DCIT, CC-1(4), AHMEDABAD vs. M/S. SHREEEM CONSTRUCTION, AHMEDABAD

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ITSSA 58/AHD/2019Status: DisposedITAT Ahmedabad28 June 2024AY 2012-136 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal for AY 2011-12. The Judicial Member noted that the Ld. DR could not dispute the repayment of loans by the assessee to the parties in question, nor dispute the findings of the Ld. CIT(A). The CIT(A) had deleted the additions under Section 68 after considering the remand report and documents submitted by the assessee, including ledger accounts, Form 16A, TDS challans, bank statements, PAN, and MCA portal status of the lenders. The CIT(A) relied on the Gujarat High Court's decision in CIT vs. Ayachi Chandrashekhar Narsangji, which held that if a loan is repaid in the next financial year and accepted by the department without probing, the addition as unexplained cash credit needs to be deleted. The Tribunal found the grounds raised by the Revenue devoid of merit. For AY 2012-13, the Tribunal dismissed the Revenue's appeal due to low tax effect, citing CBDT Circular No. 17/2019, as the tax involved was less than Rs. 50,00,000/-.

What were the facts?

The appeals were filed by the Revenue against the orders of the CIT(A) for Assessment Years 2011-12 and 2012-13. The Assessing Officer (AO) had made additions under Section 68 of the Income Tax Act, 1961, for unsecured loans of Rs. 1,50,00,000/- from New Wave Commercial Pvt. Ltd. and Rs. 50,00,000/- from Meet Enterprises. The assessee provided supporting documents, but the AO was not satisfied. The CIT(A) deleted these additions after calling for a remand report, finding the transactions genuine and the lenders creditworthy, and noting the loans were repaid. For AY 2012-13, the Revenue also appealed against additions made under Section 69 and deletions of interest. However, this appeal was dismissed due to low tax effect as per CBDT Circular No. 17/2019.

What were the issues?

1. Whether the Ld. CIT(A) erred in admitting additional evidence submitted by the assessee, given that sufficient opportunities were provided during assessment proceedings and Rule 46A conditions were not met (Section 143(3) r.w.s 153). 2. Whether the Ld. CIT(A) erred in deleting the addition of Rs. 1,50,00,000/- from New Wave Commercial Pvt. Ltd. and Rs. 50,00,000/- from Meet Enterprises under Section 68. 3. Whether the Ld. CIT(A) erred in deleting the addition of interest of Rs. 6,69,906/- under Section 40(a)(ia). 4. Whether the Ld. CIT(A) erred in deleting the disallowance of interest of Rs. 21,30,783/-. 5. Whether the Ld. CIT(A) erred in restricting the addition to Rs. 5,91,120/- as against Rs. 34,55,600/- made under Section 69. 6. Whether the Ld. CIT(A) erred in deleting the addition of interest of Rs. 19,68,118/-. 7. Whether the Ld. CIT(A) erred in deleting the disallowance of interest of Rs. 59,98,899/-. Assessee's Arguments: None appeared for the assessee. Revenue's Arguments: The Revenue contended that the CIT(A) erred in admitting additional evidence, deleting additions under Section 68 and Section 69, and deleting interest additions/disallowances. The Revenue argued that sufficient opportunities were given during assessment and Rule 46A conditions were not met. The Revenue prayed for the AO's order to be restored.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 153,Section 68,Section 40(a)(ia),Section 69

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH

Before: Shri T.R. Senthil Kumar & Shri Makarand Vasant Mahadeokar

PER T.R SENTHIL KUMAR, JUDICIAL MEMBER:-

These two appeals are filed by the Revenue as against the separate appellate orders dated 05.12.2018, passed by the Commissioner of Income Tax [Appeals]-11, arising out of the assessment orders passed under section 143(3) r.w.s 153 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years 2011-12 & 2012-13.

I.T(SS).A Nos.57 & 58/Ahd/2019 A.Y. 2011-12 & 2012-13 Page No 2 DCIT Vs. M/s. Shreem Construction

First we take IT(SS)A No.57/Ahd/2019 for AY 2011-2012, 1. an appeal by the Revenue. The Revenue has raised the following grounds of appeal:

1.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in admitting the additional evidence submitted by the assessee even though numerous and sufficient opportunity was provided to the assessee during the assessment proceedings and the conditions of Rule 46A are not satisfied. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,50,00,000/- u/s.68 of the Act from New Wave Commercial Pvt. Ltd. & Rs.50,00,000/- from Meet Enterprises. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of interest u/s.40(a)(ia) of Rs.6,69,906/-. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the disallowance of interest of Rs.21,30,783/-. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.Ο. 6. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. Today is the 42nd day of hearing of the above appeals and 2. none appeared on behalf of the assessee and no authorization filed by the assessee.

3.

The brief fact of the case is that the Assessing Officer (AO) had made the addition u/s.68 of the Act, of unsecured loan amounting to Rs.1,50,00,000/- taken from New Wave Commercial

I.T(SS).A Nos.57 & 58/Ahd/2019 A.Y. 2011-12 & 2012-13 Page No 3 DCIT Vs. M/s. Shreem Construction

Pvt. Ltd. and Rs.50,00,000/- from Meet Enterprises. The assessee has produced the copy of Ledger account, Form 16A, TDS challan and Return of Income relating to the above parties. However, the AO was not satisfied with the above submission and made the addition u/s.68 of the Act.

4.

On further appeal before the Ld.CIT(A), the Ld.CIT(A) deleted the addition after calling for Remand Report from the AO and held as follows: “.…The assessee has provided financial statement. Copy of ledger of Newwave Commercial Private Limited, confirmation on the letterhead of Newwave Commercial Private Limited, Bank statement, PAN of the Newwave Commercial Private Limited, Form No. 16A and TDS challan. acknowledgment of filling income tax return, Confirmation of the assessee's letter and its status from the MCA portal. I have carefully perused the remand report and rejoinder filed by the appellant. The lender company viz. Newwave Commercial Private Limited has total share capital and reserves of Rs 43,01,00,200 which proves the creditworthiness of the lender. Moreover, the assessee has furnished Copy of ledger of Newwave Commercial Private Limited, confirmation on the letterhead of Newwave Commercial Private Limited, Bank statement, Form No. 16A and TDS challan and Confirmation of the assessee's letter to prove the genuineness of the transaction. Moreover, the assessee has repaid the loan during the next financial years before search. And if the assessee has repaid the loan and the department has accepted the same without probing into it, the addition of such unsecured loan as unexplained cash credit u/s 68 needs to be deleted as held by Hon'ble Gujarat High Court in case of CIT Vis. AyachiChandrashekharNarsangji [2014] 42 taxmann.com 251/221 Taxman 146 (Gujarat). The High Court has held in Para No. 6 as under: 6 It is required to note that as such an amount of Rs. 1,00,00,000 vide cheque No. 102110 and an amount of Rs. 60 lakhs vide cheque No. 102111 was given to the assessee and out of the total loan of Rs. 1.60 crores, Rs. 15 lakhs vide cheque no. 196107 was repaid and therefore, an amount of Rs. 1,45,00,000 remained outstanding to be

I.T(SS).A Nos.57 & 58/Ahd/2019 A.Y. 2011-12 & 2012-13 Page No 4 DCIT Vs. M/s. Shreem Construction

paid to IA. It has also come on record that the said loan amount has been repaid by the assessee to 'A' in the immediately next year and the Department had accepted the repayment of loan without probing into it. In the aforesaid facts and circumstances of the case, when the Tribunal has held that the matter is not required to be remanded as no other view would be possible, there was no reason to interfere with the impugned order passed by the Tribunal." The lender company was also having an "Active" status as per the status available on MCA Portal. From the copy of the company master data, it can be seen that the detail of the Directors/Signatory was updated on 02.01.2018. And therefore, it can be inferred that the company is an active one. On perusal of all the documents filed by the assessee the assessee has proved beyond the doubt about the creditworthiness and genuineness of the transaction and therefore the addition of Rs. 1,50,00,000 is deleted. As regards the unsecured loan from M/s. Meet Enterprise, the assessee fumished Copy of ledger of M/s Meet Enterprise, Form No. 16A and TDS challan PAN of Mis. Meet Enterprise and Bank Statement. These documents also prove the genuineness and creditworthiness of the transaction. Moreover, such loan is also repaid by the assessee during next financial years before search, And therefore it is also squarely covered by the Jurisdictional High Court Judgement and thus liable to be deleted. This ground of appeal is allowed…” 5. The Ld.DR appearing for the Revenue, could not dispute the repayment of loan by the assessee to the above parties and also not dispute the findings arrived by the Ld.CIT(A). In the absence of the same, the ground raised by the Revenue is devoid of merits and same is liable to be dismissed.

In the result, the appeal filed by the Revenue is hereby 6. dismissed.

Now, coming to the IT(SS)A No.58/Ahd/2019 for AY 2012- 7. 2013, an appeal by the Revenue. The Revenue has raised the following grounds of appeal.

I.T(SS).A Nos.57 & 58/Ahd/2019 A.Y. 2011-12 & 2012-13 Page No 5 DCIT Vs. M/s. Shreem Construction

1.

On the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in admitting the additional evidence submitted by the assessee even though numerous and sufficient opportunity was provided to the assessee during the assessment proceedings and the conditions of Rule 46A are not satisfied. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in restricting the addition to Rs.5,91,120/- as against total addition of Rs.34,55,600/- made u/s.69 of the Act. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of interest of Rs. 19,68,118/-. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the disallowance of interest of Rs. 59,98,899/- 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O. 6. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent. 8. It is submitted that tax imposed in this case is of Rs.35,29,589/- and interest charged is Rs.19,05,979/- since, the tax involved in this Department appeal is less than Rs.50,00,000/- and as per CBDT Circular No.17/2019 dated 08.08.2019, the appeal filed by the Revenue is not maintainable and liable to be dismissed. Thus, the appeal filed by the Revenue is dismissed on Low Tax Effect.

9.

In the result the appeal filed by the a Revenue is dismissed due to Low Tax Effect.

I.T(SS).A Nos.57 & 58/Ahd/2019 A.Y. 2011-12 & 2012-13 Page No 6 DCIT Vs. M/s. Shreem Construction

In the combined result, the appeals filed by the Revenue 10. in IT(SS)A No.57/Ahd/2019 for AY 2011-12 is dismissed and IT(SS)A No.58/Ahd/2019 for AY 2012-13 is also dismissed due to Low Tax Effect. Order pronounced in the open court on 28-06-2024

Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER (True Copy) Ahmedabad : Dated 28/06/2024 Manish

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