TMI Blog2018 (11) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent : Shri Vinod Kumar Bindal And Shri Gaurav Bansal, A.Rs ORDER Per Ravish Sood, JM The present appeal filed by the revenue is directed against the order passed by the CIT(A)-8, Mumbai, dated 18.08.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (for short Act ), dated 29.03.2016. The revenue assailing the order of the CIT(A) has raised before us the following grounds of appeal: ( i) Whether on the facts and circumstances of the case and in law, the ld. CIT(A) was right in deleting the addition of ₹ 1,86,30,000/- made u/s 68 allowing the appeal of the assessee on account of loans received from M/s. Basant Marketing Pvt. Ltd. whereas the company was found bogus not only by the department but by other agencies also. ( ii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Unsecured Loan amounting to ₹ 1,86,30,000/- made by the Assessing Office u/s 68 of the I.T. Act, 1961 without appreciating that in CIT Vs P Mohankala (2007) 291 ITR 278 (SC), it has been held that the addition can be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction the A.O called upon the assessee to put forth an explanation as to why the alleged loan transaction totalling to ₹ 2,79,03,000/- entered with BMPL may not be treated as bogus and therein added to its total income as an unexplained credit under Sec.68 of the Act. In reply, it was submitted by the assessee that the DCIT (Central Circle-XXVIII), Kolkata, holding a conviction that BMPL was involved in providing bogus/accommodation entries had framed assessment in the latters case, vide his order passed under Sec.143(3), dated 08.03.2013. On the basis of the assessment framed in the case of BMPL, information was passed to the A.O having jurisdiction over the case of the assessee that BMPL was involved in providing bogus/accommodation entries, and the assessee was one of the beneficiaries of the same. It was submitted by the assessee that the CIT(A)-20, Kolkata had allowed the appeal of BMPL and exonerated it from the charge of being involved in providing bogus/accommodation entries. Further, it was brought to the notice of the A.O that the order of the CIT(A)-20, Kolkata was accepted by the A.O of BMPL and no further appeal was preferred against the same. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,07,992/- as on 31.03.2010 and the net current assets of the company is a negative f igure standing at ₹ 46,49,62,174/-. Since no interest is either paid or charged it gives rise to suspicion and all the loans are circulated among the group companies, purpose and motive of which gives rises to further suspicion of money laundering and hawala. ( f) Further, it is noteworthy that Bank statement. of BMPL show that before the transfer of funds to a group concern, funds were transferred to BMPL from other group concern and the chain continues among all the group concerns, without effecting the Profit . Loss Account of the parties as no interest is either charged or paid The real motive of the same has not been explained by the assessee company or the BMPL. In the backdrop of the aforesaid observations the A.O held the amount of loan of ₹ 1,86,30,000/- received by the assessee during the year from BMPL as an unexplained credit under Sec. 68 of the Act. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) after deliberating on the contentions advanced by the assessee was persuaded to accept the same. It was observed by the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Departmental Representative (for short D.R ) taking us through the facts of the case submitted, that as the source of the funds had not been proved to the hilt by the assessee, thus the addition made by the A.O by holding the same as an unexplained cash credit had wrongly been deleted by the CIT(A). The ld. D.R rebutted the support drawn by the assessee from the fact that BMPL was absolved by the CIT(A)-20,Kolkata of the charge of having indulged in providing bogus/accommodation entries, which as per the ld. A.R not having been further carried in appeal by the revenue had attained finality. The ld. D.R took us through a letter that was addressed by the A.O of the assessee company to the ITO, Ward-8(1), Kolkata seeking information as to whether the appeal against the order of the CIT(A)-20, Kolkata was not preferred before the Tribunal on merits or owing to low tax implication. It was averred by the ld. D.R that the A.O of BMPL had no authority to concede that no further appeal was being filed on merits. Rather, it was submitted by the ld. D.R that concrete information was received from the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal against the same, which thus had resultantly attained finality. On a perusal of the communication received from the ITO, Kolkata, it emerges that the order of the CIT(A)-20 was accepted by the revenue both on merits and low tax implication. In so far, the identity of the lender party is concerned, we find ourselves as being in agreement with the view taken by the CIT(A) that the same stands established beyond doubt. In respect of the creditworthiness of lender viz. BMPL, it emerges from the orders of the lower authorities that BMPL had received huge inflow of funds, which fact is supported by its bank statements. It is out of the said funds, that a loan of ₹ 1,86,30,000/- was advanced to the assessee company by BMPL. We are persuaded to be in agreement with the view taken by the CIT(A), that no onus was cast upon the assessee company to convince the A.O about the source of funds which had emanated from another group company which was already assessed to tax elsewhere, and whose books of accounts duly reflected the funds that have been loaned to the assessee. We are of the considered view that prior to the insertion of first proviso to Sec.68 by the Finance Act, 2012 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit. Further, a similar view was arrived at by the Hon ble jurisdictional High Court in the case of Pr. CIT-13, Mumbai Vs. Veedhata Tower Pvt. Ltd.(2018) 403 ITR 415 (Bom). The Hon ble High Court in its said judgment had observed that as per the pre-amended Sec. 68, i.e prior to A.Y 2013-14, it was not obligatory for the assessee to explain the source of the source of a credit appearing in its books of account. The Hon ble High Court had held as under : 7. The grievance of the appellant is that, even in the absence of the amendment to Section 68 of the Act, it is for the respondent-assessee to explain the source of the source of the funds received by an assessee. It is submitted that the respondent has not able to explain the source of the funds in the hands of M/s. LFPL and therefore this Appeal needs to be admitted. 8. This Court in Commissioner of Income Tax V/s. Gangadeep Infrastructure Pvt. Ltd, 394 ITR 680 has held that the proviso to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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