THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), AHMEDABAD V. AMBE TRADECORP PRIVATE LIMITED

R/TAX APPEAL NO. 306 of 2022

AI Insights

The case revolves around the revenue's challenge to the deletion of an addition of Rs. 32,20,00,000 made under Section 68 of the Income Tax Act by the Appellate Tribunal. The addition was initially made by the assessing officer, who deemed the loan transactions from M/s. J.A Infracon Private Limited and M/s. Satya Retail Private Limited as sham, questioning the creditworthiness of the lenders. However, the Appellate Authority and subsequently the Appellate Tribunal found that the assessee had provided sufficient evidence to establish the identity, creditworthiness, and genuineness of the loan transactions. The Tribunal's decision was based on detailed examinations of the documents and responses to notices under Section 133(6) of the Act, leading to the conclusion that the transactions were genuine business dealings.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 361527 (HC-GUJARAT)
• Appeal Type: High Court cases
• Pronouncement Date: 05-07-2022
• Appeal Filed By: Department
• Assessment Year: 2012-2013
• Other Referred Cases: Durga Prasad More (82) ITR 540, Sumati Dayal (214) ITR 801
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: MANISH BHATT; KARAN SANGHANI
• Keywords: Accommodation entries; Creditworthiness; Genuineness; Loan Transactions; Unexplained cash credit
• Section: 68; 133(6)

Judgement Text

"C/TAXAP/306/2022 ORDER DATED: 05/07/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 306 of 2022 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), AHMEDABAD Versus AMBE TRADECORP PRIVATE LIMITED ========================================================== Appearance: MR MANISH BHATT. SR ADVOCATE with KARAN SANGHANI for M R BHATT & CO.(5953) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 05/07/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE N.V.ANJARIA) Heard learned senior advocate Mr.Manish Bhatt with learned advocate Mr.Karan Sanghani for M.R.Bhatt & Co. for the appellant. 2. The revenue seeks to raise grievance about deletion on part of the Appellate Tribunal of addition of Rs.32,20,00,000/- made under Section 68 of the Income Tax Act on the count of unexplained cash credit. It is in this respect that the substantial questions of law is proposed as to whether the Appellate Tribunal has committed an ex-facie perverse error in deleting the said addition. 2.1 Section 68 of the Act deals with the cash credits, it provides that where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the Page 1 of 4 Downloaded on : Tue Jun 03 15:34:02 IST 2025 Uploaded by MANSHI HARISHBHAI AMIN(HC01561) on Tue Jul 12 2022 2022:GUJHC:31373-DB NEUTRAL CITATION C/TAXAP/306/2022 ORDER DATED: 05/07/2022 explanation offered by him, is not in the opinion of the assessee officer satisfactory, the sum so credited may be charged to the Income Tax. 3. The issue in this case arose in respect of the assessment year 2012-2013. It appears that the two loan transactions of Rs.8,50,00,000/- and Rs.23,70,00,000/- received by respondent assessee from one M/s. J.A Infracon Private Limited and M/s. Satya Retail Private Limited were treated by assessing officer to be sham in the sense that the creditworthiness etc. of the giver of the loan were not established. Accordingly, the assessing officer made addition under Section 68 of the Act. 3.1 While the assessing officer dealt with unexplained cash credit from the M/s. Satya Retail Private Limited and from M/s. J.A Infracon Private Limited in his order in paras 5.1 and 5.2 respectively, the Commissioner of Income Tax in the appeal preferred by assessee found on facts and the material before it that the said two cash creditors had been holding there identity, creditworthiness and genuineness in respect of the loan transactions. 3.2 The appellate authority observed that, “In this regard, it has been noticed that ledger accounts and confirmations of the aforesaid two parties have been provided by the appellant to the AO in the assessment proceedings. Thereafter, the AO also carried out the independent inquiries u/s. 133(6) of the I.T. Act and in compliance thereto both the companies have submitted the requisite information.” 3.3 The information supplied by assessee was duly noticed by Page 2 of 4 Downloaded on : Tue Jun 03 15:34:02 IST 2025 Uploaded by MANSHI HARISHBHAI AMIN(HC01561) on Tue Jul 12 2022 2022:GUJHC:31373-DB NEUTRAL CITATION C/TAXAP/306/2022 ORDER DATED: 05/07/2022 appellate authority and facts in that regard were recorded also to arrive at a finding that the unsecured loans to the aforesaid parties have been paid by account payee cheques from the bank account of the assessee which was not in dispute, muchless in doubt. The accounts were finally settled with the repayment of the loan to the lender companies. 3.4 When the revenue preferred appeal before the Appellate Tribunal, the Tribunal confirmed the findings recorded by the Appellate Authority. The Tribunal referred to the decision of Durga Prasad More (82) ITR 540 and also in Sumati Dayal (214) ITR 801, to further record on the basis of the facts that the assessee had furnished the details such as copy of ledger account, bank statements, income tax returns, balance sheet etc. It was also recorded that notice under Section 133(6) of the Act was issued to the said parties which were duly responded by them. The identity of the parties could not be, therefore disputed, recorded the tribunal. The aspect was also noticed that the assessee was not beneficiary of the loan received by it and the loan was repaid by the assessee in the subsequent year. It led to unacceptable conclusion that the impugned transaction was a business transaction between the assessee and the loan parties and that they could not be doubted for their genuineness. 3.5 While the revenue has tried to put up a case that the transactions were in the nature of accommodation entries, this case has only presumptive and assumptive value not supported by any factual data. On the contrary, on the basis of the material before the authorities, the transactions were found to be genuine. Page 3 of 4 Downloaded on : Tue Jun 03 15:34:02 IST 2025 Uploaded by MANSHI HARISHBHAI AMIN(HC01561) on Tue Jul 12 2022 2022:GUJHC:31373-DB NEUTRAL CITATION C/TAXAP/306/2022 ORDER DATED: 05/07/2022 4. Learned advocate for the appellant attempted to emphasize that for the purpose of application of Section 68 of the Act, three ingredients were necessary. Firstly identity of the parties to the transaction of loan, second is the creditworthiness of such parties and thirdly the genuineness of the transaction. It was submitted in vain that neither of the ingredients were satisfied. 5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied. 6. The Tribunal rightly recorded in para 29 of the judgment, “Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld.CIT-A. ” 7. For the reasons recorded above, no question of law muchless substantial questions arises in this appeal. It stands meritless and accordingly dismissed. (N.V.ANJARIA, J) (BHARGAV D. KARIA, J) Manshi Page 4 of 4 Downloaded on : Tue Jun 03 15:34:02 IST 2025 Uploaded by MANSHI HARISHBHAI AMIN(HC01561) on Tue Jul 12 2022 2022:GUJHC:31373-DB NEUTRAL CITATION "