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Income Tax Appellate Tribunal, JAIPUR BENCHES “B”, JAIPUR
Before: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM vk;dj vihy la-@ITA No. 137/JP/2018
ORDER PER: R.C. SHARMA, A.M. This is an appeal filed by the assessee against the order of ld.CIT(A)-2, Jaipur dated 24/11/2017 for the A.Y. 2014-15 in the matter of order passed U/s 143(3) of the Income Tax Act, 1961 (in short the Act).
In this appeal, the assessee is aggrieved for addition of Rs.5,50,000/- U/s 68 and disallowance of interest expenditure of Rs. 53,625/- U/s 57 of the Act on such borrowed funds.
2 ITA 137/JP/2018_ KS Enterprises Vs ITO 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee is a firm engaged in the business of providing freight and forwarding services. The assessee Firm filed its Return of Income on 28.10.2014 declaring income of Rs. 0/-. The assessment u/s 143(3) was completed vide order dated 21.12.2016 wherein the addition of Rs. 5,50,000/- was made U/s 68 of the Act in respect of two loan creditors namely Girdhar Gopal and Kaml Kishore and interest was also disallowed. The A.O. observed that the assessee could not produce the loan creditors, accordingly, creditworthiness was not established. By the impugned order, the ld. CIT(A) confirmed the action of the A.O.
It was contended by the ld. AR of the assessee that the assessee during the assessment proceedings provided confirmation of the parties from whom loan was received during the year under consideration. The confirmation contained details like name, address and PAN of the lenders. During the proceedings before AO and Id. CIT(A), the assessee firm submitted the account confirmations of both the parties. Thus, the assessee firm was under bona-fide belief that the submissions and confirmations would suffice. The assessee firm discharged its onus of proving identity, genuineness and creditworthiness by submitting the following:
3 ITA 137/JP/2018_ KS Enterprises Vs ITO S. No. Particulars Girdhari Gopal Kamal Kishor Premraj Jhanwar Rs.3,50,000 Rathi Rs. 2,00,000 1. Confirmation of accounts PB 3 PB 4 (containing name & address) 2. Copy of computation - PB 5-6 3. Extract of bank Passbook - PB 7-8 4. ITR acknowledgment - AE 1 5. Undertaking for change in - AE 2-5 address (alongwith proofs) 6. Account Statement (A.Y. 2014- AE 18-23 AE 6-11 15 to June 2018) 7. Form No. 16A AE 26-31 (A.Y. A.E. 12-17 (A.Y. 2017-18 2014-15) 8. Form 15G of A.Y. 2014-15 AE 24-25 - 9. PAN PB-2 PB-2 Reliance was placed on the decision of the Hon’ble Supreme Court in the case of CIT Vs Orissa Corpn. (P) Ltd. (1986) 25 Taxman 80F (SC) in support of the contention that the assessee has discharged its primary onus by furnishing name, address of the alleged creditors alongwith their confirmations. Accordingly, the assessee has discharged its primary onus, therefore, the addition made U/s 68 of the Act was not justified.
On the other hand, the ld DR has relied on the orders of the authorities below and contended that in spite of specific requisition of the A.O., the assessee could not produce the loan creditors before the A.O.. The ld DR also invited our attention to the notice issued by the A.O. U/s 133(6) of the Act to Kamal Kishore which was returned with remark of “left without address”.
4 ITA 137/JP/2018_ KS Enterprises Vs ITO 6. We have considered the rival contentions and carefully gone through the orders of the authorities below. From the record we found that during the course of assessment proceedings, the assessee has provided confirmation of loan creditors alongwith PAN details. However, notices sent by the A.O. U/s 133(6) of the Act but there was no response, accordingly, the A.O. concluded that the assessee has not discharged its onus of proving the creditworthiness of the loan creditors. We also observe that whatever documents filed by the assessee do not establish the creditworthiness of the loan creditors, therefore, one of the conditions of Section 68 of the Act was not fulfilled. We also observe that following additional documents were filed by the ld. AR before us with respect to loan creditors and which goes to the root of the issue:
S. No. Particulars Page No. 1. Kamal Kishor Rathi a. Copy of 1TR for A.Y. 2014-15 1 b. Undertaking for the change in address 2 c. Copy of Aadhar Card 3-4 d. Extract of Bank Statement for the address 5 verification e. Account Statement from A.Y. 2014-15 till June 2018 6-11 f. Form No. 16A for the A.Y. 2014-15 12-17 2. Girdhar Gopal Jhanwar a. Account Statement from A.Y. 2014-15 till June 2018 18-23
5 ITA 137/JP/2018_ KS Enterprises Vs ITO b. Copy of letter to AO for submission of Form 15G for AY 24-25 2014-15 26-31 c. Form No. 16A for the A.Y. 2017-18 In all fairness, we restore back all the issues to the file of the A.O. for deciding afresh after considering the above documents and after providing reasonable opportunity of being heard to the assessee. We direct accordingly.
In the result, appeal of the assessee is allowed for statistical purposes only. Order pronounced in the open court on 30th April, 2019.
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सहायक पंजीकार@Aेेज. त्महपेजतंत