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Facts
The Assessing Officer made an addition of Rs. 1,71,00,000/- under Section 68 for unsecured loans, treating them as bogus entries based on information from DGIT(Inv.) and a statement from Shri Vipul Vibhor Bhatt. The assessee contended the loans were genuine, providing documentation. The Ld. CIT(A) deleted the addition, finding that Rs. 1,19,00,000/- related to earlier assessment years and the remaining Rs. 52,00,000/- was supported by evidence.
Held
The Tribunal upheld the Ld. CIT(A)'s decision to delete the addition of Rs. 1,19,00,000/- as it pertained to earlier assessment years. For the remaining Rs. 52,00,000/- (later clarified as Rs. 51,00,000/- in the Tribunal's reasoning) received in the current year, the matter was remanded to the Ld. CIT(A) for fresh adjudication after considering additional evidence filed by the assessee under Rule 46A and obtaining a remand report from the AO. The assessee's cross-objection concerning the validity of reopening of assessment was dismissed.
Key Issues
1. Whether an addition under Section 68 for unsecured loans could be sustained for amounts received in earlier assessment years. 2. Whether the Ld. CIT(A) should have called for a remand report from the AO when additional evidence under Rule 46A was submitted regarding loans received in the current year. 3. The genuineness, creditworthiness, and identity of lenders for unsecured loans. 4. Validity of reopening of assessment.
Sections Cited
250, 68, 148, 133(6), Rule 46A
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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI AMARJIT SINGH & SHRI RAJ KUMAR CHAUHAN
O R D E R
PER AMARJIT SINGH, ACCOUNTANT MEMBER:
The appeal filed by the revenue and cross-objection filed by the assessee are directed against the order of ld. CIT(A), NFAC, Delhi passed u/s 250 of the Act. Both are adjudicated as under:
ITA 2211/Mum/2024 (A.Y. 2012-13) (Revenue’s Appeal)
C.O. No. 192/Mum/2024 Sumangal Commodities Private Limited A.Y. 2012-13 “1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in deleting the addition of Rs. 1,71,00,000/- made by the Assessing Officer u/s.68 of the Income Tax Act, 1961 without appreciating the fact that the assessee has failed to prove the identity, creditworthiness and genuineness of the transactions.
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate the fact that the onus is on the assessee to explain and substantiate the genuineness and true nature of transaction of Unsecured Loans.
Whether on the facts of the case and erred in law, the Ld. CIT(A) allowed the appeal of the assessee despite the documentation supporting the claim of the assessee superficially.
Whether on the facts of the case and erred in law, the Ld. CIT(A)'s order itself is perverse as the same is not even based on the facts stated by the assessee during the appellate proceedings regarding payment of bogus unsecured loan received by the assessee.
5. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT (A) was justified deleting the addition of Rs. 1,71,00,000/- made by the Assessing Officer u/s.68 of the Income Tax Act, 1961 without calling for remand report from the AO as mandated under Rule 46A of the I.T. Act.
6. The appellant prays that the order of the CIT(A) on the grounds be set aside and confirm the order of the AO.
7. The appellant craves leave to add, amend or alter all or any of the grounds.”
The case of the assessee was reopened by issuing of notice u/s 148 of the Act on 31.03.2017 on the basis of information gathered by the DGIT(Inv.), Mumbai that assessee company had obtained bogus entries / loan aggregating to Rs. 1,71,00,000/- from entities controlled / operated by Shri Vipul Vibhor Bhatt. The assessing officer asked the assessee to explain why the same should not be treated as unexplained cash credit u/s 68 of the Act. The assessee explained that it had entered into all the transactions relating to loan with the parties as genuine transaction. The assessee further submitted that it has taken genuine business loan from two entities to the amount of Rs. 52,00,000/- only during the year under consideration which has been repaid in the same financial year. The assessee also explained that it has taken genuine business loan from two entities through banking channels and all details with confirmation, balance sheet, IT Returns acknowledgements and bank statement of the lenders have been submitted. It is also submitted Shri Vipul Vibhor Bhatt has already retracted his statement and no opportunity of cross examination of Vipur Vibhor Bhatt was provided to the assessee company. However, the AO has not agreed with the submission of the assessee and stated that assessee had obtained accommodation entries from the various parties to the amount of Rs. 1,71,00,000/- as under:
Sl Name of the bogus Name of the PAN FY Credit No entities assessee/beneficiary 1 Acute Consultancy Sumangal AAGCS4844K 2011-12 4400000.00 Ltd. Commodities Pvt. Ltd. 2 Lunkad Textiles Sumangal AAGCS4844K 2011-12 3600000.00 Pvt. Ltd. Commodities Pvt. Ltd. 3 P. Saji Textiles Sumangal AAGCS4844K 2011-12 2500000.00 Limited Commodities Pvt. Ltd. 4 Sampada Sumangal AAGCS4844K 2011-12 2600000.00 Chemical Limited Commodities Pvt. Ltd. 5 Victory Sales Pvt. Sumangal AAGCS4844K 2011-12 4000000.00 Ltd. Commodities Pvt. Ltd. Total 17111111.00 C.O. No. 192/Mum/2024 Sumangal Commodities Private Limited A.Y. 2012-13 3. The AO has referred the statement of Shri Vipul Vibhor Bhatt wherein he accepted that bogus accommodation entries were provided to various beneficiaries through the various entities controlled and operated by him. The AO also stated that notice u/s 133(6) of the Act were issued to the above referred entities calling various details and confirmation pertaining to the loan transaction however no compliances were made. Therefore, the AO stated that assessee had received bogus unsecured loan of Rs. 1,71,00,000/- from above mentioned various parties and during the course of assessment proceedings, the assessee could not prove genuineness, creditworthiness and identity of the parties. Therefore, whole unsecured loan of Rs. 1,71,00,000/- was treated as bogus and added to the total income of the assessee u/s 68 of the.
4. The assessee filed appeal before the ld. CIT(A). The ld. CIT(A) after considering the various details and relevant supporting documentary evidences furnished by the assessee held that during the year under consideration the assessee had taken loan of Rs. 52,00,000/- only and the remaining amount of loan of Rs. 1,19,00,000/- was taken in the earlier years. The assessee had submitted the ledger copies and bank statement of each parties from whom the loans have been taken and these ledger copies were certified by the respective parties. The ld. CIT(A) has deleted the whole addition on the ground that loans obtained in the earlier years cannot be disallowed during the year under consideration and further the loan which were obtained during the year were C.O. No. 192/Mum/2024 Sumangal Commodities Private Limited A.Y. 2012-13 repaid to the lenders through banking channel and assessee has also submitted the relevant supporting documentary evidences.
During the course of appellate proceedings before us, the ld. Counsel submitted that loan received during the year was only Rs. 52,00,000/- and not Rs. 1,71,00,000/-. Therefore, he contended that ld. CIT(A) has rightly deleted the addition of Rs.1,19,00,000/-. The ld. Counsel further submitted that in respect of loan of Rs. 52,00,000/-, the assessee has proved the identity of lenders, genuineness of the transactions and creditworthiness of the lenders by filing copies of income tax acknowledgements, ledger confirmation, bank statement etc.
On the other hand, ld. DR supported the order of assessing officer.
Heard both the sides and perused the material on record. Without reiterating the fact as already discussed, it is undisputed fact that loan amount of Rs. 1,19,00,000/- was received by the assessee in the earlier years as demonstrated from the documentary evidences filed by the assessee. Therefore, we do not find any infirmity in the decision of ld. CIT(A) holding that loan amount received during the earlier years cannot be considered as income u/s 68 during the year relevant to the assessment year under consideration.
Even before the assessing officer, the assessee has categorically submitted that during the previous year relevant to C.O. No. 192/Mum/2024 Sumangal Commodities Private Limited A.Y. 2012-13 the assessment year under consideration, it had received Rs. 52,00,000/- only as loan from the said parties. However, we find that during the course of appellate proceedings before the ld. CIT(A), the assessee has filed additional evidences under Rule 46A of the Act on 11.06.2023 i.e. affidavits of the directors of lender companies as placed in the paper book from page no. 172 to 197 along with the other copies of document like income tax acknowledgement etc. We consider that ld. CIT(A) has neither made reference of these additional evidences filed Rule 46A in his order nor called any remand report from the assessing officer before deleting the impugned addition to the extent of Rs. 51,00,000/-. Therefore, to the extent of new loan obtained by the assessee during the year under consideration of Rs. 51,00,000/-, we remand the matter back to the file of the ld. CIT(A) for deciding the same after providing opportunity to the AO by calling remand report on the new evidences filed before the ld. CIT(A). Therefore, the appeal of the Revenue is partly allowed for statistical purposes.
C.O. No. 192/M/2024 (A.Y. 201-13)
The assessee has filed cross objection on the validity of reopening of assessment. There was delay of 30 days in filing the cross objection. The assessee filed affidavit explaining that after relieving ground of appeal, assessee was under impression that cross objection was to be filed within 60 days as against the time period of filing the same within 30 days of receiving of ground of appeal filed by the department. Considering the fact reported in C.O. No. 192/Mum/2024 Sumangal Commodities Private Limited A.Y. 2012-13 the affidavit, we find that there is a bona fide reason for delay in filing the cross objection by 30 days. Therefore, the delay in filing the cross objection is condoned. Since we have adjudicated the appeal on merit and only part of the addition pertaining to the year under consideration is restored to the file of the ld. CIT(A) to decide after calling remand report from the assessing officer because of additional evidences filed by the assessee before the ld. CIT(A) as discussed. Therefore, the cross objection filed by the assessee is not required adjudication.
10 In the result, appeal of the Revenue is partly allowed and the cross-objection of the assessee is dismissed.
Order pronounced in the open court on 21.02.2025.