TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 1700
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....trary and against the facts of the case. Relief may please be granted by quashing the entire assessment order which is passed in gross violation of principles of natural justice. 2. In the facts and circumstances of the case and in law, Id. CIT(A)/ NFAC has erred in confirming the action of the Id AO in making an addition of Rs. 1,50,00,000 by treating the unsecured loans received as alleged unexplained cash credit u/s 68 of the Act. The action of the Id. CIT(A)/ NFAC is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 1,50,00,000. 3. In the facts and circumstances of the case and in law, Id. CIT(A)/ NFAC has erred in confirming the action of the Id. AO in disallowing a sum of Rs. 3,57,521 and Rs. 59,681 u/s 36(i) (va) of the Act paid for employees' contribution to PF and ESI respectively. The action of the Id. CIT(A)/ NFAC is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the said disallowance of Rs. 4,71,202. 4. The assessee company craves its rights to add, amend or alter any of the grounds on or befor....
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....the Act and requested to drop the proceedings u/s 148 and alternatively also requested to dispose off objections through a speaking order before proceeding further. The speaking order regarding objections filed against the issuance of notice u/s 148 of the Income Tax Act, 1961 was passed on 12.02.2016 and rejected the objections filed by assessee. Further notice u/s 142(1), 143(2) along with query letter was issued on 17.08.2015 fixing the case on 09.09.2015. In response of the above the assessee filed submission 09.09.2015 in which he submitted the confirmation of unsecured loan and bank statement. On perusal of details filed by assessee and available record of assessee, show cause notice was issued to assessee vide letter No. 3229 on 11.03.2015 fixing the case on 18.03.2016. In response the show cause notice submissions was filed in which details / confirmation of unsecured loan received from M/s Falak Trading Co. Pvt. of Rs. 1,00,00,000/- and M/s Pragati Gems Pvt. Ltd. of Rs. 50,00,000/- was produce. The ld. AO noted that according to the statement of Shri Praveen Kumar Jain which was recorded during the search operation, in answer of question No. 66, 67 and ....
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....ly proven. However, from the current assessment year i.e., AY 2013-14, provisions of Sec. 68 have been amended which requires even the lendors to explain the nature and source of loans given by them. The relevant provisions of the Act are hereby reproduced for ready reference:- Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. Provided further that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory unless:- 1. The person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and 2. Su....
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....izing the assessments. In view of the above, the ground as raised by the appellant is hereby dismissed. As a result, the appeal of the appellant is hereby dismissed. 5. I have gone through the above submissions and also considered the various case laws relied on by the appellant. From the facts it is understood that the assessee collected employees' contribution of ESI and PF and the same was paid beyond due date as specified by the concerned authorities which is not allowable u/s. 36(i)(va) r.w.s. 2(24)(X) and 43B. Hon'ble Apex Court brought rest to all these disputes by its recent judgement in the case of Checkmate Services Pvt Ltd Vs CIT-1 [448 ITR 518] and clearly held that any employees contributions of PF & ESI paid beyond due dates of the concerned authorities are not allowable as expenditure. By respectfully following the above judgement, the ground raised by the appellant is hereby dismissed." 5. As the assessee did not find any favour, from the appeal so filed before the ld. CIT(A), the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the ld. AR of the assessee,....
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....Computation of income and ITR M/s Falak Trading Co. Pvt. Ltd ✓ ✓ ✓ M/s Pragati Gems Pvt. Ltd. ✓ ✓ ✓ 1.2. It is undisputed that both the lending entities were companies (AO Order Page 2), regulated by the stringent provisions of the Companies Act, 2013. Their complete financial details, on yearly basis, were available in public domain. The department also issued them PAN and these companies were regularly assessed to tax. Thus, assessee company proved beyond doubt the identity, creditworthiness of the lending companies as well as genuineness of the transactions. Thus the onus, on the part of the assessee company, stood fully discharged. 1.3. Since assessee company established the Identity of both the lending companies beyond doubt. Under such circumstances ld. AO at best could have assessed such amount in the hands of both the lending companies. Reliance is placed on the following judicial pronouncements, the extracts of which have been set out for the sake of convenience:- 1.3. i Kanhaialal Jangid vs. ACIT [2008] 217 CTR 354 (RAJ.) "....We are of the opinion that in rejecting the explanation of the assessee on the undisput....
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....evidence on record, no substantial question of law arose therefrom - Held, yes..." 1.3. iii Aravali Trading Co v ITO (2008) 220 CTR (Raj) 622 "..Head notes: Income- Cash Credit- Burden of proof- once the existence of the creditor is proved and such persons own the credits which are found in the books of the assessee, the assessee's onus stands discharged and the latter is not further required to prove the source from which the creditors could have acquired the money deposited with him...." 1.3. iv Labh Chand Bohra v ITO (2010)189 Taxman 141 (Raj) Sec. 68: Identity and genuineness of Cash Creditor proved- No need to prove the capacity of Cash Creditor - source of source not to be enquired. 1.3. v ACIT, Jaipur v M/S Rajasthan Asbestors Cement Co., Jaipur (ITA NO. 940/JP/2008) "Now tribunal has upheld the decision of CIT (A) after holding that once the existence of the creditor is proved and creditors have confirmed the advancement of loans, onus of the assessee stands discharged and that it is not the duty of the assessee to prove the source from which the creditors have advanced the loans". 1.4. APPARENT IS REAL: The transaction is absolutely in accordance with the pr....
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.... incriminating documents alleged to have been found from the business premises of Shri Praveen Jain. Ld. AO, being a quasi judicial authority, was duty bound to provide opportunity to cross examine Shri Praveen Jain and also for providing copies of the impugned documents before relying on the same for making additions in the hands of the assessee company. Request for the same was made to ld. AO as evident from Page No. 9 of the order of the ld. AO. 1.8. It is submitted that such statements of Shri Praveen Jain were untested and could become evidence only if opportunity of Cross Examination would have been provided to the assessee company. It is well settled that statement of third party cannot be unilaterally utilized against the assessee as evidence to frame the assessment for it is a serious violation of the principles of natural justice. This infringement may as well result in legally untenable assessment. 1.9. In the case of Ashwani Gupta [2010] 322 ITR 396 (Delhi), addition was made on the basis of the statement of a third party and seized documents. Neither the seized documents were provided to the assessee nor was any opportunity of cross-examination of the adverse....
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....ould be bogus. Hon'ble Jharkhand High Court in case of CIT, Jamshedpur v/s Arun Kumar Agarwal (HUF) [2012] 26 taxmann.com 113 (Jharkhand) held that "Even in a case where the share broker was found involved in unfair trade practice and was involved in lowering and rising of the share price, and any person, who himself is not involved in that type of transaction, if purchased the share from that broker innocently and bonafidely and if he show his bonafide in transaction by showing relevant material, facts and circumstances and documents, then merely on the basis of the reason that share broker was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair trade practices against the norms of S.E.B.I and Stock Exchange, then merely because of that fact a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame (sic - sham) transaction. Fact of tinted broker may be relevant for suspicion but it alone necessarily does lead to conclusion of all transaction of that broker as tinted (sic - tainted). In such circumstances, further enqu....
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....f assessee]..." 1.19. Hon'ble Calcutta High Court in the case of SAHIBGANJ ELECTRIC CABLES (P) LTD. (1978) 115 ITR 408 (Cal-HC) held that where the amounts of loan were received by cheque and repayment was also made by cheque through assessee's bankers; and confirmation of creditors along with their income-tax file numbers were furnished the assessee discharged its initial burden and ITO was not justified, in the absence of any further investigation, to reject the evidence and make addition. 1.20. The aforementioned factual and legal position was put forth before the NFAC through detailed written submissions which also form part of the Paper Book filed before the Hon'ble Bench, from Pages 14-27. However, NFAC, without any cogent basis dismissed the appeal of the assessee company. NFAC did not point out any discrepancy in the evidences submitted before it of the transactions undertaken by the assessee company, neither the same have been found to be non-genuine by the NFAC. 1.21. Ld. CIT (A) did not accept the contention of the assessee company, without any cogent basis. It has also been specified by the ld. CIT (A) in the order that it was not practically feasible to provi....
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....Hon'ble ITAT Bangalore Bench in the case of Smt. Madhu Solanki - ITA No. 974 /Bang/2009 wherein it was held as under: "14...AO did not get reply from both the trade creditors and hence he proceeded to assess the outstanding balances, while accepting the purchases made during the year & payments made during the year. The AO has made the addition u/s 68 of the Act and did not invoke provisions of Sec. 41(1) of the Act. On the contrary, the assessee has shown that the payments have been made in the succeeding year through banking channels. Accordingly, we are of the view that the revenue could not rely upon the decision rendered in the case of Sureshkumar T Jain. Under these set of facts, we are of the view that the AO could not have made addition of trade creditors u/s 68 of the Act.." 1.23. Attention is drawn towards the decision of Gujarat High Court in the case of Ojas Tarmake (P.) Ltd. [2023] 156 taxmann.com 75 (Gujarat), in which it was held that where assessee showed unsecured loans received during relevant assessment year and AO made addition on ground that assessee failed to discharge onus of liability as laid down under section 68, since amount of loan received by ....
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.... 6. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: S.No. Particulars Page No. 1. Copy of confirmation of accounts of Falak Trading Co. Pvt. Ltd. 1-2 2. Copy of confirmation of accounts of Pragati Gems Pvt. Ltd 3-4 3. Copy of bank statement (State bank of Bikaner and Jaipur) of assessee. 5-9 4. Copy of Income Tax Return and computation of A.Y. 2013-14 of Pragati Gems Pvt. Ltd 10-11 5. Copy of Income Tax Return of A.Y. 2013-14 of Falak Trading Co. Pvt. Ltd. 12-13 6. Copy of submission filed before CIT(A) in the appellate proceedings 14-27 Case laws relied upon: S. No. Particulars Page No. 1. Copy of the order of Gujarat High Court in the case of Rohini Builders, [2003] 127 Taxman 523 (Gujarat) 1 2. Copy of the order of ITAT Ahmedabad Bench in the case of RAS Concepts Pvt. Ltd., ITA No. 2352/AHD/2018 2-4 3. Copy of the order of Gujarat High Court in the case of Ojas Tarmake, [2023] 156 taxmann.com 75 (Guj) 5-10 4. Copy of the order of ITAT Mumbai Bench in the case of Swargamrut Dairy Pvt. Ltd., ITA No. 6839/MUM/2019 11-31 5. Copy of the order of ITAT Mumbai Benc....
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....ourt in the case of Checkmate Services Pvt. Ltd. vs. CIT-01, 2022 (10) TMI 617 (SC) he do not intend to press this ground. Based on these oral submission ground no. 3 raised by the assessee stands dismissed. Apropos to the ground no. 1 & 2 raised by the assessee the relevant facts as emerges from the record is that in this case, information was received related to assessee which was passed on by office of the Director General of Income tax (investigation, 3rd floor, Scindia House, Ballard Pier, Mumbai vide its office letter No DGIT (Inv)/ Information/PJ2014-15 dated 03.07.2014 and received form the Income tax Officer (Inv)(Hqrs) O/s the Director General of Income Tax (Inv), Rajasthan, Jaipur the assessee has taken the accommodation entries as unsecured loans form the following companies which are managed and controlled by Shri Praveen Kumar Jain Group, Mumbai: S. No. Name of the entry provider PAN No. Financial Year Amount 1 M/s Falak Trading Co. Pvt. AABCF5837A 2012-13 1,00,00,000/- 2 M/s Pragati Gems Pvt. Ltd AAFCP5566J 2012-13 50,00,000/- As is known from the statement of Shri Praveen Jain that the assessee is one of the beneficiaries for taking the accommodatio....