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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI M. BALAGANESH, AM & SHRI PAVAN KUMAR GADALE, JM
O R D E R PER M. BALAGANESH, AM:
This appeal of the revenue arises out of the order of the Learned Commissioner of Income Tax (Appeals) -37, Mumbai [hereinafter referred to as the ld CITA] in Appeal No. CIT(A)-37/IT-663/ACIT-25(2)/16-17 dated 8.11.2017 against the order passed by the Learned Joint Commissioner of Income Tax, Range 25(2), Mumbai [hereinafter referred to as the ld AO] under section [u/s] 143(3) of the Income Tax Act, 1961 [hereinafter referred to as the ‘Act’] dated 14.3.2016 for the Assessment Year 2013-14.
The only issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the addition of Rs 2,86,00,000/- made on account of unsecured loans u/s 68 of the Act in the facts and circumstances of the case.
We have heard the rival submissions and perused the materials available on record. We find that the assessee is a partnership firm engaged in the business of property developers and had filed its return of income for the Asst Year 2013- 14 on 30.9.2013 declaring total income of Rs 99,60,380/-. We find that during the course of assessment proceedings, the ld AO observed that the assessee had shown unsecured loans of Rs 7,77,18,378/- from various parties in its balance sheet and assessee was asked to furnish confirmations from the lenders for the same. The assessee was also asked to prove the identity, creditworthiness of the lenders and genuineness of the transactions within the meaning of section 68 of the Act. We find that the ld AO had admitted in para 6.1. of his assessment order that the assessee had furnished the loan confirmations along with the copies of ITR acknowledgement, balance sheet and bank statement of the lenders together with the list of details and dcouments called for with regard to unsecured loans. The ld AO thereafter summarised the unsecured loans received from following 7 parties as under:-
Casper Enterprise Pvt Ltd - Rs 10,00,000/- Duke Business Pvt Ltd - Rs 20,00,000/- Pragati Gems Pvt Ltd - Rs 50,00,000/- Josh Trading Pvt Ltd - Rs 50,00,000/- Nakshatra Business Pvt Ltd - Rs 40,00,000/- Olive Overseas Pvt Ltd - Rs 45,00,000/- Sumukh Commercial Pvt Ltd - Rs 71,00,000/- ---------------------- Rs 2,86,00,000/- 3.1. We find that the ld AO observed in his order that information was received from office of DGIT (Inv.) Mumbai vide letter dated 7.7.2014 wherein it was informed that Shri Pravin Kumar Jain was searched by the Investigation wing , Mumbai and during the course of search operation, it was found that Shri Pravin 3.2. We find that the assessee responded to the show cause notice before the ld AO by stating that the said loans of Rs 2.86 crores were received and repaid in normal course of business by account payee cheques. All these transactions were duly reflected in the bank accounts of the assessee as well as the respective parties also. Confirmations from all the parties together with their income tax return acknowledgements and bank statements were submitted vide letter dated 21.1.2016. We find that the assessee also furnished affidavits from all the parties denying the declaration given by them to the income tax
We find that the ld CITA, after duly acknowledging the fact that the entire documents that were called for by the ld AO had been duly submitted by the assessee before him in respect of all the 7 unsecured loan creditors, observed that the ld AO had solely relied upon the statement of Shri Pravin Kumar Jain given by him during his search. We find that the ld CITA also observed that the ld AO did not carry out any worthwhile independent enquiry in the matter and ignored the documentary evidences completely which were submitted by the assessee. He observed that no defects were pointed out by the ld AO with regard to the documentary evidences submitted by the assessee. He observed that without pointing out any defects or lacuna in the evidences submitted by the assessee, the ld AO ought not to have doubted the sources and genuineness of transactions. We find that the ld CITA observed that once the primary documents are submitted by the assessee to the ld AO as directed, then the onus shifts on the ld AO to prove that those are non-genuine. In the instant case, the ld AO had not discharged the onus cast on him and merely based on statement of a third person without any corroborative evidence, the ld AO had treated the loan transactions as accommodation entries. With these factual observations and by placing reliance on various decisions, we find that the ld CITA had deleted the addition made u/s 68 of the Act in the sum of Rs 2,86,00,000/- towards unsecured loans and correspondingly allowed deduction for interest on such unsecured loans in the sum of Rs 2,80,828/-.
At the outset, we find that the assessee had borrowed loans from 7 parties as detailed above during the Asst Year 2013-14. Out of these borrowings, we find that the assessee had duly repaid the loans within the Asst Year 2013-14 in respect of following parties :- 30.8.2012 – Repayment to Nakshatra Business Pvt Ltd – Rs 40 lacs 30.8.2012 – Repayment to Olive Overseas Pvt Ltd – Rs 45 lacs 30.8.2012 – Repayment to Casper Enterprises Pvt Ltd – Rs 10 lacs 30.8.2012 – Repayment to Duke Business Pvt Ltd – Rs 20 lacs Similarly, the loans were repaid by the assessee firm to remaining three parties in Asst Year 2014-15 as under:- 31.12.2013 – Repayment to Josh Trading Pvt Ltd – Rs 16.50 lacs 31.12.2013 – Repayment to Josh Trading Pvt Ltd – Rs 16.50 lacs 01.01.2014 – Repayment to Josh Trading Pvt Ltd – Rs 10.00 lacs 01.01.2014 – Repayment to Josh Trading Pvt Ltd – Rs 7.00 lacs -------------------- Rs 50.00 lacs -------------------- 07.01.2014 – Repayment to Pragati Gems Pvt Ltd – Rs 25 lacs 12.02.2014 – Repayment to Pragati Gems Pvt Ltd – Rs 25 lacs -------------------- Rs 50 lacs -------------------- 12.02.2014 – Repayment to Sumukh Commercial Pvt Ltd – Rs 71 lacs 5.1. We find that this tribunal had accepted loans received from 6 lenders out of the aforesaid 7 lenders as genuine while deleting the additions made u/s 68 of the Act in the case of M/s Yug Developers vs ACIT in & 7222/Mum/2018 dated 17.7.2019. The lenders who are construed as genuine in this decision are Casper Enterprises P Ltd, Duke Business Pvt Ltd, Nakshatra 5.2. We find that this tribunal had accepted loans received from Josh Trading Pvt Ltd to be genuine while deleting the addition made u/s 68 of the Act in the case of DCIT vs Trinity Infratech Pvt Ltd in ITA No. 2721/Mum/2017 dated 6.2.2019.
5.3. We find that once the assessee has furnished the complete details about the loan creditors together with their latest addresses as available with it and affidavits from directors duly notarised including details of loan repayments made to those companies and confirmations from them for the loans advanced to the assessee, the onus cast on the assessee u/s 68 of the Act stands duly discharged and no addition could be made in its hands merely on because the lenders fail to appear before the ld AO or the assessee failing to produce them before the ld AO. Reliance in this regard is placed on the decision of Hon’ble Jurisdictional High Court in the case of CIT vs Orchid Industries P Ltd reported in 397 ITR 136 (Bom). We further hold that no addition could be made on mere presumption that the assessee routed its own cash in the form of unsecured loans without any concrete evidence to this effect. Reliance in this regard is placed on the decision of Hon’ble Jurisdictional High Court in the case of PCIT vs Aquatic Remedies P Ltd in of 2016 affirming the tribunal decision in ITA No. 6356/Mum/2014. We also find that the directors of the lending companies had filed affidavits confirming the loan transactions before the ld AO which had not been disputed. Once the averments made in the affidavit are not disputed or refuted, the same are to be construed as true and correct, as held by the Hon’ble Supreme Court in the case of Mehta Parikh & Co. vs CIT reported in 30 ITR 181 (SC).
In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on .04.2021