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2016 (4) TMI 251 - ITAT AHMEDABAD

2016 (4) TMI 251 - ITAT AHMEDABAD - TMI - Unexplained cash credit - Held that:- There is no doubt about the identity, genuineness and creditworthiness of loan taken from M/s Pappillion Exports Ltd. of ₹ 60,85,000/-. From going through the paper book at pages 83 to 85 wherein bank statement of Sarvodaya Co-op. Bank Ltd. in the name of M/s Pappillion Exports Ltd. a/c no.4479 as well as bank statement of M/s Hiral Pharma Ltd. are placed, we observe that in January, 1997 a cheque No.133279 has .....

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ords have been placed by assessee showing extract of financial statement of Sarvodaya Co-op. Bank Ltd. which is having a schedule of a/c wherein name of M/s Pappillion Exports Ltd. is appearing which shows that M/s Pappillion Exports Ltd. was having its banking transactions through Sarvodaya Co-op. Bank Ltd.

Thus there occurred a bank transaction between the assessee and M/s Pappillion Exports Ltd. and assessee has duly received loan of ₹ 60,85,000/- from M/s Pappillion Exports .....

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nt was framed u/s 143(3) read with section 254 of the I.T. Act., 1961 (in short the Act) on 30.12.2010 for Asst. Year 1997-98 by ITO, Wd-4(3), Ahmedabad. The following grounds have been raised by the Revenue :- 1. The Ld.CIT(A) has erred in law and on facts in deleting the addition made on account of cash credit in the name of M/s. Pappillion Export Ltd., without appreciating fact that the A.O. has established that the unexplained cash credit appearing in books of assessee is not genuine. 2. On .....

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s framed u/s 143(3) of the Act on 29.3.2000 determining taxable income at ₹ 54,61,740/- after making addition of ₹ 60,85,000/- as unexplained cash credit received from M/s Pappillion Exports Ltd. 3. Aggrieved, assessee went in appeal before ld. CIT(A) but it did not bring any relief to the assessee. Ld. CIT(A) upheld the addition vide his order dated 21.3.2001. Thereafter the assessee went in appeal before the Tribunal wherein the issue was examined and the co-ordinate bench set asid .....

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otal income of assessee and framed assessment order u/s 143(3) r.w.s 254 of the Act assessing total income at ₹ 54,61,740/-. 6. Aggrieved, assessee went in appeal before ld. CIT(A) against the order of ld. Assessing Officer and ld. CIT(A) allowed the appeal of assessee deleting the addition made by Assessing Officer by observing as under :- 6. I have carefully considered the submissions made by the appellant's counsel and have perused all the facts brought on the record before the AO a .....

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llant because appellant was never allowed any cross-examination at the assessment stage, therefore, this statement of Shri Sasidharan and ITO's report to be excluded from consideration and (b) to re-decide the issue by verifying the bank account of M/s. Pappilion Export Ltd. maintained with Shri Sarvodaya Co- Operative Bank Ltd., Ahmedabad with reference to the certificate issued by them on the matter. In nutshell, the AO was under judicial obligation to strictly follow the observation recor .....

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of the directions of the Hon'ble Tribunal in verifying the bank accounts of the creditor with the referred Bank, facts emerging from the records of the case are: The issue, essentially had been confined to the limited direction to cross verify the transaction. It is observed that the nature of credit in real terms was only a repayment/return of loan of ₹ 73,50,000/- advanced by the appellant company and its associated concerns earlier and the appellant has submitted the contra entry o .....

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far as the book of accounts of the appellant company was concerned. Even if the said amount of ₹ 60,85,000/- was considered as a loan, the appellant company had discharged its onus of proving the identity of the party, the genuineness of the credit entry through banking channel and source of source. Since all the ingredients as required by law appear fully satisfied, the explanation submitted on record does not suffer from any apparent or factual error, so far as the ambit of Section 68 is .....

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with law, has once again made addition by treating the advance through banking channel as unexplained bank deposit. As noted in the foregoing paragraphs of this order, the appellant has categorically established identity of the creditor, genuineness of the transactions and capacity of the creditor. Appellant's counsel has pointed out that recently, Hon'ble Gujarat High Court in the case of CIT Vs. Micro Melt (P) Ltd., reported in [2010] 327 ITR 70 (Guj) he/d as under :- That the neness .....

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gh banking channel. The AO has overlooked vital facts without bringing any relevant, cogent and positive material on record. Thus, although the genuineness of the transactions and the identity of the creditor has been fully established and nothing has been brought on record to contradict the findings of the fact noted by the Hon'ble Tribunal as well. The assessment order passed by the AO in the course of second round, reveals that the AO has been guided primarily by the view taken by his pre .....

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ct. The AO is, therefore, directed to delete the addition of ₹ 60,85,0007- made on account of cash credit in the name of the aforesaid creditor. 10. Since all other grounds of appeals i.e. ground No. 1 to 6 are connected to this effective ground No.7 and I have already decided the same as aforesaid, they are not being adjudicated separately. 11. In the result, the appeal is allowed. 7. Aggrieved, the Revenue is now in appeal before the Tribunal. 8. The ld. DR relied on the order of Assessi .....

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rom M/s Pappilion Export Ltd. through bank account held with Shree Sarvodaya Co-op. Bank Ltd. Ld. AR further submitted that letter of Shree Sarvodaya Co-op. Bank Ltd. was filed before the lower authorities to prove that the account of M/s Pappilion Export Ltd. and Hiral Pharma Ltd. were being maintained with their bank and also submitted that copies of bank statements were duly filed showing the transactions of loan given by M/s Pappilion Export Ltd. through cheque no.133279 and the same being c .....

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bodaya Co-op. Bank Ltd. 11. We find that the issue about genuineness and creditworthiness of the unsecured loan taken from M/s Pappilion Export Ltd. have been duly adjudicated by the co-ordinate bench vide their order dated 29th January, 2010 in ITA No.1255/Ahd/2001 and the relevant portion of the decision is reproduced below for ready reference :- 16. We have considered rival submissions and perused the materials available on record. The Assessing Officer noted that assessee has obtained unsecu .....

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y. Any transaction with the assessee was also denied. No books of accounts are maintained. The said statement of Shri K. B. Sasidharan was never put to the assessee for the purpose of allowing any cross examination on behalf of the assessee. We may also note that his statement would also not be relevant because in his statement he has stated that he has no idea about the cheque issued on behalf of their company from Sarvodaya Co. Op. Bank Ltd. Ahmedabad. He has not disputed the confirmation lett .....

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certificate is also filed, which is reproduced in the impugned order and copy of the same is also filed at PB-12. The said bank certificate is issued by Shri Sarvodaya Co.op. Bank Ltd. to Shri Bhagwandas Premchandani Director of M/s. Pappilon Exports Ltd. and copy of the same was also given to the assessee in which bank has certified that cheque no.133279 dated 01.01.1997 of ₹ 60,85,000/- has been issued in favour of M/s.Hiralal Pharma Ltd. i.e. the assessee s company. It was also certifie .....

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t of M/s. Pappilon Export Ltd. is maintained at Ahmedabad Branch and the Assessing Officer also have its office at Ahmedabad, despite that fact, the Assessing Officer did not verify the facts at Ahmedabad and chose to get the issue examined at Tamilnadu through the I.T.O. Erode. The I.T.O. Erode also did not examine Shri Bhagwandas Premchandani and the bank account at Ahmedabad despite sufficient material available before him also. Further report of I.T.O. Erode, was confronted to the assessee v .....

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y of the bank slip, therefore, it is the responsibility of the department to verify the correctness of the evidence from available sources. The assessee therefore requested to summon the bank for getting the matter verified. The Assessing Officer did not act upon on the request of the assessee and did not summon the banker to verify the above facts and also did not allow any cross examination to the statement of Shri K.B. Sasidharan and passed the assessment order within 2 days on 29.03.2000. Th .....

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5] reported in 10 ITJ 286 held as under:- It is now well settled that where the assessee requests the Assessing Officer to issue summons, to enforce attendance of the creditors to establish the genuineness and capacity of the creditors, it is duty of the Assessing Officer to enforce attendance of creditors by issuing summons. If the Assessing Officer does not choose to issue summons and examine the creditors, he cannot subsequently treat the loans standing in the name of such creditors as nongen .....

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ngs against the assessee without it being tested under cross examination. In the absence of the statement being tested, it cannot be said that it should be believed completely to the prejudice of the assessee. Considering the above discussion, it is clear that the statement of Shri K. B. Sasidharan recorded by I.T.O. Erode and his report would not be relevant to the matter in issue as well as cannot be read in evidence against the assessee because assessee was never allowed any cross examination .....

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the assessee, the amount was not repaid by Shri Bhagwandas Premchandani and no effort was made by him to help the assessee. The assessee therefore, pressurised the Bhagwandas Premchandani for repayment of the amount and ultimately Shri Bhagwandas Premchandani Director of M/s. Pappilon Exports Ltd. issued cheque of ₹ 60,85,000/- in favour of the assessee after obtaining overdraft facility from Sarvodaya Co. Op. Bank Ltd. The above submissions of the assessee have not been properly apprecia .....

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e company for settlement of the dues, where is a fault of assessee. The assessee in the best interest of the business activity of its company was required to receive back the money. Similarly, if M/s. Pappilon Exports Ltd. did not maintained any books of account at the time of issue of the cheque in favour of the assessee, how assessee could be blamed because assessee has no control over the internal affairs of M/s. Pappilon Export Ltd. and two of its Directors. The assessee has explained the id .....

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did not examine Shri Bhagwandas Premchandani and the bank account of M/s. Pappilon Exports Ltd. with Sarvodaya Co. Op. Bank Ltd. at Ahmedabad. The details filed for the bank account had not been disputed by the Assessing Officer. The Bank certificate filed on record and reproduced in the impugned order proved that M/s. Pappilon Exports Ltd. maintained bank account with Sarvodaya Co. Op. Bank Ltd. Ahmedabad through its Director Shri Bhagwandas Premchandani. It is also not disputed that Shri Bhagw .....

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despite making a request to the Assessing Officer to summon the banker for verification of the bank account of M/s. Pappilon Exports Ltd. with Sarvodaya Co.op. Bank Ltd. Ahmedabad vide letter dated 27.03.2000 (PB-11), did not file the bank certificate before the Assessing Officer. This fact is also recorded by Learned Commissioner of Income Tax (Appeals) in the impugned order at page 6, para-4, in which the submission of the assessee is recorded that the said bank certificate could not be furnis .....

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sing Officer to re-decide the issue by verifying the bank account of M/s. Pappilon Exports Ltd. maintained with Shri Sarvodaya Co. Op. Bank Ltd. Ahmedabad and the certificate issued by them on the matter in issue as is reproduced in the order of Learned Commissioner of Income Tax (Appeals) as well as page 7 of this order. The Assessing Officer shall redecide the issue as per observation given in this order by giving reasonable sufficient opportunity of being heard to the assessee within the peri .....

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