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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI MANOJ KUMAR AGGARWAL
Aforesaid appeal by the assessee are directed against the common order dated 30th October 2015, passed by the learned Commissioner (Appeals)–48, Mumbai, for the assessment year 2007– 08 and 2009–10.
./2015 – A.Y. 2007–08
The effective grounds, as per revised grounds are as under:– “1. On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in not providing the appellant a reasonable opportunity of being heard.
2. On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in confirming the action of the Assessing Officer in making the following additions as unexplained cash credits u/s 68 of the Income Tax Act, 1961.
1. Rajesh Poddar (HUF) ` 3,75,358 2. Dhani Devi Processor ` 60,000 ––––––––– ` 4,35,438 =======
Brief facts are, the assessee is an individual. A search and seizure operation under section 132(1) of the Income Tax Act, 1961 (for short "the Act") was carried out in the case of Loha Ispat Group of cases on 22nd February 2012, and the assessee was also covered
3 Smt. Anju Rajesh Poddar under the same. As a consequence of the search and seizure operation, notice under section 153A was issued to the assessee on 16th October 2012. In response to the said notice, assessee filed her return of income on 27th November 2012, declaring income of ` 1,85,810. During the assessment proceedings, it was noticed by the Assessing Officer that the assessee had shown unsecured loan as under:–
Rajesh Poddar (HUF) ` 3,75,358 2. Dhani Devi Processor ` 60,000 ––––––––– ` 4,35,438 =======
When the Assessing Officer called upon the assessee to prove the genuineness of the unsecured loans, as alleged by the Assessing Officer, the assessee was unable to substantiate the same with corroborative evidence. The Assessing Officer observed, as per the incriminating material found during the search operation as well as statements recorded of the time of search from various persons including Shri Rajesh Poddar, CMD of Loha Ispat Ltd., and husband of the assessee, the creditors appearing in the Balance Sheet of the assessee are only providing accommodation entries by receiving cash from the company itself. The Assessing Officer observed, this fact has been admitted during the assessment proceedings of the company. Thus, the Assessing Officer was of the view that the loan creditors do
4 Smt. Anju Rajesh Poddar not have the creditworthiness to advance such loan. He, therefore, called upon the assessee to explain the unsecured loan should not be treated as unexplained cash credit under section 68 of the Act. In response to the query raised by the Assessing Officer, the assessee submitted, though the concerned persons did not have the source to provide unsecured loans but actually the money belongs to Loha Ispat Ltd., which has been routed through creditors. The Assessing Officer, however, did not accept the explanation of the assessee. He was of the view that the onus is on the assessee to prove the genuineness of the loan transaction. Alleging that the assessee has not proved the genuineness of the loan transaction, he treated the unsecured loan as unexplained cash credit under section 68 and added back to the income of the assessee. Being aggrieved of such addition, the assessee preferred appeal before the first appellate authority.
The learned Commissioner (Appeals), after considering the submissions of the assessee, however, confirmed the addition.
Learned Authorised Representative submitted, before the Assessing Officer itself the assessee has stated that unsecured loan shown by the assessee in the name of different persons in reality, was advanced by Loha Ispat Ltd., but was routed through the concerned persons. He submitted, this fact was admitted by the creditors in statement recorded from them in the course of search and seizure
5 Smt. Anju Rajesh Poddar operation. He submitted, accordingly, assessments were completed at the hands of Loha Ispat Ltd. and other persons in the group making addition as unexplained investment. He submitted, these facts could not be brought on record either before the Assessing Officer or before the learned Commissioner (Appeals) as the assessment in their case was completed after the completion of assessment in assessee’s case. The learned Authorised Representative submitted, before the learned Commissioner (Appeals) also, the case of the assessee could not be represented properly. He, therefore, submitted the matter may be restored back to the file of the Assessing Officer for deciding the issue relating to genuineness of unsecured loans keeping in view the order passed in case of Group concerns and others relevant factors.
Learned Departmental Representative submitted, the assessee in spite of being given adequate opportunity to prove the genuineness of the loan having failed to do so no further opportunity should be given to the assessee.
We have considered the submissions of the parties and perused the material available on record. As could be seen, the only grievance of the assessee is, before treating the unsecured loans as unexplained cash credits under section 68 of the Act, the Departmental Authorities have not given adequate opportunity of being heard to the assessee. In this context, it is the submission of the learned Authorised
6 Smt. Anju Rajesh Poddar Representative that certain developments have taken place after completion of the assessment in assessee’s case viz. assessment orders passed in case of Loha Ispat Ltd. and some of the creditors which may have bearing on the genuineness of unsecured loans. To prove such fact, the assessee has also submitted before us the assessment orders passed in case of Loha Ispat Ltd., Shri Rajesh Poddar (HUF) and Dhani Devi Processors for the very same assessment year. On a perusal of the aforesaid orders, we have noticed that these orders have been passed after completion of the assessment in case of the assessee. Moreover, prima–facie, it appears that they have not been submitted before the learned Commissioner (Appeals) either. Thus, these documents, in our view, have to be examined by the Departmental Authorities to find out whether they have bearing on the issue of genuineness of the unsecured loan. Further, the assessee should also get a fair opportunity to prove the genuineness of the loan transaction on the basis of aforesaid documentary evidence. Keeping this in view, we are inclined to restore the matter back to the file of the Assessing Officer for deciding afresh. Needless to mention, the Assessing Officer must afford adequate opportunity to the assessee to represent his case and the Assessing Officer should pass the order after considering the submissions of the assessee and the documentary evidence brought on record. At the same time, we direct the assessee to comply to the notices to be 7 Smt. Anju Rajesh Poddar issued by the Assessing Officer and appear before him on the date fixed with necessary evidence to establish her claim. In the event of any failure on the part of the assessee to comply to the notices / queries raised by the Assessing Officer, the Assessing Officer will be at liberty to complete the assessment on the basis of materials on record and in accordance with law. In view of the aforesaid decision, there is no need to adjudicate the merits of the addition made under section 68 of the Act at this stage.
In the result, assessee’s appeal for A.Y. 2007–08 is allowed for statistical purposes. ./2015 – A.Y. 2009–10
The effective grounds, as per revised grounds are as under:–
“1. On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in not providing the appellant a reasonable opportunity of being heard. 2. On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in confirming the action of the Assessing Officer in making the following additions as unexplained cash credits u/s 68 of the Income Tax Act, 1961.
As could be seen, the facts and issues raised in the present appeal are more or less similar to the appeal in ITA no.5831/Mum./ 2015, for assessment year 2007–08. However, for the sake of completeness, we will discuss the facts of the issue in brief.
8 Smt. Anju Rajesh Poddar
In the impugned assessment year also, the Assessing Officer in the course of assessment proceedings found that the assessee had shown unsecured loan in the name of Varun Sales Corporation. When the Assessing Officer called upon the assessee to prove the genuineness of the loan transaction, the assessee offered similar explanation as was offered by her while explaining the unsecured loans for assessment year 2007–08. However, the Assessing Officer disbelieving the explanation of the assessee, treated as unsecured loan as unexplained cash credit under section 68 of the Act and added back to the income of the assessee.
The learned Commissioner (Appeals) also confirmed the addition.
The learned Authorised Representative submitted in a statement recorded from the proprietor of Varun Sales Corporation under section 132(4) of the Act on 22nd February 2012, the concerned person has admitted of having issued cheques of ` 7.25 lakh to the assessee at the behest of Loha Ispat Ltd. which is having a running account with the assessee and the assessee was to pay Loha Ispat Ltd. an amount of ` 40 lakh. The learned Authorised Representative submitted, on the basis of the aforesaid statement of the proprietor of Varun Sales Corporation, assessment was made in the case of Loha Ispat Ltd., by treating the entire amount as unexplained investment. Thus, it was 9 Smt. Anju Rajesh Poddar submitted by the learned Authorised Representative the source of unsecured loan stands established. Learned Authorised Representative submitted, these facts could not be brought to the notice of the Assessing Officer as the assessment order in case of Loha Ispat Ltd. was passed after completion of assessment in assessee’s case. Learned Authorised Representative, therefore, submitted, the issue relating to unsecured loan may be restored back to the file of the Assessing Officer for considering afresh.
Learned Departmental Representative relied upon the observations by the Assessing Officer and the learned Commissioner (Appeals).
We have considered the submissions of the parties and perused the material available on record. As could be seen, the unsecured loan taken from Varun Sales Corporation was treated as unexplained cash credit as the assessee failed to prove the creditworthiness and genuineness of the loan transaction before the Assessing Officer. Further, the assessee’s contention before the Assessing Officer that the unsecured loan was generated by way of purchase and sale from Loha Ispat Ltd. was rejected on the reasoning that it was not supported by any documentary evidence. It is the contention of the learned Authorised Representative before us that relying upon a statement of the proprietor of Varun Sales Corporation assessment has 10 Smt. Anju Rajesh Poddar been completed in the case of Loha Ispat Ltd. by treating the money as unexplained investment. However, it is admitted by the learned Authorised Representative that the assessment order passed in case of Loha Ispat Ltd., was neither before the Assessing Officer nor before the learned Commissioner (Appeals). Keeping in view assessee’s submissions that the proprietor of Varun Sales Corporation as per statement recorded under section 132(4) had stated that the amount advanced towards unsecured loan was at the behest of Loha Ispat Ltd. and towards a running account Loha Ispat Ltd., is having with the assessee it is necessary to examine this aspect on the basis of assessment order passed in case of Loha Ispat Ltd., as it might have a bearing on the issue. For the aforesaid reasons, we are inclined to restore the matter back to the file of the Assessing Officer for deciding afresh after due opportunity of being heard to the assessee to represent its case. We also direct the assessee to co–operate with the Assessing Officer in finalising the proceedings by appearing before him and by complying to the statutory notices to be issued by him. In case, the assessee is found to be non–cooperative, the Assessing Officer is at liberty to decide the issue on the basis of material on record and in accordance with law.
In the result, assessee’s appeal for A.Y. 2009–10 is allowed for statistical purposes.
11 Smt. Anju Rajesh Poddar
To sum up, both the appeals are allowed for statistical purposes. Order pronounced in the open Court on 30.09.2016