DCIT-CC-2(3), MUMBAI vs M/S. TRIDENT MARBLES PVT LTD, MUMBAI

Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI PAVAN KUMAR GADALE

For Appellant: Shri Prakash

For Respondent: Mr. Alok Kumar, CIT-DR

Hearing: 03/08/2023Pronounced: 24/08/2023

PER OM PRAKASH KANT, AM

These two appeals by the Revenue are directed against a common order dated 06/01/2023 passed by the learned commissioner of Income-tax (Appeals)-48, Mumbai [in short the Ld. CIT(A)] for assessment year 2016-17 and 2017-18 respectively. As grounds raised in both the appeals being similar, these two appeals have been heard together and dispose off by way of this consolidated order for convenience and avoid repetition of facts.

ITA Nos. 994 & 995/M/2023 2 M/s Trident Marbles Pvt. Ltd.

Firstly, we take up the appeal for assessment year 2016 Firstly, we take up the appeal for assessment year 2016 Firstly, we take up the appeal for assessment year 2016-17. The grounds raised are reproduced as under: The grounds raised are reproduced as under:

Whether, on the facts and in the circumstances of the case and in law, Whether, on the facts and in the circumstances of the case and in law, Whether, on the facts and in the circumstances of the case and in law, The Id. CIT (A) has erred in deleting the addition on account of bogus The Id. CIT (A) has erred in deleting the addition on account of bogus The Id. CIT (A) has erred in deleting the addition on account of bogus unsecured loan of Rs. 2,55,00,000/ treated as unexplained cash credit unsecured loan of Rs. 2,55,00,000/ treated as unexplained cash credit unsecured loan of Rs. 2,55,00,000/ treated as unexplained cash credit u/s 68 of the Act. u/s 68 of the Act. 2. Whether, on the facts 2. Whether, on the facts and in the circumstances of the case and in law, and in the circumstances of the case and in law, The Id. CIT (A) has erred in deleting the addition on account of interest The Id. CIT (A) has erred in deleting the addition on account of interest The Id. CIT (A) has erred in deleting the addition on account of interest paid thereon of Rs. 23,83,247/ treating the same as an expense not paid thereon of Rs. 23,83,247/ treating the same as an expense not paid thereon of Rs. 23,83,247/ treating the same as an expense not allowable u/s 37(1) of the Act. allowable u/s 37(1) of the Act. 3. The appellant craves leave to a 3. The appellant craves leave to add, delete, alter, modify, rectify, dd, delete, alter, modify, rectify, substitute or otherwise any or all of the grounds of appeal at or before the substitute or otherwise any or all of the grounds of appeal at or before the substitute or otherwise any or all of the grounds of appeal at or before the time of hearing of the appeal. time of hearing of the appeal. 3. The briefly stated facts of the case are that stated facts of the case are that during the year during the year under consideration under consideration the assessee was engaged in was engaged in business of trading and import of marble blocks and granites. In the case of the trading and import of marble blocks and granites. In the case of the trading and import of marble blocks and granites. In the case of the assessee a search and seizure action under section 132 search and seizure action under section 132 search and seizure action under section 132 of the Income-tax Act, 1961 ( tax Act, 1961 (in short ‘the Act’) was carried out ) was carried out by the investigation wing of the Income investigation wing of the Income-tax department on 14/02/2019. on 14/02/2019. For the year under consideration, the assessee filed return of For the year under consideration, the assessee filed return of For the year under consideration, the assessee filed return of income electronically on 16/10/2016 declaring total income at income electronically on 16/10/2016 declaring total income at income electronically on 16/10/2016 declaring total income at ₹93,11,330/-. Consequent to the search action at the premises of . Consequent to the search action at the premises of . Consequent to the search action at the premises of the assessee, a notice under section notice under section 153A of the Act was issued on ct was issued on 06/11/2019. In response . In response, the assessee filed return of income the assessee filed return of income declaring same amount of total income i.e. declaring same amount of total income i.e. ₹93,11,33 330/-, which was declared in the regular return of income filed. Subsequently, declared in the regular return of income filed. Subsequently, declared in the regular return of income filed. Subsequently, statutory notices were issued and complied with and assessment statutory notices were issued and complied with a statutory notices were issued and complied with a was completed on 13/04/2021 was completed on 13/04/2021 u/s 153A of the Act u/s 153A of the Act, wherein addition for bogus unsecured loans amounting to Rs.2, nsecured loans amounting to Rs.2, nsecured loans amounting to Rs.2,70,00,000/-

ITA Nos. 994 & 995/M/2023 3 M/s Trident Marbles Pvt. Ltd.

was made under section 68 of the A s made under section 68 of the Act along with ct along with disallowance of interest paid amounting to interest paid amounting to ₹3,29,480/- under section 37(1 under section 37(1) of the act in respect of those bogus unsecured loans. On further appeal, act in respect of those bogus unsecured loans. On further appeal, act in respect of those bogus unsecured loans. On further appeal, the Ld. CIT(A) deleted the addition of the unsecured loan as well as the Ld. CIT(A) deleted the addition of the unsecured loan as well as the Ld. CIT(A) deleted the addition of the unsecured loan as well as interest disallowed thereon. Aggrieved, the Revenue is in appeal llowed thereon. Aggrieved, the Revenue is in appeal llowed thereon. Aggrieved, the Revenue is in appeal before the ITAT (in short the ‘T short the ‘Tribunal’) by way of raising grounds as way of raising grounds as reproduced above.

Before the assessee has filed a paper book containing pages 1 Before the assessee has filed a paper book containing pages 1 Before the assessee has filed a paper book containing pages 1 to 172 which includes, audited financial statements of the assessee which includes, audited financial statements of the assessee which includes, audited financial statements of the assessee and confirmation, ledger confirmation, ledger account and bank statement etc unt and bank statement etc in respect of unsecured loan parties loan parties

The ground No. No. 1 of the appeal relates to addition on account al relates to addition on account of bogus unsecured loan of of bogus unsecured loan of ₹2,70,00,000/-, which has been deleted , which has been deleted by the Ld. CIT(A).

5.1 The brief facts qua the issue in dispute The brief facts qua the issue in dispute are that the Assessing that the Assessing Officer asked the asse asked the assessee to justify the genuineness of unsecured the genuineness of unsecured loans received and interest paid thereon in respect of following interest paid thereon in respect of following parties:

Sr. No. Name of the Lender Name of the Lender Amount of Interest thereon Loan 1. Bluejay Airlines Pvt Ltd. Bluejay Airlines Pvt Ltd. 1,25,00,000 1,56,164 2. Saharsh Yarn Private limited Yarn Private limited 75,00,000 93,699 3. Mansoul Commercial Pvt Ltd. Mansoul Commercial Pvt Ltd. 30,00,000 37,973 4. Bikhan Construction Pvt Ltd Bikhan Construction Pvt Ltd 40,00,000 41,644 Total 2,70,00,000 3,29,480

ITA Nos. 994 & 995/M/2023 4 M/s Trident Marbles Pvt. Ltd.

5.2 The Assessing Officer on page 3 of the assessment order has Assessing Officer on page 3 of the assessment order has Assessing Officer on page 3 of the assessment order has noted that assessee did not file any documentary evidence to prove did not file any documentary evidence to prove did not file any documentary evidence to prove the identity and creditworthiness of the creditors and genuineness the identity and creditworthiness of the creditors and genuineness the identity and creditworthiness of the creditors and genuineness of such transactions. of such transactions.

5.2.1 The Assessing Officer has further noted that during the The Assessing Officer has further noted that during the The Assessing Officer has further noted that during the course of pre-and post search inquiries by the investiga and post search inquiries by the investiga and post search inquiries by the investigation wing of the income tax department, those unsecured loan parties were not the income tax department, those unsecured loan parties were not the income tax department, those unsecured loan parties were not found in the place of their addresses g found in the place of their addresses given in their documents i.e iven in their documents i.e PAN, return of income etc. , return of income etc.

5.2.2 The Assessing Officer The Assessing Officer further, referred to s referred to statement of shri Rajesh Agrawal, director of the assessee company , director of the assessee company, recorded on , director of the assessee company 14/02/2019 during the course of search proceedings and 14/02/2019 during the course of search proceedings and 14/02/2019 during the course of search proceedings and statement recorded on oath on 11/04/2019 statement recorded on oath on 11/04/2019 in the cou the course of survey carried out post search carried out post search action, wherein facts of non existence of facts of non existence of those parties and pape those parties and paper companies were brought to his knowledge r companies were brought to his knowledge by the Investigation wing and by the Investigation wing and he was asked to justify genuineness he was asked to justify genuineness of the above referred loans, however he could not file any of the above referred loans, however he could not file any of the above referred loans, however he could not file any satisfactory reply along with supporting documents, except the satisfactory reply along with supporting documents satisfactory reply along with supporting documents contention that assessee c contention that assessee company had taken the loan legitimately ompany had taken the loan legitimately and repaid the same through banking channel and also deducted and repaid the same through banking channel and also deducted and repaid the same through banking channel and also deducted TDS on the interest paid. TDS on the interest paid.

5.2.3 During the course of assessment proceeding, the the course of assessment proceeding, the the course of assessment proceeding, the Assessing Officer issued noti Assessing Officer issued notice under section 133(6) of the A ce under section 133(6) of the Act to

ITA Nos. 994 & 995/M/2023 5 M/s Trident Marbles Pvt. Ltd.

unsecured loan parties calling for information relating to unsecured red loan parties calling for information relating to unsecured red loan parties calling for information relating to unsecured loans, note on their business activity, copies of Income-tax return, loans, note on their business activity, copies of Income loans, note on their business activity, copies of Income financial capacity to raise loan funds financial capacity to raise loan funds etc. The Assessing Officer has . The Assessing Officer has noted that those notices were delivered to those parties by postal noted that those notices were delivered to those parti noted that those notices were delivered to those parti department. The Assessing Officer has further noted that those department. The Assessing Officer has further noted that those department. The Assessing Officer has further noted that those parties has duly responded to duly responded to him.

5.2.4 However the learned Assessing Officer rejected the However the learned Assessing Officer rejected the However the learned Assessing Officer rejected the documents filed by those parties and observed that those parties documents filed by those parties and observed that those parties documents filed by those parties and observed that those parties are are paper/dummy paper/dummy compa companies nies not not having having any any financial financial creditworthiness and were engaged in providing accommodation creditworthiness and were engaged in providing accommodation creditworthiness and were engaged in providing accommodation entries in the form of loans, share application money, purchases, as entries in the form of loans, share application money, purchases, as entries in the form of loans, share application money, purchases, as observed by the investigation wing of Income observed by the investigation wing of Income-tax tax department, Kolkata.

5.3 The Ld. CIT(A) howeve The Ld. CIT(A) however rejected the finding of the Assessing r rejected the finding of the Assessing Officer observing as under: Officer observing as under:

“7.3 From the above observation of the A.O., it appears that his the above observation of the A.O., it appears that his the above observation of the A.O., it appears that his inference of these four companies being paper/shell companies inference of these four companies being paper/shell companies inference of these four companies being paper/shell companies primarily lie on two aspects, i.e., these are Kolkata based companies primarily lie on two aspects, i.e., these are Kolkata based companies primarily lie on two aspects, i.e., these are Kolkata based companies and found non and found non-existent at the time of visit of the Inspector. In my existent at the time of visit of the Inspector. In my considered view, these aspects only raise doubts about the conduct considered view, these aspects only raise doubts about the conduct considered view, these aspects only raise doubts about the conduct of these leader companies but to establish the loan transactions as of these leader companies but to establish the loan transactions as of these leader companies but to establish the loan transactions as bogus (the transactions were done through banking channel, repaid bogus (the transactions were done through banking channel, repaid bogus (the transactions were done through banking channel, repaid later on, paid interest and TDS being deducted on it later on, paid interest and TDS being deducted on it - as confirmed as confirmed by Shri Rajesh Kumar Agarwal, Director of the appellant company in by Shri Rajesh Kumar Agarwal, Director of the appellant company in by Shri Rajesh Kumar Agarwal, Director of the appellant company in the statement recorded on 11.04.2019), the onus is on the Assessing the statement recorded on 11.04.2019), the onus is on the Assessing the statement recorded on 11.04.2019), the onus is on the Assessing Officer to establish it with evidences or find lacuna or discrepancies Officer to establish it with evidences or find lacuna or discrepancies Officer to establish it with evidences or find lacuna or discrepancies in the evidences submitted before him in the evidences submitted before him, by the appellant. Nothing to , by the appellant. Nothing to that effect has been brought on record by the A.O. in this regard. that effect has been brought on record by the A.O. in this regard. that effect has been brought on record by the A.O. in this regard. 7.4 It is further observed from para 5.10 of the assessment order 7.4 It is further observed from para 5.10 of the assessment order 7.4 It is further observed from para 5.10 of the assessment order that the A.O. had issued notices us 133(6) to the loan lenders calling A.O. had issued notices us 133(6) to the loan lenders calling A.O. had issued notices us 133(6) to the loan lenders calling for information viz., for information viz., details of loans given to the assessee, notes on details of loans given to the assessee, notes on

ITA Nos. 994 & 995/M/2023 6 M/s Trident Marbles Pvt. Ltd.

business activity, copies of ITs, financial capacity to raise the loan, business activity, copies of ITs, financial capacity to raise the loan, business activity, copies of ITs, financial capacity to raise the loan, source of funds, rate of interest, etc. source of funds, rate of interest, etc. It is clearly mentioned in the It is clearly mentioned in the order that the notices have been delivered to the addresses (lo order that the notices have been delivered to the addresses (lo order that the notices have been delivered to the addresses (loan creditors). It is further mentioned in para 5.11 that: creditors). It is further mentioned in para 5.11 that: - "7.12 In response to the said notices, replies have been "7.12 In response to the said notices, replies have been "7.12 In response to the said notices, replies have been received from the parties. After verification of credentials of received from the parties. After verification of credentials of received from the parties. After verification of credentials of these replies, it is noticed that these companies are shell these replies, it is noticed that these companies are shell these replies, it is noticed that these companies are shell companies." companies." 7.5 From the above comment of the A.., it is observed that the A.O. From the above comment of the A.., it is observed that the A.O. From the above comment of the A.., it is observed that the A.O. has concluded upon verification of the replies of the loan creditors has concluded upon verification of the replies of the loan creditors has concluded upon verification of the replies of the loan creditors that these companies are shell companies. However, the A.O. has not that these companies are shell companies. However, the A.O. has not that these companies are shell companies. However, the A.O. has not elaborated the reasons for arriving at this conclusion elaborated the reasons for arriving at this conclusion. It is not . It is not explained as to how he has reached to this conclusion. What details explained as to how he has reached to this conclusion. What details explained as to how he has reached to this conclusion. What details in the financials of the loan creditors prompted him to arrive at this in the financials of the loan creditors prompted him to arrive at this in the financials of the loan creditors prompted him to arrive at this conclusion, is not elaborated in the order. conclusion, is not elaborated in the order. 7.6 It is also observed from the submission of the appellant 7.6 It is also observed from the submission of the appellant 7.6 It is also observed from the submission of the appellant that in order to prove identity of the lenders copy of PAN cards, IT order to prove identity of the lenders copy of PAN cards, IT order to prove identity of the lenders copy of PAN cards, IT acknowledgement, ROC master data, etc. were submitted before the acknowledgement, ROC master data, etc. were submitted before the acknowledgement, ROC master data, etc. were submitted before the A.O. In order to prove genuineness of loan transactions, confirmation A.O. In order to prove genuineness of loan transactions, confirmation A.O. In order to prove genuineness of loan transactions, confirmation of loan account with address, PAN, cheque numbers, b of loan account with address, PAN, cheque numbers, bank details ank details and appellant's bank details are submitted. In order to prove credit and appellant's bank details are submitted. In order to prove credit and appellant's bank details are submitted. In order to prove credit- worthiness of the lenders, bank statement of the lenders disclosing worthiness of the lenders, bank statement of the lenders disclosing worthiness of the lenders, bank statement of the lenders disclosing source of the fund and balance sheet of the lenders are filed. No source of the fund and balance sheet of the lenders are filed. No source of the fund and balance sheet of the lenders are filed. No adverse comment has been given by the A.O adverse comment has been given by the A.O. with respect to these . with respect to these documentary documentary documentary evidences evidences evidences submitted submitted submitted during during during the the the assessment assessment assessment proceedings. 7.7 In the written submission, the appellant has also highlighted the 7.7 In the written submission, the appellant has also highlighted the 7.7 In the written submission, the appellant has also highlighted the following facts: following facts: - 7.7.1 that the A.O. has ignored that the loan received from one of the 7.7.1 that the A.O. has ignored that the loan received from one of the 7.7.1 that the A.O. has ignored that the loan received from one of the lender M/s. Mansoul Commercial Private Limited amounting to Rs. r M/s. Mansoul Commercial Private Limited amounting to Rs. r M/s. Mansoul Commercial Private Limited amounting to Rs. 30,00,000/- was received and repaid during A.Y. 2015 was received and repaid during A.Y. 2015-16 and that 16 and that for the alleged A.Y 2016 for the alleged A.Y 2016-17, no transactions had taken place. The 17, no transactions had taken place. The said documents were submitted on assessment record. This proves said documents were submitted on assessment record. This proves said documents were submitted on assessment record. This proves the degree and level on blind reliance that was made on the e degree and level on blind reliance that was made on the e degree and level on blind reliance that was made on the investigation report, that even transactions which were not done in investigation report, that even transactions which were not done in investigation report, that even transactions which were not done in A.Y. 2016-17, were added as undisclosed income us 68 of the Act. 17, were added as undisclosed income us 68 of the Act. 17, were added as undisclosed income us 68 of the Act. 7.7.2 that all documentary evidences to establish the identity an 7.7.2 that all documentary evidences to establish the identity an 7.7.2 that all documentary evidences to establish the identity and creditworthiness and genuineness of such transactions in respect of creditworthiness and genuineness of such transactions in respect of creditworthiness and genuineness of such transactions in respect of all parties have been duly submitted vide letter dated 18th Dec all parties have been duly submitted vide letter dated 18th Dec all parties have been duly submitted vide letter dated 18th Dec 2020, 23rd December 2020 2020, 23rd December 2020 and 04th March 2021 7.7.3 that the AO has not taken cognizance of such documents in its 7.7.3 that the AO has not taken cognizance of such documents in its 7.7.3 that the AO has not taken cognizance of such documents in its assessment order which shows that no examination of such t order which shows that no examination of such t order which shows that no examination of such documents were made and purely considering it a Kolkata nexus documents were made and purely considering it a Kolkata nexus documents were made and purely considering it a Kolkata nexus and wild assumptions, and wild assumptions, Acluded that such loan transactions are Acluded that such loan transactions are ingenuine and bogus; ingenuine and bogus;

ITA Nos. 994 & 995/M/2023 7 M/s Trident Marbles Pvt. Ltd.

7.7.4 that the lenders M/S. Blue jay Airlines and M/S. Saharas 7.7.4 that the lenders M/S. Blue jay Airlines and M/S. Saharas 7.7.4 that the lenders M/S. Blue jay Airlines and M/S. Saharash Yarn have also submitted the source of the amounts through which Yarn have also submitted the source of the amounts through which Yarn have also submitted the source of the amounts through which such amounts were giveil to the appellant. All of this was ignored such amounts were giveil to the appellant. All of this was ignored such amounts were giveil to the appellant. All of this was ignored while framing the assessment order; while framing the assessment order; 7.7.5 that the bank statements of the lenders disclose the source of 7.7.5 that the bank statements of the lenders disclose the source of 7.7.5 that the bank statements of the lenders disclose the source of their funds made their funds made through banking channel. The appellant had through banking channel. The appellant had furnished the relevant bank statements of the lenders corresponding furnished the relevant bank statements of the lenders corresponding furnished the relevant bank statements of the lenders corresponding to the disputed loans and is not required to prove the source of the to the disputed loans and is not required to prove the source of the to the disputed loans and is not required to prove the source of the lenders funds. In any case, as verifiable from the bank statement the lenders funds. In any case, as verifiable from the bank statement the lenders funds. In any case, as verifiable from the bank statement the loans are not sourced out of cash deposits. The A.O. had not brought are not sourced out of cash deposits. The A.O. had not brought are not sourced out of cash deposits. The A.O. had not brought any contrary material on record even to doubt the intermingling of any contrary material on record even to doubt the intermingling of any contrary material on record even to doubt the intermingling of funds. 7.8 In my considered view, looking to the overall facts and 7.8 In my considered view, looking to the overall facts and 7.8 In my considered view, looking to the overall facts and circumstances of the issue involved and evidences brought o circumstances of the issue involved and evidences brought o circumstances of the issue involved and evidences brought on record by the A.O./appellant, the addition of Rs. 2,70,00,000/ by the A.O./appellant, the addition of Rs. 2,70,00,000/ by the A.O./appellant, the addition of Rs. 2,70,00,000/- as unexplained cash credit u/s 68 of the IT. Act and Rs. 3,29,480/ unexplained cash credit u/s 68 of the IT. Act and Rs. 3,29,480/ unexplained cash credit u/s 68 of the IT. Act and Rs. 3,29,480/- as interest paid thereon are unjustified and unsustainable.There are interest paid thereon are unjustified and unsustainable.There are interest paid thereon are unjustified and unsustainable.There are ample judicial authorities supporting the above concl ample judicial authorities supporting the above conclusion, some of usion, some of which are highlighted by the appellant in his written submission. which are highlighted by the appellant in his written submission. which are highlighted by the appellant in his written submission. Hence the impugned additions are directed to be deleted. Thus, Hence the impugned additions are directed to be deleted. Thus, Hence the impugned additions are directed to be deleted. Thus, grounds of appeal no. 1, 2, 3, 4 and 5 are allowed. grounds of appeal no. 1, 2, 3, 4 and 5 are allowed.” 5.4 We have heard rival submission of the parties on the is have heard rival submission of the parties on the is have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The Assessing dispute and perused the relevant material on record. The Assessing dispute and perused the relevant material on record. The Assessing Officer has treated the unsecured loan received from the four Officer has treated the unsecured loan received from the four Officer has treated the unsecured loan received from the four parties listed above as unexplained cash parties listed above as unexplained cash credit under section 68 of credit under section 68 of the Act mainly on the ground that those four ct mainly on the ground that those four companies are ct mainly on the ground that those four paper/shell companies and same were found nonexistent at their paper/shell companies and same were found nonexistent at their paper/shell companies and same were found nonexistent at their addresses during the visit by the I resses during the visit by the Inspector of the I or of the Income-tax department. On the contrary, the assessee . On the contrary, the assessee claimed to have claimed to have filed details containing, PAN, address, containing, PAN, address, confirmation by tho confirmation by those parties, Income-tax return acknowledgement, bank statement of the tax return acknowledgement, bank statement of the tax return acknowledgement, bank statement of the assessee and lenders disclosing the source of their funds. A copy of assessee and lenders disclosing the source of their funds. assessee and lenders disclosing the source of their funds. a letter addressed to the Assessing Officer enclosing those details a letter addressed to the Assessing Officer enclosing those details a letter addressed to the Assessing Officer enclosing those details has also been filed before has also been filed before us, which is available which is available on PB-57. The

ITA Nos. 994 & 995/M/2023 8 M/s Trident Marbles Pvt. Ltd.

Assessing Officer in his order has nowhere pointed out lack of Assessing Officer in his order has nowhere pointed out lack of Assessing Officer in his order has nowhere pointed out lack of creditworthiness of the unsecured loan parties. Regarding the creditworthiness of the unsecured loan parties. Regarding the creditworthiness of the unsecured loan parties. Regarding the identity, the notices issued under section 133(6) of the Act by the identity, the notices issued under section 133(6) of the identity, the notices issued under section 133(6) of the Assessing Officer were duly served on the addresses provided. Assessing Officer were duly served on the address Assessing Officer were duly served on the address Those parties also responded and filed the documents called for by hose parties also responded and filed the documents called for by hose parties also responded and filed the documents called for by the Assessing Officer. Before us the learned counsel of the assessee the Assessing Officer. Before us the learned counsel of the assessee the Assessing Officer. Before us the learned counsel of the assessee has referred to paperbook page 48 and submitted paperbook page 48 and submitted that source of paperbook page 48 and submitted loan in the hands of party namely Bluejay Airlines P Ltd rlines P Ltd was out loan in the hands of party of sale of LIC mutual fund amounting to of sale of LIC mutual fund amounting to ₹1,27,14,924/ 924/-. In the case of Saharsh Yarn P Ltd Saharsh Yarn P Ltd also the learned counsel of the assessee also the learned counsel of the assessee referred to paperbook page No. 72, which is referred to paperbook page No. 72, which is a copy of the bank copy of the bank statement of said party and submitted that source of the loan was statement of said party and submitted that source of the loan statement of said party and submitted that source of the loan sale of LIC mutual fund amounting to sale of LIC mutual fund amounting to ₹50 lakh and 30 50 lakh and 30 lakh respectively, immediately , immediately received prior to the issue of the loan to prior to the issue of the loan to the assessee. The learned counsel of the The learned counsel of the assessee also referred to see also referred to page No. 56 of the paperbook, which is a acknowledgement of the No. 56 of the paperbook, which is a acknowledgement of the No. 56 of the paperbook, which is a acknowledgement of the information filed by the assessee before the Assessing in respect of information filed by the assessee before the Assessing in respect of information filed by the assessee before the Assessing in respect of unsecured loan parties. Regarding the party namely Mansoul unsecured loan parties. Regarding the party namely unsecured loan parties. Regarding the party namely Commercial private limited Commercial private limited, the Ld. CIT(A) has noted that loan of has noted that loan of ₹ 30 lakh was received by the assessee 30 lakh was received by the assessee in immediately preceding immediately preceding assessment year and assessment year and same was returned also in that year and in was returned also in that year and in the year under consideration no loan has been received from the the year under consideration no loan has been received from the the year under consideration no loan has been received from the that party. The learned counsel referred to the confirmation of party. The learned counsel referred to the confirmation of party. The learned counsel referred to the confirmation of account of the said party available on paperbook page 119 for account of the said party available on paperbook page 119 for account of the said party available on paperbook page 119 for assessment year 2015 assessment year 2015-16 and confirmation for AY 2016 confirmation for AY 2016-17

ITA Nos. 994 & 995/M/2023 9 M/s Trident Marbles Pvt. Ltd.

available on paperbook page 120 paperbook page 120-122. According to the said 122. According to the said confirmation for AY 2016 2016-17, there is no loan transaction is no loan transaction from the said party in the year under consideration. said party in the year under consideration.

5.4.1 From the above it is evident that assessee has discharged From the above it is evident that assessee has discharged From the above it is evident that assessee has discharged onus of providing primary documents in relation to parties, onus of providing primary documents in relation to parties, onus of providing primary documents in relation to parties, justifying identity, creditworthiness justifying identity, creditworthiness and genuineness of the and genuineness of the transaction, however the Assessing Officer transaction, however the Assessing Officer relied only on the finding relied only on the finding of the investigation wing of Kolkata and did not carry out any of the investigation wing of Kolkata and did not carry out any of the investigation wing of Kolkata and did not carry out any analysis of financial statement of unsecured loan parties for alleging analysis of financial statement of unsecured loan parties for alleging analysis of financial statement of unsecured loan parties for alleging lack of creditworthiness and lack of creditworthiness and genuineness of the transaction. It is a genuineness of the transaction. It is a strange that on the one hand the Assessing Officer is recording that strange that on the one hand the Assessing Officer is recording that strange that on the one hand the Assessing Officer is recording that notices issued under section 133(6) of the A ed under section 133(6) of the Act were duly served on ct were duly served on the unsecured loan parties the unsecured loan parties, but still he had relied on the report of on the report of the investigation wing that those parties were not found by the gation wing that those parties were not found by the gation wing that those parties were not found by the inspector of the investigation wing during the course of posts search inspector of the investigation wing during the course of posts search inspector of the investigation wing during the course of posts search proceedings. If Assessing Officer was having further doubt proceedings. If Assessing Officer was having further doubt proceedings. If Assessing Officer was having further doubt regarding the identity of those parties, he could have deputed regarding the identity of those parties, he could have deputed regarding the identity of those parties, he could have deputed inspector from his office or could have issued commission to other rom his office or could have issued commission to other rom his office or could have issued commission to other officers for visiting the pla officers for visiting the places of address of those parties, but he did ces of address of those parties, but he did not do so. The learned Assessing Officer even did not verify The learned Assessing Officer even did not verify the facta The learned Assessing Officer even did not verify that party namely Mansoul commercial private Ltd party namely Mansoul commercial private Ltd party namely Mansoul commercial private Ltd had not given any loan during the year under consideration. The addition in any loan during the year under consideration. The addition in any loan during the year under consideration. The addition in respect of that party has been made even without verifying the respect of that party has been made even without verifying the respect of that party has been made even without verifying the financial statements of the assessee. financial statements of the assessee.

ITA Nos. 994 & 995/M/2023 10 M/s Trident Marbles Pvt. Ltd.

5.4.2 In facts and circumstances discussed above, we do not In facts and circumstances discussed above, we do not In facts and circumstances discussed above, we do not find any error in the or find any error in the order of the Ld. CIT(A) on the issue in dispute der of the Ld. CIT(A) on the issue in dispute and accordingly, we uphold the same. we uphold the same. The ground No. 1 of the The ground No. 1 of the appeal of the Revenue is accordingly dismissed. The ground No. 2 appeal of the Revenue is accordingly dismissed. The ground No. 2 appeal of the Revenue is accordingly dismissed. The ground No. 2 of disallowance of interest in respect of those unsecured loan, being of disallowance of interest in respect of those unsecured loan, being of disallowance of interest in respect of those unsecured loan, being connected to the ground No.1 , same also stands dismissed. the ground No.1 , same also stands dismissed. the ground No.1 , same also stands dismissed.

The grounds raised by the Revenue in assessment year 2017 The grounds raised by the Revenue in assessment year 2017 The grounds raised by the Revenue in assessment year 2017- 18 are reproduced as under: 18 are reproduced as under:

Whether, on the facts and in the circumstances of the case and in Whether, on the facts and in the circumstances of the case and in Whether, on the facts and in the circumstances of the case and in law, The Id. CIT (A) has erred in deleting the law, The Id. CIT (A) has erred in deleting the addition on account of addition on account of bogus unsecured loan of Rs. 2,55,00,000/ treated as unexplained bogus unsecured loan of Rs. 2,55,00,000/ treated as unexplained bogus unsecured loan of Rs. 2,55,00,000/ treated as unexplained cash credit u/s 68 of the Act. cash credit u/s 68 of the Act. 2. 2. Whether, on the facts and in the circumstances of the case and 2. Whether, on the facts and in the circumstances of the case and 2. Whether, on the facts and in the circumstances of the case and in law, The Ld. CIT (A) has erred in deleting the addition on account in law, The Ld. CIT (A) has erred in deleting the addition on account in law, The Ld. CIT (A) has erred in deleting the addition on account of interest paid thereon of Rs. 23,83,247/. treating the same as an of interest paid thereon of Rs. 23,83,247/. treating the same as an of interest paid thereon of Rs. 23,83,247/. treating the same as an expense not allowable u/s 37(1) of the Act. expense not allowable u/s 37(1) of the Act. 3. 3. The a 3. The appellant craves leave to add, delete, alter, modify, rectify, ppellant craves leave to add, delete, alter, modify, rectify, substitute or otherwise any or all of the grounds of appeal at or substitute or otherwise any or all of the grounds of appeal at or substitute or otherwise any or all of the grounds of appeal at or before the time of hearing of the appeal. before the time of hearing of the appeal. 4. 4. The appellant, therefore, prays that on the grounds stated 4. The appellant, therefore, prays that on the grounds stated 4. The appellant, therefore, prays that on the grounds stated above, the order of the above, the order of the Ld. CIT (A), Mumbai, may be set aside and Ld. CIT (A), Mumbai, may be set aside and that of the Assessing Officer restored. that of the Assessing Officer restored. 6.1 During the year the year, the Assessing Officer has made addition for the Assessing Officer has made addition for the unsecured loan received from six party during the year under the unsecured loan received from six party during the year under the unsecured loan received from six party during the year under consideration and the interest in respect of the interest in respect of parties from parties from whom loans were received in precedin loans were received in preceding year as well in the year under as well in the year under consideration. The detail of loans receive . The detail of loans received and interest payment interest payment disallowed in the year under consideration is reproduced as under: disallowed in the year under consideration is reproduced as disallowed in the year under consideration is reproduced as

Sr. No. Name of Parties Address Address for for Spot verification report Observati Veri Verification on during verificatio n 1. M/s Saharsh Yarn 2A, 9 2A, 9th floor, Room I visited the premise and found that the I visited the premise and found that the ANX-1 Pvt. Ltd. No. No. 143, 143, premise was locked and not operational. A premise was locked and not operational. A

ITA Nos. 994 & 995/M/2023 11 M/s Trident Marbles Pvt. Ltd.

Commercial House, Commercial House, local enquiry reveals that the premise has local enquiry reveals that the premise has Ganesh Ganesh Chandra Chandra been locked for about one year. No such been locked for about one year. No such Avenue, Kolkata, Avenue, Kolkata, name board and business activity of the name board and business activity of the West West Bengal- Bengal company was found at the given address. company was found at the given address. 700013. 700013. Hence, the summons couldn't be served at summons couldn't be served at the given address 2. M/s Monsoul 2 2nd floor, Room No. I visited the premise and found that no such I visited the premise and found that no such ANX-2 Commercial Pvt. 212, 212, 7 7 Mangrol Mangrol company exists at the given address. Local company exists at the given address. Local Ltd. Lane, Kolkata, West Lane, Kolkata, West enquiry reveals no such name board and reveals no such name board and Bengal Bengal-700 001. business activities of the company at the business activities of the company at the given address. Hence, the summons couldn't given address. Hence, the summons couldn't be served at the given address. 3. M/s Bikhan 27, Room No. 510 27, Room No. 510 I visited the premise and found that the I visited the premise and found that the ANX-3 Construction Pvt. Narayani Narayani Building, Building, premise was locked and not operational. premise was locked and not operational. Ltd. Brobourne Brobourne Road, Local enquiry reveals that there is no such Local enquiry reveals that there is no such Kolkata, Kolkata, West West company exists at the given address. Hence, company exists at the given address. Hence, Bengal Bengal-700001 the summons couldn't be served at the given the summons couldn't be served at the given address. 4. M/s AVR Tradecon 45H, 45H, Plot Plot 11A, 11A, I visited the premises and found that this is a I visited the premises and found that this is a ANX-4 Pvt. Ltd. Ashutosh Mukherjee Ashutosh Mukherjee residential premise. Local enquiry revealed residential premise. Local enquiry revealed Road, Kolkata, West Road, Kolkata, West that there is no such company exists at the that there is no such company exists at the Bengal Bengal-700020. given address. Hence, the summons couldn't Hence, the summons couldn't be served at the given address 5. M/s.Blackcherry A A I visited the premise and found that there I visited the premise and found that there ANX-5 Commosale Pvt. Ltd. 3rd floor, Unit 3rd floor, Unit-200, was no such name board and business was no such name board and business Kolkata, Kolkata, West West activity of the company at the given address. company at the given address. Bengal Bengal-700 001 Hence, the summons couldn't be served at Hence, the summons couldn't be served at the given address. 6. M/s.Moonlight 3 3rd floor, Room I visited the premise. No business activity was I visited the premise. No business activity ANX-6 Suppliers Pvt. Ltd. No.30, 63, Madhu No.30, 63, Madhu found at the address. Local enquiry reveals found at the address. Local enquiry reveals Street, Street, Dalhousie, Dalhousie, that there is no such company exists at the that there is no such company exists at the Kolkata, Kolkata, West West given address. Hence, the summons couldn't given address. Hence, the summons couldn't Bengal Bengal-700 001 be served at the given address. 7. M/s.Ramanuj 1 1st floor, 207, I visited the premises and found that there I visited the premises and found that there ANX-7 Dealers Pvt. Ltd. 21A(1), 21A(1), was no such name board and business was no such name board and business Karnani Estate, ABC Karnani Estate, ABC activity of the company at the given address. activity of the company at the given address. Bose Bose Hence, the summons couldn't be served at Hence, the summons couldn't be served at Road, Kolkata, West Road, Kolkata, West the given address. Bengal Bengal-700 017 8. M/s.Rozelie Sales & Room Room No.47, No.47, 1° 1° I visited the premise and found that there I visited the premise and found that there ANX-8 Services Pvt. Ltd. floor, floor, Rabindra Rabindra was no such name board and business was no such name board and business Suruni, Suruni, Burra Burra activity of the company at the given address. activity of the company at the given address. (Buru) (Buru) The premise is 10 x 10 open room where 2 The premise is 10 x 10 open ro Kolkata, Kolkata, beds were lying at the floor. None was inside beds were lying at the floor. None was inside West West Bengal-700 Bengal this room. Hence, the summons couldn't be this room. Hence, the summons couldn't be 007 007 served at the given address. 9. M/s.Splendor 302/303, 302/303, Sunny Sunny I visited the premise and found that there the premise and found that there ANX-9 Realcon Pvt. Ltd. Corner, Saint Corner, Saint was no such name board and business was no such name board and business Road, Bhawanipura, Road, Bhawanipura, activity of the company being run at the given activity of the company being run at the given Kolkata, Kolkata, West West address. Hence, the summons couldn't be address. Hence, the summons couldn't be Bengal Bengal-700 020 served at the given address 10. M/s.Bluejay Pvt. 91, 3r floor, Flat No. 91, 3r floor, Flat No. I visited the premise and found that there I visited the premise and found that there ANX-10 Ltd. 303, Lalla Pora 303, Lalla Pora, 1ª was no such name board and business was no such name board and business Bye lane, Shihpur, Bye lane, Shihpur, activity of the company at the given address. activity of the company at the given address. Kolkata, Kolkata, West West Hence, the summons could not be served at Hence, the summons could not be served at Bengal Bengal-711 101 the given address

ITA Nos. 994 & 995/M/2023 12 M/s Trident Marbles Pvt. Ltd.

6.2 In the year under consideration, the Ld. CIT(A) has followed year under consideration, the Ld. CIT(A) has followed year under consideration, the Ld. CIT(A) has followed his finding in assessment year 2016 his finding in assessment year 2016-17. The relevant funding of the 17. The relevant funding of the Ld. CIT(A) reproduced as under: Ld. CIT(A) reproduced as under:

“11. The appellant has made identical submissions as that made in 11. The appellant has made identical submissions as that made in 11. The appellant has made identical submissions as that made in the preceding year AY 2016 the preceding year AY 2016-17 as reproduced above. Other facts and produced above. Other facts and backgrounds of the case regarding nine loan creditors remain the backgrounds of the case regarding nine loan creditors remain the backgrounds of the case regarding nine loan creditors remain the same. Identical findings have been given by the A.O. with respect to same. Identical findings have been given by the A.O. with respect to same. Identical findings have been given by the A.O. with respect to nine loan creditors. Since the issues involved in Appeal No. CIT(A) nine loan creditors. Since the issues involved in Appeal No. CIT(A) nine loan creditors. Since the issues involved in Appeal No. CIT(A)-48, Mumbai/10519/2016 Mumbai/10519/2016-17 for AY. 2017-18 are identical to the one that 18 are identical to the one that are stated above in CIT(A) are stated above in CIT(A)-48, Mumbai/11229/2015-16 for A.Y. 2016 16 for A.Y. 2016- 17, the undersigned findings in CIT(A) 17, the undersigned findings in CIT(A)-48, Mumbai/11229/2015 48, Mumbai/11229/2015-16 for A.Y. 2016-17 would mutatis mutandis, apply to this appeal for A.Y. 17 would mutatis mutandis, apply to this appeal for A.Y. 17 would mutatis mutandis, apply to this appeal for A.Y. 2017-18 as well. Hence, the impugned additions of Rs. 2,55,00,000/ 18 as well. Hence, the impugned additions of Rs. 2,55,00,000/ 18 as well. Hence, the impugned additions of Rs. 2,55,00,000/- and Rs. 23,83,247/ and Rs. 23,83,247/- are directed to be deleted. 11.1 Accordingly, this appeal of the appellant for AY 2017 11.1 Accordingly, this appeal of the appellant for AY 2017-18 is Partly 18 is Partly Allowed too.” 6.3 Before us the learned counsel of the assessee Before us the learned counsel of the assessee Before us the learned counsel of the assessee submitted that Assessing Officer had had grossly erred in its application of the mind by grossly erred in its application of the mind by ignoring that loans stated to be have been received in the year ignoring that loans stated to be have been received in the year ignoring that loans stated to be have been received in the year under consideration amounting to under consideration amounting to Rs. 55,00,000/ 55,00,000/-, had been actually received by the assessee in the previo actually received by the assessee in the previous year corresponding us year corresponding to assessment year 2018 to assessment year 2018-19 and in the assessment year under 19 and in the assessment year under consideration no transaction had taken place consideration no transaction had taken place from those parties from those parties except interest payment to few parties except interest payment to few parties.

6.4 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In view of the pute and perused the relevant material on record. In view of the pute and perused the relevant material on record. In view of the submission of the learned counsel of the assessee that no loans submission of the learned counsel of the assessee that no loans submission of the learned counsel of the assessee that no loans were received from those six parties during the year under were received from those six parties during the year under were received from those six parties during the year under consideration, it needs verification at the end of the Assessing consideration, it needs verification at the end of the Assessing consideration, it needs verification at the end of the Assessing Officer, as the ld CIT(A) decided the issue without any opportunity as the ld CIT(A) decided the issue without any opportunity as the ld CIT(A) decided the issue without any opportunity

ITA Nos. 994 & 995/M/2023 13 M/s Trident Marbles Pvt. Ltd.

to the Assessing officer. T to the Assessing officer. Therefore in the facts and circumstances of herefore in the facts and circumstances of the case, we feel it appropriate to restore the issue in dispute to the the case, we feel it appropriate to restore the issue in dispute the case, we feel it appropriate to restore the issue in dispute file of the Assessing Officer for examination of file of the Assessing Officer for examination of the facts and decide the facts and decide in accordance with law. If no loans are received from those six in accordance with law. If no loans are received from those six in accordance with law. If no loans are received from those six parties in the year under consideration, then no addition invoking parties in the year under consideration, then no addition invoking parties in the year under consideration, then no addition invoking section 68 could be made in respect of those partie section 68 could be made in respect of those parties. The grounds of s. The grounds of the appeal of Revenue evenue are accordingly allowed for statistical ly allowed for statistical purposes.

In the result, the appeal of the R the result, the appeal of the Revenue for assessment evenue for assessment year 2016-17 is dismissed whereas appeal for assessment 17 is dismissed whereas appeal for assessment year 2017-18 17 is dismissed whereas appeal for assessment is allowed for statistical purposes. allowed for statistical purposes.

Order pronounced in the open Court on nounced in the open Court on 24/08/2023. /08/2023. Sd/ Sd/- Sd/- (PAVAN KUMAR GADALE PAVAN KUMAR GADALE) (OM PRAKASH KANT) (OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 24/08/2023 Dragon Legal/Rahul Sharma, Sr. P.S. Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai

DCIT-CC-2(3), MUMBAI vs. M/S. TRIDENT MARBLES PVT LTD, MUMBAI