TaxTMI 
TaxTMI 
2022 (7) TMI 477
X X X X Extracts X X X X
X X X X Extracts X X X X
....ving more than Rs.132 crore turnover in fruits and the assertions made before Ld.CIT(A) that the accounts were managed by only one accountant aged 65 years and whose alleged resignation rendered them helpless & clueless is unbelievable. 1.3 It is also quite unbelievable assertion that the partners of the assessee firm or any of their employees could not submit regular and routine details during the I.T. assessment proceedings or they could not hire consultant to do their ordinary I.T. work of furnishing of details. 1.4 That the Ld. C1T(A) erred in law by not appreciating that the assessee already had the benefit of the auditor who had audited its accounts and, therefore, his service would have been available. 2. The Ld. CIT(A) erred in law and on facts in deleting the addition made on account of unexplained cash credit u/s 68 of the I.T. Act, 1961 amounting to Rs.78,50,469/- though the assessee was not able to prove the genuineness of these transactions. 3. The Ld. CIT(A) erred in law and on facts in deleting the addition made on account of unexplained Unsecured loan of Rs.47,50,000/- though the assessee was not able to establish the identity, cr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uired document and submitted through email as on 26th December 2018. However, the AO without considering the submission passed the assessment order dated 26th December 2018. 5.1 The assessee accordingly contended that it was prevented by sufficient cause to furnish the necessary document during the assessment proceeding. Therefore additional evidences in pursuance to the provision of Rule 46A of the Income Tax Rule should be accepted. 6. The AO in remand report objected the admission of additional evidences and contend that there were sufficient opportunity provided to the assessee to file necessary documents and explanation during the assessment proceeding but the assessee without any cogent reason failed to comply the notices issued upon it. The explanation furnished by the assessee for non-cooperation during the assessment proceeding and filing of additional evidence is not covered under the provision of Rule 46A of the Income Tax Rule. 7. In rejoinder the assessee reiterated its submission made earlier in this regard. 8. The learned CIT-A after considering the facts in totality accepted the additional evidences furnished under rule 46A of the Income Tax Act Rules by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d CIT-A has adjudicated the appeal filed by the assessee after calling the remand report from the AO. Thus it is implied that the opportunity of being heard was rendered to the AO in pursuance to the provisions of rule 46A of income tax rules. Hence, there was no violation of the provisions of income tax rule was as alleged by the Revenue. 12. We have heard the rival contention of both the parties and perused the materials available on record. It is an admitted fact that the learned CIT-A has called for the remand report from the AO. However, the AO in the remand report objected on the admission of the additional evidences filed by the assessee before the learned CIT-A. However, we note that the learned CIT-A admitted the additional evidences filed by the assessee after placing reliance on the judgment of Hon'ble Gujarat High Court in the case of CIT vs. Kamlaben Sureshchandra Bhatti 44 taxmann.com 459 wherein it was held as under: 3. With respect to first issue of admission of additional evidence, we notice that the CIT [A] recorded that the notice of hearing issued by the Assessing Officer on 31st October 2011 was received by the assessee on the date of hearing itself....
X X X X Extracts X X X X
X X X X Extracts X X X X
....action and credit worthiness of the lender. Further, the loans received were repaid during the year and all the transaction of accepting and repaying the loan have been routed through banking channel. Therefore the genuineness of the loan transaction cannot be doubted. 16.1 With regard to the loan amount of Rs. 47.5 lakh credited from Smt. Shermeen Samir Menon furbished copy of ITR, ledger, and bank statement. The assessee submitted that she is wife of one of partner namely Samir Memon. 16.2 The AO in remand with respect to loan of Rs. 78,50,469/- credited from 7 person which were squared during the year found that proof of filing of ITR by one of lender namely M/s DR Fabrics from whom loan amount of Rs. 45,688/- credited was not submitted. Further on perusal of ITR of remaining 6 lenders it was found that income declared were not incommensurate with the amount of loan provided. Thus, the assessee failed to establish the credit worthiness of the lender. With regard to the loan from Smt. Shermeen Samir Menon, there was not found any deficit but raised doubt on low income declared by her. 16.3 The assessee in rejoinder submitted that the AO without pointing any defect in the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y same date and from this party appellant has received loan of Rs.5,50,000 is received by appellant. Similar letter was also filed by DaulatramHarjani on 10th December, 2018 which is submitted at paper book page No. 161 and this letter clearly states that copy of 1TR-V is also filed by depositor with Assessing Officer in assessment proceedings. Thus, observation of AO in the Remand Report that copy of return of income filed by depositor is not available cannot be accepted. So far as loan received from D.R. Fabrics is concerned, it is observed that during the year appellant has taken very meagre loan of Rs. 45,688. The appellant ; has taken loan of Rs.4.96 lacs in earlier assessment year and this entire loan was repaid in current year. When AO is not disputing the opening balance and repayment made in current year, loan taken during the year which is representing only interest payment, cannot be subject matter of addition under Section 68 of the Act only on the ground that return of income qf depositor is not available. It is observed that major loan is received from M.P. Traders for Rs.51,68,781. The appellant has made frequent transactions with this concern which include receipts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eal before us. 19. The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained in the assessment order orders which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. 20. On the other hand learned AR submitted that the amount of loan received by it was subsequently repaid. Likewise, all the documents such as identity and creditworthiness of the parties and genuineness of the transactions were furnished. As per the learned AR, the impugned amount of loan cannot be treated as unexplained cash credit as provided under section 68 of the Act. The learned AR vehemently supported the order of the learned CIT-A. 21. We have heard the rival contentions of both the parties and perused the materials available on record. The provision of section 68 of the Act fastens the liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties. These liabilities on the assessee were imposed to justify the cash credit entries under Section 68 of the Act by the Hon'ble Calcutta High Court in the case o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nancial strength of the creditor to advance loan with judicious approach and in accordance with material available on record but not in arbitrary and mechanical manner. 21.6 In the light of the above discussion, we proceed to adjudicate the issue in hand. With respect to the identity of the party, we find that the AO in his remand has given categorical finding that the assessee has furnished the details such as copy of ledger account, bank statements, income tax return, etc. From the above, there remains no doubt that the identity of the loan parties is not in disputed, as it has been proved beyond doubt. 21.7 With respect to the genuineness of transaction, we note that the assessee has submitted that all the transaction are carried out through banking channel and in support has furnished the copy of bank statement showing the transaction and the same were transferred out of fund available in the bank account. It is also pertinent to note the AO on remand report does not doubt the genuineness of fund available in the bank of the lender. In the given facts and circumstances, the genuineness of the transaction cannot be doubted, 21.8 Coming to the third condition the creditw....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s held that the matter is not required to be remanded as no other view would be possible, there was no reason to interfere with the impugned order passed by the Tribunal. [Para 6] 21.10 Before we conclude, we are conscious about the fact that the provisions of Section 68 of the Act are deeming provisions which implies that there are certain transactions which are not the income of the assessee but these are deemed as income under the relevant provisions of the Act. Thus, we have to see the deeming provisions beyond the facts available on record. However, the question arises for the adjudication whether only the credit entries should only be considered for the purpose of cash credit entries as provided under section 68 of the Act after ignoring the debit entries. To our mind the debit entries cannot be set aside for determining the income of the assessee. 21.11 In view of the above, we are of the opinion that, once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the year or later years. Thus, in the given facts and circ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he AO was reconciled. 26. The learned CIT-A sought remand report form the AO and The AO in remand report accepted the explanation furnished by the assessee. 27. The learned CIT-A after considering the facts in totality deleted the addition made by the AO by observing as under: On consideration of entire facts and submission filed by the Appellant during the course of Appellate Proceedings it was observed that the Assessing Officer has made addition towards difference in cash balance on the ground that there is difference of Rs.15,67,530/- between closing cash and Bank Balance as on 31/03/2015 and opening balance of cash and bank account as per audited annual accounts for A.Y. 2016-17. During the course of Appellate Proceedings the Appellant has submitted grouping in support of audited annual accounts. On consideration of entire facts it is observed that the Current Account with HDFC bank which was previously shown under the head Cash and Bank Balance has been reclassified and the same has been regrouped under the head other current liabilities. Thus there is no difference in opening cash and Bank balance as per audited annual accounts of the Appellant for the year un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ards difference in balance of current liabilities amounting to Rs.1,58,36,099/- made in the Assessment Order is not justified and hence the same is hereby deleted. Thus this ground of appeal of the Appellant is allowed. 28. Being aggrieved by the order of the learned CIT-A, the Revenue is in appeal: 29. The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained in the assessment order orders which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. 30. On the other hand learned AR vehemently supported the order of the learned CIT-A. 31. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset we note that the AO in his remand report has submitted that the addition made in the assessment proceedings as discussed above is liable to be deleted. The relevant extract of the remand report reads as under: (iii) On perusal of above argument and details submitted by the assessee, it is observed that balance of "Current account with HDFC bank" of Rs. 15,67,530/- was included in "cash and bank balance....