessment is upheld and accordingly ground nos. 1 to 5 are dismissed. 3 I.T.A. No.2255/Kol/2024 Assessment Year: 2013-14 Infinity Housing Projects Pvt. Ltd. 7.3 At ground no. 6 & 7, the appellant states that the addition of Rs. 43,16,35,640/- made u/s 68 of the IT Act, 1961 is not valid. The appellant states that the credits received in its bank account were from a sister concern of M/s Infinity group. 7.4 During the appellate proceedings, the appellant had provided the list of credits received along with copy of the bank statements, ledger extracts/confirmation etc. The lists of credits are mentioned as below: Name of payer PAN Amount Infinity Infotech Parks Ltd. AABCI 0692 J 12,10,00,000/- Infinity Township Pvt. Ltd. AABCI 3833 K 22,18,00,000/- Arcee Finvest Ltd. AABCL 4433 A 17,96,20,000/- Total 52,24,00,000/- At Sl. No. 1 & 2, M/s Infinity township Pvt. Ltd. was hundred percent holding company of the appellant whereas M/s Infinity Infotech Park Ltd was hundred percent holding company of M/s Infinity Township Pvt. Ltd. The group is engaged in Real Estate business and in the process of which funds were raised from its group entities. Similarly, M/s Arcee Finvest Ltd. also is a group entity. All the group entities are having independent existence with different PAN numbers. The concerns of the credit received from M/s Infinity Infotech Parks Ltd. was through a bank transaction which is reflected in its regular books of accounts. Similarly, the source of credit received from Infinity Township Pvt. Ltd. is the funds provided by M/s Infinity Infotech Parks Ltd. The credit was received through a banking channel duly reflected in its balance sheet. The credit received from M/s Arcee Finvest Ltd. which is NBFC was reflected in this bank statement and the audited books of account. All the above three concerns have also given confirmations in this regard. 7.5 In light of the above facts, the identity, creditworthiness, genuinity transaction stands proven. The appellant to that extent has discharged its onus placed on it u/s 68 of the Income Tax Act, 1961. The appellant has relied on the judgment of Hon. Calcutta High Court in the case of PCIT Vs. Sreeleather 448 ITR 332 wherein it was held that “once the assessee discharges the onus of establishing an identity proving the genuineness of the transaction and creditworthiness of the lender, addition made u/s 68 is invalid”. The appellant also relied on the judgment of PCIT vs. Overtop Marketing Pvt. Ltd. 148 taxmann.com 94 wherein the addition made u/s 68 were held as perverse, once the primary onus was discharged by the appellant. Thus, the law is clear and the judgments relied upon by the appellant stand in their favour. Hence, the additionmade of Rs. 43,16,35,640/- as unexplained credit is erroneous and the addition is deleted. 7.6 The cash credit of Rs.43,16,35,640/- which is treated as unexplained were supported by name and address, PAN No., of the persons. The Assessing Officer to that extent has failed to prove beyond reasonable doubt that the transactions are sham. Merely on surmises treating the receipt of share capital from the sister concern is that of a receipt from shell company without proper evidence cannot be justified. More so in the present case the three tests laid to 4 I.T.A. No.2255/Kol/2024 Assessment Year: 2013-14 Infinity Housing Projects Pvt. Ltd. prove the creditworthiness were satisfied. Namely, the factors of identity of the creditors, nature of transactions and source of the credits were explained beyond reasonable doubt. 7.7 Thus ground number 6 & 7 of the appeal are allowed.” 6. After hearing the rival contentions and perusing the material on record, we find that the assessee is engaged in the business of real estate development and construction of flats. During the year the assessee has borrowed money from Infinity Infotech parks Ltd., Infinity Townships Pvt Ltd and Arcee Finvest Ltd. The assessee has taken total unsecured loans aggregating to Rs. 52,24,00,000/- the details whereof are given hereinabove while reproducing the order of Ld. CIT(A). We note that the two parties namely Infinity Infotech Parks Ltd. from whom Rs. 12,10,00,000/- was taken is 100% ultimate holding company of the assessee whereas second one Infinity Township Pvt. Ltd. who had lent to Rs. 22,18,00,000/- to the assessee company was 100% holding company of Infinity Infotech Ltd. The group is engaged in the real estate business and these loan transactions were made in the ordinary course of business to the group entities. So far as the third lender namely M/s Arcee Finvest Ltd. is concerned who lent 17,96,20,000/- to the assessee, the said company is also a group entity. We note that the money was received through banking channel and reflected in the books of accounts of the assessee and all the three concerns have confirmed the said transactions. It is not the case of AO that the money has routed into these companies first and then transferred to the assessee company. We note that the money advanced by these companies were out of their own funds. 7. We further note that the Ld. CIT(A) has given a clear cut finding of the facts of this issue recording that the unsecured loans were within the group companies and were given out of own funds. Thus the AO has grossly misconstrued the facts. Therefore, we do not find any infirmity in the order of Ld. CIT(A) as the Ld. CIT(A) has passed a very reasoned order by taking into account the factual matrix of the case and thus rightly reversed the order passed by the AO which was full of infirmities as the AO has treated the funds borrowed by the assessee from the holding company and other group entities as accommodation entries in utter disregard of facts available on records as well as furnished by the lenders before the AO. We have examined all the 5 I.T.A. No.2255/Kol/2024 Assessment Year: 2013-14 Infinity Housing Projects Pvt. Ltd. documents furnished before us which were also available before the authorities below and are of the considered view that the order of the AO was contrary to the facts of the case and ld. has rightly reversed the same by passing a reasoned and speaking order. Accordingly, we uphold the appellate order by dismissing the appeal of the revenue. 8. In the result, the appeal of the revenue is dismissed. Order is pronounced in the open court on 7th March, 2025 Sd/- Sd/- (Pradip Kumar Choubey /Ĥदȣप क ुमार चौबे) (Rajesh Kumar/राजेश क ुमार) Judicial Member/ÛयाǓयक सदèय Accountant Member/लेखा सदèय Dated: 7th March, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- ITO, Ward-2(1), Kolkata 2. Respondent – Infinity Housing Projects Pvt. Ltd. , Infinity Infotech Parks Ltd., Sector-V, Block-G, PL Salt Lake City, West Bengal-700091. 3. Ld. CIT(A)-NFAC, Delhi 4. Ld. Pr. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata "