TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 119
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....re decided by the common order for the sake of brevity and convenience. 2. First, we are taking the appeals for the assessment year 2011-12 in M/s. Pacific Leasing and Research Ltd. The Revenue in its appeal in I. T. A. No. 331/Jodh/2018, has raised the following grounds of appeal : 1. Whether on the facts and in the circumstances of the case and in taw the Commissioner of Income-tax (Appeals) was justified in deleting the addition of Rs. 7,00,00,000 out of the total addition of Rs. 8,24,50,000 made by the Assessing Officer under section 68 of the Income-tax Act on account of unsecured loans obtained by the asses see. 2. Whether on the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) was justified in deleting the additions when the assessee failed to produce the alleged creditors for verification. 3. Whether on the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) was justified in deleting the additions when the creditworthiness of the alleged creditor was not established. 3. The assessee in its cross-appeal in I. T. A. No. 311/Jodh/2018 has raised the following grounds of appeal : ....
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....ee filed its return of income declaring an income of Rs. 1,18,580 on March 26, 2016, declaring the same income as declared while filing the original return of income under section 139. The assessment was completed under section 153A read with section 143(3) on December 29, 2017. The Assessing Officer while passing the assessment order made the addition on account of unsecured loan received by the assessee from the following eight parties aggregating to Rs. 8,24,50,000 : Sl. No. Name of parties Amount of loan (Rs.) 1. Bankebihari Commercial Pvt. Ltd. 25,00,000 2. Desire Vincom Pvt. Ltd. 4,50,000 3. Dream Vally Sales Pvt. Ltd. 50,00,000 4. MVS Leasing Pvt. Ltd. 5,50,00,000 5. Silverlake Traders Pvt. Ltd. 5,00,00,000 6. Sunview Retails Pvt. Ltd. 1,00,00,000 7. Trend Tradecorn Pvt. Ltd. 20,00,000 8. Zigma Commtrade Pvt. Ltd. 25,00,000 8,24,50,000 5. During the assessment proceeding, the Assessing Officer asked the assessee to furnish the details of unsecured loan. The assessee furnished its reply along with the documentary evidence to substantiate the identity of the loan creditor, creditworthiness and genui....
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....ave admitted that they provided accommodation entry in the form of long-term capital gains or unsecured loan. The said statements were not related to the assessee. Such statement has no evidentiary value. No cross-examination of such person was provided to the assessee. The original assessment for the year under consideration was already completed and the addition in reassessment under section 153A is invalid in the absence of any incriminating material found during the search. The learned authorised representative further submits that the addition in the unabated assessment cannot be made in the absence of incriminating material unearthed during the search. No such incriminating material for making addition on account of share application was found during the search, therefore, the entire additions in the assessment order on account of share application is liable to be deleted. In support of his submission, the learned authorised representative relied upon the decision of the Delhi Tribunal in Anurag Dalmia v. Dy. CIT in I. T. A. Nos. 5395 and 5396/Delhi/2017 dated February 15, 2018, the Visakhapatnam Tribunal in G. Koteshwara Rao v. Dy. CIT [2015] 64 taxmann.com 159 (Vizag), the ....
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.... Gutgutia, prop. M/s. Ferns "N" Petals [2017] 395 ITR 526 (Delhi) ; [2017] 295 CTR 466 (Delhi) (vii) CIT v. Kabul Chawla [2016] 380 ITR 573 (Delhi) 9. On the other hand, the learned Departmental representative for the Revenue supported the order of the Assessing Officer. The learned Departmental representative further submits that the assessee has not challenged the validity of assessment, either during the assessment or during the first appellate stage. 10. In the rejoinder submission, the learned authorised representative of the assessee submits that during the assessment proceeding, the assessee has raised specific objection that the original assessment was already completed under section 143(3) or intimation under section 143(1) was issued or the time for issuance of notice under section 143(2) was already lapsed when the notice under section 153A was issued. The assessee also raised the objection that no incriminating material qua the addition was found in the search. This fact is duly recorded by the Assessing Officer in para 5.7 at page Nos. 4 to 8 of the assessment order. The learned authorised representative further submits that the assessee raised the ground of appeal....
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...., the legal ground raised by the assessee is allowed and the assessment order is held as invalid, consequent upon the entire addition made therein are directed to be deleted. 14. As we have held that the addition in the assessment order is invalid, therefore, the discussions on alternative submission of the assessee on the merits as well as on other grounds of appeal have become academic. 15. In the result, the appeal of the assessee for the assessment year 2011-12 is allowed consequently the appeal filed by the Revenue is dismissed I. T. A. No. 324/Jodh/2018 for assessment year 2014-15 by the Revenue 16. The Revenue has raised the following grounds of appeal : "1. Whether on the facts and in the circumstances of the case and in law the Commissioner of Income-tax (Appeals) was justified in deleting the addition of Rs. 1,75,00,000 made by the Assessing Officer under section 68 of the Income-tax Act on account of unsecured loans obtained by the assessee. 2. Whether on the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) was justified in deleting the additions when the assessee failed to produce the alleged creditors for verificat....
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...., therefore, no addition in the completed assessment unless incriminating material came in possession of the Assessing Officer, can be made. The assessee also submitted that they have already furnished the confirmation and copy of the account of each of the respective creditors along with the Income-tax return, balance-sheet of the said creditor, in their reply in response to the notice under section 131 on November 10, 2015 and on June 8, 2016. The assessee also relied upon certain case law. The contention of the assessee was not accepted by the Assessing Officer holding that the Deputy Director of Income-tax, Kolkata had made investigation and the entities from which the assessee has obtained unsecured loan are Kolkata base are shell companies. The Assessing Officer made the addition aggregate of the amount of unsecured loan. On appeal before the learned Commissioner of Income-tax (Appeals), the entire addition was deleted by the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) deleted the entire addition after seeking remand report from the Assessing Officer. The learned Commissioner of Income-tax (Appeals) concluded that the assesse....
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.... relief to the assessee on the merits of. Therefore, we are of the view that the assessee can raise such plea by taking the course of rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963. 21. The hon'ble Gujarat High Court in Pr. CIT v. Sun Pharmaceuticals Industries Ltd. [2018] 408 ITR 517 (Guj) ; [2017] 86 taxmann.com 148 (Guj) held that, though the assessee has not appealed, can defend the order appealed against on any ground decided against him by the lower authority, whose order is otherwise in his favour. 22. The hon'ble Bombay High Court in Skol Breweries Ltd. v. Asst. CIT in I. T. A. No. 34 of 2009 dated February 19, 2009 held that rule 27 specifically provides that it is open to the appellant in respect of ground which had been held against him to support the order of any of the grounds decided against him. If the issue of jurisdiction is held in favour of the appellant then even though on the merits the order may have been against the assessee-appellant, yet the appeal paper by the Revenue will have to be dismissed if lack of jurisdiction is established. Admittedly the Assessing Officer nowhere in the assessment order referred that the addition made by him....
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....g and Finance Pvt. Ltd. whereas the appellant in discharge of its onus under section 68 of the Act has filed confirmation of accounts as well as bank statements reflecting the transactions with other substantiating documents, which are available at page Nos. 56-230 of the paper book and also in common paper book and further common paper book filed separately. From these documentary evidences placed on record identity, creditworthiness and genuineness of trans actions is established. There is no gain saying that the onus squarely lies on the appellant to prove the identity, creditworthiness and genuineness of the cash credits. In the case of Addl. CIT v. Bahri Bros P. Ltd. [1985] 154 ITR 244 (Patna), the hon'ble Patna High Court has held 'if the loans are given by an account payee cheque, it amounts to identification of the parties and discharge of burden by the borrower'. In view of the above, it is clear that the appellant discharged its burden under section 68 of the Act. Even otherwise, there is no adverse finding of any investigation conducted by the Department in relation to this company. Therefore, in the absence of any independ ent inquiry and any adverse finding....
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.... P. Agarwal recorded during search under section 132(4) wherein he made disclosure in respect of long-term capital gain in his individual hands. I have gone through the statement of Shri J. P. Agarwal and his disclosure made in his statement, notably, the disclosure made was in his personal capacity only and with respect to long-term capital gains only and not in respect of any other transactions be it be receipt of unsecured loans. Therefore, I find that in the absence of any nexus of the statement of Shri J. P. Agarwal with the appellant or its total income, this basis of addition adopted by the Assessing Officer is farfetched and cannot be concurred. 4.3.6 Further, the Assessing Officer has treated the various companies from whom unsecured loans were received as shell companies based on initial investigation carried out behind the back of the appellant. In the instance case, the Assessing Officer has considered only part of the investigation and not full outcome of the investigation carried out. It is seen that in the report dated December 21, 2017, the Deputy Director of Income-tax, (Investigation) has forwarded its report on compliances made by the lender companies, however,....
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....ra Nos. 3.36 to 3.43 above. 4.3.9 It is a settled judicial position that under the Income-tax law primary burden under section 68 of the Act is on the appellant and once this burden is discharged under section 68 of the Act, no addition under section 68 of the Act is justifiable in the hands of the asses see in view of the judgments in case of Shree Barkha Synthetics Ltd. v. Asst. CIT [2006] 283 ITR 377 (Raj) ; [2006] 155 Taxman 289 (Raj), CIT v. Morani Automotives (P.) Ltd. [2014] 264 CTR 86 (Raj), CIT v. Orissa Corporation P. Ltd. [1986] 159 ITR 78 (SC) ; 25 Taxman 80F (SC), CIT v. Mark Hospitals (P.) Ltd. [2015] 373 ITR 115 (Mad), CIT v. Jai Kumar Bakliwal [2014] 366 ITR 217 (Raj), CIT v. Creative World Telefilms Ltd. [2011] 333 ITR 100 (Bom), CIT v. Patel Maheshbhai Dahyabhai [2014] 222 Taxman 153 (Guj), Pr. CIT v. G and G Pharma India Ltd. [2016] 384 ITR 147 (Delhi) referred to above which have been followed recent by hon'ble Delhi Tribunal in the case of ITO v. Softline Creations (P) Ltd. in I. T. A. No. 744/Delhi/2012 vide its order dated February 10, 2016 [2016] 51 ITR (Trib) 460 (Delhi). Further the hon'ble apex court as well as the High Court has held that once ....
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....he Assessing Officer of those lenders, whether in their respective returns they had shown existence of such amount of money and had further shown that those amount of money had been lent to the assessee. If before verifying of such fact from the Assessing Officer of the lenders of the assessee, the Assessing Officer decides to examine the lenders and asks the assessee to further prove the genuineness and creditworthiness of the transaction, the Assessing Officer does not follow the principle laid down under section 68. (para 16)' In the instant case before me, the Assessing Officer has not followed the due procedure of law under section 68 of the Act There fore, requiring the assessee to produce the directors of the lender company was not legally tenable in view of the judgment of the Gujarat High Court (supra). 4.3.12 It must be mentioned that the unsecured loans from Glaze Construction Pvt. Ltd. Nihon Commodities Pvt. Ltd. and VSG Leasing and Finance Pvt. Ltd. are paid back as confirmed by the Assessing Officer in his supplementary remand report dated April 4, 2018 and there is not a single statement or report to implicate Grove Suppliers Pvt. Ltd. to hold them as shell c....
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....0 made by the Assessing Officer under section 63 of the Income-tax Act on account of unsecured loans obtained by the assessee. 2. Whether on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Appeals) was justified in deleting the additions when the assessee failed to produce the alleged creditors for verification. 3. Whether on the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) was justified in deleting the additions when the creditworthiness of the alleged creditor was not established before the Assessing Officer. 4. Whether on the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) was justified in deleting the addition of Rs. 38,34,910 made by the Income-tax Officer by disallowing the claim of interest expenses on unsecured loans treated as bogus by the Assessing Officer." 27. We have noted that ground Nos. 1 to 3 is identical to the ground of appeal raised in appeal for the assessment year 2014-15, except variation of figure. In appeal for the assessment year 2014-15, we have already affirmed the order of the learned Commissioner of Income-tax (A....
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....he assessee has received unsecured loan of Rs. 7 crores from M/s. MVS Leasing Pvt. Ltd. The Assessing Officer asked the assessee to prove the identity and genuineness of transaction and creditworthy of the lender. The assessee furnished the confirmation of the loan. The Assessing Officer on his observation that during search and as well as the post-search action Shri J. P. Agarwal, who is the key person of the group made statement about the accommodation entry in the form of long-term capital gains. The assessee vide its reply dated November 27, 2017 objected that the assessment for the years 2010-11 to 2016-17 already completed either under section 143(3) or section 143(1) or the time for issuance of notice under section 143(2) has already expired and the assessment will not abate. As there is no incriminating material was recovered during the search, therefore, no addition on account of unsecured loan can be made. The assessee also contended that in the regular assessment, the issue was examined and was accepted. The contention of the assessee was not accepted by the Assessing Officer, the Assessing Officer on his observation as we have already noted in the assessee's group c....
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....the submission of the assessee is also accepted in dismissing the appeal of the Revenue in view of rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963. 35. In the result, the appeal of the Revenue is dismissed. I. T. A. No. 322/Jodh/2018 by the Revenue for the assessment year 2014-15 (Pacific industrial Limited, Mumbai). The Revenue has raised the following grounds of appeal : "1. Whether on the facts and in the circumstances of case and in law, the Commissioner of Income-tax (Appeals) was justified in deleting the addition of Rs. 75,00,000 made by the Assessing Officer under section 68 of the Income-tax Act on account of unsecured loans obtained by the assessee. 2. Whether on the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) was justified in deleting the additions when the assessee failed to produce the alleged creditors for verification. 3. Whether on the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) was instilled in deleting the additions when the creditworthiness of the alleged creditor was not established before the Assessing Officer." 36. We have noted that the ....