TIRUPATI TIMBERS & PACKAGING P. LTD.,,KOLKATA vs. ITO, WARD 4(1),, KOLKATA

(A.Y. 2011-2012) Tirupati Timbers & Packaging Pvt. Limited Information had been received from the ADIT(Inv.), Unit-6, Kolkata that the assessee-company entered into a sham transaction with M/s. Pushker Trading & Holdings Pvt. Ltd. which is a shell company controlled and managed by Shri Subhash Chand Bhartia and received Rs.5,00,000/- as beneficiary from M/s. Pushker Trading & Holdings Pvt. Ltd. during the FY 2010-11 relevant to AY 2011-12. On the basis of above information gathered from the ADIT (Inv.), Unit-6, Kolkata, the assessment was reopened under section 147 of the Act after taking approval from the ld. PCIT-2, Kolkata on 30.03.2018 and notice under section 148 of the Act was issued to the assessee-company. The assessee-company filed its return of income in response to notice under section 148 of the Act on 10.04.2018. Notice under section 143(2) was issued on 18.07.2018 requiring to produce the details/documents/accounts or any other evidence. On 20.08.2018, a notice under section 142(1) along with questionnaire was sent to the assessee, and in response, the assessee-company filed details/documents against the said notice. Consequently a letter was issued to the assessee- company on 25.09.2018 requesting it to produce the Director of M/s. Pushker Trading & Holding Pvt. Ltd. within seven days of receipt of the letter, the transaction made with the stated company would be treated as a sham transaction and the amount of Rs.5,00,000/- would be treated as unexplained cash credit, but the Director of the assessee-company failed to produce the Director of M/s. Pushker Trading & Holding Pvt. Ltd. Thereafter a final show-cause notice was issued to the assessee-company dated 01.11.2018 requiring it to show-cause as to why the amount of Rs.5,00,000/- transacted with M/s. Pushker Trading & Holding (A.Y. 2011-2012) Tirupati Timbers & Packaging Pvt. Limited Pvt. Ltd. would not be treated as a sham transaction and why such amount would not be treated as unexplained cash credit. In reply, it was stated that the assessee-company has taken an unsecured loan of Rs.5,00,000/- from M/s. Pushker Trading & Holding Pvt. Ltd. on 24.06.2010 by account payee cheque of Original Bank of Commerce and the loan was refunded on 16.11.2013. The assessee-company stated that the loan transaction with the lender was a genuine transaction and requested not to treat the same as unexplained cash credit. Not being satisfied, the ld. Assessing Officer opined that the transaction made by the assessee-company is a sham transaction for the benefit of the assessee-company. Finally, ld. Assessing Officer determined the total assessed income of the assessee-company at Rs.12,30,962/-.

Ground - 1: That the Ld. Addl./JCIT(A) was not justified in confirming the additions of unsecured loan of Rs. 5,00,000/- made by the Ld. A.O. as unexplained cash credit u/s 68 of the Income Tax Act, 1961, even when the appellant has proved the identity, genuineness and credit worthiness of the 4. (A.Y. 2011-2012) Tirupati Timbers & Packaging Pvt. Limited lender and more so when the same has not been repudiated by the Ld. A.O. and hence the additions of Rs. 5,00,000/- is liable to be deleted. Ground - 2: That the Ld. Addl./JCIT(A) and the Ld. AO has wrongly and arbitrarily disregarded the evidences in form of PAN, ITR, Financial Statements and Bank Statement of the lender proving the identity, genuineness and creditworthiness of the lender without pointing out any discrepancies on the same and alleging the transactions to be sham transactions without assigning any reason and hence the additions of unsecured loan of Rs. 5,00,000/- is liable to be deleted. Ground -3: That the Ld. Addl./JCIT(A) was not justified in confirming the additions of unsecured loan of Rs. 5,00,000/- made by the Ld. A.O. as unexplained cash credit u/s 68 of the Income Tax Act, 1961, even when the loan has been fully repaid subsequently and no additions was permissible u/s 68 of the Act in light of the judgements passed by the jurisdictional high court and hence the additions of Rs. 5,00,000/- is liable to be deleted. Ground -4: That the Ld. Addl./JCIT(A) was not justified in confirming the additions of unsecured loan of Rs. 5,00,000/- made by the Ld. A.O. as unexplained cash credit u/s 68 of the Income Tax Act. 1961, even when the Ld. AO has allowed the interest expenses on the same and he is not allowed to blow hot and cold at the same time and hence the additions of Rs. 5,00,000/- is liable to be deleted. Ground - 5: That the Ld. AddL/JCIT(A) was not justified in confirming the additions of unsecured loan of Rs. 5,00,000/- made by the Ld. A.O. as unexplained cash credit u/s 68 of the Income Tax Act, 1961, even when no opportunity has been given to the assessee to confront the back materials relied extensively in impugned orders like statement, investigation wing report, etc. and not allowing the cross examination to the appellant and hence the impugned assessment order passed u/s 147/143(3) of the Act dated 27.11.2018 is liable to be quashed. Ground - 6: That the Ld. Addl./JCIT(A) was not justified in confirming the additions of unsecured loan of Rs.5,00.000/- made by the Ld. A.O. as unexplained cash credit u/s 68 of the Income Tax Act, 1961, even when on the facts and in the circumstances, the Ld. AO wrongly, arbitrarily and without jurisdiction issued notice u/s 148 of the Act, dated 30.03.2018, which is void-ab-initio since he had no reasons to believe as stated in section 147 of the Act and hence the impugned

5. (A.Y. 2011-2012) Tirupati Timbers & Packaging Pvt. Limited assessment order passed u/s 147/143(3) of the Act, dated 27.11.2018, is liable to be quashed. Ground - 7: The Appellant craves Leave to add/to and/or alter, modify or rescind the grounds rescind the grounds hereinabove before or at the time of hearing of this Appeal.

7. I have heard both the sides. It was the submission of the ld. Counsel for the assessee that the assessee repaid the entire loan amount of Rs.5,00,000/- and TDS was also deducted and all the transactions were also recorded in the books of account. Therefore, the ld. counsel prayed before the Bench to delete the addition made by the ld. Assessing Officer.

8. On the other hand, it was the submission of the ld. Departmental Representative that as the assessee has not given satisfactory evidence before the ld. Assessing Officer as well as ld. Addl./JCIT(Appeals), the ld. Assessing Officer made the addition and ld. Addl./JCIT(Appeals) confirmed the same. Therefore, he pleaded to uphold the orders passed by the lower authorities.

9. I have perused the material available on record. It is an admitted fact that the assessee has received an amount of Rs.5,00,000/- from M/s. Pushker Trading & Holding Pvt. Ltd. It is also an admitted fact that the loan was taken by the assessee by account payee cheque on 24.06.2010 and the said loan was repaid on 16.11.2013. The main contention of the ld. Counsel for the assessee is that all these transactions are recorded in the books of account and it is a genuine transaction and there is no evidence to show that the transaction of the assessee-company is a sham transaction. Therefore, the addition made by the ld. Assessing 6 (A.Y. 2011-2012) Tirupati Timbers & Packaging Pvt. Limited Officer for an amount of Rs.5,00,000/- under the provision of Section 68 of the Income Tax Act is not warranted. After considering the above said facts and circumstances and the contention of the ld. Counsel for the assessee, I am of the view that there is no material to believe that the loan transaction of Rs.5,00,000/- between the assessee-Company and M/s. Pushker Trading & Holding Pvt. Ltd. is a sham transaction. There is no dispute that the entire amount was recorded in the books of account of the assessee-Company and repayment was also done by the assessee-Company through banking channel. Therefore, I do not find any material to establish that the transaction is a sham transaction. Therefore, I direct the ld. Assessing Officer to delete the addition made by him for an amount of Rs.5,00,000/- under section 68 of the Income Tax Act. Hence, the grounds raised by the assessee are allowed.