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िनधा�रती की ओर से /Assessee by Shri Sapnesh R Sheth, C.A राज� की ओर से /Revenue by Shri Vinod Kumar Sr-DR सुनवाई की तारीख/Date of hearing 03.03.2023 उद्घोषणा की तारीख/Date of 17.04.2023 pronouncement Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by Revenue is directed against the order of ld. Commissioner of Income-tax (Appeals)-3 Surat [for short to as “Ld. CIT(A)”] dated 11.03.2020 for the assessment year 2013-14, which in turn arises out of assessment order passed by Assessing Officer under section 143(3) of Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for the sake of brevity) on 22.03.2016. The Revenue has raised the following grounds of appeal:- “1. Whether on facts and circumstances of the case and in law the Ld. CIT(A) was justified in deleting the addition of Rs.1,07,00,000/- out of the total addition made by the AO at (A.Y 13-14) Rajlaxmi Infra Rs.1,25,00,000/- on account of bogus unsecured loans, by observing that the unsecured loans to the extent of Rs.1,07,00,000/- are genuine, without considering the fact brought out and analyzed by the AO and failure on the part of the assessee to prove the creditworthiness and genuineness of the transactions in respect of unsecured loans totalling to Rs.1,25,00,000/-?.
2. Whether on facts and circumstances of the case and in law the Ld. CIT(A) was justified in deleting the addition of Rs.58,00,745/- made by the AO on account of bogus purchases, by observing that the same are genuine, without considering the facts brought out, even by enquiries conducted us/ 133(6) of the Act, and further failure on the part of the assessee to furnish the details as called for by the AO to prove the genuineness of the purchases in question during the assessment proceedings, as well as before the Ld. CIT(A) during the appellate proceedings?.
3. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer.
4. It is, therefore, prayed that the order the Ld. CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent.
5. The appellant craves leave to add, alter, amend and/or withdraw any round(s) of appeal either before or during the course of hearing of the appeal.”
2. Brief facts of the case are that assessee-firm is engaged in the business activities of builder & developer, filed its return of income for assessment year 2013-14 on 30.09.2013 declaring income of Rs.2.26 crores. The case was selected for scrutiny. During assessment, Assessing Officer noted that assessee has shown unsecured loan from four parties, namely, Hemantbhai P Patel of Rs.75.00 lakh; M/s Kamdhenu Developers of Rs.10.00 lakh; Mukesh Patel of (A.Y 13-14) Rajlaxmi Infra Rs.10.00 lakh and Manish B. Shah proprietor of Navkar Auto Glass of Rs.25.00 lakh respectively. In order to verify the genuineness of unsecured loan, Assessing Officer issued notice under section 133(6) of the Act to all four creditors (parties). The Assessing Officer recorded that no reply was received from such lenders. The assessee was asked to substantiate the unsecured loan by furnishing confirmations, bank statements and copy of capital account of those lenders. The Assessing Officer recorded that vide submission dated 16.03.2016, the. assessee furnished copy of confirmations, bank statements, PAN No. of Hemantbhai P Patel to prove his creditworthiness, the assessee filed copy of sale deed about sale of his asset. For M/s Kamdhenu Developers, the assessee filed copy of confirmation, ITR and bank statement. For loan of Mukesh Patel no detail was furnished. For loan of Manish B Shah, prop. of Navkar Auto Glass, the assessee furnished copy of confirmation, ITR and bank statement. On examination of such details, the Assessing Officer held that in absence of proper explanation, about source of funds of Hemantbhai P Patel, the creditworthiness and genuineness of transaction could not be (A.Y 13-14) Rajlaxmi Infra established and unsecured loan of Rs.75.00 lakh and treated it as non-genuine. For M/s Kamdhenu Developers, the Assessing Officer held that capital account of lender was not furnished and in their return of income, they have shown income of Rs.3.65 lakh only. Thus, creditworthiness and genuineness of unsecured loan of Rs.10.00 lakhs was not established and treated as bogus. With regard to unsecured loan from Mukesh Patel, Assessing Officer recorded that no documents to establish transaction of unsecured loan was furnished and loan of Rs.10.00 lakh was treated as bogus. So far as unsecured loan from Manish B Shah, prop. of Navkar Auto Glass, the Assessing Officer held that in the return of income for assessment year 2013-14, he declared income at Rs.4.37 lakhs and their capital account was not furnished. On further verification of their bank account, the Assessing Officer noted that it was an overdraft (OD) account, which was used for providing loan to others and bank statement shown that cash was deposited on the same date and after that cheque was issued to give unsecured loan. On the basis of aforesaid observation, the Assessing Officer treated the entire unsecured loan amount as unexplained cash credit (A.Y 13-14) Rajlaxmi Infra treated under section 68 of the Act. Though, the aggregate of unsecured loan was of Rs. 1.20 Crore, while the assessing officer in the assessment order made addition of Rs. 1.25 Crore.
3. On further perusal of books of account, the Assessing Officer noted that assessee has shown purchase from four parties, namely, Vaishnav Infrastructure Pvt. Ltd., of Rs.13,16,257/; Maruti Enterprises of Rs.16,76,845/-; Ralja Traders of Rs.21,05,123/- and V.D. Enterprises of Rs.7,02,520/- total aggregate of Rs. 58,00,745/-. In order to verify the genuineness of such purchases, the Assessing Officer issued notice under section 133(6) of the Act to all four parties. The Assessing Officer recorded that no reply was received from such parties. Thereafter, the assessee was asked to produce such parties for verification and their confirmations. The Assessing Officer recorded that neither reply was furnished nor new address or any evidence was filed to prove genuineness of such purchases from the parties. The Assessing Officer treated the purchase of Rs.58,00,745/- as bogus and added to the income of assessee.
(A.Y 13-14) Rajlaxmi Infra 4. Aggrieved by the addition made by Assessing Officer, the assessee filed appeal before the Ld. CIT(A). Before Ld. CIT(A) the assessee filed detailed written submission. The submission of assessee was recorded in para-4 of the order of Ld. CIT(A). In the written submission, the assessee explained that aggregate of unsecured loan from four lenders was of Rs.1.20 crores. The Assessing Officer erroneously made such addition of unsecured loan of Rs.1.25 crores as bogus and treated under section 68, which is excessive by Rs.5.00 lakhs. (i) For the unsecured loan of Rs.75.00 lakh received from Hemantbhai P Patel, the assessee submitted that the creditor sold his agriculture land and filed copy of sale deed. From the bank account of lender, it is evident that he has received payment of Rs.50.00 lakhs each on 29.03.2012 and 04.4.2012 respectively. Thus, he was having sufficient bank balance out of which, Rs.75.00 lakh was given to assessee as loan. The lender independently confirmed loan transaction during the assessment vide reply dated 22.03.2016. The assessing officer rejected the bank statement on the ground that (A.Y 13-14) Rajlaxmi Infra cheque No. was not mentioned in his bank statement and thus, addition of Rs.75.00 lakhs is not at all valid. The assessee has no control over the manner in which bank gives details in the pass-book of the lender. On the objection that lender has not filed its return of income, or adverse inference in any case, could be taken against lender. The assessee has clearly prove the source of lender and there was no cash deposit in the bank account of lender. There is no evidence that assessee has given cash to lender against receive of such unsecured loan. Thus, assessee proved identity of lender, capacity of loan and genuineness of loan unsecured loan transaction. (ii) For addition of unsecured loan of Rs.10.00 lakh from M/s Kamdhenu Developers, assessee submitted that copy of PAN, ITR, confirmation and bank statement were furnished. The Assessing Officer made addition on the ground that no capital account or bank statement from 01.04.2012 to 15.05.2012 was furnished and assessee explained that M/s Kamdhenu Developers provided unsecured loan to assessee for a short period i.e. 19.05.2012 to 09.02.2013, which is evident from the bank (A.Y 13-14) Rajlaxmi Infra statement and confirmation provided during the assessment. The loan was repaid during the year itself, which clearly proves the genuineness of unsecured loan transaction and bank statement was provided during the course of assessment proceedings, which clearly covers all such transaction between lender and assessee. The lender filed its return of income showing substantial income of Rs.3.75 lakh on which tax of Rs.1.13 lakh was paid so that the loan of Rs.10.00 lakh given to assessee for a short period cannot be doubted. The notice under section 133(6) was duly served upon the lender. There is no evidence that assessee gave cash to lender against receipt of cheque of loan from them. Thus, assessee also proved the identity of lender and creditworthy and genuineness of such unsecured loan. It was submitted that unsecured loan received from Kamdhenu developers was also repaid during the year itself. (iii) Against loan from Shri Manish B Shah, prop. of Navkar Auto Glass, assessee submitted that they have filed ITR, confirmation and bank statement. The Assessing Officer made addition by holding that bank account was overdraft (A.Y 13-14) Rajlaxmi Infra account and Shri Manish B Shah deposited cash in its bank account and subsequent issued cheque. The assessee explained that lender was having overdraft account having facility of Rs.30.00 lakh by banker which clearly proves that it was having capacity to grant such unsecured loan of Rs.25.00 lakhs. Thus, the stand of Assessing Officer the creditworthiness of lender is not proved is completely erroneous. Other observation of Assessing Officer was that loan was given after depositing cash in the bank account is again incorrect, because the assessee received substantial loan of Rs.17.00 lakh on17.07.2012 and 18.07.2012 respectively, prior to which there was no cash deposit in the overdraft account entries appearing prior to issue of loan shows, represent cash withdrawal of Rs.5.50 lakh. Such entry of cash withdrawal has been associated by Assessing Officer as cash deposit when conclusion drawn by him was incorrect even the balance of Rs.8.00 lakh is very much genuine, which was issued from the overdraft account and cash deposit prior to issuance of cheque to the assessee cannot be viewed adversely as there was substantial cash withdrawal from (A.Y 13-14) Rajlaxmi Infra overdraft account. On the basis of such contention, the assessee also stated that they have proved the identity, genuineness and creditworthiness of such transactions. And loan from Shri Manish B Shah (prop. of M/s Navkar Auto Glass) is repaid in the subsequent financial year by account payee cheque only. Relevant evidence in this regard is enclosed herewith and no addition could be made. To support such submission, assessee relied on the decision of Hon'ble jurisdictional High Court in the case of CIT vs. Ayachi Chandrasekhar Narsinhji 42 taxmann.com 251 (Guj). (iv) Against the loan of Rs.10.00 lakh from Shri Mukesh M Patel, for which the assessee has not any evidence to prove the genuineness of such unsecured loan. The assessee submitted that addition was made without providing opportunity to the assessee at the time of assessment proceedings and assessee could not produce supporting evidence due to beyond reasons on the part of assessee, as evidence and documents to substantiate such loan, were not received from the lender. However, Assessing Officer, in his assessment order held that notice under (A.Y 13-14) Rajlaxmi Infra section 133(6) was served, such fact clearly proves the existence of lender. The assessee prayed to ld CIT(A) to admit such evidence as additional evidence by invoking provision of Rule-46A of Income Tax Rule, 1962. The assessee further bank statement of lander there is balance of Rs.1.17 crores and loan of Rs.10.00 lakh was given to the assessee; facts clearly show his creditworthy. On the basis of such submission, the assessee prayed for deleting the addition unsecured loan of Rs.10.00 lakh. (v) To support his other submission assessee by filing complete details of lenders about their identity, creditworthy and genuineness of transaction discharged his primary onus, relied upon the decision of Hon'ble jurisdictional High Court in the case of DCIT vs. Rohini Builders (2003) 256 ITR 230 / 127 taxman.com 523 (Guj), wherein it was held that where assessee established identity of creditors by giving their complete addresses, GIR number/PAN as well as confirmation along with copies of assessment orders wherever available and assessee discharged its primary onus. On similar ratio of law, the assessee also relied on another case law of (A.Y 13-14) Rajlaxmi Infra Hon'ble jurisdictional High Court in the case of CIT vs. Ranchhod Jivabhai Nakhava in Tax Appeal No.50 of 2011 dated 20.03.2012.
On the disallowances of purchases, the assessee submitted that Assessing Officer grossly erred in making huge addition by disallowing purchase only on the ground that party did not file any evidence in response to notice under section 133(6) of the Act. During the assessment, assessee furnished complete details of purchase; like bank statement, bills issued by above parties, ledger account showing payments made on different occasions. Moreover, notice under section 133(6) was duly served on the parties and service of notice clearly established that existence of suppliers. The bills contained CST number, address and contract number. Now if suppliers did not submit reply in response to letter issued by Assessing Officer, in such case necessary penal action should be taken in their case as they committed default by not furnished reply. The assessee purchased materials for day-to-day business activity and it is not possible by assessee to force suppliers to attend before Assessing Officer, as he has no power granted by statute to control them. The (A.Y 13-14) Rajlaxmi Infra purchase of assessee are duly supported by documentary evidence. The Assessing Officer has not pointed out any defect by furnishing documentary evidence filed by assessee. The assessee has proved the genuineness of such purchase by filing evidence available with the assessee, during the period under consideration, project of assessee was in progress and entire expenses of purchases directly or indirectly were transferred to work in progress account. The purchase made from those parties are not claimed as expense for the year. A survey was carried out by revenue during the relevant financial year, no contrary evidence was found during the survey action that purchase made from such parties were bogus. The assessee made payment to suppliers in succeeding year, ledger account showing payment was also furnished. In subsequent year, the assessment was completed under section 143(3) by accepting return of income. No adverse inference called for against such payment to such suppliers were made in the assessment order passed under section 143(3) of the Act for assessment years 2015- 16 & 2016-17 respectively. The assessee submitted that no addition can be made on mere suspicious without bringing (A.Y 13-14) Rajlaxmi Infra any cogent evidence on record. To support assessees submission, assessee relied upon the decision of Hon'ble jurisdictional High Court in the case of CIT vs. M.K. Brothers (1987) 163 ITR 249 (Guj) and ITAT Ahmedabad in the case of M/s Akruti Dyeing & Printing Pvt. Ltd. ITA No.2551/Ahd/2006.
The Ld. CIT(A) after considering the contents of assessment order and submission of assessee and relying on the case law filed by assessee granted substantial relief to the assessee in deleting the addition of unsecured loan and sustained the addition to the extent of Rs.18.00 lakh. The addition on account of bogus purchase of Rs.58.00 lakh (approx.) was entirely deleted.
The Ld. CIT(A) while deleting the substantial part addition of unsecured loan, examined the fact qua all lenders. Against loan of Rs.75.00 lakh from Hemant Bhai P Patel, the Ld. CIT(A) held that assessee furnished PAN, confirmation and bank statement. The lender filed his reply vide dated 22.3.2016 and furnished the required details before Assessing Officer. The lender also furnished copy of sale deed to explain his source of loan given to assessee. The Ld. CIT(A)
(A.Y 13-14) Rajlaxmi Infra noted that on perusal of statement of lender, it is seen that he has received Rs.50.00 lakhs each on 19.03.2012 and 04.04.2012 respectively on sale of his land and out of such fund, he was given a loan of Rs.75.00 lakh to assessee. On the observation of assessing officer that cheque number was not mentioned in the bank statement, the ld CIT(A) held that such fact is not at all relevant for deciding the genuineness of such unsecured loan transaction, and merely non-mention of cheque number, the transaction cannot be treated as unexplained cash credit under section 68 of the Act. There is no evidence on record to indicate that assessee has given cash to the lender. The Ld. CIT(A) by referring the decision of Hon'ble jurisdictional High Court in the case of Ranchhod Jivabhai Nakhava (supra) deleted the addition of Rs.75.00 lakh received from Shri Hemantbhai P Patel. For loan received from Kamdhenu Developers, Ld. CIT(A) held that during assessment, they filed copy of PAN, ITR, account confirmation and bank statement. The Assessing Officer made addition on the ground that return of income shown by the lender, does not justify the loan amount. The lender is a partnership firm and filed return of income and paying tax (A.Y 13-14) Rajlaxmi Infra Rs.1.13 lakh on the return of income filed at Rs.3.65 lakh. Thus, the capacity of loan cannot be doubted as loan received through account payee cheque. Further, loan received and repaid within a short span of time, during the year under consideration itself. The Ld. CIT(A) by referring decision of Hon'ble jurisdictional High Court in the case of Aychi Chandrasekhar Narsinhji (supra) deleted the addition of Rs.10.00 lakh received from M/s Kamdhenu Developers. For unsecured loan received from Mukesh Patel, the Ld. CIT(A) noted that assessee has not filed any evidence before Assessing Officer though, filed various evidence at appellate stage to establish the genuineness of such loan. The assessee was given sufficient opportunity during assessment proceedings to file relevant evidence. Thus, the additional evidence was not admitted thereby confirmed the addition of Rs.10 lakh received from Shri Mukesh Patel. For fourth unsecured loan received from Manish B. Shah (prop. of Navakar Auto Glass) the Ld. CIT(A) recorded that lender filed confirmation, ITR, account confirmation. The unsecured loan was given from its overdraft account and overdraft revealed that lender has been granted overdraft of Rs.35.00 lakh by (A.Y 13-14) Rajlaxmi Infra Mehsana Urban Co-Operative Bank Ltd., The Assessing Officer made the addition by holding that prior to issuing loan, cash was deposited in the bank of lender. On examination of bank statement, Ld. CIT(A) held that observation of Assessing Officer is not fully correct that Rs.5.50 lakh represented cash withdrawal made on 17.07.2012 by lender and the same does not represent the cash deposit. The lender given aggregate loan amount of Rs.17.00 lakh on 17.07.2012 and 18.07.2012, on the above dates he was having overdraft bank account, cash withdrawal of Rs.5.50 lakh by lender on the above dates as effect an increasing the loan amount which has not appreciated by Assessing Officer that cash deposit was made prior to giving such unsecured loan. The lender is income tax payee, account confirmation and bank statement is already filed on record. So no addition could be made in view of the decisions of Ranchod Jivabhai Nakhava and Rohini Developers (supra). Regarding balance of Rs.8.00 lakh on subsequent dates, Ld. CIT(A) noted that loan was given after cash deposit in its bank account. Thus, observation of Assessing Officer to that extent (A.Y 13-14) Rajlaxmi Infra is correct thereby unsecured loan of Rs.8.00 lakh from Shri Manish B. Shah (prop. of Navkar Auto Glass) was confirmed.
On the addition of bogus purchase, Ld. CIT(A) held that during assessment, Assessing Officer issued notice under section 133(6) of the Act, however no reply was furnished by the purchasers. Though, survey was carried out under section 133A on 30.01.2013, no incriminating evidence indicating ingenuity of purchase was found during the survey. The assessee furnished complete books of account with relevant bills & vouchers and no comments was made by Assessing Officer regarding correctness of book result, which is accepted by Assessing Officer. The assessee made payment of purchase to Maruti Enterprise, Ralja Traders & V.D. Enterprises in succeeding years. In succeeding year, assessment was completed under section 143(3), wherein no adverse inference was drawn with the payments made to those parties. In case of Vaishnav Infrastructure Private Limited the goods were returned in subsequent year and amount of Rs.13,16,257/- was also reversed in subsequent year also by reducing such purchase. The assessment order for AY 2015-16 was made under section 143(3) and no (A.Y 13-14) Rajlaxmi Infra adverse inference was drawn against such party. The payments to all three parties were made through banking channel. Further against purchase of Rs.50.98 lakhs from such party are not claimed and entire amount was transferred to closing work-in-progress. Thus, there was no basis of treating the purchase made from the entities as bogus. During the survey, the disclosure of Rs.2.26 crores was offered for taxation and no attempt was made by assessee to set off such disclosure by claiming bogus purchase. On such observation, Ld. CIT(A) also deleted the addition of Rs.58,00,745/-. Aggrieved by the order of Ld. CIT(A) the Revenue has filed present appeal before Tribunal.
We have heard the submission of Ld. Senior-Departmental Representative (Sr-DR) for the Revenue and Ld. Authorized Representative (Ld.AR) for the assessee. Ground No.1 relates to deleting the addition of Rs.1.02 crore of unsecured loan from three parties. The Ld. Sr-DR for the Revenue supported the order of Assessing Officer and would submit that during assessment the assessee has not filed the copy of return of income of Himatbhai Patel and the nexus of sale consideration of land and the transaction of unsecured loan.
(A.Y 13-14) Rajlaxmi Infra Kamdhenu Developers has shown very low income for AY 2013-14 and their capital account was not filed. Similarly, Manish B Shah had shown return income of Rs. 4,37,195/- for the year under consideration. He has used his overdraft (OD) account for lending amount to the assessee. there was cash deposit in his bank account before landing the amount.
On the other hand, Ld. AR for the assessee relied on the order passed by Ld. CIT(A). The Ld. AR for the assessee submits that before Assessing Officer assessee discharged its onus in filing complete details like name, address, PAN of creditors to prove identity. The assessee filed bank statement of the creditors and their ITR to prove the creditworthiness. The Ld. AR for the assessee submits that assessing officer has not brought any adverse evidence against the assessee. the notice under section 133(6) was duly served on all three lenders. The loan received from Kamdhenu Developers was return in the same financial year. The repayment is not doubted by the assessing officer. The ld AR for the assessee further submits that assessee has also proved the creditworthy of Manish B Shah, who was having OD facility from Mehsana Urban Co- (A.Y 13-14) Rajlaxmi Infra operative Bank. The ld AR for the assessee also relied on his submissions as well as all the case laws filed before ld CIT(A).
We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. The assessing officer made addition of unsecured loan of Rs. 1.20 Crore received from four parties by taking view that assessee failed to prove the creditworthy of the lender in one way or the other. The ld. CIT(A) confirmed the addition of unsecured loan of Rs.10.00 lakhs from Mukesh Patel, which is not the subject matter of the grounds of appeal
before us. So we shall discuss the facts qua remaining three lenders.
12. We find that against unsecured loan from Hemant Bhai Patel the assessing officer held that in the transaction reflected in the banks account cheque number is not mention. The ld. CIT(A) held that assessee furnished PAN, confirmation and bank statement. The lender filed his reply vide dated 22.3.2016 and furnished the required details before Assessing Officer. we find that the ld CIT(A) in his finding recorded that lender also furnished copy of sale deed to explain his source of loan given to assessee. The Ld. CIT(A)
(A.Y 13-14) Rajlaxmi Infra further held on perusal of statement of lender, held that lender received Rs.50.00 lakhs each on 19.03.2012 and 04.04.2012 respectively on sale of his land and out of such fund a loan of Rs.75.00 lakh to assessee. On the objection of assessing officer that cheque number was not mentioned in the bank statement, the ld CIT(A) held that such fact is not at all relevant for deciding the genuineness of such unsecured loan transaction, and merely non-mention of cheque number, the transaction cannot be treated as unexplained cash credit under section 68 of the Act. There is no evidence on record to indicate that assessee has given cash to the lender. In our view the ld CIT(A) granted relief to assessee on appreciation of evidence on record.
Against unsecured loan from Kamdhenu Developers, we find that the assessing officer made addition by taking view that the income shown by lender does not justify the loan given by said lender. The ld CIT(A) granted relief to the assessee by holding that lender has paid advance tax of Rs.3.75 lakhs and his capacity to lend money cannot be doubted. The loan was given through banking channel. The loan was paid during the year itself. The ld CIT(A) also referred the decision (A.Y 13-14) Rajlaxmi Infra of Jurisdictional High Court in CIT Vs Ayachi Chandershekhar Narsinhji (supra). It was also held that source can be independently examined in the hands of lender. We find that the view taken by ld CIT(A) is based on the ratio of law laid down by Hon’ble High Court that when the loan was repaid by the assessee and repayment is not doubted by assessing officer no such addition of loan is justified. In our view, no interference in required on the finding of ld CIT(A). Now, turning to the impugned unsecured loan from Manish B Shah. The assessing officer made addition of Rs. 25.00 lakhs by taking view that lender has OD account and some cash deposits were found soon before issuance of cheque of loan. As noted above before ld CIT(A) explained the facts, which we have recorded supra. We find that ld CIT(A) on appreciation of facts find that observation of assessing officer is partially correct. There were no such cash deposits prior to lending of Rs. 17.00 lakhs (out of total loan of Rs. 25.00 lakhs) on 17.07.2012 and 18.07.2012. the remaining Rs. 8.00 lakhs was given on later dates which was confirmed by ld CIT(A).
(A.Y 13-14) Rajlaxmi Infra 14. We find that Hon’ble Jurisdictional High Court in CIT Vs Ayachi Chandrashekhar Narsangji (2014) 42 taxmann.com 251(Gujrat) held that where department has accepted repayment of loan in subsequent financial year, no addition was to be made in the current year on account of cash loan. Further, in case of CIT Vs Ranchod Jivabhai Nakhava (2012) 21 taxmann.com 159 (Gujarat), the Hon’ble jurisdictional high court held that where the lenders of the assessee are income tax assessee whose PAN have been disclosed, the assessing officer cannot not ask assessee to further prove genuineness of the transaction without first verifying such facts from income tax returns of lenders. We also find that the assessee furnished all such details of the lenders/ depositors. There is no evidence that credit/ advance in the books of assessee was result of some circular transactions. We find that before granting relief to the assessee, the ld CIT(A) cross checked all such details, including the proof of repayment and granted relief to the assessee.
In view of the above discussion, we do not find any infirmity or illegality in the order of ld CIT(A), which we affirm with our (A.Y 13-14) Rajlaxmi Infra additional observation. In the result, ground No.1 of the appeal is dismissed.
Ground No. 2 relates to deleting the addition on account of disallowance of purchases. The ld Sr DR for the revenue supported the order of assessing officer. The ld SR DR for the revenue submits that during assessment the assessing officer issued notice under section 133(6) to the parties form whom the assesse claimed purchase, however, none of the parties responded to such notices. The assessee failed to furnish the confirmation of all the parties. The ld Sr DR for the revenue prayed for reversing the order of ld CIT(A) and to restore the additions in the assessment order.
On the other hand, the ld AR for the assessee supported the order of ld CIT(A). The ld AR for the assessee submits that assessing officer made addition on the ground that parties did not file any evidence in response to notice under section 133(6) of the Act. However, the assessee furnished complete details of purchase; like bank statement, bills issued by above parties, ledger account showing payments made on different occasions. Notice under section 133(6) was duly served on the parties which clearly established that existence (A.Y 13-14) Rajlaxmi Infra of suppliers. The ld AR for the assesse submits that complete bills with CST number, address and contract number were filed before assessing officer. The reply to be filed or not to be filed by the supplier in not under control of assessee, in such case necessary penal action could be taken in their case as they committed default by not furnished reply. The assessee purchased materials for day-to-day business activity which are duly supported by documentary evidence. The Assessing Officer has not pointed out any defect by furnishing documentary evidence filed by assessee. The assessee has proved the genuineness of such purchase by filing evidence available with the assessee, during the period under consideration, project of assessee was in progress and entire expenses of purchases directly or indirectly were transferred to work in progress account. The purchase made from those parties are not claimed as expense for the year. Ld AR for the assessee further submits that a survey action was carried out by revenue during the relevant financial year, no contrary evidence was found during the survey action. The assessee made payment to suppliers in succeeding year, ledger account showing payment was also furnished. In subsequent (A.Y 13-14) Rajlaxmi Infra year, the assessment was completed under section 143(3) by accepting return of income. The ld AR for the assessee prayed for dismissal of this ground of appeal
18. We have considered the rival submissions of the parties and have gone through the orders of lower authorities carefully. The assessing officer disallowed the purchases of aggregating of Rs. 50.98 lakhs by taking view that notices under section 133(6) were served on all the supplier but all failed to file their reply. The assessee was directed to produce all the parties and to file confirmation. The assessee failed to file confirmation and in producing all four parties, thus, the assessing officer disallowed the entire purchases. As recorded above, before ld CIT(A) the assesse filed his detailed written submissions and contended that they have filed complete details to substantiate the purchase and assessing officer has not pointed out any defect in the evidence filed by assessee. The assessee has proved the genuineness of such purchase by filing evidence available with the assessee, during the period under consideration, project of assessee was in progress and entire expenses of purchases directly or indirectly were transferred to work in progress account. The (A.Y 13-14) Rajlaxmi Infra purchase made from those parties are not claimed as expense for the year. It was also contended that a survey action was carried out by revenue during the relevant financial year, no contrary evidence was found during the survey action to doubt the purchases.
We find that the ld CIT(A) deleted the entire disallowance of purchases by holding that assessee furnished complete books of account with relevant bills & vouchers and no comments were made by Assessing Officer regarding correctness of book result. Further, the assessee made payment of purchase to Maruti Enterprise, Ralja Traders & V.D. Enterprises in succeeding years. In succeeding year, assessment was completed under section 143(3), wherein no adverse inference was drawn with the payments made to those parties. In case of Vaishnav Infrastructure Private Limited the goods were returned in subsequent year and amount of Rs.13,16,257/- was also reversed in subsequent year also by reducing such purchase. It was also held that in assessment order for AY 2015-16 made under section 143(3) and no adverse inference was drawn against such party. The payments to all three parties were made through banking (A.Y 13-14) Rajlaxmi Infra channel. Further against purchase of Rs.50.98 lakhs from such party are not claimed and entire amount was transferred to closing work-in-progress. Thus, there was no basis of treating the purchase made from the entities as bogus. In our view the ld CIT(A) deleted entire disallowance based on factual analysis. No contrary facts are brought to our notice to take other view, thus, we affirms the order of ld CIT(A) on this issue. In the result, this ground of appeal
is dismissed.
20. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on 17/04/2023.