M/S. GEE SQUARE EXPORTS INDIA PRIVATE LIMITED,MUMBAI vs. ACIT 15(1)(2), MUMBAI

This appeal in A.Y.2015-16 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-24, Mumbai in appeal No.CIT(A)-24/ACIT-15(1)(2)/IT-237/2017-18 dated 10/01/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 14/12/2017 by the ld. Assistant Commissioner of Income Tax- 15(1)(2), Mumbai (hereinafter referred to as ld. AO).

The Ground No. 2 raised by the assessee is with regard to non- admission of additional evidences by the ld CITA which were filed before him by the assessee in terms of Rule 46A of the Income Tax Rules, 1962. The inter connected issue involved thereon on merits is as to whether the ld CIT(A) was justified in confirming the addition made in the sum of Rs 2,00,00,000/- by the ld AO as unexplained cash credit u/s 115BBE of the Act, in the facts and circumstances of the case.

The brief facts of this issue are that the assessee is engaged in the business of manufacturing and selling of ice and undertake freezing and cold storage activity. It is also engaged in export of frozen foods viz sea food exports. The assessee filed its return of income for the Asst Year 2015-16 on 30.9.2015 declaring total loss of Rs 78,87,376/-. The ld AO observed during the course of assessment proceedings that the assessee had borrowed unsecured loan of Rs 2,00,00,000/- from M/s Eagle Container Foods Pvt Ltd among other parties. The assessee was asked to submit the address and confirmation from the above party. The assessee vide its letter dated 4.9.2017 filed the ledger copy and confirmation from the said party. The ld AO observed that no documentary evidences to establish the credit worthiness of the lender and genuineness of the transaction was furnished by the assessee company. The assessee was asked to furnish the ledger confirmation in original, ITR-V, bank statements reflecting the transaction. Notice u/s 133(6) of the Act was also issued on the said party to reply within 3 days from the date of receipt of such notice. No response was received from the said party by M/s. Gee Square Exports (I) Pvt.Ltd. the ld AO. Accordingly, the ld AO concluded that the primary onus to establish the identity, creditworthiness and genuineness of transactions in respect of alleged unsecured loan appearing as credit in the books of accounts of the assessee company was not proved by the assessee with any evidences. Since they remain unexplained, the same was sought to be taxed as unexplained cash credit u/s 68 r.w.s 115BBE of the Act by the ld AO in the assessment.

Before the ld CIT(A), the assessee pleaded that the notice u/s 133(6) of the Act was issued by the ld AO only on 15.11.17 and since the party was stationed in Ghaziabad, it would take 10/15 days to deliver the notice itself and thereafter immediately responding to the same is practically not possible. The ld AO did not wait for the reply to be filed by the said party and completed the assessment on 14.12.17, whereas the party had replied to the notice u/s 133(6) of the Act directly to the ld AO on 21.12.17 , which is evidenced by receipt issued by the Courier company. The assessee also stated that due to continuous persuasion with the said party, the assessee could obtained the copy of their relevant ITR copy, their bank statements and the courier receipt copy on 21.12.17 through email. These documents were filed before the ld CITA as additional evidences in terms of Rule 46A of the IT Rules. The ld CITA in his order in para 4.2.6 observed as under:-

We have heard the rival submissions. The primary facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. We find that the loan transactions with M/s Eagle Continental Food Pvt Ltd is to be examined in the instant case. In support of this, the assessee had furnished the various documents as stated above before the ld CIT(A), which had not been admitted as additional evidences in terms of Rule 46A of the Rules. We find that the ld AR had also placed the annual accounts of M/s Eagle Continental Food Pvt Ltd to prove its creditworthiness together with its Income tax return acknowledgement for the Asst Year 2015-16, bank statements evidencing the loan transaction duly highlighted, confirmation of balance from loan creditor etc. We find that these documents go to the root of the matter and are crucial for adjudication of the issue on merits of the case. Hence we deem it fit and appropriate to admit the same and direct the ld AO to consider the same to decide the issue on merits. The ld AO is accordingly directed for making denovo adjudication of the issue on merits in the light of aforesaid documents. The assessee is given liberty to furnish additional documents, if any, in support of its contentions. The ld AO is also at M/s. Gee Square Exports (I) Pvt.Ltd. liberty to make any enquiries in this regard to examine the veracity of loan transaction with M/s Eagle Continental Food Pvt Ltd, if he so desires. Accordingly, the Ground No. 2 and 3 raised by the assessee are allowed for statistical purposes.

The Ground No. 4 raised by the assessee is with regard to non-grant of TDS credit of Rs 2,88,000/- by the ld AO. We find that before the ld CIT (A), this ground was not pressed by the assessee. No argument was advanced before us with regard to this ground. Hence, the Ground No. 4 is treated as dismissed.

In the result, the appeal of the assessee is partly allowed for statistical purposes.