TaxTMI 
TaxTMI 
2024 (6) TMI 274
X X X X Extracts X X X X
X X X X Extracts X X X X
....erved upon the assessee. In response to the notices issued, Shri. Anish Shah, Chartered Accountant and Authorized Representative attended the proceedings. The assessee is a partnership firm engaged in the business of property development. During the relevant year, the assessee has borrowed new loans and paid interest to the various unsecured loan parties as under: Sr. No. Name of the Party PAN Amount as on 31.03.2014 Loan taken during the year Interest paid during the year Amount as on 31.03.2015 1. M/S. Divyanshi Gems Pvt. Ltd. Cabin No. A, Off No. 404, Pramukh Darshan Apartment, Near Charkhana Chakala, Rampura Main Road, Surat - 395003. AADCD8741R 3,58,82,840 32,74,309 3,88,29,717 2. M/s. Manbhawan Exim Pvt. Ltd. Cabin No. A, Off No. 404, Pramukh Darshan Apartment, Near Charkhana Chakala, Rampura Main Road, Surat - 395003. AAGCM9487J 2,32,20,847 21,18,902 2,51,27,859 3. M/S. Siddham Gems Pvt. Ltd. Room No. 202, 2nd Floor, Veer Park Apartment, Ghachi Sheri Taratiya Hunuman Haripura, Surat - 395003. AAQCS2578G 42,97,546 2,25,00,000 17,02,651 2,83,29,932 4. M/s. Radhey Krishna Gems Pvt. Ltd. 6/1766, Sainath Bldg., Gro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. 7. During the assessment proceedings, the Learned Assessing Officer i.e., Ward 20(2)(3), Mumbai (hereinafter referred to as the "AO") vide his order dated 27.12.2017 issued under section 143(3) of "the Act", observed that from the data reported in the audited accounts, it became clear that the lenders were indulging not in real diamond trading business but simply acting as an accommodation entry provider because the share capital of all lenders' private limited companies were hardly Rs. 1,00,000/- with which it is not even imaginable to have a turnover running into crores and further none of the lenders had borrowed either on short term or long-term basis even a single rupee to report such a huge turnover and further these companies were showing very low and negligible profit despite showing huge turnover. 8. The Ld. AO therefore observed that the assessee failed to prove the genuineness of the interest expenditure to let it to be interest paid on the unsecured loans. Hence, the interest expenditure of Rs. 1,51,31,232/- was disallowed. Accordingly, the said amount is reduced from the closing work in progress and the closing WIP was considered as Rs. 27,67,18,200/- instead of R....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the assessee/appellant who has argued that: i. The Ld. AO has erred in disallowing the interest expenditure and unsecured loans taken by the assessee without any legal basis despite the fact that the Hon'ble ITAT has allowed those loans as genuine for the previous assessment year. ii. There is sufficient evidence and the material available with the assessee to show that the parties from whom the unsecured loans were taken and interest was paid are genuine and creditworthy and the addition under section 68 of "the Act" was not warranted in the absence of contrary material having not brought on record by the revenue. iii. If the parties are not available or not responding as is observed by the Ld. AO and said fact has been made basis of addition under section 68 of "the Act" which has no legal basis. iv. Two paper books have been submitted during arguments by the assessee/appellant and the Ld. AR has taken us to page 208 of paper book no. II stating that the statement of accounts shows how the loan amount was given. Similarly, he has referred to page no. 24 and 38 of the paper book no. II in support of these arguments. He has also referred the page no. 42 of the paper boo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....editworthiness as well as genuineness of the transaction was accepted by the Hon'ble Tribunal for the previous A.Y. 2013-14 and the present appeal pertains for A.Y. 2015-16. 14. It is therefore argued that the additional evidence be permitted to be filed to establish the identity of the creditors and their creditworthiness as well as genuineness of the transaction. The Ld. DR on behalf of the revenue has argued that no reason has been assigned as to why the documents which are sought to be submitted through additional evidence were not produced before the Ld. AO or the Ld. CIT(A) and as such there is no justification for non-filing the same at appropriate time and therefore vehemently argued that the application of additional evidence does not have any merit and liable to be dismissed. 15. We have considered the rival submissions and gave our thoughtful consideration. On perusal of the judgment of the Ld. Coordinate Bench, ITA No. 5615/Mum/2017 referred (supra), it is noticed that in para no. 12 it has been observed that "on the contrary, the assessee has filed the entire documents, required to establish the identity of the creditors and their creditworthiness, as well as genuine....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... pass orders or for any other substantial cause, or, if the income-tax authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specified by them, the Tribunal, for reasons to be recorded, may allow such document to be produced or witness to be examined or affidavit to be filed or may allow such evidence to be adduced." 20. In support of their application, the assessee/appellant has relied the judgment of the Hon'ble Bombay High Court reported as Smt. Prabhavati S. Shah Vs. Commissioner of Income Tax, (1998) 231 ITR 1. Para 9 of the judgment of the Hon'ble Bombay High Court referred (supra) is relevant and reproduced as under: "9. We are also of the opinion that in the facts and circumstances of this case, even under rule 46A of the Rules the assessee should have been allowed to produce the additional evidence. The Appellate Assistant Commissioner, in our view, was not correct in holding that the case of the assessee did not fall in any of the four exceptions set out in sub-rule (1) of rule 46A. In fact, the present case would fall under clause (c) of subrule (1) of rule 46A because the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....22. We have examined the contents of the application for additional evidence to find out the reasons for not producing the said evidence before the Lower Authorities. It is stated in the application is as under: - "2. The issue involved in the present appeal relates to the addition u/s 68 of the Act of Rs. 3,76,31,232/- being loan from 1 party and interest payment to 8 parties without appreciating that assessee had duly discharged the burden of proof by producing all the primary evidence namely loan confirmation, ITR & audited financial, copies of bank statement of lenders, repayment details in support of the loan parties. Further the earlier period (AY 2013-14) loans were subjected to assessment and appellate proceeding before ITAT wherein the very same loans were accepted to be genuine. However during the relevant year under consideration the AO as well as CIT(A) refused to follow the AY: 2013-14 CIT(A) as well as ITAT orders. The CIT(A) relied on inspector report which stated that parties are not in existence and therefore verification could not be carried out. 3. In view of the above, the appellant is now filing the additional evidence to substantiate the case of the Appell....