TMI Blog2018 (9) TMI 1540X X X X Extracts X X X X X X X X Extracts X X X X ..... he Johari Group mentioned about the loan of ₹ 50 lacs only. When the FIR is accepted as explanation of the transactions then the remaining amount of ₹ 50 lacs which is not found mentioned in the FIR is required to be established by producing the independent evidence. In the absence of the confirmations from the parties despite various opportunities granted to the assessee, we find that the assessee has failed to discharge his onus in respect of the balance amount of ₹ 50 lacs. Since a considerable time has lapsed and the assessee has already availed three opportunities, therefore, no reason to interfere with the orders of the authorities below regarding the addition of ₹ 50 lacs pertaining to the creditor Trimurti Enterprises and Johari Jewellers Pvt. Ltd. In the result, a part addition is deleted amounting to ₹ 14,25,000/- being already suffered tax in the block assessment and ₹ 50 lacs as it was part of the FIR and the details in the FIR and creditors in the books of accounts are matching. Unexplained loan creditors under section 68 - Held that:- We find that this amount of ₹ 8,00,000/- in the name of M/s. Sheetal Suitings Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri P.C. Parwal (CA) For the Revenue : Smt. Seema Meena (JCIT) ORDER PER VIJAY PAL RAO, JM : These two appeals by the assessee are directed against two separate orders of ld. CIT (A) dated 23rd February, 2018 and 3rd January, 2017 for the assessment years 1994-95 95-96 respectively. This is the third round of appeals for both the assessment years as in the earlier proceedings the matter was twice remanded by the Tribunal, once to the record of the AO and on the second round it was set aside to the record of the ld. CIT (A). The common issue raised by the assessee in these appeals is regarding addition sustained by the ld. CIT (A) under section 68 of the IT Act treating the loans received from various persons as unexplained cash credit. First, we take up the appeal for the assessment year 1994-95 wherein the assessee has raised the following grounds :- 1. The ld. CIT (A) has erred on facts and in law in confirming the addition of ₹ 1,30,35,000/- u/s 68 by treating the loan received from the following persons as non-genuine :- S.No. Particu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, amend and modify any of the grounds of appeal. 4. Necessary cost be allowed to the assessee. 2. The assessee is a proprietor of M/s. Terry Tex Overseas, M/s. V.R. Textiles and partner in M/s. Sikar Marino Trader. The assessee derived income from house property and interest income. The assessee filed his return of income on 16.12.1994 declaring income of ₹ 1,18,400/-. In the assessment completed under section 147 read with section 143(3) dated 28th March, 2002 the AO assessed the total income at ₹ 1,55,30,542/- by making the addition on account of unexplained loans/gifts of ₹ 1,48,10,000/- and disallowance of claim of interest of ₹ 5,92,142/-. Thus both the disallowances were inter-connected and rather the disallowance of interest is consequential to the disallowance of claim of loan. The assessee challenged the action of the AO by filing an appeal before the ld. CIT (A) and vide order dated 3rd September, 2004 the ld. CIT (A) allowed the relief of ₹ 1,24,90,000/- out of the total addition on account of unexplained loans of ₹ 1,48,10,000/-. Thus the ld. CIT (A) sustained the addition of ₹ 23,20,000/- in respect of cash credits. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the FIR not amount assessed in the block assessment. He simply confirmed the addition made by the Assessing Officer on this basis that the letters issued to certain persons returned back and few of the creditors did not comply the summons. However, he ignored this contention of the assessee that new addresses of few creditors were given to whom no letter was written by the Assessing Officer. We, therefore, considering the totality of the facts, deem it appropriate to set aside this issue back to the file of ld. CIT (A) to be adjudicated afresh in accordance with law after considering the various details which were claimed to have been filed before him by the assessee. Accordingly, the issue is remanded back to the file of ld. CIT (A) to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. The ld. CIT (A) has passed the impugned order as remanded by this Tribunal and confirmed the addition made by the AO of ₹ 1,30,35,000/-. 3. Aggrieved by the order of ld. CIT (A), the assessee has again approached the Tribunal third time. The ld. A/R of the assessee has submitted that out of this additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en stated in the FIR and, therefore, the said transaction of loan is otherwise proved from independent sources. 3.1. As regards the creditors to the extent of ₹ 14,25,000/-, the ld. A/R has submitted that the said amount was already assessed to tax in the block assessment. He has referred to the details of the amount assessed to tax in the block assessment and submitted that the 4 loan creditors having total loan of ₹ 14,25,000/- was part of the block assessment under section 158BC. The ld. A/R has pointed out that the AO made an addition of ₹ 1,19,73,000/- in the block assessment which includes this amount of ₹ 14,25,000/- in respect of the 4 creditors which is manifest from the record as per the details of additions made in the block assessment as well as the details of the creditors which are part of the additions made by the AO in the regular assessment years. He has further submitted that the said addition of ₹ 1,19,73,000/- made in the block assessment was sustained by the Tribunal vide order dated 1st December, 2007 in ITSSA No. 21/JP/1997. Hence the ld. A/R has submitted that the amount which is already added in the block assessment cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that this concern is also of Johari Group and the amount was received by cheque. The assessee produced the cheque details and copy of account of the creditor in support of the claim. However, the AO made the addition on the ground that summon issued under section 131 was refused to accept by this creditor. The ld. A/R has submitted that since the assessee has dispute with the Johari Group and a FIR was lodged against the assessee, therefore, due to hostile business terms the assessee could not produce the creditor before the AO. However, when the assessee is not having good terms with the creditor, and produced the evidence of receipt of the amount through cheque, then the addition is not justified. 3.4. Shri Krishna Builders ₹ 70,000/-. The ld. A/R has submitted that this amount was received by cheque and was also repaid by the assessee through cheque. However, the AO made the addition on the ground that summon issued under section 131 to the creditor was not responded and, therefore, when the creditor has not appeared before the AO the loan was treated as unexplained. He has submitted that when the assessee produced all other evidences of receipt and repayment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the contentions and objections of the assessee against the additions made by the AO and confirmed by the ld. CIT (A) is regarding ₹ 14,25,000/- which was part of the additions made by the AO in the block assessment for the assessment year 1995-96. Our attention was drawn to the block assessment order at pages 101 to 111 of the paper book wherein we find that out of the total addition of ₹ 1,19,73,000/-, an amount of ₹ 14,25,000/- pertains to 13 creditors which are common as in the block assessment as well as part of the additions made by the AO under section 68 of the IT Act. This fact has been pointed out by the assessee before the authorities below, however, neither the AO nor the ld. CIT (A) has taken the pain to verify the relevant record on this issue. Accordingly, in view of the fact that this amount of ₹ 14,25,000/- was already taxed by the AO while passing the block assessment order and the details of the creditors which were part of the additions made in the block assessment are placed at pages 88 to 94 of the paper book. Accordingly, the addition to the extent of ₹ 14,25,000/- is deleted. 5.1. As regards the loan of ₹ 1 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the 4 persons of Johari Group. Accordingly when the loan amount can be verified from the independent document and evidence and the creditors have already lodged FIR against the assessee, then to that extent the assessee has produced the cheque details of receipt of loans and repayment of the said loans, the source of the said amount stand duly explained and the addition made by the AO to the extent of ₹ 50 lacs which is part of the FIR is not justified. Hence we delete the addition of ₹ 50 lacs pertaining to the first 4 creditors as per the above details. 5.2. As against the balance amount of ₹ 50 lacs comprising of ₹ 25 lacs each of M/s. Trimurti Enterprises and M/s. Johari Jewellers Pvt Ltd., though the assessee filed the confirmations but despite various opportunities and the matter was remanded twice to the record of the authorities below, the assessee failed to produce the creditors for confirmation of the details filed by the assessee. Even the FIR filed by the Johari Group mentioned about the loan of ₹ 50 lacs only. Therefore, when the FIR is accepted as explanation of the transactions then the remaining amount of ₹ 50 lacs wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law in sustaining the disallowance of ₹ 18,09,798/- (2,58,092 + 15,51,706) out of interest expenses. He has further erred in sustaining the disallowance ignoring that his predecessor CIT (A) vide its order dt. 25.08.2009 has already deleted disallowance of Rs. 2,56,711/- and to this extent the order of ld. CIT (A) has attained finality. 3. The ld. CIT (A) has erred in facts and in law in not following the directions given by the Hon ble ITAT in correct prospective in confirming the above addition. 4. The assessee craves to alter, amend, and modify any of the grounds of appeal. 5. Necessary cost be allowed to the assessee. Ground No. 1 is regarding addition on account of unexplained loan creditors under section 68 of the IT Act. 7. In the reassessment proceedings, the AO made addition of ₹ 63,37,766/- as unexplained cash credit under section 68 of the IT Act. In the first round of appeal, the ld. CIT (A) deleted the addition to the extent of ₹ 25,09,853/- out of ₹ 54,37,766/- and sustained the additions of ₹ 9,00,000/- and ₹ 29,27,913/-. On further appeal by the assessee, this Tribunal vide order dated 31st May, 2007 set aside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the creditors, a legal notice was served through its Advocate for recovery of the loan amount of ₹ 10 lacs which established the fact that the transaction is genuine. Thus the ld. A/R has submitted that the AO and ld. CIT (A) has made the addition only for want of production of the creditor by the assessee which was not possible for the assessee after the lapse of a period of 22 years. The ld. A/R has submitted that having regard to the facts and circumstances of the case, the assessee at the first stage requested the AO to summon the parties for enquiry and also to conduct enquiry from the bankers of the creditors to ascertain the genuineness and creditworthiness of the parties. He has pointed out that the identities of the parties are not in dispute. The AO has doubted the creditworthiness and genuineness of the transactions. However, once the assessee requested for conducting the enquiry from the bankers of the creditors, it would have been established whether the creditors were having creditworthiness or not. He has relied upon the decisions as relied for the assessment year 1994-95. 9. On the other hand, the ld. D/R reiterated the submissions as made for the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd in respect of the claims of loan credits. We further note that the assessee has claimed to have repaid the amounts of loans for the assessment year 1994-95 in the subsequent assessment year. Therefore, the repayment which is prior to the introduction of new cash credits would be available for set off against the additions of this assessment year. Since the AO has not given the benefit of repayment of the amount to the assessee but the fact remains that the assessee has repaid some of the creditors appearing in the books for the assessment year 1994-95 during the assessment year 1995-96, therefore, to the extent of repayment as per the record and bank account of the assessee which is prior to the introduction of new creditors during the assessment year 1995-96, the assessee would get the benefit of the said amount. Thus to the extent of no change in the peak cash credit in the cash book of the assessee, the repayment would be considered as re-introduction of the fresh cash credit during the year. Hence, we allow part relief to the extent of repayment in above terms. The AO is directed to verify the details of the repayment and the peak cash credit in the cash book of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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