TaxTMI 
TaxTMI 
2021 (11) TMI 510
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....use the learned CIT(A) has erred in law and on facts in confirming the disallowance of interest paid on old loan taken from M/s Success Vyapar Ltd. and M/s Neil Industries Ltd.: Sl. No. Name of Lenders Amount of loan Amount of interest Total addition 1. M/s Success Vyapar Ltd. 00 10,11,696.00 10,11,696.00 2. M/s Neil Industries Ltd. 00 1,40,31,248.00 1,40,31,248.00 Total 1,50,42,944.00 1,50,42,944.00 without appreciating the supporting documentary evidences & explanation of the appellant placed on record and ignoring the information obtained u/s 133(6) of the Act from the loan creditors. 5. Because the learned CIT(A) failed to appreciate that the assessee had duly discharged the onus of proving, all the three ingredients of section 68 of the Act namely identity of the lenders of unsecured loan, genuineness of the transactions and credit worthiness of the lenders and that such loans in the case of appellant, various family members and their business associates had been accepted in the orders passed earlier u/s 143(3)/153C of the Act of the group of cases and such loan amounts with interest we....
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....e assessee further submitted that even the Assessing Officer, by issuing notice u/s 133(6) of the Act to the above loan creditors, had obtained the information directly from such loan creditors and no discrepancy was found between the replies filed by the assessee and in those filed by the loan creditors directly. It was submitted that during the assessment proceedings when the Assessing Officer show caused the assessee as to why the interest paid on such loans be not disallowed, the assessee filed various replies vide letter dated 08/07/2017 and 27/09/2017 and it was submitted that the assessee had paid interest on genuine unsecured loans and moreover, the loans already stood repaid and proper tax at source has been deducted from such interest payments. Learned counsel for the assessee submitted that during assessment proceedings before the Assessing Officer it was requested that the persons on whose statements the Department was relying, should be made available to the assessee for cross examination but those were not made available for their cross examination. Learned counsel for the assessee submitted that when this issue was taken before learned CIT(A), he held that cross exam....
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....is placed in paper book pages 104 & 231 respectively for assessment year 2015-16 and for assessment year 2014-15 such documents are placed in paper book pages 45,46,108 and 236 respectively. We further find that in the assessment orders of these companies, interest paid by the assessee has been accepted to be their income, a copy of such assessment order in the case of loan creditor, is placed at pages 60 to 101 of the paper book. The various documents filed by the assessee to support its claim have been summarized in form of a chart, which for the sake of completeness has been made part of the order and is reproduced below: 4.1 We find that the only reason for disallowing the interest is that the authorities below have held the loan creditors to be bogus and being engaged in the business of providing accommodation entries, but no material was found during the search indicating therein that such transactions were not genuine. Moreover, we find that the assessee had already repaid the whole of the loan amount during the earlier year and present year. At the time of search i.e. on 31/08/2015, both accounts stood squared up as the assessee had already repaid the loans along with in....
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....s in both the years are similar. For the sake of completeness, the findings of learned CIT(A) in this respect are reproduced below: "6.8 On the issue of cross examination, undersigned is of the view that, statements of share brokers, operators, promoters &. exit providers were shown and confronted to the appellant. Further, Hon'ble Supreme Court, in the well-known Dhakeswari Cotton Mills (26 ITR 775 at 782) case, ruled that the Evidence Act may have no application to tax assessment proceedings. However, the court also clarified later, in Chuharmal vs CTT (172 I7R 250 at 255 SC), that when the taxing authorities are desirous of invoking the principles of the Evidence Act in proceedings before them, they are not prevented from doing so. All that is required is that whatever material they collect will have to be placed before the taxpaying assessee if adverse inference is going to be drawn - audi alteram partem is a well-known principle of natural justice. This principle is established by the judgment of the Supreme Court in Dhakeswari Cotton Mills Ltd. v. C.I.T. (26 I.T.R. 775,783), and applied by that court in Kishinchand Chellaram vs C.I.T. (125 I.T.R. 713), where an a....
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....levant in the wake of finding of facts. The appeal of the appellant is accordingly dismissed." In the instant case all the incriminating statement has been shown to the appellant who has not challenged the content of the incriminating statement. Therefore it is concluded that, AO has followed the principal of natural justice by producing and confronting all the incriminating documents and statements recorded in favour of revenue to the appellant. 6.9 In view of the above detailed discussion of the factual matrix of the case and considering the enumerated judicial pronouncements, it is concluded that appellant company has miserably failed to prove the vital ingredients of creditworthiness of the creditors and genuineness of the transaction. Therefore, undersigned find no reason to interfere with the addition made by Assessing Officer, u/s 68 of the Act. The same is therefore, confirmed and grounds of appeal of the appellant are dismissed for each assessment year i.e. A.Y. 2010-11 to A.Y. 2015-16. However, ld. A.R. pointed out thorough his written submission that in the assessment for A.Y. 2010-11, A.O. took wrong figure of unsecured loan at Rs. 2,04,80,000/-, where....
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....of the assessment order itself. The assessees had filed complete information and explanation with respect to the unsecured loans taken from these companies. The evidences filed by the assessees include the confirmed copy of account, copy of ITR of lenders and final accounts of the lenders. Such confirmations and evidences have been taken on record by the Assessing Officer and a copy of such confirmations and evidences is placed at pages 61 to 65, 73, and 45 to 53 relating to first assessee and at paper book pages 19 to 22 in respect of second assessee and at paper book pages 74 to 77, 60 to 62 and 64 and 55 of the paper book in the case of third assessee. The Assessing Officer, during the course of assessment proceedings, also issued notices u/s 133(6) of the Act to the above lenders and in response to the notices, the Assessing Officer received replies from the lenders with evidences of having advanced the loans to the assessees. Along with the reply, the lender companies also filed their copy of ITRs and final accounts etc. with the Assessing Officer and the Assessing Officer did not find any difference between the documents filed by the assessees and those filed by the lenders d....
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....rom time to time, the copies of various replies, filed by the assessees, have been summarized and made part of this order in the form of a chart, as reproduced below and wherein various documents indicating the pages of paper books are mentioned: 5.2 Therefore, the findings of the Assessing Officer that assessees have not filed complete information is contrary to the facts on record. The Assessing Officer noted that despite giving notices u/s 131, nobody had appeared for cross examination and therefore, he held that assessees was also responsible for bringing them before him for cross examination and therefore, he shifted the onus to assessees for bringing the Departmental witnesses for their cross examination. The Assessing Officer started the assessment proceedings at the fag end of time barring date as the first query letter was issued in September, 2017. These assessees were required to explain the unsecured loans from these creditors for the first time in December only by issuing show cause notice dated 14/12/2017 and through this notice dated 14/12/2017, the Assessing Officer sent to the assessees the statement of its witnesses. The assessment orders have been passed....
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....to Emerald Garden Project being carried out by M/s Morning Glory Infra Ltd. The Assessing Officer completed the assessment by making the addition of Rs. 64,00,00,000/- on account of unaccounted income. 3. The ld. CIT(A) confirmed the addition. 4. Apropos ground No.2.2, the ld. A.R. of the assessee has contended that the ld. CIT(A)/Assessing Officer erred on facts and in law in making the aforesaid addition on the basis of ex-parte material, in gross violation of the principles of natural justice. 5. The ld. D.R., on the other hand, has placed strong reliance on the impugned order, whereby the ld. CIT(A) has held that it cannot be said that the assessee was not provided any opportunity of cross-examination of Shri Anoop Asthana. 6. The following grounds, in this regard, were raised by the assessee before the ld. CIT(A):- "2. That the assessing officer erred on facts and in law in making addition of Rs. 64 crores alleging the same to have been received by the appellant as on-money in cash, not accounted for in the regular books, against sale/ booking of flats in Emerald Garden Project. 2.1 That the assessing officer erred on facts....
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....er of great suspect and are totally unreliable/unauthentic. (g) No adverse inference can be drawn from certain payment receipts (3 in number) in respect of flats in Emerald Garden project found from the premises of Mr. Anoop Asthana, particularly when nothing adverse has been stated by Mr. Asthana in this regard. On perusal of the aforesaid, it will kindly be appreciated that the contents of the diary found at the premises of a third party are totally unreliable and unauthentic, which could not have been the basis of drawing any adverse inference against the appellant, much less for the purpose of making any addition. Re: Statement of Mr. Anoop Asthana recorded during the course of survey proceedings. Coming to the statement of Mr. Anoop Asthana, recorded during the course of survey proceedings at his premises, which has been heavily relied upon by the Assessing Officer to infer that the appellant took on money in cash from the customers on sale/booking of flats, it is respectfully submitted as under: It is submitted that the aforesaid statement could not have been relied upon by the Assessing Officer for the following reasons: (a) Copy ....
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....books of account. 5.7 During the post survey proceedings the incriminating document mentioned here-in-above and the statement of Shri Anoop Asthana was specifically confronted to the Managing Director of the appellant company Shri Sanjeev Kumar Jhunjhunwala (SKJ) on 27/6/2014 which is reproduced at page 6 and 9 of the assessment order by the Assessing Officer. In the statement Shri SKJ accepted the statement of Shri Anoop Asthana that the entries are related to the appellant companies. However, he surrendered Rs. 9 crore as an unaccounted income for the F.Y. 2014-15 relating to A.Y. 2015-16 as the undisclosed income in his individual capacity. This is interesting to note that undisclosed income of Rs. 9 crore offered by Shri SKJ is on very flimsy ground that he earned the undisclosed income from commodity trading. It is also interesting to note that Shri SKJ has not disclosed any profits from the commodity trading in any of the immediate previous year or subsequent year. Thus, the contention of SKJ that surrendered amount of Rs. 9 crore is on account of commodity trading remains unsubstantiated obviously because it represents on money received in the Emerald project. ....
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....the back of the assessee. He merely states that during survey proceedings the statement of Shri Anoop Asthana proprietor of AAP was recorded; that in answer to question No.22, in the statement recorded on 25/6/2014, Shri Anoop Asthana has categorically stated that page 163 of the annexure A-4 are the entries relating to Emerald Garden and the amount of white and black represents the amount of cheque and cash; that it is also stated that the black amount, which is invariably in cash, is directly paid to the appellant company by the investor, to the Director of the appellant company; that Shri Anoop Asthana also states that he only gets the commission income at the time of registration of the property; that he continues to state in the same answer that this process has been followed in minimum 12 flats of Emerald Garden, which is booked through him; that thus, it is crystal clear that the appellant company is receiving 25% consideration in cash which is not reflecting in the regular books of account; that further, as per material LP-32, 33 and 51, impounded from the premises of AAP, it is noted that these documents are the receipts of payments made by Shri Arun Kumar (LP-32), Shri Sa....
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....ght on record. The appellant has, all through, denied any knowledge of the contents of the diary. It also could not be expected to be aware of the contents recorded in the diary found at the time of survey at the premises of Shri Anoop Asthana, a third party. It is undisputed that the contents of the diary had no signature and/or any other authentication on behalf of the appellant. This being so, the diary impounded from the premises of Shri Anoop Asthana cannot be used to draw any adverse inference against the appellant, in any manner. The assessee/appellant maintains as follows. Shri Anoop Asthana was one of the property brokers who dealt with in the project of the appellant and acted as broker for sale of certain plots in the Emerald Garden project, during preceding years. The appellant had not sold any flat through Shri Anoop Asthana during the year under consideration (i.e. F.Y. 2014-15). Pertinently, Shri Anoop Asthana, earlier in January 2014 (31/1/2014), had booked two flats with the appellant in his own wife's name in the Emerald Garden project, but since he could not make necessary payments as per the payment schedule, the appellant was constrained to cancel his booking o....
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....inciple of audi alteram partem. The following judgments, inter alia, are eloquent in this regard:- 1. Kishinchand Chellaram vs. CIT, 125 ITR 713 (SC). 2. Saraswati Industrial Syndicate Ltd. vs. CIT, 237 ITR 1 (SC). 3. State of Punjab vs. Bhagat Ram, AIR 1974 SC 2335. 4. Kalra Glue Factory vs. Sales Tax Tribunal, 167 ITR 498 (SC). 5. CIT vs. Pradeep Kumar Gupta, 207 CTR 115 (Del). 6. Sona Electric Company vs. CIT, 152 ITR 507 (Del). 7. CIT vs. Eastern Commercial, 210 ITR 103, 110 (Cal). 8. P.S. Abdul Majeed vs. STO, 209 ITR 821, 823 (Ker). 9. CIT vs. Sham Lal, 127 ITR 816 (P&H). 10. Mukund Singh and Sons vs. Presiding Officer, 107 STC 300 (P&H). 11. Anupam Agencies vs. State of Punjab, 98 STC 338 (P&H). 12. Prakash Chand Mehta vs. CIT, 220 ITR 277, 279 (MP) 13. CIT vs. D.M. Doshi, 229 ITR 315 (Guj) 14. Amarjit Singh Bakshi (HUF) vs. ACIT, 263 ITR (AT) 75 (Del) (TM) 15. Mahes Gulabrai Joshi vs. CIT, 95 ITD 300 (Mum). 16. Monga Metals (O) Ltd., 67 TTJ 247 (All) 17. Verma Roadways vs. ACIT, 75 ITD 183 (All) 18. Sarita Devi Kaj....
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....-factory and delivery basis in comparison with goods which were sold to buyers from depots. Investigation was carried out and statements of two buyers were recorded, on basis of which Show Cause Notice was served upon Assessee. Adjudicating Authority passed order confirming demand in Show Cause Notice on ground that price at which goods were sold to customers from depots may not be basis for determining value for purpose of excise duty- Adjudicating Authority also took into consideration price list of Assessee maintained at its depots that was treated as price for purposes of levying excise duty. Assessee filed Appeal against order of Adjudicating Authority that was dismissed by CESTAT. Assessee submitted that it was not allowed to cross-examine dealers whose statements were relied upon by Adjudicating Authority in passing impugned orders. Held, not allowing Assessee to cross-examine witnesses by Adjudicating Authority though statements of those witnesses were made as basis of impugned order, amounted in serious flaw which make impugned order nullity as it amounted to violation of principles of natural justice. It was to be borne in mind that order of Commissioner was based upon st....
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....ere made under section 153C on the same date, as on which the assessment for A.Y. 2015-16 was made, i.e., on 9.12.2016. Strikingly, the material forming the basis of the addition presently under consideration is the very same as that on which the completed assessments under section 153C for those earlier years were reopened, but no addition was made. 15. As regards receipts bearing no.1030 dated 31.05.2013, no.1396 dated 05.04.2014 and No.1418 dated 28.04.2014, the same had been found from the possession of Shri Anoop Asthana, the broker. So far as regards the two receipts dated 05.04.2014 and 28.04.2014, the related sale deeds were executed and final registration in favour of the customers was executed on 19.06.2018 and 31.05.2018, respectively. The receipt no.1030 dated 31.05.2013 related to assessment year 2014-15, but no addition was made in the said assessment year. In relation to the said receipts, Shri Sanjeev Kumar Jhunjhunwala had been extensively examined by the Authorised Officer during the course of survey and he had given name-wise details of the persons to whom the receipts in question had been issued by the appellant company. His statement was recorded on 27....
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....o be raised by the assessee is justified. It is accepted as such. Accordingly, the addition made is deleted. Nothing further survives for adjudication, nor was anything else argued. 19. In the result, the appeal is allowed. 5.5 In the above noted case, decided by Lucknow Bench of the Tribunal, the Bench has taken into account all the relevant case laws and has decided the issue in favour of the assessee." 5. In the present case, all documentary evidences, for the claim made by the assessee, are available with the authorities for which they have not made any adverse comments. The only reason for making and upholding the disallowance of the interest is the statement recorded by the officers of the Department and that too not by the Assessing Officer himself and that too which were not made available to the assessee for cross examination and therefore, these statements cannot be utilized against the assessee. If we ignore these statements, the rest of documentary evidences well support the claim of the assessee. Therefore, ground No. 4 to 9 are allowed. 6. In the result, both the appeals of the assessee stand partly allowed. (Order pronounced in the open cou....
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....s under: Neil Industries Ltd. 1.Copy of reply 104 i. Copy of reply 2.Confirmed copy of account 111 ii. Confirmation of M/s. Neil Industries Ltd. Dated: 21.06.2021 Copy to:- The Ld. CIT/DR., ITAT, Lucknow. 3. Copy of Bank statement 4. Copy of ITR 5. Copy of balance sheet & audit report 138 to Copy of ITR of M/s. 143 Neil Industries Ltd. 149 iii. 194 to 205 26-27 & 36 31 & 37 3 32 & 38 (CA Pradeep Kumar Kapoor) Authorized Representative Document 2 M/s MehndipurBalaji Enterprises (P) Ltd. Details of loan taken and repaid by the assessee company M/s. Success Vyapar Limited M/s. Neil Industries Limited A.Y. 2013-14 Reference Particulars Opening balance as Amount (in Rs.) Amount PB Page No. Particulars Referenc e PB Page (in Rs.) No. 3,49,20,653 on 01.04.2012 Opening balance as on 01.04.2012 40,05,312 Loan taken 15,00,000 Loan taken 70,00,000 Interest Credited Interest Credited 42,72,539 Part-I, 10,03,050 Part - II, (11,14,500) Page- Page- TDS debited TDS debited 4,27,25....
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.... Credited TDS debited Amount (in Rs.) Reference PB Page No. 2,88,59,482 4,28,50,000 64,60,865 63-64 6,46,086 loan repaid NIL Closing balance as on 7,75,24,261 31.03.2014 A.Y. 2015-16 Particulars Amount (in Rs.) Reference PB Page No. Opening balance as on 01.04.2013 Loan taken 54,66,027 Suppleme 10,00,000 ntary PB Interest Credited 6,77,619 Conslidat (752910) TDS debited (75291) loan repaid Closing balance as on 31.03.2014 ed A.Y. NIL 2013-14 NIL of Page- 234 71,43,646 Particulars Amount (in Rs.) Reference PB Page No. Particulars Opening balance as 7,75,24,261 on 01.04.2014 Loan taken 50,00,000 Opening balance as on 01.04.2014 Loan taken Amount (in Rs.) Reference PB Page No. 71,43,646 Interest Credited Interest Credited 70,62,725 7,71,514 48 (857238) TDS debited TDS debited 7,06,273 (85724) loan repaid Closing balance as on 8,24,00,000 64,80,713 loan repaid Closing balance as NIL 79,15,160 Suppleme NIL ntary PB ed A.Y. NIL ....
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....terest Credited Interest Credited 10,08,096 3,85,055 (427834) 119 114 of A.Y. 2015- TDS debited TDS debited NIL 42,784 16 (42784) loan repaid NIL loan repaid 39,50,335 Closing balance as Closing balance as 10,89,175 NIL on 31.03.2016 on 31.03.2016 Document 4 M/s. Shri Mehndipur Balaji Enterprises Pvt. Ltd. A.Y. 2013-14 [ITA No. - IT(SS)A-114/LKW/2019] S.N. Particulars of Documents Page No. of respective Paper Book M/s. Success Vyapar Limited 1. Confirmed copy of account 74 2. Copy of acknowledgement of ITR 75 3. Copy of relevant page of Bank Statements showing the entry of payment made to assessee 76-77 4. Copy of assessment order u/s 143(3) of the I. T. Act, 1961 for A.Y. 2013-14, A.Y. 2012-13 & A.Y. 2014-15 101-127 5. Notice u/s 133(6) dated 04.12.2017 6. Reply dated 08.12.2017 filed on 26.12.2017 in response to notice u/s 133(6) issued by Ld. AO alongwith confirmed copies of accounts, bank statement, copy of acknowledgement of ITR & copy of audited balance sheet with annexure. M/s. Neil Industries Limited 164 & 272 16....
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....sued by Ld. AO alongwith confirmed copies of accounts, bank statement, copy of acknowledgement of ITR & copy of audited balance sheet with annexure. 142 & 250 214-248,256, 311-329 M/s. Neil Industries Limited 4. Confirmed copy of account 55 5. Copy of assessment order u/s 143(3) of the I. T. Act, 1961 for A.Y. 2014-15 6. Notice u/s 133(6) dated 21.11.2017 106-135 331-332 7. Reply dated 08.12.2017 filed on 19.12.2017 in response to notice u/s 133(6) issued by Ld. AO alongwith confirmed copies of accounts, bank statement, copy of acknowledgement of ITR & copy of audited balance sheet with annexure. 334,345, 370-382 Document 5 M/s. Shri Balaji Betal Nuts Pvt. Ltd. A.Y. 2013-14 [ITA No. - IT(SS)A-105/LKW/2019] S.N. Particulars of Documents M/s. Success Vyapar Limited 1. Confirmed copy of account 2. Copy of acknowledgement of ITR 3. 3 Page No. of respective Paper Book 61 & 73 62 Copy of relevant page of Bank Statements showing the entry of payment made to assessee 63-64 4. Copy of assessment order u/s 143 (3) of the I. T. Act, 1961 for A.Y. 2013-14, A.Y. 2012-1....
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....ated 21.11.2017 230 233 8. Reply dated 08.12.2017 filed on 19.12.2017 in response to notice u/s 133(6) issued by Ld. AO alongwith confirmed copies of accounts, bank statement, copy of acknowledgement of ITR & copy of audited balance sheet with annexure. A.Y. 2016-17 [ITA No. - IT(SS)A-108/LKW/2019] S.N. Particulars of Documents M/s. Success Vyapar Limited 1. Confirmed copy of account 2. Copy of acknowledgement of ITR 3. Copy of assessment order u/s 143(3) of the I. T. Act, 1961 for A.Y. 2013-14, A.Y. 2012-13 & A.Y. 2014-15 M/s. Neil Industries Limited Page No. of respective Paper Book 45 46 73-99 4. Confirmed copy of account 5. Copy of acknowledgement of ITR 6. Copy of assessment order u/s 143(3) of the I. T. Act, 1961 for A.Y. 2014-15 7. Notice u/s 133(6) dated 21.11.2017 8. Reply dated 08.12.2017 filed on 19.12.2017 in response to notice u/s 133(6) issued by Ld. AO alongwith confirmed copies of accounts, bank statement, copy of acknowledgement of ITR & copy of audited balance sheet with annexure. 47-48 49 100-129 230 232 Document 6 M/s. Ghata Mehndipur Balaji Agriextra....