Income Tax Appellate Tribunal - Kolkata
Sri Vinamra Daga, Kolkata vs Dcit, Circle - 6(1), Kolkata, Kolkata on 16 November, 2018
1
ITA No. 2320/Kol/2017
Vinamra Daga, AY 2014-15
आयकर अपील
य अधीकरण, यायपीठ - "D" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH: KOLKATA
(सम )Before ी जे. सध
ु ाकर रे डी, लेखा सद य एवं/and ी ऐ. ट . वक , यायीक सद य)
[Before Shri J. Sudhakar Reddy, AM & Shri A. T. Varkey, JM]
I.T.A. No. 2320/Kol/2017
Assessment Year: 2014-15
Sri Vinamra Daga Vs. Deputy Commissioner of Income-tax,
(PAN: ACQPD6902L) Circle-6(1), Kolkata.
Appellant Respondent
Date of Hearing 08.11.2018
Date of Pronouncement 16.11.2018
For the Appellant Shri A. Kochar, Advocate
For the Respondent Shri C. J. Singh, Sr. DR
ORDER
Per Shri A.T.Varkey, JM
This appeal preferred by the assessee is against the order of the Ld. CIT(A)-10, Kolkata dated 16.08.2017 for AY 2014-15.
2. The main grievance of the assessee is against the action of the Ld. CIT(A) in confirming the addition of Rs. 40,00,000/- which the assessee claimed to have received as unsecured loan and Rs.4,22,531/- being the interest related to the aforesaid amount of loan of Rs.40,00,000/-.
3. Brief facts of the case are that the assessee filed its return electronically on 20.09.2014 declaring total income of Rs.92,82,290/-. Later the case was selected for scrutiny. The AO noted that the assessee has taken unsecured loan to the tune of Rs.44,22,531/- from M/s. Pasupati Trade Links Pvt. Ltd. In order to find out the veracity of the loan, the AO issued notice u/s. 133(6) of the Income-tax Act, 1961 (hereinafter referred to as the "Act") which the AO notes to have returned un-served. However the AO 2 ITA No. 2320/Kol/2017 Vinamra Daga, AY 2014-15 acknowledged that the assessee produced (i) loan confirmation, (ii) bank statement, (iii) copy of ITR Acknowledgment, (iv) audited Balance Sheet of the lender company to prove the unsecured loan. However, the AO was of the opinion that the assessee has routed its own money through jamakharchi/shell/paper companies. Thereafter, the AO made a general observation of the modus operandi adopted by shell/paper companies which provided accommodation entries in lieu of cash and thereafter made the addition of Rs.44,22,531/-. The AO also added Rs.4,22,531/- separately (disallowance u/s. 37(1) on account of bogus expenditure) after taking note that the assessee had booked interest on loan to the tune of Rs.4,22,531/- and since the loan itself has been treated by him as bogus, therefore, the interest debited in respect of the bogus loan was also disallowed. Aggrieved, assessee preferred an appeal before the Ld. CIT(A) who was pleased to dismiss the appeal of the assessee. Aggrieved, the assessee is before us.
4. We have heard rival submissions and gone through the facts and circumstances of the case. It was brought to our notice by the Ld. AR that the unsecured loan taken by the assessee is only to the tune of Rs. 40,00,000/- and not Rs.44,22,531/- as noted by the AO and thus the addition made of Rs.44,22,531/- as bogus unsecured loan itself is per se erroneous because the unsecured loan was only Rs. 40,00,000/- and the interest on it booked by assessee was Rs.4,22,531/- and, therefore, the AO erred in making an addition of Rs.44,22,531/- as bogus unsecured loan. It was also brought to our notice that the AO has made double addition of the interest element. On one hand he has made the entire addition of Rs.44,22,531/- under the head bogus unsecured loan wherein the loan amount of Rs.40,00,000/- + Rs.4,22,531/- was added and thereafter separately disallowed an amount of Rs.4,22,531/- u/s. 37(1) of the Act. According to Ld. AR, the double deduction itself exposes the prejudice and pre-determined mind of the AO that the loan is an accommodation entry. It was brought to our notice that the assessee has already repaid the loan amount and for that he drew our attention to page 31 of the paper book which is the letter written by the ITO, Ward-5(2), Kolkata who is the AO of M/s. Pasupati Tradelink Pvt. Ltd. (the lender company in this case) wherein the ITO has asked for the confirmation from the assessee in respect to the amount refunded/repaid by him to M/s. Pasupati Tradelink 3 ITA No. 2320/Kol/2017 Vinamra Daga, AY 2014-15 which the assessee has taken as unsecured loan from the lender M/s. Pasupati Tradelink Pvt. Ltd. The Ld. AR drew our attention to page 31 of the paper book wherein the assessee has replied to the notice of the AO of the lender company M/s. Pasupati Tradelink Pvt. Ltd. wherein the assessee had confirmed to have repaid the loan amount of Rs. 40,00,000/- and filed (i) details of loan received, (ii) loan confirmation for the period ending 31.03.2015,
(iii) bank account details, (iv) copy of ITR Acknowledgement for the AY 2015-16, (v) audited financial statement being P&L Account and Balance Sheet for AY 2015-16. The Ld. AR drew our attention to the loan confirmation by the lender company M/s. Pasupati Tradelink Pvt. Ltd. which is placed at page 11 of the paper book and the Ld. AR drew our attention to page 12 from which the source of the advancing amount to the assessee is described from which it transpires that the lender M/s. Pasupati Tradelink Pvt. Ltd. had paid to the Vasundhar International vide cheque No. 000285 dated 05.04.2013 for Rs. 40 lakhs as loan and that the lender/creditor had made the said payment out of own sources generated from the receipt of Rs. 40 lakhs from the fund it received from M/s. Godavari Exim Pvt. Ltd. vide cheque No. 377304 dated 05.04.2013. The Ld. AR drew our attention to page 13 of the paper book which is the bank statement of the lender/creditor M/s. Pasupati Tradelink Pvt. Ltd. from which we note that M/s. Pasupati Tradelink Pvt. Ltd. received Rs.40 lakhs from M/s. Godavari Exim Pvt. Ltd. on 05.04.2013. The Ld. AR drew our attention to the audited statement of account of the loan creditor which is placed at pages 14 to 29 of the paper book and the ITR for AY 2014-15 of the loan creditor is found placed at page 30 of the paper book and thus he pleaded that the assessee has discharged the burden casted upon him to prove the identity, creditworthiness and genuineness of the unsecured loan taken by the assessee from lender company M/s. Pasupati Tradelink Pvt. Ltd. So he pleaded that addition was unjustified and want us to delete the addition. On the other hand, the Ld. DR supported the orders of the authorities below and does not want us to interfere in the impugned order.
5. We note that the assessee an individual is carrying on the business under the following two proprietorship concerns (i) M/s. Vasundhara International and (ii) M/s. Global Impex. The assessee was conducting trading of fans of Orient brand and was the 4 ITA No. 2320/Kol/2017 Vinamra Daga, AY 2014-15 distributor of it in the State of Rajasthan. We note that the assessee had taken a loan of Rs. 40 lakhs for M/s. Vasundhara International on 05.04.2013 which fact has been confirmed by the creditor/lender M/s. Pasupati Tradelink Pvt. Ltd. which is evident from perusal of page 11 of the paper book. The source of the lender company giving loan to the assessee has also been explained from the contents of page 12 of the paper book and this fact has been corroborated by the bank statement of the lender/creditor M/s. Pasupati Tradelink Pvt. Ltd. which is placed at page 13 of the paper book and the loan has been given to assessee through bank transaction. We note that the lender company has PAN AAECP8702B and is an income tax assessee and a perusal of page 30 of the paper book reveals that the lender had filed its return of income. From the perusal of pages 31 and 32 reveals that the assessee had refunded the amount of Rs. 40 lakhs to M/s. Pasupati Tradelink Pvt. Ltd. which fact is corroborated from the queries raised by the AO of the lender company as discussed above. Thus, the assessee has been able to discharge the onus casted upon it to prove the identity, creditworthiness and genuineness of the loan creditor. For taking such a view we rely on the order of the Hon'ble Calcutta High Court in S. K. Bothra & Sons HUF Vs. ITO 347 ITR 347 (Cal). Further, we note that the Hon'ble Calcutta High Court in Crystal Network (P) Ltd. Vs. CIT 353 ITR 171 (Cal) has observed that the creditors cannot be disbelieved merely because they did not respond to summons when all other documents to substantiate the loan transaction has been filed before the assessing authority. The Hon'ble Calcutta High Court in CIT Vs. Dataware (P) Ltd. ITA No. 263 of 2011 dated 21.09.2011 has held that in case if the AO has doubt regarding the creditworthiness of the loan creditor, then the AO in turn had to seek report from the AO of the loan creditor and thereafter only draw adverse inference against the loan creditor. In this case, the loan creditor has even shown the source of the loan disbursed to the assessee (from funds it received from M/s. Godavari Exim Pvt. Ltd. as discussed) and we note that the AO has not made any exercise to discredit the loan creditor in any manner other than making certain general observations of the accommodation entry providers which cannot be the legal basis for disbelieving the loan the assessee received from M/s. Pasupati Tradelink Pvt. Ltd. and which amount the assessee has repaid as is evident from the correspondence between the assessee and the AO of the lender company as discussed above. The assessee has discharged the onus by placing all the 5 ITA No. 2320/Kol/2017 Vinamra Daga, AY 2014-15 documents before the AO/Ld. CIT(A) as discussed above. Therefore, the Ld. CIT(A) erred in not giving credence to the aforesaid documents filed before him without any adverse material to substantiate his stand. Hence, we are inclined to delete the addition of Rs. 40 lakhs which the assessee has taken as loan as well as the interest which the assessee has given to the lender of Rs.4,22,531/-. The additional disallowance u/s. 37(1) of the Act of Rs.4,22,531/- is also deleted. Thus, the assessee gets relief of Rs.44,22,531/- and Rs. 4,22,531/- u/s. 37(1) of the Act.
6. In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 16/11/2018
(J. Sudhakar Reddy) (A. T. Varkey)
Accountant Member Judicial Member
Dated: 16th November, 2018
Jd.(Sr.P.S.)
Copy of the order forwarded to:
1 Appellant - Shri Vinamra Daga, C/o S. L. Kochar, Advocate, 86, Canning Street, Kolkata-700 001.
2 Respondent - DCIT, Circle-6(1), Kolkata.
3 CIT(A)-10, Kolkata. (sent through e-mail)
4 CIT , Kolkata
5 DR, Kolkata Benches, Kolkata (sent through e-mail)
/True Copy, By order,
Sr. Pvt. Secretary