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D.K. Enterprise Versus ACIT, Central Circle 15 & 16, Mumbai

2016 (5) TMI 427 - ITAT MUMBAI

Addition on unsecured loans - Held that:- Assessee had not received any fresh loan during the year under consideration, that all the loans were appearing on the first date of the assessment year are older loans. In the earlier years, the assessee had filed confirmation letters or other documentary evidences to show the genuineness of the transaction. In those years, the AO. s had dealt the loans independently. Either they had not made any addition u/s. 68 of the Act by holding that the loan tran .....

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ot be added to the income of the assessee, under section 68 of the Act, in subsequent years. In the case, under consideration, all the loans are of earlier years, as stated earlier. In the cases of Manju Bafna, Praveen Bafna, Shailesh Bafna additions were made in earlier year . Therefore, in our opinion no addition can be made for the year under appeal, as it would result in double addition of the same amount. As far as the provisions of section 28 (iv) of the act is concerned we are of the opin .....

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Respondent : Shri J. D. Mistry ORDER Per Rajendra, AM Challenging the order, dtd. 24/05/2010 of the CIT (A)-23, Mumbai the assessee has filed the present appeal. Assessee-firm, engaged in the business of building construction, filed its return of income on 01/12/2003, declaring total income at rupees NIL. The assessing officer (AO) completed the assessment, u/s. 143(3) of the Act, on 14/02/2006, determining the income of the assessee at ₹ 5. 10 Crores. During the course of hearing before u .....

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summons to the creditors. On the basis of the assessee s request summons were issued as per the addresses given by the assessee wherein no loan confirmation had been filed. Ten of the summons were returned by the postal authorities. The AO directed the assessee to furnish the new addresses and to produce the parties concerned. Hearing was fixed on 09. 02. 2006. However, instead of producing the parties, the authorized representative(AR)of the assessee appeared on 02. 03. 2006 before the AO and g .....

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limitation. He held that these liabilities were carried forward year after year in the balance sheet, that genuineness of the transactions was never could that in the case of Agarwal Machine and Engineering stores opening balance of ₹ 3, 00, 000/-was written off and was offered as income for the year under consideration. As a result, the loan amount of ₹ 50. 76 lakhs was added to the total income of the assessee u/s. 68 of the Act as unexplained cash credit. 3. Aggrieved by the order .....

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that in the case of Anand Mangal Fintrade Ltd. (AMFL)an amount of ₹ 2 lakhs has already been deleted in the appellate proceedings of the A. Y. 1989-90, that the Tribunal, vide its order date 29. 06. 2001, had deleted the addition, that AO was not justified in disallowing the amount in question, that the amount of loans of three parties namely Pravin Bafna, Shailendra Bafna and Manju J. Bafna(Rs. 3 lakhs, ₹ 6 lakhs and ₹ 3 lakhs respectively) were disallowed in the A. Y. 2001- .....

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ation letters to the AO, that the letters were received by that assessee after the last hearing took place. The assessee made an application to the FAA for admitting additional evidences. The FAA forwarded the fresh evidences to the AO for its comment, who , in his report dated 08. 02. 2010, stated the contention of the assessee had been considered. In case of Manju Bafna it was stated that after the effect was given to the order of the Tribunal the addition of ₹ 3 lakhs to the income of t .....

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sideration, that the liabilities were not trading liabilities, that the provision of section 41(1) of the Act were not applicable. After considering the submission of assessee and the assessment order along with the remand report of the AO, the FAA held that the assessee had dealt the matter and unresponsive manner, that it had failed to prove genuineness and the identity of the lender, that initially the AO was not supplied with the confirmation of the creditors, that summons were issued as the .....

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arties, that there was no compliance on 10. 03. 2006 also by the assessee, that in the entire span of about 2 to 3 years (November 2004 to March 2006) the assessee was not able to prove the genuineness of the loan taken in spite of the fact that a number of opportunities were provided by the AO. The FAA referred to the case of Sumati Dayal (214 ITR 801), Nanakchand Laximdas (104 ITR 151) and held that the assessee had failed to prove the genuineness of the transaction and the creditworthiness of .....

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of above nine parties amounting to ₹ 33, 76, 000/- remained unexplained. With regard to amount of ₹ 2, 00, 000/- showed as unsecured loan AMFL, the FAA observed that Tribunal had restored back the matter to the file of the AO, that the Tribunal had not deleted the addition outright, that during the year under consideration the amount remained outstanding, that the assessee had not furnished any evidence before the AO or him to support the fact that liability was alive and continuing. .....

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d liability was yet alive and continuing, that the provision of section 41(1)of the Act were not applicable to the facts of the case. However, the FAA held that as per the provision of section 28(iv) value of any benefit or perquisite arising from the business of the exercise of profession was a taxable item of income, that the transaction in question had close and direct nexus with the business of assessee, that the amount of ₹ 19 lakhs was liable to brought u/s. 28(iv) of the Act. 5. Bef .....

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t in the earlier year, the issue was set aside, that while giving effect to the order the AO had accepted the loan of AMFL. With regard to provisions of section 28(iv), he contended that provisions of said section were not applicable, that the assessee did not get any deduction. The Departmental Representative(DR) argued that assessee had admitted that time limit has lapsed for paying the loans, that it had not filed details before the AO during the assessment proceedings. 6. We have heard the r .....

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aiesh Bafna and Manju J. Bafna, the FAA invoked the provisions of section 28(iv)of the Act, that in the last case i. e. in case of AMFL an addition of ₹ 2. 00 lakhs was made by the AO while passing the order of AY 1989-90, that the Tribunal had deleted the disallowance vide its order date 29. 6. 2001. We further find that in the list of unsecured loans of the balance sheet of 31. 3. 2003 of the assessee (Pg No. 178-179 of the PB), the names of Arvind Enterprises, Bhagyalaxmi Trading Corpn. .....

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6. 2001)a relief of ₹ 13. 13 lakhs for the AY. 89-90, under the head unexplained cash credit added u/s. 68 of the Act, was given. It is found that the amount ₹ 13. 13 lakhs included the name of Anand Mangal(Rs. 2. 00 lakhs). Pg. No. 112 of the PB is the confirmation letter of Vinod Mehra, wherein he had confirmed the advancing the loan of ₹ 8. 50 lakhs to the assessee for the AY. 95-96. It also gives details of GIR No. of the Vinod Mehra. PgNo. 86 to 97 of the PB are the docume .....

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d a confirmation letter on 1. 4. 1999. Pg. No. 65 is the confirmation of SUB, dt. 1. 4. 01 for the AY 2001-02. Pg. No. 70 to 73 of the PB are about Rajesh Bafna. The documents include return of income, computation of total income for the AY. 2003-04. In the details of loans and advances the name of the assessee is appearing. Raj Enterprise has issued confirmation letter for the AY 2001-02 on 1. 4. 01 and had confirmed the transaction with the assessee. It has also given its PAN. Vide its letter .....

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of the Act, on 19. 3. 2004, for the AY. 2001-02. It is found that Prime Construction had issued confirmation letter (Pg. 95of the PB)for an amount of 1. 25 lakhs for the AY. 1993-94, giving its PAN. The confirmation was filed in response to notice issued u/s. 142(1) of the Act for the AY. 1994-95 by the AO. Pg No. 36 to 41 are the returns of income/AY. 2001-02 and 03-04, computation of income and balance sheet, PAN, Bank account and confirmation letter of the loan of ₹ 3. 00 lakhs of Jasbi .....

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see had filed confirmation letters or other documentary evidences to show the genuineness of the transaction. In those years, the AO. s had dealt the loans independently. Either they had not made any addition u/s. 68 of the Act by holding that the loan transactions were fictitious or they have made additions in that particular year. In our opinion, the AO can invoke the provisions of section 68 of the Act for the loans taken during a particular assessment year. But, if a loan is received in earl .....

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