ACIT Central-2, Indore V. Shri Avnish Sarvapria Bansal, Indore

ITSSA 170/Ind/2021

AI Insights

The case revolves around an appeal by the Revenue against the decision of the CIT(A) which had deleted an addition of Rs. 1,47,80,000 made by the AO on account of bogus unsecured loans under section 68 of the Income-tax Act, 1961 for the Assessment Year 2015-16. The AO had initially made the addition due to the assessee's failure to provide documentary evidence to substantiate the loan transactions. However, during the first appeal, the CIT(A) accepted additional evidence provided by the assessee, including loan confirmations, bank statements, and income tax returns of the creditors, and found the transactions to be genuine. The Tribunal, after considering the arguments and evidence presented, upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130383 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-09-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 05-12-2021
• Other Referred Cases: Ayachi Chandrashekhar Narsangji, (2014) 42 Taxmann.com 251 (Guj HC), H.K. Pujara Builders, (2019) 33 NYPTTJ 186 (Mum Trib.), Umesh Electricals vs. ACIT, (2011) 18 ITJ 635 (Trib-Agra), Aseem Singh vs. ACIT (2012) 19 ITJ 52 (Trib.- Indore), Smt. Sumati Kumar Kasliwal & Others vs. ITAT No. 181, 472/Ind/2017 dt. 30.04.2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence; Accommodation entries; TDS; Bogus
• Section: 68; 143(3); 153A; 251

Judgement Text

Page 1 of 11 आयकर अपीलȣय अͬधकरण, इंदौर Ûयायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER IT(SS)A No. 170/Ind/2021 Assessment Year: 2015-16 DCIT/ACIT(Central), Indore बनाम/ Vs. Shri Avinash Sarvapriya Bansal, 135,Baikunthdham Colony, Indore (Assessee / Appellant) (Revenue / Respondent) PAN: AHDPB8908J Assessee by Shri Ashish Goyal & Shri N.D. Patwa, Adv. Revenue by Shri P.K. Mishra, CIT DR Date of Hearing 06.07.2023 Date of Pronouncement 14.09.2023 आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by appeal-order dated 30.09.2021 passed by learned Commissioner of Income-Tax (Appeals)-3, Bhopal [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 28.12.2017 passed by learned DCIT (Central)-2, Indore, [“Ld. AO”] u/s 153A read with section 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2015-16, the Revenue has filed this appeal on following solitary ground: “On the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in law in deleting the addition amounting to Rs. 1,47,80,000/- for the Shri Avinash Sarvapriya Bansal ITA No.170/Ind/2021 Assessment year 2015-16 Page 2 of 11 assessment year 2015-16 made on account of bogus unsecured loans u/s 68 of the Income-tax Act, 1961.” 2. The sole issue being contested in present appeal by revenue is the addition of Rs. 1,47,80,000/- made by AO u/s 68 in respect of unsecured loans taken by assessee but deleted by Ld. CIT(A) in first-appeal. 3. Ld. DR for revenue opened his arguments by carrying us to Para No. 4.1 to 4.10 of assessment-order wherein the AO has made addition for different assessment-years in respect of unsecured loans taken by assessee from different creditors, out of which an addition of Rs. 1,47,80,000/- has been made in AY 2015-16 involved in present appeal. Ld. DR submitted that the when the AO asked the assessee to establish loan transactions, the assessee did not file any documentary evidence (as noted by AO in “Remarks” column against S.No. 10-22 of the Table on Page No. 11-12 of assessment-order for AY 2015-16). Therefore, the AO was very much correct in doubting the identity and creditworthiness of creditors and the genuineness of transactions and thereby invoke section 68. Ld. DR went on submitting that during first-appeal, the CIT(A) accepted additional evidences submitted by assessee before him qua the loan creditors and also called remand-report from AO but nowhere in his appeal-order, the CIT(A) has re- produced the remand-report and yet deleted the addition. Ld. DR submitted that this approach of CIT(A) is not justifiable. 4. Per contra, Ld. AR for assessee submitted that the assessee has filed sufficient documentary evidences to prove the elements of section 68. Ld. AR drew our attention to a chart compiled by him and filed as Page No. 2 to 4 of the written-submission which reveals all details/documents filed by assessee at lower stage. The said chart is scanned and re-produced below for an immediate reference: Shri Avinash Sarvapriya Bansal ITA No.170/Ind/2021 Assessment year 2015-16 Page 3 of 11 Shri Avinash Sarvapriya Bansal ITA No.170/Ind/2021 Assessment year 2015-16 Page 4 of 11 Shri Avinash Sarvapriya Bansal ITA No.170/Ind/2021 Assessment year 2015-16 Page 5 of 11 Shri Avinash Sarvapriya Bansal ITA No.170/Ind/2021 Assessment year 2015-16 Page 6 of 11 5. Ld. AR submitted that the CIT(A) has admitted the additional evidences so filed by assessee after due consideration of assessee’s case in terms of Rule 46A(1)(b) of Income-tax Rules, 1962 in Para No. 2.1 of appeal- order and the revenue has also not raised any ground against such action of CIT(A). Therefore, any questioning raised by Ld. DR on admission of additional evidences by CIT(A), is not sustainable. Ld. AR then placed a heavy reliance on the order of CIT(A) and argued that the CIT(A) has correctly deleted addition by clear-cut observations/findings and taking into account judicial rulings directly applicable to assessee’s case. Therefore, his order must be upheld. 6. We have heard the learned Representatives of both sides at length and perused the case-record including the orders of lower-authorities. First of all, we find that the CIT(A) has admitted documentary evidences filed by assessee on the basis of Rule 46A(1)(b) of Income-tax Rules, 1962. The Ld. AR for assessee has also contended, very rightly, that there is no ground raised by department in Appeal-Memo to assail the admission of additional evidences and hence no objection can be taken by revenue in this regard. 7. On merits of deletion of addition by CIT(A), from the first appellate order we find that the CIT(A) has granted relief to the assessee by following observations and findings: “4.1 Ground No. 1to 4 for assessment year 2010-11, 2011-12, 2015- 16 and 2016-17: Through these grounds of appeal the appellant has challenged addition of Rs. 19,50,000/- in A.Y. 2010-11, Rs. 62,00,000/- in A.Y. 2011-12, Rs. 1,47,80,000/- in A.Y. 2015-16 on account of unexplained cash credit u/s 68 of the Act and Rs. 3,13,973/- on account of interest paid to lenders. The AO during assessment proceedings observed that the assessee has taken unsecured loans of Rs. 19,50,000/- in A.Y. 2010-11, Rs. 62,00,000/- in A.Y. 2011-12, Rs. 1,47,80,000/- in A.Y.2015-16. XXX (c) Unsecured loan of Rs. 1,47,80,000/- in A.Y. 2015-16: Shri Avinash Sarvapriya Bansal ITA No.170/Ind/2021 Assessment year 2015-16 Page 7 of 11 The appellant has taken unsecured loan of Rs. 60,00,000/- from M/s. S.T. Associates, Rs. 20,00,000/- from Shri Mohan Modi, Rs. 10,00,000/- from Harinarayan Daulal Damnani HUF, Rs. 5,00,000/- from Smt. Shilpa Garg, Rs. 8,30,000/- from Shri Saurabh Mishra, Rs. 5,50,000/- from Shri Kunal Mishra, Rs. 5,00,000/- from Shri Pawan Mangal, Rs. 6,00,000/- from Shri T.R. Maheshwati, Rs. 4,00,000/- from Smt. Gayatri Gupta, Rs. 4,50,000/- from Shri Dilip Kumar Gupta HUF, Rs. 3,50,000/- from Smt. Swati Gupta, Rs.9,00,000/- from Smt. Manjjula Singhal and Rs. 2,50,000/- from Shri Sushil Agrawal. The appellant in order to prove identity and creditworthiness of the lender and genuineness of the transaction has furnished copies of confirmation of the lender, copies of bank account statement, copy of ITR. On perusal of evidences on record, it is evidently clear that appellant has proved identity and creditworthiness of the lender and genuineness of the transaction. The appellant has made repayment of loans to various lenders, the appellant has paid interest to the lenders and has deducted TDS. All the transactions have been executed through Bank accounts and no cash was deposited prior to the loan transaction. Thus, the AO was not justified in making addition of Rs. 1,47,80,000/- in A.Y. 2015-16. XXX 4.1.1 As discussed above, the appellant has furnished all details such as documents relating to identity, creditworthiness of the lenders and genuineness of the transactions. Thus, prima facie liability of the assessee to prove the genuineness of the transaction and to establish the identity and creditworthiness of the lenders stands discharged. Thus, considering the fact that the lenders are regular tax assessee and have given the loan through account payee cheque and have confirmed the transaction the liability of the assessee of explaining the genuineness of the transaction stands discharged and the addition cannot be made on mere suspicion how so strong the reasons of suspicion may be. The appellant has also made repayment of these loans. The brief details of repayment made by appellant are as under: A.Y. 2015-16 Sl. Name of the alleged party Assessment Year of Receipt of Loan Amount alleged by AO Amount of loan repaid including interest (if any) Year of Repayment (AY) 1. ST Associates 2015-16 60,00,000 20,00,000 2022-23 2. Mohan Modi 2015-16 20,00,000 20,00,000 2015-16 3. Harinarayan Daulal Damnani HUF 2015-16 10,00,000 10,00,000 2015-16 4. Shilpa Garg 2015-16 5,00,000 5,00,000 2015-16 Shri Avinash Sarvapriya Bansal ITA No.170/Ind/2021 Assessment year 2015-16 Page 8 of 11 5. Sourabh Mishra 2015-16 8,30,000 8,30,000 2015-16 6. Kunal Mishra 2015-16 5,50,000 5,50,000 2015-16 7. Pawan Mangla 2015-16 5,00,000 5,00,000 2015-16 8. T.R. Maheshwari 2015-16 6,00,000 6,00,000 2015-16 9. Gayatri Gupta 2015-16 4,00,000 4,00,000 2015-16 10. Dilip Kumar Gupta 2015-16 4,50,000 4,50,000 2015-16 11. Dilip Kumar Gupta HUF 2015-16 4,50,000 4,50,000 2015-16 12. Swati Gupta 2015-16 3,50,000 3,50,000 2015-16 13. Manjula Singhal 2015-16 9,00,000 9,00,000 2015-16 14. Sushil Agrawal 2015-16 2,50,000 2,50,000 2015-16 Total 1,47,80,000 1,07,80,000 Hon'ble Gujarat High Court in the case of Ayachi Chandrashekhar Narsangji, (2014) 42 Taxmann.com 251 (Guj HC) has held that “It has also come on record that the said loan amount has been repaid by the assessee to Shri Ishwar Adwani in the immediate next F.Y. and the Department has accepted the repayments of loan without probing into it. In the aforesaid facts and circumstances of the case, when Tribunal has held that the matter is not required to be remanded as no other view would be possible, we see no reason to interfere with the impugned order passed by ITAT”. Similar view was taken by Hon'ble ITAT Mumbai in the case H.K. Pujara Builders, (2019) 33 NYPTTJ 186 (Mum Trib.). 4.1.2 The lenders have furnished the loan confirmation, copy of bank account and proof of filing of the return. By filing the above documents the appellant is able to establish the – i. Identity of the lenders – the lenders are income tax payer and filed the loan confirmations. ii. Genuineness of the transaction – the appellant has taken the loan through banking channel. The appellant is in the receipt of loan by cheque. Copies of bank statements of lender persons are placed on record and perused. Appellant has made repayments of the loan taken as per his convenience of fund availability as is evident from loan confirmation letters duly accompanied by bank statements. iii. Creditworthiness of the lenders – the lenders are income tax payers and filing the income tax return. The persons have not only given the loan to the appellant but to other parties also. 4.1.3 From the above it is clear that the appellant has satisfied all the three conditions required for genuineness of the transaction. The same view has been upheld by Hon'ble ITAT in the following cases :- i. Umesh Electricals vs. ACIT, (2011) 18 ITJ 635 (Trib-Agra): (2011) 131 ITD 127 : (2011) 141 TTJ. Shri Avinash Sarvapriya Bansal ITA No.170/Ind/2021 Assessment year 2015-16 Page 9 of 11 Establishment of identity and creditworthiness proved – Assessee produced the bank account of creditor in his bank account on the same day on which loan was given – Assessee furnished the cash flow statement of creditor – Based on inquiry, AO noted that creditor was engaged in providing accommodation entries –HELD – In group cases, it has been held that there was no evidence against the creditor to prove that he was providing accommodation entries Further, mere deposit of money by the creditor on the same day, does not establish that the loan is not genuine - Assessee has proved the source of credit and also the source of source – Addition cannot be made. ii. Aseem Singh vs. vs. ACIT (2012) 19 ITJ 52 (Trib.- Indore) Identity and creditworthiness proved – Assessee took loan of Rs. 1,00,000/- confirmation of creditor was filed – Lower authorities made addition u/s 68 holding that amount was deposited in cash in the bank account of lender immediately prior to date of loan – HELD – Assessee has established the identity – The party has confirmed the transaction – If AO doubted the transaction. AO should have called creditor u/s 131 – Addition cannot be made. Thus, appellant has furnished all the required details in order to prove identity of lenders, genuineness of the transactions and creditworthiness of the lenders. 4.1.4 It is important to mention here that Hon'ble Indore ITAT in the case of Smt. Sumati Kumar Kasliwal & Others vide order in appeal No. IT(SS)A No. 181, 472/Ind/2017 dt. 30.04.2019 has held that the AO has not disputed the evidences filed by the appellant before him and additions were made without any investigation deserves to be deleted. In the instant case also no incriminating material was found during the course of search. The alleged transaction purely looks to be a normal business transaction in which short term loan has been taken for business purposes and have been repaid back after having sufficient funds. The relevant extract of decision is reproduced as under :- “7.16 In the light of above judgments and given facts and circumstances of the case are of the considered view that the appellant i.e. the assessee has been successful to prove the genuineness, creditworthiness and identity of the alleged cash creditors on account of the fact that all the relevant details and supporting documents are placed on record. Further no incriminating material was found during the course of search which could clearly prove that the alleged transaction of receiving loan was an accommodation entry. The assessee’s case further finds support from the fact that the alleged loans were taken for a period of two months and have been repaid back with interest. Tax has also been deducted at source on the interest paid. The alleged transaction of receiving loan and being repaid back has been duly acknowledged by the cash creditors in the affidavit. These transaction of receiving loan cannot be equated to a capital Shri Avinash Sarvapriya Bansal ITA No.170/Ind/2021 Assessment year 2015-16 Page 10 of 11 formation exercise. Alleged transaction purely looks to be a normal business transaction in which short term loan has been taken for business purposes and have been repaid back after having sufficient funds. The documents filed in support of identity, creditworthiness and genuineness i.e. Profit & loss accounts, income tax returns, audit reports, affidavit of the cash creditors and identity proof have not been disputed by the revenue authorities at any stage. Ld. A.O seems to have made the addition without making any investigation after the loan was taken. The finding given in the impugned assessment order about the investment is during the period prior to taking the loan. We therefore in the given facts and circumstances of the case and respectfully following the judgments in the preceding paragraphs are of the considered view that the addition for unexplained cash credit of Rs.1,80,00,000/- needs to be deleted. We therefore set aside the finding of both the lower authorities and allow this issue of unexplained cash credit raised by the assessee” 4.1.5 In view of the above discussion, addition made by the AO amounting to ..... Rs. 1,47,80,000 in assessment year 2015-16 and Rs. 3,13,973 in assessment year 2016-17 are deleted. Therefore, appeal on these grounds is allowed.” 8. On perusal of same, we find that the CIT(A) has made meritorious, objective and cautious findings; only thereafter he has accepted assessee’s claim and granted relief. Since we have already re-produced CIT(A)’s order in preceding paragraph, we refrain from making a detailed discussion to avoid repetitiveness. Suffice it to mention that the CIT(A) has made certain concrete and cogent findings such that (i) the assessee has filed A/c confirmations, Bank statements and copies of ITR of creditors; (ii) the assessee has made repayments to all creditors during the year itself (except in one case where repayment was made in subsequent year); (iii) the assessee has paid interest to creditors; (iv) the assessee has deducted TDS out of interest payments; (v) all loans have been taken through banking channel and no cash was deposited in creditors’ accounts prior to the loan transactions. Therefore, the CIT(A) has rightly deleted addition made by AO Shri Avinash Sarvapriya Bansal ITA No.170/Ind/2021 Assessment year 2015-16 Page 11 of 11 on the basis of rulings mentioned in his order. Therefore, we do not find any valid reason to interfere in the order of CIT(A). Consequently, his order is upheld. The revenue’s appeal is devoid of merit and fails. 9. Resultantly, this appeal of revenue is dismissed. Order pronounced in the open court on 14.09.2023. Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore Ǒदनांक /Dated : 14.09.2023 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore