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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI NABIN KUMAR PRADHAN
Instant appeal by the Revenue is directed against the order dated 6th January 2014, passed by the learned Commissioner (Appeals)–33, Mumbai, for the assessment year 2002–03.
The Revenue is aggrieved by the decision of the learned Commissioner (Appeals) in deleting the addition made of ` 29,50,000 by the Assessing Officer under section 68 of the Income Tax Act, 1961 (for short "the Act").
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Brief facts are, the assessee a partnership firm filed its return of income for the year under consideration on 31st October 2002, declaring nil income. On the basis of information found in the course of assessment proceedings for the assessment year 2006–07, the Assessing Officer re–opened the assessment under section 147 of the Act by issuing a notice under section 148 on 26th March 2009. The reason for re–opening of assessment as recorded by the Assessing Officer was, the assessee had shown outstanding loan of ` 49,50,000 from And Agro Food in the balance sheet. However, assessee had not filed any confirmation to prove the loan, hence, the said amount being unexplained cash credit has to be assessed as income of the assessee. In the course of re–assessment proceedings, it was submitted by the assessee that actually the assessee had made advance payment of ` 49,50,000 to And Agro Foods Ltd. and has received back an amount of ` 29,50,000 from them. It was submitted, though, the assessee had made lot of efforts to obtain confirmation from the concerned party but due to considerable lapse of time assessee was unable to locate the whereabouts of the said party. The assessee submitted, actually the assessee had not received any loan from the concerned party but in fact has received back an amount of ` 29,50,000 out of the money advanced to them. It was submitted, as the assessee could not get back the balance amount, he has written off the said amount as bad debt in his books of account in assessment year 2009–10. In support
3 Dhanraj Chhaganlal & Co. of such claim, the assessee also produced ledger account of the aprty in assessee’s books to prove that it is the assessee who has actually advanced an amount of ` 49.50 lakh to the concerned party. The Assessing Officer, however, did not find merit in the submissions of the assessee. He observed, the onus is on the assessee to prove the genuineness of a credit appearing in the books of account. He observed, as the assessee failed to produce the party and letter issued by the Department to the said party returned unserved, the assessee has failed to prove the genuineness of the credit. Accordingly, he treated the amount of ` 29.50 lakh as unexplained cash credit under section 68 and added back to the income of the assessee. Being aggrieved of such addition, assessee preferred appeal before the learned Commissioner (Appeals).
In the course hearing before the first appellate authority, assessee submitted the details of concerned party viz. And Agro Services Pvt. Ltd. including PAN details. It was submitted by the assessee that in the mean while And Agro Group of companies merged into another company namely Noble Resources and Trading India Pvt. Ltd. Assessee submitted, though, it made efforts to obtain confirmation from the company which took over the business of And Agro Services Pvt. Ltd. but the said company in letter dated 29th January 2013, though, acknowledged the merger of And Agro Services
4 Dhanraj Chhaganlal & Co. Pvt. Ltd., but it expressed its inability to confirm the balance of ` 29.50 lakh as it did not have accounting records for the year 2001–02. The learned Commissioner (Appeals), after considering the submissions of the assessee in the light of facts and material on record, found that the assessee had advanced loan of ` 49.50 lakh to And Agro Services Pvt. Ltd. and received back an amount of ` 29.50 lakh from the said company. He also noted that in its financial statement, the assessee had shown the amount of ` 29.50 lakh as loan received. However, he observed that in the absence of datewise ledger account of the said party, the assessee’s claim cannot be verified. As far as allegation of the Assessing Officer that assessee failed to prove identity of the party, the learned Commissioner (Appeals) did not agree with the same. He observed that in the course of proceedings before him, the assessee had furnished the income tax particulars including PAN details of And Agro Services Pvt. Ltd. as downloaded from the website. The learned Commissioner (Appeals) also observed that the assessee had submitted before him company master details downloaded from Ministry of Corporate Affairs, Government of India, indicating that company’s name has been changed from And Agro Services P. Ltd. to Noble Resources and Trading Pvt. Ltd. As far as the allegation of the Assessing Officer that assessee could not obtain any confirmation from the creditors, the learned Commissioner (Appeals) perusing the letter issued by Noble
5 Dhanraj Chhaganlal & Co. Resources appreciated the difficulty of the assessee in obtaining the confirmation. Thus, on consideration of the aforesaid facts and material on record, the learned Commissioner (Appeals) held that the Assessing Officer had not brought any cogent material on record to prove that sum of ` 29.50 lakh belongs to the assessee. Accordingly, he deleted the addition.
While the Learned Departmental Representative relied upon the observations of the Assessing Officer, the learned Authorised Representative reiterated the stand taken before the learned Commissioner (Appeals).
Having considered the submissions of the parties and perused the material on record, we do not find any infirmity in the order of the learned Commissioner (Appeals). As could be seen, from the assessment stage itself consistent stand of the assessee is it has advanced loan of ` 49.50 lakh to And Agro Services Pvt. Ltd. and has received back an amount of ` 29.50 lakh from them. The assessee has also tried to prove such facts by producing the books of account. It is also evident that the assessee has written off the unrecovered balance amount from And Agro Services Pvt. Ltd. as bad debt in his books of account in assessment year 2009–10. These facts have not be controverted by the Assessing Officer. Further, the assessee has proved the identity of And Agro Services P. Ltd. by submitting the 6 Dhanraj Chhaganlal & Co. income tax particulars and its merger with another company viz. Noble Resources and Trading India Pvt. Ltd., with authentic documentary evidence. In fact, Noble Resources and Trading India Pvt. Ltd. in its letter dated 29th January 2013, had acknowledged the fact of merger of And Agro Services Pvt. Ltd. with it w.e.f 1st January 2006. However, in the absence of accounting records, they expressed their inability to provide confirmation of account. These facts clearly establish the existence of And Agro Services Pvt. Ltd. Therefore, the inability of the assessee in obtaining the confirmation cannot be the sole basis for treating the amount of ` 29.50 lakh as unexplained cash credit as it has to be appreciated that the said amount was received in financial year 2001–02 and after a lapse of about 8 to 9 years, that too, when the said company has already merged with another company it would be very difficult for the assessee to obtain such confirmation and absence of such confirmation cannot be a sole basis for treating the amount of ` 29.50 lakh as unexplained cash credit, when other evidences brought on record proves assessee’s claim. Therefore, in our view, the learned Commissioner (Appeals) was justified in deleting the addition. In view of the aforesaid, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Department.
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In the result, Department’s appeal is dismissed. Order pronounced in the open Court on 24.08.2016