M/S N. G. GROUP ,MUMBAI vs. ITO, WARD-28(2)(, NAVI MUMBAI

ITA No.503/Mum/2022 for A.Y. 2009-10, is filed by M/s NG Group (assessee/ appellant) against Appellate order passed by the learned Commissioner of Income-tax (Appeals)-26, Mumbai [the learned CIT (A)] dated 28th February 2019.

Assessee has raised the solitary issue in appeal against confirmation of addition of ₹14 lacs from four different parties as unexplained cash credit under Section 68 of the Income-tax Act, 1961 (the Act).

Assessee has raised the following grounds of appeal: -

Firstly, the registry has noted that this appeal is filed on 21st March 2022, whereas the date of service of commutation of the order of the learned CIT (A) is 28th February 2019 and therefore, the impugned appeal is delayed by 1,057 days.

Assessee has filed the petition dated 17th March 2022 for condonation of delay. The petition is as under: -

The assessee has also submitted an affidavit of Mr. vijay Ravji Gajra supporting the delay for reasonable cause.

The learned Authorized Representative vehemently reiterated the reasons stated in the application for condonation of delay.

The learned Departmental Representative vehemently objected stating that the above delay is not properly explained and cannot be condoned.

Coming the facts of the case, assessee is a partnership firm engaged in the business of developing and building of residential and commercial premises. It filed its return of income on 30th September 2009 declaring nil income. Thereafter, assessment order under Section 143(3) of the Act was passed on 30th December 2011, determining the total income of ₹2,63,63,340/-. On appeal before the learned CIT (A), assessee got part success and thereafter

Subsequently, a survey under Section 133 of the Act was conducted on one Mr. Sailesh M Shah on 5th October, 2010, and his statement was recorded, wherein he stated that he has arranged unsecured loan in lieu of cash given by NG group during the various period and further interest was paid to the lenders through him which was withdrawn in cash and after deducting commission balance cash was handed over to NG Group. Subsequently, on 11th September 2014, Shri Sailesh Shah once again confirmed the statement originally recorded on 15th October, 2010. The learned Assessing Officer noted that there are 12 parties whose Permanent Account Number is available and through whom unsecured loan of ₹40 lacs was provided on 22nd April 2008 to the assessee. Therefore, reasons were recorded and notice under Section 148 of the Act was issued on 8th February 2016. In response to that notice on 20th February 2016, assessee requested for the reason and material for reopening. On 21st March 2016, reasons were provided. Further on 30th March 2016, Assessee requested a copy of statement of Mr. Sailesh Shah and also asked an opportunity to cross-examine him. The statement was provided on 13th October 2016. Assessee was once again asked to comply with the notice under Section 148 of the Act and an opportunity to cross- examine Mr. Sailesh Shah was provided when a summon under Section 131 of the Act was issued to assessee as well as Mr. Sailesh Shah. Assessee did not attend on that

Assessee aggrieved with assessment order preferred the appeal before the learned CIT (A). The assessee challenged the reopening of assessment, which was dismissed. The assessee has also challenged the addition of ₹40 lacs of unsecured loans. The learned CIT (A) deleted the addition to the extent of ₹21.50 lacs with respect to seven parties as genuine holding that assessee furnished copy of confirmation, return of income and bank statement of the lender. With respect to Mr. Sandeep C. Shah, he also found that assessee furnished bank statement. Accordingly, addition to the extent of the above sum was also deleted. Thus, he deleted the addition to the extent of ₹26 lacs. With respect to other parties as

The learned Authorized Representative submitted a paper book containing 132 pages. She referred to page no. 90 of the Paper Book where the complete details of the lenders are submitted. It was also stated that in all the cases assessee has furnished the name of the parties from whom loans are taken, their Permanent Account Number, Their address, the manner of repayment, their confirmation, and the return of income. She submitted that merely non furnishing of bank statement of some of the lenders resulted into the confirmation of addition.

The learned Departmental Representative vehemently supported the order of the learned CIT (A).

We have carefully considered the rival contentions and perused the orders of the lower authorities. The only issue before us is the addition under Section 68 of the Act with respect to four different parties amounting to ₹14 lacs. We deal each of them as under: -

In view of the above facts, we direct the learned Assessing Officer to delete the addition of ₹14 lacs confirmed by the learned CIT (A) with respect to unsecured loan of four different parties. We find that assessee has discharged its initial onus of proving the identity, creditworthiness of the parties and genuineness of the transaction. Therefore, the addition under Section 68 of the Act of ₹ 14 lacs is deleted. Consequentially, the disallowance of interest on these loans is also deleted.

In the result, the appeal filed by the assessee is allowed.