TMI Blog2022 (7) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... to establish (i) identity of the loan provider (ii) creditworthiness of loan providers and (iii) genuineness of the transactions, and therefore he held those loans as unexplained cash credit in terms of section 68 - assessee filed a letter before the CIT(A) wherein the assessee had requested for filing additional evidences, because those evidences could not be filed before the Assessing Officer.HELD THAT:- We find that in the case of M/s Sunrise Associate [ 2022 (7) TMI 934 - ITAT MUMBAI] in view of retraction of statement by Sh. Gautam Bhanwarlal Jain, has restored the matter of addition u/s 68 , back to the Assessing Officer for re-examination. DR could not controvert that there was limited time frame in which the assessee was asked to provide the information and before the assessee could file the said information, the assessment order was passed on 22/12/2017. In our opinion, the assessee fulfils the circumstances under Rule 46A(1)(d) i.e. no sufficient opportunity, therefore additional evidences are eligible for admission. Since in respect of the ground No. 1 of the appeal, we have already restored the issue-in-dispute to the file of the Assessing Officer and therefore, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was adjourned on written request filed. Further, on 24.05.2022, the Authorized Representative of the assessee was present and on whose request, the matter was posted on 13.06.2022. On 13.06.2022 also none attended, and therefore, the matter was adjourned to 15.06.2022. But still no compliance was made. In the circumstances, we were of the opinion that the assessee is not interested in prosecuting the appeal. Thus same was heard ex-parte qua the assessee, after hearing arguments of the Ld. DR and taking into consideration written submission of the assessee available on record. ITA No. 7163/MUM/2019 Assessment Year: 2013-14 2. We first take the appeal of the assessee for AY 2013-14. The grounds raised in assessment year 2013-14 are reproduced as under: 1. The Ld. CIT(A) erred in upholding the addition made by Ld. AO estimating business income at ₹68,94,265/- rejecting the books of account. 2. The Ld. CIT(A) erred in upholding the addition made by the Ld. AO of ₹235,00,000/- as cash credit u/s 68 of the Act. 3. The Ld. CIT(A) erred in not allowing set off of losses to be carried forward. 3. Briefly stated facts of the case are that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is in appeal before the Tribunal raising the ground as reproduced above. 4. Ground No. 1 of the appeal relates to rejection of books of accounts and addition of ₹68,94,265/- to the gross profit. 5. The Assessing Officer observed that assessee failed to produce bills vouchers etc. for verification. He further noted that the Director Sh Kirtikumar Tarachand Doshi stated during survey proceedings that purchase and sale transaction with M/s Mirah d cor Group were without physical delivery and in the nature of accommodation entry transactions. In view of those facts, the Assessing Officer rejected the books of accounts and estimated addition at the rate of the 5% on sales of ₹13,78,85,318/- which was worked out to ₹68,94,265/-. The Ld. CIT(A) upheld the addition holding that profit embedded in bogus transactions in the form of brokerage/commission was over and above the normal profit declared by the assessee. 6. Before us in written submission filed, the Ld. counsel of the assessee has submitted that during the year there was no transaction with Mirah Group including M/s Mirah d cor Private Limited and therefore lower authorities are not justified in rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding afresh. The ground No. one of the appeal is accordingly allowed for statistical purposes. 9. The ground No. 2 of the appeal relates to addition of ₹2,35,00,000/- in respect of loans, which have been held as cash credit under section 68 of the Act. 10. The Assessing Officer observed loans received of ₹25,00,000/from M/s Karishma diamonds private limited (in short Karishma ), ₹35,00,000/- from M/s Parasnath Gems private limited (in short Paraswnath ), ₹1,50,00,000/- from M/s Marine Gems Private Limited (in short Marine) and ₹25,00,000/- from M/s Keshria Diamonds Private Limited (in short Keshriya ). He also noted that during survey proceedings, the director of the assessee company, Sh Kirtikumar Doshi was asked to justify the nature and source of those loan transactions but the assessee failed to substantiate and provide any details of the directors of those companies or any other contact of those persons. Sh Kirtikumar stated that he did not remember either the name of the directors or contact person from whom the loans were received and he was also not aware about the business activity of those parties from whom loans were received. In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of CIT Vs Prashant (p) (1994) 121CTR 20 (Cal.) wherein it is held that even payment by account payee cheque is not sacrosanct and it would not make otherwise nongenuine transactions as genuine. 10.4 In view of above observations, the Ld. Assessing Officer held that assessee failed to establish (i) identity of the loan provider (ii) creditworthiness of loan providers and (iii) genuineness of the transactions, and therefore he held those loans as unexplained cash credit in terms of section 68 of the Act. 11. Before the Ld. CIT(A) the assessee submitted that additions were made relying on the third-party statement and no reasonable opportunity was given to the assessee to produce necessary documents. The assessee filed affidavits of the director of Paraswanath and Karishma, however same were not admitted by the Ld. CIT(A) in terms of Rule 46A of Income Tax Rules, 1962. The Ld. CIT(A) rejected the retraction statements given by the directors of Paraswnath and Karishma. The assessee also filed copies of information, bank statement and acknowledgement of Income-tax return in respect of the parties to support its onus under section 68 of the Act. 11.1 Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment is framed and the submissions will not be entertained. In view of these facts clause (a) and clause (d). In the interest of natural justice, we earnestly request your Honour kindly to admit the additional evidence and oblige. We have already furnished two sets of submission which enables your Goodselves to forward the same to the Assessing Officer for remand report. We undertake to appear before the Assessing Officer for producing all the necessary details if any called by him. Hope your Honour will please do the needful and admit the case for adjudication and oblige. 13.1 We find that in the case of M/s Sunrise Associate in ITA No. 244 245/Mum/2022 for AY 2013-14 2014-15, the Co-ordinate Bench, in view of retraction of statement by Sh. Gautam Bhanwarlal Jain, has restored the matter of addition u/s 68 of the Act, back to the Assessing Officer for re-examination. 14. The Ld. DR could not controvert that there was limited time frame in which the assessee was asked to provide the information and before the assessee could file the said information, the assessment order was passed on 22/12/2017. In our opinion, the assessee fulfils the circumstances under Rule 46A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in-dispute are that the Assessing Officer in view of fact of issuing accommodation entry bills to to M/s Mirah Group during the year under consideration, the Assessing Officer rejected books of accounts of the assessee and assessed commission/brokerage @ 2% on the sales of ₹18,31,85,888/- recorded in books of accounts. The addition for brokerage was worked out to ₹36,63,718/-. The Ld. CIT(A) upheld the estimation of the brokerage income on the test of human probability and circumstantial evidences following decision of the Hon ble Supreme Court in the case of Meenaxi Mills Ltd. 63 ITR 609 and McDowell Co. 154 ITR 148. Before us, in the written submission filed, the Ld. Counsel of the assessee submitted that assessee has also declared gross profit of ₹1,21,56,097/- from the business activity recorded in the books of accounts at the gross profit rate of 5.12%. According to his submission, when the assessee has also declared gross profit @ 5% on the business activity recorded in books of account which the Assessing Officer has treated as activity of providing accommodation entry and therefore, the Assessing Officer is not justified in making separate addition for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d has been added by the Assessing Officer u/s 68 of the Act which have been disputed by the assessee. 22. We find that the issue-in-dispute of treating loan received from parties namely M/s M/s Marine Gems P Ltd, M/s Parshwnath Gems P. Ltd., Karishma Diamonds Private Limited has already been restored to the file of the Assessing Officer for deciding afresh in assessment year 2014-15. Therefore, accordingly, following our finding in assessment year 2013-14, these grounds No. 1, 2, 4 5 of the appeal of the assessee are also restored to the file of the Assessing Officer for deciding afresh following our direction in assessment year 2013-14. These grounds of appeal are accordingly allowed for statistical purposes. ITA No. 7162/MUM/2019 Assessment Year: 2015-16 23. Now we take up the appeal of the assessee for assessment year 2015-16. The ground No. 1 relates to rejection of books of accounts and making of estimated of addition of ₹79,51,707/- in the year under consideration. The Assessing Officer has estimated income from brokerage for issuing accommodation entry bills @ 5% of the total sales. In written submission, the Ld. Counsel of the assessee has submit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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