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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-3’ : NEW DELHI
Before: SHRI H.S. SIDHU
filed the Cross Objection which is emanate from the Order dated 16.5.2014 of the Ld. CIT(A)-VIII, New Delhi pertaining to assessment year 2006-07. The grounds raised in the revenue’s appeal reads as under:-
“1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 50,00,000/- made by the AO u/s. 68 of the I.T. Act, 1961 despite of having information from the Investigation Wing that the assessee has received accommodation entries worth of Rs. 50,00,000/-? 2. That the order of the Ld. CIT(A) is erroneous and is not tenable on facts and in law. 3. The ground of appeal are without prejudice to each other.
4. That the appellant craves leave to add, alter, amend or forgo any ground(s) of the appeal raised above at the time of hearing.
2. The grounds raised
by the Assessee in the Cross Objection reads as under:- “1. That the Ld. CIT(A) failed to appreciate that the order passed by the AO u/s. 143(3)/147 of the I.T. Act, 1961, on 20.3.2014, perverse to the law and to the facts of the case, because of relying only upon the borrowed information as without having his own independent satisfaction thereof to the information referred to him by the DI (Inv.), Delhi.
2. That the CIT(A) was further erred in law to estimate interest @1% per month on the loan amount received by the appellant company without the support of any cogent material either collected or placed upon records, though it was not before the AO. 3. That the respondent company assails their right to amend, alter or change any grounds of appeal of any time even during the course of hearing of instant appeal. Prayer:- It is therefore, prayed that the order passed by the AO may please be quashed and also delete the estimated additions of Rs. 3.50 lacs as confirmed by the Ld. CIT(A).
3. The brief facts of the case are that the AO had made the addition of Rs. 50 lacs u/s. 68 of the I.T. Act, 1961 as unexplained cash credit, treating it as bogus accommodation entry. In this case a Search/Survey operation u/s. 132(133(a) was conducted in the business/residential premise of Sh. Aseem Kumar Gupta, CA on 26.3.2010, where he had stated that he had given accommodation entry to the assessee company. In this case the income of assessee was assessed at Rs. 34,84,168/- u/s 143(3)(ii)/147 of the I.T. Act, 1961 vide his order dated 20.3.2014.
4. Aggrieved with the aforesaid order of the AO, the assessee filed appeal before the Ld. CIT(A) who vide impugned order dated 16.5.2014 deleted the addition and made the addition of Rs. 3,50,000/- on account of estimated interest paid and partly allowed the appeal of the assessee.
5. Against the order of the learned CIT(A) the Revenue is in appeal and the Assessee has filed the Cross Objection before the Tribunal.
Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal. It was submitted by the learned Sr. DR that the AO has rightly assessed the income at Rs.34,84,168/- and rightly made the addition of Rs. 50,00,000/- u/s. 68 of the I.T. Act. He further stated that the Ld. CIT(A) has wrongly deleted the addition of Rs.50 lacs, despite of having information from the Investigation Wing that the assessee has received accommodation entries worth of Rs. 50 lacs. Therefore, he requested that the order of the Ld. CIT(A) may be cancelled on this addition and appeal of the Revenue may be allowed accordingly.
7. On the contrary, the Ld. Counsel of the Assessee contended that the action of the AO was not justified. With regard to deletion of addition of Rs. 50 Lacs he stated that Ld. CIT(A) has rightly deleted the addition which does not need any interference on my part.
However, with regard to Cross Objection is concerned, he stated that the addition of Rs. 3,50,000/- made by the Ld. Ld. CIT(A) is wrong and the same may be deleted.
I have heard both the parties and perused the relevant records available with me especially the order of the Ld. CIT(A). I find that the Ld. CIT(A) has elaborately discussed the issue and gave his finding at page no. 7 & 8 of his impugned order. For the sake of convenience, the relevant finding of the Ld. CIT(A) is reproduced below:-
“I have perused the assessment order, written submissions and discussed the matter with the ARs very carefully. The ARs vehemently argued that there is no accommodation entry given by Sh. Aseem Kumar Gupta,
CA to this appellant company in the past. There was only one loan taken by appellant on from Moderate Credit
Crop Ltd. by cheque no. 743431 & 743430 dated
18.08.2015 of Rs. 25 lacs each. The loan was repaid by cheque no. 230415 dated 28.04.2007 of Rs. 45 lacs and cheque no. 530345 dated 03.05.2007 of Rs. 5 lacs. Thus the loan was repaid 3 years before the date of statement taken by investigation wing of the department from the CA Sh. Aseem Kumar Gupta in 2010. Therefore, the department should not take a wrong view of genuine loan taken by the party from another company M/s. Moderate
Credit Corp. Ltd. and treat as bogus accommodation entry. The ARs also further argued that there is no cheques. Hence, it cannot be treated as bogus accommodation entry. Therefore the addition made cash introduction to the bank account of M/s. Moderate Credit
Corp. Ltd. before issuing cheque or no such other transaction however happened with that company. The genuine transaction made by the appellant company cannot be treated as a sham transaction. I have discussed the matter with the ARs very carefully after going through the paper book evidences and return copy.
I am of the opinion that this is a genuine loan transaction which has been repaid by the AO Rs. 50 lacs stands deleted.
The loan is taken from non-related parties/company M/s. Moderate Credit Corp. Ltd. It is strange to believe that any non-related party will given loan of Rs. 50 lakh without taking any interest from the appellant company. The loan period 7 months in this FY approximately. Hence I estimate interest @1% per month (i.e. 12% per year simple interest rate) for the above 7 months on principal amount of Rs. 50 lacs which in this FY 2005-06 comes to Interest = 50,00,000 x 7/12 x 12/100
= 50,00,000 x 7/12 x 12/100
= 3,50,000/-
Thus I add this Rs. 3,50,000/- as estimated interest paid by appellant company which was not shown in books of a/cs, and hence reduce the returned loss by this amount.
The net assessed loss after giving effect to this order will be Rs. (-) 15,15,832 + 3,50,000 =
Rs. 11,65,832/-).
In the result, the appeal is partly allowed.”
After perusing the aforesaid finding of the Ld. CIT(A), I find that there was only one loan taken by assessee from Moderate Credit Crop Ltd. by cheque no. 743431 & 743430 dated 18.08.2015 of Rs. 25 lacs each. The loan was repaid by cheque no. 230415 dated 28.04.2007 of Rs. 45 lacs and cheque no. 530345 dated 03.05.2007 of Rs. 5 lacs. Thus the loan was repaid 3 years before the date of statement taken by Investigation Wing of the Department from the CA Sh. Aseem Kumar Gupta in 2010. Therefore, the department should not take a wrong view of genuine loan taken by the party from another company M/s. Moderate Credit Corp. Ltd. and treat as bogus accommodation entry. Therefore the addition made cash introduction to the bank account of M/s. Moderate Credit Corp. Ltd. before issuing cheque or no such other transaction however happened with that company. Hence, the genuine transaction made by the assessee company cannot be treated as a sham transaction. I am of the opinion that this is a genuine loan transaction which has been repaid by the AO Rs. 50 lacs which was rightly been deleted by the Ld. CIT(A) which does not need any interference on my part, hence, I uphold the order of the Ld. CIT(A) on this issue. I also find that Ld. CIT(A) further observed in his impugned order that the loan is taken from non-related parties/company M/s. Moderate Credit Corp. Ltd. He further observed that it is strange to believe that any non-related party will given loan of Rs.50 lakh without taking any interest from the appellant company. The loan period 7 months in this FY approximately. Hence he rightly estimated interest @1% per month (i.e. 12% per year simple interest rate) for the above 7 months on principal amount of Rs. 50 lacs which in this FY 2005-06 comes to :
Interest = 50,00,000 x 7/12 x 12/100 = 50,00,000 x 7/12 x 12/100 = 3,50,000/-
Thus Ld. CIT(A) had rightly add this Rs. 3,50,000/- as estimated interest paid by assessee company which was not shown in books of a/cs, and hence reduced the returned loss by this amount. Therefore, the observation of the Ld. CIT(A) that the net assessed loss after giving effect to this order will be Rs. (-)
15,15,832 + 3,50,000 = Rs. 11,65,832/-) is quite genuine and therefore, the addition made of Rs. 3,50,000/- by the Ld. CIT(A) is reasonable, hence, I upheld the same. In view of the above, I am of the view that Ld. CIT(A) has passed a well reasoned order which does not need any interference on my part, hence, I uphold the same. Accordingly, the appeal of the Revenue and the Cross Objection filed by the assessee stand dismissed.
In the result, the Revenue’s Appeal and Assessee’s Cross Objection both are dismissed in the aforesaid manner.
Order pronounced in Open Court on this 09-01-2017.