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These appeals are filed by the assessee against the order dated 30/1/2017 passed by CIT(A)-II, New Delhi.
The grounds of appeal are as under:- ( A.Y 2013-14) (A) Because the learned Assessing officer failed to appreciate that for the AY 2013- 14, the receipt of Rs 26 lakh from Ms. Jasmine Kochar Kapoor was well documented. The other amount towards payment of 10,60,056/- to M/s Intec Capital Limited and accrued interest of Rs. 7,21,366/- and therefore each and every entry in the ledger account does not suffer from any ambiguity. (B) Because the only creditor's name reflected in the ledger account of current year transaction FY-2012-13 is that of Ms. Jasmine Kochar Kapoor and the money was received from her through three cheques from her NRO account at Canara Bank and Yes Bank at Nagpur. If the balance sheet for the year 2012- 13 is examined along with the audit report in form 3CB, 3CD are looker into, there is absolutely no ambiguity and it is a million dollar question how the learned Assessing Officer and the Appellate Authority could ignore the disclosures in the balance sheet and Audit Report for the AY 2013-14. (C) It is pertinent to mention that Section 68 of Income Tax, 1961 reads "where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source there of or the explanation offered by him, is not in the opinion of the Assessing officer, satisfactory, the sum so credited may be charged to Income Tax as the income of the assessee of that previous year." In the touchstone of the aforesaid provision, if the assessment order is examined: the following facts would emerge.
(i) Sum credited in the books - only Rs 26 lakh - well explained. (ii) The assessee offered explanation with sources in the confirmation of accounts along with copy of the bank statement and also copy of her passport and also the PAN number CRNPK6973N. It is pertinent to mention that Ms. Jasmine Kochar Kapoor is a Birmingham citizen. (iii) Because in the aforesaid facts and circumstances, if the Assessing officer had any doubt with regard to genuineness of creditor Ms. Jasmine Kochar Kapoor, he ought to have issued a notice under Section 133 (6) of the Income Tax, 1961 to find to veracity of the entry made in the Books of Accounts of the Assessee for the year 2013-14. (iv) Because the Assessee has discharged the primary onus by submitting the Confirmation of Accounts, Copy of the Passport, PAN Number and Bank statement indicating the source from which the cheques were issued. (v) Because in a similar situation, the IT AT of Mumbai in the matter of Shree Krishan Hindu Merchants Club versus ITO in reported in (2017) 53ITR held: "we restore the matter back to the file of the AO with a direction to the AO to issue 133 (6) to the concerned creditor to find out their genuineness and for obtaining their confirmation. Accordingly the AO is to decide the issue afresh after giving due opportunity to the assessee. (vi) Because the entire assessment proceeding are bad in law and void ab initio since the Ld. ACIT - Circle 33(1) - New Delhi has wrongly considered the Opening balance as on 01.04.2012 of Unsecured loan A/c as the receipts of the financial year 2012-13, though the appellant has submitted copies of Tax Audit Report (Form 3CB and 3CD) during the assessment proceeding before the assessing officer. (D) Because taxing provision being required to be strictly construed and there being no intendment in law or equity about taxation. The provisions of addition to income under Section 68 of the Income Tax Act, 1961 is not liable to be loosely interpreted, thus the addition made by the Assessing Officer is unjustified and unsustainable hence the Assessment Order passed by the Assessing Officer is liable to be set aside. (E) Because the addition to made by the Assessing Officer is ill founded and baseless for which it is liable to be vitiated. (F) Because the appellant never has any intention to suppress facts nor has it committed any fraud for which he is liable to be prosecuted.
The appellant craves leave of the Hon'ble Tribunal to add, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal, submit written submissions, adduce evidence, paper book and such other facts and figures before or at the time of final hearing of the case, if necessary so arises.”
2. M/s Siddharth Exports, a partnership firm is engaged in manufacture and trading (export) of Engineering and Automobile spare parts. The assessee is filing Income Tax Returns (ITR) regularly. During the Assessment Year 2013-2014, the assessee received Unsecured Loan of Rs. 26,00,000/- through three cheques issued as detailed below : Sl Chq. No Date Amount Bank A/C No. (Rs.) 1 738671 23.10.2012 600,000 Canara Bank, Nagpur A/C No. 0265101012274 2 738674 23.10.2012 10,00,000 Canara Bank, Nagpur A/C No. 0265101012274 3 649338 23.10.2012 10,00,000 Yes Bank, Nagpur NRO A/c No. 002890400000072 The above cheques were drawn from by Ms. Jasmin Kochar Kapoor, a citizen of GBR (United Kingdom) and also an Overseas Citizen of India (OCI). Her Passport Number is A097004 dated 02.02.2007 issued at Birmingham. The assessee got their account audited u/s 44AB of the Income Tax Act, 1961. The assessee e- filed Income Tax Return (ITR) for the Assessment Year 2013-14 attaching necessary audit report in form 3CD as prescribed by the Act. The tax audit u/s 44AB, the mandatory disclosure under "Particulars of Loans Accepted during the Previous Year 2012-13", Annexure to Form 3CD in respect to receipt of "Unsecured Loan" during the previous year as well as copy of said Audit Report in Form No. 3CB and Statement of Particulars in Form No. 3CD was filed by the assessee before the Assessing Officer. Notice dated 09.11.2015 issued by the Assessing Officer. The assessee submitted certain documents on 16.11.2015. On 22.03.2016, the AR of the assessee submitted following documents: (i) Confirmation of ledger a/c" the 7 (seven) persons whose names appearing under "Unsecured Loan A/c" (ii) Details worksheet on Unsecured Loan A/c for the period under consideration along with "confirmation of loan A/c" as on 31.03.2013 to the Assessing Officer during the assessment proceeding which are hereunder : (iii) Unsecured Loan during the F.Y.2012-13 (A.Y. 2013-14) Ref. Sch. IX to Balance Sheet: Received Opening Receipt Payment(-) Closing From Balance as during the made during Balance as on 1/4/2012 Financial the year on Year 31/3/2013 P B Sales 8,000,000 0 0 8,000,000 Trading Compny Sanjay K 500,000 0 0 500,000 Srivastava Suman Ku. 500,000 0 0 500,000 Jha Intec Capital 3,116,644 0 (1,060,056) 2,056,588 Ltd. Jasmine 0 2,600,000 0 2,600,000 Kochar Kapoor Manoj 4,000,000 0 0 4,000,000 Sabarwal Gurmeet 888,726 0 0 888,726 Kaur Bhagwant 20,000 0 0 20,000 Kaur Interest on 0 721,366 0 721,366 Unsecured Loan Total 17,0250,370 3,321,368 (1,060,056) 19,286,680 On 22.03.2016, the Assessing Officer served Show Cause Notice to the AR proposing to "treat the unexplained cash credit u/s 68 of the Act and added back to the income of the assessee". The assessee explained that cash credit amount of Rs. 170,25,370/- was the closing balance of previous year i.e. 2011-12 as submitted above in the table. The Assessing Officer added an amount of Rs.1,80,65,314/- to income.
Being aggrieved by the Assessment Order the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that the Assessing Officer without considering the factual matrix of the case, adjudicated the matter and arbitrarily decided to disallow unsecured loan amounting to Rs. 180,65,314/- which includes previous year closing balance of Rs. 17,025,370/-. The Assessing Officer, despite being explained about the factual position of unsecured loan amount with relevant records, made an observation that the Assessee was deliberately avoiding to attend the office and defend the case. The Assessing Officer also observed that the Assessee could not furnish the ITR of persons from whom unsecured loan was received except in the case of Sh. Sanjay Srivastava. The Ld. AR submitted further that the Assessing Officer was not justified in adding back Rs. 1,80,65,314/- to the declared income without any basis and mere approval of assessment order by the CIT(A) is a failure of justice. The Ld. AR submitted that in response to the query raised by the Assessing Officer during assessment proceeding u/s 143(3), the assessee filed following documents: i) Copy of confirmation (dated 01.04.2014) from Ms. Jasmine Kochar Kapoor towards receipt of genuine "unsecured loan" of Rs. 26,00,000/- through three cheques from Ms. Jasmin Kochar Kapoor, a citizen of GBR (United Kingdom) who is an Overseas Citizen (OCI) having Passport No. A 097004 dated 02.02.2007 issued at Birmingham; ii) Copy of bank accounts of Canara Bank and Yes Bank Nagpur; iii) Copy of Passport No. A 097004 dated 02.02.2007 and PAN - CRNPK6973N The Ld. AR submitted that the assessee actually received genuine "Unsecured loan" of Rs. 26,00,000/- through three cheques from Ms. Jasmin Kochar Kapoor, a citizen of GBR (United Kingodm) who is an Overseas Citizen (OCI) having Passport No. A097004 dated 2/2/2007 issued at Brimingham:
Sl No. Chq No. Date Amount (RS) Bank A/C 1 738671 23.10.2012 600,000 Canara Bank, Nagpur A/C No. 0265101012274 2 738674 23.10.2012 10,00,000 Yes Bank, Nagpur 3 649338 23.10.2012 10,00,000 NRO A/c No. 002890400000072 TOTAL 26,00,000 (Rs.)
The Ld. AR submitted that in accordance with the provisions of Section 106 of Indian Evidence Act, 1872, the assessee discharged their burden to proof by submitting relevant documents and explanations with regards to "genuineness of transaction, Source of Source, and credit worthiness of the lender" during assessment proceeding. The Ld. AR submitted that to confirm the above transactions, documents and explanation submitted, the Assessing Officer has not issued requisition u/s 133(6) of the Income tax Act, 1961 and passed ex parte order disregarding the material facts. The Ld. AR submitted that the Assessing Officer initiated recovery proceeding by issuing Notice dated 12.02.2018 u/s 221 of the Income Tax Act, 1961 and also attached four Bank Accounts of the assessee and recovered Rs. 26,37,028/-. The Ld. AR submitted that the order of the CIT(A) and Assessment Order dated 28.03.2016 having been passed ex parte causing serious prejudice to the interest of justice and liable to be set aside being violative of principles of natural justice. Both the authorities failed to appreciate the materials on record, the cryptic and unreasoned orders passed are unsustainable and liable to be set- aside. The Ld. AR submitted that loans in question having been received from genuine sources and the lenders are identifiable, hence ex parte assessment made without causing any enquiry u/s 133 of the Income Tax Act, 1961 after 6 months of assessment proceeding period is contrary to law. The Ld. AR relied upon the decision of the Tribunal (Delhi) in the case of ITO Vs M/s. Necleus Steel Private Limited (ITAT Delhi) (judgment dated 23.03.2018 [ITA No. 369/DEI/2015]”.
6) As regards appeal for A.Y. 2014-15, the ground, the factual matrix and the submission of the Ld. AR are as follows:
Because the Ld. Assessing officer failed to appreciate that for the (i) Assessment Year 2014-15, the receipt of Rs 87 lakh from Ms. Jasmine Kochar Kapoor was well documented in the ledger account and it does not suffer from any ambiguity.
Because the only creditor's name reflected in the ledger account of current (ii) year transaction FY-2014-15 is that of Ms. Jasmine Kochar Kapoor and the money was received from her through six cheques from her NRO account at Yes Bank at Nagpur. If the balance sheet for the year 2014-15 is examined along with the audit report in form 3CB, 3CD are looked into, there is absolutely no ambiguity and it is a million dollar question how the Ld. Assessing Officer and the Appellate Authority could ignore the disclosures in the balance sheet and Audit Report for the AY 2014- 15.
It is pertinent to mention that Section 68 of Income Tax, 1961 reads : (iii) "where any sum is found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source there of or the explanation offered by him, is not in the opinion of the Assessing officer, satisfactory, the sum so credited may be charged to Income Tax as the income of the assessee of that previous year." In the touchstone of the aforesaid provision, if the assessment order is examined: the following facts would emerge : (a) Sum credited in the books - only Rs 87 lakh - well explained. (b) The assessee offered explanation with sources in the confirmation of accounts along with copy of the bank statement and also copy of her passport and also the PAN (CRNPK6973N). It is pertinent to mention that Mrs Jasmine Kapoor is a Birmingham citizen. (c) Because in the aforesaid facts and circumstances, if the Ld. Assessing officer had any doubt with regard to genuineness of creditor Ms. Jasmine Kochar Kapoor, he ought to have issued a notice under Section 133 (6) of the Income Tax, 1961 to the creditor to find out the veracity of the entry made in the Books of Accounts of the Assessee for the financial year 2013-14. (d) Because the Assessee has discharged the primary onus by submitting the Confirmation of Accounts, Copy of the Passport, PAN and Bank A/c statement indicating the source from which the cheques were issued.
(e) Because in a similar situation, the IT AT of Mumbai in the matter of Shree Krishan Hindu Merchants Club versus ITO in reported in (2017) 53 ITR held "we restore the matter back to the file of the AO with a direction to the AO to issue 133 (6) to the concerned creditor to find out their genuineness and for obtaining their confirmation. Accordingly the AO is to decide the issue afresh after giving due opportunity to the assessee." (f) Because taxing provision being required to be strictly construed and there being no intendment in law or equity about taxation. The provisions of addition to income under Section 68 of the Income Tax Act, 1961 is not liable to be loosely interpreted, thus the addition made by the Ld. Assessing Officer is unjustified and unsustainable hence the Assessment Order passed by the Ld. Assessing Officer is liable to be set aside. (g) Because the addition made by Ld. Assessing Officer is ill founded and baseless for which it is liable to be vitiated. (h) Because the appellant never ever had any intention to suppress facts nor has it committed any fraud for which he is liable to be prosecuted.
The appellant craves leave of the Hon'ble Tribunal to add, amend, modify, substitute, delete and/ or rescind all or any of the grounds of appeal, submit written submissions, adduce evidence, paper book and such other facts and figures before or at the time of final hearing of the case, if necessary so arises.
8. M/s Siddharth Exports, a partnership firm is engaged in manufacture and trading (export) of Engineering and Automobile spare parts. The assessee is filing Income Tax Returns (ITR) regularly. During the Assessment Year 2014-2015, the assessee received Unsecured Loan of Rs. 87,00,000/- through 6 (six) nos. cheques as detailed below : Sl. No. Chq. NO. Date Amount Bank A/C (Rs.) 1 649341 31.05.2013 10,00,000 Yes Bank, Nagpur NRO A/C No. 2 649342 05.06.2013 15,00,000 002890400000072 3 649344 12.07.2013 15,00,000 4 649345 12.07.2013 25,00,000 5 649346 23.09.2013 15,00,000 6 649357 05.02.2014 700,000 TOTAL 87,00,000 The above cheques were drawn from Ms. Jasmin Kochar Kapoor, a citizen of GBR (United Kingdom) and also an Overseas Citizen of India (OCI). Her Passport Number is A 097004 dated 02.02.2007 issued at Birmingham. The assessee got its account audited u/s 44AB of the Income Tax Act, 1961. The assessee e-filed Income Tax Return (ITR) for the Assessment Year 2014-15 attaching necessary audit report in Form 3CD as prescribed by the Act. As per statutory requirement of tax audit u/s 44AB, the mandatory disclosure under "Particulars of Loans Accepted during the Previous Year 2013-14" Annexure to Form 3CD such as receipt of "Unsecured Loan" issued during the previous year. Notice dated 09.11.2015 was issued by the Assessing Officer. On 27.12.2016, the office of Assessing Officer served Show Cause Notice dated 06.12.2016 to show cause why unsecured loan shall not be treated as unexplained credit u/s 68 of the Income Tax Act, 1961. On 29.12.2016, the assessee submitted written explanation. The Assessing Officer made an independent enquiry through e-mail and telephonic conversion with ITO - Ward 1(3), Nagpur on 12.12.2016 about ITR status of Jasmine Kochar Kapoor (PAN CRNPK6973N) and on 22.12.2016, ITO Nagpur replied through e-mail about non-filing of ITR. Thus, the Assessing Officer made an addition of Rs. 87,00,000/- as unsecured loan and other addition of Rs. 1,47,000/-.
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that the said creditor is a citizen of GBR (United Kingdom) and holder of Passport Number is A 097004 dated 02.02.2007 issued at Birmingham, hence she is not filing ITR and it was already explained to Ld. Assessing Officer during the hearing proceeding. The Ld. AR further submitted that the Assessing Officer, despite being explained about the factual position of unsecured loan amount with relevant records, made an observation that the Assessee was deliberately avoiding to attend the office and defend the case. The Assessing Officer also observed that the Assessee could not furnish the ITR of persons from whom unsecured loan was received. The Ld. AR further submitted that addition of 87,00,000/- made to the total income disregarding the documentary evidences and without any basis and mere approval of assessment order by the CIT (A) is a failure of justice. The Ld. AR submitted that the assessee actually received genuine "unsecured loan" of Rs. 87,00,000/- through three cheques from Ms. Jasmin Kochar Kapoor, a citizen of GBR (United Kingdom) who is an Overseas Citizen (OCI) having Passport No. A 097004 dated 02.02.2007 issued at Birmingham : Sl. No. Chq. NO. Date Amount Bank A/C (Rs.) 1 649341 31.05.2013 10,00,000 Yes Bank, Nagpur NRO A/C No. 2 649342 05.06.2013 15,00,000 002890400000072 3 649344 12.07.2013 15,00,000 4 649345 12.07.2013 25,00,000 5 649346 23.09.2013 15,00,000 6 649357 05.02.2014 700,000 TOTAL (RS.) 87,00,000 The Ld. AR further submitted that in response to the query raised by the Assessing Officer during assessment proceeding u/s 143(3), the assessee filed copy of confirmation (dated 01.04.2014) from Ms. Jasmine Kochar Kapoor towards receipt of genuine "unsecured loan" of Rs. 26,00,000/- through following three cheques from Ms. Jasmin Kochar Kapoor, a citizen of GBR (United Kingdom) who is an Overseas Citizen (OCI) having Passport No. A 097004 dated 02.02.2007 issued at Birmingham; (i) Copy of Bank A/c Statement Yes Bank, Nagpur NRO A/c No. 002890400000072. (ii) Copy of Passport No. A 097004 dated 02.02.2007 and PAN - CRNPK6973N. The Ld. AR further submitted that an independent enquiry through e-mail dated 22.12.2016 was made by the Assessing Officer with ITO W (1)(3), Nagpur on specific issue i. e. "Filing of ITR by Ms. Jasmine Kochar Kapoor (PAN - CRNPK6973N) for the assessment year 2013-14, 2014-15". The Ld. AR submitted that the order of the CIT(A) and Assessment Order having been passed exparte causing serious prejudice to the interest of justice and liable to be set aside being violative of principles of natural justice. The Ld. AR submitted that both the authorities having failed to appreciate the materials on record, the cryptic and unreasoned orders passed are unsustainable and liable to be set-aside. The Ld. AR submitted that loans in question having been received from genuine sources and the lenders are identifiable, hence ex-parte assessment made without causing any enquiry u/s 133 of the Income Tax Act, 1961 after 6 months of assessment proceeding period is contrary to law. The Ld. AR submitted that without any cogent and credible evidence to the contrary, holding the genuine loan in question as concealed income is unfair and unreasonable.
The Ld. DR relied upon the Assessment Order and the order of the CIT(A) for both the Assessment Years.
We have heard both the parties and perused the material available on record. The first question arose in the present appeal is whether the assessee has discharged the onus by proving the identity and creditworthiness of the creditor and the genuineness of the transaction in respect of unsecured loan from Ms. Jasmine Kochar Kapoor. The assessee has claimed to have furnished the confirmation of the creditor, the passport of the creditor and the bank account of the creditor in India. Copies of these documents have also been placed in the paper book. From a perusal of the alleged confirmation, copy of which has been placed in the paper book, we find that it is only the copy of account of the creditor in the assessee’s books of account. It is not signed by the creditor and therefore, it cannot be said to be a confirmation of the loan from the creditor. The only other document produced in support of such cash credit is the passport of the creditor and her bank account in India. She has a permanent account number in India but has not filed any return of income in India on the ground that she is a non-resident during the year under consideration and therefore, do not have any income chargeable to tax in India. However, no evidence is filed with regard to her income in the country where she is living. What is her source of income has also not been explained. The bank account of the assessee in India is filed in support of explaining the source of income. However, from where the credit came in this bank account has also not been explained. In the above circumstances, we are of the opinion that the assessee has miserably failed to prove the creditworthiness of the creditor as well as genuineness of the transaction. We, therefore, hold that the assessee could not discharge the onus of proving the cash credit in the name of Ms. Jasmine Kochar Kapoor.
Now, the second question that arises is with regard to the quantum of addition. It is stated by the learned counsel that in assessment year 2013- 14, the Assessing Officer made the addition of Rs.1,80,65,313/- for unexplained unsecured loan but most of the credit is old credit in the assessee’s books of account and fresh loan during the year under consideration was only to the tune of Rs.26 lakhs. During the course of hearing before us, he referred to the balance sheet of the last year as well as this year so as to point out that there were huge unsecured loans in last year also. So far as the legal proposition is concerned, the addition for cash credit can be made only in respect of fresh credit during the accounting year relevant to the assessment year under consideration. However, what is the actual credit during the year under consideration is a factual thing which requires verification at the end of the Assessing Officer. We, therefore, set aside the issue of addition for unexplained loan to the file of the Assessing Officer and direct him to verify the quantum of fresh credit in the assessee’s books of account during the accounting year relevant to the assessment year under consideration and make the addition only in respect of fresh credit and not in respect of opening balance. Needless to mention that Assessing Officer will allow adequate opportunity of being heard to the assessee while giving effect to this order.
So far as assessment year 2014-15 is concerned, the learned counsel fairly accepted that the addition made for unexplained cash credit is Rs.87 lakhs and which is the fresh loan taken from Ms. Jasmine Kochar Kapoor. Therefore, for the assessment year 2014-15, we sustain the orders of the lower authorities on this point and dismiss the assessee’s appeal.
In the result, the appeal of the assessee for assessment year 2013-14 is deemed to be partly allowed for statistical purposes and that of assessment year 2014-15 is dismissed. Order pronounced in the Open Court on 26th June, 2018.