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Facts
The assessee initially filed a return declaring loss, but during a Section 147 reassessment following a Section 133A survey, an addition of Rs. 30 lakhs was made as unexplained cash credit under Section 68. The CIT(A) subsequently deleted this addition. The revenue appealed to the ITAT, contending that the assessee failed to prove the identity and capacity of the lenders, who were allegedly providing bogus accommodation entries.
Held
The Tribunal condoned the delay in filing the appeal, finding it genuine and bonafide. On merits, the Tribunal upheld the CIT(A)'s order, stating that the assessee provided sufficient evidence including loan confirmations, bank statements, and ledgers demonstrating that loans were taken via banking channels and repaid with interest after TDS. The Tribunal noted the AO relied on third-party statements without establishing their direct relevance to the assessee's case.
Key Issues
Whether the CIT(A) was justified in deleting the addition of Rs. 30 lakhs made under Section 68 as unexplained cash credit, when the assessee provided detailed evidence of the loans and the AO relied on uncorroborated third-party statements.
Sections Cited
139, 143(3), 133A, 148, 147, 68, 253
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM:
This is the appeal preferred by the revenue against the order of Commissioner of Income Tax (Appeals)- 20, Kolkata (hereinafter referred to as the Ld. CIT(A)] dated for AY 2014-15.
Assessment Year: 2014-15 Lagan Engineering Company Limited 2. It appears from the report of the registry that the appeal has been filed after a delay of 64 days for this the assessee has filed condonation petition., which are as follows-
On perusal of the condonation petition, the reason for delay in filing the appeal seems to be genuine and bonafide. The Ld. A.R did not raise any objection in condoning the delay. Keeping in view, the condonation petition as well as judicial pronouncement that the case should be decided on merit not on technical issue, the delay is hereby condoned.
Brief facts of the case of the assessee are that the assessee filed its return of income u/s 139 of the Act declaring total loss of Rs. 3,12,39,216/-. The assessment was completed u/s 143(3) determining total loss of Rs. 2,86,54,904/- by making the addition of Rs. 25,84,312/-. Against the said addition the assessee preferred an appeal before the Ld. CIT(A) and Ld. CIT(A) deleted all the additions vide its order dated 27.06.2018. A survey operation u/s 133A of the Act was conducted, notice u/s 148 of the Act was issued and in response to the same the assessee filed its return of income declaring total loss of Rs. 3,09,25,749/-. The assessment u/s 147 of the Act was completed determined Assessment Year: 2014-15 Lagan Engineering Company Limited the assessed total loss of Rs. 2,37,92,350/- by making an addition of Rs. 30 lakhs as unexplained cash credit u/s 68 of the Act.
Aggrieved by the said order the assessee preferred an appeal before the Ld. CIT(A) wherein the appeal of the assessee has been allowed.
Being aggrieved and dissatisfied the revenue preferred an appeal before us.
The Ld. D.R challenges the very impugned order by submitting that the Ld. CIT(A) erred in deleting the addition of Rs. 30 lakhs ignoring the reality that the assessee could not be able to establish the identity and capacity of entry operators and their jamakharchi companies providing bogus accommodation entries. The Ld. Counsel submits that the Ld. CIT(A) did not consider the judgment of Hon’ble Supreme Court in the case of CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC), Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC). He has also submitted that case of the assessee falls in the exception clause laid down under para 3.1 of CBDT Instruction, so, the tax effect which is no doubt is below the monetary limit has no relevancy.
Contrary to that the ld. A.R supports the impugned order thereby submitting that the assessee took interest bearing loan from various loan creditors amounting to Rs. 30 lakhs for FY 2013-14 which was subsequently repaid. The Ld. Counsel submits that the assessee company was facing several financial crunches and as such it used to take temporary unsecured loan from various parties, time of time to meet the urgent working capital, loan have been taken through banking channels and repaid through banks with interest after deduction of TDS. The ld. Counsel submits that the assessee has submitted the copy of loan confirmation, copy of ledger for the year of repayment at the time of the assessment proceedings that has been considered by the Ld. CIT(A) and passed an order in favour of the assessee. His further submission is that the assessee company has no connection with so-called alleged entry operators and it is unknown to the assessee whether any statement of those person or any third party has been recorded by the Investigation Wing or the AO where they have admitted to have provided accommodation entry. It is further been argued by the Ld. A.R that the AO did not refer Assessment Year: 2014-15 Lagan Engineering Company Limited any impounded documents/ paper with its identity mark either from initiation from the reassessment proceedings or for the purpose of making addition of Rs. 30 Lakhs to the total income, rather the AO relied on the third party statement without realizing the fact that whether those statements of third party were taken in survey or assessment proceedings.
Upon hearing the submission of the counsel of the respective parties following facts have been emerged:- i) the assessee being a company has filed its return of income on 29.11.2014 declaring total amount of Rs. 3,12,39,126/-. ii) The assessment was competed u/s 143(3) dated 14.02.2016 determining total income of Rs. 2,86,54,904/-. iii) the assessee preferred an appeal before the Ld. CIT(A) wherein all the additions were deleted . iv) A survey operation u/s 133A of the Act was conducted in the premises of the assessee on 04.11.2019 and on the basis of findings of survey and further investigation of the case notice u/s 148 of the Act was issued. v) An assessment u/s 147 of the Act was completed on 28.03.2022 declaring assessed total loss of Rs. 2,37,92,350/- by making an addition of Rs. 30 lakhs as unexplained cash credit.
The Ld. D.R has argued that his case is covered with exceptional clause so tax effect if below monetary limit has got no relevancy. Admittedly in the present case the tax effect is below the prescribed monetary limit of filing the appeal, so, we have decided to hear the appeal on merit. On perusal of the order of CIT A it appear that the assessee in support of its case copy of the loan confirmation, copy of relevant page of bank statement, copy of ledger from the year of the loan to the year of repayment have been submitted at the time of assessment proceedings. The assessee has also filed a details of chart of loan and repayment of loans which are as follows:
It has been mentioned in the assessment order that the unsecured loan have been taken from the paper/jamakharchi company because as per investigation wing from M/s Octal Commodities Pt. Ltd. the company M/s Malavika Merchants pvt. Ltd. was controlled and managed by the entry operator Rajesh Kumar Agarwal, Raghuvir Sales pvt. Ltd. controlled and managed by Vikash Kumar Agarwal and M/s Octal Communities Pvt. Ltd. was controlled and managed by the entry operator Rajesh Kumar Agarwal. There is no denying to this fact that the AO has relied on the third-party statement without realizing the fact that whether those statement of third party were taken in course of survey or assessment proceedings in the case of assessee or in the search/ survey conducted on different purposes or different contracts. No such categorical finding has been brought on record by the AO. It is pertinent to mention here that the assessee has submitted in the course of proceedings, that the assessee company has no connection with so-called alleged entry operators. It is further important to mention here that loan has been taken through banking channel and the same has been repaid with interest after deduction of TDS. The Ld. CIT(A) in allowing this appeal of the assessee has not only discussed the facts of the case rather discussed the judicial pronouncements. We do not find any infirmity in the impugned order. Accordingly, the appeal of the revenue is hereby dismissed.
Order is pronounced in the open court on 24th April, 2025
Sd/- Sd/- (Rajesh Kumar/राजेश कुमार) (Pradip Kumar Choubey /�द�प कुमार चौबे) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 24th April, 2025 SM, Sr. PS Copy of the order forwarded to: 1. Appellant- DCIT, CC-1(4), Kolkata 2. Respondent – Lagan Engineering Company Limited, 14, Dr. Mohd Ishaq Road, KYD Street, Kolkata-700016 3. Ld. CIT(A)- 20, Kolkata 4. Ld. PCIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail)