Tribunal grants partial relief to assessee, directs deletion of addition. Appeal allowed with further instructions.

The Tribunal upheld the Ld. CIT(A)'s decision partially, providing relief to the assessee. The remaining addition of Rs. 6,58,49,749/- was directed to be deleted. The Tribunal allowed the appeal, instructing the Ld. CIT(A) to address the issue concerning section 2(22)(e) after hearing the assessee. The order was pronounced on 21st August 2019, with the appeal partly allowed for statistical purposes.

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Issues Involved:
1. Partly confirming the addition of Rs. 88,99,899/- from the loan of Rs. 1,10,00,000/- taken from Diamond Carbon Pvt. Ltd.
2. Partly confirming the addition of Rs. 2,06,08,437/- from the loan of Rs. 2,50,00,000/- taken from Wimper Trading and Distributors Pvt. Ltd.
3. Partly confirming the addition of Rs. 3,41,16,137/- from the loan of Rs. 7,05,00,000/- taken from Mukherjee Firms Pvt. Ltd.
4. Partly confirming the addition of Rs. 22,25,276/- from the loan of Rs. 1,20,00,000/- taken from Mukherjee Capital Pvt. Ltd.
5. Confirming part of the additions on presumptions regarding capital and reserves of shareholders.
6. Non-adjudication of the applicability of section 2(22)(e) by the Ld. CIT(A).

Issue-wise Detailed Analysis:

1. Partly Confirming the Addition from Diamond Carbon Pvt. Ltd.:
The Ld. CIT(A) held that the assessee failed to prove the creditworthiness and genuineness of the loan transaction. Out of the total loan of Rs. 1,10,00,000/-, an amount of Rs. 21,00,101/- was deemed to be explained from business reserves, while Rs. 88,99,899/- was treated as unexplained, sourced from unexplained share capital and share premium.

2. Partly Confirming the Addition from Wimper Trading and Distributors Pvt. Ltd.:
The Ld. CIT(A) found that M/s. Wimper Trading and Distributors Pvt. Ltd. had business reserves of Rs. 43,91,563/-, which explained part of the loan. However, the remaining Rs. 2,06,08,437/- was considered unexplained, funded by dubious share capital.

3. Partly Confirming the Addition from Mukherjee Firms Pvt. Ltd.:
The Ld. CIT(A) noted that M/s. Mukherjee Firms Pvt. Ltd. had business surplus of Rs. 3,03,83,863/- and an opening balance of Rs. 60,00,000/-, explaining Rs. 3,63,83,863/- of the loan. The remaining Rs. 3,41,16,137/- was treated as unexplained, sourced from dubious share capital and share premium.

4. Partly Confirming the Addition from Mukherjee Capital Pvt. Ltd.:
The Ld. CIT(A) observed that M/s. Mukherjee Capital Pvt. Ltd. had business surplus of Rs. 97,74,724/-, explaining part of the loan. The remaining Rs. 22,25,276/- was considered unexplained, funded by dubious share capital and share premium.

5. Confirming Part of the Additions on Presumptions:
The Ld. CIT(A) confirmed part of the additions based on the presumption that the capital and reserves of the shareholders were old and had been routed through various investments and fixed deposits, which were later given as interest-bearing loans to the assessee.

6. Non-adjudication of the Applicability of Section 2(22)(e):
The Ld. CIT(A) did not explicitly adjudicate the applicability of section 2(22)(e), although the submissions of the assessee implied that it was not applicable.

Tribunal's Findings:

On the Additions Confirmed by Ld. CIT(A):
The Tribunal held that the assessee had discharged its onus under section 68 by proving the identity, creditworthiness, and genuineness of the lender companies and the loan transactions. The Tribunal noted that the AO had accepted the interest outgoing to the four lender companies, which supported the assessee's claim. The Tribunal also highlighted that the lender companies were income tax assessees, had filed their returns, and had substantial capital and reserves.

On Judicial Precedents:
The Tribunal referred to several judicial precedents, including the Supreme Court and various High Courts, which emphasized that once the assessee proves the identity, creditworthiness, and genuineness of the transactions, the onus shifts to the AO to disprove the same. The Tribunal found that the AO had not conducted any investigation to disprove the documents furnished by the assessee.

On Section 68:
The Tribunal reiterated that section 68 requires the assessee to explain the nature and source of any sum found credited in its books. In this case, the assessee had provided sufficient evidence to explain the nature and source of the loans received. The Tribunal concluded that the addition made by the AO was based on conjectures and surmises and could not be justified.

Conclusion:
The Tribunal upheld the order of the Ld. CIT(A) giving partial relief to the assessee but directed the deletion of the remaining addition of Rs. 6,58,49,749/-. The Tribunal allowed the appeal of the assessee, directing the Ld. CIT(A) to adjudicate the ground related to section 2(22)(e) in accordance with the law after hearing the assessee.

Order:
The appeal of the assessee was partly allowed for statistical purposes. The order was pronounced in the open court on 21st August 2019.

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