TMI Blog2022 (12) TMI 1262X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of transfer of interest-bearing borrowed funds at lesser rate of interest - CIT(A) has rightly followed case of South Indian Bank Ltd. [ 2021 (9) TMI 566 - SUPREME COURT] wherein it is held that if assessee possesses sufficient interest free funds as against investment in tax free securities, then, there is a presumption that investment which has been made in tax free securities were out of interest free funds owned by the assessee. The case of Principal Commissioner of Income Tax (Central) - 1 vs. NRA Iron and Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] relied by the Department is distinguished of peculiar fact of the instant case. Accordingly, we find no infirmity in finding of the Ld. CIT(A) in deleting Addition. Since the assessee gets relief in quantum appeal, the consequential penalty levied u/s 271(1)(c) is deleted. - Decided in favour of assessee. - I.T.A. Nos. 471 & 472/Asr/2019 - - - Dated:- 17-11-2022 - Dr. M. L. Meena, Accountant Member And Sh. Anikesh Banerjee, Judicial Member For the Appellant : Sh. Rohit Mehra, CIT DR For the Respondent : Sh. Daljit Singh Marwaha, CA ORDER PER DR. M. L. MEENA, AM: These appeals have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case and in law the Ld. CIT(A) was in error in not appreciating the law laid down by the Hon ble Supreme Court of India in the case of NRA Iron and Steel Pvt. Ltd., where the Apex Court while discussing genuineness of share capital laid down the general principles that would apply to judge the genuineness of a transaction, creditworthiness etc. 3. Whether in the facts and circumstances of the case and in law the Ld. CIT(A) was in error in establishing the source and genuineness of the addition in capital and unsecured loan. Appellant craves leave to amend or add any one or more grounds of appeal. 4. The appellant assesse is a partnership firm, purportedly engaged in the business of manufacturing of copper wires etc. at Shed No. 1-C, Industrial Area, Kathua in the state of J K. For the assessment year under consideration. The said return was selected for scrutiny under CASS, pursuant to which the assessment proceedings commenced where it was mentioned in the assessment that the various opportunities given to the appellant firm, which remained unattended, constraining the AO to frame an ex parte order and treated the addition to the capital of the appellant fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,667 6. RAJEEV KALRA 18,135,140 1,45,00,000 91,84,025 1,28,19,165 TOTAL 6,13,42,442 1,87,00,000 8,66,83,027 3,67,36,100 3,00,95,515 Genuineness of the credit in the accounts of the partners is submitted and the analysis made is submitted as under: (a) Subhash Shroff, Partner:- (i) Copy of partner's capital account for the period 01.04.2011 to 31.03.2012 in the Appellant books of accounts. (ii) Copy of Bank Statements of the partner. (i) Copy of Computation of Income and acknowledgment of income tax return filed inform no ITR-V for AY 2012-13. The assessee partner had filed his return of income at Rs.5.86.562/- for the assessment year 2012-13 and has shown exempted income u/s 10(2A) at Rs.36,73,610/-. On going through the bank statement of the assessee maintained with Indian Overseas Bank it is observed that the assessees partner had transferred an amount of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urned and the balance amount of Rs 9,80,000/- only is outstanding and payable as on 31.03.2012. The complete details of unsecured loan is also reflected in the Form no 3CD viz.- name, address and PAN of the lender. In support of the nature, mode, source and genuineness of the unsecured loan received from Neerja Megan, the following details/documents have been produced by the assessee:- (i) Copy of Neerja Megan account in the assessee's books of account. (ii) Copy of Neeraj Magan's ITR-V and Computation of income for the A.Y. 2012 (iii) Copy of Bank Statement of Neeraj Magan for relevant periods. No further document has been provided to explain the source of credit in the account. Regarding interest paid In this connection, The Assessee has submitted that M/s Harlal Gupta Sons was debtor in earlier years but later on in as per arrangement between the parties, it has been decided to consider that debt as interest bearing loan to him. It is observed on verification of the details filed that the assessee opened an account with Oriental Bank of commerce on 30.08.2011 and availed overdraft facility from 06.09.2011 from the Bank whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable. The Assesses has duly discharged the duty cast under the provision of Income Tax Act. Thus, the assessing officer not justified in making an addition of Rs.9,80,000/- as an unexplained cash credit u/s 68 of the Income Tax Act, 1961 and the impugned addition deserves in be deleted. Regarding interest paid page no 8: The Assessing officer observed and confirmed the factual matrix that M/s Harlal Gupta Sons was the debtor and as per arrangement with him that debit balance converted into loan in the earlier years and that time the Assessee did not have any OD limit/ loan facility from Bank. Our Submission - The Assessing Officer allegation in the assessment order that Assessee had transfer fund to M/s Harilal Gupta Sons as advance at low rate of interest out of borrowing fund from bank at higher rate of interest is incorrect. Thus addition/ disallowance on incorrect facts liable to be deleted. Kindly place the above on record, and we request you to kindly consider the above submission along with written submission and paper book on record. We shall be pleased to provide further details, evidence and information. We also request your good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2012-13 and declaring total Income of Rs. 4,88,570/- after claiming deduction u/s 80IB of the Income Tax Act, 196. The Assessment completed u/s 144 as best judgment assessment. Ground no 1: Addition in partner capital account Rs 1,87,00,000 : KTMR received Rs 1,87,000 from the partners and partners have withdrawn Rs 8,66,83,027. The detail of the partners capital account is as under: Name of partner Bal as on 01.04.2011 Addition Drawing Profit Bal as on 31.03.2012 SUBHASH SHROFF 8,76,024 1,37,00,000 15,305,834 55,10,415 1,26,66,605 NAWAL MAGAN 87,62,024 2,78,77,193 55,10,415 (1,36,04,754) ASHUTOSH GUPTA (11,05,943) 35,00,000 25,00,000 36,73,610 35,67,667 TARUN DHINGRA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort as well as documents available on record, has passed a reasoned order and directing the addition of Rs. 1,87,00,000/- be deleted. Ground no. 2: Unsecured loan Rs 9,80,000 : Unsecured loan of Rs 49,90,000 received from Neerja Magan and out of that Rs 40,10,000 returned and the balance amount of Rs 9,80,000 o/s as on 31.03.2012. The complete detail of unsecured loan is duly provided in the Form no 3CD including name, address PAN number of the lender. AO alleged that KTMR failed to furnish detail/ documentary evidence to prove the genuineness of and offered no explanation nature and source of these loans. KTMR filed Copy of Neerja Magan account in the Assessee book of account for period 01.04.2011 to 31.03.2012, Copy of Neerja Magan ITR-V and Computation of income for the AY 2012-13, Copy of Bank Statement of Neerja Magan in support of the nature, mode, source, genuineness of the unsecured loan received from Neeja Magan and submit that documentary evidence establishes the nature, mode, source and genuineness of unsecured loan from Neeja Magan. AO in remand report stated that no further document has been provided to explain the source of credit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rival contention, perused the material on record and the written submissions filed. The Assessment Order has been passed exparte qua the assessee by the Assessing Officer (In short the AO ). However, it is seen that the Ld. CIT(A) has called for remand report and adjudicating the issued raised challenged before it after taking into consideration the remand report of the AO and the rebuttal of the assessee. It is seen that the Ld. CIT(A) has addressed and controverted the contentions raised by the rival parties therein, while granting relief to assessee. 9. It is seen that The Ld. CIT (A) has considered that fact that the first proviso was inserted by the Finance Act 2012 w.e.f 01/04/2013 i.e. A. Y. 2013-14 and therefore, prior to the insertion of first proviso to section 68, the lability of the assesses was limited to establish the identity of the Creditor/Lender/Investor, the creditworthiness and genuineness of transaction, and further the proviso is not applicable to the appellant assessee being a partnership Firm. (Not a company in which the public are substantially interested). According we find no perversity in the order of the CIT(A) to the facts on record inasmuch as t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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