2023 (1) TMI 1083 - AT - Income Tax

Tribunal upholds CIT(A)'s decision, rejects Revenue's appeal on additions made by AO

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the additions made by the AO, accept the unsecured loan from M/s ... Addition of Sundry creditors and unsecured loans - re-payment of impugned sundry credit - non-submission of the relevant details and evidences in respect of the sundry creditors and unsecured loans - HELD THAT:- Hon’ble Jurisdictional High Court in CIT Vs Ayachi Chandrashekhar Narsangji [2013 (12) TMI 372 - GUJARAT HIGH COURT] held that where department has accepted repayment of loan in subsequent financial year, no addition was to be made in the current year on account of cash loan. Further, in case of CIT Vs Ranchod Jivabhai Nakhava [2012 (5) TMI 186 - GUJARAT HIGH COURT] held that where the lenders of the assessee are income tax assessee whose PAN have been disclosed, the assessing officer cannot not ask assessee to further prove genuineness of the transaction without first verifying such facts from income tax returns of lenders. We also find that in the present case, the assessee furnished all such details of the lenders/ depositors. We further find that there is no allegation of assessing officer that any of such lenders/ creditors are part of syndicate of accommodation entry provider. There is no evidence that credit/ advance in the books of assessee was result of some circular transactions. Now again adverting to the primary submissions of ld AR for the assessee that the assessing officer in fact has not made any addition either on account of disallowance of sundry creditors or unsecured loan, in fact such observation was the basis of rejection of books of account. As we have noted that the ld CIT(A) clearly held that the basis of rejection of books of account was not justified. We find that books of account of assessee was duly audited and no reference or whisper about the audited books were made no adverse remarks was made by auditor of assessee. no specific defect was pointed in the books of assessee as required under section 145(3) of the Act, thus, such rejection lacks the statutory conditions, which we do not approve. Hence, we do not find any infirmity or illegality in the order passed by ld CIT(A), which we affirms, with our additional observations. Thus, in view of the aforesaid discussions, we do not find any merit in the ground No.1 to 3 of appeal raised by the revenue. Whether CIT(Appeals) has erred in not enhancing the assessmen by adding the unsecured loan and sundry creditor to the returned loss which the AO had disallowed and determined at Rs. NIL only? - HELD THAT:- The assessing officer filed three remand report and no such plea was raised nor any basis of such enhancement was raised. Moreover, the assessing officer himself accepted the transaction of sundry creditors and accepted the repayment in next assessment year in the assessment order passed under section 143(3). As recorded above the assessee also fully discharged its onus on unsecured loan. It is settled position under law that after passing the assessment order the assessing officer become functus officio and if any material or information comes to his notice subsequently, then he is required to follow the course of action prescribed under Income Tax Act and not otherwise. The assessing officer has neither initiated action under section 154 or 147, if he was of the view that assessment was required to be enhance or reopened, within the time period prescribed under Act. Even otherwise, we find that once, the contention of the assessee was accepted, after receiving remand report from assessing officer, and no such plea was raised by assessing officer, hence, there was no scope left for enhancement. Therefore, we do not find any merit in the ground of appeal raised by the revenue. In the result, the ground No. 4 of appeal raised by the Revenue is dismissed. Issues Involved:1. Deletion of addition made by the AO due to non-submission of relevant details and evidence regarding sundry creditors and unsecured loans.2. Acceptance of unsecured loan from M/s Ridham Jewels Pvt. Ltd. despite lack of confirmation and details.3. Failure of the CIT(A) to enhance the assessment by adding the unsecured loan and sundry creditors to the returned loss.4. Admission of additional evidence by the CIT(A) during the appellate stage.Issue-wise Detailed Analysis:1. Deletion of Addition Made by the AO:The Revenue challenged the CIT(A)'s decision to delete the addition made by the AO in the assessment order due to the non-submission of relevant details and evidence regarding sundry creditors amounting to Rs. 84,45,85,996/- and unsecured loans of Rs. 26,32,52,300/-. The AO had rejected the books of accounts under section 145(3) and disallowed the entire loss claimed by the assessee. The CIT(A) admitted additional evidence during the appellate stage, which included confirmation letters, bank statements, and ledger accounts, proving the genuineness of the transactions. The Tribunal upheld the CIT(A)'s decision, stating that the AO's rejection of the books of accounts was not warranted as the assessee had provided sufficient documentary evidence to prove the genuineness of the transactions.2. Acceptance of Unsecured Loan from M/s Ridham Jewels Pvt. Ltd.:The Revenue argued that the CIT(A) erred in accepting the unsecured loan from M/s Ridham Jewels Pvt. Ltd. without proper confirmation and details. The AO had noted that the confirmation and other details were not produced by M/s Ridham Jewels in response to the notice under section 133(6). However, during the remand proceedings, M/s Ridham Jewels Pvt. Ltd. provided the necessary details, including confirmation letters, bank statements, and ledger accounts. The CIT(A) found that the identity, genuineness, and creditworthiness of the lender were established, and the Tribunal agreed with this finding, dismissing the Revenue's appeal on this ground.3. Failure to Enhance the Assessment:The Revenue contended that the CIT(A) failed to enhance the assessment by adding the unsecured loan and sundry creditors to the returned loss. The Tribunal noted that the AO had not made any specific addition on account of sundry creditors or unsecured loans in the assessment order but had merely disallowed the entire loss by rejecting the books of accounts. The CIT(A) had reversed the rejection of the books of accounts and accepted the genuineness of the transactions based on the additional evidence provided. The Tribunal found no merit in the Revenue's ground for enhancement, as the AO had accepted the repayment of sundry creditors in the subsequent assessment year, and the assessee had discharged its onus regarding the unsecured loan.4. Admission of Additional Evidence:The Revenue argued that the CIT(A) erred in accepting additional evidence during the appellate stage. The Tribunal noted that the CIT(A) had admitted the additional evidence considering the principle of natural justice and had forwarded the evidence to the AO for comments through remand reports. The AO had accepted the genuineness of the transactions in the remand reports. The Tribunal found that the CIT(A) had followed due process in admitting the additional evidence and upheld the CIT(A)'s decision.Conclusion:The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s order to delete the additions made by the AO, accepting the unsecured loan from M/s Ridham Jewels Pvt. Ltd., and rejecting the enhancement of the assessment. The Tribunal found that the CIT(A) had correctly admitted additional evidence and that the AO's rejection of the books of accounts was not justified. The Tribunal also noted that the repayment of sundry creditors in the subsequent assessment year had been accepted by the AO, further supporting the CIT(A)'s decision.