DCIT-27(3), MUMBAI, NAVI MUMBAI vs. VINTAGE ENTERPRISES, NAVI MUMBAI

Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) justified in deleting the addition made u/s.68 of the Act on loans taken from M/s. Krishna Fashion World without Vintage Enterprises

Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) justified in deleting the addition made u/s.68 of the Act on loans taken from M/s. Radiance Finvest Ltd. without appreciating the fact that assessee could not prove the genuineness and creditworthiness of the loan creditor.

Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) justified in deleting the addition made u/s.68 of the Act on loans taken from M/s. Radiance Finvest Ltd. holding that the company is registered with the ROC, Maharashtra and data about its creditworthiness, identity and genuineness are publicly available on MCA 21 without appreciating the fact that loan creditor could not produce the financials to prove the genuineness and creditworthiness of the loan given.

Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) justified in deleting the addition made u/s.68 of the Act ignoring the decision of the Hon'ble Supreme Court of India in the case of Pr.CIT(Central)-I Vs. NRA Iron & Steel Pvt. Ltd. wherein it was held that the onus of proof is on the assessee to establish by cogent and reliable evidence of the identity of the investor companies, the credit-worthiness of the investors, and genuineness of the transaction, to the satisfaction of the Assessing Officer.”

Brief facts of the case are that the assessee is a partnership firm engaged in the business of Builder and Developer. Loss of (-)Rs.12,31,483/- declared in the return for A.Y. 2013-14 e-filed on 29.09.2013. Case selected for scrutiny under computer-assisted scrutiny selection (CASS) for verification of large increase of unsecured loans and large amounts of sundry creditors. Valid statutory notices u/s.143(2) and 142(1) of the Act duly served upon the assessee. During the course of assessment proceedings, ld. Assessing Officer (AO) observed that no sales took place during the year and the entire construction cost has been treated as work-in-progress. The only income shown in the profit and loss account is Rs.34,47,300/- from sale of plot and Rs.93,61,021/- as other income. Ld. AO also noticed that assessee has taken unsecured loans from various parties. The Vintage Enterprises

Aggrieved assessee preferred appeal before ld.CIT(A) and various details called for by ld.CIT(A) were filed. Additional evidences also filed. Remand report called for to which necessary compliance rebuttal was made by the assessee. After considering the assessee’s submissions and the remand report, ld.CIT(A) held in favour of the assessee.

Now the Revenue is in appeal before this Tribunal assailing some of the additions deleted by ld.CIT(A). In the grounds of appeal, the main challenge is against the deletion of addition made u/s.68 of the Act for the unsecured loans taken from the following parties :

Ld. Departmental Representative referring to the above unsecured loans submitted that the assessee has failed to prove the creditworthiness and the genuineness of the transactions. He submitted that in the case of creditor M/s. Krishna Fashion World, no return of income has been filed for A.Y. 2013-14 and even the balance sheets are not available for Vintage Enterprises

PCIT Vs. Bikram Singh (2017) 85 taxmann.com 104 (Delhi) 2. Siddharth Export Vs. ACIT (2019) 112 taxmann.com 193 (Delhi) 3. Blowell Auto (P) Ltd. Vs. ACIT ( 2009) 177 Taxman 261 (Punjab & 5. ITO Vs. Sai Everest Building & Developers (2022) 142 taxmann.com 383 (Mumbai –Trib.) 6. M/s. U Toll Corporation Ltd. Vs. ACIT – ITA No.107/VNS/2018 8. ACIT Vs. Prasanna Purple Mobility Solutions Private Limited – ITA No.871/PUN/2023 order dated 05.08.2024 9. Sumati Dayal Vs. CIT ( 1995) 80 Taxman 89 (SC)

On the other hand, ld. Counsel for the assessee vehemently argued supporting the submissions filed before ld.CIT(A) along with the finding of ld.CIT(A), chart showing the details of loans and advances, paper book running into 278 pages. Ld. Counsel also referred to the following written submissions and the case laws relied on :

All the above referred details/evidences are available at pages 33 to 39 of the paper book. Here it may not be out of place to mention that the creditor complied with the notice issued u/s 133(6) as well as the summons issued u/s 131 of the act and confirmed the loan. Thus the assessee discharged the onus cast on it of proving the identity, capacity and genuineness of the transaction However, the learned A.O. made the addition only on the ground that the creditor has been filing return only since last 3 years, the income declared was only Rs.2.5 lakhs and the credit balance was only miniscule. Needless to mention that this cannot be ground good enough to make the addition u/s 68 of the act. Without prejudice to the above, a perusal of the Bank Statement of the loan creditor would reveal that the loan creditor had received a sum of Rs.10,70,027/- as repayment of loan given earlier which explains the source of the present loan to the appellant.

Loan from M/s. Krishna Fashion World Rs.7.98,00,000/- + Interest Rs.74,69,186/-

Loan from M/s. Radiance Finvest Ltd. Rs.2.90.00.000/- + interest Rs.74.69,186/-