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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH, AHMEDABAD
Before: SHRI P.M. JAGTAP & Ms. SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
This appeal is filed by the assessee against the order dated 19.03.2019 passed by the CIT(A)-8, Ahmedabad for the Assessment Year 2008-09.
The grounds of appeal are as under:
“1. That the Ld. CIT(A) has erred in law and on the facts in partly allowing the appeal of the assessee on the issue of addition of Rs.5,37,21,000/- made u/s..68 of the Income Tax Act, 1961 on account of unexplained cash credit. 2. That the Ld. CIT(A) has erred in law and on the facts in deleting the disallowance of expenditure amounting to Rs.68,05,325/-.”
The assessee company is engaged in the business of real estate development. The return of income declaring loss of Rs.(-) 16,71,492/- was filed on 03.12.2008. The assessment was completed under Section 143(3) of the Income Tax Act, 1961 on 30.12.2010 determining total income of Rs.5,88,54,833/- after making addition of Page 2 of 4 Rs.5,37,21,000/- under Section 68 of the Act and Rs.68,05,325/- being disallowance of expenditure claimed. Against the order under Section 143(3) of the Act, the assessee preferred appeal before the CIT(A) who confirmed the action of the Assessing Officer. The assessee carried the matter before the Tribunal and the Tribunal in dated 15.10.2014 observed that the assessee was only able to produce evidence in respect of identity of the creditors though before the CIT(A) but failed to prove the necessary ingredients of creditworthiness and genuineness of transactions, therefore, set aside the assessment with direction that the assessee has to establish the creditworthiness and genuineness of the transaction of unsecured loan appearing in the balance sheet. Accordingly, the Assessing Officer issued notice under Section 142(1) on 07.07.2015 thereby the assessee filed submissions dated 28.07.2015. After taking into account the submissions of the assessee, and the related evidences, the Assessing Officer made addition of Rs.5,37,21,000/- which was originally determined as per order under section 143(3) of the Act dated 30.12.2010 under Section 68 of the Act.
Being aggrieved by the assessment order the assessee preferred appal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
Ld. DR submitted that no fresh evidence has been filed by the assessee in support of the claim of the assessee that the addition of Rs.5,37,21,000/- cannot be made under Section 68 of the Act related to unsecured loan. The Ld. DR submitted that the CIT(A) without taking cognizance of the observations of the Assessing Officer and simplicitor deleted the said addition.
Ld AR relied upon the order of the CIT(A) and submitted that relevant evidences related to creditworthiness and genuineness of the parties were produced in the original assessment under Section 143(3) of the Act as well as assessment under Section 143(3) read with Section 254 of the Act.
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee filed confirmation in respect of M/s. Jupiter Business Limited and M/s. Sudarshan Enterprise as well as ledger account of the said party from the various of assessee company, copy of bank statement of Shri
Page 3 of 4 Vinayak Sahkari Bank Limited for the subsequent year showing entries of repayment of loan as well as entries in case of M/s. Jupiter Business Limited, copy of audited account for F.Y. 2007-08 downloaded from the website of MCA along with the copy of company master data. But, to establish the creditworthiness and genuineness of the transactions in respect of both the parties, the assessee has only produced ledger account of the said party from the books of the assessee company and not the return of income of those parties thereby pointing out the creditworthiness of M/s. Jupiter Business Limited and M/s. Sudarshan Enterprise. The CIT(A) while deleting the addition has relied upon the confirmation letter and the bank account as well proof of repayment of loans of both the parties. The assessee has filed the details related to repayment of loans to the said parties which shows that the assessee has taken these loans from the parties and subsequently repaid the said loans. The Credit worthiness of M/s Sudarshan Enterprise was stated to be not doubted by the Assessing Officer as per the observations of the CIT(A) but the findings of the Assessing Officer clearly shows that the creditworthiness of the parties was in doubt. In respect of M/s Jupiter Business Limited also the creditworthiness was in doubt. The parameter of creditworthiness is determined from various documents including the return of income along with Profit & Loss account of those parties taken by the assessee has to see whether those parties are having sufficient amount to lent the same to the other parties. But from the perusal of records and the bank statement, it is seen that the assessee is showing only the bank statement related to the transfer of amount from these parties to the assessee and not that of the actual balance of M/s. Jupiter Business Limited and M/s. Sudarshan Enterprise. Thus, the first parameters of creditworthiness was never established by the assessee during the remand back proceedings before the Assessing Officer and the CIT(A) has not properly appreciated the evidences and without verifying the creditworthiness granted relief to the assessee which is not just and proper. Hence, ground no.1 of the Revenue’s appeal is allowed.
As regards ground no.2 related to deletion of disallowance related to expenditure, the Assessing Officer has not given any specific finding as per the contentions of the Ld. AR and simplicitor disallowed the expenditure that business of the assessee was not commenced. The ld. AR further submitted that the Assessing Officer was not correct in disallowing it and the CIT(A) rightly deleted this addition.
Page 4 of 4 9. Ld. DR submitted that the assessee has not given details of this expenditure and, therefore, the same should have not been allowed by the CIT(A).
We have heard both the parties and perused all the relevant material available on record. The assessee has demonstrated before the Assessing Officer as well as before the CIT(A) that the purchase of land is actually shown in the trading account and was never capitalised during the year and the same is evident from the Profit & Loss account furnished before the Assessing Officer during the assessment proceedings. In fact, from the perusal of the cases as well as from the observations of the Tribunal, it is seen that the assessee has actually commenced in F.Y. 2007-08 relevant to A..Y under appeal and, therefore, the CIT(A) has rightly deleted this addition. Ground no.2 is dismissed
In the result appeal of the Revenue is partly allowed.
Order pronounced in the open Court on this 20th day of July, 2022.