TaxTMI 
TaxTMI 
2023 (7) TMI 128
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....ances: i. Disallowance of trading loss: (a) Cut & Polished diamonds Rs. 75,77,155/- (b) 0.995 Gold Kg. Bar Rs. 12,00,380/- (c) 22 carat Gold Ornaments Rs. 15,29,577/- ii. Addition u/s. 68 of I.T. Act Rs. 2,90,00,000/- iii. Disallowance of interest expenses Rs. 13,11,396/- 3. Aggrieved against the Assessment Order, the assessee filed an appeal before Commissioner of Income Tax (Appeals)-5, Ahmedabad. During the appellate proceedings, the assessee filed additional documents invoking Rule 46A of the I.T. Rules. The Ld. CIT(A) called for a Remand Report from the Assessing Officer and entertained the additional documents. After getting rejoinder from the assessee, the Ld CIT[A] deleted the additions made by the Assessing Officer observing as follows: "... 4.5 It is also worthwhile to note that from the perusal of the account of cut and polished diamonds placed on page 132 to 135 of the PB there are various instances where the purchases have been affected at lower rate and have been immediately sold on the same date or immediately succe....
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.... collected behind the back of the appellant and used against him while drawing adverse inferences. It was held in CIT v. Sham Lal (1981) 127 ITR 816 (P&H) that the revenue is not entitled to place reliance on the material which was brought on the record at the back of the assessee. The assessee is, entitled to rebut the material placed before him if he so chooses. Any material placed on the record without notice to the assessee cannot be relied upon by the revenue. Thus, only those materials which have been collected at the back of the assessee and in respect of which opportunity to rebut the same has been granted to the assessee that revenue can rely. To put it differently, it seems now well settled that it is open to the assessing officer to take into account other materials that may come to his knowledge apart from the accounts submitted by the assessee. Undoubtedly principles of natural justice require that the assessee should be given an opportunity to rebut any inference that may be drawn against him from such other materials. Though for that purpose the assessing officer is not bound to disclose the actual source of information he should indicate to the assessee tha....
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....g the loss arising therefrom is not permissible when the genuineness of the transaction has not been disproved. In view of the above factual matrix and the various judicial pronouncements (supra), the addition is hereby directed to be deleted. Ground No.2 is accordingly allowed. 3.1. The Ld CIT[A] deleted the additions made under section 68 of Rs. 2.9 crores after considering various information and passed a detailed order observing as follows: "... 4.9 The AO has stated that the verification of the Balance Sheet revealed that the appellant had accepted unsecured loans of Rs. 5,51,78,862/- during the year under consideration. The appellant was directed to furnish the details of the unsecured loans in the specified format. The appellant was also directed to furnish copy of Ledger accounts for the new loans accepted during the year along with confirmation and other evidences to prove the identity, creditworthiness and genuineness of the transactions. As per the AO, in spite of providing sufficient opportunities the appellant could only furnish the name and address of the parties along with the PAN was also copy of accounts from their books. The AO has also stated that not....
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....PAN, address and bank statement had been furnished on pg.146 to 148 of the PB. Further she had complied with the letter issued u/s 133(6) by filing the details vide letter dated 13.06.2013. The copy of the same is placed on pg.151 of the PB wherein she had categorically intimated that return of income had not been filed on account of income not exceeding taxable limit. In the remand report the AO has intimated l the bank statement placed on page 153 to 155 does not contain the name of the Bank or the account number and therefore the same is not verifiable. He has also pointed out that there was a discrepancy of Rs. 2,00,000/- in the account as appearing in the Balance Sheet. All these doubts have been duly addressed and the appellant in the course of remand proceedings has furnished the bank statement indicating the name of the depositor and bank account number along with the copy of the PAN card which establishes the bank account pertained to the depositor. As regards discrepancy of Rs. 2,00,000/- it was clarified that the aforesaid amount had been erroneously debited in the account of her husband Shri Hasmukh Doshi. Further in the subsequent years the accounts were re....
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....ave been returned in the subsequent year. Copies of accounts of the subsequent years have been placed on page 18 to 26 of the PB accompanying the counter comments to the remand report dated 23/07/2018. The amount in question has been returned in the previous year relevant to A.Y.2018-19. Further, interest had been paid to the depositor and TDS was also deducted on such payments made. 6 Pragnesh H. Shah 1000000 The copy of account with confirmation, PAN, copy of bank statement, acknowledgement of return of income for A.Y.2010-11, copy of driving license have been placed on page 189 to 205 of the PB. Further, the loans have been returned in the subsequent year. Copies of accounts of the subsequent years have been placed on page 27 to 30 of the PB accompanying the counter comments to the remand report dated 23/07/2018. The amount in question has been returned in the previous year relevant to A.Y.2013-14. 4.10 Therefore, from the above discussion it would be apparent that the appellant had furnished all evidences which establish the identity, genuineness and creditworthiness of the cash creditor. Cogent and reliable evidences including confirmation, pan, and ack....
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.... claimed to have incurred losses on sales effected by the goods purchased on the same day, having transactions with related concerns. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition u/s 68 of the Act of Rs. 2,90,00,000/- by holding that unsecured loans taken by assessee were genuine, without appreciating the fact that assessee could not establish the identity & creditworthiness of lenders. 2.1. The Ld. CIT(A) erred in not considering the fact that the assessee failed to prove the genuineness of the transactions made by those persons with the assessee with supporting proof. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 13,11,396/- by holding that interest expenses incurred by assessee on unsecured loans were genuine. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 5. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 5. The Ld. Sr.D.R. Shri Atul Pan....
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....ram. The Ld. Counsel in this connection relied upon Co-ordinate Bench decision in the case of Kamlesh Zaveri in ITA No. 1420/Ahd/2013 wherein the loss claimed by the assessee were deleted by the Hon'ble Tribunal. 7. Regarding unsecured loans and addition u/s. 68 of Rs. 2.9 crores, during the appellate proceedings, the assessee filed additional evidences under Rule 46A about the details of unsecured loans. The Ld. CIT(A) called for a Remand Report from the A.O. and after getting the rejoinder from the assessee and taking note that the loss were being repaid during the next Financial Year and interest is also paid with appropriate TDS which is available at Page Nos. 265 to 294 of the Paper Book. Therefore the Ld CIT[A] deleted the additions following Hon'ble Jurisdictional High Court judgements in the case of CIT Vs. Ranchod Jivabhai Nakhva (2012) 208 taxmann 35 (Guj.) and CIT Vs. Ayachi Chandrashekhar Narshangji (2014) 221 taxmann 146 (Guj.) Further the Ld. CIT(A) deleted the above additions after verification of the PAN, Copy of the contra account, Acknowledgement of Return of Income, Bank Statements of the depositors. Thus pleaded that the deletion made by the Ld. CIT(A) does n....
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....re the sales value will depend on the make of the ball bearing. In case of precious stones also, the sales value will undoubtedly differ from quality to quality, but in such cases, each stone is of different quality and its value is so subjective that it may be valued differently by different valuers. Hence, in such cases, unless there is strong evidence to hold otherwise, the sales as shown have to be accepted when quantitatively there is no discrepancy. As regards non-production of parties, it is not a sufficient ground to draw an adverse inference, particularly when the addresses given by the assessee tallied with those available with the bankers of those parties and with the sales-tax authorities. It would be too much to expect the assessee to do anything more in case of its customers. With regard to AO's contention that sales to these three parties have been made at lower prices, it is a mere statement of opinion by the AO not supported by any direct or indirect evidence. The AO's observations regarding the entries in the bank account of the three parties do give rise to curiosity and should prompt the AO to probe further. But if the probe leads to nowhere, the unsatia....
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....of our is supported by the Co-ordinate Bench of this Tribunal decision dated 25-01-2017 in ITA No. 1420/Ahd/2013 in the case of Kamlesh Jhaveri Vs. ITO, wherein after considering the various judgments of the Hon'ble High Courts held that the losses claimed by the assessee are genuine and cannot be termed as colourable with the intention to evasion of tax. Marghabhai Kishabhai Patel & Co. V CIT (1977) 108 ITR 54 (Guj.) Section 145 of the Income-tax Act, 1961 - Method of Accounting - Estimation of profits - Assessment years 1962-63 to 1965-66 Assessee firm was found to have purchased tobacco from its partners at higher price than average price paid to outside parties - ITO, thus, added back certain amount on ground that purchase price of tobacco was wrongly inflated - Tribunal affirmed decision of ITO - Whether unless it was shown that transaction was not bona fide one or to be a sham or price paid was not what was shown in books of account, it was not open to revenue to disregard figures of transactions shown in books of account of assessee-firm - Held, yes - Whether, therefore, Tribunal was not justified in disallowing a part of actual price of tobacco paid by ass....
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....ction between assessee and its subsidiary company was bona fide transaction; that it might be that assessee had transferred its valuable shares at cost price to its subsidiary in order to so arrange its affairs as to reduce its tax burden and, therefore, unless ITO on basis of material before him was able to come to conclusion that assessee had really made profits in transaction, it was not permissible for him to add back to assessee's return any fictional income. Whether order of AAC was in accordance with law - Held, yes CIT v AmitbhaiGunvantbhai (1981) 129 ITR 573 (Guj.) The Tribunal had overlooked one important fact, namely, that the entries in the books of account of 'G'. (HUF) were not challenged by the department as a device or as a cloak to evade the tax Nowhere on the record the department challenged that the entries did not reflect the real transaction between the parties. In the absence of any such challenge, according to the assessee, it was not open to the Tribunal to come to the conclusion that the money was not received by 'G' in his capacity of HUF but was received by him in his capacity as the guardian of the assessee. ....
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.... evidence led before it. It was not open to the Tribunal in law to draw the inference when the entries in the books of account of G, (HUF) were not challenged as a device or as a cloak to evade tax. Under these circumstances, the Tribunal's conclusion that the money had in fact reached the hands of the natural guardian of assessee and, hence, the assessment, was not based on any evidence on record. 10.1. Thus the disallowances made by the Assessing Officer on claim of losses are devoid of merits and the same are liable to be deleted and order of the Ld. CIT(A) is hereby confirmed. 11. The next addition namely unsecured loans of Rs. 2.9 crores and interest payment thereon are considered by the Ld. CIT(A) in detail. During the remand proceedings and the detailed discussion of each creditor in a tabulator form is already extracted at Page Nos. 5 to 7 of this order. 11.1. The Ld. D.R. appearing for the Revenue could not produce before us any contra findings arrived by the Ld. CIT(A). The Ld. D.R. could not deny the TDS on the interest paid by the assessee to the creditors. Further the above unsecured loans have been repaid in the subsequent assessment years and copies of t....
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.... of the creditors. In other words, the Assessing Officer had no authority to dispute the correctness of assessments of the creditors of the assessee when a co-ordinate Assessing Officer is satisfied with the transaction.[Para 17] Thus, the Tribunal rightly set aside the addition made by the Assessing Officer, based on erroneous approach by wrongly shifting the burden again upon the assessee without verifying the income tax returns of the creditors. The position, however, would have been different if those creditors were not income tax assessee's or if they had not disclosed those transactions in their income tax returns or if such returns were not accepted by their Assessing Officer [Para 18] There was no merit in the appeal and same was to be dismissed. [Para 19] As per the above referred decision where the confirmation and PAN numbers have been furnished the onus on the appellant stands discharged. On obtaining the same the AO of the assessee would be required to forward the details to the AO of the creditors. This is the exercise which has to be mandatorily followed where the confirmation and PAN numbers have been given. In case the AO's of the creditor....