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Assessee represented by Sh J.P. Bairagra-_(AR) Revenue represented by Sh. Yashwant Kumar Bhaskar (CIT-DR) Appeal heard on 31 May 2018 Order announced on 31 May 2018 Per Pawan Singh Judicial Member; 1. This appeal by revenue under section 253 of Income-tax Act is directed against the order of ld. Commissioner (Appeals)-47, Mumbai dated 09.07.2016 for assessment year 2009-10. The revenue has raised following grounds of appeal: (i) On the facts and in the circumstances of the case and in law the learned Commissioner (Appeals) erred in deleting a sum of Rs.2,30,00,000/-on account of unexplained cash credit under section 68 of the Act, without appreciating the fact that assessee has not submitted the supporting documentary evidence to the satisfaction of the assessing officer and claim of repayment of loan under section 68 does not make loans explained unless the assessee’s establishes identity of the party, genuineness of transaction and creditworthiness of parties from whom loans were taken. - Shri Vini Ahuja (ii) On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in admitting additional evidence under Rule 46A, in the form of settlement agreement and bank statement evidencing the payment, which was not at all produced before the assessing officer at the time of passing assessment order, being event occurred subsequent to the date of passing of the assessment order.
Brief facts of the case are that a search and seizure action under section 132 was carried out at the residence and business premises of Flamingo/ Bermaco group on 31st of October 2009. During the course of search unaccounted cash and incriminating document were found and accordingly appropriate asset /documents were seized. Statement of Sh.
Viren Ahuja, father of assessee was recorded under section 132.
Consequent upon the search notice under section 153A was served upon the assessee on 12.04. 2010. In response to the notice the assessee filed return of income on 20 June 2011 declaring total income of Rs. 26,87,920/-. The assessment was completed on 08.06.2012. The assessing officer while passing assessment order besides the other additions made addition under section 68 for Rs.2,30,00,000/- under section 68 on account of unexplained cash credit. On appeal before Commissioner (Appeals) the entire addition was deleted. Therefore, aggrieved by the order of Commissioner (Appeals) the revenue has filed present appeal before us.
We have heard learned DR for the revenue and the learned AR of the assessee and perused the material available on record. The learned DR for Shri Vini Ahuja the revenue supported the order of assessing officer. The learned DR submitted that during the assessment proceeding, the assessing officer noted that the assessee has accepted unsecured loan of Rs. 2.3 crore from SRM Energy System Private Ltd. However, the assessee has not submitted the supporting documentary evidences regarding the unsecured loan such as copy of loan application, sanctioned and approval letter from the loan creditor bank statement reflecting the loan taken, creditworthiness of the loan creditor; whether any asset has been mortgaged for availing close amount of loan, loan current etc. The assessing officer made addition under section 68 on account of unexplained cash credit. The learned CIT(A) deleted the entire addition by admitting the additional evidence furnished by the assessee during the appellate stage only. No remand report was called on such additional evidences from assessing officer, before admitting the additional evidences. The learned Commissioner (Appeals) has not given any opportunity to the assessing officer to make any comment before admitting the additional evidences.
On the other hand, the learned AR of the assessee submits that subsequent to the assessment proceeding and in the intervening period of appellate proceeding the assessee repaid the impugned amount of Rs. 2.30 crore to the creditors. The learned AR of the assessee further submits that assessee furnished additional evidence before the learned 3 ITA No. 2602/M/2015- Shri Vini Ahuja Commissioner (Appeals). The ld CIT(A) called the remand report of assessing officer, the copy of the remand report is placed on record. It was explained that assessee is Director of various companies belonging to Bermaco group of companies. The observation of the assessing officer that assessee received a loan of Rs.2.30 crore from SRM Energy System during previous year, but not filed supporting documentary evidence regarding unsecured loan, the observation of assessing officer is unfounded as the assessee furnished supporting documentary evidence regarding unsecured loan such as copy of loan application, sanctioned and approval letter from loan creditor company, bank statement reflecting the loan taken, creditworthiness of loan creditor. The assessee before the ld CIT(A) vide his letter dated 20 December 2013 contended that the assessee received an amount of Rs.2.30 crore in pursuant to the Memorandum of Understanding (MOU) dated 10th November 2008, copy of which is placed before the lower authorities and also filed before the Tribunal, SRM Energy Private Ltd in order to procure land in the name of said company of approximately 60 acre of land for setting of a plant of Power Project in Tamil Nadu was taken. During the course of assessment the confirmation along with the accounts of Assessee Company was filed.
The assessee also relied upon certain additional evidences, which were forwarded to assessing officer. The assessing officer in pursuance of the direction of learned Commissioner (Appeals) submitted his remand report 4 Shri Vini Ahuja dated 06.02. 2014. In the remand report the assessing officer categorically held that advances is revenue receipt of the assessee for the year because assessee has no liability to repay the said amount. The assessing officer further contended that during the appellate proceeding assessee has produced MOU with SRM Energy Ltd and that that SRM Energy has filed a legal case against the assessee. The matter is now pending before Arbitrator appointed by Mumbai High Court. The assessee has claimed that above amount is liable to repaid in the event of its failure to procure the required land as per MOU with SRM Energy Ltd. The assessing officer further contended in its report that assessee has utilised the advance on his own and not for the purpose as decided in MOU at the same time assessee has not paid such advance to SRM Energy without any sufficient reason which clearly shows that assessee had no intention to repay this amount. The learned AR of the assessee further submitted that the contention of learned AR that no remand report was sought from assessing officer is unfounded. The assessing officer was given full opportunity to make this comment on the additional evidences furnished by the assessee. Moreover, the assessee in pursuance of settlement arrived in a Company Petition filed by SRM Energy Ltd. before Hon’ble Bombay High Court, wherein the assessee made settlement vide order dated 12th August 2014 wherein assessee was granted two weeks time to repay the amount to creditor. And in view of the settlement and undertaking before 5 ITA No. 2602/M/2015- Shri Vini Ahuja the High Court the assessee repaid the said amount in between 23rd August to 26th August 2014. The documents like the order of Bombay High Court dated 12.08.2014 and the copy of the statements of bank showing the payments to the creditors needs no verification from the assessing officer. The learned Commissioner (Appeals) after appreciating the fact, remand report and the order of High Court and the payment made pursuant to the High Court order, deleted the addition. The learned AR of the assessee in support of his submission relied upon the decision of Patna High Court in case of CIT Versus Sager Construction Private Ltd 56 taxmann.com 434 (Patna), DCIT versus NE Technology India Private Ltd 47 taxmann.com 405 (Hyderabad Tri), ACIT versus Krafts Palace 58 taxmann.com 24 (Agra Tri ), Hinduja Group India Ltd versus ACIT ( 2466 /M/2014 & ITA No. 575/M/2016) dated 17th May 2018.
We have considered the rival submission of the parties and have gone through the order of authorities below. The Assessing Officer made the addition of Rs. 2.3 Crore holding that the assessee has not furnished documentary evidence about the unsecured loan from SRM Energy System Pvt. Ltd. to prove the loan from the creditor. Before the ld. Commissioner (Appeals), the assessee urged that during the intervening period of appellate proceeding, the assessee has repaid the loan to the creditor. It was further explained that SRM Energy Ltd. filed a Civil Suit 6 ITA No. 2602/M/2015- Shri Vini Ahuja before Sessions Court, Thane for recovery of Rs. 5.3 Crore against the assessee (Rs. 2.3 Crore from SRM Energy Ltd. and Rs. 3 Crore for Energy System Ltd.). The said creditor also filed a Company Petition before Hon’ble Bombay High Court, wherein the assessee undertakes to repay the amount of creditors, vide undertaking/order dated 15.07.2014.
Subsequently, the assessee again made settlement before Hon’ble High Court to pay the amount within two weeks vide order dated 12.08.2014.
We have noted that order on Company Petition dated 15.07.2014 is on record (Page No. 7-8 of PB). Further, the extension of time payment vide order dated 12.08.2014 is also on record (Page No. 27 of PB). The assessee has also placed on record statement of bank account of Axis Bank Ltd. showing the payment of Rs. 2.3 Crore to SRM Energy Pvt. Ltd. We have further noted that after considering the order of High Court and the payment made in pursuant to the order, the ld. ld. Commissioner (Appeals) has deleted the addition. The Hon’ble Patna High Court in case of CIT v/s Sagar Construction P. Ltd. (supra) held that when ld. Commissioner (Appeals) exercised only overriding power under Rule 46A(4) in considering document furnished by assessee and found investment proper, the Assessing Officer was not justified in submitting that he did not get opportunity to consider the same. In our view, the documents on which the ld. Commissioner (Appeals) relied, which consist of order of Hon’ble Bombay High Court dated 15.07.2014 and 7 Shri Vini Ahuja 12.08.2014 and the statement of account showing repayment of loan/credit to the creditor and satisfied himself. In our view, the Assessing Officer is not justified in raising ground of appeal that he was not given opportunity. No contrary law is brought to our notice.
Therefore, we do not find any reason to interfere with the order of ld. Commissioner (Appeals). Hence, the grounds of appeal raised by revenue are dismissed.
In the result appeal of the revenue is dismissed.
Order announced in the open court on 31st May 2018 in open court.