TaxTMI 
TaxTMI 
2018 (11) TMI 590
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....he business of real estate. He declared income of Rs. 15,56,530/- in the return of income filed on 13.10.2006. Case selected for scrutiny. Notices u/s 143(2) and 142(1) of the Act were duly served upon the assessee. Ld.A.O while examining the financial statements noticed that certain unsecured loans were taken during the year from four parties for a total amount of Rs. 1,02,00,000/- and interest of Rs. 6,14,855/- was paid thereon. In order to satisfy about the identity, genuineness and creditworthiness of alleged unsecured loans, Ld.A.O called for various information which were duly supplied by him. Ld.A.O linked the alleged cash creditor companies as part of Lunkard Group of Companies on which survey was conducted u/s 133A of the Act on 2.5.2006 wherein it was noticed that some of the group companies are alleged to be in the practice of providing accommodation entries. Ld.A.O gave his finding of fact that the alleged cash creditor companies which gave loan to the assessee were not part of the group of companies held by the Lunkard Group but they were in association with the Lunkard Group of companies. Though the assessee furnished all necessary evidences to prove the identity, gen....
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....ct, 1961 Rs.1,25,00,000/- 2. Interest on the loans Rs. 5,55,875/- 3. Expenditure incurred for procuring loans Rs. 6,25,000/- Total assessed income Rs.1,64,53,255/- 6. Aggrieved assessee preferred appeal before the Ld.CIT(A) for Assessment Year 2006-07 and 2007-08. Ld.CIT(A) deleted the addition relating to unexplained cash credit and interest paid there on and unexplained expenditure along with the relevant ground raised by the assessee. However the addition for disallowance of deduction u/s 24 claimed by the assessee on the rental income was sustained at Rs. 7,92,350/-. 7. Now both the revenue and assessee are in cross appeal for Assessment Year 2006-07 and revenue appeal for Assessment Year 2007-08. 8. We will first take up revenue's appeals I.T.A.No.382/Ind/2014 & I.T.A.No. 383/Ind/2014 raising following common ground for Assessment Year 2006-07 and 2007-08 respectively. "1. Deleting the addition of Rs. 1,05,00,000/- & Rs. 1,25,00,000/- for A.Y. 2006-07 & 2007-08 respectively. That on the facts & circumstances of the case, the identity, creditworthiness and genuineness of the creditors was not properly proven before AO and therefore the same needed to be added. 2.....
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....inetic Cop Finance 354 ITR v/s 296 (Delhi) 4. Gangeshwari Metal (P) Ltd Income-tax Act, 1961, 597/2012 order dated 21.01.2013 (High Court of Delhi) 12. We have heard rival contentions and perused the records placed before us and gone through the judgments carefully. Revenue is aggrieved with the deletion of following additions by Ld.CIT(A) made by the A.O for Assessment Year 2006-07 and 2007- 08 for the alleged unexplained cash credit and interest paid there on and undisclosed expenditure for procuring accommodation entries. S. No. Name of the Company Unsecured loans taken Interest paid 1 Trimurti Finvest P.Ltd 30,00,000/- 1,65,040/- 2 Purvi Finvest Ltd 5,00,000/- 63,782/- 3 K.K. Patel Finance Ltd 40,00,000/- 3,08,740/- 4 East West Finvest India Ltd 27,00,000/- 77,293/- 1,02,00,000/- 6,14,855/- Addition of Rs. 5,25,000/- made for Assessment Year 2006-07 for procuring loans. S. No. Name of the Company Unsecured loans taken Interest paid 1 Trimurti Finvest P.Ltd 35,00,000/- 1,80,875/- 2 Purvi Finvest Ltd 30,00,000/- 1,25,250/- 3 K.K. Patel Finance Ltd 30,00,000/- 1,05,000/- 4 East West Finvest India Ltd 3....
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....usion P. ltd. is not applicable to their case, as that was regarding addition of share capital while appellant's case is that of receiving of unsecured loans, wherein identity of all depositors is established, as they are assessed to tax and even assessment made is] s 143(3) in case of depositors is also filed. They further submitted that AO framed assessment assuming that various depositors were of Lunked group, but none of these companies belong to Lunkad group as they are belonging to Darak group. 7. I have gone through the arguments of both AO as well as that of appellant. Since all the depositors have confirmed about giving such deposits, the amounts were given 'through account payee cheques, the depositors were all filing returns of income, proof of which is furnished and even bank statements of depositors were furnished and in such bank accounts of depositors, no cash deposits were seen. Further the reference of AO to survey of Lunkad group & to the term of accommodation entry provider does not help revenue's case because that survey took place in 2006 and after considering the findings of survey the Hon'ble ITAT, Indore in case of Mis Narmada Extrusion P.....
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....or material in his possession and then came forward to merely reject the same on .the presumptions. In such an eventuality no addition can be made u/ s 68 of LT. Act. 9. On the basis of facts of the case and relying on various case laws discussed above the addition of unsecured loans Rs. 1 ,05,00,000 1- & Rs. 1,25,00,0001- and interest on such loans of Rs. 6,14,855/- & Rs. 5,55,875/- In AY 2006-07 & AY 2007-08 is deleted. Gr. No. 1&2 of appeal are allowed." 15. It is also observed that Ld. Counsel for the assessee placed heavy reliance on the decision of the Indore Tribunal in the case of ACIT V/s Girish Kumar Sharda (supra) wherein similar issue of unexplained cash credit from the same set of four companies came up for adjudication and the Tribunal dismissed the revenue's appeal observing as follows; "9. Rival contentions have been considered and records perused. From the record, we found that the assessee had borrowed loans from the following parties. 9. S. No. Name of the parties & Address PAN No 1 M/s. K.K. Patel Fianance Ltd, 114, Sarlit Tower, Y.N. Road, Indore AABCK4282G 2 M/s Purvi Finvest Ltd, G-1 "Rudrash", 127 Baikunthdham Colony, Indore (M.P) AABC....
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....e), Order dated 30.12.2011, wherein the Tribunal have observed that the Ld. CIT(A) was not justified in deleting the addition on the ground that the addition is to be made in the hands of the person who has given the loan and not in the hands of the beneficiaries. It is clear from the order of the Tribunal in that order of the Ld. CIT(A) was reversed on the issue of taxability of the impugned amount in the hands of creditors or assessee who was beneficiaries. The Tribunal have held that amount is required to be added in the hands of the beneficiaries, thus, reasoning given by the Ld. CIT(A) was not accepted. However, in this order of Narmada Extrusions (supra), the Tribunal have also dealt with the merit of the addition and found that addition to be restricted to the extent of entries found in the material collected during the course of survey at Lunkad Group and not to the extent of entire amount of loan so taken from Lunkad Group. 13.From the record, we found that Assessing Officer has made addition in respect of the loans which were taken and even repaid by the assessee. While making the addition, following was the precise observations of the Assessing Officer :-. "The ass....
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.... produce the creditors. 17.As per requirement of Section 68 the sum credited in the books of accounts can be considered to be the income of the assessee in a case where the assessee does not offer any explanation or the explanation offered by him, in the opinion of Assessing Officer is not satisfactory. The explanation of the assessee in the present case is that all these creditors are income tax assessees and their PANs have given alongwith their copy of bank account as well as preceding years. By filing these evidences, it can be said that the assessee had is charged the initial burden laid upon him under Section 68. When the particulars regarding income tax assessment and bank account, audited balance sheet duly indicating advancing of loan to the assessee, have been filed then initial burden has to be held to be discharged and then the burden shifts on the Revenue to show that what is stated or explained by the assessee is not satisfactory. No material whatsoever, has been brought on record by the Ld. Assessing Officer to show that what was explained by the assessee, was not a correct state of affairs. If any sum is found credited in the accounts of the creditors. Then the c....
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.... on various decisions gi yen in his order in addition to that reliance was also placed on the following decision :- (a) CIT v. Orissa Corporation P. Ltd., (1986) 159ITR 78 (SC) (1986) 52 CTR 138 in the instant case, the Hon'ble Apex Court held as under : "In this case, the assessee had given the names and address of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income tax assessees. Their index numbers were income tax assessees. Their index numbers were in the file of the Revenue. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or preserve or based on no evidence. If the conclusion is based on same evidence on which a conclusion could be arrived at, no question of law as such arises." 22.Now ....
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....re in question before the Tribunal in the instant two appeals before us. It has been clearly held by the Hon'ble Tribunal that all the alleged four companies are genuine and unsecured loans from these companies cannot be held to be unexplained cash credit u/s 68 of the Act. Even the linking of the assessee's case to the Lunkard Group was there in the case of ACIT V/s Girish Kumar Sharda (supra) and detailed finding has been given by the Tribunal in its order dated 30.1.2014. It is also evident from the perusal of the record that all the four companies are regularly assessed to tax and their assessment u/s 143(3) of the Act have been framed for Assessment Year 2006-07 and copies of the same are placed at page 66-73 of the paper book. They carry regular business activities and have sufficient funds for giving on credit towards interest. Identity of four companies are well established. Genuineness is duly proved by the transactions which are made through account payee cheque. All necessary details including bank statement/ financial statements, confirmation of account, PAN detail have been filed with these four companies and are placed on record at all proceedings are sufficient t....
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....essee is of real estate business and leased out properties were commercial complex, therefore the alleged receipt of Rs. 26,87,635/- is a business receipt and no deduction is allowable u/s 24 of the Act. Appeal filed by the assessee before the Ld.CIT(A) find no favour to the assessee. 22. Now the assessee is in appeal before the Tribunal. 23. Ld. Counsel for the assessee has made following written submissions in support of his contention that the rental income from the said unsold immoveable property is being regularly shown under the head income from house property and deduction u/s 24 of the Act have been claimed consistently. In the subsequent years also this claim has been allowed by the revenue authorities. 1. In the appellant's case for the said AY appellant was engaged in the business of real estate. 2. That appellant had shown rental income of Rs. 26,87,635/- under the head income from house property and claimed standard deduction of 30% u/s 24 of Income Tax Act, 1961 amounting to Rs. 7,92,350/- while offering the rental income for income tax. 3. That Ld.AO had alleged that the appellant has wrongly considered the rental income as income from house property instea....
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.... unsold were being rented out. The rented immoveable properties are included in the closing stock of the company. Now whether the rental income received from such immovable properties which are part of the business stock are to be taken as business income or from house property. The above question needs to be adjudicated in the light of judicial pronouncements of Hon'ble Apex Court in the case of East India Housing and Land Development Trust Ltd (Supra) wherein Hon'ble Apex Court has categorically held that "the income derived by the company from shops and stalls was income received from house property and fell under the specific head described in Section 9. The character of that income was not altered because it was received by the company formed with the object of developing and setting up markets". 26. The Hon'ble High Court of Calcutta in the case of Azimganj Estate Pvt. Ltd Vs CIT held that "in the case of property builder and developer assessee-rental income from unsold flats are to be taken as income from house property". 27. Hon'ble High Court of Delhi in the case of New Delhi Hotels Ltd has also held that "in case of property builder and developer assesse....