TMI Blog2021 (10) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... Additions u/s 68 - unsecured loan from various persons - HELD THAT:- On perusal of the remand report, we find that the Assessing Officer did not comment on any of the documents filed by the assessee during the course of the appellate proceedings rather the Assessing Officer reiterated the findings of the then Assessing Officer. Thus, it is clear that the Assessing Officer failed to controvert the genuineness of the transaction and identity as well as creditworthiness of these parties. As from documentary evidences, it is apparent that the assessee satisfactorily discharged the primary onus cast upon him under section 68 of the Income-Tax Act, 1961 to establish the identity and creditworthiness of these parties and genuineness of the transactions as entered into with them. Taking into consideration all these facts, the ld. CIT(A) examined each and every entry in respect of unsecured loan received from the creditors and reached to the conclusion that the addition made by the Assessing Officer is unjustified. In view of these facts, we are of the view that it is a settled position of law that no addition is called for under section 68 of the Income-Tax Act, 1961 on account of unse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atai and from whom agricultural income was received during the year along with the details with respect to area of land - the amount of agricultural income was duly shown by the assessee in his income-tax return every year and the agricultural income shown by the assessee had also been duly examined and accepted in the preceding as well as subsequent years. On consideration of above facts, it is clear that non-acceptance of agricultural income shown by the assessee in his income-tax return was unjustified more so when agricultural income was shown by the assessee on a year-to-year basis and such agricultural income had also duly been examined and accepted in the preceding as well as subsequent years. Thus, we direct the Assessing Officer to accept the agricultural income in full. Disallowance u/s 40(a)(ia) of the I.T. Act for non-deduction of TDS on the amount of late payment charges - benefit of the second proviso to section 40(a)(ia) - HELD THAT:- As second proviso to section 40(a)(ia) of the Act shall have retrospective effect from 01-04-2005 and in the present case, the relevant assessment year is the Assessment Year 2010-11 and the benefit of the second proviso to sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces or the case, Ld. CIT (A) is justified in deleting the additions of ₹ 9,15.600/- on account of disallowances or claimed of interest out of income from other sources. by holding that similar claim made by the assessee was allowed in subsequent year. 5. Whether on the facts and in the circumstances or the case Ld. CIT (A) is justified in holding that since the assessee was having agricultural land, he should have agricultural income even though the assessee failed to produce evidences regarding agricultural activities. 6. Whether on the facts and in the circumstances of the case Ld. CIT (A) is justified in deleting the disallowance u/s 40(a)(ia) of the IT Act even though the first proviso of section 201(1) of the IT Act was inserted w.e.f. 01/07/2012 whereas the relevant A.Y. in the case of the assessee is A. Y. 2010-11 and also the assessee has not produced the certificate from C.A in prescribed proforma as envisaged in provision to sec 201 (I) of the Act. 3. Assessee has raised the following grounds in Cross Objection: C.O.No.32/Ind/2018 Assessment Year 2010-11 1. That on the facts and in the circumstances of the case and in law, the Ld CIT (A) e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der. The appellant during the course of hearing furnished complete details in respect of advances as received by him against the sale of Agricultural land through cheques and also in cash, details of landsold to Shri Rakesh Agrawal including the registry as provided which was also made available to the assessing officer mentioning the details of cheques as actually received by the appellant and significant amount of cash which was adjusted in these two registry. The appellant has provided the PA No, Confirmation and affidavit. In addition to that, copy of the registry as executed was also provided proving not only the identity but the genuineness of transactions as executed by the appellant. The amount as received by the appellant as advance against sale of land was thus proved by the appellant. Hence, the assessing officer was not justified in adding the same as income of the appellant. I hereby direct the assessing officer to delete the addition of ₹ 85,00,000/- and ₹ 1,07,50,000/- totaling to ₹ 1,92,50,000/- made to the total income of the appellant. This ground of appeal is accordingly allowed. 6. Ld. CIT-DR relied upon the order of the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, we are of the view that ld. CIT(A) was right in recording that the Assessing Officer failed to controvert the genuineness of the transaction and identity as well as creditworthiness of the said party. Before us too, the ld. Counsel for the assessee filed the following documents in support of the action of the ld. CIT(A): S. No Description of documents Page No. of Paper Book 1 Copy of confirmation of accounts of Shri Rakesh Agrawal wherein he duly confirmed the amount of advances of ₹ 85,00,000/- and 1,07,51,000/- given to the assessee 59-60 2 Copy of affidavit of Shri Rakesh Agrawal on oath wherein he again confirmed that he gave advances of ₹ 85,00,000/- and ₹ 1,07,51,000/- to the assessee towards purchase of agricultural land 61-62 3.1 Copy of registry as executed between the assessee and Shri Rakesh Agrawal for sale of agricultural land for a consideration of ₹ 1,50,79,000/- 63-69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clear that amount of advances of ₹ 85,00,000/- and ₹ 1,07,51,000/- received from Shri Rakesh Agrawal were subsequently adjusted against sale of agricultural land made to Shri Rakesh Agrawal and the entire particulars of these advances were duly mentioned in the registered sale deeds as well. Thus, there was no justification for adding the amount of these advances to the total income of the assessee u/s 68 of the Income-Tax Act, 1961. So far as the case-laws cited by the Assessing Officer are concerned, we find that these are not applicable to the facts of the present case since the same deal with receiving of unsecured loan by an assessee and in the present case, no unsecured loan was received by the assessee from Shri Rakesh Agrawal rather the assessee received advance against sale of land from Shri Rakesh Agrawal which was subsequently adjusted against sales made to Shri Rakesh Agrawal and this fact was duly verifiable from the registered sale deeds executed subsequently. It is a settled position of law that no addition is called for u/s 68 of the Income-Tax Act, 1961 in respect of advances (cash credits) found recorded in the books of accounts which are subsequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in the case of Pr. CIT v. Montage Enterprises (P.) Ltd. as reported in [2018] 100 taxmann.com 99 (Delhi) approved the findings of the Ld CIT(A) and Hon ble ITAT wherein it was held that: 5. The Assessee has three manufacturing Units, i.e. Malanpur, Jammu and Noida. The original income declared was 'Nil' for the relevant Assessment Years. A search and seizure operation was conducted in respect of M/s. Flex Group of Companies on 23.02.2006, which led to the notice being issued under Section 153A of the Act to the Assessee. In the course of search assessment proceedings, the Assessing Officer added the sum of ₹ 2.32 crores, which the Assessee claim towards trade credit. The CIT(Appeal) directed deletion of this amount after due verifications of the record by expressing his satisfaction that the credits claimed were genuine and in accord with the documents and the records produced by the Assessee. The CIT's findings are as follows :- 10.3 I have carefully considered the facts of the case, submissions made by the appellant and remand report submitted by the A.O. It is observed that the appellant could not file the confirmations from the trade cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Circle-2, Jodhpur as reported in [2014] 50 taxmann.com 396 (Jodhpur - Trib.); c) ACIT v. Titan Engineers as reported in [2011] 15 taxmann.com 340 (ITAT-Bangalore); 11. On consideration of the above facts and discussion thereof in the light of the judicial precedents (supra), we are of the view that the additions of ₹ 85,00,000/- and ₹ 1,07,51,000/- as made by the Assessing Officer on account of advance received against sale of land by invoking the provisions of section 68 of the Income-Tax Act, 1961 were unjustifiable since the amount of advances received by the assessee were subsequently adjusted against the sales made by the assessee and the same was also verifiable from the registered sale deeds. Thus, the Assessing Officer was not justified in treating the amount of advance received by the assessee as his income as the Assessing Officer failed to consider the fact that the assessee had sold agricultural land belonging to him to Shri Rakesh Agrawal in lieu of consideration which included the amount of advance received from the said party. Accordingly, we are of the view that the additions of ₹ 85,00,000/- and ₹ 1,07,51,000/- made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive part/findings recorded by the ld. CIT(A) are reproduced hereunder: The appellant further claimed that as against fresh addition of ₹ 79,00,000/-, an amount of ₹ 1,59,30,060/- was added to the total income of the appellant which in any case was not justified. The amount as added by the assessing officer is dealt in detail hereunder:- 4.4.1] SMT ANJANA BHACHAWAT OF ₹ 5,00,000/- The appellant had received loan of ₹ 5,00,000/- from Smt Anjana Bhachawat during the course of assessment proceeding. Copy of her ledger account in the books of the appellant was filed. The amount was added to the total income of the appellant by stating that PA No and address of the loan creditor was not provided. The appellant has provided copy of confirmation letter, PAN No and also bank account of the loan creditors. The documents as filed by the appellant were referred to the assessing officer for his comments but nothing new was submitted by him. The appellant has filed copy of confirmation letter, copy of ledger of the loan creditor in his books of account and has also filed copy of bank account of the loan creditor wherein the amount as advanced to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwarded to the assessing officer for his comments but nothing new was submitted by him. The appellant filed copy of confirmation letter, PAN No, copy of account of the appellant in his books, copy of statement of affairs and also filed copy of bank account of the loan creditor wherein the amount as advanced to the appellant was duly reflected. I find that the appellant by filing ample documents has discharged his onus lying on him and no contrary findings were given by the assessing officer on these documents even in remand proceeding. I, therefore, direct the assessing officer to delete the addition of ₹ 31,00,000/- as made to the total income of the appellant. 4.4.4] M/s SHREE MANGAL MURTI TRADEX P LIMITED OF ₹ 18,60,060/- The assessing officer during the course of assessment proceeding added an amount of ₹ 18,60,060/- to the total income of the appellant by invoking the provision of section 68 of the Act by stating that only copy of ledger was filed without PAN No and address. The appellant during the course of appellate proceeding filed copy of account of the appellant in the book of Shri Mangal Murti Tradex P Limited and contra account in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 25,00,000/- as made to the total income of the appellant. 4.4.6] M/s THE IESM ACADEMY, INDORE OF ₹ 32,00,000/- The assessing officer during the course of assessment proceeding added an amount of ₹ 32,00,000/- to the total income of the appellant by invoking the provision of section 68 of the Act by stating that only the copy of ledger was filed. The appellant during the course of appellate proceeding filed the copy of account of the appellant in the book of M/SThe IESM Academy, Indore and contra account in the book of the appellant, copy of Computation of total income as filed with Acknowledgment, copy of final account and Copy of Bank statement of that party. The documents as filed by the appellant were forwarded to the assessing officer but in the remand report nothing new was submitted by him. On perusal of the copy of account of the appellant in the book of that firm, it is clearly evident that an amount of ₹ 1,65,682/- was due to the appellant at the beginning and at the end an amount of ₹ 2,18,833/- was payable by the appellant. The appellant let-out his premises to the said firm for use of office and also to run Hostel by it. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opening balance and simply pickingup some entries in isolation for making addition to the total income of the appellant. The amount as due from the appellant was duly reflected in the books of that firm, and the appellanthad filed the ample documents so as to duly the discharge onus lying on it. Hence, the assessing officer was not justified in adding an amount of ₹ 29,70,000/- to the total income of the appellant. I, therefore, direct the assessing officer to delete the addition of ₹ 29,70,000/- as made to the total income of the appellant. 4.4.8] The decisions as referred aboveare also applicable on the facts of the present case of the appellant. The appellant with the sufficient documents has properly discharged onus lying on it. I, therefore, direct the assessing officer to delete the entire addition made U/s 68 of the Act to the tune of ₹ 1,59,30,060/-. This ground of appeal is thus allowed. 14. Ld. CIT-DR relied upon the order of the Assessing Officer and submitted that since the assessee failed to furnish the sufficient documents in respect of the parties from whom unsecured loans were taken during the year, the Assessing Officer was rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Manisha Morya Unsecured Loan NIL 18,00,000 NIL 18,00,000 18,00,000 3 Vijit Ramavat Unsecured Loan NIL 25,00,000 NIL 25,00,000 25,00,000 Sub-Total NIL 48,00,000 NIL 48,00,000 48,00,000 4 Deepak Jain Advance against Land NIL 31,00,000 NIL 31,00,000 31,00,000 Sub-Total NIL 31,00,000 NIL 31,00,000 31,00,000 5 Shree Mangal Murtee Tradex Private Limited Loans and Advances 21,05,056 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents filed before the ld. CIT(A) and also available with the Assessing Officer were filed before us as under: S. No Description of documents Page No. of Paper Book 1 Anjana Bhachawat [PAN: ARQPB6739A] Addition of ₹ 5,00,000/- 1.1 Copy of confirmation of accounts of the unsecured loan creditor 94 1.2 Copy of ledger account of the unsecured loan creditor in the books of the assessee 95 1.3 Copy of bank statement of the unsecured loan creditor duly highlighting the amount as advanced to the assessee 96 2 Manisha Morya [PAN: AITPM2857J] Addition of ₹ 18,00,000/- 2.1 Copy of confirmation of accounts of the unsecured loan creditor 97 2.2 Copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the company for the year ended 31st March, 2010 wherein the amount payable to the assessee is duly reflected [Page No. 124] 114-129 5 Vijit Ramavat [PAN: ADUPR0676G] Addition of ₹ 25,00,000/- 5.1 Copy of confirmation of accounts of the unsecured loan creditor 130 5.2 Copy of ledger account of the unsecured loan creditor in the books of the assessee 131 5.3 Copy of bank statement of the unsecured loan creditor duly highlighting the amount as advanced to the assessee 132 6 The IESM Academy [PAN: AAEFT4206F] Addition of ₹ 32,00,000/- 6.1 Copy of ledger account of the creditor in the books of the assessee 133-134 6.2 Copy of ledger account of the assessee in the book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition made by the Assessing Officer is unjustified. In view of these facts, we are of the view that it is a settled position of law that no addition is called for under section 68 of the Income-Tax Act, 1961 on account of unsecured loans if the assessee establishes the identity and creditworthiness of the parties and genuineness of the transactions as entered into with them. Our view is supported by the following judicial pronouncements: CIT, Meerut v. Avant Grade Carpets Ltd. as reported in [2015] 54 taxmann.com 216 (All); CIT-1 v. Apex Therm Packaging (P.) Ltd. as reported in [2014] 42 taxmann.com 473 (Guj); CIT v. Ranchhod Jivabhai Nakhava as reported in [2012] 21 taxmann.com 159 (Guj.) Ashok Pal Daga v. CIT as reported in [1996] 220 ITR 452 (MP); CIT v. Metachem Industries as reported in [2000] 245 ITR 160 (MP) CIT v. Mark Hospitals (P.) Ltd. as reported in [2015] 373 ITR 115 (Madras)(Mag.) 16. In view of the above discussion in the light of the judicial pronouncements (supra), we are of the view that the addition of ₹ 1,59,30,060/- as made by the Assessing Officer on account of unsecured loans received during the year by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowed by the Assessing Officer is summarized as under: S. No Particulars Amount of interest claimed [in Rs.] Amount of interest disallowed [in Rs.] 1 Deduction of interest claimed under the head Income from House Property 26,52,018 10,18,580 2 Deduction of interest claimed under the head Income from Other Sources 9,15,600 9,15,600 Total 35,67,618 19,34,180 The Assessing Officer observed that the assessee purchased and letout the commercial properties situated at Dhenu Market prior to the date of sanction of loan from ICIC Bank Ltd. and State Bank of India. The Assessing Officer also observed that the assessee failed to furnish any evidence in respect of loan taken for purchase of other properties. Accordingly, the Assessing Officer disallowed an amount of ₹ 10,18,580/- out of interest claimed under the head Income from House Prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 300000 300000 4 SOP 150000 150000 1018580 5.4] The claim of interest of the assessee was legal and proper and the same was also accepted in the succeeding years by the assessing officer himself. Copy of assessment orders as passed for the Asst Years 2009-10 2012-13 are enclosed for your kind reference. 5.5] That in view of the above, the deduction of Interest as claimed by the assessee was legal and proper, the addition so made by the assessing officer was therefore not right, the same now requires to be deleted in full. 19. Ld. CIT-DR relied upon the order of the Assessing Officer. On the other hand, ld. Counsel for the assessee, reiterating the submissions made before Revenue Authorities, relied upon the order the ld. CIT(A). 20. We have heard rival contentions of both the parties and perused material available on record. We find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the order of the ld. CIT(A) on this point. Accordingly, ground no.3 raised in the appeal of the Revenue is dismissed. 21. So far as ground no.4 with regard to addition of ₹ 9,15,600/- on account of interest claimed under the head Income from Other Sources is concerned, the Assessing Officer observed that the assessee failed to prove the direct nexus of funds borrowed and advanced to the parties from whom interest income was earned. Accordingly, the Assessing Officer disallowed an amount of ₹ 9,15,600/- on account of interest claimed under the head Income from Other Sources . The details of claimed deduction on account of interest paid on the borrowed funds only to the extent of interest income earned from the following parties and offered for tax under the head Income from Other Sources is as under: S. No Name of the party Amount of interest income [in Rs.] 1 Jitendra Soni 6,08,000 2 Lunawat Management and Educational Services Limited 35,810 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings, the assessee filed copy of account of the parties to whom loans were advanced and from whom interest income was earned and offered for tax under the head Income from Other Sources . Thus, the assessee categorically explained that the amount borrowed was advanced to these parties and therefore, interest paid on the borrowed funds was rightly claimed as deduction against the interest income earned and offered for tax under the head Income from Other Sources . We find that the assessee claimed deduction on account of interest paid on the borrowed funds only to the extent of interest income earned from the parties and offered for tax under the head Income from Other Sources and the deduction claimed on account of interest paid against the income offered for tax under the head Income from Other Sources was duly examined and allowed in the preceding as well as subsequent years. A comparative chart showing the amount of deduction claimed on account of interest against the income offered for tax under the head Income from Other Sources in the preceding as well as subsequent years is summarized as under: S. No Particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground No 8 The appellant in this ground of appeal has challenged the treatment of Agricultural income as given by the assessing officer as income from other sources. The appellant during the course of hearing and also during the appellate proceeding provided detail of Agricultural land given on Batai for ₹ 8,14,000/- to various persons. The detail contain name of the person to whom lands were given on Batai, Name of village where agricultural land was situated, area of land and the amount actually received by the appellant. The appellant has consistently shown Agricultural income which was duly accepted by the assessing officer, year-wise detail of Agricultural Income as shown by the appellant and as accepted by the assessing officer is as under:- S.No Particulars 2009-10 2010-11 2011-12 2012-13 1 Agricultural income as shown 382000 814000 501400 9,00,000 2 Agricultural income as accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the amount of agricultural income was duly shown by the assessee in his income-tax return every year and the agricultural income shown by the assessee had also been duly examined and accepted in the preceding as well as subsequent years as is evident from the following comparative chart: S. No Particulars Assessment Years 2009-10 2010-11 (Year in appeal) 2011-12 2012-13 1 Type of assessment Regular assessment Section 143(3) Regular assessment Section 143(3) Summary assessment Section 143(3) Regular assessment Section 143(3) 2 Agricultural income shown 3,82,000 8,14,000 5,017,400 9,00,000 3 Agricultural income accepted 3,82,000 NIL 5,01,400 8,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asst Year 2011-12. The appellant also filed a certificate from chartered accountants of M/s Arihant Capital Markets Limited duly certifying that an amount of ₹ 18,99,796/- as charged from the appellant was duly offered for tax by them in their income tax return. The said issue stands now settled in favour of the appellant, since the recipient has offered the income in its return of total income and therefore the appellant is not to be treated as appellant indefault.Similar addition as made in the case of the appellant in the AsstYear 2009-10 has already been deleted by this office vide order Appeal No IT-193/ 15-16 / 185 dt 30-11-2016. Considering the decisions as relied upon by the appellant and present position of law in connection with the provision of section 40[a][ia] of the Act; I hereby direct the assessing officer to delete the addition of ₹ 18,99,796/- made to the total income of the appellant U/s 40[a][ia] of the Act. This ground of appeal is accordingly allowed. Being aggrieved, the Revenue is in appeal before this Tribunal. 32. Ld. CIT-DR relied upon the order of the Assessing Officer. On the other hand, ld. Counsel for the assessee, reiterati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the broker, Arihant Capital Markets Ltd. at Page No. 183 of the paper book. Further, we are of the view that the law is no more res-integra that second proviso to section 40(a)(ia) of the Income-Tax Act, 1961 inserted by the Finance Act, 2012 with effect from 1st April, 2013 is declaratory and curative in nature and it shall have retrospective effect from 01-04-2005. This view is supported by the following judicial pronouncements: CIT-1 v. Ansal Land Mark Township (P.) Ltd. [2015] 377 ITR 635 (Delhi) Rajeev Kumar Agarwal v. ACIT, Range-3, Mathura - [2014] 45 taxmann.com 555 (Agra - Trib.) DCIT, Circle-2(1)(1), Ahmedabad v. Esaote India (NS) Ltd. - [2018] 96 taxmann.com 624 (Ahmedabad - Trib.) DCIT, Circle 1, Udupi v. Ananda Marakala - [2014] 48 taxmann.com 402 (Bangalore - Trib.) ITO v. Dr. Jaideep Kumar Sharma [2014] 34 ITR(T) 565 (Delhi - Trib.) ACIT, Central Circle-24(1), New Delhi v. Satish Sehrawat [2018] 92 taxmann.com 231 (Delhi Trib.) ACCME (Urvashi Pumps) Eng. (P.) Ltd. v. JCIT (OSD) Circle-4 Jaipur - [2018] 90 taxmann.com 189 (Jaipur - Trib.) Dilip Kumar Roy v. ITO, Ward-1, Nadia - [2016] 68 taxmann.com 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of the copy of account as filed by the appellant during the course of hearing which was also provided to the AO for his comments. On perusal of the said account, it appears that an amount of ₹ 2,00,000/- was first advanced by the appellant which was refunded on very next date. The appellant during the course of assessment proceeding also brought these facts to the notice of the assessing officer. Considering the overall facts of the case and submission as made by the appellant during the course of assessment proceeding and also in the appellate proceeding, I find that the amount as received by the appellant was nothing but the amount as advanced by him received back and therefore there was no justification for adding the same by invoking the provision of section 68 of the Act but the fact of the matter remains that the appellant has not provided complete postal addresses and even Pan No of this party neither during the course of assessment proceeding nor the appellate proceedings.I therefore have no hesitationin confirming the addition of ₹ 2,00,000/- as made by the assessing officer. This ground of appeal is dismissed. Being aggrieved, the assessee is in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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