S.M. LIME INDUSTRIES,GUWAHATI,ASSAM V. DCIT/ACIT, CIR-1, GUWAHATI

ITA 37/GTY/2024

AI Insights

The case involves S.M. Lime Industries, a partnership firm engaged in trading lime, which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2018-19. The primary contention was the addition of Rs. 7,71,74,960 to the assessee's income under section 68 of the Income Tax Act, 1961, which was treated as unexplained income from unsecured loans. The Tribunal found an error in the recorded amount of a loan from Shanti Kumar Jain and corrected it. For the remaining loans, the Tribunal noted the need for further examination of the provided details to substantiate the identity, creditworthiness, and genuineness of the loan transactions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23878 (ITAT-GUWAHATI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SOUMENDU SEKHAR DAS
• Assessee Lawyers: B.L. PUROHIT
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH, GUWAHATI BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND SHRI MANOMOHAN DAS, JUDICIAL MEMBER आयकर अपील सं. / ITA No.37/GTY/2024 िनधा\u0005रण वष\u0005 / Assessment Year: 2018-19 S.M. Lime Industries, 21 BR Towers, Janapath, G.S. Road, Ulubari – 781007 Assam PAN – AAGFS6516B Vs. Additional/Joint/Deputy/ Asstt. Commissioner of Income Tax/Income Tax Officer, NFAC, Delhi अपीलाथ\u0007 / Appellant \t यथ\u0007 / Respondent Assessee by: Shri B.L. Purohit, FCA Department by: Shri Soumendu Sekhar Das, JCIT Date of hearing: 27.11.2024 Date of Pronouncement: 20.01.2025 आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal pertaining to Assessment Year 2018-19 at the instance of assessee is directed against the order dated 26.12.2023 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 30.06.2021 passed u/s.143(3) r.w.s.144B of the Act. 2 ITA No.37/GTY/2024 S.M. lime Industries 2. Assessee has raised following grounds of appeal : “1. On the facts and in the circumstances of the Appellant's case the learned CIT(Appeals) was not justified in dismissing the Appellant's appeal and confirming the huge addition of Rs.7,71,74,960/- made by the A.O. in the appellant's Returned income u/s.68 of the Income Tax Act, 1961 by treating the Appellant's genuine loans as unexplained income. 2. The Assessment made by the A.O. was contrary to the provisions of law as well as it was contrary to the records submitted by the Appellant and available with the A.O. The assessment had been made without application of mind and was made without considering the Returned figure, explanations and documents submitted and without examining the loan creditors. The entire addition made by the A.O. therefore should have been deleted by the learned CIT(Appeals). 3. In course of assessment proceeding as well as in the proceeding of appeal before the learned CIT (Appeals) the Appellant had submitted proof regarding genuineness of all loans taken by them. Therefore the learned CIT (Appeals) was highly unjustified in holding that the Appellant had failed to discharge the onus regarding these loans. 4. The learned CIT (Appeals) erred in law is not directing the A.O. to allow carry forward of the Returned Loss of the Appellant Rs.33,81,859/-. 5. On the facts and in the circumstances of the Appellant's case it is prayed that the entire addition of Rs.7,71,74,960/- made by the A.O. and upheld by the learned CIT(Appeals) may be deleted and A.O. may be directed to accept the Returned loss of Rs.33,81,859/- as per Appellant’s Return. 6. The appellant further prays for leave to amend/alter the above grounds or/and take any other grounds of appeal before or at the time of the hearing of the appeal.” 3. Brief facts of the case are that the assessee is a Partnership Firm engaged in the business of trading in lime. Return of income for the A.Y. 2018-19 as claimed by 3 ITA No.37/GTY/2024 S.M. lime Industries the assessee in the paper book as per Page 2A and 3 has been filed on 07.11.2017 declaring Nil income. The case selected for scrutiny on account of two reasons; i.e. (1) Unsecured loans and (2) Transactions with Company whose Registration has been cancelled by MCA. Various details are called for to which compliance was made to the partial satisfaction of the AO. Ld. AO majorly focused on the issue of unsecured loans and asked the assessee to explain the nature and source of the unsecured loans in light of the provisions of section 68 of the Act. Assessee provided the details of Identity, Credit worthiness and genuineness of the loan transactions. On the basis of these details, ld. AO was partly satisfied and out of the total unsecured loans of Rs.8,89,24,960/- accepted the claim of unsecured loans of Rs.1,17,50,000/- but made addition for the balance amount of Rs.7,71,76,960/-. 4. Aggrieved assessee preferred appeal before the ld.CIT(A). There was delay which was on account of receiving demand notice at a later date. The assessee also faced problem in e-filing the appeal which resulted into delay. However, the said delay was condoned. Thereafter, even though the assessee has claimed to have furnished all the details but ld.CIT(A) has summarily dismissed the appeal by observing that the submissions made are all well considered but since the assessee failed to discharge the 4 ITA No.37/GTY/2024 S.M. lime Industries onus on it to satisfy all the three ingredients of section 68 of the Act, the alleged loan credits in respect of 11 of them are held as unexplained credits u/s.68 of the Act. 5. Now the assessee is in appeal before the Tribunal challenging the impugned order passed by ld.CIT(A). 6. Before us, referring to detailed paper book containing 222 pages, firstly ld. Counsel for the assessee stated that the AO has taken wrong figure of unsecured loan received by the assessee from Shanti Kumar Jain. The actual loan taken was only Rs.4.00 lakh but the ld. SO has inadvertently mentioned as Rs.4.00 crore in the assessment order and has made addition for the said sum as part of the alleged impugned addition. He submitted that this being an apparent error needs to be rectified and in support he referred to the confirmation of account and the bank statement indicating loan of Rs.4.00 lakh. 7. As far as the remaining unsecured loans are concerned, ld. Counsel for the assessee referred to the details in the paper book stating that all the creditors are having PAN, filing Income-tax returns regularly and details of the addresses have been provided. He further stated that the loans are genuine and have been utilized for the business and the documentary evidences are sufficient enough to prove the Identity, Creditworthiness and 5 ITA No.37/GTY/2024 S.M. lime Industries genuineness of the transactions and none of the details have been rebutted by the Revenue authorities at any stage. He also submitted that the ld. AO while concluding the assessment proceedings has mentioned the returned income as Nil whereas the assessee has declared the loss of Rs.36,07,579.71/- in the audited profit and loss account and the said loss deserves to be carried forward for subsequent years. 8. On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities and stated that the assessee failed to explain the nature and source of the alleged unsecured loans. However, ld. DR was fair enough in accepting the fact that the actual loan availed by the assessee from Shanti Kumar Jain was only Rs.4.00 lakh but inadvertently it has been wrongly mentioned as Rs.4.00 crore by the AO. 9. We have heard the rival contentions and perused the record placed before us. The main issue is regarding addition made by the AO u/s.68 of the Act at Rs.7,71,74,960/-. The alleged unsecured loans have been taken from 11 persons which includes individuals, HUF as well as Private Limited company. Though the assessee is claiming to have furnished the details time and again before both the lower authorities and copies of the same 6 ITA No.37/GTY/2024 S.M. lime Industries has been filed before us to explain the nature and source of the alleged sum including the Names, Addresses, PAN numbers, Bank details, Income-tax returns etc. Firstly, we notice that in the list of unsecured loans mentioned at page 6 and 7 of the assessment order, loan of Rs.4.00 crore is mentioned against the name Shanti Kumar Jain. Ld. Counsel for the assessee with the help of bank statement, confirmation of account, audited balance sheet and tax audit report has successfully demonstrated that the actual loan from Shanti Kumar Jain is Rs.4.00 lakh and not Rs.4.00 crore. This being an apparent mistake needs to be corrected. Therefore, out of the total addition of Rs.7,71,74,960/-, Rs.3.96 crore deserves to be deleted on account of wrong figure adopted by the AO. We hold and order accordingly. 10. For the remaining addition of Rs.3,75,74,960/-, even though the assessee has furnished the details of Identity, Creditworthiness and genuineness of the transactions entered into with loan creditors, however it is not discernible from the impugned orders and assessment order as to whether all these were placed before the lower authorities or not. Prima-facie, the assessee has a good case on merits but since these details needs to be verified at the end of the lower authorities, we deem it fit to restore the matter to the file of Jurisdictional Assessing Officer for 7 ITA No.37/GTY/2024 S.M. lime Industries examining the nature and source of unsecured loans of Rs.3,75,74,960/-. To sum up, Grounds of appeal No.1, 2 and 3 raised by the assessee are partly allowed for statistical purposes as out of the impugned addition, Rs.3.96 crore has been deleted. For the remaining amount, necessary verification has to be carried out by the Jurisdictional Assessing Officer. 11. As far as Ground of appeal No.4 is concerned, audited profit and loss account clearly indicates that the assessee has suffered loss but the AO has mentioned Nil returned income and the said mistake needs to be rectified in the set-aside proceedings which we have directed while dealing Grounds of appeal No.1 to 3. 12. Other grounds raised by the assessee are being general in nature needs no adjudication. 13. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced on this 20th day of January, 2025. Sd/- Sd/- (MANOMOHAN DAS) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER \u000bदनांक / Dated : 20th January, 2025 Satish 8 ITA No.37/GTY/2024 S.M. lime Industries आदेश क\u0002 \u0003ितिलिप अ\tेिषत / Copy of the Order forwarded to : 1. अपीलाथ\u0014 / The Appellant. 2. \u0015\u0016यथ\u0014 / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय \u0015ितिनिध, आयकर अपीलीय अिधकरण, “, Guwahati” ब\u001aच, / DR, ITAT, Guwahati Bench 5. गाड\u0005 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar "