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Income Tax Appellate Tribunal, “A” BENCH, KOLKATA
This appeal at the instance of the Revenue is directed against the order of National Faceless Appeal Centre, Delhi [the learned CIT (A)] dated 17th January, 2024, which is arising out of the assessment order under Section 143(3) of the Income-tax Act, 1961 (the Act) dated 26th April, 2021.
Brief facts of the case are that the assessee is a partnership firm engaged in the saree business. E-return for A.Y. 2018- 19, furnished on 30th October, 2018, declaring total income of ₹12,64,310/-. Case of the assessee selected for complete scrutiny under Computer Assisted Scrutiny Selection
Aggrieved assessee preferred an appeal before the ld. CIT (A) and partly succeeded as ld. CIT (A) deleted the addition of ₹1,96,50,000/- and sustained the remaining amount of unexplained unsecured loan at ₹1,26,50,000/- along with disallowing the interest paid / payable thereon at ₹1,26,50,000/-.
Both the parties have filed the appeal. However, assessee succeeded to in the appeal filed before this Tribunal vide dated 2nd July, 2024. This Tribunal has decided in favour of the assessee, deleting the addition of unexplained unsecured loan sustained by the ld. CIT (A)
Now against the additions confirmed by the Ld. CIT (A), the Revenue has filed the instant appeal raising following grounds: -
“1. That on the facts and circumstances of the case, the learned CIT (A) erred to give a relief of ₹1,96,50,000/- despite of the fact the Assessing Officer has added back the entire unsecured loan following genuineness and creditworthiness of the unsecured loan amounting to ₹3,23,00,000/- were not in his procession during the course of assessment proceedings.
2. That on the facts and circumstances of the case, the learned CIT (A) erred to give a relief of ₹22,99,882/- despite of the fact the Assessing Officer has added back the entire interest component of ₹42,19,262/- on the unsecured loan following genuineness and creditworthiness of the same were not in his procession during the course of assessment proceedings.”
The Ld. DR vehemently argued supporting the order of the AO. and, on the other hand, the Ld. counsel for the assessee supported the order of the Ld. CIT (A).
We have heard the rival contentions and perused the records available on record. The Revenue is aggrieved with the finding of the ld. CIT (A) deleting the addition made by the ld. AO made u/s 68 of the Act for the alleged unsecured loan for ₹1,96,50,000/- and deletion of disallowance of interest of ₹22,99,882/-. The ld. AO during the course of assessment proceeding observed that the assessee, who is engaged in the business of saree and other dress material has taken unsecured loans from various parties to the tune of ₹7,32,58,026/-. The ld. AO was dissatisfied with regard
Sl. Name of the Loan Interest Address PAN No. party to whom received (₹) Amount 133(6) is issued (₹) 1. Aditya Abhani 1,40,001 1A, Ashutosh AKKPA2376F Mukherjee Road, Kolkata-700020 2. Anjali Jain 20,00,000 1,51,014 P-73, CIT Road, ADQPJ8858A Phool Bagan, Kolkata-700054 3. Ayush Fintrade 1,67,999 27, Shakespear AACCA9148G Sarani, Kolkata- Pvt. Ld. 700 017 4. Barasia Fiscal 2,00,548 27,Brabourne ADXPB3429Q Road, Kolkata- Services 700 001 5. Bijay Kumar Jain 6,50,000 19,446 4/D, Chetan ACIPJ7097A Seth Street, Diamond Tower, 1st Floor, Kolkata-700 007 6. CS Sales Pvt. Ltd. 25,00,000 72945 154, Jamunalal AABCC79111l Bajaj Street, 1st Floor Kolkata- 700007 7. Generavity 99,315 1st Floor, 12BB AAECG0655L Ganguly Street, Kolkata-700 012 8. Giriraj Properties 3,41,918 7, Ram Kumar AAACZ5384K Lakhit Lane, Pvt. Ltd. Kolkata-700 007 9. Kapuri Devi Jain 96,001 2/D, Goa Bagan ACPPJ2148F Kolkata 10. Khusbu Jain 2,10,000 12/1/1. AOJPJ1624G Byllygunge Road, Kolkata 11. Krishna Sharma 43,154 24, Kalakar Street, Kolkata- 700007 12. Payal Emporium 57,945 2/2A, Chetan AADCP6011A Seth Street, 5th Pvt. Ltd. Floor, Kolkata- 700007 13. Platinum Overseas 30,00,000 2,01,370 1, British Indian AABCP6699E Street, 1st Floor, Pvt. Ltd. Suit NO,-105, Kolkata-700059 14. Preeti Abhani 1,40,001 1A, Asutosh AKKPA3377E Mukherjee Road, Kolkata-700 020 15. Priti Jain 84,001 12/1/1 ACHPJ2604C bullygunge Park Road, Kolkata 16. Pushpa Devi 20,00,000 83,836 7, Rajani Sen AFHPA3377A Road, Kolkata- Agarwal 026 17. Rajesh Agarwal 50,00,000 4,45,205 EC-123, Salt AAIHR3004F Lake City Centre, Sector- 1, Kolkata-700 064
Now, once the assessee discharges its onus, the ld. AO has to record his satisfaction before making any addition. The ld. AO has to conduct necessary enquiry and to find any discrepancy in the details filed by the assessee. When the ld. AO was made available with the PAN no. and the address of the alleged parties, the Ld. AO ought to have carried out the exercise u/s 133(6) of the Act or to contact the concerned AO of the alleged parties.
The Hon'ble Apex Court in case of CIT vs. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 78 (SC) dated 19th Mach, 1986, has held as follow:-
“13. In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called
It is common ground that the question on the penalty aspect depended on the quantum aspect.
In the premises it cannot be said that any question of law arose in these cases. The High Court was, therefore, right in refusing to refer the questions sought for. The appeals, therefore, fail and are dismissed with costs.”
11. We further observe that in assessee’s own case for the very same assessment year, where the addition confirmed by ld. CIT (A) were challenged before this Tribunal, this Tribunal after discussing the facts of each of the cash creditors has deleted the addition confirmed by Ld. CIT (A) observing as under: -
“10. To summarize, we find that ld. CIT(Appeals) has confirmed the addition under section 68 of the Act either on account of wrong PAN or no PAN or just confirmed on the basis of analysis of ld. Assessing Officer. After going through the details, we are satisfied that the assessee has successfully explained the identity and creditworthiness of the cash creditors and genuineness of the transactions with sufficient evidences and that nature source of the alleged cash credit is explained to our satisfaction and therefore, provisions of section 68 of the Act are not attracted. Similar type of issue had come up before this Tribunal in the case of M/s. Parwati Lakh Udyog (supra), wherein also loans from individual/other persons were taken but since complete details regarding PAN, Bank statement, financial statement and income tax returns details were filed, addition under section 68 of the Act was deleted. Para 9 of this order reads as under:-
Respectfully following the above decision as well as the other decisions referred herein above, we after thoroughly examining the details filed by the assessee are satisfied with nature and source of alleged cash credit and the same having been explained to our satisfaction and thus set aside the filing of ld. CIT(Appeals) and
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 30.09.2024.