KALI TRANSPORT PVT. LTD.,KOLKATA vs. D.C.I.T.,CIRCLE-10(1), KOLKTA

This assessee’s appeal for assessment year 2015-16 arises against the CIT (Appeals), 4, Kolkata’s order dated 13-12-2019 passed in case No. 147/CIT(A)- 4/2018-19 involving proceedings u/s 143(3) of the Income-tax Act, 1961 in short the ‘Act’). We have heard both the parties. Case file perused.

Learned authorized representative submits during the course of hearing that the assessee only wishes to press for its from 6 to 12 the substantive ground challenging correctness of both the lower authorities’ action treating it unsecured loans of Rs. 1,29,00,000/- as unexplained cash credits u/s. 68 of the Act ( referred to hereinafter as the ‘Act’) and interest thereupon of Rs. 1,13,79,611/- as unexplained expenditure u/s. 69C of the Act; respectively. Mr. Tibrewal vehemently argues that both the lower authorities have erred in law in making both the above additions thereby holding that the assessee had failed to prove identity, genuineness and creditworthiness of the creditors concerned. He further invited our attention to assessment order dated 27.12.2017 that the creditor parties have been wrongly treated as accommodation entry providers by way of ploughing back of assessee’s unaccounted income being routed back through papers transaction only.

The Revenue’s stand on the other hand relies on both the lower authorities’ action treating the assessee’s unsecured loans and interest expenditure thereon unexplained cash credit unexplained expenditure (supra); respectively.

We have given our thoughtful consideration to rival submissions. We find that the assessee has filed before us voluminous paper book(s) running 1 to 606 pages comprising of loan confirmations, ITR acknowledgements, TDS Certificates (Form 16), audited accounts as well as master data and compilation of various judicial precedents; respectively. We notice from a perusal of the corresponding details at page-605 of PB-4, that the assessee had availed fresh unsecured loans from M/s. Blue Chip Financial Consultants P.Ltd (Rs. 10,00,000/-), M/s. Landmark Commodeal P. Ltd. (Rs.29,00,000/-), M/s. Zevit Commotrade P.Ltd (Rs.10,00,000/-), M/s. Ratnanandan Commercial P.Ltd (Rs.10,00,000/-), M/s Reliable Merchandise P.Ltd (Rs.50,00,000/-) & M/s. Rover Commosales P.Ltd (Rs.20,00,000/-); respectively. It had clearly made re- payment of Rs. 57,71,516/-, Rs. 1,38,83,890/-, Rs. 5,48,256/-, Rs. 52,41,772/- and Rs.4,04,304/- to said entities (except the fifty one) having opening balance(s) of Rs. 1,42,922/- Rs. 92,58,256/-, Rs.61,71,722/- and Rs.69,09,304/-; respectively. Case file also suggests that the corresponding closing balance also accepted by the assessing authority as correct as on 31/3/2014 and the assessee has been assessed u/s. 143(3) of the Act in AYs 2009-10 and 2012-13 as well. The same sufficiently indicates that assessees had been maintaining running account(s) involving not only fresh unsecured loans having closing balances also therefrom sums.

Coupled with this, it is not in dispute that the assessee’s case stands on a very much identical footing qua M/s. Reliable Merchandise P.Ltd since it has placed on record all the corresponding details on the same lines only Hon’ble jurisdictional high court’s decision in CIT vs. Dataware P.Ltd in ITAT No. 263 of 2011, GA No. 2856 2 dated 21.09.2011, holds that why the assessee placed on record its expenditure with supporting evidence, the initial onus is on the Assessing Officer to verify the necessary details/party from the corresponding assessing authority having accepted the relevant transactions. Their lordships in S.K. Bothra & Sons,HUF vs. ITO 347 ITR 347(Cal) also holds that if the assessee discharges his/its initial onus by filing detailed explanation along with supportive evidence, it is the duty of the Assessing Officer to carry out necessary further investigation. Case law in Crystal Networks P.Ltd vs. CIT reported in 353 ITR 171 (Cal) also holds that when the assessee files all necessary evidences on record before the Assessing Officer, then mere failure of the creditor party(ies) to appear cannot form the so basis to invoke sec. 68 of the Act. Keeping in mind the detailed evidence as well as judicial precedents, we hold that once the assessee has discharged its onus on identity, genuineness and creditworthiness of running account & discharged its onus qua credit side of loan and interest expenditure thereupon before the Assessing Officer, both the lower authorities have erred in law and on facts in treating the same as unexplained cash credits & unexplained expenditure u/s. 68 & 69C of the Act; respectively. These two additions made u/s. 68 & 69C of the Act are directed to be deleted therefore.

The assessee’s appeal is allowed in above terms. Order pronounced in the Court on 15-12-2020 Sd/- Sd/- [ J.Sudhakar Reddy ] [ S.S.Godara ] Accountant Member Judicial Member Dated :15 -12-2020 **PRADIP, Sr. PS Copy of the order forwarded to: