TaxTMI 
TaxTMI 
2021 (1) TMI 941
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....ssee was asked to submit the documents to prove the genuineness of the transactions. Assessee has submitted bank statement and income tax return. Assessee has not submitted balance sheet and confirmation of the loan from the director. AO could not verify the nature of transaction, whether it is out of accumulated capital. Since assessee has not submitted balance sheet and confirmation, AO treated this transaction as unexplained credit since assessee has failed to substantiate the identity, credit worthiness and genuineness of the transaction. Further, AO observed that assessee was having business transaction with seven trade creditors and in order to verify the genuineness of the trade transactions, he issued notice u/s 133(6) of the Act to all these creditors. Since most of the parties are not traceable, he issued notice 131 to the assessee to produce the parties. No parties were produced before him, he treated these transactions as not genuine and he made addition u/s 68 of the Act as the genuineness and identity of the creditors are not established. He made addition to the extent of Rs. 3,86,58,127/-. 3. AO observed that Kalash Enterprises is part of Rajendra Jain group conce....
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....the appellant company as its income u/s.41(1) of the Act. During the course of appellate proceedings, it was submitted that in respect of M/s.Divya Jewels, there was no business transactions during the impugned assessment year and the credit outstanding was re-paid in AY 2015-16. The details of transactions were filed before the Ld.AO vide appellant's letter dated 23-11-2016. As regards Shri Girish Agarwal and Smt. Poonam Agarwal, it was stated by Ld. AR that first was Director's remunerations and the second was salary paid on which IDS was regularly deducted and hence, there was no ground on which such addition can be made. Further as regards Jewel Diamond, it was stated that no business transaction was carried out with the said entity during the impugned assessment year and here again it was re-paid in AY 2015-16. As far as Renisha Impex P Ltd. is concerned, it was stated that during the year, regular business transaction with the said entity for purchase and payments were also made and the outstanding balance was re-paid in AY 2015-16. As far as Varun Gems is concerned, it was again stated that there were regular business transactions with the appellant during the AYs 20....
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....ccommodation entry and hence, as per the margin in Diamond Industry ranging from 1 to 4.5%, he made the addition of 5% as the appellant's transactions were in the grey market. During the course of appellate proceedings, Ld. AR argued that merely on the basis of suspicion, no addition could be made and even the said Rajendra Jain had retracted his statement. Ld.AR has relied on the decision of Hon'ble Bombay High Court in the case of Babulal C. Borana - 282 ITR 251 where it was held that amounts could not be added as undisclosed investment only because the vendor denied the transaction. He also relied on the decision of Hon'ble ITAT. Mumbai in the case of Raieev G Kalathil in ITR 6727/M/2012 dated 20-08-2014. Ganpat A Sanqhvi in ITR 2826/M/2013 and Rarnjla Pravin S. in ITR 5246/M/2013 to substantiate that even in case of Hawala Dealers in the Sales Tax Department, no addition could be made only on the grounds of suspicion, if payments were duly recorded by account payee cheques and no evidence was available that cash had been received back. 2.4.12. Having considered the pros and cons, I find that the issue at hand is squarely covered by the decisions cited at hand and Ld....
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....en though AO issued notice u/s 133(6) to all the parties and none of the parties has attended before the AO, which clearly indicates that the transactions with these parties are not genuine and she supported the findings of AO. 7.2 With regard to Ground No. 3, Ld. DR submitted that the purchases made by assessee are not proved to be genuine and assessee has taken these purchases from the group concerns which are controlled by Rajendra Jain, she submitted that the investigation wing has found that these group is involved in hawala and providing of accommodation entries. Therefore, AO has fairly made addition only to the extent of benefit enjoyed by the assessee. 8. On the other hand, Ld. AR brought to our notice the written submission filed by assessee, which is reproduced below:- * Submission on ground no. 1: Unexplained Cash Credit on account of outstanding loan balance of Director - Mr. Vivek Surana amounting to Rs. 79,50,000/-. 3. During the year under an appeal, the appellant company has regular loan transactions with one of its director named Mr. Vivek Surana. There was a opening credit balance of Rs. 60,00,000/- and appellant company has received....
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.... III. To prove the Genuineness of the above loan transaction, appellant has submitted the extract of Bank Statement for all receipt and payment of loan transaction with the director Mr. Vivek Surana, duly highlighting the entries of loan received and paid by the appellant company. Your honor can refer page no. 63 to 72 and 153 to 189 of the paper book, the details in length were submitted. Therefore, the findings given by the Ld. AO was in the contradiction of section 68 of the Act. 8. By submitting the above details, the appellant has discharged his primary onus of proving the loan transaction as Genuine Transaction. However, the Ld. Assessing Officer without considering the facts and circumstances of the case erred in making addition of Rs. 79,50,000/- being the amount received towards loan transaction u/s. 68 as Unexplained Cash Credit without having any jurisdiction. 9. In para 2.4.7 of CIT(A) order, the CIT(A) had clearly stated that the assessee had satisfied all the 3 ingredients of section 68 of the Act and hence, the addition made cannot be sustained. > Further, following legal position/ judicial rulings on the subject under consideration must be ....
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....t. v. Similarly as held in the case of CIT v. Metachem Industries (2000) 245 ITR 160 (MP) where a credit is shown to have come from a person other than the assessee, there is no further responsibility of the assessee to show that it has come from accounted source of the lender, as long as the fact that he had made the advance and was capable of making the advance are established. vi. It was held by the Hon'ble Madras High Court in Hastimal (S) v. CIT (1963) 49 ITR 273 that after a lapse of decade, the assessee should not be placed upon the rack and called upon to explain not merely the origin and source of a capital contribution, but also the origin of origin and source of the source. vii. Recently in a similar case that of the Assessee, The honorable ITAT Delhi in the case of ITO, Ward 15 (2) vs. M/s. Rakam Money Matters P. Ltd. has held that "AO has to bring on record any valid material or evidence to discredit the evidences and the explanation given by the assessee company and cannot rely only on statement of third parties recorded by the investigation wing. Thus it is settled law that in the matter of cash credit, assessee needs to prove ....
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....n M/s. SDB Estate Pvt Ltd vs. ITO-(5)(3)(2) in ITA No. 584/Mum/2015: AY 2008-09. xvii. Further ITAT-"D" Bench has decided the following cases in favour of the assessee on similar issues. a) ITO - 10(2)(1) vs. M/s. Deep Darshan Properties Pvt Ltd in ITA No. 2117/Mum/2014 : AY 2006-07 and ITA No.2118/Mum/2014 : AY 2007-08 b) ITO -10(2)(3) vs. Aajivan Computers Pvt Ltd in ITA No.2160/Mum/2014 :AY 2006-07 c) ITO -10(2)(3) vs. Dignity Securities Trading Pvt Ltd in ITA No.2157/Mum/2014 :AY 2006-07 d) ITO -10(2)(1) vs. M/s. Blue Hill Properties Pvt Ltd in ITA No.2119/Mum/2014 :AY 2006-07 With the facts and various Judicial rulings as discussed above, it is crystal clear that the Unsecured Loan Received by the appellant was genuine and cannot be treated as Accommodation entry. Humble Prayer:- The unsecured loan is genuine and duly supported by documentary evidence. Hence, the addition of Rs. 79,50,000/- made by the Ld. AO requires to be deleted as the same was on assumption basis which does not have any stand in law and requires to be deleted. Therefore, we request your honor to kindly rely on CIT(A) order. * ....
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.... or deduction has been made is in existence in that year or not; or b. the successor in business has obtained, whether in cash or in any other manner whatsoever, any amount in respect of which loss or expenditure was incurred by the first-mentioned person or some benefit in respect of the trading liability referred to in clause (a) by way of remission or cessation thereof, the amount obtained by the successor in business or the value of benefit accruing to the successor in business shall be deemed to be profits and gains of the business or profession, and accordingly chargeable to income-tax as the income of that previous year. Explanation l.-For the purposes of this sub-section, the expression "loss or expenditure or some benefit in respect of any such trading liability by way of remission or cessation thereof shall include the remission or cessation of any liability by a unilateral act by the first mentioned person under clause (a) or the successor in business under clause (b) of that sub-section by way of writing off such liability in his accounts. Explanation 2.-For the purposes of this sub-section, "successor in business" means,-i.where there has bee....
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....there was accumulation of last so many years. * Each and every year, the appellant paying off liability of remuneration to director, [paper book - page 51] M/s. Jewel Diamond 1,22,73,273/- Creditor: No business transaction during the A.Y.2014-15. Amount was repaid in A.Y.2015- 16 [paper book - page 52 & 53] Ms. Poonam Agarwal 5,50,810/- Salary A/c.: The appellant regularly making payment. TDS was deducted on monthly basis, [paper book - page 54] Paid taxes to government,income tax return filed, computation of total income, Income and expenditure A/c , capital A/c, Balance sheet [paper book -page 190 to 194]. M/s. Renisha Impex Pvt. Ltd 1,45,77,298/- Creditor: There were regular business transaction during the A.Y.2014-15, i.e. regular purchase and payments thereof. Entire outstanding amount was repaid in A.Y.2015-16 [paper book - page 55 & 56] M/s. Varun Gems 36,48,306/- Creditor There were regular business transactions during the A.Y.2014-15 and A.Y.2015-16, i.e. regular purchase and payments thereof. [paper book - page 57,58 & 59] Hence, question of payment of outstanding liability does not arise....
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....evidence, no evidence that cash received back. Addition cannot be made: The only Reliance is on the basis of third party enquiry and suspicions and there is no finding evidence of cash given by the suspicious lender to the assessee nor is any cash found over and above the cash as per books. The third party unilateral act cannot be the basis of addition. Your assessee has already submitted the relevant details of party with their confirmations, their banks statements, their ITR Acknowledgement and the payments made by "Account Payee Cheque" which is also verify by the Ld. AO u/s 133(6). Thus the addition purported to be made is made on suspicious. In present case transactions are duly supported by the documents and AO has not any evidence that cash is received back by the respondent. Therefore, the addition cannot be made. Ratio of the below mentioned judgments: {suspicious cannot take place the evidence} The Ld. AO suspected and noted that as the purchases were from one of the group concern of Mr. Rajendra Jain who was engaged in providing bogus entries. But the Ld. AO failed to appreciate fact that the said statement was retracted by him. Hence, the same....
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....N LAL JEWELS (P) LTD (2012) 147 TTJ 308 (DEL) (TRIB) The assessee while furnishing necessary information reading the transactions and the aforesaid parties like purchase bills issued against goods purchased, sales tax registration numbers of the parties, PAN's, their confirmations and Bank statements showing the debit of the amount paid through account payee cheques to them in the account of assessee and credited in the Bank Account of sellers, had discharged its primary onus, thereafter the onus shifted on the department to rebut the same. Addition under section 69C was held to be not justified. C.G. DIAMOND INTERNATIONAL v. DY CIT (2006) 104 TTJ 809 (MUM) (TRIB) It is not the case of the Revenue that the assessee is not maintaining books of account. The purchases are recorded in the books of account. Payments are made by cheques to the immediate purchasers. They accepted and confirmed the sale. To hold otherwise, there should be some evidence in the possession of the Revenue. Suspicion, however strong, cannot take the place of evidence and that alone cannot be the criteria for deciding the matter. DY. CIT v. KIRTILAL KALIDAS JEWELLERS ....
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....NT INVESTMENT CORPORATION (1999) 238 ITR 680 (CAL) Transaction duly supported by the evidence, no evidence that cash received back. Addition cannot be made. CIT v. M K BROS (163 ITR 249) ITO v. KANCHANWALA GEMS 122 TTJ 854 Identity, source of payment explained, bank payment, books of account accepted, then addition of book entries cannot be take place. BABULAL C BORANA v. ITO (282 ITR 251) Issue is also decided by the Hon'ble Jurisdictional Tribunal in case GANPATRAJSANGHI SHRI GANPATRAJ A. SANGHAVI v ACIT I.T.A. No 2826/ MUM/2013 Alternatively, Without prejudice to the above, the credit of bogus purchase will be allowed if the same is sold or lying in stock. FREE INDIA ASSURANCE SERVICE LTD v. DCIT (2011) 12 TAXMANN.COM 424 (MUM) Bogus purchases: Fact that suppliers names appear in the list of hawala dealers of the sales tax department and that assesses is unable to produce them does not mean that the purchases are bogus if the payment is through banking channels and GP ratio abnormally high. ASSTT. CIT v. SHRI RAMILA PRAVIN S NO. 5246/MUM/2013 If the payment of purchase....
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....ion with Director cannot be termed as non-genuine. Therefore, we are inclined to accept the findings of Ld. CIT(A). Accordingly, ground no. 1 is dismissed. 11. With regard to ground No. 2, we notice from the record that AO disallowed the trade creditors because the assessee could not bring them to AO in person. We notice that these are trade creditors and also two directors accounts are involved. We considered the findings of the Ld CIT(A) carefully and found that trade creditors M/s Divya Jewels, M/s Jewel Diamond and M/s Kingstar has no business transaction during this assessment year and these are outstanding balances of previous assessment year. Since these are transactions of earlier AY and its settlements were made in the subsequent AY, in our view there is no scope for disallowance u/s 68. Therefore, we are inclined to accept the findings of Ld CIT(A). 12. With regard to M/s Renisha Impex and Varun Gems, it is noticed that these parties are having regular business transactions and without any findings on transactions with them as bogus or accommodation entries, there is no scope for AO to disallow these transactions. Therefore, we are inclined to accept the findings of....
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....ent. (c ) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall notordinarily(emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the noticeboard. 8. Quite clearly, "ordinarily" the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression "ordinarily" has been used in the said rule itself. This rule was inserted as a result of directions of Hon'ble jurisdictional High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein Their Lordships had, inter alia, directed that "We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are l....
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....f 15 days after the lifting of lockdown". Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, "It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly", and also observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020". It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus "should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure...". The term 'force majeure' has been defined in Black's Law Dictionary, as 'an event or effect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a....