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TMI Blog2024 (5) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in the business of construction and development of property. Subsequently, the case was selected under CASS and assessment was completed under section 143(3) of Income-tax Act, 1961 (in short "Act") on 29.12.2016 assessing income at Rs.. 4,88,620/-. 4. A survey was conducted under section 133A of the Act on 24.03.2017 in JPV Group involved in building and construction activities. The assessee is one of the entity of JPV group. As per survey reports and various enquiries conducted had revealed that the entities of the JPV group are involved in acceptance of bogus unsecured loans from fictitious companies having no genuine activities. During the survey, statements of key persons were recorded and it was observed that JPV group concerns had accepted unsecured loans and paid interest in their books of account from certain other suspicious parties including M/s Dev Darshan Diamond Pvt. Ltd., M/s Madan Impex Pvt. Ltd., M/s Mangal Murti Impex Pvt. Ltd., M/s. Om Sai Stone Ltd., M/s Frontline Diamond Pvt. Ltd., M/s. Rajat Diamond Exim Pvt. Ltd. and M/s. Nikhil Gems Pvt. Ltd. Summons under section 131 of the Act were issued to the above said parties to verify their identity, creditwort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above said parties during the course of assessment proceedings. After considering the above submissions, Assessing Officer reproduced the loan amount, interest paid and return of income of the above said parties in the assessment order at Page No.3, for the sake of clarity it is reproduced below: - Name of leaner and PAN Loan amount Interest paid Returned Income of the leaner as per Rol Dev Darshan Diamond Pvt. Ltd. AADCD8917F 54,00,000/- 7,06,475/- 1,72,840/- Frontline Diamond Pvt. Ltd. AABCF5034H 34,00,000/- 1,26,404/- 4,14,680/- Rajat Diamond Exim Pvt. Ltd AAECR0706R 5,05,00,000/- 1,50,444/- 3,84,780/- Madan Impex Pvt. Ltd. AAHCM3262A 9,00,000/- 3,73,060/- Mangal Murti Impex Pvt. Ltd. AAGCM5940C 10,35,000/- 1,91,730/- Om Sai Stone Ltd. AAFCS2403R 10,80,000/- 4,65,380/- Nikhil Gems Pvt. Ltd. AADCN4423G 1,17,370/- 25,130/- Total 5,93,00,000 Rs..41,15,693/- 8. By referring to the above chart, Assessing Officer observed that none of the parties has declared sizeable profit to match the loan give to the assessee. It clearly shows that the above said parties does not have creditworthiness and it is mere accom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of amount received from the banking channel cannot not be doubted. The Ld AO has not gathered any additional/independent evidence to show that the transaction with the Appellant Firm was sham, fictitious or artificial except believing the statements given by some group members. The Ld AO has failed to give any evidence to show that the unaccounted cash of the appellant had changed hands. The Appellant states that no addition could be made on mere presumption that the Appellant routed its own cash in the form of unsecured loans without any iota of evidence to this effect. 4.2. All the details of the loan were filed during the course of the scrutiny assessment During the course of scrutiny assessment too, the Appellant had filed all the details before the Ld AO. The Appellant had furnished the following details before the ld AO for all the loan creditors 1. Copies of ledger extracts 2. The copies of confirmations 3. The extracts of bank statement showing the amount received 4. The copies of ITR 5. Status of the lender Companies at ROC All these documents clearly prove the identity of the loan creditors, creditworthiness of the loan creditors and genu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f actual amount received from Rajat Diamonds Impex Pvt Ltd Rs. 31,50,000 and M/s Dev Darshan Diamonds Pvt Ltd Rs.49,50,000/-. 2. From the above, your Honours will observe as under. The above loans were re-paid in the current year itself or in the next year/s as such the parities were in existence at the time of acceptance and repayment of the loan The accommodation entry is one time entry taken by any person which continues to exists in the books whereas in case of the assessee the loan was repaid to the lender in the same year or next year, this does not make the loan as bogus or mere an accommodation entry in the books. e. As such the loan taken by the Appellant from the lender parties were genuine loans taken for commercial expediency for business purposes and repaid with Interest and were not accommodation entries, alleged by the Ld AO. 4.4. The interest paid and TDS deducted on the loan taken in the year and earlier years. a. The interest paid and TDS deducted thereon during the year to M/s Devdarshan Diamond Pvt Ltd., M/s Om Sai Stone Ltd., M/s. Madan Impex Pvt Ltd., M/s Nikhil Gems Pvt Ltd., M/s Rajat Diamond Exim Pvt Ltd. and M/s. Mangal Murti Impex Pvt Ltd o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons as non-genuine or sham or demonstrating Appellant's involvement and cannot sustain. There was no evidence brought out by the Ld AO of any unaccounted money from the Appellant or that third party received or utilized the unaccounted money received from the Appellant with reference to the loan received and amount paid for the interest expenditure. 4.8. Denied access to any Cross examination or Retraction, if any: 1. The Appellant was not being provided any statement recorded against it, so that it cannot be examined, rebutted and also cross examined. If any withdrawal or retraction of such statement is made then the same was also not intimated to Appellant. The Appellant had objected to the notice that in the recording the reason, the Ld AO have not given any statement from JPV Group, in respect of the above parties stating that they are bogus and the amount has been received through the accommodation entries. Even during the assessment proceedings also, even after requesting for the same, the alleged statement or material was not provided to the Appellant, so that cross-examination with respect to the same could be done. Therefore, it is violation of principle of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther hold that no addition could be made on mere presumption that the assessee routed its own cash in the form of unsecured loans without any concrete evidence to this effect. Reliance in this regard is placed on the decision of Hon'ble Jurisdictional High Court in the case of PCIT vs Aquatic Remedies P Ltd in ITA No. 83 of 2016 affirming the tribunal decision in ITA No. 6356/Mum/2014. We further find that all the loans were duly repaid by the assessee either in the same assessment year or in the immediately succeeding assessment year with interest after subjecting the interest to due deduction of tax at source. These facts are not controverted by the revenue before us. Hence the addition made u/s 68 of the Act deserve to be deleted on merits also. Correspondingly, the interest paid on such loans would become allowable expenditure u/s 36(1)(iii) of the Act as there is no dispute that the monies received in the form of loans had been utilised by the assessee LLP for its business purposes." b. In case of M/s Shree Laxmi Developers I.T.A No.5954/Mum/2016, the jurisdictional Tribunal has held as under. "....... The assessee also furnished evidences to prove that the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47, for reopening the assessment, are absent 2.2. Without Prejudice, the Notice issued u/s 148 of the Act is invalid and void ab initio as the reason recorded amounts to Reason to Suspect and do not amount to Reason to Believe. 2.3. Without Prejudice, the Notice issued u/s 148 the Act is invalid and void ab initio as the Notice was issued without mentioning the correct limb ie. whether to assess' or 'reassess the income of the Appellant 2.4. Without Prejudice, the Reason Recorded for re-opening the assessment is based on borrowed satisfaction and hence not valid in law. 3.0. Without prejudice, the Ld CIT(A) erred in upholding the addition of Rs. 5,93,00,000/- in in respect of loan received, both on the facts and circumstances of the case and in law. 4.0. Without prejudice to the above, the Ld CIT(A) erred in upholding the addition Rs. 41,15,693/- in respect of interest paid on loan, both on the facts and circumstances of the case and in law. 5.0. The Appellant prays that it may be allowed to add, alter or amend the above grounds of appeal and to make detailed submissions at the time of appeal." 12. With regard to Ground Nos. 1 and 2 which are relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied to the said notice u/s 133(6). The learned Assessing Officer has not pointed out any discrepancy in the details submitted by the Appellant vis a vis details received in response to notice u/s 133(6) of the Act nor there is whisper in the Assessment Order that complete details as sought for was not provided by the Appellant and lender. Therefore, had the learned Assessing Officer taken little pain to appreciate the details submitted by the Appellant as well as the lender, the learned Assessing Officer would not have concluded the loan as bogus. * The entire fulcrum of the Assessment Order is derived from Para. 9.1. (page 3 of the Assessment Order) which clearly affirms that the learned Assessing Officer conducted the reassessment merely on the basis of surmises and conjectures. * Thus, to prove genuineness of the transaction, the Appellant demonstrated that it has received the loans through banking channel, recorded the same in books of accounts, and also repaid back the same in the immediately next financial year (i.e., short span of time). Further, the Appellant furnished bank statements of the lender and its own bank statement, ROC details, ITR copy of the lender, loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the lower authorities. 16. Considered the rival submissions and material placed on record, it was submitted before us that in assessee's own case relating to A.Ys.2011-12, 2012-13 and 2013-14, the Coordinate Bench has decided the issue in favour of assessee by quashing the reopening of the assessment in the above said order. It was submitted that in the above said period the assessee has taken loan from M/s. Rajat Diamond Exim Pvt. Ltd., M/s Dev Darshan Diamond Pvt. Ltd., M/s Mangal Murti Impex Pvt. Ltd., M/s. Om Sai Stone Ltd., M/s. Nikhil Gems Pvt. Ltd. and M/s.Madan Impex Pvt. Ltd., therefore since the facts remain the same the loan taken from the above said parties cannot be treated differently in this assessment year. Therefore, the transaction with the above said parties should be treated as genuine and the additions proposed by the Assessing Officer should be deleted. After careful consideration of the facts on record, we observe that in the A.Ys. 2011-12, 2012-13 and 2013-14 the Coordinate Bench has decided the issue on technical ground of reopening of assessment as bad in law and they have not gone into the fact or merits of the issue involved. Therefore, we cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has repaid the above said loan in three installments Rs.. 11,00,000/- on 23.12.2013 i.e., within the same assessment year and Rs.. 4,50,000/- on 15.01.2014 i.e., within the same assessment year and Rs.. 16,00,000/- on 21.01.2016 i.e., in the subsequent assessment year. It clearly shows that assessee has taken the loan through banking channels and repaid the same by banking channels. Therefore, when the assessee repays the loan which was taken from this party, therefore, this itself shows that assessee has demonstrated the genuineness of the transaction. 21. Third party i.e, M/s Dev Darshan Diamond Pvt. Ltd., we observe that the assessee has taken loan of Rs.. 49,50,000/- during the current assessment year under consideration from this party and it is submitted before us by filing copy of bank statement that assessee has repaid the above said loan in three installments Rs.. 20,00,000/- on 10.03.2016 i.e., in the subsequent assessment year and Rs.. 24,50,000/- on 28.03.2016 i.e. in the subsequent assessment year and Rs. 5,00,000 on 16.04.2016 i.e., in the subsequent assessment year. It clearly shows that assessee has taken the loan through banking channels and repaid the same b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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