TaxTMI 
TaxTMI 
2017 (11) TMI 75
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....s and supporting were filed and if required any further supporting he should have specifically called for the same. 2) On the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming disallowance of interest expenses of Rs. 38,37,603/- an alleged cash credit included in total income u/s. 68 of the I.T. Act which was done by the Assessing Officer without giving proper opportunity to explain. 3. Brief facts of the case are that the assessee filed its return of income for A.Y. 2010-11 on 7.9.2010 declaring total income of Rs. 4,29,89,260/-. Thereafter the case was selected for scrutiny under CASS to "Examine taxability of income from sale of property as reported in ITS under AIR and examine the long term capital gain as regards sale consideration and indexed cost of acquisition." In this case, survey action u/s. 133A was also carried out on 4.3.2010. Thereafter notice u/s. 143(2) dated 26.8.2011 was issued and served upon the assessee. The assessee firm is engaged in the business of builders and developers. The assessee-company had shown unsecured loan from various companies located in Kolkata, West Bengal. Therefore the commission u/s. 131(1)....
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....er passed by the learned CIT(A) is not justifiable and is liable to be set aside. It is also argued that in view of the availability of PAN, copy of acknowledgment of returns, the identity of the parties is established. Since the assessee has received amounts through cheques and also repaid the amounts through cheques, the genuineness of the transactions also established. Further the assessee has also filed confirmation letters in this regard. It is also argued that the assessee has submitted audited accounts for the year ended on 31.3.2010 for all the 12 parties and a perusal of the same would show that they were possessing huge share capital and reserves & surplus amount. Therefore the creditworthiness of these parties was also established. Accordingly the Ld A.R contended that the assessee has discharged the initial burden of proof placed upon it u/s 68 of the Act and hence the Ld CIT(A) was not justified in confirming the addition. In support of these contentions, the learned AR placed reliance on the findings of Hon'ble Gujarat High Court given in the case of DCIT Vs. Rohini Builders (256 ITR 360); the decision rendered by Hon'ble Bombay High Court in the case of CIT Vs. M....
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....in this case and appear to be accommodation entry. This is for your kind perusal and necessary action." 9. On perusal of the above mentioned report, we noticed that the summons were sent to these companies and no companies were found on the given address and information gathered by the official leads to a conclusion that these companies were jamakharchi/paper/sham companies. Based on this report, the claim of unsecured loan of the assessee company was rejected and the amount of Rs. 5.73 crores was added to the income of the assessee as unexplained cash credit u/s. 68 of the Act. Now, it is required to be seen what types of evidences were given by the assessee before the authorities in order to discharge the initial burden of proof placed upon it u/s 68 of the Act. The assessee has provided copies of loan confirmations as available both in the books of the companies and in the books of the assessee firm, which lie in Compilation-3 of the paper book. The assessee has also provided copies of bank statement of the assessee firm, wherein cheques given by the creditors were deposited and from where the repayments of the said loans were made, which also lie in Compilation-3 of the pape....
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.... Assessing Officer has recorded the statements of only six creditors, viz., creditors at serial Nos. 1, 2, 3, 4, 6, and 7. However, in respect of all the 21 creditors the assessee has furnished their complete addresses along with GIR numbers/permanent account numbers as well as confirmations along with the copies of assessment orders passed in the cases of creditors at serial Nos. 1, 2, 4, 5, 6, 7, 9, 10, 11, 12 and 16. In the remaining cases where the assessment orders passed were not readily available, the assessee has furnished the copies of returns filed by the creditors with the Department along with their statement of income. All the loans were received by the assessee by account payee cheques and the repayments of loans have also been made by account payee cheques along with the interest in relation to those loans. It is rather strange that although the Assessing Officer has treated the cash credits as nongenuine, he has not made any addition on account of interest claimed/paid by the assessee in relation to those cash credits, which has been claimed as business expenditure and has been allowed by the Assessing Officer. It is also pertinent to note that in respect of some of....
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....e by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by treating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69. 8. Further, we may point out that section 68 under which the addition has been made by the Assessing Officer reads as under : "68. 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 explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." 9. The phraseology of section 68 is clear. The Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this, case the legislative mandate is not in terms of the words "shall be charge....
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.... account the surrounding circumstances. 6.5 The Tribunal ought to have taken note of the fact thatthe assessee was not able to produce even a single party before the Assessing Officer despite agreeing before the learned CIT(A) that will produce all parties before the Assessing Officer during remand proceedings." 4. We have considered the submissions. 5. The Assessing Officer added Rs. 95 lakhs as income under Section 68 of the Income Tax Act only on the ground that the parties to whom the share certificates were issued and who had paid the share money had not appeared before the Assessing Officer and the summons could not be served on the addresses given as they were not traced and in respect of some of the parties who had appeared, it was observed that just before issuance of cheques, the amount was deposited in their account. 6. The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the Assessee has also prod....