Gujarat High Court
The Principal Commissioner Of Income ... vs Yogendrakumar Gupta on 7 March, 2023
Author: N.V.Anjaria
Bench: N.V.Anjaria
NEUTRAL CITATION
C/TAXAP/629/2022 ORDER DATED: 07/03/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 629 of 2022
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THE PRINCIPAL COMMISSIONER OF INCOME TAX 1
Versus
YOGENDRAKUMAR GUPTA
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Appearance:
MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1
for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 07/03/2023
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE N.V.ANJARIA) Heard learned advocate Mr. Varun Patel for the appellant.
2. The present appeal under section 260A of the Income Tax Act, 1961 arises out of order dated 23rd March, 2022 of the Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad in Income Tax Appeal No. 416 of 2016 in respect of Assessment Year 2006-2007.
2.1 The appellant-Revenue has proposed the following question of law stating to be arising as substantial question of law, "Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal has erred in law and on facts in deleting the addition of Rs. 8,71,00,000/- made on account of unexplanied cash credit u/s. 68 of the Act, without properly appreciating the facts of the case and the material brought on record"
3. The assessee happenes to be an individual engaged in the business of trading in shares and securities. On the basis of information received that the assessee had obtained accommodation entries in form of loan and advances for Rs. 8,71,00,000/- from one M/s. Basant Marketing Private Ltd.. Kolkata, the Assessing Officer reopened the assessment of the Page 1 of 5 Downloaded on : Sun Sep 17 22:29:27 IST 2023 NEUTRAL CITATION C/TAXAP/629/2022 ORDER DATED: 07/03/2023 undefined assessee.
3.1 The assessee during the reassessment stated that he had provided all the details of loan transactions with the said M/s. Basant Marketing Private Ltd. and that during the assessment proceedings under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') the genuineness of the loan was accepted. The assessee also furnished copy of the affidavit from the Director of M/s. Basant Marketing Private Ltd..
3.2 The Assessing Officer found that the assessee had failed to file any document or supporting evidence and proof of identity and genuineness of the transactions as well as the proof of creditworthiness of the lenders. It was observed by the Assessing Officer that it was found in course of the search conducted against one Arun Dalmia and Others at Mumbai that they were engaged in the money laundering. for which they had created 20 companies, one of which was M/s. Basant Marketing Private Ltd..
3.3 The Assessing Officer held that the assessee could not satisfy the conditions of sections 68 of the Act to show the identity, creditworthiness and genuineness of the transaction. Resultantly, the Assessing Officer treated the loan of Rs. 8.71 crores as unexplained credit under section 68 of the Act to add the same in the total income of the assessee.
3.4 When the assessee filed appeal against the said order of the Assessing officer before the Commissioner of Income Tax (Appeals), the Appellate Authority deleted addition for the following reasons, "(i) The amount received as loan by the appellant from M/s Basant Marketing P. Ltd. is through regular banking channels. Thus, the appellant has proved the identity of the creditor and the genuineness of the transactions, which has been further strengthened by filing Page 2 of 5 Downloaded on : Sun Sep 17 22:29:27 IST 2023 NEUTRAL CITATION C/TAXAP/629/2022 ORDER DATED: 07/03/2023 undefined confirmation from the creditor.
(ii) On going through the bank amount of M/s Basant Marketing P. Ltd. with ABN amro Bank from which amount was transferred to appellants account, it is found that there is no cash deposit in the said bank account of the creditor immediate before transferring money to the appellants bank account. In the said account, there are hardly few cash entries of small amount throughout the year. All the transactions in the said bank account are through regular modes of transfer of money. This proves the credit worthiness of the creditor.
(iii) M/s Basant Marketing P. Ltd. is assessed to Income-tax at Kolkata and the appellant filed its PAN before the AO. In the case of M/s Basant Marketing P. Ltd., for AY 2010-11, the CIT(A)-20, Kolkata has given the findings as mentioned below vide order dated 30-01-2015. Para-15 of the CIT (A) order is reproduced below:
"I have considered the rival submissions and perused the material placed on record, I have already discussed at length the various aspects of the factual and legal position in the present appeal. In view of such discussions, I am of the opinion that there is no material on record to back the finding of the AO that the assessee company was involved in providing accommodation entry, I am unable to accept the finding of the AO that the documents which were maintained by the assessee company in the normal course of its business and which were being presented regularly to the ROC as well as to the income tax department were fabricated, I am also unable to uphold the order of the AO that no income was earned or no expenditure was incurred by the assessee company or that its total income had to be treated as nil. In view of the above, I am of the considered opinion that there is no material on record to back the contention of the AO that the assessee company was fake and that it did not actually exist. The judicial decisions relied upon by the Ld ARs in course of the appellate proceedings also support the case of the assessee. The AO is therefore directed to assess the total income as declared by the assessee in its return of income by not treating the assessee company as fake or bogus. Ground no 1 to 4 are allowed. Ground no 5 and 6 are directed against the legal validity of the impugned order in as much as it was illegal and bad-in-law. The Ld ARs did not elaborate these grounds. I find no legal infirmity in the impugned order. Ground no 5 and 6 are dismissed. Ground no 7 is general in nature."
3.5 In the proceedings thus M/s. Basant Marketing Private Ltd. was Page 3 of 5 Downloaded on : Sun Sep 17 22:29:27 IST 2023 NEUTRAL CITATION C/TAXAP/629/2022 ORDER DATED: 07/03/2023 undefined found to be a genuine company and transaction of the said company was found to be in order. The Revenue took the matter to the appellate Tribunal.
3.6 Considering the second aspect that the lender party M/s. Basant Marketing Private Ltd. was found to be genuine company, the Tribunal observed as under, "10.8 Be that as it may be, we also find that in the own case of lender party M/s Basant Marketing for assessment year 2010-11 the learned CIT(A)-20 Kolkata held the said party as genuine company. We also find that in case of ITO vs. The Surat Safe Deposit Vault Pvt. Ltd bearing ITA No. 1791/Ahd/2017 corresponding to A.Y. 2007-08, where the assessee (The Surat Safe Deposit Vault Pvt) has also taken loan from M/s Basant Marketing P. Ltd held as genuine by the coordinate bench of this tribunal. The relevant finding of the bench reads as under:
6. We have heard both the parties and gone through the impugned order. The assessee has furnished copy of audited accounts, balance sheet and P&L account along with annexure, copy of ledger of Basant Marketing P. Ltd. And during the course of assessment proceedings, Basant Marketing P. Ltd. categorically confirmed the entry of Rs.2,43,00,000/- with copy of bank accounts reflecting the transaction there in. And M/s. Basant Marketing P. Ltd. has confirmed amount outstanding in the account of company is only Rs. 1,93,00,000/- which has been repaid during F.Y.2014-15. And so far remaining amount 50,00,000/- is concerned, assessee filed separate proof of payment to the A.O. and again filed before the Ld. CIT(A) and it was at Calcutta conducted detailed enquiry of Basant Marketing P. Ltd. wherein it is mentioned that Basant Marketing is not a fake company and its activities are genuine."
4. Now in the present case, it is to be recollected that the allegation against the assessee was that it had obtained accommodation entry in form of loan to the tune of Rs. 8.71 crore from the said M/s. Basant Marketing Private Ltd. and that the said party was not genuine company.
It was the information received that the said party M/s. Basant Marketing Page 4 of 5 Downloaded on : Sun Sep 17 22:29:27 IST 2023 NEUTRAL CITATION C/TAXAP/629/2022 ORDER DATED: 07/03/2023 undefined Private Ltd. was one of the 20 fake companies amongst the group of companies created by one Dalmiya. On the basis of such information, the department proceeded against the assessee denying the assessee the benefit by treating the loan from the said M/s. Basant Marketing Private Ltd. as unexplained credit.
5. As could be seen from the facts noted and recorded by the appellate authority and the Income Tax Appellate Tribunal, the said M/s. Basant Marketing Private Ltd. has been held to be a genuine party. Its identity, genuineness and creditworthiness were established. When M/s. Basant Marketing Private Ltd. was found to be a genuine lender, the entire basis for proceedings against the assessee would vanish. The Revenue was not justified in proceeding against the assessee on the ground that the loan taken from the said M/s. Basant Marketing Private Ltd. was unexplained credit and that the lender was not genuine.
6. Since the factual foundation for reopening the assessment of the respondent-assessee is absent, the action taken by the appellant-Revenue against the respondent-assessee cannot be endorsed to. This court is in complete agreement with the findings of the Appellate Authority and the Tribunal.
6.1 No question of law, much less any substantial question of law arises in this appeal.
7. Accordingly, the appeal is dismissed.
(N.V.ANJARIA, J) (NIRAL R. MEHTA,J) C.M. JOSHI Page 5 of 5 Downloaded on : Sun Sep 17 22:29:27 IST 2023