TMI Blog2022 (10) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... ial position of Shreeji Aluminium Pvt Ltd., we do not agree with the submissions of the Revenue. As a result, we find no infirmity in the aforesaid findings of the learned CIT(A). In respect of all the other entities, the AO in its remand report gave similar reply that unsecured loan lender have advanced the fund on the same day or within 10 to 12 days on which they have received the same. In its latest submission dated 12/07/2022, the Revenue has made submission only regarding loan from Parul Mittal, and submitted that the response under section 133(6) is self-serving and is not corroborated with balance sheet and profit and loss account. In respect of addition on account of Sheelaben Thummar, Kirti Thummar HUF and Krushy Metal, we find from the details available in the paper book that these are appearing as loans / deposits by the assessee s proprietary concern viz. Krushy trading company. Thus, we find no infirmity in the findings of the learned CIT(A) that same cannot be added under section 68 of the Act. Loan from Ram Avtar Paper Ltd., we find from audited financial at page 191 and 192 of the paper book that the company has capital and reserves of Rs. 68,17,941 and sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity of being heard to both the parties. Grounds raised in assessee s cross objection are allowed for statistical purpose. - Cross Objection no.115/Mum./2019 & ITA No.697/Mum./2018 - - - Dated:- 19-9-2022 - SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER Assessee by: Shri Ashwin Chhag Revenue by: Shri Vinay Sinha ORDER PER SANDEEP SINGH KARHAIL, J.M. The present appeal by the Revenue and cross objection by the assessee are against the order dated 17/10/2017, passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals) 45, Mumbai, [ learned CIT(A) ], for the assessment year 2012 13. ITA no.697/Mum./2018 Revenue s Appeal : A.Y. 2012 13 2. In its appeal, the Revenue has raised following grounds: 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 10,12,91,595/- as unexplained cash credit u/s.68 of the Income Tax Act, 1961, without appreciating the fact that the creditworthiness of creditors and genuineness of the transactions were not established. 2. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which justifies the transaction entered into by the assessee are genuine in nature. The Assessing Officer ( AO ) vide order dated 31/03/2015 passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that in respect of loan taken from Shri Ashok Kumar Jain (proprietor M/s.Varsha Gems), Little Diam and Meridien Jewellery, during the course of search, Shri Bhanwarlal Jain and group company have on oath accepted the fact that they are only giving accommodation entries in view of cash. Further, the AO held that the payment of interest or TDS cannot be sole criteria for genuineness. The AO also held that the aforesaid 3 entities have not made any compliance to notice issued under section 133(6) of the Act, which again confirms the fact that the assessee has taken benefit of accommodation entries. During the course of assessment proceedings, notices dated 20/03/2015 under section 133(6) were also issued to all the entities from whom the assessee has taken loan during the year under consideration. However, as noted in the assessment order, no compliance has been received pursuant thereto. Accordingly, the AO made an addition of entire amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40,00,000 3. Paresh Babulal Patel 87,50,000 4. Parul Mittal 6,00,000 5. Ram Avtar Mittal HUF 2,90,000 6. Shreeji Aluminum Pvt. Ltd. 6,31,00,595 7. Ram Avtar Paper Pvt. Ltd. 20,00,000 8. Sanjay Mittal Sons 5,24,000 9. Shivkumar Sons HUF 9,00,000 10. Suyash Mittal Family 10,60,000 11. Ashokkumar Jain 1,10,00,000 12. Vikas Mittal Sons 3,87,000 13. Kirit K. Thummar HUF 6,00,000 14. Krushy Metal 7,80,000 15. Shetlaben K. Thummar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO not only issued notice under section 133(6) but also issued summons under section 131 of the Act and recorded the statement of some of the aforesaid loan lenders, during the remand proceedings. We find that since, during the original scrutiny assessment proceedings, due to paucity of time, details could not be filed by the assessee in response to notices issued under section 133(6), therefore, the AO proceeded merely on the basis of statement recorded in the case of Shri Bhanwarlal Jain group during the search conducted on 03/10/2013. However, learned CIT(A) had the advantage of various factual details and submissions filed by the assessee as well as remand report of the AO, while deciding assessee s appeal. Thus, in order to decide this appeal, which involves independent loan transaction of the assessee with aforementioned 15 entities, it is relevant to analyse and examine the facts, as available on record, in respect of each and every of these loan transactions. At the outset, it is relevant to note that in respect of all the loan transactions, identity of the lender is not in dispute. 8. In the present case, it has not been disputed that summons under section 131 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) as well as summons under section 131 to which the concerned person of this entity has replied to and attended. Further the statement of the loan lender was recorded by the AO pursuant of the aforesaid summons. Assessee further submitted that the AO in its remand report neither commented nor relied upon the documentary evidence placed on record and the statements so recorded is also not dealt with by the AO. 11. The learned CIT(A) vide impugned order noted that statement under section 131 was recorded on 03/02/2017, wherein the fact of grant and receipt of loan and interest was accepted. Further, the learned CIT(A) accepted the contention of the assessee in regard to the loan transaction with Little Diam, by observing as under: When we examine these facts, here appellant had appeared before AO u/s 131 and also Income tax return was filed, so identity is proved. All these loans of Rs.80 lakhs were through banking channel and given by cheque, this proves the genuineness of transaction. With respect to loan extended to the appellant, appellant had sundry creditor of Rs.59,33,97,087/- from which this concern ws extending loans to various persons and which had also earned int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned CIT(A), assessee filed additional evidence and remand report of the AO was sought. In the remand report filed before the learned CIT(A), reference was again made to the statement recorded during the course of aforesaid search on 03/10/2013. In reply, assessee submitted that the AO in the remand proceedings issued notice under section 133(6) as well as summons under section 131 of the Act. Further statement of the loan lender was also recorded, which is not dealt with by the AO in its remand report. 14. The learned CIT(A) vide impugned order noted that statement under section 131 was recorded on 03/02/2017, wherein the fact of grant and receipt of loan and interest was accepted. Further, the learned CIT(A) accepted the contention of the assessee in regard to the loan transaction with Meridien Jewellery Pvt. Ltd., by observing as under: When we examine all the above facts, as appellant had attended summons u/s 131 and also filed Income tax return copy which has PAN address, this proves the identity of the lender. Here loan was paid of Rs.40 lakhs through banking channel and amount was also received back through banking channel. In this loan. interest was paid and als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO on the basis of search conducted in the case of Shri Bhanwarlal Jain group and in absence of any detail, made addition under section 68 of the Act. Before the learned CIT(A), assessee filed additional evidence and remand report of the AO was sought. In the remand report filed before the learned CIT(A), reference was again made to the statement recorded during the course of aforesaid search on 03/10/2013. In reply, assessee submitted that the AO in the remand proceedings issued notice under section 133 (6) as well as summons under section 131 of the Act. Further statement of the loan lender was also recorded, which is not dealt with by the AO in its remand report. 17. The learned CIT(A) vide impugned order noted that statement under section 131 was recorded on 26/04/2017, wherein the fact of grant of loan was accepted. Further, the learned CIT(A) accepted the contention of the assessee in regard to the loan transaction with Ashok Kumar Jain, by observing as under: On examination of these facts and also the the statement recorded u/s 131, it is clear that appellant's identity was proved as Income tax return copy was submitted. All the transactions were carried through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit is only Rs. 9,56,747. Therefore, since the facts have not been correctly appreciated by the learned CIT(A), we deem it appropriate to remand the addition pertaining to this loan transaction of the assessee with Ashok Kumar Jain to the file of learned CIT(A) for de novo adjudication. The learned CIT(A) shall be at liberty to seek any other information / document for complete adjudication of this issue. Needless to mention that no order shall be passed without affording opportunity of being heard to both the sides. (iv) Paresh Babulal Patel 19. During the course of assessment proceedings, it was noticed that assessee has taken loan of Rs. 87,50,000, from Paresh Babulal Patel. In absence of reply pursuant to notice issued under section 133(6) of the Act, the AO made the addition in respect of this loan transaction under section 68 of the Act. Before the learned CIT(A), assessee filed additional evidence and remand report of the AO was sought. In the remand report filed before the learned CIT(A), it was submitted that unsecured loan have been advanced by the lender on the same day on which he had received the money from other person. In reply, assessee submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid findings of the learned CIT(A). v) Shreeji Aluminium Pvt Ltd. 22. During the course of assessment proceedings, it was noticed that assessee has taken loan of Rs.6,31,00,595, from Shreeji Aluminium Pvt. Ltd. In absence of reply pursuant to notice issued under section 133(6) of the Act, the AO made the addition in respect of this loan transaction under section 68 of the Act. Before the learned CIT(A), assessee filed additional evidence and remand report of the AO was sought. In the remand report filed before the learned CIT(A), it was submitted that unsecured loan have been advanced by the lender on the same day on which he had received the money from other person. In reply, assessee submitted that the AO in the remand proceedings issued notice under section 133(6) as well as summons under section 131 of the Act. Further statement of the loan lender was also recorded, which is not dealt with by the AO in its remand report. The assessee further submitted that out of the whole amount of Rs. 6,31,00,595, Rs. 3,74,95,540, is the opening balance. The assessee also submitted that during the year it had business transaction with this lender and made purchases of Rs. 59,30,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dated 06/08/2019 filed by the AO, through office of learned DR, we find that the AO accepted the fact that pursuant to summons issued under section 131 statement of Director of Shreeji Aluminium Pvt Ltd. We find that even in the latest submission dated 12/07/2022, filed by the learned DR, statement recorded under section 131 is stated to be self-serving in nature, which is not corroborated with balance sheet and profit and loss account. From the perusal of financials of Shreeji Aluminium Pvt Ltd., forming part of the paper book from page 131 156, we find that the company has Revenue from operations of Rs. 8,55,41,652. Further, it has long-term borrowing of 3,90,15,064, from Karnataka bank Ltd. The company has fixed assets of Rs. 2,54,93,062. We further find that the company has trade payables of Rs. 1,83,68,844 in comparison to trade receivables of Rs. 5,79,22,610. Therefore, in view of the aforesaid financial position of Shreeji Aluminium Pvt Ltd., we do not agree with the submissions of the Revenue. As a result, we find no infirmity in the aforesaid findings of the learned CIT(A). 25. In respect of all the other entities, the AO in its remand report gave similar reply that u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctly deleted the addition in respect of this entity. 29. Further, as regards payment from Suyash Mittal family, it is the claim of the assessee that this is in respect of repayment of earlier loan. No material contrary to assessee s claim has been brought on record. Thus, we are of the considered view that learned CIT(A) has correctly deleted the addition in respect of this entity. 30. In respect of loan of Rs. 6,00,000 from Parul Mittal, we find from page 123 of the paper book that the person has capital of Rs. 59,04,304, loans and advances receivable of Rs. 42,92,118, and fixed assets of Rs. 4,87,510. In respect of loan of Rs. 52,24,000 from Sanjay Mittal Sons, we find from page 201 of the paper book that it has capital of Rs. 23,53,896. In respect of loan of Rs. 9,00,000 from Shivakumar Sons HUF, we find from page 208 that it has capital of Rs. 23,09,835.17. As regards loan of Rs. 3,87,000 from Vikas Mittal Sons, we find from page 228 that it has capital of Rs.25,07,454.50. Further, as regards loan of Rs. 2,90,000 from Ram Mittal HUF, we find from page 129 of paper book that it has capital of Rs. 22,94,715. However, we find that the details of capital account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought and hence resulting in delay in filing the present cross objection. In view of the above, assessee has submitted that the delay was in the bona fides circumstances and has prayed for condonation of same. The learned DR did not raise any serious objection and therefore, in view of the submissions made in the application seeking condonation of delay, we are of the considered view that there was sufficient cause for not filing the present cross objection within the limitation period. Accordingly, we condone the delay in filing the present cross objection by the assessee. 34. The ground No. 1, raised in assessee s cross objection, is more of an argument by assessee in support of the impugned order passed by the learned CIT(A). Therefore, the same needs no adjudication. 35. In grounds No. 2 and 3, assessee has challenged issuance of notice under section 143(2) of the Act on the ground that the same is without jurisdiction. It is the plea of the assessee that notice under section 143(2) was issued by ITO Ward 25 (2) (1), however, the jurisdiction in the case of the assessee lies with ACIT 33 (2), Mumbai. From the perusal of record we find that this issue was not raised by t ..... 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