ITO 3(3)(4), MUMBAI vs. VENKATESH SECURITIES LTD, MUMBAI

आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:

2 | P a g e & 1951/MUM/2018 17.01.2018. The Assessments were framed by the Income Tax Officer, Ward-3(3)(4), Mumbai (in short ITO/ AO) for the A.Ys. 2008-09 & 2013-14 vide order dated 29.03.2016 & 17.03.2015, under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).

Ground in AY 2013-14

1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has wrongly deleted the addition of ₹ 2,30,00,000/-

3 | P a g e & 1951/MUM/2018 made by the AO with respect to unexplained cash credit under section 68 of the I.T. Act 1961 without appreciating the fact that the credit entries standing against the name of M/s Basant Marketing Pvt. Ltd. were not reflected in the books of account of M/s Basant Marketing Pvt. Ltd as the said company had claimed to have not done any business activity during the period of relevant to AY 2013-14.”

MIs. Basant Marketing Pvt. Ltd (Rs 1,51,40,000/-), MIs. Art Link Vintrade Pvt. Ltd. (Rs.1,75,000/-) M/s Parth Tradelinks Pvt. Ltd (Rs.25,000/-)

3.1.3 This issue of loan from BMPL had also come up before my predecessor in the case of Sh. Harsh Dalmia's Appeal for A.Y.2008-09 who is the director of MIs Venkatesh Securities Ltd. vide order No. CIT(A)-8IIT-753/14-15 dated 29.09.2016. He had decided this issue in favour of the appellant in which MIs. Basant Marketing Pvt. Ltd (BMPL) is involved. Further, in that case. Hon'ble ITAT Mumbai has confirmed the decision of the Ld. CIT(A) Mumbai vide order dated 17.10.2016. The relevant extract of the above order passed by my predecessor is reproduced here as follows:-

5.2. 1 He has not disputed the amount or the fact that the amount was received from BMPL and is duly reflected in 5 | P a g e & 1951/MUM/2018 audited books of both parties Identity or creditworthiness of BMPL has not been challenged Perusal of para 4.8 of the order reveals that the Assessing Officer has also not disputed that appellant has made payments to BMPL in FY' 2007-08 (AY 2008-09) and FY 2008-09 (AY 2009- 10). Essentially, the Assessing Officer has held the impugned amount as accommodation entry- because he observed that the appellant had a running account with BMPL Further, he has held the receipt as income u/s. 28(iv). Finally, without invoking any particular section of the Act, the Assessing Officer has also concluded that the amount is income from unexplained sources.

5 2 2 These facts strongly indicate that the Assessing Officer was largely influenced by the history of the case and not by any facts. It is difficult to understand that once the impugned sum is taken as a value of any benefit or perquisite" u/s. 28(iv) received by the appellant from BMPL how then could it be considered as income from unexplained source? Similarly, if it is income from "unexplained source' how then can it be 6 | P a g e & 1951/MUM/2018 deemed income received from BMPL in exercise of business or profession of the appellant? As already observed, the Assessing Officer has not raised any doubt about the identity. creditworthiness or the fact of the transaction so even provisions of section 68 do not apply.

5.2.3 In deciding this issue, my decision in appellants own case in respect of additions u/s. 68 w.rt. BMPL for AY 2008- 09 and AY 2009-10 in Appeal Nos. CIT(A)-81IT753114-15 & CIT(A)-8/IT- 753/14- 15 are also relevant. All the facts relating to BMPL are similar in the instant appeal and have been discussed in detail in those orders. In view of these (acts and circumstances. I find no merit in the impugned addition and the same is deleted. This ground is allowed.

Further, It is found that in the case of this disputed and controversial lender M/s Basant Marketing Pvt Ltd . 59, Bentinck Street, Kolkata- 69, PAN AABCB3077A, the CIT(A)-20, Kolkata. has passed an order Appeal no 22/CIT(A)- 20/CC-2(2)/09-10 dated 30/01/2015 for AY 2010-11, in which he has allowed the appeal of the assessee. The issues concerned the 7 | P a g e & 1951/MUM/2018 genuineness of the party and its financial and business activities and capacity.”

5. Similarly, in respect of loan taken from Artlinkd Vintrade Pvt. Ltd. of ₹ 1,75,000/- and Parth Tradelinks Pvt. Ltd. of ₹ 25,000/- was also deleted by CIT(A) vide para 3.14 to 3.16 as under: - “3.1.4 Further, the same issue of cash credit w.r.t associate concern namely MIs Parth Trading Pvt. Ltd. has also been decided in the favour of the appellant by my Ld. Predecessor in appellants own case for AY 09-10 in appeal No. CIT(A)-8/IT94/13-14 dated 29.11.2015. So, that 8 | P a g e & 1951/MUM/2018 leaves only the cash credit of Rs 1.75.0001- from Artlink Wintrade Pvt. Ltd.

3.1.5 I find that similar additions were made of "unproved' credits by the assessing officer in appellants case in earlier years and have been considered and decided in favour of assesse by my Ld. Predecessor in appellants appeals against order u/s 143(3) for AYs 2006-07 to 2009-10 . The nature of transactions, the non- completion of enquiries and the observations of the assessing officer in the assessment orders are similar and stereotype. to those in the instant appeal In order passed by my Ld. Predecessor in appeal No. CIT(A)-8/IT-68/14-15 dated 29.11.2016 for AY 2006-07, he has examined in detail applicability of section 68 on similar facts and circumstances and relied on several case laws for arriving at a decision. In the appellate order passed by my Ld. Predecessor in appeal No. CIT(A)-8/lT-600/12- 13 dated 29.11.2016 for AY 2007-08, he had even observed: ln the instant case, not only did the appellant discharge its onus of establishing identity and creditworthiness of creditors and genuineness of transactions, the assessing officer has 9 | P a g e & 1951/MUM/2018 admitted that all the balances were very old It is settled law that such old balances cannot be added u/s 66 for the current year".

3.1.6 Since the facts and circumstances are the same for this assessment year. except for the amount involved, following the decision of Hon'ble ITAT Mumbai for assessment year 2008-09, CIT(A)-20, Kolkata and considering the reasoning of my Ld. Predecessors earlier decisions on similar grounds and after looking into the submissions of the appellant in the instant appeal. I am of the opinion that the balance two additions also deserve to be deleted. In view of the above, addition made u/s 68 in respect of all the three unexplained/ unapproved credit is hereby deleted. This ground of appeal is allowed.”

6. Now before us, the learned Counsel for the assessee file copy of Tribunal orders for AY 2006-07, 2007-08, 2009-10 and 2011-12 in to 1501/Mum/2017 vide order dated 21.11.2018, wherein Tribunal exactly on identical facts deleted the addition by holding that the Basant Marketing Pvt. Ltd is a genuine company and even the creditworthiness of the Act was not doubted. The Tribunal held in Para 6 as under: - “6. On appraisal of the above mentioned finding, we noticed that the AO has raised the addition

10 | P a g e & 1951/MUM/2018 in sum of Rs.1,70,37,750/- on account of non- genuine company of M/s. Basant Marketing Pvt. Ltd. The Commissioner appeals has already held in case of group company concerned M/s. Watermark Systems (India) Pvt. Ltd. for the A.Y. 2008-09 in Appeal No. CIT(A)-8/IT-407/14-15 as genuine company. The finding has been extracted by the CIT(A) in his order which has been mentioned above. The company has also been held as genuine company by the CIT(A)- 20 Kolkata in his order of the A.Y. 2010-11 in case of M/s. Basant marketing Pvt. Ltd. The identity is not in dispute and in its books of account sufficient fund has been reflected. The bank statement also established its credit worthiness. The CIT(A) has relied upon number of cases mentioned in his order and arrived at this conclusion that the assessee has proved the identity, genuineness and credit worthiness of transaction, therefore, no addition can be raised hence allowed the claim of the assessee. The facts are not distinguishable at this stage also. There is no finding of any authority on record in which it has been held that M/s. Basant Marketing Pvt. Ltd. is not genuine company. The Department nowhere preferred the appeal against the judgment mentioned in the finding nor perverse finding is on record.

11 | P a g e & 1951/MUM/2018 Taking into account all the facts and circumstances, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is decided in favour of the assessee against the revenue.”

2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in deleting the addition of ₹ 3,25,520/- as unexplained income from undisclosed source made by the AO without appreciating the fact that the assessee failed to establish the trail of cash withdrawn and deposited from and to its bank accounts and also failed to furnish detailed entry wise cash book for the period relevant to AY 2008-09?”

12 | P a g e & 1951/MUM/2018 9. We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the AO made addition of ₹ 3,25,520/- being the amount of cash deposit in assessee’s bank account on various dates during the year. The assessee explained before AO that cash deposit in the bank account was out of opening cash balance available with the assessee as on 11.04.2007 amounting to ₹ 11,86,377/- and drawings made from its bank account from time to time. We noted that the CIT(A) deleted the addition as the revenue could not point out that the cash available with the assessee i.e. opening cash balance as on 01.04.2007 amounting to ₹ 11,86,377/- is not available or it was not disputed. Even now, before us, the Revenue has not disputed the availability of the cash balance and out of which the assessee claimed to have been deposited in the bank amounting to ₹ 3,25,520/-. Hence, we find no infirmity in the order of CIT(A) deleting the addition.

“3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has not appreciated the fact that as per provisions of section 71 of the Act, the income ascertained under section 68 of the IT Act cannot be set off against the income assessed under various heads of income prescribed under section 14 of the IT Act and failed to appreciate the spirit behind the insertion of the words “[or set off of