9911796707
TMI Blog2021 (10) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus companies? 2. Whether on the fact and the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the addition made on account of unexplained unsecured loan without appreciating the facts the during course of assessment proceedings, the assessee company could not produce the directors of the investors companies before the Assessing Officer? Therefore, identity, capacity of the alleged investors and genuineness of transaction remained unexplained? 3. Whether on the fact and the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance on account of vehicle expenses amounting to Rs. 3,77,374/- without appreciating the fact that the assessee has not maintained any log register in respect of vehicle expenses to distinguish the business and personal nature of the expenses? 4. Whether on the fact and the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the disallowance on account of telephone expenses amounting to Rs. 65,719/- without appreciating the fact that the assessee has not maintained any call register in respect of telephone expenses to distinguish the business and personal natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT(A) who has deleted the addition made by Assessing Officer. Aggrieved, the Revenue is in appeal before us. 5.Mrs. Anupama Singla, Learned Senior DR for the revenue vehemently submitted before the Bench that during the course of assessment proceedings, the Assessing Officer observed that the assessee has taken unsecured loan of Rs. 2,85,00,000/- from 11 companies. The AO also observed that all these concerns having address at Kolkata and also found high frequency of common address of Companies and directors. In order to verify the correctness, the AO issued commission u/s 131(l)(d) to the DDIT( Inv.), Unit-II(l), Kolkata on 13.03.2014.In his reply the DDIT( Inv.) submitted that Summons u/s 131 of the IT Act could be served upon none of these lenders but one. The findings of Kolkata Investigation Wing indicated that the said companies are merely paper entities operating mainly for providing accommodation entries. Therefore, she stated that assessee has failed to establish the identity, genuineness and creditworthiness of the transactions of the alleged unsecured loans. Based on these facts, she prayed the Bench that order passed by the assessing officer should be upheld. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , ld Counsel prays the Bench that since learned CIT(A) has passed a reasoned order, and speaking order therefore the same me be upheld. 8.We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We find that key issue arises for our apt adjudication in the instant lis, is, whether assessee company has satisfied the three ingredients of section 68 of the Act, namely:(i) Identity; (ii) Genuineness; and (iii) Creditworthiness, in respect of Lenders/Creditors. Let us, first of all, we should consult the provisions of section 68 of the Act. Section 68 under which the addition has been made by the Assessing Officer reads as under: "68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reat the loans taken by the assessee from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw and adverse inference against the assessee. in the case of six creditors who appeared before the Assessing Officer and whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by' treating the cash deposits in their bank accounts as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents to the DDIT in response to this inquiry and the report, dated 26/03/2014, may be only a preliminary report. To verify the facts, the case records were called for by ld CIT(A), during the appellate proceedings and examined the same by him. On perusal, it is noticed by ld CIT(A) that in the case records, there is only one report of the DDIT dated 26/03/2014, in which it has been mentioned that the Inspectors of the Unit were deputed to serve the summons to the Lenders but except for Prime Vyapaar (P) Ltd., summons could not be served due to incomplete addresses of the lenders. Relevant part of the report reads as under:- "To investigate the above commission, inspectors attached with this unit were deputed to serve the summon u/s 131 of the IT Act to the companies as mentioned in our commission. But the inspectors were not succeeded to succeed to serve the summon to the companies mentioned in your commission due to insufficient addresses. Name of the companies which were unable to trace out by the inspectors are listed below with the remarks of the inspectors." Per contra, Ld. AO has reproduced the Enquiry Report purportedly received from Kolkata office in para 8.2 of assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TION LTD. 159 ITR 78 and of Hon'ble ITAT, Ahmedabad in the Case of ROHINI BUILDERS - 76 TTJ 521 (Ahd). Hon'ble Supreme Court in the case of ORRISSA CORPORATION LTD. 159 ITR 78 (supra) has held as under:- "13. In this case, the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income tax assessees. Their index numbers were in the file of the Revenue. The Revenue apart from issuing summons under S. 131 at the instance of assessee, did not pursue the matter further. The Revenue did not examine the source of income of said alleged creditors to find out they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue so-called alleged creditors. In those circumstances, the assessee could not do anything further.........." The Coordinate Bench of ITAT, Ahmedabad, in the case of ROHINI BUILDERS (supra) has also taken the view that merely because the summons issued to the creditors could not be served or they failed to appear before the AO, loans taken from those creditors could not be treated to be non-genuine. 12. When a question as to the creditwo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from sufficient documentary evidences furnished by the assessee. It is evident that all the lenders are very old companies assessed to tax and are also very old NBFCs registered with and regulated by the RBI and the loans were received through banking channel and have also been repaid in subsequent years through banking channel. The factum of repayment has not been disputed by the Ld. AO. The Ld. AO has not brought on record any finding or report of investigation agency to establish his allegation that impugned lenders were 'paper companies' or found indulged in racket of providing 'accommodation entries'. In absence of such material, we cannot take judicial notice about unfounded allegation in respect of these Lender Companies. Hence, reasons mentioned by the assessing officer in his assessment order, is not sufficient for making the addition under section 68 of the Act. From the details and documentary evidences furnished by the assessee, the identity, creditworthiness and genuineness of all the lenders are clearly established. Section 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
