ITO-33(3)(3), MUMBAI vs. M/S URVI REALTORS, MUMBAI

order : 29.08.2022 O R D E R Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Revenue has challenged the order, dated 12.11.2018 passed by the Ld. Commissioner of Income Tax (Appeals)-45, Mumbai [hereinafter referred to as „the CIT(A)‟] for the Assessment Year 2014-15, whereby the CIT(A) had allowed the appeal filed by the Appellant/Assessee against the Assessment Order dated 29.12.2016 passed under Section 143(3) of the Act [hereinafter referred to as „the Act‟].

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(a) erred in deleting the addition u/s 68 of the Act without appreciating the fact that identity, genuineness and creditworthiness of the transactions were not established during the course of assessment proceedings.

3. The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the Assessing Officer be restored.

4. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.”

Assessment Year: 2014-15 5 M/s Mangalmurti Diamond 63,00,000 40,807 63,40,807 Pvt. Ltd. 6 Palak Gems 15,00,000 0 15,00,000 Total 1,88,50,000 7,18,248 1,95,68,248

Assessment Year: 2014-15 7. We have heard the rival submission and perused the material on record including the written submission, dated 08.08.2022 filed by the Learned Departmental Representative, and the order of CIT(A) as well as the documents placed in the paper-book of the Assessee referred to and relied upon the Learned Authorised Representative for the Assessee. We note that the CIT(A) has deleted the addition made by the Assessing Officer under Section 68 of the Act without appreciating facts of the case. The CIT(A) has completely misdirected himself in believing that assessment order, dated 29.12.2016, was passed in reassessment proceedings under Section 143(3) read with Section 147 of the Act. In paragraph 4.2 of the order impugned that CIT(A) has incorrectly recorded that the Assessee had argued that the case of the Assessee was reopened based upon information from the DGIT(Inv). As rightly pointed out by the Learned Departmental Representative the case of the Assessee was selected for scrutiny under Computer Assisted Scrutiny Selection (CASS) and assessment under Section 143(3) of the Act was framed on the Assessee vide Assessment Order, dated 29.12.2016. A Perusal of the Assessment Order shows that in response to notice issued by the Assessing Officer under Section 133(6) of the Act, no reply was received except from M/s. Rajat Diamond Exim Pvt. Ltd. The Assessing Officer had examined the bank statement of M/s. Rajat Diamond Exim Pvt. Ltd furnished along with the aforesaid reply, and thereafter, in paragraph 4.3 of the Assessment Order, expressed his dissatisfaction. The Assessee had only furnished balance confirmations from other lenders. Therefore, it is clear that the CIT(A) had moved on an incorrect premise that all documents pertaining to the 5 lenders from which unsecured loans were taken during the year were furnished during assessment proceedings. Further, while the CIT(A) has returned a finding that Assessment Year: 2014-15 the unsecured loans were repaid, the balance confirmations and Schedule „B‟ Unsecured Loans‟ forming part of the financial accounts relevant for Assessment Year 2014-15 show that unsecured loan were outstanding from all the 5 lenders as on 31,03.2014. The order of CIT(A) is silent as to the details of repayment of unsecured loans. Thus, the conclusion drawn by the CIT(A) that the Assessee has discharged initial onus cast upon the Assessee in terms of Section 68 of the Act to establish identity & creditworthiness of the lender as well as genuineness of the transaction is unsustainable as it is based upon incorrect facts. However, we also note that the Learned Departmental Representative has placed on record along with the submission a copy of statement of Sh. Ravin S. Salva, partner of the Assessee- firm wherein he has stated he would produce the statement and other documents to prove loans taken and subsequent repayment. As per Paper-Book 1 filed before CIT(A) on 27.03.2019 (placed at Pg. 1 to 76 of paper-book filed by the Assessee before us), the bank statements of the 5 lenders were filed before the CIT(A). Since these were in the nature of additional evidence, the CIT(A) was required to, at least, call for a remand report from the Assessing Officer before taking the same into consideration. The submission of Learned Departmental Representative is no such remand report was sought before admitting and relying upon these documents/bank statements and therefore, the matter should be remanded back to the CIT(A).

Assessment Year: 2014-15 after calling for remand-report from the Assessing Officer and after giving the Assessee a reasonable opportunity of being heard.

Order pronounced on 29.08.2022.