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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI OM PRAKASH KANT
Present for: Assessee by : Ms. Dinkle Hariya, A.R. Revenue by : Shri Kiran P. Unavekar, D.R. Date of Hearing : 02 . 06 . 2022 Date of Pronouncement : 12 . 07 . 2022 O R D E R Per : Kuldip Singh, Judicial Member: For the sake of brevity aforesaid appeals bearing common question of law and facts are being disposed of by way of composite order.
The appellant, M/s. Sunrise Associates (hereinafter referred to as ‘the assessee’) by filing the present appeals, sought to set aside the impugned order even dated 07.12.2021 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment years 2013-14 & 2014-15 on identically worded grounds except the difference in figures inter alia that: :- & 245/M/2022 2 M/s. Sunrise Associates
“1.1 Ground of Appeal That on facts and in law the Ld. CIT has erred in confirming an addition to total income of Rs .16,38,797/- of interest paid on loan.
Our Submission 1. Allow the deduction of interest paid of Rs. 16,38,797 /-since Commissioner Appeal erred in a. Ignoring relevant material and considerations as submitted by the Appellant- Here Commissioner Appeal in Order mentioned that the Assessee has not provided any evidences in appellate proceeding and not discharged the primary onus. However we would like to update the facts that the Assessee has submitted all documents of transaction to Assessing officer and all judicial supporting case laws & supporting documents to transactions to Appellate Authority on hearings dated 24lh August 2018 and 31sl January, 2019. (Attaching our 2 personal hearing letter copies in IT AT submission also so same can be considered by your good office) Reiterating Pronouncement of Judgment, we have relied upon in personal hearing letters: - (Attaching judgement of H.K. Pujara in 1TAT Appeal)
ACIT vs. M/s H.K. Pujara Builders, Mumbai Tribunal, dated 31-10-2018 and ACIT vs. Shreedham Builders, Bombay Tribunal, ITA No. 5589/ Mum/2017, dated. 22- 6-2018, AY 2012-13, where Tribunal confirmed the Order of Commissioner Appeal which stated If Assessee proved identity, creditworthiness as well as genuineness of transactions, then the Assessee had discharged its primary onus on providing complete details in respect of loan transactions evidencing that the loans are not bogus. And where additions were made to Income of Assessee purely based upon presumption or statement recorded and later on retracted by concerned parties. Apart from that nothing was placed on record by Assessing Officer to suggest that Information furnished by Assessee were non-genuine. Held that Addition on account of Unsecured Loans cannot be made where the Assessee discharges its primary onus of providing complete details in respect of loan transactions. b. In this regard, the Learned Assessing Officer failed to consider the fact that the information/view taken while passing the order is general in nature with no evidentiary value. c. The Learned Assessing Officer failed to consider the fact that the Appellant had furnished the Loan Confirmations, ITR and Bank Statements of Loan Parties. d. Also, the Learned Assessing Officer failed to consider the fact that the Appellant had actually taken loan from the above said & 245/M/2022 3 M/s. Sunrise Associates parties for its smooth running of the business and the said transaction was carried out through proper banking channel. e. Again, the Learned Assessing Officer erred in Initiating Penalty u/s 271(l)(c) in respect of the above. f. The Appellant craves leave to alter, amend or withdraw all or any of the grounds of appeal herein or add any further grounds as may be considered necessary and to submit such statements, documents and papers as may be considered necessary either before or during the appeal hearing.
2. The Learned Commissioner Appeal while Disallowing Interest failed to consider the fact that the Appellant has to pay the interest to the party from whom loan is taken.
3. The Learned Commissioner Appeal failed to consider the relevant case laws submitted during the assessment proceeding.
4. The order of the Commissioner Appeal making the aforesaid Addition is contradictory in law and facts of the case.”
2. Briefly stated facts necessary for adjudication of the controversy at hand are : the assessee is a partnership firm engaged in the business as builder and developer. During the scrutiny proceedings Assessing Officer (AO) noticed that the assessee has claimed interest payment of Rs.2,57,003/- and Rs.13,81,794/- to M/s. Rajat Diamond Exim P. Ltd. and M/s. Frontline Diamond P. Ltd. in respect of claim of unsecured loan respectively. AO also noticed that in the search and seizure operation carried out in the case of Gautam Jain & Group on 30.10.2013 said concerns were into providing accommodation entries of bogus purchases/ unsecured loan and the assessee was one of the beneficiaries who has obtained accommodation entries of unsecured loan. Declining the contentions raised by the assessee, AO proceeded to hold that the alleged loan from M/s. Rajat Diamond Exim P. Ltd. and M/s. Frontline Diamond P. Ltd. of Rs.2,57,003/- and Rs.13,81,794/- respectively was non genuine/accommodative in nature and thereby made addition of Rs.1638797/- (Rs.2,57,003 + Rs.13,81,794) and & 245/M/2022 4 M/s. Sunrise Associates thereby framed the assessment under section 143(3) of the Income Tax Act, 1961 (for short ‘the Act’).
3. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
The Ld. A.R. for the assessee challenging the impugned order contended inter alia that the entire addition has been made by the AO and confirmed by the Ld. CIT(A) on the basis of assumptions and uncorroborated material collected during the search and seizure operation in case of Gautam Jain & Group that the assessee has received the loan through proper channel duly accounted for in the books of account which he has partially repaid and that assessee intends to bring on file additional evidence inter alia a copy of retraction affidavit filed by Shri Dharmendar Kumar Bhave, Director of M/s. Rajat Diamond Exim P. Ltd. and M/s. Frontline Diamond P. Ltd. and being proprietor of M/s. Rajan Gems lender of the assessee which could not be filed before the lower authority. However, on the other hand, the Ld. D.R. for the Revenue relied on the order passed by the Ld. CIT(A). & 245/M/2022 5 M/s. Sunrise Associates 6. We have perused the application filed by the assessee for leading additional evidence including loan confirmation from lenders, ITR acknowledgment of the lender, copy of the bank statement of the lenders and affidavit filed by Shri Dharmendar Kumar Bhave, making retraction of the statement got recorded by him during search and seizure operation.
We are of the considered view that when the entire addition is based on the information collected during the search and seizure operation carried out in case of Gautam Jain & Group the entire additional evidence now sought to be brought on record by the assessee along with retraction affidavit of Shri Dharmendar Kumar Bhave, lenders from whom the assessee claimed to have availed of the loan, is required to be examined to substantiate the cause of justice. Moreover, the Ld. CIT(A) has passed the impugned order ex-parte without having any reply of the assessee on record. To decide the issue once for all assessee must be provided with an opportunity of being heard. So we hereby allow the additional evidence sought to be led by the assessee and case is remitted back to the Ld. CIT(A) to decide afresh after considering the additional evidence and by providing opportunity of being heard to the assessee. Consequently both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the open court on 12.07.2022.