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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri P K Bansal & Shri Pawan Singh
O R D E R Per P K Bansal, Vice-President:
These appeals have been filed by the Revenue against two separate orders of the CIT(A)-20, Mumbai, both dated 04.06.2015, for A.Ys 2007-08 and 2012-13.
We shall first deal with the appeal in ITA 4691/Mum/2015 for A.Y. 2007-08. Both the parties agreed that the issues involved in both the appeals are common with identical facts and, hence, whatever view is taken in A.Y. 2007-08 shall apply to A.Y. 2012-13 also.
The grounds taken by the Revenue for A.Y. 2007-08 read as under:
"1. Whether on the facts and in circumstances of the case and in law, the Ld CIT(A) was right in deleting the addition made u/s 68 of the Act to the tune of Rs. 40,00,000/- on account of unexplained unsecured loan I taken from Javda India Impex Limited and Lexus Infotech Ltd. ?"
"2. Whether on the facts and in circumstances of the case and in law, the Ld CIT(A) was right in deleting the disallowance of interest made u/s f 37 (I) of the Income Tax Act, 1961 of Rs. 45,134/- which is paid on the loan taken from the above two companies?"
"3. Whether on the facts and in circumstances of the case and in law, the Ld CIT(A) was right in ignoring the findings of the Investigation Wing of the Department that Mr. Praveen Kr. Jain and his group had floated many companies and entities with dummy directors/proprietors, and these companies were providing bogus entries for unsecured loan to the companies in lieu of cash?"
"4. Whether on the facts and in circumstances of the case and in law, the Ld CIT(A) was right in ignoring the fact that evidences were found during search proceedings in the case of Mr. Praveen Kumar Jain that the assessee has taken accommodation entries of unsecured loan from the above three parties?"
"5. Whether on the facts and in circumstances of the case and in law, the Ld CIT(A),was right in ignoring the fact that summons u/s 131 issued to the Directors of the aforesaid concerns during the course of assessment proceedings could not be served, and thereby, genuineness of the alleged loan transactions and creditworthiness of the loanee could not be established and hence the assessee could not discharge the onus resting on him?"
The only issue involved in this appeal relates to the deletion of the addition of 40 lacs made by the Assessing Officer u/s. 68 of the I.T. Act and consequently, the deletion of the addition made by the Assessing Officer in respect of the interest thereon amounting to ` 45,134/-. The brief facts of the case are that on the basis of the information received from the DGIT (Investigation), Mumbai, the Assessing Officer noted that the assessee was one of the beneficiaries of accommodation entries given by Shri Praveen Kumar Jain. A search and seizure action u/s. 132 of the I.T. Act had been conducted in the case of Shri Praveen Kumar Jain and from the statements of Shri Praveen Kumar Jain and his associates it was known that the assessee is one of the beneficiaries of the accommodation entries provided by them. On the basis of specific information that accommodation entries of ` 20 lacs each had been made to the assessee on account of loans advanced to it by M/s Javda India Impex Ltd. (hereinafter referred to as Javda) and M/s. Lexus Infotech Limited (hereinafter referred to as Lexus) on 15th Feb 2007 and 31st Jan, 2007 respectively, the Assessing Officer initiated proceedings u/s. 147.
In a statement of Shri Nilesh Parmar, one of the associate of Shri Praveen Kumar Jain stated that both Javda and Lexus were among the thirty-three companies controlled by Shri Praveen Kumar Jain through dummy Directors.
The Assessing Officer also noted that Shri Praveen Kumar Jain and his associates immediately filed retraction statements vide affidavits on the same day. All the stamp papers which have been used to file the affidavits have been purchased from the same vendor on the same day, notarized by the same advocate and filed it in the office of CBDT. The Assessing Officer did not accept the retraction and took a view ignoring all the evidences filed by the assessee specifically the fact that the assessee has received the said loan through cheque and the said loan has been returned by the assessee in the next year through cheque. Thus, the Assessing Officer made the addition of the sum of ` 40 lacs as unproved cash credit u/s. 68 of the I.T. Act and correspondingly disallowed the interest amounting to `.45,134/- on the sum of ` 40 lacs. While making the addition u/s. 68, the Assessing Officer relied on the decision of Hon’ble Supreme Court in the case of CIT vs. Durga Prasad More 82 ITR 540. Aggrieved the assessee went in appeal before the CIT(A).
Before the CIT(A), the assessee filed all the documentary evidences which were produced before the Assessing Officer consisting of the copies of confirmation of these loans, copies of bank accounts from which loan had been advanced, the list of directors of the two companies and copies of the acknowledgment of return filed by these companies. The assessee also furnished copy of written submissions dated 15.03.2015 as well as affidavit of Shri Praveen Kumar Jain retracting his statement. The CIT(A) after going through the submissions deleted the addition made by the Assessing Officer.
We have heard the rival submissions along with the orders of the tax authorities below. We noted that during the impugned assessment year, the assessee had taken unsecured loans from the following two parties:
Sr. No. Name of the Party PAN Loan taken Rate of and Address (Rs.) Interest 1. Javda India Impex AAACA7065L 20,00,000 9% Limited CS-1, Silver Anklet, Yari Road, Versova, Mumbai 400 061 2. Lexus Infotech AAACL4646G 20,00,000 9% Ltd. 626, Panchratna, Opera House, Mumbai 400 002 When the Assessing Officer asked the assessee to prove the genuineness of these loans, the assessee submitted the following documents: a. Copy of acknowledgment of income tax return filed for A.Y. 2007-08. b. Copy of PAN of the parties c. Copy of bank statement of the parties from where the cheque is issued. d. List of directors of the parties e. Copy of annual report of the parties for financial year 2006-07. f. Copy of loan confirmation from the parties.
The Assessing Officer treated these loans to be non-genuine and made addition u/s 68 of the I.T Act on the basis of the statement of Shri Nilesh Parmar, one of the associate of Shri Praveen Kumar Jain, Director of Mohit International and one of the dummy Director of some of the companies of Shri Praveen Kumar Jain. Although said statement has been immediately retracted by him by filing a affidavit with the CBDT, the CIT(A) has deleted the said addition as in his opinion the assessee has duly discharged his onus as laid down on it u/s. 68 of the I.T.Act. It was also noted by the CIT(A) that the assessee has proved the identity, credit worthiness as well as genuineness of the transactions and, therefore, no addition u/s. 68 can be made.
The learned AR before us relied on the order of the CIT(A) and has also pointed out that the loan received by the assessee has been returned to the respective parties through cheques and in none of the case the respective party has deposited any cash. He relied on the following Tribunal decisions:
• Arceli Realty Ltd vs. ITO [ITA No. 6492/Mum/2016 dated 21.04.2017(Mumbai)] • M/s Komal Agrotech Pvt. LTd. vs. ITO [ITA No.437/Hyd/2016 dated 25.11.2016 (Hyderabad)]
• Sudhanshu Suresh Pandhare vs. ITO [ITA No.5185/Mum/2012 dated 05.10.2016 (Mumbai)]
• Dilsa Distributors Combines vs. ITO [ITA No.5849/Mum/2011 dated 06.09.2013(Mumbai)]
• Aim Properties & Investments Pvt. Ltd vs. ITO [ITA No. 7426/Mum/2012 dated 04.12.2013 (Mumbai] He further placed reliance on the following judgments:
• Nemi Chand Kothari vs. CIT [2004] 136 Taxman 213 (Gau) • Vijay Kumar Talwar vs. CIT [2011]330 ITR 1 (SC)
The learned DR, on the other hand, relied on the decisions of the Hon’ble Delhi High Court in the case of Principal CIT vs. Bikram Singh ITA 55/2017 & CIT vs. Jansampark Advertising & Marketing Pvt. Ltd. in ITA 525/2014
We have gone through the orders relied upon by the learned DR. We noted that the decision of the Delhi High Court in the case of Bikram Singh, the assessee could not discharge the onus as laid down by section 68 of the Act. Similarly, in the case of CIT vs. Jansampark Advertising & Marketing Pvt. Ltd. (supra), the additions have been made u/s. 68 in respect of the share capital received by the assessee from various companies and during the course of investigation, it was found that the share capital has been received from three entry operators, who are allegedly in the business of providing accommodation entries. Notices issued u/s. 131 to these parties were returned undelivered by the postal authorities with the remark “left”/ “no such person”. Under these circumstances, the Hon’ble High Court took a view that the assessee failed to discharge the burden to prove the credit worthiness as well as the genuineness of the transactions.
But in the impugned case, we noted that the assessee has submitted all the evidences including the confirmation of the creditors. This is not a case where the creditors have not given confirmations rather they have duly confirmed to giving loan to the assessee, the loans were received and returned through banking channels. The assessee has also submitted copies of bank accounts. The lender has not deposited cash into bank account. The assessee has duly discharged the onus with regard to identity of the lender, credit worthiness of the party and all supporting evidences as required u/s. 68 of the I.T.Act. Therefore, in our opinion the decisions relied upon by the DR does not assist the Revenue to the facts of the present case.
We have also gone through the decisions relied upon by the learned AR. We noted that this Tribunal in similar circumstances in the case of Komal Agrotech Pvt. Ltd. vs. ITO in vide its order dated 25.11.2016 has held as under:
A plain reading of the assessment order demonstrates that the AO merely went by the Investigation done by the office of D.G.I (Investigation), Mumbai. No enquiries or investigation was carried out. No evidence to controvert the claims of the Assessee was brought on the record by the AO. Even the statement of Shri Praveen Kumar was supplied. Nothing is on record about the result if investigations done by DGIT (lnv), Mumbai. The papers filed by the assessee do demonstrate the identity, creditworthiness and genuineness of the transaction. The addition is made merely on surmises and conjectures.
In view of the above, we hold that the addition made under section 68 of the Act is bad in law.
We noted that in the said case also loan had been received from Javda India
12. Being consistent with the view taken by this co-ordinate Bench in the case of Komal Agrotech Pvt. Ltd. (supra), and in view of the facts and circumstances, we do not find any illegality or infirmity in the orders of the CIT(A). It is accordingly, confirmed for both the years under appeal.
In the result, the appeals filed by the Revenue are dismissed.
Order pronounced in the open court on 14th day of September, 2017.