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M/s. D.K. Industries Versus I.T.O Ward 34 (3) , Kolkata

Unexplained cash credit u/s 68 - Held that:- The assessee had brought the loan balances from these three parties to Nil as on 31.3.2009 in its books of accounts. It is not in dispute that the assessee was indeed carrying on money lending business in the past and had derived interest income thereon. This is quite evident from the copy of audited balance sheets filed by the assessee for the years ended 31.3.1998 and 31.3.1999, wherein the interest income is admitted by the assessee as income from .....

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m making any recoveries. It is also not in dispute that the assessee had brought the balances of these parties to Nil as on 31.3.2009 in its books of accounts. Hence the assessee is entitled to claim the balances of these three parties as a trading loss u/s 28 of the Act. Thus we find lot of force in the alternative argument of the assessee that the non-recovery of the loan dues , according to Learned AO, should be allowed as a deduction as regular business loss from money lending activity , whi .....

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The Respondent : Shri Rajendra Prasad, JCIT, ld.Sr.DR ORDER SHRI M.BALAGANESH, AM This appeal of the assessee arises out of the order of the learned CIT(A)-XX, Kolkata in appeal no. 280/CIT(A)-XX/Wd-34(3)/11-12/Kol dated 17-12-2012 against the order of assessment framed for the assessment year 2009-10 u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ). 2. The only issue to be decided in this appeal is as to whether a sum of ₹ 36,50,036/- received by the assessee .....

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sum of ₹ 36,50,036/- , the assessee replied that one of the businesses of assessee firm is money lending and during the course of money lending business, it had advanced monies to the three parties and the said balances were outstanding for more than 10 years. During the assessment year under appeal, after lot of continued efforts from the assessee, the following three parties directly deposited cash into the bank account of the assessee towards repayment of their respective loan dues :- ( .....

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parties commencing from Asst Year 2003-04 onwards. The assessee stated that these loan balances were outstanding from Asst Year 1997-98 onwards but records were available with the assessee only from Asst year 2003-04 onwards. The assessee argued that the source of cash deposits in the bank account to the tune of ₹ 36,50,036/- is duly explained by way of loan balances received back from the aforesaid three parties in cash. The assessee also requested the Learned AO to issue summons u/s 131 .....

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t was argued that the assessee had placed the last known address of the loan debtor as is available in its records to the Learned AO and therefore the discharge of onus has been duly done by it. It was argued that had the Learned AO issued summons u/s 131 of the Act to those parties, they could have furnished necessary evidences in this regard. It was alternatively argued by the assessee that admittedly, one of the business of assessee was money lending and the lending to these three parties wer .....

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should be given the benefit of deduction of bad debt u/s 36(1)(vii) of the Act or as regular business loss as admittedly money lending is also one of the businesses of the assessee. It was argued that if the monies received from these three parties are not believed to be genuine, then correspondingly the assessee had already reduced the loan balances (part of business activity) on the asset side of the balance sheet which effectively amounts to write off the bad debt and hence deduction for the .....

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terprises ₹ 5,89,989/= and Vinay Kumar Baid ₹ 80,62,627/- which is due from them to the appellant since last more than Ten years and reflected as Sundry Debtors ( Loans & Advances) in the Balance Sheet. The aforesaid additions is unwarranted, bad in law and not sustainable. 2) That the Income-Tax Officer erred in invoking provisions of Sec.68 of I.T. Act and the Learned CIT(Appeals) erred in agreeing the same, which is not applicable in the Appellants case and hence the addition .....

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lated to creditors or loan taken but in this case the same relates to sundry debtors i.e. advance given by us to the parties in earlier years which has been received back. The creditworthiness of the Appellant who has advanced is proved, there is no credit entry in Appellant's Books but squared up debit entry and taxes have already been paid on debit entries. 5) That without prejudice to above the sundry debtors from whom money could not be realized after lapse of a decade, the same is to be .....

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ccounts of the assessee which amounts to effective write off of the same. He further argued that the Learned AO had not rejected the books of accounts of the assessee by pointing out certain deficiencies thereon. He placed reliance on the co-ordinate bench decision of this tribunal in the case of Sanjeev Kejriwal, Kolkata vs ITO in ITA No. 371/Kol/2010 dated 9.11.2012 in support of his contentions. In response to this, the Learned DR vehemently supported the orders of the lower authorities. 6. W .....

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143(1) of the Act dated 27.7.2001 for Asst Year 1999-2000 vide page 73 ; (v) copy of tax audit report together with audited accounts for Asst Year 1999-2000 vide pages 74 to 105 ; (vi) copy of IT return acknowledgement and assessment order us 143(3) of the Act for the Asst Year 1998-99 vide pages 106 to 113 and (vii) copy of audited balance sheet as on 31.3.1998 together with tax audit report vide pages 114 to 140 . 6.1. We find that the addition has been made the Learned AO on the ground that t .....

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ssessee had indeed requested the Learned AO to issue summons to M/s Raj Enterprises and M/s Brand Alloys Ltd to make verification of the subject mentioned receipts. But the said summons could not be served on the parties at the address given by the assessee to Learned AO. The assessee had only proved the identity of the loan creditors (as they are existing from 31.3.1998 in its books which is also accepted by revenue) , but however, the assessee was not able to prove the creditworthiness of thos .....

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ev Kejriwal vs ITO in ITA No. 371/Kol/2010 dated 9.11.2012, we find that the facts stated thereon are squarely distinguishable with regard to realization of monies from debtors. In that case, there was a clear finding given by the Learned CIT(A) that the monies received represent realization from debtors. Whereas, in the instant case, the entire dispute revolves on the fact of realization of monies from loan debtors. Hence reliance placed on the aforesaid decision does not advance the case of th .....

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for the sake of convenience :- 3. That the business of the firm shall be mainly that of export & import of agro products like raw cotton, pulses, food grain, spices etc., ginning and pressing of cotton, commission agent, manufacturer s representative, general merchant, financier including money lending business, real estate and shall be entitled to carry on any other trade or business or manufacturing whatsoever as mutually agreed upon by the partners. The same clause is present in the orig .....

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0,036/- in total of these three parties. This goes to prove that the assessee had continued its money lending business. During the asst year under appeal, the balances from these three parties are shown as nil in view of recoveries made by the assessee from them, according to assessee , which fact is also evident from the balance sheet as on 31.3.2009 filed in the paper book. However, the realization of monies from these loan parties have been disbelieved by the Learned AO and we have already gi .....

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