TaxTMI 
TaxTMI 
2024 (12) TMI 1655
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....ing Grounds of appeal: "1. That on the facts and in the circumstances of the case and in law, the Ld. CIT(Appeal) has erred in deleting the additions of Rs.7,26,00,000/- (assessment order u/s.143(3) of the Act dated 27.12.2019) and Rs. 2,24,00,000/- (assessment order u/s 147/143(3) of the Act dated 14.03.2022) made u/s 68 of the Income Tax Act 1961 on account of Unexplained cash credit. 2. That on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeal) has erred in deleting the addition of Rs. 4,75,000/- (assessment order u/s. 147/143(3) of the Act dated 14.03.2022) made u/s. 69C of the Income Tax Act 1961 on account of Commission paid to entry operators. 3. That on the facts and in the circumstances of the case and in law, the Ld. CIT (Appeal) has erred in deleting the addition of Rs.42,10,718/- (assessment order u/s. 147/143(3) of the Act dated 14.03.2022) made u/s. 36(iii) of the Income Tax Act 1961 on account of Disallowance of relatable interest expenses. 4. That the revenue reserves its rights to substantiate, modify, delete, supplement and/or alter the grounds at any time of the appeal proceedings." 3.1 The reven....
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....ed 27.12.2019 passed u/s 143(3) of the Act. 4. Being aggrieved by the aforesaid assessment order, assessee preferred the appeal before the Ld. CIT(A). The Ld. CIT(A), however, by way of a detailed order, deleted the additions so made by the AO.The Revenue, thus, has come in appeal before us. 5. We have heard the rival contentions of the Ld. Representatives of the parties and gone through the record. 5.1 Before the Ld. CIT(A), the assessee reiterated its submissions and again furnished the relevant details of loan creditor companies which included the address and PAN of the allottees, the identity and address proof of the directors of the loan creditor companies, share application forms, bank statements highlighting the transactions, PAN Cards of the applicants, financial statements with ITR acknowledgements for AY 2017-18, along with details of sources of funds, with supporting documentary evidences. The Ld. CIT(A) forwarded the said documentary evidence along with submissions to the AO for a remand report. Thereafter, the AO sent the remand report to the Ld. CIT(A) reiterating his observations as were made in the assessment order. and recommended for the confirmation of t....
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....t in this case, all the creditor companies were active compliant companies with the Registrar of Companies and they have also been filing their returns with the Income Tax Department. That all the material necessary for establishing the identities, creditworthiness and genuineness had been furnished by the assessee. He further observed that each of the loan creditors-maintained bank accounts and copies of their respective bank accounts from which they had made payments to the assessee were filed by each of them before the AO as well before the Ld. CIT(A). Further, each of the loan creditors accepted the fact that they have advanced loan to the assessee and that such transactions were duly reflected in their respective books of accounts, as well as in their audited Balance Sheets. He further noted that the creditors had duly explained the source of funds which was from sale of investment. He further noted that the AO had not doubted the source of funds with the creditors. He noted that the AO had not produced any material to show that the transactions were unnatural. The Ld. CIT(A) observed that in this case, the only objection of the AO was that the loan creditor companies did not ....
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....next financial year through banking channels. The recovery proceedings uls. 226(3) initiated against Mukesh J. shah was also dropped by the A. O. Therefore, the provisions of section 68 do not attract of the loan transactions between the assessee M/s. Savitaben Mangaldas Trust and Shri Mukesh J. Shah. Therefore, the addition on this account is also liable to be deleted and the grounds raised by the Revenue is devoid of merits." In the present case most of the loans were repaid during the same FY only. The above observations of the Hon'ble ITAT is clearly applicable to the present case. d) Further, in the case of CIT v. S. Kamaljeet Singh [2005] 147 Taxman 18 (All.), the Hon'ble Allahabad High Court had pronounced that on the issue of discharge of assessee's onus in relation to a cash credit appearing in his books of account, has observed and held as under:- "4. The Tribunal has recorded a finding that the assessee has discharged the onus which was on him to explain the nature and source of cash credit in question. The assessee discharged the onus by placing (i) confirmation letters of the cash creditors; (ii) their affidavits; (iii) their full....
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....rs. The relevant part of the order of the ld. CIT(A) is reproduced as under: - " Gyaneshwar Vyapaar Pvt Ltd : The assessee in order to substantiate the Identity, Creditworthiness and Genuineness of the transaction with the loan creditor, the assessee company submitted the following documentary evidence. * Income Tax Return for the Assessment Year 2017-18 evidencing that the company is an income tax assessee regularly assessed to tax, * PAN: AAECG6384J. * Bank Statement maintained by the company for the relevant period evidencing the advancing of loan and receipt of the principal amount with interest through proper medium. * Source of Funds. * Loan Confirmation from the loan party duly evidencing that the loan along with interest after deducting TDS was routed through bank. * Master Data available on the ROC website evidencing that the company exists at the given address. The above documentary evidence were submitted during the assessment proceedings and further also at the time of remand proceedings before the AO. The AO has not reported any discrepancy in the documentary evidence. Further on ....
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....n of Rs. 5,76,00,000/- and earn interest income. The interest income received by the company was duly reflected in the annual accounts. Thus, the creditworthiness of the company with respect to the loan transaction is beyond any doubt. Also from the copy of loan confirmation, it was observed that the loan amounting to Rs. 5,51,00,000/- (approx.) was squared off during the assessment year and the closing balance as on 31.03.2017 was Rs 25,00,0001-. Interestingly I find that the repayment of loan is accepted by the AO without any adverse comment. Nityadhara Housing Pvt Ltd. The assessee in order to substantiate the Identity, Creditworthiness and Genuineness of the transaction with the loan creditor, the assessee company submitted the following documentary evidence. * Income Tax Return for the Assessment Year 2017-18 evidencing that the company is an income tax assessee regularly assessed to tax, * PAN: AADCN9446R. * Bank Statement maintained by the company for the relevant period evidencing the advancing of loan and receipt of the principal amount with interest through proper medium. * Source of Funds. * Loan Confirmation....
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.... annual accounts of the loan creditor company as submitted in form of paper book (Pg 163-174), I find that during the relevant year the company had substantial shareholder's fund and Reserves & Surplus of Rs. 9,96,43,671/- and the amount of loan advanced to assessee company was Rs. 70,00,000/-, which approximately 7.03% of the available funds. Thus the party had substantial resources on its own, shareholders fund to advance the loan of Rs. 70,00,000/- and earn interest income. Thus, the creditworthiness of the company with respect to the loan transaction is beyond any doubt. Also from the copy of loan confirmation, it was observed that the loan was squared off during the assessment year and interestingly I find that the repayment of loan is accepted by the AO without any adverse comment. 5.3. The Ld. CIT(A), thereafter, concluded that factually all the loan creditor companies had sufficient net worth of their own to make the investments. In most cases the percentage of net worth so-invested was at a very a very low percentage of their net worth. He further referred to the decision of the ITAT, Kolkata in the case of ITO vs. Goodpoint Commodeal (P) Ltd in ITA No. 1204/Kol/201....
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....T(A). The ld. CIT(A) nhas categorically held that the assessee had taken short term loans for its business needs and due interest was paid by the assessee on the said loans. The receipt of interest has also been taken into account by the creditors and due taxes paid thereupon. Moreover, the Ld. AR of the assessee has demonstrated that all the loans were repaid during the financial year, itself, in which the loans were taken. Under the circumstances, we do not find any infirmity in the order of the CIT(A) in this case, hence the same is upheld. Appeal of the revenue is, hereby, dismissed. ITA NO 180/Kol/2024: 6. After the aforesaid scrutiny assessment, a survey action was also carried out at the premises of the assessee. During the said survey action, it was noted that the assessee had accepted unsecured loans amounting to Rs. 2,24,00,000/-, from four more parties. Statement of Shri Vivek Gupta, key person of the assessee company was recorded during the survey action, wherein he admitted that the assessee had taken accommodation entries from the aforesaid four loan creditors. The case of the assessee was thus reopened u/s 147 of the Act, whereby the AO made addition of the afo....
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....in which the said loans were taken. He, therefore held that the assessee had duly proved that the loans were taken for a short period for the business needs of the assessee, due interest was paid on the said loans, which was duly accounted for in the books of accounts of the creditors. The creditors had filed their Income Tax Returns. The source of source was duly explained, which was not doubted by the AO. The creditors had good financial worth and the loan amount was a very small percentage of their net creditworthiness. He observed that the only adverse comment noted by the AO was based on statements recorded during the survey operation of Shri Vishwanath Gupta and Shri Vivek Gupta, the key persons of the company who later retracted their statements as the same contended to be recorded in duress. The ld. CIT(A) in this respect has noted that the alleged statement was retracted by way of affidavits dated 29.11.2019 & 24.12.2019 respectively, as the same was recorded in duress and was not voluntary. It was also explained that at the time of survey, the family was going through tough phase, as wife of Shri Vishwanath Gupta & mother of Shri Vivek Gupta was detected with cancer and w....
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....Income Tax Authority to examine any person on oath, hence, any such statement has no evidentiary value and any admission made during such statement cannot, by itself, be made the basis for addition. The above findings of the Hon'ble High Court have been upheld by the Hon'ble Supreme Court as the appeal against the said order has been dismissed by the Hon'ble Supreme Court vide order dated 20.09.12 reported in (2012) 25 Taxman.com 413. Similar view has been adopted by the Hon'ble Delhi High Court in the case of "CIT vs. Dhingra Metal Works" (2010) 328 ITR 0384 and by the Hon'ble Kerala High Court in the case of "Paul Mathews & Sons vs. CIT" (2003) 263 ITR 0101. Even the Hon'ble A.P. High Court in the case of "Naresh Kumar Agarwal" (2015) 53 taxmann.com 306 (Andhra Pradesh) has observed that where, in the absence of any incriminating material etc. found from the premises of the assessee during the course of search, statement of assessee recorded under section 132(4) would not have any evidentiary value. Similar view has been adopted by the Jaipur bench of the Tribunal in the case of "Shree Chand Soni vs. DCIT" (2006) 101 TTJ 1028 (Jodhpur). The Hon'ble Delhi High Court in the case....
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....ded by the assessee that the surrender was made under threat or coercion and that no incriminating material was found during the search action. The stand of the department was that the admission was voluntary and was not under a mistaken belief of fact or law and that the assistance had enough time to go through the facts of their case, law applicable in their case and take advice from their counsels and advisors before filing the letter of surrender of undisclosed/unaccounted income and that the admission by them was final and binding on them; The co-ordinate Jaipur Bench of the Tribunal, after overall appreciation of the fact and evidences before it, observed that the assessee's surrender was not based on any incriminating material and that the discloser being not voluntary and extracted by the department in creating a coercive situation cannot be relied solely to be basis of addition as undisclosed income. The co-ordinate bench of the Tribunal while relying upon various case laws of the higher authorities observed that it is well settled legal position that merely on the basis of a statement which is not supported by the department with cogent corroborative material cannot be a ....