2018 (1) TMI 541

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.... thirteen days. Condonation petition has been filed. Reason shown for the delay seem to be justified. Ld. Departmental Representative did not raise any serious objection. Delay is condoned. Appeal is admitted. 3. Facts apropos are that assessee had filed his return of income for the impugned assessment year disclosing income of B3,67,400/-. During the course of assessment proceedings, it was noted by the ld. Assessing Officer that assessee had taken loans aggregating 31,00,116/- from one M/s. Rasim Exports Private limited (hereinafter as the Company) where he was a director holding shares in excess of 10%. The said Company was having accumulated profits of B2,90,57,875/- as on 31.03.2009. Explanation of the assessee was sought as to why ....

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....ced from B44,42,006/- to B29,44,485/-. Ld. Assessing Officer noted that for other bank loans, no documents were furnished by the assessee for any guarantee given by him. As per the ld. Assessing Officer, in the case of G. Sreevidya (supra) decided by the Co-ordinate Bench, the concerned assessee had given collateral for a bank guarantee, on a pre-condition that the concerned Company gave loans to him. As for the judgment of Hon'ble Calcutta High Court in the case of Pradip Kumar Malhotra (supra) view taken by the ld. Assessing Officer was that the board of directors of the concerned Company from where Shri Pradip Kumar Malhotra had taken loans, had passed a resolution enabling them to give loans to Pradip Kumar Malhotra. Thus according to h....

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....ata Bench of the Tribunal in the case of ITO vs. Gayatri Chakraborty (2016) 45 ITR(Trib) 197. According to her, unless assessee had given a personal guarantee and collateral security for the loans raised by the Company, it could not have fulfilled its export commitments. As per the ld. Authorised Representative, there was a Board resolution of the Company authorizing the assessee to withdraw funds from the Company for his personal use. Contention of the ld. Authorised Representative was that transactions were quidpro- quo and commercial in nature. As per the ld. Authorised Representative this arrangement was purely based on business expediency. Ld. Authorised Representative further, submitted that there was an orally agreed pre-condition in....

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....led any cash credit facility from State Bank of Hyderabad. He has also noted that major interest expenditure incurred by the Company was on term loans from SIDBI. Ld. Assessing Officer also states that assessee was unable to furnish documents regarding collateral security given by him for bank loans other than to State Bank of Hyderabad. Terms and conditions attached to the financial assistance provided by SIDBI to M/s. Rasim Exports Private limited placed at paper book papers 15 to 17 state as under:- "Collateral Security "First charge by way of mortgage in favour of SIDBI on all the immovable properties (both present and future) alongwith building and other structures comprised in SF No.S. No.127/2 & 98/5 and situate at ....

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.... for loans raised by the Company from State Bank of Hyderabad, there is an affidavit of the assessee which is placed at paper book pages 21 to 25. What is stated at para 3 to 9 of this affidavit is apposite and this is reproduced hereunder:- "3. That I am/ we are owner(s) of the property with possession and l/We have absolute rights and powers for mortgaging the property. 4. That the property belongs to our joint family and I /We have offered the property as security to the bank the consent of all co-parceners in my/our family. {I/We have been authorised by the other co-parceners/joint owners/joint family members to create the mortgage in favour of the Bank.] ** 5. That the Bank has sanctioned various credit facil....