TMI Blog2022 (10) TMI 227X X X X Extracts X X X X X X X X Extracts X X X X ..... loan was genuine transaction. In the present case, the assessing officer allowed cross examination of entry provider, who remained stand on their examination in chief. Hence, we affirm the order of ld CIT(A), which is assailed in ground No.2 of this appeal. In the result, ground No. 2 of the appeal is dismissed. - ITA Nos. 465, 466, 467 & 468/Srt/2018 - - - Dated:- 30-9-2022 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri Rajesh C Shah, CA For the Department : Shri Anurag Dubey, Sr. DR ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER: PAWAN SINGH, JUDICIAL MEMBER: 1. These four appeals by the assessee are directed against the separate orders of learned Commissioner of Income Tax (Appeals)-2, Surat (in short, the ld. CIT(A) all dated 13/04/2018 for the Assessment years 2012-13 to 2015-16. 2. In all these appeals, the assessee has raised certain common ground of appeal. Facts in all the appeals are common, therefore, with the consent of parties, all the appeals were clubbed, heard together and are decided by this consolidate order to avoid the conflicting decision. For appreciation of fact, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was also informed by DDIT (Invt.) that both the parties have confirmed on oath that they have given loan to Ruchi Sarees (assessee) which is accommodation entries and that entries appearing in Form 26AS about the TDS on interest are mere entries. On the basis of such information, the Assessing officer has reason to believe that the income of assessee has escaped assessment. The assessee filed objection against the reopening vide objection dated 17/07/2017 and the same was disposed of vide order dated 19/07/2017. After rejecting objection, the Assessing officer proceeded for assessment. The Assessing officer issued show cause notice as to why the loan taken from Shri Maheshbhai Tulshibhai Patel and Shri Ramesh Rangildas Mehta had been treated as unexplained money. The assesse files its reply on 19/07/2017 and 28/07/2017. The contents of reply of assesse is recorded at page Nos. 3 to 5 of assessment order. In the reply, the assessee in sum and substance submitted that the assessee has availed loan from both the parties which is shown in its books as unsecured loan. The loan is received through account payee cheques. The assessee disclosed full particulars with the name, address and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Shri Ramesh Rangildas Mehta regarding cheque given to assessee, the director of assessee asked them to show any cheque which was discounted, Shri Rameshchand Mehta replied I don t know . When same question was asked to Shri Maheshbhai Patel, re replied that he had given cheque to assessee against which he has received commission. The assessee explained that in the cheque discounting business, the party first gives cheque to the discounter and they received cash from the customer where the commission is deducted from the cheque amount but in case of assessee, Shri Ramesh Chand Mehta and Shri Maheshbhai Patel have given cheque to the assessee which was repaid through banking channel and no cash transaction is involved. Thus, the whole transaction does not fit in the common parlance of cheque discounting transaction ambit. Shri Maheshbhai Patel in his statement stated that he does not have any idea, thus he was hiding something else he might have given this statement. The assessee has paid interest to both the parties and deducted TDS. Shri Maheshbhai Patel provided loan by way of two cheques of Rs. 5.00 lacs each on 24/01/2011 and 14/02/2011 to Ruchi Sarees who is sister concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m to be the loan are not genuine as unsecured loan which is nothing but arranged affairs being pre-ordained series of transactions and upheld the addition. 6. We have heard the submissions of the learned authorised representative (AR) of the assessee and the learned senior departmental representative (Sr DR) for the revenue and have also gone through the orders of the lower authorities. The ld. AR of the assessee submits that he has raised additional ground of appeal challenging the validity of reopening and notice under Section 148 of the Act. The facts relating to additional ground of appeal are available on record and no new fact is to be brought on record. To support his submissions, the ld. AR relied upon the decision of Hon ble Apex Court in the case of NTPC Vs CIT (1998) 229 ITR 383 and Jute Corporation of India Ltd. Vs CIT (1991) 187 ITR 688. 7. On the other hand, the ld. Sr. DR for the revenue submits that no ground of appeal was raised by assessee before the first appellate authority. No facts regarding challenging the validity of notice under Section 148 and reopening under Section 147 of the Act is emanating from the order of ld. CIT(A) which is not the ground in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly, loan from Sunit trading company was also repaid on 14/6/2014 with interest. The confirmation of loan is filed, which is on record. In case of assessee, the original assessment was completed under Section 143(3) on 25/3/2015. The transaction of loan was accepted after proper verification of both the loans. Loan of Maheshkumar Tulsidas Patel was debited in the bank account of lender on 27/12/2011. The lender has given loan of Rs. 10.00 las out of his amount credited in his bank account of Rs. 10,77,819/- on 24/12/2011. The said credit was on account of loan return by sister concern of assessee namely Ruchi Sarees (proprietary concern of Anuradha Agarwal who is director of assessee). The ld. AR submits that original loan in case of Ruchi Sarees was added under Section 68 in the scrutiny assessment under Section 143(3) of the Act. However, on appeal, the addition was deleted by the ld. CIT(A) and on further appeal by the revenue, the same was dismissed by the Tribunal in ITA No. 1536/Ahd/2016 dated 22/03/2021. The copy of assessment order in case of Anuradha Agarwal, proprietor of Ruchi Sarees, order of ld. CIT(A) is also filed. and order of Tribunal in ITA No. 1536/Ahd/2016 is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer made allegation of cheque discounting they must disclose which cheque was given by assessee for discounting. When the lender has claimed that they have discounted the cheque then why he has again received the amount of loan bank on 14/6/2014. If it is presumed that the assessee has given post-dated cheque on 14/6/2014 which depositors/lenders has discounted and given cheque of Rs. 10.00 lacs and Rs. 16.00 lacs in December, 2914 and that he got commission of interest for the period from December, 2011 to June, 2014. Such story is itself wrong and addition under Section 68 cannot be made against the assessee. Before making addition under Section 68, the Assessing Officer has to demonstrate that transaction falls under the ambit of Section 68 of the Act. The ld. AR for the assessee reiterated that the transaction of loan was genuine, the assessee paid interest thereon and refunded the entire amount and that his case is covered by the decision of Hon ble Gujarat High Court in case of CIT Vs Ayachi Chadrasekhar Narsangji (supra). The case of assessee is also covered by the decision of Tribunal in case of Anuradha Agarwal dated 22/03/2021 in ITA No. 1536/Ahd/2016 wherein similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... que discounting stated that they have not advanced any loan to the assessee and it was mere entries. It was also held that mere payment of cheque is not sacrosanct nor can it make a non-genuine transaction as genuine. 12. We find that the ld. CIT(A) confirmed the action of Assessing Officer on similar lines. The ld. CIT(A) also held that both the persons have admitted in their statement that they have not given loan to assessee but only provided accommodation entry. We find that during the cross examination, the lender reiterated the transaction of loan was a mere entry. As noted above before ld CIT(A) the assessee filed detailed written submissions and tried to impresses that cheques discounting business is different than the accommodation entry of unsecured loan. We find that the ld CIT(A) while confirming the addition held that on making investigation form lenders, the lenders admitted that unsecured loan given to the assessee were only paper transactions and in cross examination, they again admitted it is an accommodation entry. It was also held that the assessing officer had brought evidence on record to prove that the unsecured loan availed by assessee from two entry provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stand on their examination in chief. Hence, we affirm the order of ld CIT(A), which is assailed in ground No.2 of this appeal. In the result, ground No. 2 of the appeal is dismissed. 16. Ground No.1 relates to the disallowance of interest expenses of Rs. 80,811/-. Considering the facts that we have confirmed the action of lower authorities in treating the unsecured loan as paper/ sham transaction and confirmed the addition under section 68. Therefore, the disallowance of interest expenses is also upheld. In the result, ground No. 1 of the appeal is also dismissed. 17. In the result, this appeal of assessee is dismissed. 18. Now we take ITA No. 466 to 468/Srt/2018 for the A.Y. 2013-14 to 2015-16. In all these appeals, the assessee has challenged the confirmation of disallowance of interest expenses. Considering the fact that we have upheld tha addition under section 68 in lead case and also affirmed the disallowances of interest expenses, following the principles of consistency, these appeals are also dismissed with similar directions. 19. In the result, all these appeals of assessee are dismissed. Order pronounced in the open court on 30th September, 2022 in open co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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