ITO 32 (1)(1), MUMBAI vs. M/S AGNEL CORPORATION, MUMBAI

The revenue has filed the appeal against the order of the Learned Commissioner of Income Tax (Appeals)-44, Mumbai [hereinafter in short “Ld.CIT(A)”] passed u/s. 271(1)(c) of the Act and section 250 of the Income-tax Act (for short “Act”).

The Brief facts of the case are that the assessee is a partnership firm and is engaged in the business of construction and builders. The assessee has filed return of income on 04.07.2012 with the total income of ₹.10,98,900/-. Subsequently, the case was selected for scrutiny and notices u/s.143(2) and 142(1) of the Act are issued. In response to the notices, the Ld. AR of the assessee appeared from time and time and submitted the details. Assessing Officer on perusal of the financial statements found that the assessee has disclosed unsecured loans in the balance sheet and the assessee was called to explain the identity, creditworthiness and genuineness of the persons who have advanced loans to the assessee and the assessee has submitted the details with the evidences. The Assessing Officer has dealt on these facts in the 3 ITA.NO. 6881/MUM/2019 (A.Y. 2012-13) M/s. Agnel Corporation Assessment Order in respect of each independent loan creditor. Since the assessee has not complied with the conditions/ingredients necessary in respect of unsecured loans obtained from 13 parties, the A.O. has treated the amounts as unexplained cash credits u/s. 68 of the Act and made an addition of ₹.1,76,92,144/-.Further, the assessing officer made disallowance of interest on unsecured loans debited in the profit and loss account of ₹.17,44,694/- and assessed the total income of ₹.1,94,36,840/- and passed order u/sec143(3) of the act dt 31-03-2015. Subsequently, the Assessing Officer has initiated penalty proceedings u/s.271(1)(c) of the Act. In the penalty proceedings the Assessing Officer relied on the findings of the A.O. in the scrutiny proceedings in respect of unsecured loans and interest paid. The assessee was also provided opportunity to make submissions. The Assessing Officer found that the assessee has submitted reply but could not provide or furnish evidences to prove the genuineness of unsecured loans. It was brought to the knowledge of the A.O. in the penalty proceedings that against the Assessment Order passed u/s. 143(3) of the Act dated 31.03.2015, on appeal by the assessee the Ld.CIT(A) has confirmed the addition made by the Assessing Officer. Therefore, the Assessing Officer in the penalty proceedings observed that the assessee has furnished inaccurate

Aggrieved by the Penalty order, the assessee has preferred an appeal with the Ld.CIT(A). Whereas Ld.CIT(A) has dealt elaborately on the findings of the Assessing Officer and the assessees submissions. Further the appellate authority, find that against order of the Ld.CIT(A) confirming the addition made by the Assessing Officer, the assessee has filed an appeal before the Tribunal. The Hon'ble Tribunal in ITA.No. 1814/Mum/2017 in assessee’s case for the A.Y. 2012-13 has deleted the addition, The Ld.CIT(A) considering the fact that the additions made by the Assessing Officer are deleted by the Hon'ble Tribunal observed that the levy of penalty is not sustainable and has relied on the judicial decisions. The Ld.CIT(A) find that the Hon'ble ITAT has deleted the impugned addition of unexplained cash credits and the disallowance of interest on loans made by the Assessing Officer. Accordingly, the CIT(A) has deleted the penalty and partly allowed the appeal of the assessee.

Aggrieved by the order of the Ld.CIT(A), the revenue has filed the appeal before the Honble Tribunal.

We have heard the rival submissions and perused the material available on record. Prima Facie, the Ld.CIT(A) has deleted the addition relying on the decision of the Hon'ble Tribunal in assessee’s own case. We found that the Hon'ble Tribunal has granted relief to the assessee in the quantum appeal. The Ld.CIT(A) relied and referred to the observations of Honble ITAT at Page No. 4 Para 6.4 of the order and deleted the penalty. The Ld.DR fairly accepted the fact that ITAT has deleted the additions of unsecured loans and interest on loans. The Ld. DR could not controvert the observations of the Ld.CIT(A) with any new cogent evidences or information Accordingly, we found that the 6 ITA.NO. 6881/MUM/2019 (A.Y. 2012-13) M/s. Agnel Corporation Ld.CIT(A) has relied on the judicial decisions of the Hon'ble High Court and the Coordinate Bench of Honble Tribunal in assessee’s own case and granted the relief. We follow the judicial precedence and we do not find any infirmity in the order of the Ld.CIT(A) and uphold the same and dismiss the grounds of appeal of the revenue.

In the result, revenue’s appeal is dismissed.