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2023 (4) TMI 576
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....ate: situated at Vastral" and declared total turnover of Rs. 9.62 Crores and Gross Profit and Net Profit Ratio declared thereon are @ 16.9% and @ 13.15% respectively. 3. On perusal of the Audit Report by the Assessing Officer, the assessee accepted unsecured loan to the tune of Rs. 3,74,48,720/- from various parties during the year. However creditworthiness of the following parties were not commensurate with the Return of Income: Sr. No. Name of Partners Unsecured loan accepted A.Y. 2015-16 Return Income Remark (i) Shivam Corporation Prop Nanadkunwar Madanlal Maliwal PAN: ACLPM5494R 5500000 529830 For examining of genuineness, creditworthiness of the party, summons were issued upon the specific party and noticed that they have no creditworthiness commensurate with return of income filed. (ii) Mahesh Tex Fab Prop Priyanka D Maliwal PAN: BKPPB0378E 3000000 53210 (iii) Radhe Corporation Prop Deepak Madanlal Maliwal HUF PAN: AAIHD3877L 3000000 259310 (iv) Shree Ram Corporation Prop Rajmal Nanlal Maliwal PAN: ACGPM2788M 2500000 632760 (v) C.R. maliwal & Co. Prop Priyanka Jaimin Mantri PAN: AVHPM8792R 4000000 ....
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....payment of the same through banking channel. The appellant has submitted name/address/PAN/copy of ban statement/acknowledgement of ITR/Statement of Income and confirmation of ledge accounts. The appellant has repaid the entire loan alongwith interest in A.Y.2016-17. The appellant has made successful rebuttal of each and every point raised by the appellant. The TDS has been deducted while making payment of interest or repayment of loan and the impugned TDS has been paid to the Government. The appellant has proved that the figures in ITRS for the creditors are correct and necessary explanation has been kept on record. It is not necessary that in all the cases for whole of t amount the creditors would be using their own funds, funds can also be borrowed fur by the creditors. I also find from the bank statements on record that there is no cash deposits in creditors account. There is also no finding by the AO that appellant's own undisclosed money has come indirectly through the bank accounts of the creditors. The appellant has painstakingly submitted adequate information including paper book in 170 pages and the same is concised in table below: Name of Party Bal. as on 31.03.....
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.... of the lenders, it was his duty to ascertain from the Assessing Officer of those lenders, whether in their respective retur they had shown existence of such amount of money and had further shown that those amounts 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, in our opinion, the Assessing Officer did not follow the principle laid down under Section 68 of the Income Tax Act. If on verification, it was found that those lenders did not disclose in their income tax return the transaction or that they had not disclosed the aforesaid amount, the Assessing Officer could call for further explanation from the assessee to prove the genuineness of the transaction or creditworthiness of the same. However, without verifying such fact from the income tax return of the creditors, the action taken by the Assessing Officer in examining the lenders of the assessee was a wrong approach. Moreover, we find that those lenders have made inconsistent statement as p....
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....en without evidence as to the nature of the income could justify acceptance, where the assesseee has given the GIR number /PAN of the creditor and also shows that the amounts were received by account payee cheques. It was further held that it is not necessary, that there should be an explanation as to the source of the money on the part of the creditors in every case." Reliance is also placed on another case i.e. CIT vs. Dharamdev Finance Pvt. Ltd. 43 Taxmann 395 (Guj.) wherein it is held, "No addition on account of cash credits could be made, where assessee had given PAN of creditors, their confirmations and their bank statements which established their creditability" There are other case laws supporting the case of the appellant 1) Murlidhar Lahorimal Vs. CIT 280 ITR 512 (Guj.) ii) CIT VS. Pragati Co-op. Bank Ltd. 278 ITR 170 (Guj.) iii) CIT Vs. Orissa Corporation Pvt. Ltd. 159 ITR 78 (SC) iv) CIT vs. Sanjay K. Thakkar Tax Appeal Nos.524 of 2004, 525 and 526 of 2004 and 579 to 583 of 2003 dated 12-9-2005 (Guj. HC) v) ITO VS Kailpar Credit & Mercantile Pvt. Ltd. in ITA No.421/Ahd/2008 (ITAT, Ahd.) I a....
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.... of Income-tax (A) ought to have upheld the order of the Assessing Officer in respect of above issues. 4. It is, therefore, prayed that the order of the Ld. Commissioner of Income-tax (A) may be set-aside and that of the Assessing Officer be restored. 5.1. The Ld. Sr. D.R. appearing for the Revenue supported the order passed by the Assessing Officer and pleaded that the additions to be restored. 6. Per contra, the Ld. Senior Counsel Shri S.N. Soparkar appearing for the Assessee submitted before us a Paper Book containing various details of the creditors namely ledger account, contra account, Income Tax Return copies, Bank Statements, Balance Sheet and Profit and Loss account which were all submitted before the Assessing Officer as well as before Ld. CIT(A). The Ld. Senior Counsel also submitted before us a list of Judgments rendered by Hon'ble Gujarat High Court in support of its arguments namely: (i) CIT vs. Ranchhod Jivabhai Nakhava [2012] 21 taxmann.com 159 held as follows: "Section 68 of the Income-tax Act, 1961 Cash credits - Assessment year 2006-07 - Whether once assessee has established that he has taken money by way of account payee cheques from l....
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....charge of the burden upon the Revenue, such a finding of fact would not call for interference when the appeal before this Court is limited to the substantial questions of law. The decision upon which the reliance has been placed by Mr. Bhatt in Tax Appeal No.800/12 (supra) is of no help to the Revenue because the facts and circumstances of the present case cannot be equated with the facts of the said case considered by this Court. It is hardly required to be stated that whether the explanation is sufficient or not would essentially depend upon the facts and circumstances of each case. But the principle remains that once the initial burden is discharged by the assessee, it would be for the Revenue to show that the transaction was bogus leading to conclusion for discarding of the explanation. In the present case, as observed by us hereinabove, the burden was not discharged and therefore the Tribunal has held in favour of the assessee. We do not find that any substantial question of law would arise for consideration in the present appeals, as canvassed. 8. Hence, the appeals are meritless and therefore, dismissed. (iii) In the case of CIT vs. Himatsu Bimet Ltd. [2011] 12 t....
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....sked to prove source of credits in its books of account but not source of source Held, yes Whether merely because summons issued to some of creditors could not be served or they failed to appear before Assessing Officer, could not be ground to treat those credits as non-genuine Held, yes Whether considering totality of facts and circumstances of case, especially fact that Assessing Officer had not disallowed interest claimed/paid in relation to those credits in assessment year under consideration or even in subsequent assessment years, and tax at source had been deducted out of interest paid/credited to creditors, Tribunal was justified in deleting addition made - Held, yes Whether as there was no substance in appeal and no substantial question of law arose, appeal was liable to be dismissed." (v) In the case of CIT vs. Ayachi Chandrashekhar Narsangji [2014] 42 taxmann.com 251 held as follows: "Section 68, read with section 143, of the Income-tax Act, 1961 - Cash credit [Loans] - Assessment year 2006-07 Assessing Officer framed assessment under section 143(3) wherein he made addition of Rs. 1.45 crore under section 68 on ground that loan taken from one 'IA' was ....