TMI Blog2020 (6) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. We thus affirm CIT(A)'s action deleting the impugned addition. The Revenue fails in its former substantive grievance. Unexplained cash credits - HELD THAT:- We note during the course of hearing that not only the assessee had proved identity, genuineness and creditworthiness of both these entities right in scrutiny but also the said entities duly responded to the Assessing Officer's verification exercise. Coupled with this, we are informed in the light of the lower appellate findings that the impugned unsecure loans already stand paid (supra). All these clinching aspects have gone unrebutted from the Revenue side. We therefore hold in these facts and circumstances that the CIT(A) had rightly deleted the impugned unexplained cash credits addition as well as interest payment in lower appellate discussion. The same stands affirmed. The Revenue's instant second substantive ground is also declined. - ITA No. 2101/KOL/2018 - - - Dated:- 19-6-2020 - Sh. S.S. Godara, Judicial Member And Dr. A.L. Saini, Accountant Member For the Appellant : Sh. Dhrubajyoti Ray, JCIT For the Respondent : Sh. Miraj D. Shah, AR. ORDER PER SH. S.S.GODARA, JUDICIAL M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) in stock summary as 19.01.2015( Page-36) total value is appearing at ₹ 5,08,28,743/-, whereas as per the books of the firm, the figure is ₹ 6,25,37,143/-. Therefore, it was submitted by the assessee that prima facie it was apparent from the said sheet that certain items of stock lying in the opening stock as on 01.04.2014 was taken at Nil value though the stock quantities were reflecting in the said survey sheet. It was explained by the assessee that when the value of opening stock is considered, the total stock value would exactly be the same figure of ₹ 6,25,37,143/-. The Ld. A.O has also recorded that the assessee has furnished a detailed working sheet in respect of stock summary. 2. The Id. AO has stated in the assessment order that the reply of the assessee was considered and not found to be acceptable. As per the Ld. AO it was to be noted that the assessee firm's stock of ₹ 7,24,02,168/- was found and physically inventorised by the survey team as on 20.01.2015, whereas the assessee could explain and reconcile stock of ₹ 6,25,37,143/- only. Therefore, the Ld. AO reckoned that there was excess stock of ₹ 98,65,025/ - (7,24,02,168 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g survey powers u/s 133A of the Act does not empower the ITO to examine any person on oath and hence the statement recorded thereon has got no eindentiary value . In the case of Anupam Nadi vs. ITO, Ward -46(1), Kolkata.fITA No. 2037/Kol/2014) given by the Hon'ble ITAT C Bench, Kolkata has endorsed the same view. g. The Godown in which survey u/s 133A was conducted used jointly by the associate concern namely M/s Sree Bishandas Iron Works for convenience of dispatch and delivery of goods. In the proceeding of survey operation u/s 133A the survey team inevitably found certain item of stock which belongs to the associate concern namely M/s Sree Bishandas Iron Works. The appellant during the hearing provided the documentary evidences with respect to such stock of ₹ 98,65,025/-, which conclusively suggest that the these stock was belongs to the associate concern M/s Sree Bishandas Iron Works. The appellant provided the books of account of the associate concern M/s Sree Bishandas Iron Works along with documentary evidences such as invoice copies and challan i.r.o such stock vide its submission dated 30.11.2017. Such books of account were already in the possession of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Stock of M/s Sree Bishandas Iron Works lying in our premises 245.27 98,65,025/- 1,716.64 7,24,02,168/- i. It is pertinent to mention here that in the statement recorded u/s 131 on 20.01.2015 Sri Lalit Kumar Goel had duly pointed out that I believe that we would achieve approximately around the figure (₹ 7,24,02,168/-) taken physically inventory of stock at the work shop at 321, G. T. Road(N), Howrah -711 202. After reconciliation at this stage it is established beyond all doubts if the Book Stock of the Associates concern M/s Sree Bishandas Iron Works is taken into account the entire physical stock would conform the stock in Books of Accounts. j. In the instant case, the assessing officer has exercised his discretion against the assessee and in favour of the revenue. The reason for exercising such discretion is that the alleged stock was found in the common premises of the appellant and such stock inventory was identifiable.[Paper Book pg no. 29-3 7] k. Here the decision of Calcutta High Court in the case of Principal Commissioner Income-tax, Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e its submission dated 30.11.2017. m. Stock summary of Sree Bishandas Iron Works for the period 01.04.2014 upto survey date i.e. 20.01.2015 is also produced before the Ld. A.O vide our submission 22.12.2017. The stock summary is also produced before your honour for your kind perusal and reference. [Paper Book pg no. 38-64] n. The appellant has also referred to the answers given by the partner of the firm for the questions raised by the Survey Team to reiterate that Shri Jagdish Parshad Goel, partner of the firm wasn't exactly sure about the valuation of the stock at the time survey statement recorded by the survey team, and that in order to cooperate with the department he agreed to deposit a sum of ₹ 47,00,000/- as advance tax based on the projected statement drawn by the survey team. o. Nevertheless the A.O without considering the reconciliation statement and written explanation in proper perspective unlawfully added back the Associate concern's stock of ₹ 98,65,025/ - in the hand of the appellant firm. 4. After carefully examining the action of the Ld. AO and the submissions filed by the appellant along with the relevant Paper Book, I find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t seized document) - Assessment year 2007-08 - Some scribbled figures were appearing on document seized in search -Assessee disowned this document - Revenue's case was that presumption would be that content of said document would be true and computation made by Assessing Officer would be valid in terms of section 69C - Appellate Authorities exercised their discretion against revenue and in favour of assessee for reason that no stock discrepancy could be demonstrated and there was no corroboration of figures forming basis of addition to income of assessee as was directed by Assessing Officer - No question about said document was put to assessee in course of search - Thus, appellate authorities doubted inherent probative value or quality of above document upon applying their mind on it and found that information contained in or revealed by document was not linked to undisclosed income of assessee and, hence, rejected reasoning of Assessing Officer on basis of which latter came to his finding that figures appearing on said document could be computed to arrive at undisclosed income of assessee - Whether since both appellate authorities had examined said document and found that same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carefully considered the action of the Ld.AO in making addition of ₹ 1,00,00,000/- as Unexplained cash credit u/s 68. The Ld. AO noticed from the details available on record and investigation wing that the concerned loan creditors are bogus/paper companies who are involved in giving accommodation entries in the form of unsecured loan in lieu of commission. The assessee in response argued that as regards to the Credit Worthiness of the Loan Creditor M/s Admire Vinimay Pvt Ltd is concerned, the said loan creditor provided the loan of ₹ 28,00,000/- out of its Owned Shareholders Fund. The Capital structure of the Loan Creditor is extracted below: Amount (Rs.) (a) Share Capital 1,29,30,000/- (b) Reserves and Surplus 30,11,30,082/- Total Shareholders Fund 31,40,60,082/- Loan given to Kwality Steel Processors (appellant) during the year of ₹ 28,00,000/-. The loan was given to the appellant in the normal course of business due to exigencies and contingencies and your appellant has duly pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Shareholders Fund 31,40,60,082/- Loan given to Kwality Steel Processors(appellant) during the year of ₹ 28,00,000/-. 7. I have carefully perused the submissions of the appellant and relevant documents. From the books of account it is apparent that the appellant has received loan amount of ₹ 28,00,000/- during the year and repaid the same in the year itself. The loan creditors also comply with the notice issued u/s 133(6) and provided the necessary documents. However as regards to the departmental data base report is concerned that the loan creditor is bogus/paper company it was argued by the appellant that no verification has been conducted by the Ld. A.O to proved that the such loan creditor is actually is a bogus/paper company. On the contrary such loan creditor comply with the all requirements which in an ideal world would normally suggest or fulfill all the conditioned. Moreover, the loan amount was duly repaid in the year itself [paper book pg no. 69], therefore in view of the decision of the Income Tax Appellate Tribunal (Delhi Bench I) in the case of Golden Remedies (P.) Ltd vs Income-tax Officer, W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given to the appellant in the normal course of business due to exigencies and contingencies and your appellant has duly provided interest on such loan and duly deducted TDS on such interest. However as regards to the departmental data base report is concerned that the loan creditor is bogus/paper company it was argued by the appellant that no verification has been conducted by the Ld. A.O to proved that the such loan creditor is actually is a bogus/paper company. On the contrary such loan creditor comply with the all requirements which in an ideal world would normally suggest or fulfil all the conditioned. Similarly, in the case of this Loan creditor also, the appellant / Ld. A.R has placed necessary evidence that the Loan Creditor has operating revenue ₹ 4,44,78,752/-, and that its credit-worthiness ought not to be doubted. Further from the financial statements of the loan creditor it is quite apparent that the loan creditor wasn't raised any share capital or borrowing during the relevant assessment year. Moreover, Ld. A.O had not at all carried out any investigation to show that those companies did not exist but were paper company; they were not having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y despite having their income tax details and annual accounts. Despite specific request, no details are called for either from the assessee or from the investor/ lender companies or from bankers and no summons under section 131 of the Income Tax act, 1961 or inquiry letter under section 133(6) of the Income Tax Act, 1961 were issued. No inspector report with respect to the investor/lender company was obtained or available with the Ld. A. O. It also appears that the Report of the Investigation Wing was not shown or confronted to the assessee-firm anytime during the scrutiny proceedings. 11. The Ld. A.O was not precluded from either obtaining the complete details from the MCA Website or from issuing notice u/s 133(6) of the Income Tax Act, 1961 to the Registrar of Companies for obtaining the annual reports, annual returns under the Companies Act and shareholders director's details since beginning of those companies. He may have also further obtained the DIN (Director's Identification No) of the directors of the companies which is linked with the Permanent Account No or any identification details of the directors. The details from bankers should also have been obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing officer should enquire from the Assessing Officer of the creditor as to the genuineness of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor but instead of adopting such course, the Assessing officer himself could not enter into the return of the creditor and brand the same as unworthy of credence. So long it is not established that the return submitted by the creditor has been rejected by its Assessing Officer, the Assessing officer of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness of transaction through account payee cheque has been established. Under the facts and circumstances, I am of the considered view that the addition is merely based on surmises and conjectures and on material not relevant for the case of the appellant-taxpayer. Therefore I find that the additions made by the Ld. AO are not sustainable on the facts of the case, and the law applicable. The addition of ₹ 1,00,00,000/ - is therefore deleted, and the grounds on merit are allowed in favour of the assessee. Ground No 4 therefore stands allowed. 11. Ground No 5 taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of both these entities right in scrutiny but also the said entities duly responded to the Assessing Officer's verification exercise. Coupled with this, we are informed in the light of the lower appellate findings that the impugned unsecure loans already stand paid (supra). All these clinching aspects have gone unrebutted from the Revenue side. We therefore hold in these facts and circumstances that the CIT(A) had rightly deleted the impugned unexplained cash credits addition of ₹1,00,00,000/- as well as interest payment of ₹19,43,506/- in lower appellate discussion. The same stands affirmed. The Revenue's instant second substantive ground is also declined. 6. Before parting, it is noted that the order is being pronounced after ninety days of hearing. However, taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the foregoing period needs to be excluded. For coming to such a conclusion, we rely upon the decision of the Co-ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited in ITA No. 6264/Mum/2018 6103/Mum/2018, Assessment Year 2013-14, order dated 14th May, 2020. 7. In the result, this Re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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