TMI Blog2021 (2) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... addition made u/s. 68 of the Act, on the ground that these are unexplained cash credits, is bad in law. The loan creditors in this case have also explained sources of sources. Assessing Officer as well as the Ld. CIT(A) based their decisions on conjectures and surmises. Thus, this addition made u/s. 68 of the Act, is hereby deleted. Consequently, the interest expenditure disallowed on these cash credits is also directed to be deleted - Decided in favour of assessee. - ITA No. 2634/Kol/2019 - - - Dated:- 12-1-2021 - J. Sudhakar Reddy, Member (A) And S.S. Godara, Member (J) For the Appellant : Miraj D. Shah, Advocate For the Respondents : Dhrubajyoti Ray, JCIT, D/R ORDER J. Sudhakar Reddy, Member (A) 1. This appeal filed by the assessee is directed against the order of the Learned Commissioner of Income Tax (Appeals) - 5, Kolkata, (hereinafter the Ld. CIT(A) ), passed u/s. 250 of the Income Tax Act, 1961 (the 'Act'), dt. 02/12/2019, for the Assessment Year 2013-14. 2. The assessee is a company and e-filed its return of income for the Assessment Year 2013-14 on 25/09/2015, declaring total income of ₹ 39,41,690/-. The assessee was engaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee submitted that the notice u/s. 143(2) of the Act was issued by the Assessing Officer i.e., ITO Ward-3(3) and that the assessee has raised objections and consequently the file was transferred to the jurisdictional Assessing Officer i.e., DCIT, Cricle-11(1), Kolkata, who had passed the impugned assessment order on 14/03/2016. He submitted that the jurisdictional Assessing Officer i.e., DCIT, Circle-(11)(1), Kolkata, did not issue any notice u/s. 143(2) of the Act and hence the assessment order passed u/s. 143(3) of the Act, is bad in law. Alternatively, he submitted that in case ITO, Ward-3(3), Kolkata is the jurisdictional officer, then the assessment order passed by the DCIT, Circle-11(1), Kolkata, is without jurisdiction and hence bad in law. 7. On merits, he submitted that as on 01/04/2012, the assessee had opening balance of unsecured loans including interest of ₹ 2,80,85,410/- and further an opening balance amount of ₹ 2,69,00,000/- without interest, which appeared in the balance sheet. He submitted that as on 31/03/2013, unsecured loans of ₹ 5,89,62,908/- (including interest) and ₹ 5,54,00,000/- (without interest), is outstanding fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indings. He submitted that the companies which gave the loans, could not be found at the address stated in the documents and submitted that out of 32 parties only 22 parties replied to the notices. He relied on the order of the Ld. CIT(A) and pointed out that most of the companies which had given the loans, had meagre income, and that this shows that the creditworthiness of these companies is suspicious. He relied on the order of the Assessing Officer as well as the findings of the Ld. CIT(A) and submitted that the findings of the Ld. CIT(A) on this issue may be upheld. 9. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 10. In this case, the ITO Ward-3(3), Kolkata, issued notice u/s. 143(2) of the Act on 04/09/2014. In reply, on 22/09/2014, the assessee wrote to the ITO, Ward-3(3), Kolkata, stating that he has no jurisdiction over the assessee. Thereafter on 31/07/2015, the DCIT, Circle-11(1), Kolkata, had issued notice u/s. 142(1) of the Act to the assessee. The DCIT, Circle-11(1), Kolkata, completed assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that there is no dispute in the fact that the notice u/s. 143(2) of the Act dt. 29/09/2016 has been issued by the ITO, Wd-1(1), Durgapur. Later, the case was transferred to the jurisdiction of the ACIT on 11/08/2017. Thereafter, no notice u/s. 143(2) of the Act was issued by the Assessing Officer having jurisdiction of this case and who had completed the assessment on 26/12/2017 i.e., ACIT, Circle-1(1), Durgapur. Under these circumstances, the question is whether the assessment is bad in law for want of issual of notice u/s. 143(2) of the Act. 9. This Bench of the Tribunal in the case of Shri Sukumar Ch. Sahoo vs. ACIT in ITA No. 2073/Kol/2016 order dt. 27.09.2017, held as follows:- 5. From a perusal of the above Instruction of the CBDT it is evident that the pecuniary jurisdiction conferred by the CBDT on ITOs is in respect to the 'non corporate returns' filed where income declared is only up to ₹ 15 lacs; and the ITO doesn't have the jurisdiction to conduct assessment if it is above ₹ 15 lakhs. Above ₹ 15 lacs income declared by a non-corporate person i.e. like assessee, the pecuniary jurisdiction lies before AC/DC In this case, admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d statutory notice which was beyond the time limit prescribed for issuance of notice u/s. 143 of the Act. We note that the ACIT by assuming the jurisdiction after the time prescribed for issuance of notice u/s. 143(2) of the Act notice became quorum non judice after the limitation prescribed by the statute was crossed by him. Therefore, the issuance of notice by the ACIT, Circle-27, Haldia after the limitation period for issuance of statutory notice u/s. 143(2) of the Act has set in, goes to the root of the case and makes the notice bad in the eyes of law and consequential assessment order passed u/s. 143 of the Act is not valid in the eyes of law and, therefore, is null and void in the eyes of law. Therefore, the legal issue raised by the assessee is allowed. Since we have quashed the assessment and the appeal of assessee is allowed on the legal issue, the other grounds raised by the assessee need not to be adjudicated because it is only academic. Therefore, the additional ground raised by the assessee is allowed. 7. In the result, appeal of assessee is allowed. 9.1. This Bench of the Tribunal in the case of Krishnendu Chowdhury vs. ITO reported in [2017] 78 taxmann.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 143(2) of the Act was never issued which was evident from the orders passed on record as well as the stand taken by the Appellant in the memo of appeal. It was further submitted that issuance of notice under Section 143(2) of the Act being prerequisite, in the absence of such notice, the entire proceedings would be invalid. 8. The law on the point as regards applicability of the requirement of notice under Section 143(2) of the Act is quite clear from the decision in Hotel Blue Moon's case (supra). The issue that however needs to be considered is the impact of Section 292BB of the Act. 9. According to Section 292BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee. It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial year 2012-2013 on 02/08/2012. The loan was made by account payee cheque/RTGS. This company was incorporated on 19/03/1996 and was having company identification number U51909WB1996PTC078213. This company duly filed its return of income before ITO Ward 9(1), Kolkata and was having PAN AAACA3914A. This company was having a paid up capital with free reserves and surplus of ₹ 1,60,75,700/- as on 31/03/2013 and ₹ 1,60,75,700/- as on 31/03/2012 respectively. The said loan including interest was repaid on 03/11/2012. The copy of the Confirmation of account, TDS, Audited Accounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which this company had made the loan are also available in the paper book. All the relevant documents for this company are available on pages 347-360 of the Paper Book-2. Certified Copy of their reply u/s. 133(6) of the Income Tax Act, 1961 filed before the Ld. AO is available on page No. 298-299 of the Paper Book-1. 2) M/s. Ayush Business Private Limited: This Company had given a loan ₹ 10,00,000/- to the assessee company, which was received during the financial year 2012-2013 on 22/05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which this company had made the loan are also available in the paper book. All the relevant documents for this company are available on pages 379-393 of the Paper Book-2. Certified Copy of their reply u/s. 133(6) of the Income Tax Act, 1961 filed before the Ld. AO is available on page No. 302-303 of the Paper Book-1. 4) M/s. Balasaria Holdings Private Limited: This Company had given a loan ₹ 5,00,000/- to the assessee company, which was received during the financial year 2012-2013 on 27/07/2012. The loan was made by account payee cheque/RTGS. This company was incorporated on 12/09/1995 and was having company identification number U67120WB1995PTC074216. This company duly filed its return of income before ITO Ward 5(4), Kolkata and was having PAN AABCB1322L. This company was having a paid up capital with free reserves and surplus of ₹ 66,41,05,705/- as on 31/03/2013 and ₹ 66,46,33,490/- as on 31/03/2012 respectively. At the end of the year there was a closing balance of ₹ 5,36,690/- to be payable by the assessee company to above party and the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24/01/2013. The copy of the Confirmation of Account, TDS, Audited Accounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which this company had made the loan are also available in the paper book. All the relevant documents for this company are available on pages 435-460 of the Paper Book-2. Certified Copy of their reply u/s. 133(6) of the Income Tax Act, 1961 filed before the Ld. AO is available on page No. 309-310 of the Paper Book-1. 7) M/s. Deora Finance Private Limited: This Company had given a loan ₹ 27,00,000/- to the assessee company, which was received during the financial year 2012-2013 on 22/09/2012. The loan was made by account payee cheque/RTGS. This company was incorporated on 18/03/1988 and was having company identification number U65993WB1988PTC043976. This company duly filed its return of income before ITO Ward 6(1), Kolkata and was having PAN AABCD1811E. This company was having a paid up capital with free reserves and surplus of ₹ 29,81,72,293/- as on 31/03/2013 and ₹ 29,77,14,280/- as on 31/03/2012 respectively. The said loan including interest was repaid on 29/01/2013. The copy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us is enclosed herewith along with the Written Submission. The copy of the Confirmation of account, TDS, Audited Accounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which this company had made the loan are also available in the paper book. All the relevant documents for this company are available on pages 499-517 of the Paper Book-2. 10) M/s. Indraloke Tie-Up Private Limited: There was a opening balance of 10,00,000/- including interest which was received by the assessee company in the previous year and a further loan of ₹ 5,00,000/- to the assessee company, which was received during the financial year 2012-2013 on 25/05/2012. The loan was made by account payee cheque/RTGS. This company was incorporated on 24/12/2008 and was having company identification number U51909WB2008PTC131451. This company duly filed its return of income before ITO Ward 6(1), Kolkata and was having PAN AACCI0038F. This company was having a paid up capital with free reserves and surplus of ₹ 1,51,20,483/- as on 31/03/2013 and ₹ 1,51,08,860/- as on 31/03/2012 respectively. At the end of the year there was a closing balance of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 076826. This company duly filed its return of income before ITO Ward 12(3), Kolkata and was having PAN AAACJ6457F. This company was having a paid up capital with free reserves and surplus of ₹ 19,99,64,373/- as on 31/03/2013 and ₹ 19,96,81,622/- as on 31/03/2012 respectively. The said loan including interest was repaid on 08/11/2012. The copy of the Confirmation of Account, TDS, Audited Accounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which this company had made the loan are also available in the paper book. All the relevant documents for this company are available on pages 557-586 of the Paper Book-2. Certified Copy of their reply u/s. 133(6) of the Income Tax Act, 1961 filed before the Ld. AO is available on page No. 316 of the Paper Book-1. Certified Copy of their statement recorded u/s. 131 of the Income Tax Act, 1961 filed before the Ld. AO is available on page No. 341-343 of the Paper Book-1. 13) M/s. KR Infra Projects Private Limited: This Company had given a loan ₹ 50,00,000/- to the assessee company, which was received during the financial year 2012-2013 on 11/09/2012. The loan was made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the financial year 2012-2013 on 29/06/2012 05/09/2012. The loan was made by account payee cheque/RTGS. This company was incorporated on 27/09/2011 and was having company identification number U45400WB2011PTC168191. This company duly filed its return of income before ITO Ward 49(1), Kolkata and was having PAN AACCL1073D. This company was having a paid up capital with free reserves and surplus of ₹ 49,25,58,364/- as on 31/03/2013 and ₹ 49,24,99,296/- as on 31/03/2012 respectively. At the end of the year there was a closing balance of ₹ 21,43,212/- to be payable by the assessee company to above party and the said loan including interest was repaid on 03/11/2012. The copy of the Confirmation of account, TDS, Audited Accounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which this company had made the loan are also available in the paper book. All the relevant documents for this company are available on pages 612-634 of the Paper Book-2. 16) M/s. Mojjika Steels Private Limited: There was a opening balance of 11,08,000/- including interest which was received by the assessee company in the previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the assessee company in the previous year and a further loan of ₹ 20,00,000/- to the assessee company, which was received during the financial year 2012-2013 on 22/05/2012. The loan was made by account payee cheque/RTGS. This company was incorporated on 30/12/2008 and was having company identification number U51909WB2008PTC131563. This company duly filed its return of income before ITO Ward 6(3), Kolkata and was having PAN AACCN9212G. This company was having a paid up capital with free reserves and surplus of ₹ 7,14,86,411/- as on 31/03/2013 and ₹ 7,20,09,431/- as on 31/03/2012 respectively. At the end of the year there was a closing balance of ₹ 42,15,408/- to be payable by the assessee company to above party and the said loan including interest was repaid on 20/11/2013. Copy of Confirmation of Account reflecting therein nil balance to be payable by us is enclosed herewith along with the Written Submission. The copy of the Confirmation of Account, TDS, Audited Accounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which this company had made the loan are also available in the paper book. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. AO is available on page No. 325-326 of the Paper Book-1. 21) M/s. Poonam Mercantiles Private Limited: This Company had given a loan ₹ 15,00,000/- to the assessee company, which was received during the financial year 2012-2013 on 02/08/2012. The loan was made by account payee cheque/RTGS. This company was incorporated on 19/03/1996 and was having company identification number U51909WB1996PTC078213. This company duly filed its return of income before DC-CIRCLE-XIII, Kolkata and was having PAN AABCP5206F. This company was having a paid up capital with free reserves and surplus of ₹ 3,63,88,041/- as on 31/03/2013 and ₹ 3,63,61,025/- as on 31/03/2012 respectively. At the end of the year there was a closing balance of ₹ 15,39,946/- to be payable by the assessee company to above party and the said loan including interest was repaid on 02/01/2016. Copy of Confirmation of Account reflecting therein nil balance to be payable by us is enclosed herewith along with the Written Submission. The copy of the Confirmation of account, TDS, Audited Accounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of the year there was a closing balance of ₹ 10,43,200/- to be payable by the assessee company to above party and the said loan including interest was repaid on 26/02/2016. Copy of Confirmation of Account reflecting therein nil balance to be payable by us is enclosed herewith along with the Written Submission. The copy of the Confirmation of account, TDS, Audited Accounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which this company had made the loan are also available in the paper book. All the relevant documents for this company are available on pages 794-833 of the Paper Book-2. Certified Copy of their reply u/s. 133(6) of the Income Tax Act, 1961 filed before the Ld. AO is available on page No. 331-332 of the Paper Book-1. 24) M/s. Saraogi Viniyog Private Limited: This Company had given a loan ₹ 50,00,000/- to the assessee company, which was received during the financial year 2012-2013 on 22/05/2012. The loan was made by account payee cheque/RTGS. This company was incorporated on 06/04/1995 and was having company identification number U65999WB1995PTC070950. This company duly filed its return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2012-2013 on 05/11/2012. The loan was made by account payee cheque/RTGS. This company was incorporated on 23/01/2008 and was having company identification number U74120WB2008PTC122038. This company duly filed its return of income before ITO Ward 1(1), Kolkata and was having PAN AALCS5338P. This company was having a paid up capital with free reserves and surplus of ₹ 5,01,06,864/- as on 31/03/2013 and ₹ 5,00,89,791/- as on 31/03/2012 respectively. At the end of the year there was a closing balance of ₹ 10,43,496/- to be payable by the assessee company to above party and the said loan including interest was repaid on 22/03/2016. Copy of Confirmation of Account reflecting therein nil balance to be payable by us is enclosed herewith along with the Written Submission. The copy of the Confirmation of Account, TDS, Audited Accounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which this company had made the loan are also available in the paper book. All the relevant documents for this company are available on pages 880-900 of the Paper Book-2. 27) M/s. STB Export Private Limited: This Company had given a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2008 and was having company identification number U92100WB2008PTC123768. This company duly filed its return of income before DCIT Central Circle-4 (XVIII)/KOL, Kolkata and was having PAN AACCV6598B. This company was having a paid up capital with free reserves and surplus of ₹ 3,07,95,251/- as on 31/03/2013 and ₹ 3,07,80,898/- as on 31/03/2012 respectively. At the end of the year there was a closing balance of ₹ 21,47,353/- to be payable by the assessee company to above party and the said loan including interest was repaid on 22/03/2016. Copy of Confirmation of Account reflecting therein nil balance to be payable by us is enclosed herewith along with the Written Submission. The copy of the Confirmation of account, TDS, Audited Accounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which this company had made the loan are also available in the paper book. All the relevant documents for this company are available on pages 939-961 of the Paper Book-2. 30) M/s. Venkatesh Realcon Private Limited: This Company had given a loan ₹ 25,00,000/- to the assessee company, which was received during the financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital with free reserves and surplus of ₹ 1,52,81,107/- as on 31/03/2013 and ₹ 1,49,45,468/- as on 31/03/2012 respectively. The said loan including interest was repaid on 14/03/2013. The copy of the Confirmation of Account, TDS, Audited Accounts, IT Return and other documents are available in the Paper Book-2. The details of source of funds from which this company had made the loan are also available in the paper book. All the relevant documents for this company are available on pages 1000-1013 of the Paper Book-2. 13. On examining the above voluminous records and documents produced by each creditor in support of the genuineness of the transaction and as interest has been paid on all these loans and as TDS has been deducted on these interest payments and as the Assessing Officer nor the Ld. CIT(A) have any adverse material to controvert the evidence filed by each of these creditors and also looking at the fact that each of the parties are assessed to Income Tax and as many of the loans have been repaid, we come to a conclusion that the addition made u/s. 68 of the Act, on the ground that these are unexplained cash credits, is bad in law. The loan creditors in this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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