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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:
1. “On the facts and circumstances of the case and in law, the ld. CIT(A) erred in holding that the assessee has discharged the onus cast regarding unsecured loan transaction not being bogus cash credit and the interest paid on these bogus cash received despite of the fact that the assessee has himself stated its involvement in bogus entries and getting commission from the brokers.”
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.
The reasons of re-opening were provided to the assessee on 18.06.2014.
The assessment was re-opened on the basis of information received from DIT (Inv) Calcutta that a search action was carried out at the premises of Shri Praveen Aggarwal who was involved in providing bogus accommodation entry. In the said search it was found that assessee has received loans of Rs. 50,00,000/- on 12.03.2008, Rs. 50,00,000/- on 13.03.2008 from M/s Tuticorin Trexim Pvt. Ltd., and Rs. 25,00,000/- from M/s Linkpoint Infrastructure Pvt. Ltd. As per the information both the lender companies were managed by Praveen Aggarwal. The loans transactions were bogus accommodation entry. On the basis of this information; the assessment was re-opened under section 147. The re- assessment was completed on 30.06.2014 under section 143(3) r.w.s. 147.
The Assessing Officer while passing the re-assessment order made the addition of Rs. 1,25,00,000/- by treating as bogus credit in the books of 2 M/s Bhakti Homes Pvt. Ltd. account and made addition under section 68 of the Act. On appeal before the ld. CIT(A), the entire addition was deleted Therefore, aggrieved by the order of ld. CIT(A), the Revenue has filed the present appeal before us.
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;
1 CIT vs. Gagandeep Infrastructure Pvt. (ITA No. 1613 of 2014 dated 20.03.2017. 2 CIT vs. Lovely Exports [2008] 216 CTR 195 (SC). 3 DCIT vs. Rohini Builders (2002) 256 ITR 360 Gujarat HC. 4 Rohini Builders vs. DYCIT (ITAT Ahmedabad (2001) 117 Taxmann 25. 5 PCIT vs. Veedhata Tower Pvt. Ltd. of 2015 (Bom HC). 6 ITO vs. Anant Shelters (P.) Ltd. (2012) 20 Taxmann 153 Mumbai ITAT. 7 Shri Naresh Hiran vs. ITO (ITA No. 1236/Mum/2017 (Mum ITAT). 8 ACIT vs. H K Pujara Builders, (ITA No. 1056/Mum/2016 (Mum ITAT). 9 ITO vs. Vikram Muktilal Vora (ITA No. 842/Mum/2017). 10 M/s Reliance Corporation vs. ITO (ITA No. 1069 to 1071/Mum/2017. 11 Sanghvi Realty Pvt. Ltd. vs. DCIT (ITA No. 3018/Mum/2017, ITA No. 3019/Mum/2017, ITA 3020/Mum/2017) 12 ITO vs. Gujarat Construction (Mumbai ITAT). 13 Rushabh Enterprises vs. ACIT (60 Taxmann.com 134 (Bom) (2015). 14 DCIT vs. Rohini Builders (SC)
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)
ITA No.1233/M/16- M/s Bhakti Homes Pvt. Ltd. Calcutta. We have noted that the copy of statement of Praveen Agarwal recorded under section 132(4) was not provided to the assessee. Similarly, the report on the basis of which the assessment was re-opened was shared with the assessee. The assessing officer simply relied on the statement of Praveen Agarwal and made addition under section 68, without making any independent investigation. The assessee provided the details of lender which consist of confirmation, PAN Number and statement of Bank of Account of lender’s company. The Assessing Officer has not made any independent investigation nor gave any finding on the documentary evidence furnished by assessee.
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.
The Parliament did not introduced to proviso of section 68, with retrospective effect nor does the proviso to introduced states that it was introduced 'for removal of doubts' or that it is 'declaratory'. Therefore, it is not open to give it retrospective effect, by proceeding on the basis that the M/s Bhakti Homes Pvt. Ltd. addition of the proviso to section 68 is immaterial and does not change the interpretation of section 68 both before and after the adding of the proviso.
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.