SEVEN STAR FRUITS P.LTD,MUMBAI vs. DCIT 1(3), MUMBAI

आदेश / O R D E R Per Joginder Singh(Judicial Member) The assessee is aggrieved by the impugned order dated 17/11/2015 of the Ld. First Appellate Authority, Mumbai. The only ground raised/agitated by the assessee is with respect to confirming the addition of Rs.54,50,000/- made u/s 68 of the Income Tax Act, 1961 (hereinafter the Act).

2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee declared loss of Rs.1,30,20,203/- in its return filed on 27/10/2010 and the assessment was completed u/s 143(3) of the Act making addition of Rs.54,50,000/- as unexplained cash credit u/s 68 of the Act. On appeal before the Ld. Commissioner of Income Tax (Appeal), the addition so made by the Ld. Assessing Officer was sustained. The matter travelled to the Tribunal, wherein, vide order date 25/11/2010 (ITA No.4016/Del/2010), the matter was remanded back to the Assessing Officer with a direction to produce the loan creditor Shri Aditya Bagaria along with all documents and after providing adequate opportunity to the assessee. As

per the direction of the Tribunal, summons u/s 131 of the Act were issued and statement of Shri Aditya Bagaria was recorded on 30/12/2011, which has been reproduced in the assessment order. The father of Shri Aditya Bagaria is one of the Directors of the assessee firm. The Ld. Assessing

M/s Seven Star Fruits Pvt. Ltd.

Officer observed that Shri Aditya Bagaria advanced loan of Rs.54,50,000/- to the assessee company during Financial Year 2006-07 when he was a student and was having source of income of Rs.15,000/- per monthly only as a management trainee. The source of the loan amount was claimed to be borrowing from other individuals, whose name was given Shri Ashish Barwale, the said person was also explained to be relative and student, studying in US.

As per the Department, the creditworthiness of Shri Ashish Barwale remained to be proved and further the capital account and balance sheet of Shri Aditya Bagaria does not reflect any kind of unsecured loan borrowed from Shri Ashish Barwale. Before us, the assessee contended that additional evidence was filed before the Ld. Commissioner of Income Tax (Appeal) confirming the loan amount outstanding as on 31/03/2007 from four persons namely Shri Ashish Barwale, Shri Shirish Barwale, Shri B.R.

Barwale and M/s Gangabishan Bhikulala (HUF). The assessee has also annexed the bank statement of relatives from whom the loan was claimed to be obtained by Mr. Aditya Bagaria. Admittedly, the assessee has changed its M/s Seven Star Fruits Pvt. Ltd. stand as earlier, it was claimed to be Mr. Aditya Bagaria and now from aforementioned four persons/parties.

Considering the totality of facts and mandate of Article 265 of Constitution of India that only due taxes has to be levied/collected and further the principle of natural justice, we deem it appropriate to remand this appeal to the file of the Ld. Assessing Officer to examine the identity, creditworthiness and genuineness of the transactions. The assessee is directed to produce all the aforementioned persons/parties before the Ld. Assessing Officer to examine the genuineness of the transactions along with other ingredients of section 68 of the Act. The assessee is also directed to furnish necessary evidence in support of its claim. The assessee be given opportunity. It is made clear that the Ld. Assessing Officer may examine the factual matrix uninfluenced by any observation made in the impugned order. The assessee be put to strict proof of explaining the transactions and its genuineness. The appeal of the assessee is allowed for statistical purposes only.

M/s Seven Star Fruits Pvt. Ltd.

Finally, the appeal of the assessee is allowed for statistical purposes.

This Order was pronounced in the open court in the presence of Ld. representative from both sides at the conclusion of hearing on 08/05/2018.