Income Tax Appellate Tribunal - Indore
Maa Narmada Enterprises, Indore vs Department Of Income Tax on 28 February, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARMA, A.M.
PAN NO. : AAKFM9523A
I.T.A.No. 68/Ind/2011
A.Y. : 2004-05
ACIT, M/s. Mahakal Traders,
3(1), vs Indore.
Indore.
Appellant Respondent
PAN NO. : AALFM3953F
I.T.A.No. 71/Ind/2011
A.Y. : 2005-06
ITO, M/s.Maa Narmada
Enterprises,
Ward 3(1), vs 95-96, Sector C,
Indore. Scheme No.54,
Indore.
Appellant Respondent
Appellant by : Shri Arun Dewan, Sr. DR
Respondents by : Shri Anil Kamal Garg, C.A.
Date of Hearing : 28.02.2012
Date of : 27.03.2012
pronouncement
ORDER
PER R. C. SHARMA, A.M.
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I.T.A.No. 68/Ind/2011:
This is an appeal filed by the Revenue against the order of CIT(A)-II, Indore, dated 31.03.2011 for the assessment year 2004-05.
2. Following grounds have been taken by the Revenue :-
On the facts and in the circumstances of the case, the CIT(A) has erred in :-
1) Deleting the additions of Rs. 50,00,000/- made by the Assessing Officer on account of unexplained cash credits u/s 68 of the Income-tax Act, 1961.
2) Deleting the addition of Rs. 2,50,000/- made by the Assessing Officer on account of disallowance of commission expenses incurred for obtaining the unsecured loans.
3. Facts in brief are that the assessee is engaged in the business of trading in liquor following the mercantile system of accounting. During the scrutiny of assessment proceedings, addition was made by the Assessing Officer on account of cash creditor u/s 68 amounting to Rs. 50 lakhs. Further addition of Rs. 2.50 lakhs was made on account of disallowance of 2
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commission expenses. By the impugned order, the ld. CIT(A) deleted the addition after having following observations :-
"4.2.3 In the context of the facts and findings as given in the Lunkad Group of cases, It has been held that the Lunkad group had failed in discharging its onus to explain the source of huge share capital introduced year after year in their group companies. The documents impounded during the survey in the Lunkad group of cases, though, for the limited period only, do suggest the modus operandi adopted by them in providing entries to the beneficiaries. But this has not been accepted by the Lunkad group so far. Rather, they (Lunkad group) have issued confirmatory letters to the various beneficiaries in support of having given genuine loan and share application money. Had they accepted the modus operandi of providing only entries, then the required 3
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course would have been confirming the additions made in the hands of beneficiaries. But this has not been done so.
Rather the Lunkad group had tried to reinforce the stand of beneficiaries by way of issuing confirmatory letters to them but in their own cases they have utterly failed to discharge the primary onus of explaining the source. Therefore, in the circumstances, the additions made on this issue were sustained on substantive basis in the cases of Lunkad group of companies itself. Confirming addition on the same issue in the hands of beneficiaries would I amount double addition [ though on different hands] . Further in the facts of the case, the decision of Hon'ble jurisdictional High Court in the case of Metachem Industries Limited supports the grounds of the assessee. Accordingly, 4
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keeping in view the findings which has been given by me in Lunkad Group of cases and following the principal of consistency, the addition made u/s 68 on this issue, can not be sustained in the cases of beneficiaries."
4. Contention of ld. Senior DR was that the assessee could not explain the cash credit received from Lunkad Group and that survey material collected during course of survey at Lunkad Group indicated that loans given by Lunkad Group was not genuine.
5. On the other hand, the contention of ld. Authorized Representative was as under :-
" The entire action of the ld. Assessing Officer to regard the subject transaction of loans as mere accommodation entries is based only upon conjectures, surmises, bald guess work and whims without any adverse material on record. That during the entire assessment proceedings, which were 5
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carried on for almost one and half years by having several hearings, the learned Assessing Officer has not whispered even once about the allegations made by him against the creditors from whom the assessee had taken the subject loans. The learned AO never disclosed the facts to the assessee that any survey was conducted in the premises of one of the creditor namely "M/s. Rajveer Marketing & Investment Pvt. Ltd.' and its group concerns. During the entire assessment proceedings, the learned Assessing Officer never sought any explanation from the assessee as regard his so called findings in the case of creditors.
2. NO NEXUS GOT ESTABLISHED BY THE AO WITH THE MODUS OPERANDI OF THE CREDITORS WITH THEIR FINANCIAL TRANSACTION WITH THE ASSESSEE The learned Assessing Officer in making the impugned addition u/s. 68 of the Income- Tax Act, 1961, without giving any opportunity to the assessee to meet out its case, was in gross 6
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violation of natural law and justice and therefore such additions have rightly been deleted by the learned CIT(A) after fully examining the facts and circumstances of the case. CITATIONS:
i) Kishanchand Chellaram vs. CIT (1980) 125 ITR 713 (SC).
ii) CIT vs. Eastern Commercial Enterprises (1994) 210 ITR 103 (Cal)
3.NO LINK FOUND BETWEEN THE DOCUMENTS IMPOUNDED FROM THE CREDITORS' PREMISES U/S. 133A AND THE TRANSACTIONS RECORDED BY THE ASSESSEE 3.01 The learned assessing officer has alleged that the transactions shown by the assessee with the creditors namely, 'M/s. Rajveer Marketing & Investment Pvt. Ltd. and M/s.
Westend Management Technologies Pvt. Ltd., are merely accommodation entries. The learned assessing officer, further alleged that such creditors received cash from the assessee and after routing such cash through various companies, the amount was given as cheques to the assessee. In this regard it is submitted that the entire finding is based merely on conjectures, 7
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surmises, whims and fancies of the learned assessing officer without having any iota of evidence on record. The learned assessing officer has alleged that before obtaining the cheque, the assessee provided cash to the creditors but he could not specify that when, to whom and by whom such cash was given. He could also not pin point any nexus between the subject transactions shown by the assessee in its regular books of account and that in the alleged papers recovered from the creditors' premises during the course of survey u/s. 133A. The assessee is carrying on business of country liquor and Indian made foreign liquor by obtaining required license from 'State Excise Authorities'. During the year under consideration, for obtaining the license for sale of liquor in the next financial year, the assessee was required to make payment of earnest money deposit to State Excise Authorities. Accordingly, the assessee directly made contact with the subject creditors as also with eight other creditors for obtaining loans. It shall not be out of place to mention here that the learned assessing officer, after 8
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making in-depth enquiries, accepted the loan transactions of other eight creditors but with the pre-conceived notions, he opted to disregard the genuineness of transactions of the assessee with the subject creditors. It shall be appreciated by Your Honours that at the time of entering into loan transactions, a borrower, who is always considered to be at lower hand, cannot enquire the sources of funds of the lender. In such circumstances, merely on the notion that the lender arranged such funds from some other entities, the entire transactions fulfilling the test of genuineness could not be disregarded merely on suspicion, more particularly in a circumstances when not a single adverse evidence, having bearing with such transactions was brought on record.
That out of the entire transactions of Lunkad Group, as reproduced by the ld. Assessing Officer himself at page no. 7 to page no.11 of the assessment order, none of the transactions pertains to the assessee and therefore, the ld. Assessing Officer was not justified in drawing any adverse 9
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inference against the assessee.
4. THE ASSESSEE HAD ESTABLISHED IDENTITY OF THE CREDITORS. GENUINENESS OF THE TRANSACTIONS AND CAPACITY OF THE CREDITORS BEYOND ALL DOUBTS.
It is a settled law that for the purpose of section 68, an assessee is merely required to establish identity of the creditors, genuineness of the transactions and creditworthiness of the creditors. In the present case, the assessee had established all the three ingredients of cash credit with documentary evidences, during the course of: assessment proceedings.
The assessee, through its counsel's letter dated 30-11- 2006, had offered its explanation with all the documentary evidences. A copy of such written submission is being submitted as Annexure A-2.03 [Paper Book Page No.27 to 30].
The assessee vide para (3) of the above referred letter dated 30-11-2006, had very categorically furnished each and 10
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every detail, along with the documentary evidences [kindly refer Page No. 28 to 29 of Paper Book]. Further, even before the learned CIT(A), the assessee had furnished various documents for establishing identity of the creditors, genuineness of the transactions and capacity of the creditors. The gist of the explanation of the assessee, along with the relevant documentary evidences which are forming part of the paper book, is as under:-
Identity of the Creditors As regard, identity of the above named creditors, the necessary details, which were also furnished before both the authorities below, are as under:
S Name Complete Constitutio PAN Name of
No. Address n the AO
with whom
assessed
1 M/s. Rajveer Marketing 13, Race Course A company regi- AAACR7836A JCIT-
& Investments Pvt. Ltd. Road, Indore stered under the . Range-3,
Companies Act, Indore
1956 with
R.O.C., Gwalior
2 M/s. Westend 13, Dr. R.S. A company regi- AAACW1623N JCIT-
Management Bhandari Marg, stered under the Range-3,
Technologies Pvt. Ltd. Indore Companies Act, Indore
1956 with
1. R.O.C., Gwalior
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Genuineness of the Transactions
As regard, genuineness of the transactions of loans entered into by the assessee with the above stated concern/companies, at the outset, it is submitted that all the subject transactions have taken place through account payee cheques only. In order to prove, the genuineness of the transactions, we are submitting herewith the following documents:
i) Copy of loan confirmation letters duly signed by the ab above named creditors [Annexure A-3.01 to A-3.02] [Paper Book Page No.34 and 35].
ii) Xerox copy of the relevant Bank Statements of the assessee for the concerning previous year duly marked with the transactions entered into with such creditors (Annexure A-3.03). [Paper Book Page No.36 and 37].
iii) Copy of account the above named creditors in the books of accounts of the assessee (Annexure A-3.04 and A-3.05).
[Paper Book Page No.38 and 39].
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iv) Copy of Affidavits duly sworn-in before the Notary Public by the directors of the lenders company proving the genuineness of the transactions beyond all doubts. (Annexure A-5.01 and A-5.02). [Paper Book Page No.49 and 50] .
C. Credit Worthiness of the Creditors As regard credit worthiness of the creditors, it is submitted as under:
i) That, all the above named creditors are regularly assessed to Income-Tax under Permanent Account Number and with the Assessing Officer as per detail furnished in sub-para (A) supra.
ii) That, all the loan transactions have taken place through account payee cheques only.
iii) That, as regard sources of the creditors to make loans to the assessee, it is submitted that both the creditors companies are duly registered with Reserve Bank of India as Non-Banking Finance 13
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Companies vide Reg. No. B-03. 00156 dated 11- 05-2002 and Reg. No.B-3.00155 dated 11-05- 2002 respectively. In order to prove such fact, we are submitting herewith xerox copy of the certificates of R.B.I. registration as Annexure A- 3.06 & A-3.07. [Paper Book Page No.40 & 41]
1.
iv) That, in order to prove further the credit worthiness of the above named creditors, we are also submitting herewith xerox copy of the Bank Statements of the above named companies for the relevant period as Annexure A-3.08 to A-3.09) [Paper Book Page No.42 to 44] 5 THE ASSESSEE HAD DISCHARGED ITS INITIAL ONUS OF PROVING 5.01 That, by establishing the identity of the creditors, genuineness of transactions and creditworthiness of the creditors, the assessee had discharged the initial onus lied on it and thereafter the onus got shifted on the revenue to disprove 14
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the explanation of the assessee.
CITATION :
i) CIT vs. Mehrothra Brothers, (2004) 270 ITR 157 (MP). ii) CIT vs. Bai Shnab Charan Mohanty (1995) 212ITR 199 (Ori) iii) Addl. CIT vs. Bahri Bros. (P) Ltd (1985) 154ITR 244 (Pat) iv) Anil Rice Mills vs. CIT (2006) 282ITR 236 (All) v) Shankar Industries vs. CIT, (1978) 114ITR 689 (Cal) vi) Orient Trading Company vs. CIT (1963) 49 ITR 723 (Bom) vii) CIT vs. Shree Gopal & Co. (1993) 204 ITR 285 (Gau)
viii) CIT vs. Jauharimal Goel (2006) 201 CTR (All) 54
ix) CIT vs. Down Town Hospital (P) Ltd.
(2004) 267 ITR 439 (Gau):
5.02 An assessee cannot be required to explain the source of the source. In this context, reliance is placed on the very detailed finding given by their lordship of High Court of Gauhati in the case of Nemichand Kothari vs. CIT as 15
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reported in (2003) 264 ITR 254 (Gau). In such case, the assessee who obtained certain loans, through account payee cheques, disclosed the source from which he received the loan and also established the identity of the creditor. During the course of assessment of such assessee, the Assessing Officer examined the creditor under s. 131 of the IT Act. The creditor stated to have received loan from three other persons (sub-creditors) before giving loan to the assessee. The AO, upon examining the assessment records of sub-creditors, formed the view that the sub-creditors were not having capacity to give loans to creditor. On such finding, the Assessing Officer made addition u/s. 68 of the Act in the hands of the assessee."
5.04 The Hon'ble Jurisdictional High Court of Madhya Pradesh in case of CIT vs. Metachem Industries (2000) 245ITR 160 (MP) observed as under:
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"Once it is established that amount has been invested by a particular person be he is a partner or an individual then the responsibility" of the assessee firm is over. The assessee firm can not ask that person who makes investment whether the money invested is properly taxed or not. The assessee is only to explain that this investment has been made by the particular individual and it is the responsibility of the individual to account for the investment made by him if that person owns that entry then the burden of the assessee firm is discharged. " 5.05 It is a settled law that when section 68 is invoked and the assessee furnishes an explanation then it is incumbent upon the AO to examine the explanation and arrive at a conclusion as to whether the explanation is satisfactory and he has to communicate his decision to the assessee if the explanation is not found satisfactory.
CITATIONS
i) EXOIMP Resources (India) Ltd. vs. CIT, (2005) 276ITR 17
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87 (Cal)
ii) Hindustan Tea Trading Co. vs. CIT, (2003) 263 ITR 289 (Cal.) /
iii) Pritam Daftari vs. CIT, (2006) 283ITR 259 (Cal) DESPITE MAKING SPECIFIC REQUEST THE LEARNED AO DID NOT EXERCISE HIS POWERS OF ISSUING SUMMONS U/S 131 TO THE DIRECTORS OF THE CREDITOR COMPANIES :
7.01 It is further submitted that during the course of assessment proceedings, the assessee through its letter dated 30-11-2006, reproduced herein above, had made a very categorical request to the learned AO to issue the summons u/s. 131 of the Act to the creditors, should the AO was not satisfied with the assessee's explanation as regard to the genuineness of loan transactions [kindly I refer Para 1 of PB Page No.30]. Despite such specific request, made much before the date of conclusion of assessment proceedings, the learned Assessing Officer 18
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did not exercise his powers but chosen to make impugned additions merely on guess work and extraneous consideration. In such circumstances, the additions so made by the learned Assessing Officer was not called for."
6. We have considered the rival submissions and have gone through the orders of the authorities below. The issue with regard to loan taken from the Lunkad Group has been dealt by the Tribunal in case of Mittal Group vide order dated 30th December, 2011.
7. In the order dated 30th December, 2011, the deletion of addition made by the ld.CIT(A) was reversed by observing as under :-
"From the order of the CIT(A), it is clear that he has deleted the addition in the hands of the assessee company on the plea that addition in the hands of creditor company (Lunkad Group) has been confirmed on substantive basis. As per CIT(A), if he confirmed the same addition in the hands of the assessee company, it will amount to double addition in respect of the 19
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same amount of income. We found that additions have been made in the hands of Lunkad Group on the plea that the source of share capital received by them could not be explained. However, addition has been made in the hands of the assessee company on the plea that genuineness of the loan transactions has not been established in view of the incriminating documents found during course of survey at Lunkad Group. Incriminating documents was found pertained to the month of April, 2006, which indicated that Lunkad Group was in receipt of cash from various beneficiaries including assessee and which has again been given to the beneficiaries through cheques. There is no dispute to the well settled legal proposition that in case of cash credit, assessee is not only required to prove the identity of the loan creditor but also the genuineness of transaction of loan as well as capacity of the loan creditor to advance the said amount of loan. In the instant case, there is no dispute to the identity in so far as Lunkad Group is also on 20
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Department's record and a survey has been carried out at premises of Lunkad Group. The genuineness of transaction of the loans become doubtful in view of the incriminating documents found during survey at Lunkad Group. Even though the assessee has filed loan confirmation alongwith affidavit of Director of the creditor company (Lunkad Group) but they could not produce the Director of Lunkad Group to substantiate the contents of affidavit as well as confirmation so filed. The CIT(A) has deleted the addition on the plea of double addition by stating that confirming addition in the hands of assessee company in respect of loans received by it amounts to double addition. In this regard, there is a direct decision of Hon'ble Supreme Court in the case of ITO vs. CH Atchaiah, 218 ITR 239, wherein it was observed that no option has been given under the 1961 Act, and it has been specifically provided that tax has to be levied on right person notwithstanding the fact that the amount has already been added in the hands of some other person. 21
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Meaning thereby addition should be made in the hands of the right person and the same cannot be deleted only on the plea that the same amount has been added in the hands of some other person. It was observed by the Supreme Court that there is no option under the 1961 Act, unlike the one given under 1922 Act and the AO must tax the right person and right person only. By "right person" is meant the person, who is liable to be taxed according to the law with respect to a particular income. The expression "Wrong Person" is obviously used as opposite of the expression "right person". Merely because a wrong person is taxed with respect to a particular income, the AO is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact, which course is more beneficial to the Revenue. A person lawfully liable to be taxed can claim no immunity because the Assessing Officer has taxed the said income in the hands of another person contrary to law. Similar provision has been laid down by the 22
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Hon'ble Supreme Court in the case of Smt. Taradevi, 88 ITR 323. The proposition so discussed above as laid down by the Hon'ble Supreme Court has been followed by the I.T.A.T. Special Bench in the case of Pradeep Agencies, 111 TTJ 346.
Applying the above proposition of law to the facts of the instant case, we can safely conclude that the ld. CIT(A) was not justified in deleting the addition in the hands of the assessee company merely on the plea that the same amount has been added in the hands of the creditor company. We found that in case of Lunkad Group addition was made in respect of cash received by it from persons, whose name, address and other particulars could not be furnished before Assessing Officer. This addition is mothering to do with the genuineness of loan received by assessee from Lunkad Group. Before reaching to the third criteria of creditworthiness, assessee have to cross the barrier of genuineness of loan transaction, which has become doubtful in view of the incriminating material found during course of survey at Lunkad Group 23
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with regard to receipt of cash from the assessee company and issue of cheque against such cash in favour of the assessee company. Thus, a legally wrong view has been taken by the ld.CIT(A), which made the Department entitled to file an appeal against such order of CIT(A). Thus, there is no merit in the argument of ld. Authorized Representative to the effect that the Department had wrongly come in appeal against the order of CIT(A)."
8. However, the issue of addition has also been dealt on merit in the case of Mittal Group (supra) and matter was restored to the Assessing Officer with the following observations :-
"19. We have considered the rival contentions and found from record that the assessee company has taken loan from Lunkad group since assessment year 2002-03 onwards. Not only loan was taken but it was also repaid either during the year or in subsequent year. The assessee has taken loan through account payee cheques as per its business requirement, paid interest thereon and also deducted TDS on such interest 24
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payment. In all these years, the assessee had filed loan confirmation letters. These loan transactions have been accepted by the Department either u/s 143(1) or 143(3) of the Income-tax Act, 1961. The whole problem arose due to the survey at business premises of Lunkad Group on 2.5.2006, wherein certain documents for the month of April, 2006, was found and impounded, which indicated that Lunkad Group had received cash from various persons including assessee. Even though full name of assessee was not mentioned on the papers so impounded but the Assessing Officer inferred that name of "Narmada" as relating to assessee company, namely, "Narmada Extrusion Limited". The Lunkad Group was asked to explain these incriminating documents indicating receipt of cash from various parties, but the Lunkad Group could not explain the same and dispute arose between the Lunkad Group and Department with regard to survey conducted at Lunkad Group. The Lunkad Group has also filed a writ petition in the M.P.High Court against the Department for the survey 25
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so conducted and the records so impounded. This writ petition is still pending in the Court. It was also brought to our notice that High Court has directed for issue of copy of documents so impounded alongwith copy of books of accounts to Lunkad Group, but as per assertion of Lunkad Group, the same have still not been furnished to it. When the assessment of the assessee company was framed with respect of the search conducted at business premises u/s 153A on 5.10.2006, the Department found that the assessee group had also taken loans from Lunkad Group. The assessee was again asked during proceedings u/s 153A to substantiate the loan transaction for which the assessee had furnished confirmation letter as well as affidavits of creditors. The Department also asked to produce the Director of Lunkad Group before them. The assessee had produced loan confirmation letters and affidavit of Lunkad Group to substantiate the loan transaction, but the assessee failed to produce the Directors of Lunkad Group in person. Under these 26
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circumstances, the Department has taken a view that all the transaction of loan starting from financial year 2001-02 till date of search were not genuine and it was assessee's own money, which has been given back to the assessee in the form of loan entry. Here the contention of the ld. Authorized Representative was that Mr.Lunkad had challenged the survey action conducted by Income Tax Department before the Hon'ble High Court. Since the writ as filed by Lunkad Group is pending before the Hon'ble High Court for the reasons he has grievance with the Income Tax Department. Due to dispute of Lunkad Group with Department and pendency of writ petition in the Hon'ble High Court, assessee could not persuade the Lunkad Group to appear in person before the Department. His further contention was that impounded document from Lunkad Group only pertained to the month of April, 2006, and there was no incriminating material for any period other than month of April, 2006, indicating that the assessee has given any cash to Lunkad Group for 27
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taking loan entry from 1.4.2001 to 31.3.2007. He further contended that at the most additions could be made only with respect to the entries in the impounded documents, which indicated any cash being given by the assessee to Lunkad Group and not beyond it. He further contended that Assessing Officer had no where related the cash entries on these documents as having been deposited in bank account for issue of cheque to assessee, nor made any efforts to relate such cash deposit as having been utilized for issue of cheque in assessee's favour nor anything was brought on record by Assessing Officer suggesting return of cash to assessee whenever assessee had repaid the loan so taken from Lunkad Group. On the other hand, contention of the ld. CIT DR was that incriminating documents as mentioned by Assessing Officer in his assessment order even though pertained to one month, it indicated the modus operandi of Lunkad Group for advancing loans to the assessee , therefore, the Department has applied the same conclusion even with 28
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respect to the loans, which were taken and also repaid in earlier years for which no incriminating document was found either at the business premises of the assessee or at Lunkad Group.
20. After analyzing all the documents placed on record, we found that additions have been made by Assessing Officer in respect of all the loans which even though taken and repaid by assessee in earlier years starting from 1.4.2001. Contention of Assessing Officer was that since the assessee could not produce the creditor in person, therefore, the confirmation and the affidavits filed by the creditors cannot be relied upon.
We found that all the necessary documentary evidence to substantiate the loan transaction have been filed by the assessee, which indicated receipt and repayment of loan, payment of interest thereon and deduction of tax at source in respect of the interest paid thereon. It appears that due to the dispute between the Department and the Lunkad Group and the writ petition filed by Lunkad Group in the High Court, 29
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assessee could not persuade the Lunkad Group to appear in person before the Department. It is also not in dispute that no incriminating document was found by Department in assessee's premises either during course of search or on subsequent inquiry suggesting any cash given by assessee to Lunkad Group in consideration of loans so taken nor receipt of any cash whenever there was repayment of loan by assessee to Lunkad Group. Under these circumstances and in the interest of justice, one more opportunity should be given to assessee for producing the loan creditor for confirming the contents of confirmation and affidavits so filed. Keeping in view incriminating documents found during the course of survey at Lunkad Group for the period 1.4.2006 to 1.5.2006 pertaining to the assessment year 2007-08, even though related to one month only, the Department was justified in making addition in the hands of the assessee company in the assessment year 2007-08 by disbelieving the loan transactions. As per our considered view, addition 30
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should be made with respect to the amount of cash found to be given by the assessee to the Lunkad Group as per incriminating documents so found at Lunkad Group during survey after giving opportunity to assessee for cross examination. Mere presumptions without any material on record to the effect that even in respect of all the earlier years, the assessee might have given cash to the Lunkad Group for getting unsecured loan, is not justified. All the loans were received by assessee through account payee cheques and also repaid through account payee cheques. Assessee had also filed even confirmation letters and affidavits to substantiate the loan transactions. Only because of incriminating document pertaining to period 1.4.2006 to 1.5.2006, the Department doubted the genuineness of all the loan transactions pertaining to period starting from 1.4.2001 to 31.3.2007. Before making addition or disallowing the cash credit, on the plea of genuineness, the Department is required to bring on record some evidence to indicate that the assessee has paid cash in 31
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consideration of the cheques so issued. Without any evidence, much less a cogent evidence, it is not legally justified to doubt the genuineness of loan transaction or make addition in the hands of the assessee company for which no material much less a cogent material is in possession of Department. In the interest of justice and fair play, we restore the grounds raised by the assessee in the cross objection to the file of the Assessing Officer for deciding afresh in terms of our above discussion and as per law. "
21. As the issue raised by the Revenue is covered by the order of the Tribunal in the case of Mittal Group, respectfully following the same, we restore the matter to the file of the Assessing Officer for deciding the same afresh in terms of our directions given in the order of Mittal Group dated 30th December, 2011.
22. In the result, the appeal of the Revenue is allowed in terms indicated hereinabove.
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23. In I.T.A.No. 71/Ind/2011 in the case of M/s. Maa Narmada Enterprises, the following grounds have been taken by the Revenue :-
On the facts and in the circumstances of the case, the ld. CIT(A) erred in -
1. Deleting the additions of Rs. 50,00,000/- made by the Assessing Officer on account of unsecured loan u/s 68 of the Income-tax Act, by way of accommodation entries obtained by the assessee from Lunkad Group.
2. Deleting the addition of Rs. 82,285/- made by the Assessing Officer on account of interest expenses being paid for accommodation entries obtained from Lunkad Group which has been received back in cash from the operator.
3. Deleting the addition of Rs. 2,50,000/- made u/s 69A of the Income-tax Act on account of unexplained source of expenses incurred for payment of commission to Lunkad Group for 33
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providing accommodation entries @ 5% as out of book expenditure.
24. Since the facts in the above case are similar to M/s Mahakal Traders as discussed above, respectfully following the same reasoning, we allow this appeal also in terms indicated hereinabove.
25. In the result, both the appeals of the Revenue I.T.A.Nos. 68 & 71/Ind/2011 are allowed in terms indicated hereinabove.
This order has been pronounced in the open court on 27th March, 2012.
sd/- sd/-
(JOGINDER SINGH) ( R.C.SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 27th March, 2012.
CPU*
19273
34