BMR POLYMERS (P) LTD.,NEW DELHI vs. ITO, WARD- 1(3), GURGAON

The assessee is engaged in the business of manufacturing unsaturated Polymers raising. The assessee filed return declaring loss of Rs. 1,65,250/- on 30/09/2012 which was subsequently revised on 16/10/2012. The Assessing Officer completed the assessment on 27/3/2015 thereby arising the income of Rs. 67,07,061/- as against return loss of Rs. 1,65,250/- by making addition of Rs. 44,74,311/- on account of unsecured loan received from the two Directors of assessee company namely Smt. Manju Sahu & Sh. Sanjay Sahu respectively.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

The Ld. AR submitted that before the Assessing Officer complete books of accounts of the assessee was furnished and at that time no defects whatsoever was pointed out by the Assessing Officer in regular books of account maintained by the assessee. In-fact there is no whisper in the assessment order that the assessee has any sale outside its books of account or there is any unaccounted sale. The Ld. AR further submitted that in such circumstances, the finding that unsecured loans received by the assessee from its Directors is wholly erroneous and based purely on suspicious, surmises and conjuctures. In-fact, the assessee has given complete documentary evidence thereby establishing that sum was received from Smt. Manju Sahu and Sh. Sanjay Sahu through their bank account not a single evidence or material has been brought on record by the Revenue to controvert the evidences furnished by the assessee and the Assessing Officer merely on his own assumptions and presumptions held that unsecured loans received by the assessee as its own money. The Ld. AR further submitted that before recording such findings the Assessing Officer has lead evidences to show that the money has eroded from the coffers of the assessee and such burden has not been discharged and aforesaid finding has been recorded as without any material and hence the addition made is unsustainable in law. The assessee relied upon the decision of the Hon’ble Delhi High Court in case of CIT(A) Vs. Value Capital Services Pvt. Ltd. 307 ITR 334 and also the decision of the Hon’ble Delhi High Court in case of CIT(A) Vs. Real Time Marketing Pvt. Ltd. 306 ITR 55. The Ld. AR also relied upon the decision of the Hon’ble Gujrat High Court in case of DCIT Vs. Rohini Builders 256 ITR 316 thereby following the judgment of Hon’ble Apex Court in case of Orissa Corporations 159 ITR 78. The Ld. AR further submitted that during the course of assessment proceedings copy of confirmation of account along with copy of bank statement of Smt. Manju Sahu and Sh. Sanjay Sahu thereby depicting transfer of account from the bank account of the Directors. The Ld. AR submitted that once the aforesaid two persons had confirmed about the sums which were given by them as unsecured loan from their bank account, no addition can be made in the hands of the assessee and if the Assessing Officer was not satisfied about the source of sum paid to the assessee then he could have examined such sums in their hand by reopening their assessment. As can be seen from the documents relating to Smt. Manju Sahu it is evident that the balance as on 8/10/2011 was Rs. 25,20,000/- out of which money was given to the assessee as unsecured loan in two installments as below. One Rs.4 lacs on 31/10/2011 through RTGS and Rs. 20, 40,000/- on 4/11/2011 through RTGS. As regards to the Assessing Officer’s observation that cash was deposited before transferring money to the assessee of Rs. 4 lacs on 29/10/2011 and Rs. 6 lacs on 9/11/2011 before transferring amount to Sh. Sanjay Sahu. The Assessing Officer failed to notice that on 10/11/2011 thee was a cash withdrawal of Rs. 10 lacs out of the balance outstanding in the account. Thus, cash deposit within a short spent of time was deposited out of the cash available from withdrawal made by the assessee on 10/10/2011. The Ld. AR submitted that the sum was found to be credited in the books of the assessee where as explained by the assessee through its authorized representative where in the form of unsecured loans to the assessee from its Directors, Smt. Manju Sahu and Sh. Sanjay Sahu. The genuineness and creditworthiness of the creditors as well as the transactions have been crude beyond reasonable doubt by providing documentary evidences relating to the transactions and the Directors. However, the Assessing Officer not being satisfied regarding the sum added the said amounts to the income of the assessee company. The additional evidence were filed before the CIT(A) and the same was accepted. However, despite filing of the required detailed documents by way of ITR of Smt. Manju Sahu and Sh. Sanjay Sahu. These documents were not considered while arriving at the final decision by the CIT(A). The Ld. AR further submitted that the remand report also has not highlighted as to why the additional evidence should not be admitted. Thus, the Ld. AR submitted that the appeal of the assessee be allowed.

The Ld. DR relied upon the order of the Assessing Officer and the CIT(A).

We have heard both the parties and perused the material available on record. In respect of the loans taken from the Directors of the Company, the assessee has submitted the relevant documentary evidences to establish the genuineness, creditworthiness and capacity of these loanee. Section 68 is applicable in the case where the assessee offers no explanation about the nature and source therewith or the explanation offered by him is not in the opinion of the Assessing Officer satisfactory in respect of the sum so credited which may be charged to income tax. But in the present case, the Assessing Officer failed to record his opinion and satisfaction as to why the sum credited in the books of account of the assessee is coming under the purview of Section 68. The explanation offered by the assessee that the bank account and the capacity of the creditor who have given the loan amount was proved through ITR details of the said parties along with bank statements and cofirmations which clearly shows the proper balance in their respective bank accounts and their capacity to loan the amount to any other party as well. Thus, all these factor were ignored by the CIT(A) as well as the Assessing Officer. Therefore, the CIT (A) was not right in dismissing the plea of the assessee and sustaining the addition. Hence, appeal of the assessee is allowed.

In result, appeal of the assessee is allowed.