RAMESH KUMAR CHIRIMAR,KOLKATA V. A.C.I.T., CIRCLE - 40, KOLKATA, KOLKATA

ITA 1848/KOL/2024

AI Insights

The case involves Ramesh Kumar Chirimar, an individual engaged in the business of transportation under the name 'M/s. Krishna Road Carriers', who appealed against the order of the National Faceless Appeal Centre, Delhi, which upheld the reassessment order passed by the Assessing Officer (AO). The AO had made additions under section 68 of the Income-tax Act, 1961, for unsecured loans amounting to Rs.30,00,171 and disallowed interest expenditure of Rs.1,08,407. The Tribunal examined the evidence provided by the assessee, including loan confirmations, income tax returns, audited financial statements, and bank statements, and found the loans to be genuine and the transactions to be properly documented.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474480 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Other Referred Cases: CIT Vs. Orissa Corporation (P) Ltd. 159 ITR 78, ITO Vs. M/s. Cygnus Developers (P) Ltd. in ITA No.282/Kol/2012, dated 02.03.2016, CIT Vs. Metachem Industries 245 ITR 160, (MP), Dy.CIT Vs. Rohini Builders 256 ITR 360 (Guj.)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAPIL MONDAL
• Assessee Lawyers: SIDDARTH AGARWAL
• Keywords: Set aside; Reassessment proceedings
• Section: 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES “SMC”, KOLKATA BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.1848/Kol/2024 Assessment Year: 2014-15 Ramesh Kumar Chirimar, C/o. Subhash Agarwal & Associates, Advocates, Siddha Gibson, 1, Gibson Lane, Suite 213, 2nd Floor, Kolkata – 700 069 West Bengal PAN : AEIPC4792H V/s ACIT, Circle-40, Kolkata Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal pertaining to Assessment Year 2014-15 at the instance of assessee is directed against the order dated 16.08.2024 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (in short ‘the Act’) which in turn is arising out of Assessment Order dated 27.12.2019 passed u/s.147 r.w.s.143(3) of the Act. 2. The assessee has raised the legal issue challenging the validity of reassessment proceedings u/s.147 r.w.s.143(3) of the Act in Grounds of appeal No.1, 2 and 3 that there is no independent application of mind and no independent enquiry by the AO and that no proper approval u/s.151 of the Act was Assessee by : Shri Siddarth Agarwal Revenue by : Shri Kapil Mondal Date of hearing : 25.11.2024 Date of pronouncement : 29.01.2025 ITA No.1848/Kol/2024 Ramesh Kumar Chirimar obtained. However, ld. Counsel for the assessee failed to place credible evidence to support his legal ground. I therefore dismiss the legal grounds raised by the assessee. Accordingly, Grounds of appeal No.1 to 3 are dismissed. 3. Ground of appeal No.6 being general in nature required no adjudication and the said ground is dismissed as such. 4. Remaining are Grounds of appeal 4 and 5 which require adjudication. In the said grounds, the grievance of the assessee is that ld.CIT(A) erred in upholding the action of the AO making addition of Rs.30,00,171/- u/s.68 of the Act for the alleged unsecured loans and also disallowed the interest expenditure of Rs.1,08,407/-. 5. Succinctly, the facts of the case are that the assessee is an individual carrying on the business of Transporter under the name and style “M/s. Krishna Road Carriers”. Income of Rs.15,45,110/- declared in the return filed for the A.Y. 2014- 15 on 30.09.2014. The assessment was reopened by issuance of notice u/s.148 of the Act. The main issue arising during the course of re-assessment proceedings was that the assessee had to explain unsecured loans of Rs.13,00,171/-. Even though the assessee has furnished the details, ld. AO was not satisfied with the explanation of the assessee and he invoked section 68 of the Act and made addition of Rs.13,00,171/- and also disallowed interest of Rs.1,08,407/- paid to the alleged cash creditors. Income assessed at Rs.46,53,692/-. 6. Aggrieved assessee preferred appeal before the ld.CIT(A) but inspite of furnishing the details to explain the alleged cash credits and also placing reliance on various decisions, failed to ITA No.1848/Kol/2024 Ramesh Kumar Chirimar get any relief. Now the assessee is in appeal before the Tribunal. 7. Ld. Counsel for the assessee in support of his contention that genuine loans have been taken, took us through the paper book containing 91 pages providing details of documents with respect to each of the cash creditor and also made reference to the written submissions placed at pages 76 to 91 of the paper book. Reliance was placed on the decision of Hon’ble supreme Court in the case of CIT Vs. Orissa Corporation (P) Ltd. 159 ITR 78, decision of Coordinate Bench of Tribunal in the case of ITO Vs. M/s. Cygnus Developers (P) Ltd. in ITA No.282/Kol/2012, dated 02.03.2016, CIT Vs. Metachem Industries 245 ITR 160, (MP), Dy.CIT Vs. Rohini Builders 256 ITR 360 (Guj.). 8. On the other hand, ld. Departmental Representative supported the orders of the lower authorities. 9. I have heard the rival contentions and perused the record placed before me. In the instant case, section 68 of the Act has been invoked with regard to the unsecured loans of Rs.30,00,171/- taken by the assessee from following three parties : Sl.No. Name of the company Loan Advanced 1 M/s. Arrowlink Vintrade Pvt. Ltd. Rs.10,00,060/- 2 M/s. Santakaram Sales Pvt. Ltd. Rs.10,00,055/- 3 M/s. Subhkari Marketing Pvt. Ltd. Rs.10,00,056/- Total Rs.30,00,171/- ITA No.1848/Kol/2024 Ramesh Kumar Chirimar The interest paid on the above unsecured loans during the year at Rs.1,08,407/- has also been disallowed. Now the assessee in order not to fall in the clutches of section 68 of the Act has to explain the nature and source of the cash credits to the satisfaction of the AO. The nature and source can be explained by way of placing evidence to prove the Identity, Creditworthiness of the alleged loan creditors and genuineness of the transactions. The assessee is carrying out the business in the name of M/s. Krishna Road Carriers and books of accounts are regularly maintained and audited u/s.44AD of the Act. The gross freight during the year is approximately Rs.12.55 crore and net income is declared at Rs.15.66 lakh. It gives an overview that assessee is into the genuine business activity. 10. Now the assessee has taken the unsecured loans in the course of business from the alleged three parties. The details of the parties are duly reflected in the Form No.3CD attached to the Tax Audit Report. Further, the assessee has furnished the loan confirmations, ITRs, Audited financial statements, relevant pages of bank statement, source of alleged sum available in respect of all the three cash creditors. It is also not in dispute that all the three cash creditors named above have replied to the notices issued u/s.133(6) of the Act. So the identity is not in dispute as all the cash loan creditors are Private Limited Companies and provided their identity details. So far as the creditworthiness of the loan creditors are concerned, I have perused the balance sheet of the three companies invoices that they have sufficient funds available with them. M/s. Arrowlink Vintrade Pvt. Ltd. was having net ITA No.1848/Kol/2024 Ramesh Kumar Chirimar worth of Rs.21.13 crore as on 31.03.2014 as against the loan of Rs.10.00 lakh given to the assessee. Similarly, M/s. Santakaram Sales Pvt. Ltd. was having net worth of Rs.28.66 crore as against loan of Rs.10.00 lakh and M/s. Subhkari Marketing Pvt. Ltd. was having net worth of Rs.33.51 crore as against loan of Rs.10.00 lakh which clearly indicates that all the three cash creditor companies are having sufficient credit worthiness and have given the alleged loans through banking channel to the assessee for its business purposes. Now coming to the genuineness of the transactions, I have gone through the confirmation of accounts for succeeding year also which are placed at pages 41A, 57A and 72A of the Act and find that the alleged loans have been fully repaid during the subsequent financial year. Interest paid during the year as well as subsequent year has been duly accounted for in the books of account. It thus proves the genuineness of the transaction also. Now since all the three ingredients have been fulfilled, in my considered opinion, assessee has successfully explained the nature and source of the alleged sums. There remains no room for invoking section 68 of the Act in the present state of affairs. I further find support from the following decisions : 1. CIT Vs. Orissa Corporation (P) Ltd. 159 ITR 78 2. ITO Vs. M/s. Cygnus Develoeprs (P) Ltd. in ITA No.282/Kol/2012, dated 02.03.2016, 3. CIT Vs. Metachem Industries 245 ITR 160, 4. Dy.CIT Vs. Rohini Builders 256 ITR 360 (Guj.). The addition of Rs.30,00,171/- made by the Assessing Officer u/s.68 of the Act is hereby deleted. ITA No.1848/Kol/2024 Ramesh Kumar Chirimar 11. Further since the unsecured loans have been found to be genuine, the interest expenditure of Rs.1,08,407/- also deserves to be allowed. I therefore set aside the finding of ld.CIT(A) on merits of the case and allow the Grounds of appeal No.4 and 5 raised by the assessee. 12. In the result, the appeal of the assessee is partly allowed. Order pronounced on this 29th day of January, 2025. - Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे/Pune; \u0001दनांक / Dated : 29th January, 2025 Satish आदेश क\u0002 \u0003ितिलिप अ\tेिषत / Copy of the Order forwarded to : 1. अपीलाथ\f / The Appellant. 2. \r\u000eयथ\f / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय \rितिनिध, आयकर अपीलीय अिधकरण, “(SMC)” ब\u0014च, Kolkata/ DR, ITAT, “(SMC)” Bench, Kolkata. 5. गाड\u0018 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar, ITAT, Kolkata "