TMI Blog2023 (6) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... the requirement of law like identity, credit capacity and genuineness of transaction is satisfied by the assessee. Hence, the addition made by the Assessing Officer is deleted and the ground of appeal of the Revenue is dismissed. - ITA No. 9025/Del/2019 - - - Dated:- 23-3-2023 - Sh. C. M. Garg, Judicial Member AND Dr. B. R. R. Kumar, Accountant Member For the Assessee : None For the Revenue : Sh. Manoj Kumar, CA (LOA filed), Sh. Kanv Bali, Sr. DR ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by Revenue against the order of the ld CIT(A)-IV, Kanpur dated 07.08.2019. 2. The Revenue has raised the following grounds of appeal: 1. On facts and circumstances of the case and in law, the Ld C1T (A) erred in law while deleting the addition of Rs. 2,00,00,000/- made by A.O. in respect of unexplained cash credit for which no satisfactory explanation was furnished by the assessee in view of the amended provisions to section 68 w.e.f. 01.04.2013 and therefore the burden u/s 68 could not have been said to be discharged by assessee just by filing confirmations at appellate stage in view of the ratio of decision in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claims raised by assessee nor has not controverted this assertion of the AO in remand report, while admitting the addl. Evidence. 6. On facts circumstances of the case and in law. the Ld. CIT(A) erred in admitting the additional evidence at appellate stage without appreciating that the purpose of rule 46A is to ensure that evidence is primarily led before the Income-tax Officer as held in Rajkumar Srimal 102 ITR 525 (Cal), Ganpatrai Sons Ltd. 24 1TR 362 (Bom). 3. Facts taken from the order of the ld. CIT(A). 4. A search and seizure operation u/s 132 was conducted on 30.09.2015 at the premises of the assessee. Accordingly, notice u/s 153A of the Act was issued on 25.10.2017. Further, in response to notice u/s 153A of the Act, the assessee filed return declaring income of Rs. 19,01,730/-. Subsequently, the Assessing Officer completed assessment by making addition of Rs. 2,00,00,000/- on account of unexplained unsecured loan. Aggrieved, the assessee is in appeal before the ld. CIT(A) who deleted the addition made by the AO. Hence, the appeal before us. Unexplained unsecured loans: 5. The assessee company has received an amount of Rs. 1,00,00,000/- fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited with the hank account of the company received from the following parties, which were also squared up during the financial year itself: Name of the company Date of Receipt Amount (Rs) Date of squared up Amount (Rs) Juliana Finance Private Limited 08/06/2013 1,00,00,000/- 26/03/2014 27/03/2014 50,00,000/- 50,00,000/- RITS Jewellers Private Limited 25/06/2013 50,00,000/- 24/03/2014 50,00,000/- A. V Homes Private Limited 25/06/2013 50,00,000/- 25/03/2014 50,00,000/- 1.5 During the course of assessment proceedings, the appellant has submitted the copy of complete bank statement for year under consideration along with the detailed bank narration dearly showing nature of debit and credit bank entries. 1.6 The appellant has also paid interest on above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lender(s). Therefore, the entire sum of Rs. 2,00,00,000/- is treated as unexplained and hereby added to the total income as unexplained unsecured Loans u/s 68 of the Income Tax Act 1.10 On perusal of the impugned assessment order, it is observed that the learned assessing officer has made the said addition only on the basis of conjectures and surmises by alleging that the assessee has failed to furnish any details /documents and thus failed to discharge his onus to prove the creditworthiness of the investors, genuineness of the transactions and existence of the lender(s) though the repayment of amount received and payment of interest thereon has been clearly shown in the same bank narrations submitted before the learned assessing office. 1.11 It is pertinent to note that the appellant has made satisfactory compliance in relation to various notices received and queries raised through order sheet entries. The appellant himself disclosed true and correct particulars of its income and also of various financial transaction undertaken by the appellant either through banking channel or otherwise during the year under consideration. (Pages 1 to 3 of the Paper Book) 1.12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d such amount. In the absence of such documentary evidences, treated the said unsecured loan of Rs. 2,00,00,000 as unexplained. 1.17 It is pertinent to note that the appellant had put forth details / explanations as far it can submit in few days time, the same cannot be arbitrarily and prejudicially disregarded merely on the basis of doubts, surmises and conjectures and thus cannot form a basis for making an addition of Rs. 2,00,00,000/- in the hands of the appellant on account of unexplained unsecured loan under section 68 of the Income tax Act, 1961. 1.18 In view of above, it is strongly argued dun the. impugned addition of Rs. 2,00,00,000/- merely on the basis of doubts, suspicion, conjectures and surmises is bad in law, as it is a well settled law that disallowance/ addition must be related to some evidence or material placed on record. We relied on following decisions rendered: Commissioner of Income-tax vs. Greaves Cotton Co. Ltd., 68 ITR 200, SUPREME COURT OF INDIA Mehta Parikh Co. vs. Commissioner of Income-tax, 30 ITR 181, SUPREME COURT OF INDIA Omar Salay Mohatned Sait Commissioner of Income-tax, 37 ITR 151, SUPREME COURT OF I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of the learned assessing officer also remain un-complied. 1.22 It is pertinent to note that when learned assessing officer has jurisdictional information of the lenders, then he has every right to show cause and ask the lenders about the said transactions. In the present case, even no information has been submitted by the appellant as alleged, the Id. AO have other means available with him to retrieve the information direct from the lenders financial statements or lenders itself as they all are companies incorporated under the Companies Act, 1956 and the said facts are best known to the AO and after this-the learned assessing officer while perusing such, information can apply his judgment as to the validity of the claim of the appellant. However, in order to reduce his burden and in order to pass order in hurry the Id. assessing officer simply failed to acknowledge the details / documents produced by the appellant and alleged no details were submitted by the appellant as regard to said entities. 1.23 It is pertinent to note in a case where such information as required under the provisions of section 133(6)/131 of the Income Tax Act, 1961 has not been asked f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in the case of Charan Singh vs. State of UP (AIR 1976 SC 520) that court must guard against the danger of allowing conjectures and suspicion to take place of legal proof. If two views are possible on any evidence, one proving guilt and another proving innocence, the view favourable to the accused be adopted. We relied on the following decisions also rendered by Hon'ble Supreme court and various Hon'ble High Courts: Provash Chandra Dalui vs. Biswanath Banerjee AIR 1989 SC 1834 (Supreme Court) Commissioner of Income tax vs. Sodra Devi [1957] 32 ITR 615 (Supreme Court) Glass Lines Equipment Co. Ltd. vs. CIT [2002] 253 ITT: 454 (Gujarat) Narayan Prasad Vljaivargiya vs. Commissioner of Income tax [1976] 202ITR 748 (Calcutta) 1.29 Further, it is also pertinent to note that the learned assessing officer has also failed to afford an opportunity of being heard before making addition of Rs. 2,00,00,000/- as unexplained credit which is in gross violation of principle of natural justice. 1.30 It is also pertinent to note that the principle of natural justice states that before any action is taken on the basis of material / information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Supreme Court: K. Kraipak v. Union of India AIR [1970] SC 150 (Supreme Court) State of Kerala v. K. T. Shadult Grocery Dealer AIR [1977] SC 1627 (Supreme Court) 1.33 It is well settled principle of natural justice that before any action is taken, the affected party should be given a notice to show cause against the proposed action and seek his explanation. Any order passed without giving notice is against the principles of natural justice. Accordingly, even if there is no provision in the statute about giving of notice, if the order in question adversely affects the rights of an individual, the notice must be given. The notice must be clear, specific and unambiguous and the changes should not be vague and uncertain. The object of notice is to give an opportunity to the individual concerned, to present his case. Moreover, the notice must give a reasonable opportunity to comply with the requirements mentioned therein natural justice, therefore, requires that the person adversely affected by the proposed acts, decisions or proceedings be given adequate notice of what is proposed, so that he may be in a position: a) to make representation on his own behalf, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal Commissioner of Income-tax-9 v. Ram Avtar Verma, [2017] 88 taxmann.com 666 (HC- Delhi) Principal Commissioner of Income-tax-18 v. Ms. Lata Jain [2017] 81 taxmann.com 83 (HC - Delhi) Principal Commissioner of Income-tax, Ahmadabad v. Dipak Jashvantlal PanchaU [2017] 88 taxmann.com 611 (HC- Gujarat) Principal Commissioner of Income-tax-1 v. Devangi, [2017] 88 taxmann.com 610 (HC - Gujarat) Commissioner of Income-tax-20 v. Deepak Kumar Agarwal) [2017] 86 iaXmdnn.com 3 (HC - Bombay) HBN Dairies Allied Ltd. v. Assistant Commissioner of Income Tax, Central Circle-4, New Delhi [2018] 96 taxmann.com 353 (ITAT- Delhi) Priya Holding (P.) Ltd. v. Assistant Commissioner of Income Tax, Central Circle 2(1), Ahmedabadf2018] 90 taxmann.com 408 (ITAT- Ahmadabad) 1.37 Thus, it is pertinent to note that keeping in view the above mentioned facts and in the circumstances of the appellant's case, reappraisal of facts and ratio of cases cited, the learned assessing officer erred both in facts and in law as under: A. The learned AO erred both in fact and in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed its remand report on 04.07.2019, which is as under: Dated: 04.07.2019 F.No. JCIT/CC/OSD/Noida/2017-18/363 To, The Commissioner of Income Tax (Appeals), 16/104A, Income Tax Office, Civil Lines, Kanpur- 208002 [Through Proper Channel] Sir, Sub- Calling for Remand Report in the case of M/s Ashiyana Civil Contractors Pvt. Ltd. M-167, 302, 304 Harsha Corner Complex for the AY 2014-15- Regarding. As directed, written submissions made by the assesses and the evidences placed in the paper book forwarded to this office were examined with reference to records maintained in this office, and report for above assessment years1 are being submitted for your good self s kind perusal and consideration. 2. In the very outset, it is relevant to mention that search seizure operation a/s 132 of the Income Tax Act, 1961 was conducted on 30/09/7015 on the premises of the assessee comprising Airwill Group of cases. Search action u/s 132(1) of the Act was carried out at the business premise of the Assessee company at B-20, 21-22, Sector16, Noida 201306 (U.P.). Various incriminating documents were found and seized/impounded during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease of M/s Juliana Finance Pvt. Ltd it was seen that ITR was filed at Rs. 6,98,851/- for the AY 2014-15, The loan amount was squared up during the year. Interest on loan amount has been paid. But no complete bank statement was given, hence the return amount is not reflecting. No complete sets of bank account were submitted. Hence, nature and sources of the credit in the bank accounts are not amenable to verification. From the perusal of the Audited balance sheet and profit Loss account it is seen that the company is not engaged in any business. No income from business has been reported during the year. An income of Rs. 43,93,666/- was declared under the heads income from other sources . In the previous year too, there was no income from business, it had only income from other sources of Rs. 38,82,978/-. Hence, the capacity to lend a loan of Rs. 1,00,00,000/- is not proved in this case. 4.2 In the case of M/s RITS Jewelers Pvt. Ltd., it was seen that ITR was filed at Rs. 3,64,152/- for the AY 2014-15. The loan amounts was squared up during the year, interest on loan amount has been paid. But no complete bank statement was given, hence the return .amount is not reflecting. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-listed companies. In the cases of all three parties/companies, the creditworthiness is hot proved. 5. Therefore, in view of above facts, your goodself may take appropriate decision in accordance with law. The rejoinder of the assessee in the remand report is as under: This is with reference to Remand Report dated 04/07/2019 submitted at your office by learned Joint Commissioner of Income Tax, OSD, Central Circle -1, Noida. A copy of the said remand, report has been provided to us by your good self vide letter dated 05.07.2019 for our comments /explanation on same. In this regard, we would like to submit as under: - At the very outset, we would like to submit that in the remand report, the assessing officer did not objected the main contentions of the appellant raised in the written submission filed before your good self, So the appellant stands by the submissions made earlier, wherein the main contentions tape as under: A. The learned AO erred both in facts and in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with bank account being unexplained cash credit u/s 68 only on the basis of conjectures and surmises without a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of the company Date of Receipt Amount (Rs.) Date squared up of Amount (Rs.) Juliana Finance Private Limited 08/06/2013 1,00,00,000/- 26/03/2014 27/03/2014 50,00,000/- 50,00,000/- RITS Jewellers Private Limited 28/06/2013 50,00,000/- 24/03/2014 50,00,000/- AV Homes Private Limited 25/06/2013 50,00,000/- 25/03/2014 50,00,000/- The appellant has also paid interest on above mentioned amounts received after deducting tax at source during the financial year under consideration, payment of which has also been made through same bank account and also shown in the bank narrations submitted before the learned assessing officer. However, despite of comprehensive information available with him and also aware of the fact that the appellant has got merely 38-40 days time only to furnish all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 133(6) of the Income tax Act, 1961. The same is extracted as under: In the case of M/s Juliana Finance Private Limited, it was seen that ITR was filed at Rs. 6,98,851/- for the A.Y. 2014-15. The loan amount ms squared up during the year. Interest on loan amount has been paid. But no complete bank statement was given, hence the return amount is not reflecting. No complete set of bank account were submitted. Hence, nature and sources of the credit in the bank accounts are not amenable to verification. From the perusal of the Audited balance-sheet and Profit and loss account it is seen that the company is not engaged in any business. No income from business has been reported during the year. An income of Rs. 43,93,666/- was declared under the heads income from other sources . In the previous year too, there was no income from business, it had only income from other sources of Rs. 38,82,978/-. Hence, the capacity to lend a loan of Rs. 1,00,00,000/-is not proved in this case. In the case of M/s RITS Jewellers Private Limited, it was seen that ITR was filed at Rs. 3,64,152/- for the A.Y. 2014-15. The loan amount was squared up during the year. Interest on loan amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st payments and also submitted their Financials, Bank statement and Returns for verification of same. However, the learned assessing officer arbitrarily and prejudicially rejecting the submissions by alleging impugned statements again only on the basis of conjectures and surmises. From the verification of Financials of the lenders as available in the Public Domain of MCA it is evincible that all the companies are profit making companies and have accumulated Reserves and Surplus. The detail of same is summarized as under: - Name of Company PBT for A.Y. 2014-15 Reserves and Surplus As on 31.03.2014 As on 31.03.2013 Juliana Finance Private Limited 6,98,851/- 4,19,74,131/- 4,14,91,225/- R1TS Jewellers Private Limited 2,77,152/- 1,28,86.491/- 8,423,229/- AV Homes Private Limited 2,67,268/- 12,858,619/- 8,386,436 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself: Name of the company Date of Receipt Amount (Rs.) Date of squared up Amount (Rs.) Juliana Finance Private Limited 08/06/2013 1,00,00,000/- 27/03/2014 26/03/2014 50,00,000/- 50,00,000/- RITS Jewellers Private Limited 28/06/2013 50,00,000/- 24/03/2014 50,00,000/- AVT Homes Private Limited 25/06/2013 50,00,000/- 25/03/2014 50,00,000/- Since the appellant was not able to furnish all the requisite details / documents regarding the amount received from above mentioned persons as the appellant got almost 38 - 40 days only to furnish all the details for 7 AYs. Though, the learned assessing officer himself acknowledged that fact in the impugned order that the amount of Rs. 2,00,00,000/- deposited into bank account, which were also squared up during the FY its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the official portal of Ministry of Corporate affairs (MCA). Creditworthiness of the lender s Income tax return, of the lenders for the year under consideration. Bank statement of the lenders. Genuineness of transaction Bank statement of appellant and lenders showing relevant credit and arid debit entries. Confirmed copy of ledger account in the books of the appellant. Further, it is also pertinent to note that from the perusal of confirmed copy of accounts of the relevant parties it is also quite evident that the appellant has also paid interest on such amounts during the financial year under consideration and tax at source has also been deducted thereupon. It is pertinent to note that now the appellant had duly discharged its onus to prove the identity, creditworthiness of the persons and genuineness of the transaction by furnishing the documents, required by your goodself, which proves that the said amount received and squared up were disclosed and is genuine in nature. It is well settled law that addition of unexplained cash credit under the Income Tax Act, 1961 cannot be made when the assessee discharged his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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