SHREENATH CONSTRUCTION,MUMBAI vs. ACIT 25(1), MUMBAI

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ITA 7455/MUM/2018Status: DisposedITAT Mumbai21 July 2022AY 2012-133 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee had provided PAN of the lenders and its own bank statements showing NEFT transfers. The AO could have verified the transactions using his statutory powers and the assessee cannot be forced to obtain lenders' bank documents.

What were the facts?

The assessee, a partnership firm, received unsecured loans from seventeen parties. The Assessing Officer (AO) made an addition of Rs. 37 lakhs as cash credit from four parties who did not respond to notices, as the assessee failed to provide their bank statements and income tax returns.

What were the issues?

Whether the assessee discharged its initial onus under Section 68 by providing confirmation letters and PAN of lenders, and whether the AO took sufficient steps to verify the cash credits.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

For Respondent: Ms. Naina Krishnakumar
Hearing: 19.07.2022Pronounced: 21.07.2022

The assessee has filed this appeal challenging the order dated 19.9.2018 passed by learned CIT(A)-37, Mumbai and it relates to A.Y. 2012-13. The only issue urged in this appeal relates to addition of cash credit made under section 68 of the Act.

2.

None appeared on behalf of the assessee, even though notice of hearing was sent by the registered post on several occasions to the assessee. Hence, I proceed to dispose of the appeal ex-parte, without presence of the assessee.

3.

I have heard learned DR and perused the record. The assessee is a partnership firm and is doing business of civil labour contactor. During the course of assessment proceedings, it was noticed that the assessee has taken unsecured loan of Rs.1,20,08,292/- from seventeen parties. The Assessing Officer issued notices to all the seventeen parties. The Assessing Officer, however, did not receive reply from the following four parties:-

2 Shreenath Construction a) Bharti Textiles Rs. 9,00,000/- b) J.K. Textile Rs. 3,50,000/- c) K.V. Implex Rs. 12,00,000/- d) Laxmi Trading Co. Rs.12,50,000/- Total : Rs.37,00,000/- Hence, the Assessing Officer asked the assessee to furnish confirmation letters obtained from these four parties along with copies of their bank statement and income tax return. The assessee could furnish only confirmation letters obtained from these parties and did not furnish their bank statement and income tax return. Accordingly, the Assessing Officer took the view that the assessee has failed to prove cash credits and assessed the above said amount of Rs. 37 lakhs as income of the assessee.

4.

Before learned CIT(A) assessee contended that it has furnished confirmation letters obtained from these parties, their respective PAN numbers and also bank account of the assessee in order to prove that these loans were received through banking channels by way of NEFT transfer. Accordingly it was contended that the assessee has discharged initial onus placed upon it under section 68 of the Act. The Learned CIT(A) noticed that the assessee has not furnished copy of the bank statement and copy of income tax return statement of lenders. The PAN number of lenders was held to be insufficient by Ld CIT(A). Accordingly, he confirmed the addition made by the Assessing Officer.

5.

I noticed that the assessee has furnished PAN of the lenders and also its bank statements. It is stated by the assessee that the lenders have transferred money electronically by way of NEFT transfer. It is quite possible that the assessee could not have forced the lenders to furnish their bank documents and income tax statements. Since the assessee has furnished PAN number of lenders, it was possible for the AO to collect their income tax returns. Further, the AO could have made enquiries with the bankers in order to find out the details of the persons, who transferred funds to the assessee by NEFT transfer.

3 Shreenath Construction I notice that the AO has not taken steps mentioned above in order to verify the veracity of the confirmation letters furnished by the assessee. If the bank statement of the assessee shows that the name of the transferor of the funds, then there is no requirement or necessity for obtaining bank statement of the lenders. Accordingly, in my view, both the requirements pointed out by the AO could have been verified by the Assessing Officer from the records available with him and also by using his statutory powers. Accordingly, I am of the view that, in the interest of natural justice, this issue requires fresh examination at the end of the Assessing Officer. Accordingly, I set aside the order passed by learned CIT(A) on this issue and restore the same to the file of the Assessing Officer for examining it afresh in the light of the discussions made supra.

6.

In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.

Order pronounced in the open court on 21.07.2022.

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