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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Ms. SUCHITRA KAMBLE & SHRI WASEEM AHMED
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
This appeal is filed by the Revenue against the order dated 03.04.2017 passed by the CIT(A)-3, Rajkot for the Assessment Year 2013-14.
The Revenue has raised the following grounds of appeal:
“1. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.50,00,000/- made u/s.68 of the I.T. Act, 1961 in respect of unsecured loans without appreciating the facts of the case mentioned in the assessment order.
2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.2,00,00,000/- on account of payment made towards share capital and premium treated as unexplained cash credit u/s.68 without appreciating the facts of the case mentioned in the assessment order.
3. Whether, on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the said addition of Rs.50,00,000/-made u/s.68 of the I.T. Act, 1961 without appreciating the ratios of the decisions in the cases of Umesh Krishnani vs. ITO (2013), 35 taxmann.com 598 (Gujarat High Court), CIT vs. Precision Finance Pvt. Ltd, 208 ITR 465 (Calcutta High Court) and ACIT vs. Nakoda Fashion Pvt. Ltd. in ITA No.1716/Ahd/2012.
Assessment Year: 2013-14 Page 2 of 4
4. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made on account of disallowance of Rs.16,25,998/- u/s.14A r.w. Rule 8D without appreciating the facts of the case.
On the facts of the case and in law, the Ld. CIT(A) ought to have upheld the assessment order of the A.O.
6. It is therefore prayed that the order of the CIT(A) may be set aside and that of the AO be restored to the above extent.
The assessee is a Private Limited Company engaged in the business of manufacturing and trading of ceramic glazed tiles. The assessee filed return of income on 30.09.2013 showing total income at Rs.1,11,27,350/-. During the course of assessment proceedings, the Assessing Officer proposed addition under Section 68 of the Income Tax Act, 1961 in respect of unsecured loan received from M/s. Pankaj Piyush Trade & Investment Limited amounting to Rs.50,00,000/- and unsecured loan accepted and later on issued shares against the same loan of M/s. Oswal Services Pvt. Ltd. amounting to Rs.2,00,00,000/-. In response to the notice under Section 142(1) of the Act, the assessee filed submissions along with relevant evidences in respect of nature and source of the amounts deposited, existence and creditworthiness of the persons and genuineness of the transactions including production of contract confirmation and bank statement of the parties as well as relating to the source of the fund ain the hands of those parties. The Assessing Officer made addition of Rs.16,25,998/- under Section 14A of the Act towards investment made in subsidiary company and further made disallowance of Rs.4,77,320/- under Section 36(1)(va) of the Act out of expenses on account of Provident Fund.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
5. The Ld. DR submitted that as regards ground no.1, the CIT(A) was not correct ain deleting the addition of Rs.50,00,000/- made under Section 68 of the Act in respect of unsecured loans as the assessee has not explained the source and the assessee
Assessment Year: 2013-14 Page 3 of 4 should have produced depositor. The Ld. DR further submitted that the letter/notice issued under Section 133(6) was returned back with the remark that these premises are vacant premises. As regards to ground nos.2 &3 related to deletion of addition of Rs.2,00,00,000/- on account of payment made towards shares and premium treated as unexplained cash credit under Section 68 of the Act, the Ld. DR relied upon the assessment order wherein it has been clearly stated that the assessee failed to prove the transaction of investments and unsecured loans made by M/s. Oswal Services Pvt. Ltd. As regards ground no.4, the ld. DR relied upon the assessment order.
As regards ground no.1, the Ld AR submitted that the CIT(A) has given a detailed finding and relied upon the decision of the CIT(A).
As regards ground nos.2 & 3, the Ld AR submitted that the source of the source related to payment made to share capital and premium was also explained to the Assessing Officer and hence relied upon the order of the CIT(A).
As regards ground no.4, the Ld. AR relied upon the order of the CIT(A) and submitted that there was no exempt income.
We have heard both the parties and perused all the relevant material available on record. As regards ground no.1, the assessee has explained the source of source related to depositors before the Assessing Officer and the confirmation from the said parties were also on record. The CIT(A) has given elaborate finding to that extent and there is no need to interfere with the same. As relates to letter/notice under Section 133(6), the assessee explained that the finding of the Assessing Officer is not correct and relied upon the confirmations. Ground no.1 of Revenue’s appeal is dismissed.
As regards to ground no.2 the assessee has explained the source of the source related to cash transactions and payment made towards share capital and premium and the details of the same were before the Assessing officer. The assessee has explained genuineness, creditworthiness and identity of the said parties which cannot be doubted. Hence, the finding given by the CIT(A) are just and proper. Ground nos.2 &3 of Revenue’s appeal are dismissed.
Assessment Year: 2013-14 Page 4 of 4 11. As regards ground no.4, it is accepted fact that no exempt income claim was made by the assessee and hence the CIT(A) has rightly deleted the addition made on account of disallowance under Section 14A read with Rule 8D of the Rules. Thus, ground no.4 of Revenue’s appeal is dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open Court on this 28th day of September, 2022.