SIDDHSHEKHA DEVELOPERS LIMITED LIABILITY PARTNERSHIP,MUMBAI vs. ITO WARD 22(3)(6), MUMBAI, MUMBAI

The dispute in the present appeal is confined to addition of Rs.1,80,00,000/- made under section 68 of the Income Tax Act, 1961 (in short, ‘the Act’). Of course, the assessee has also raised certain legal issues questioning the validity of reopening of assessment u/s. 147 of the Act. However, at the time of hearing, learned counsel appearing for the assessee 1 restricted her submissions only with reference to the addition of Rs.1,80,00,000/- made under section 68 of the Act. Hence, the other grounds raised by the assessee are deemed to have not been pressed.

With reference to the issue on merits, briefly the facts are, the assessee is a resident corporate entity. For the assessment year under dispute, assessee filed its return of income on 30-9-2014, declaring Nil income. Subsequently, based on certain information, the Assessing Officer formed the belief that income chargeable to tax has escaped assessment. Accordingly, he reopened the assessment under section 147 of the Act. In response to notice issue under section 148 of the Act, the assessee filed its return of income on 22.8.2022, declaring Nil income. In course of assessment proceedings, the Assessing Officer noted that as per information available on record, the assessee had taken accommodation entries by way of loans through intermediaries of another company, namely, Innocent Deal Trade Pvt Limited having Current Account No. 129505500098 with ICICI Bank, Kolkata.. He observed, as per the investigation carried out, it was found that M/s Tanya Vincom Pvt Ltd, who had advanced unsecured loan of Rs.1,80,00,000/- to the assessee, is one of the intermediary concerns of Innocent Deal Trade Pvt Limited. Based on this information, the Assessing Officer called upon the assessee to prove the genuineness of the loan transaction of Rs.1,80,00,000/-. In response to the show-cause notice issued by the Assessing Officer, the assessee furnished various documentary evidences, including confirmation from the lender, bank statement of the lender, etc. The Assessing Officer, however, was not convinced. Relying upon the information available on record, he ultimately concluded that the loan amount of Rs.1,80,00,000/- is in the nature of unexplained cash credit. Hence, he added back to the income of the assessee by invoking the provisions of Section 68 of the Act. Though, the assessee contested the addition before learned first appellate authority, however, it was confirmed.

We have considered rival submissions and perused the materials on record. It is the say of the assessee that assessee had availed the loan from M/s Tanya Vincom Pvt. Ltd through banking channels. In this context, the assessee has placed on record bank statement of lender company. On perusal of the bank statement, it is noticed that the assessee received aggregate amount of Rs.1,80,00,000/- as loan from M/s Tanya Vincom Pvt Ltd in different tranches between the period 5-12-2010-13 till 28-12-2013. The bank statement of the lender company further reveals that the loan availed was repaid by the assessee during the Financial Year 2017-18 corresponding to Assessment Year 2018-19. It is also a fact on record that the assessee has paid interest on loan taken after deducting tax at source. Thus, qua the loan taken, following facts stand established:

So far as genuineness of the transaction, the Assessing Officer has observed that the lender is one of the intermediaries of Innocent Deal Trade Pvt Limited. However, on perusal of the bank statement of the lender company, we have not found any amount received by the lender company from Innocent Deal Trade Pvt Limited. In fact, the lender company has issued a confirmation on 4th May 2023, clearly stating that the immediate source of the loan was not from Innocent Deal Trade Pvt Limited. This confirmation furnished by the lender company is corroborated by its bank statement. Thus, the allegation of the Assessing Officer