2024 (6) TMI 1371

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....d cash credit despite detailed inquiry revealing the non- existence of creditor?' 2. Brief facts giving rise to the present tax appeal can be stated as under: 3. The assessee is a company engaged in the business of trading of rough and polished diamonds and derived income from business during the period under consideration. The assessee company has shown GP rate of 0.82% on a turnover of Rs. 83,61,61,111/-. Accordingly, the return of income was filed for the period under consideration on 13.02.2016 declaring total income at Rs. 56,54,590/-. 4. The assessment proceedings under section 143 (3) of the Act was completed on 30.12.2018 wherein the total income of the assessee was assessed at Rs. 12,13,54,590/- thereby making addition of Rs.11,57,00,000/- to the total income of the assessee on account of unsecured loan treating the same as unexplained cash credit under section 68 of the Act and tax was charged at special rates as per section 115BBE of the Act. 5. Being aggrieved by the aforesaid, the assessee preferred an appeal before the learned CIT(Appeals), Surat who vide its order dated 10.02.2020 allowed the appeal of the assessee observing, inter-alia, as under: ....

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....the assessee in the immediately next year and the Department has accepted the repayment of such loan without proving it, no addition can under section 68 can be made, deleted the entire additions. During the hearing, the Ld. AR for the assessee vehemently argued that the assessee received the said amount during the course of its business activities and the amount was return either within one or two days or in a span of very short period, for which the provisions of section 68 cannot be invoked. We find the Ld. AR for the assessee filed following summary of impugned deposits and refunds; Sr. No. Details of payers Details of trade advance received Details of trade advance repaid Repayment within Name Date of receipt Amount received Date of payment Amount repaid 1 M/s. Anushul Gems Pvt Ltd. 20/08/2015 Rs. 31.00.000/- 21/08/2015 Rs. 31.00.000/-   2 M/s. Manhar Impex Pvt. Ltd. 07/07/2015 13/07/2015 Rs. 5,00,000/- Rs. 73,00,000/- 08/07/2015 14/07/2015 Rs. 5,00,000/- Rs. 73,00,000/- 1 day 3 M/s. Uttam Gems Pvt ltd. 07/07/2015 Rs. 50,00,000/- 08/07/2015 Rs. 50,00,000/- 1 day 4 M....

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....d advocate Ms. Kalpana Raval for the appellant and learned advocate Mr. Tej Shah for the respondent. 9. Having considered the submissions advanced by learned advocates for the respective parties and the orders impugned in this appeal, what is evident is that the amount of loan received by the assessee was returned within the same financial year and in most of the cases within 30 days. The said repayment was also verified from the Ledger Account and the Bank Statement. 10. In view of aforesaid undisputed fact with regard to repayment of loan, at this juncture, it would be pertinent to take note of decision of this Court in case of Dy. CIT v. Rohini Builders reported in 256 ITR 360 (Guj), wherein it is held as under: 'We have considered the rival submissions and have also gone through the order passed by the Assessing Officer, the relevant portion of which we have also extracted in para. 2 above. The Commissioner of Income-tax (Appeals) more or less confirmed the addition on the reasoning given by the Assessing Officer in the assessment order. A perusal of the chart given by us in para. 3 above indicates that out of 21 creditors the Assessing Officer has recorded the s....

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.... account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee -from those creditors as non- genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non- compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw an adverse inference against the assessee. In the case of six creditors who appeared before the Assessing Officer and whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in....