ASST CIT 15(1)(2), MUMBAI vs. BHAKTI HOMES P.LTD, NAVI MUMBAI

This appeal by Revenue is directed against the order of ld. Commissioner of Income-tax (Appeals)-24, Mumbai [“the ld. CIT(A)”] dated 31.12.2015, which arises from the assessment order passed under section 143(3) r.w.s.147 dated 30.06.2014 for Assessment Year 2008-09. The Revenue has raised the following grounds of appeal:

Brief facts of the case are that the assessee is a Pvt Limited Company engaged in the business of builder and developer filed its return of income for Assessment Year 2008-09 on 21.09.2008 declaring nil income. The M/s Bhakti Homes Pvt. Ltd. assessment was processed under section 143(1). Subsequently, the assessment was re-opened under section 147 of the Act. The assessment was re-opened on the basis of information received from DIT (Inv) about the accommodation entry availed by assessee from Praveen Aggarwal of Calcutta. Notice under section 148 dated 24.03.2014 was served upon the assessee for filing return of income. In response to the notice under section 148, the assessee filed its reply dated 16.06.2014 and acknowledgment of return dated 16.06.2014. The assessee requested for reasons of re-opening.

We have heard the ld. Departmental Representative (DR) for the Revenue and ld. Authorized Representative (AR) of the assessee and perused the material available on record. The ld. DR for the Revenue submits that a search and seizure was carried out inc case of Praveen Aggarwal on 12.1.2012 by DDIT(Inv) Calcutta. In the search, it was discovered that Praveen Aggarwal was providing accommodation entries of various nature including bogus bills, sub-contrary, commission fees, purchase and sale of unquoted shares. Statement of Praveen Agarwal was recorded under section 143(4). During the investigation it was revealed that the assessee is one of the beneficiaries who has availed bogus entry of loan from the entities managed by Praveen Aggarwal. Therefore, the Assessing Officer added Rs. 1.25 Crore under section 68 of the Act. The ld CIT(A) deleted the addition on his observation that the assessing officer has not made independent investigation. The ld CIT(A) has co-terminus power to investigate the issue independently or thorough assessing officer.

On the other hand, the ld. AR of the assessee submits that the assessee has taken genuine loan from two Calcutta based Companies. The loans were genuine and were taken through Banking channel. The assessee paid interest after deducting TDS on interest payments. The loan has been paid 3 ITA No.1233/M/16- M/s Bhakti Homes Pvt. Ltd. subsequently through banking channel. The assessee provided PAN No. of the lender company, confirmation and the ledger account. The assessee paid interest on the loan amount after deducting TDS. The assessee has proved identity and creditworthy of the lender. The assessee also proved the genuineness of transaction by filing confirmation of the lender and showing the interest payment for genuineness of the transaction. The assessee has paid interest after deducting TDS. In support of his submission, the ld. AR of the assessee submits that his has filed a list of decision in support of his case. During the hearing no specific case law was refereed by ld. AR for the assessee. However, the ld AR for the assessee has relied upon the following decision;

We have considered the rival submission of the parties and have gone through the orders of authorities below. The Assessing Officer has made addition on the basis on the basis of information received from DDIT (Inv)

The ld. CIT(A) deleted the addition on his observation that the Assessing Officer has not given copy of report received from DDIT(Inv.) Calcutta (ADIT), Calcutta on the basis of which Assessing Officer formed his opinion that loan transaction were same . The assessee obtained the loan from account payee cheques. The ld. CIT(A) further observed that Praveen Agarwal has not the mentioned in his statement that the assessee had paid any cash to any point of time in return of loan availed by assessee. The assessee has been able to prove the creditworthiness, identity and genuineness of the transaction. The assessee has ultimately paid the money back to the loan creditor through banking channel. The assessee paid Rs. 25,00,000/- on 14.06.2010 to M/s Linkpoint Infrastructure Pvt. Ltd. Further the loans taken from M/s Tuticorin Trexim Pvt. Ltd was repaid on 5 M/s Bhakti Homes Pvt. Ltd. 19.10.2010 and 17.12.2010 through Cosmos Co-operative Bank, Vashi, Navi Mumbai through Cross Account Payee Cheque. The ld. CIT (A) further observed that Assessing Officer has not verified if Praveen Agarwal named the assessee as one of the beneficiary of bogus transaction carried out by him. On the basis of his observation the ld. CIT (A) deleted the addition. We have noted that the assessing officer/ revenue has not filed even single piece of documents in his possession, before the Tribunal, to substantiate their contention.

Hon’ble Bombay High Court in CIT Vs Gagandeep Infrastructure (P) Ltd [2017] 80 taxmann.com 272 (Bombay) held that where revenue urged that assessee company received share application money from bogus shareholders, it was for revenue to proceed by reopening assessment of such shareholders and assessing them to tax and not to add same to assessee's income as unexplained cash credit. The Hon’ble Court further held that the proviso to section 68 has been introduced by the Finance Act, 2012 with effect from 1-4-2013. Thus, it would be effective only from the assessment year 2013-14 onwards and not for the subject assessment year.

Considering the factual and legal discussion narrated above, we do not found any illegality or infirmity in the order passed by ld CIT(A). No contrary fact, evidence or law is brought to our notice to take contrary view.

In the result, appeal filed by Revenue is dismissed.