DY. COMMISSIONER OF INCOME TAX 2(3)(1), MUMBAI vs. M/S SYSTEMATIX HOLDINGS PVT LTD, MUMBAI
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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
PER OM PRAKASH KANT, AM
This appeal by the Revenue is directed against order dated 29.08.2022 passed by the Ld. Commissioner of Income-tax – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2014-15, raising following grounds:
Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in holding that the addition of Rs.21,92,50,000/- u/s 68 of the Act is not
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sustainable ignoring the fact that the assessee has not sustainable ignoring the fact that the assessee has not sustainable ignoring the fact that the assessee has not been able to justify the creditworthiness of the lenders. been able to justify the creditworthiness of the lenders. been able to justify the creditworthiness of the lenders. 2. The Ld. CIT(A)’s order is contrary in law and on the The Ld. CIT(A)’s order is contrary in law and on the The Ld. CIT(A)’s order is contrary in law and on the facts and deserves to be set aside. facts and deserves to be set aside. 2. At the outset, on perusal of the At the outset, on perusal of the record, it is seen that this it is seen that this appeal has been filed with delay of 111 days. The Ld. Departmental appeal has been filed with delay of 111 days. The Ld. Departmental appeal has been filed with delay of 111 days. The Ld. Departmental Representative (DR) submitted that delay in filing the appeal Representative (DR) submitted that delay in filing the appeal Representative (DR) submitted that delay in filing the appeal occurred due to change of jurisdiction of the Pr. Commissioner of occurred due to change of jurisdiction of the Pr. Commissioner of occurred due to change of jurisdiction of the Pr. Commissioner of Income-tax and transfer and post tax and transfer and posting of the Assessing Officer ing of the Assessing Officer holding the charge of the jurisdictional Assessing Officer. He holding the charge of the jurisdictional Assessing Officer. He holding the charge of the jurisdictional Assessing Officer. He submitted that there was a bona fide reason for not filing the appeal submitted that there was a bona fide reason for not filing the appeal submitted that there was a bona fide reason for not filing the appeal on time and therefore, delay should be condoned and matter might on time and therefore, delay should be condoned and matter on time and therefore, delay should be condoned and matter be decided on merit. be decided on merit.
We have heard rival submission on the issue of condonation of ave heard rival submission on the issue of condonation of ave heard rival submission on the issue of condonation of the delay in filing the appeal. In our opinion, there was no malafide the delay in filing the appeal. In our opinion, there was no malafi the delay in filing the appeal. In our opinion, there was no malafi in delay in filing the appeal and the reasons stated being sufficient delay in filing the appeal and the reasons stated being sufficient delay in filing the appeal and the reasons stated being sufficient cause, we condone the delay and admit the appeal for adj the delay and admit the appeal for adj the delay and admit the appeal for adjudication.
Briefly stated, facts of the case are that the assessee filed its facts of the case are that the assessee filed its facts of the case are that the assessee filed its return of income electronically on 24.03.2015 declaring total return of income electronically on 24.03.2015 declaring total return of income electronically on 24.03.2015 declaring total income at Rs. Nil. The return of income filed by the assessee was income at Rs. Nil. The return of income filed by the assessee was income at Rs. Nil. The return of income filed by the assessee was subjected to scrutiny proceedings u/s 143(3) of to scrutiny proceedings u/s 143(3) of the Act and in the the Act and in the assessment, order passed u/s 143(3) of the Act on 29.12.2016 order passed u/s 143(3) of the Act on 29.12.2016, the order passed u/s 143(3) of the Act on 29.12.2016 Assessing Officer disallowed the long term capital loss amounting to Assessing Officer disallowed the long term capital loss amounting to Assessing Officer disallowed the long term capital loss amounting to Rs.11,87,26,561/- determining total income at Rs.5,29,73,730/ determining total income at Rs.5,29,73,730/-. determining total income at Rs.5,29,73,730/
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Officer on the basis of the 4.1 Subsequently, the Assessing Subsequently, the Assessing Officer on the basis of the information received from Dy. Director of Income information received from Dy. Director of Income-tax Investigation, tax Investigation, Kolkata, recorded reasons to believe that income escaped recorded reasons to believe that income escaped recorded reasons to believe that income escaped assessment and issued notice u/s 148 of the Act on 28.09.2017. In assessment and issued notice u/s 148 of the Act on 28.09.2017. In assessment and issued notice u/s 148 of the Act on 28.09.2017. In the reasons recorded the reasons recorded, the Assessing Officer noted that assessee ha fficer noted that assessee had received bogus accommodation entries from company namely M/s received bogus accommodation entries from company namely M/s received bogus accommodation entries from company namely M/s Bridge & Building Construction Co. Pvt. Ltd. Bridge & Building Construction Co. Pvt. Ltd., which was controlled which was controlled and managed by Shri Ajit Kumar Jindal and managed by Shri Ajit Kumar Jindal, who accepted on oath the who accepted on oath the fact of providing bogus bills of fact of providing bogus bills of accommodation entries. In the accommodation entries. In the reassessment proceedings, the Assessing Officer along with the reassessment proceedings, the Assessing Officer along with the reassessment proceedings, the Assessing Officer along with the issue on which the assessment proceedings were reopened, also issue on which the assessment proceedings were reopened, also issue on which the assessment proceedings were reopened, also added unsecured loans obtained by the assessee during the year unsecured loans obtained by the assessee during the year unsecured loans obtained by the assessee during the year under consideration as unexplained cash credits u/s 68 of the Act. h credits u/s 68 of the Act. The Assessing Officer asked details in respect of following six The Assessing Officer asked details in respect of following six The Assessing Officer asked details in respect of following six unsecured loan parties: parties: S. No. Name of the company/firm Name of the company/firm Amount of loan Amount of loan received (Rs.) received (Rs.) 1. Magicline Trading Company Pvt. Ltd. Magicline Trading Company Pvt. Ltd. 69,50,000/ 69,50,000/- 2. Goldlife Trading Co. Goldlife Trading Co. Pvt. Ltd. 3,11,50,0000/ 3,11,50,0000/- 3. Nikhil Khandelwal Nikhil Khandelwal 1,10,00,000/ 1,10,00,000/- 4. Goldflag Exports Pvt. Ltd. Goldflag Exports Pvt. Ltd. 1,50,000/ 1,50,000/- 5. Excel Money Management Services Excel Money Management Services 15,65,00,000/ 15,65,00,000/- Pvt. Ltd. 6. Wonder Dream Realtors Pvt. Ltd. Wonder Dream Realtors Pvt. Ltd. 1,35,00,000/ 1,35,00,000/- 4.2 In response to the query by the Assessing Officer, the assessee In response to the query by the Assessing Officer, the assessee In response to the query by the Assessing Officer, the assessee filed details of the borrowing including confirmation copy of ledger filed details of the borrowing including confirmation copy of ledger filed details of the borrowing including confirmation copy of ledger account, their financial statement etc. The Assessing Officer issued account, their financial statement etc. The Assessing Officer issued account, their financial statement etc. The Assessing Officer issued
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notice u/s 133(6) of the Act to all the six unsecured loan parties. notice u/s 133(6) of the Act to all the six unsecured notice u/s 133(6) of the Act to all the six unsecured Out of which three parties responded and filed the details as called Out of which three parties responded and filed the details as called Out of which three parties responded and filed the details as called for by the Assessing Officer. for by the Assessing Officer. Regarding the remaining three parties he remaining three parties, it was stated by the assessee that those parties duly responded to was stated by the assessee that those parties duly responded to was stated by the assessee that those parties duly responded to notice u/s 133(6) issued in the origi notice u/s 133(6) issued in the original assessment proceedings. nal assessment proceedings. The assessee filed copy of their replies filed during original The assessee filed copy of their replies filed during original The assessee filed copy of their replies filed during original assessment proceedings. However, the Assessing Officer observed assessment proceedings. However, the Assessing Officer assessment proceedings. However, the Assessing Officer that few loan parties were sharing address ew loan parties were sharing address with the assessee. He the assessee. He also observed huge inflow inflow and outflow of fund in their balance sheet fund in their balance sheet without having any business income in their hands. The Assessing without having any business income in their hands. The Assessing without having any business income in their hands. The Assessing Officer concluded that assessee was engaged in routing of that assessee was engaged in routing of black that assessee was engaged in routing of money through multiple through multiple layersfor avoiding payment of genuine tax payment of genuine tax liability. Accordingly, liability. Accordingly, in the order passed u/s 147 r.w.s. 143(3) on e order passed u/s 147 r.w.s. 143(3) on 27.12.2018, he held that closing balance of loan parties amounting he held that closing balance of loan parties amounting he held that closing balance of loan parties amounting to Rs.33,21,00,000/- - as unexplained cash credit in terms of section as unexplained cash credit in terms of section 68 of the Act.
4.3 On further appeal, the Ld. CIT(A) deleted this addition. On further appeal, the Ld. CIT(A) deleted this addition. On further appeal, the Ld. CIT(A) deleted this addition. Aggrieved the Revenue is before the Tribunal by way of raising grieved the Revenue is before the Tribunal by way of raising grieved the Revenue is before the Tribunal by way of raising grounds as reproduced above. grounds as reproduced above.
Before us, the Ld. Counsel of the assessee filed a Paper Book Before us, the Ld. Counsel of the assessee filed a Paper Book Before us, the Ld. Counsel of the assessee filed a Paper Book containing pages 1 to 101. containing pages 1 to 101.
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. The issue in dispute and perused the relevant material on record. The issue in dispute and perused the relevant material on record. The issue in
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dispute involved is dispute involved is regarding addition u/s 68 of the Act for addition u/s 68 of the Act for unexplained cash credit. The Ld. CIT(A) noted that there was an unexplained cash credit. The Ld. CIT(A) noted that there was an unexplained cash credit. The Ld. CIT(A) noted that there was an arithmetical error in the quantum of thmetical error in the quantum of addition. He further noted that addition. He further noted that the Assessing Officer has rectified the amount the Assessing Officer has rectified the amount of unexplained cash of unexplained cash credit to Rs.21,92,50,000/ to Rs.21,92,50,000/- in his rectification order u/s 154 of the in his rectification order u/s 154 of the Act dated 11.02.2019. Thus 19. Thus, the dispute is related to the dispute is related to the additions of Rs.21,92,50,000/- - having details of parties as under: as under: 1. Magicline Trading Company Pvt. Ltd. Magicline Trading Company Pvt. Ltd. 69,50,000/- 2. Goldlife Trading Co. Pvt. Ltd. Goldlife Trading Co. Pvt. Ltd. 3,11,50,000/- 3. Nikhil Khandelwal Nikhil Khandelwal 1,10,00,000/- 4. Goldflag Exports Pvt. Ltd. Goldflag Exports Pvt. Ltd. 1,50,000/- 5. Excel Money Management Services Pvt. Excel Money Management Services Pvt. 15,65,00,000/- Ltd. 6. Wonder Dream Realtors Pvt. Ltd. Wonder Dream Realtors Pvt. Ltd. 1,35,00,000/- Total 21,92,50,000/- 6.1 Before us, the assessee submitted that persons from whom Before us, the assessee submitted that persons from whom Before us, the assessee submitted that persons from whom loans have been taken loans have been taken are group entities/relates parties and all the entities/relates parties and all the documents in respect of those parties including copy of their ITR, documents in respect of those parties including copy of their ITR, documents in respect of those parties including copy of their ITR, financial statement, , confirmation and bank statement etc. in confirmation and bank statement etc. in respect of identity, creditworthiness and genuineness of the respect of identity, creditworthiness and genuineness of the respect of identity, creditworthiness and genuineness of the transactions were duly duly filed. It was further submitted that the It was further submitted that the Assessing Officer also carried out inquiry Assessing Officer also carried out inquiry u/s 133(6) which were u/s 133(6) which were also duly responded by those parties and therefore, there is no also duly responded by those parties and therefore, there is no also duly responded by those parties and therefore, there is no reason for Assessing Officer to disregard the unsecured loan reason for Assessing Officer to disregard the unsecured loan reason for Assessing Officer to disregard the unsecured loan received entries is as unexplai received entries is as unexplained cash credit. The Ld. CIT(A) after ned cash credit. The Ld. CIT(A) after considering the submission of the assessee and assessment order, considering the submission of the assessee and assessment order considering the submission of the assessee and assessment order deleted the addition as under: deleted the addition as under:
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“6.5 In the light of the above discussion, the issue in hand is 6.5 In the light of the above discussion, the issue in hand is 6.5 In the light of the above discussion, the issue in hand is being adjudicated. With respect to the identity of the six being adjudicated. With respect to the identity of the six being adjudicated. With respect to the identity of the six persons, it is found that the appellant has furnished the persons, it is found that the appellant has furnished the persons, it is found that the appellant has furnished the details such as copy of ITs, financial statements, confirmation details such as copy of ITs, financial statements, confirmation details such as copy of ITs, financial statements, confirmation of accounts of accounts and the bank statements etc. The parties have and the bank statements etc. The parties have also submitted the details in response to notices issued us also submitted the details in response to notices issued us also submitted the details in response to notices issued us 133(6) during the course of original assessment proceedings 133(6) during the course of original assessment proceedings 133(6) during the course of original assessment proceedings and the present reassessment proceedings. One person is an and the present reassessment proceedings. One person is an and the present reassessment proceedings. One person is an Individual ieSh Nikhil Khandelw Individual ieSh Nikhil Khandelwal who is a director and the al who is a director and the share holder of the appellant company. Other persons are share holder of the appellant company. Other persons are share holder of the appellant company. Other persons are sister concerns/related entities of the appellant company. sister concerns/related entities of the appellant company. sister concerns/related entities of the appellant company. From the above, there remains no doubt that the identity of From the above, there remains no doubt that the identity of From the above, there remains no doubt that the identity of the loan parties is in dispute, as it has been prov the loan parties is in dispute, as it has been prov the loan parties is in dispute, as it has been proved beyond doubt. 6.6 With respect to the genuineness of transactions, it has 6.6 With respect to the genuineness of transactions, it has 6.6 With respect to the genuineness of transactions, it has been noted that the appellant has submitted that all the been noted that the appellant has submitted that all the been noted that the appellant has submitted that all the transactions were carried out through banking channel and in transactions were carried out through banking channel and in transactions were carried out through banking channel and in support has furnished the copy of bank statements showing support has furnished the copy of bank statements showing support has furnished the copy of bank statements showing the transactions and the same were transferred out of funds e transactions and the same were transferred out of funds e transactions and the same were transferred out of funds available in the bank accounts. In the given facts and available in the bank accounts. In the given facts and available in the bank accounts. In the given facts and circumstances, the genuineness of the transaction cannot be circumstances, the genuineness of the transaction cannot be circumstances, the genuineness of the transaction cannot be doubted. 6.7 Coming to the third condition the creditworthiness of the 6.7 Coming to the third condition the creditworthiness of the 6.7 Coming to the third condition the creditworthiness of the lender. The AO held that the credit worthiness of the lenders AO held that the credit worthiness of the lenders AO held that the credit worthiness of the lenders has not been established merely on the basis that income has not been established merely on the basis that income has not been established merely on the basis that income declared by the lenders is not commensurate to the amount of declared by the lenders is not commensurate to the amount of declared by the lenders is not commensurate to the amount of loan advanced by them. The amount of income declared in loan advanced by them. The amount of income declared in loan advanced by them. The amount of income declared in return of income may be importan return of income may be important ingredient to decide the t ingredient to decide the creditworthiness but same solely cannot be the criteria. It is creditworthiness but same solely cannot be the criteria. It is creditworthiness but same solely cannot be the criteria. It is quite possible that one party in particular has earned less quite possible that one party in particular has earned less quite possible that one party in particular has earned less income but have accumulated considerable funds out of income but have accumulated considerable funds out of income but have accumulated considerable funds out of previous earnings or may have other assets or funds previous earnings or may have other assets or funds previous earnings or may have other assets or funds from loan or gift or any other sources which are not part of income loan or gift or any other sources which are not part of income loan or gift or any other sources which are not part of income declared in return. The AO has not carried out necessary declared in return. The AO has not carried out necessary declared in return. The AO has not carried out necessary examination to establish that the lenders have not the examination to establish that the lenders have not the examination to establish that the lenders have not the capacity to lend the amount to the appellant. Iherefore in capacity to lend the amount to the appellant. Iherefore in capacity to lend the amount to the appellant. Iherefore in absence of hecess absence of hecessary examination the primary evidences ary examination the primary evidences submitted by the appellant to establish creditworthiness submitted by the appellant to establish creditworthiness submitted by the appellant to establish creditworthiness cannot be rejected summarily. cannot be rejected summarily.
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6.8 The appellant has duly provided all the details of the 6.8 The appellant has duly provided all the details of the 6.8 The appellant has duly provided all the details of the lenders however the AO was not satisfied with credit lenders however the AO was not satisfied with credit lenders however the AO was not satisfied with credit worthiness of the l worthiness of the lenders. In that situation the Assessing enders. In that situation the Assessing Officer has to conduct inquiry into the creditworthiness of the Officer has to conduct inquiry into the creditworthiness of the Officer has to conduct inquiry into the creditworthiness of the lender. The AO had issued notice u/s. 133(6) of the Income lender. The AO had issued notice u/s. 133(6) of the Income lender. The AO had issued notice u/s. 133(6) of the Income Tax Act, 1961 to all the lenders and called for the details. The Tax Act, 1961 to all the lenders and called for the details. The Tax Act, 1961 to all the lenders and called for the details. The . AO has stated in the asses . AO has stated in the assessment order that M/s. Goldlife sment order that M/s. Goldlife Trading Co.Pvt. Ltd., Mis. Goldflag Exports Pvt. Ltd. and M/s. Trading Co.Pvt. Ltd., Mis. Goldflag Exports Pvt. Ltd. and M/s. Trading Co.Pvt. Ltd., Mis. Goldflag Exports Pvt. Ltd. and M/s. Wonderdream Realtors Pvt. Ltd. have replied to the notices Wonderdream Realtors Pvt. Ltd. have replied to the notices Wonderdream Realtors Pvt. Ltd. have replied to the notices issued us. 133(6) of the Act. All the other companies had issued us. 133(6) of the Act. All the other companies had issued us. 133(6) of the Act. All the other companies had replied to the notices issued u/s. 133(6) of replied to the notices issued u/s. 133(6) of the Act issued the Act issued during the course of the original assessment proceedings us. during the course of the original assessment proceedings us. during the course of the original assessment proceedings us. 143(3) of the Act. In the Assessment Order, the AO has stated 143(3) of the Act. In the Assessment Order, the AO has stated 143(3) of the Act. In the Assessment Order, the AO has stated that three companies have same addresses as that of the that three companies have same addresses as that of the that three companies have same addresses as that of the appellant company. The AO stated the theory of the appellant company. The AO stated the theory of the appellant company. The AO stated the theory of the transactions between sister concerns /related companies for s between sister concerns /related companies for s between sister concerns /related companies for routing money. The appellant had already submitted that all routing money. The appellant had already submitted that all routing money. The appellant had already submitted that all these three companies are group entities. Further, the Income these three companies are group entities. Further, the Income these three companies are group entities. Further, the Income Tax Act never restricted any person or companies to operate Tax Act never restricted any person or companies to operate Tax Act never restricted any person or companies to operate from the same registered from the same registered office. The Act also does not restrict office. The Act also does not restrict that the sister concerns cannot lend/take unsecured loans that the sister concerns cannot lend/take unsecured loans that the sister concerns cannot lend/take unsecured loans to/from each other. Therefore, the adverse inference drawn by to/from each other. Therefore, the adverse inference drawn by to/from each other. Therefore, the adverse inference drawn by the AO,on account of same address or transactions between the AO,on account of same address or transactions between the AO,on account of same address or transactions between sister concerns is not sustainable in l sister concerns is not sustainable in law. 6.9 The adverse inference on the issue that the companies are 6.9 The adverse inference on the issue that the companies are 6.9 The adverse inference on the issue that the companies are not engaged in any substantial business and majority of the not engaged in any substantial business and majority of the not engaged in any substantial business and majority of the business is of receiving and giving loan to related concerns business is of receiving and giving loan to related concerns business is of receiving and giving loan to related concerns therefore these transactions are bogus is also not acceptable therefore these transactions are bogus is also not acceptable therefore these transactions are bogus is also not acceptable as the AO has to consider the creditworthiness of the lender AO has to consider the creditworthiness of the lender AO has to consider the creditworthiness of the lender by its financial statements and not whether they are doing by its financial statements and not whether they are doing by its financial statements and not whether they are doing any business or not. Therefore the contention of the appellant, any business or not. Therefore the contention of the appellant, any business or not. Therefore the contention of the appellant, that if the lenders did not carry out any substantialbusiness that if the lenders did not carry out any substantialbusiness that if the lenders did not carry out any substantialbusiness activities, how a activities, how any addition could have been made us. 68 in ny addition could have been made us. 68 in the hands of the appellant, has substance. Apparently, the the hands of the appellant, has substance. Apparently, the the hands of the appellant, has substance. Apparently, the persons have adequate sources to provide the loans to the persons have adequate sources to provide the loans to the persons have adequate sources to provide the loans to the appellant as reflected in Their financial statements and also appellant as reflected in Their financial statements and also appellant as reflected in Their financial statements and also recorded by these persons in their recorded by these persons in their books of accounts. books of accounts. 6.10 In addition to the above, the Hon'ble Jurisdictional ITAT 6.10 In addition to the above, the Hon'ble Jurisdictional ITAT 6.10 In addition to the above, the Hon'ble Jurisdictional ITAT Mumbai in the case of Shalimar Hosing & Finance Ltd. on the Mumbai in the case of Shalimar Hosing & Finance Ltd. on the Mumbai in the case of Shalimar Hosing & Finance Ltd. on the similar facts has heldas under: similar facts has heldas under:
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The documents mentioned above with regard to all 16. The documents mentioned above with regard to all 16. The documents mentioned above with regard to all the lenders are also submitt the lenders are also submitted before us, by way of ed before us, by way of paper book. We note that the identity of the lenders is paper book. We note that the identity of the lenders is paper book. We note that the identity of the lenders is duly proved. They have duly responded to assessing duly proved. They have duly responded to assessing duly proved. They have duly responded to assessing officers notice issued us 133(6) and have made due officers notice issued us 133(6) and have made due officers notice issued us 133(6) and have made due compliances. It is not even the case of the assessing compliances. It is not even the case of the assessing compliances. It is not even the case of the assessing officer that these p officer that these parties are non-existent. The lending existent. The lending companies are also active companies as evident from companies are also active companies as evident from companies are also active companies as evident from the documents furnished from the website of Ministry of the documents furnished from the website of Ministry of the documents furnished from the website of Ministry of Corporate Affairs. The bank statement of the lending Corporate Affairs. The bank statement of the lending Corporate Affairs. The bank statement of the lending companies have also been furnished. Loan is granted companies have also been furnished. Loan is granted companies have also been furnished. Loan is granted throug through bank. No adverse inference has been noted by h bank. No adverse inference has been noted by the assessing officer from the bank statement. 17. The the assessing officer from the bank statement. 17. The the assessing officer from the bank statement. 17. The grievance of the assessing officer is that these grievance of the assessing officer is that these grievance of the assessing officer is that these companies do not have substantial income and hence companies do not have substantial income and hence companies do not have substantial income and hence are not capable of giving loans. He has also expressed are not capable of giving loans. He has also expressed are not capable of giving loans. He has also expressed doubt about the position of reserves and fund position doubt about the position of reserves and fund position doubt about the position of reserves and fund position without brining on record any cogent material from any without brining on record any cogent material from any without brining on record any cogent material from any further enquiry made by bench. We find that the funds further enquiry made by bench. We find that the funds further enquiry made by bench. We find that the funds position of the companies as noted by the Id. CIT (A) is position of the companies as noted by the Id. CIT (A) is position of the companies as noted by the Id. CIT (A) is quite capable of granting loans. T quite capable of granting loans. The adverse inference he adverse inference drawn drawn drawn from from from the the the financial financial financial statement statement statement of of of lending lending lending companies is only a surmise by the assessing officer companies is only a surmise by the assessing officer companies is only a surmise by the assessing officer without making any enquiry. In this regard, we note without making any enquiry. In this regard, we note without making any enquiry. In this regard, we note that honorable jurisdictional High Court in the case of that honorable jurisdictional High Court in the case of that honorable jurisdictional High Court in the case of Pr.CIT Pr.CIT vs Veedhata Tower Pvt vs Veedhata Tower Pvt. Ltd, orderdated . Ltd, orderdated 21.04.2018 has held that when all the necessary 21.04.2018 has held that when all the necessary 21.04.2018 has held that when all the necessary details of the fund provider was available with the details of the fund provider was available with the details of the fund provider was available with the assessing officer, he was free to make the necessary assessing officer, he was free to make the necessary assessing officer, he was free to make the necessary enquiry and addition under section 68 in the hands of enquiry and addition under section 68 in the hands of enquiry and addition under section 68 in the hands of the recipient were unjustified. the recipient were unjustified. Furthermore, assessee Furthermore, assessee has also paid interest to the lenders. It has also has also paid interest to the lenders. It has also has also paid interest to the lenders. It has also deducted tax at source. Loan have been duly repaid, deducted tax at source. Loan have been duly repaid, deducted tax at source. Loan have been duly repaid, some part has been repaid even in the present some part has been repaid even in the present some part has been repaid even in the present assessment year. In these circumstances, in our assessment year. In these circumstances, in our assessment year. In these circumstances, in our considered opinion assessee has disc considered opinion assessee has discharged the onus. harged the onus. The assessing officer has not brought on record any The assessing officer has not brought on record any The assessing officer has not brought on record any cogent material to make the addition as unproved cash cogent material to make the addition as unproved cash cogent material to make the addition as unproved cash credit. Hence, the addition made by the assessing credit. Hence, the addition made by the assessing credit. Hence, the addition made by the assessing officer is not sustainable." officer is not sustainable."
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6.11 Be that as it may be, the undisputed facts regarding the 6.11 Be that as it may be, the undisputed facts regarding the 6.11 Be that as it may be, the undisputed facts regarding the six parties which have provided the loans to the appellant that six parties which have provided the loans to the appellant that six parties which have provided the loans to the appellant that some have opening balances, some have received back some some have opening balances, some have received back some some have opening balances, some have received back some money from the appellant during the year as repayment. money from the appellant during the year as repayment. money from the appellant during the year as repayment. Thus. looking to t Thus. looking to the ledger accounts it can be said that the he ledger accounts it can be said that the impugned transactions were the business transactions impugned transactions were the business transactions impugned transactions were the business transactions between the appellant and the loan parties. In this regard, it between the appellant and the loan parties. In this regard, it between the appellant and the loan parties. In this regard, it is pertinent to refer the judgment of the Hon ble Gujarat High is pertinent to refer the judgment of the Hon ble Gujarat High is pertinent to refer the judgment of the Hon ble Gujarat High Court in case CIT vs.Ayachi Chandr Court in case CIT vs.Ayachi Chandrashekhar Narsangji ashekhar Narsangji reported in 42 taxmann.com 251 where it was held as under; reported in 42 taxmann.com 251 where it was held as under; reported in 42 taxmann.com 251 where it was held as under; "It is required to note that as such an amount of. Rs. "It is required to note that as such an amount of. Rs. "It is required to note that as such an amount of. Rs. 1,00,00,000 vide chequeNo. 102110 and an amount of 1,00,00,000 vide chequeNo. 102110 and an amount of 1,00,00,000 vide chequeNo. 102110 and an amount of Rs. 60 lakhs vide cheque No. 102111 was given to the Rs. 60 lakhs vide cheque No. 102111 was given to the Rs. 60 lakhs vide cheque No. 102111 was given to the assessee and out of assessee and out of the total loan of Rs. 1.60 crores, Rs. the total loan of Rs. 1.60 crores, Rs. 15 lakhs vide cheque no. 196107 was repaid and 15 lakhs vide cheque no. 196107 was repaid and 15 lakhs vide cheque no. 196107 was repaid and therefore, an amount of Rs.1,45,00,000 remained therefore, an amount of Rs.1,45,00,000 remained therefore, an amount of Rs.1,45,00,000 remained outstanding to be paid to IA. It has also come on record outstanding to be paid to IA. It has also come on record outstanding to be paid to IA. It has also come on record that the said loan amount has been repaid by the that the said loan amount has been repaid by the that the said loan amount has been repaid by the assessee to 'IA assessee to 'IA' in the immediately next year and the ' in the immediately next year and the Department had accepted the repayment of loan Department had accepted the repayment of loan Department had accepted the repayment of loan without probing into it. In the aforesaid facts and without probing into it. In the aforesaid facts and without probing into it. In the aforesaid facts and circumstances of the case, when the Tribunal has held circumstances of the case, when the Tribunal has held circumstances of the case, when the Tribunal has held that the matter is not required to be remanded as no that the matter is not required to be remanded as no that the matter is not required to be remanded as no other view w other view would be possible, there was no reason to ould be possible, there was no reason to interfere with the impugned order passed by the interfere with the impugned order passed by the interfere with the impugned order passed by the Tribunal. [Para 6]" Tribunal. [Para 6]" 6.12 In view of the above facts and circumstances, the identity 6.12 In view of the above facts and circumstances, the identity 6.12 In view of the above facts and circumstances, the identity and genuineness of transaction and creditworthiness of all and genuineness of transaction and creditworthiness of all and genuineness of transaction and creditworthiness of all these persons stands sub these persons stands substantiated by the appellant. This stantiated by the appellant. This clearly shows that theaddition has been made by the A0 clearly shows that theaddition has been made by the A0 clearly shows that theaddition has been made by the A0 merely on the basis of surmises anti y on the basis of surmises anti conjectures. 6.13 Further, it is observed that the appellant during the 6.13 Further, it is observed that the appellant during the 6.13 Further, it is observed that the appellant during the course of thefiledreassessment proceedings submitted all t course of thefiledreassessment proceedings submitted all t course of thefiledreassessment proceedings submitted all the details called for by the AO i.e. copy of ITs, financial details called for by the AO i.e. copy of ITs, financial details called for by the AO i.e. copy of ITs, financial statements, confirmation of accounts and the bank statements statements, confirmation of accounts and the bank statements statements, confirmation of accounts and the bank statements to substantiate the identity, creditworthiness and genuineness to substantiate the identity, creditworthiness and genuineness to substantiate the identity, creditworthiness and genuineness of the transactions. In the appellant's case regular assessment of the transactions. In the appellant's case regular assessment of the transactions. In the appellant's case regular assessment us 143(3) was passed hence the contention of the appellant ) was passed hence the contention of the appellant ) was passed hence the contention of the appellant that all these details were also submitted during the original that all these details were also submitted during the original that all these details were also submitted during the original assessment proceedings u/s. 143(3) cannot be denied. It is an assessment proceedings u/s. 143(3) cannot be denied. It is an assessment proceedings u/s. 143(3) cannot be denied. It is an
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undisputed fact that in the original assessment order the AO undisputed fact that in the original assessment order the AO undisputed fact that in the original assessment order the AO did not draw any ad did not draw any adverse inference on the details of verse inference on the details of unsecured loans from these persons. The case was reopened unsecured loans from these persons. The case was reopened unsecured loans from these persons. The case was reopened on the information received from the Investigation Wing, on the information received from the Investigation Wing, on the information received from the Investigation Wing, Kolkata which related to other concern i.e. transaction with Kolkata which related to other concern i.e. transaction with Kolkata which related to other concern i.e. transaction with M/s. Bridge and Building Construction Pvt. Ltd M/s. Bridge and Building Construction Pvt. Ltd. however, the . however, the AO did not restrict himself to the said transaction but went AO did not restrict himself to the said transaction but went AO did not restrict himself to the said transaction but went into detailed scrutiny of other unsecured loan transactions into detailed scrutiny of other unsecured loan transactions into detailed scrutiny of other unsecured loan transactions with the six persons mentioned supra. Further, from the with the six persons mentioned supra. Further, from the with the six persons mentioned supra. Further, from the catena of decisions/judgment cited by the appellant supra it catena of decisions/judgment cited by the appellant supra it catena of decisions/judgment cited by the appellant supra it can be safely concluded that any attempt by the assessing be safely concluded that any attempt by the assessing be safely concluded that any attempt by the assessing officer to deal with the issue which was already considered officer to deal with the issue which was already considered officer to deal with the issue which was already considered in, the original assessment proceeding again in re in, the original assessment proceeding again in re in, the original assessment proceeding again in re-assessment proceedings, by conducting fresh inquiry again, without any proceedings, by conducting fresh inquiry again, without any proceedings, by conducting fresh inquiry again, without any contrary material a contrary material already available on record, would have lready available on record, would have amounted to review of the original assessment order, which is amounted to review of the original assessment order, which is amounted to review of the original assessment order, which is impermissible. Thus, it can be seen that the addition made by impermissible. Thus, it can be seen that the addition made by impermissible. Thus, it can be seen that the addition made by the AO is clearly on the basis of the change of opinion and the AO is clearly on the basis of the change of opinion and the AO is clearly on the basis of the change of opinion and such a review is not permissible such a review is not permissible as per law.” 6.2 We have perused the finding of the Ld. CIT(A) We have perused the finding of the Ld. CIT(A). W . We find that the assessee has filed a copy of ITR, financial statement confirmation of assessee has filed a copy of ITR, financial statement confirmation of assessee has filed a copy of ITR, financial statement confirmation of the accounts and bank statement etc. The Assessing Officer has not the accounts and bank statement etc. The Assessing Officer has not the accounts and bank statement etc. The Assessing Officer has not pointed out any defect pointed out any defects in those documents filed by the assessee. ents filed by the assessee. Further the Assessing Officer also carried out inquiries u/s 133(6) Further the Assessing Officer also carried out inquiries u/s 133(6) Further the Assessing Officer also carried out inquiries u/s 133(6) of the Act. All the notices issued u/s 133(6) duly served upon the of the Act. All the notices issued u/s 133(6) duly served upon the of the Act. All the notices issued u/s 133(6) duly served upon the secured loan parties and not a single noticed returned unserved. secured loan parties and not a single noticed returned unserved. secured loan parties and not a single noticed returned unserved. Further few parties responde Further few parties responded to the notice issued u/s notice issued u/s 133(6) and filed all the relevant information. In respect of other parties, it was filed all the relevant information. In respect of other filed all the relevant information. In respect of other submitted by the assessee that they had responded to the notice submitted by the assessee that they had responded to the notice submitted by the assessee that they had responded to the notice u/s 133(6) of the Act issued in original assessment proceedings. u/s 133(6) of the Act issued in original assessment proceedings. u/s 133(6) of the Act issued in original assessment proceedings. Regarding the observation of the Assessing Officer that ervation of the Assessing Officer that few ervation of the Assessing Officer that unsecured loan parties unsecured loan parties weresituated at address , as that , as that that of the
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assessee. The Ld. CIT(A) has observed that there is no restriction for . The Ld. CIT(A) has observed that there is no restriction for . The Ld. CIT(A) has observed that there is no restriction for operating from the same registered office particularly when the operating from the same registered office particularly when the operating from the same registered office particularly when the unsecured loan parties are related to the assessee. Regarding no or loan parties are related to the assessee. Regarding no or loan parties are related to the assessee. Regarding no or low business income in the hands of the unsecured loan parties the low business income in the hands of the unsecured loan parties the low business income in the hands of the unsecured loan parties the Ld. CIT(A) has held that there are enough resources for extending Ld. CIT(A) has held that there are enough resources for extending Ld. CIT(A) has held that there are enough resources for extending the loan to the assessee which is evident from the financial the loan to the assessee which is evident from the financial the loan to the assessee which is evident from the financial statement filed by those unsecured loan parties. In our opinion, tement filed by those unsecured loan parties. In our opinion, tement filed by those unsecured loan parties. In our opinion, finding of the Ld. CIT(A) on the issue in dispute is well reasoned finding of the Ld. CIT(A) on the issue in dispute is well reasoned finding of the Ld. CIT(A) on the issue in dispute is well reasoned and we do not find any infirmity in the same. The ground of appeal and we do not find any infirmity in the same. The ground of appeal and we do not find any infirmity in the same. The ground of appeal of the Revenue is accordingly dismissed. of the Revenue is accordingly dismissed.
In the result, the appeal of the Revenue is dismissed. the appeal of the Revenue is dismissed. the appeal of the Revenue is dismissed.
Order pronounced in the open Court on nounced in the open Court on 22/05/2023. /05/2023. Sd/- Sd/- Sd/ (KAVITHA RAJAGOPAL KAVITHA RAJAGOPAL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 22/05/2023 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
