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2020 (6) TMI 567
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....g the impugned addition of Rs. 98,65,025/- on grounds of discrepancy in stock. The Ld. AO has recorded that a survey operation u/s 133A of the Income Tax Act, 1961 was conducted on 20.01.2015 in the business premises of the assessee at 4, India Exchange Place,2nd Floor, Kolkata- 700 001, and after that the case was converted for scrutiny and statutory notices issued in the matter. The Ld. AO has recorded that during the scrutiny there was compliance by the assessee and the Id. A.R for the assessee-firm appeared from time to time to represent the case, filed written submissions and documents as asked for. The jurisdictional facts as recorded by the Ld. AO are that during the course of survey operation conducted on 20.01.2015, the physical stock was verified by survey team in the presence of the assessee firm's employee, Shri Praveen Sharma and the same was duly certified by Sri Jagdish Pd. Goel, one of the partners of assessee firm. According to the Ld. AO, upon the physical verification of stock, the value of stock was determined at Rs. 7,24,02,168/- which was duly agreed by Sri Jagdish Pd. Goel but closing stock as per computer extract impounded during the course of survey was....
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....y of the appellant firm and Rebate &. Discount was taken at an arbitrary figure. b. Although documentary evidences and impounded Tally Data conspicuously shows that those stock pertains to the Associate concern which was operating from the same common Godown. c. The discrepancies had been clarified before the Ld A.O by the appellant by stating that figures of Profit and Loss Account draw upto 20.01.2015 were exactly in conformity with the Profit & Loss Account drawn by the survey team. The exception is that the arbitrary figures of rebate & discount of Rs. 52,00,000/- credited by the surveying officers, and only they could explain the same. d. The survey team took figures of Inventory at Rs. 7,24,02,168/- which unfortunately includes inventory figure of our Associate concern of Sree Bishandas Iron Works (PAN - AANFS0164Q) of Rs. 98,65,025/-. The list of Inventory of Sree Bishandas Iron Works are given in Annexure-2. The details of our stock statement as at 2014-15 was Rs. 6,25,37,1 73/- list attached in Annexure-3. e. The documentary evidences attached with such inventory list conclusively prove that the survey team wrongly included the said inve....
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....this acceptance was obvious. The appellant firm during the course of hearing reconciled the entire stock found by the survey team conclusively. However, the Ld. A.O only accepted the reconciliation to the tune of Rs. 6,25,37,143/- and added the alleged difference in stock of Rs. 98,65,025/ - to the income the appellant without considering the reconciliation in proper perspective by ignoring all the relevant material facts and evidences on record. Further, this alleged stock of Rs. 98,65,025/- was duly reflected in the books of account of M/s Sree Bishandas Iron Works and the electronic data of the books of accounts was contained in the impounded Hard Drive which can be easily verified. The relevant portion of the submission dated 22.12.2017 is extracted below: "The figures of stock of 192.31MT + 52.963 M.T=245.273M.T in Page 8 of the Physical Inventory Sheet, however, pertains to the stock of the Associate firm, M/s. Shree Bishandas Iron Works lying in the premises as both the firm operates from the common godown at 321, G . T. Road (North), P. O. Beturmath, Howrah - 711 202. The tally data of Sree Bishandas Iron Works is also in the impounded Hard Disk kept in your record....
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....obative value or quality of above document upon applying their mind on it and found that information contained in or revealed by document was not linked to undisclosed income of assessee and, hence, rejected reasoning of Assessing Officer on basis of which latter came to his finding that figures appearing on said document could be computed to arrive at undisclosed income of assessee -Whether since both appellate authorities had examined said document and found that same could not be connected with assessee's transaction, findings of appellate authorities could not be held to be perverse - Held, yes [Paras 10 and 11] [In favour of assessee]" l. Your appellant in support of its claim provided all possible and necessary evidences. In the assessment order no definite finding regarding stock discrepancy detected in the course of survey was spelt out although generalized comment was made regarding discrepancy in stock. From the above submission of alleged stock of Rs. 98,65,025/- it is clear that no cogent material was unearthed during the survey or post survey investigation or assessment proceedings to suggest that the assessee has indulged in making undisclosed purchases o....
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....ce along with statement reconciling the amount of Rs. 98,65,025/- with tax invoices showing the amount of Rs. 98,65,025/-belong to the sister concern and the amount also reflected in the stock summary of the sister concern. 6. I have carefully perused the appellant's contention and written submission along with relevant paper book no. 37-68 where it is apparent that the amount of Rs. 98,65,025/- belong to the appellant's sister concern namely M/s Sree Bishandas Iron Works. I have also gone through the impounded electronic data printout where the books of accounts of the sister concern also recorded and it is apparent from this record that the stock summary, ledger copies and invoices as produced by the appellant do tally with the electronic impounded data record. Further I have also considered the appellant argument that the assessing officer has exercised his discretion against the assessee and in favour of the revenue. The reason for exercising such discretion is that the alleged stock was found in the common premises of the appellant and such stock inventory was identifiable.[Paper Book pg no.29-37], 7. The appellant also refers the ju....
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....f appeal 2 & 3 taken by the appellant are allowed." 3. We have given our thoughtful consideration against and in support of the impugned addition. There is no dispute on facts about the department's having carried out survey action at assessee's business premises allegedly suggesting stock inventory of Rs.98,65,025/- terming subject matter of the impugned addition. We notice from the case records that the clinching aspect which requires our consideration is that the assessee had duly produced item no. KSP/HD/1 as well as books of its sister concern namely M/s. Sree Bishandas Iron Works indicating the impugned differential stock belonging to the said other party only. Learned DR's vehement contention seeking to rely on the assessee's alleged survey statement goes contrary to the CBDT circular issued way back on 10.03.2003 that mere search/survey statements. do not carry any significance without supportive evidence. We go by the very analogy in the facts of this case and hold that the mere reliance on the alleged survey statement without having any corresponding evidence in support would not help the Revenue's case. We thus affirm CIT(A)'s action deleting t....
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....er A.Y 2-14-15, being Rs. 8,70,12,823/ -, and this surely indicates the capacity of the Loan Creditor. The appellant also refer decision of the Income Tax Appellate Tribunal (Delhi Bench I) in the case of Golden Remedies (P.) Ltd vs Income-tax Officer, Ward 12(2) , New Delhi [[2007] 18 SOT 260 (DELHI] where it was held that "Whether where assessee had taken loans from three parties through account payee cheques and had repaid same through account payee cheques, which was duly confirmed by each of parties and assessee had also produced bank accounts and permanent account numbers of each of parties to support its case, Assessing Officer was not justified in treating said transactions as non-genuine, and therefore, no addition could be made under section 68 - Held, yes" 6. It was further pleaded by the assessee-firm that the loan given by the loan creditors from their owned fund as the loan creditors does not have any long term loan funds which is clearly substantiate through financial statements of the loan creditors. The Capital structure of the Loan Creditor is extracted below: Amount (Rs.) (a) Share Capital 1,29,30,000/- (b) Reserves and Sur....
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....ssee such credit has to be a sum of money received by the assessee during the assessment year and the assessee either offers no explanation about the nature and source of such credit found in the books of account or the explanation offered by the assessee in the opinion of the Ld. A. O is not satisfactory. It is only then the sums found credited in the books may be treated to be the income of the assessee of the previous year, "Assessee offers no explanation" has been defined by the Hon'ble Supreme Court in the case of P. Mohanakala (supra) to mean the assessee offers no proper reasonable and acceptable explanation as regards the sum found credited in the books maintained by the assessee. 9. The Capital structure of this Loan Creditor is extracted below: Amount (Rs.) (a) Share Capital 1,61,18,200/- (h) Reserves and Surplus 28,85,64,745/- Total Shareholders Fund 30,46,82,945/- Loan given to Kwality Steel Processors(appellant) during the year of Rs. 72,00,000/-. The loan was given to the appellant in the normal course of business due to exigencies and contingencies and your appellant has duly provided interest on such loan and duly....
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....is case, I find that the loan creditors duly filed their confirmation with in stipulated time frame along with all the requisitions. Therefore above decision would not properly fit in the instant case. The assessee had not obtained the loans in any public issue but it is privately placed. During the course of assessment proceedings it is not controverted that assessee has submitted details before the Assessing Officer with respect to loan. Namely, and address of lenders their PAN, confirmation of the parties with respect to above transactions, Photocopy of bank accounts of the parties from whom the amount of loans have been paid to the assessee. Photocopy of Income Tax Return of the lenders, Balance sheet of the depositors. On furnishing of information by the assessee of all the companies, from whom the assessee has taken unsecured loan, the Ld. A.O had not at all carried out any investigation to show that those companies do not exist but were paper company; they were not having worth of investing in the company and the transaction lacks genuinity despite having their income tax details and annual accounts. Despite specific request, no details are called for either from the assesse....
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....e Income-tax Act with the Assessing Officer of those companies to investigate the correct facts then should have placed before the assessee to rebut it. Strangely, none of the above exercise has been carried out by the Assessing Officer. None of them has been looked at leave aside the exercise of such powers. In such circumstances, it is apparent that Assessing Officer does not have any evidence to allege that loans taken by the assessee is bogus. Hence, that assessee has discharged initial onus cast upon him under section 68 with respect to loan. 12. Further reliance is placed on the decision of Hon'ble Calcutta High Court in the case of CIT-III v Dataware Pvt. Ltd. ITA No. 263 of 2011 wherein it was held as under: In our opinion, in such circumstances, the Assessing officer of the assessee cannot take the burden of assessing the profit and loss account of the creditor when admittedly the creditor himself is an income tcuc assessee. After getting the PAN number and getting the information that the creditor is assessed under the Act, the Assessing officer should enquire from the Assessing Officer of the creditor as to the genuineness of the transaction and whe....
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....s no merit. 13. FINDINGS & DECISION: While adjudicating the matter of the disputed loans, I have decided the matter in favour of the appellant. As a sequel and corollary, the payment of interest on account of these loans is also held to be genuine, and the addition on account of the disallowance of interest of Rs. 19,43,506/- is also deleted. The ground, as a result stands allowed." 5. We have given our thoughtful consideration to rival pleadings against and in support of the impugned addition. There is hardly any dispute about the basic fact that the assessee had claimed the impugned sum as unsecured loan coming from two parties i.e. M/s. Admire Vinimay Pvt. Ltd. and M/s. Ginni Vinimay Pvt. Ltd. involving sums of Rs.28 lakhs and Rs.72 lakhs; respectively. The Revenue's stand as per the Assessing Officer's findings is that these two entities have been found to have been providing accommodation entries in departmental investigation. We note during the course of hearing that not only the assessee had proved identity, genuineness and creditworthiness of both these entities right in scrutiny but also the said entities duly responded to the Assessing Officer's verifi....