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Income Tax Appellate Tribunal, “G” BENCH
Before: SHRI PAVANKUMARGADALE,JUDICIALMEMBER & SHRI AMARJIT SINGH
ORDER
PER PAVAN KUMAR GADALE, JM:
The Revenue has filed the appeal against the order of Commissioner of Income Tax Appeals(CIT(A)-24 Mumbai, passed under Section 143(3) r.w.s. 147 and 250 of the Income Tax Act, 1961 (hereinafter in short “the Act”). The Revenue has raised the following grounds of appeal.
2 Global Natural Resources Ltd.Mumbai
1. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in making deletion of Rs.2,00,00,000/- as unexplained cash credit u/s. 68 of the Income Tax Act, 1961.
2. “The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the AO be restored.
“The application craves leave to add, amend or alter any grounds or add new ground, which may be necessary.”
The brief facts of the case, are that the assesse is engaged in business and filed the return of income for the assessment year 2011-12 on 29.09.2011 disclosing a total income of Rs.Nil. The Assistant Commissioner of Income Tax, Kolkata has received the information that large value of cash deposits are made in the bank account maintained with ICICI followed by immediate transfer to other banks through RTGS and TRF in different layers. On perusing the bank statement it was found that the funds were deposited in cash and transfer to another bank account and it was evident that the assesse is one of the beneficiary and the transactions of the assesse with M/s. Sunview Retail Pvt. Ltd. of Rs 2 Crores is doubted. Therefore the Assessing officer (AO) has reason to believe that the income has escaped assessment and issued notice under Section 148 of the Act after recording the reasons for reopening of Assesseement. Incompliance to notice, that the assesse has filed the return of income on 02.05.2018 disclosing a total income of Rs. Nil.
3 Global Natural Resources Ltd.Mumbai 3.Subsequently, notice under Section 143(2) and 142(1) of the Act are issued along with the questioner. The A.O on perusal of the Balance sheet found that the assesse has disclosed unsecured loan of Rs. Nil. Whereas, in the bank statements, the assesse has received the credit from M/S Sunview Retail Pvt ltd amounting to Rs.2,00,00,000/-and was return back to lender. The A.O. has called for the explanations of credit appearing in the bank statement with the supporting evidences and also to furnish the return of income of the lender company along with the copy of bank statements. Since, the assesse has not submitted the evidences to prove the credit worthiness and genuineness of the lender and relied on the judicial decisions and made an addition of Rs.2 crores alleged an unexplained cash credit and assessed the total income of Rs.2,00,00,000/- and passed the order under Section 143(3) r.w.s. 147 dated 14.12.2018.
4.Aggrieved by the order, the assesse has filed an appeal with the CIT(A) whereas, the CIT(A) considered the grounds of appeal, findings of the scrutiny assessment and submissions filed in course of hearing proceedings and the assesse also has filed the elaborate submissions in respect of the transactions as referred in the CIT(A) order. Whereas the CIT(A) has received the said information filed for the first time before the appellate authority and deleted the addition and allowed the assesse appeal. Aggrieved by the CIT(A) order, the Revenue has filed an appeal with the Honble Tribunal.
4 Global Natural Resources Ltd.Mumbai
At the time of hearing, the learned DR submitted that the CIT(A) has erred in deleting the cash credit under Section 68 of the Act though, the payments were not verified by the AO and CIT(A) has relied on the information without calling for the comments from the AO on the details filed by the assessee and prayed for allowing the revenue appeal. Per contra the Ld.AR relied on the order of the CIT(A).
We heard the rival submissions and perused the material on record. The Sole grievance of the revenue that the CIT(A) relied on the information submitted by the asssessee for the first time and the A.O. was not provided the opportunity to verify and examine the evidences. Whereas, the learned AR submitted that, the CIT(A) powers are coterminous under Section 251 of the Act and the CIT(A) is entitled to consider the material filed on record in the appellate proceedings and shall take a decision and pass the order. In the course of, hearing the learned AR has made elaborate submissions in respect of cash credit transactions and repayments made subsequently.Whereas, these facts are never bought on record before the AO in the Assesseement proceedings with supporting evidences by the assessee and ingredients u/sec68 of the Act were not satisfied. At this juncture, we considered it appropriate to refer to the decision of the CIT(A) at page 8 Para 2.4 of the order read as under as under: 2.4 I have given my careful consideration to the rival submissions, perused the material on record and duty considered the factual matrix of the case as also the applicable legal position and give below my observation and conclusion.
5 Global Natural Resources Ltd.Mumbai
BERIF FACTS OF THE ISSUE:
There was one company named AK Mining Ltd. It has its PAN no.AAACL6208N and situated at 159, CST Road, Santacruz (East), Mumbai-400098. AK Mining Ltd. was having bank account with Laxmi Vilas Bank,Vashi, Navi Mumbai Branch with Account No. 0177359000000243. Thecompany AK Mining Ltd. was amalgamated with Global Natural ResourcesLtd. on 13/11/2010. The AK Mining Ltd had three directors namely, Mr. RajuMarmat (DIN: 01451957), Mr. Madhukar Londhe (DIN : 00147075) and Mr.Tejas Rane (DIN: 02300844). Before the amalgamation took place, AKMining Ltd. has taken loan from Witthal Commercial Pvt. Ltd. ofRs.2,00,00,0007- on 30/04/2010 on the same day the assessee has givenloan of the similar amount to Sunview Retail Pvt. Ltd. Again on 23/08/2010Sunview Retail Pvt. Ltd. returned back Rs. 2,00,00,000/- of the assessee andon the next day, i.e. 24/08/2010 the assessee returned to Witthal Commercial Pvt. Ltd. of Rs.2,00,00,OOO/-. The above transactions are reflected along withthe name of the borrower and the lender in the bank statement. On study ofthe bank statement it is reviled that there has been no cash deposit orwithdrawal in bank account. Hence the observation of the AO that the fundsdeposited into cash were immediately transferred to other bank account isnot correct. The observation of the AO that large value cash was depositedinto several bank accounts maintained with ICICI Bank followed byimmediate transfer to other bank accounts through RTGS/TRF in differentlayers. There were also several additional bank accounts in different bankswere large cash was also deposited regularly and from whom the fund werecoming to the account of the parties. The accounts were subsequently closedin very short span of time after making high value cash transaction. Onperusal of bank statement, it is seen that the funds
6 Global Natural Resources Ltd.Mumbai deposited into cash wereimmediately transferred to other bank account. Though the aboveobservation of the AO might have been correct for other such type ofcompanies but is not correct with regard to the assessee as no cash depositor withdrawal is seen in the assessee's bank account. Also, the AO hasobserved that he has found that the assessee company M/s Global NaturalResources Ltd. has also received the alleged fund from Sunview Retail Pvt. Ltd. it factually incorrect because assesse company has not received any loan from Sunview Retail Pvt. Ltd. but it has received back the loan given earlier to Sunview Retail Pvt. Ltd. The assessee's case can also be not treated as case of multilayer money routing as claimed by the AO because the assessee has not only taken and given loan but also received back and repaid the loan. Had it been the case of money routing through multi-layer companies than the assessee would have taken loan from one company and given to another but never received back or repaid. One thing we did not mis out that though Global Natural Resources Ltd. is assesse company but the transactions had happened in the previous company A.K. Mining Ltd. before amalgamation and all the three directors have changed after amalgamation. It can be also seen that assessee company is not the defunct company but it has started doing business from A.Y.2011-12 onwards and offered profit year on year. So, it can be concluded that assessee company is not formed for doing some sort of money laundering but for doing genuine business. There is not being any cash deposit or withdrawal in the bank account, whatever loan given is received back. Hence I do not go in conformity with AO and delete the addition made of Rs.2,00,00,000/- u/s.68 of the Act. The addition stands deleted. 2.5 In the result, the appeal is allowed.
We considering the overall facts, circumstances and elaborate submissions of the transactions find that the 7 Global Natural Resources Ltd.Mumbai CIT(A) has granted the relief but AO never got an opportunity to verify these facts and evidences filed. Accordingly, we restore this disputed issue for limited purpose to the extent of verification and examination of the facts and evidences filed to the file of the Assessing officer and the AO should provide adequate opportunity of hearing to the assesse and the assesse should also co- operate in submitting the information and we allow the grounds of appeal
for statistical purpose.
8. In the result, the appeal filed by the revenue is allowed for statistical purpose. Order pronounced in the open court on day of 14th October 2022.