×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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15-01-2020, Maa Annapurna Transport, Section 68, 106, 131, Tribunal Kolkata
This is an appeal preferred by the revenue against the order of Learned Commissioner of Income-tax (Appeals) [ in short, the ‘Ld. CIT (A)], Kolkata-4 dated 23-01-2018 for the assessment year 2013-14.
2. The grounds of appeal of the revenue are as under:-
“1 That on the fac s and the circumstances of the case and in law, the Ld. CIT (A) did not call for Remand Rep rt and erred in deleting the addition of Rs. 2,60,67,315/- u/s. 68 of the Act, only keeping reliance upon submission of the A/R of the assessee. None of the twelve companies could be located on the given address from whom the assessee company had claimed to have taken unsecured loan.
2 That on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in
deleting the addition of Rs.12,75,987/- on account of interest payment to bogus loan creditors.
3· That on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in accepting the Appeal of the assessee, whereas the assessee company had not deposited the deducted amount of Rs. 8,46,634/- on account of employees' contribution to PF and ESI within the time of due date.
4 That on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the amount of Rs. 3,15,107/- being the interest on late payment of TDS.
5 That on the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred in concluding that the identity of the loan creditors was proved relying solely on the basis of paper documentation whereas in reality the loan creditors were non-existent at the addresses given as found out after physical verification and decided the appeal without calling for any report from the A.O on the submission made by assessee before him.
6 That the appellant craves leave to add to and/or alter, amend, modify or rescind the grounds hereinabove before or hearing of this appeal.”
3. Ground Nos. 1 & 5 are the same and therefore, are being dealt with.
4. The main grievance of the revenue as per grounds of appeal raised before us it that the ld. CIT(A) has erred in deleting the addition of Rs. 2,60,67,315/- u/s. 68 of the Income-tax Act, 1961 ( in short, the ‘Act’), which was added by the AO without calling for the remand report when 12 (twelve) companies, which had provided the loan to the assessee could not be located at the given addresses; and that the ld. CIT(A) has erred in concluding that the identity of the loan creditors were proved solely on the basis of paper documentation placed by the assessee before the ld. CIT(A) whereas in the reality the loan creditors were non-existent at the addresses furnished by the assessee.
5. Brief facts of the case as noted by the AO are that during the assessment proceedings while perusing the a coun s and details of the assessee, the AO opined that the assessee company had received unsecured loans from various entities out of which the following companies have been found to be paper companies and having no worth and he drew th s ch rt/table at page 2&3 of the assessment order giving out the details as below:
6. After reproducing the aforesaid chart at pages 2 & 3 of the assessment order, the AO asked the ld.AR of the assessee company to explain the identity, creditworthiness and genuineness of the loan creditors for the loan received during the year under consideration.
7. The AO acknowledges that pursuant to the same, the Ld. AR of the assessee company filed the reply, balance sheets, bank statements and ITRs of some of the loan creditors. However, the AO notes that the reply could not be accepted by him, thereafter from para 3.2 onwards he described the general modus operandi carried out by the jamakharcha companies/paper companies from pages 3-7 of his order and then at para 3.9 added Rs.2,60,67,315/- u/s. 68 of the Act by observing the following:
“3.9 The total of unsecured loans received from bogus companies as mentioned in the table above is Rs. 2,85,67,315/-.The assessee has also repaid back unsecured loans during the year itself to these paper companies and has taken again afre h from the same company or the other paper companies. Hence, a peak has been calculated based on the incoming and outgoing of these unsecured loans of Rs. 2,85,67,315/-, which comes to Rs. 2,60,67,315/-. In the light of the ratio of the decisions as discussed above vis-a-vis the facts and circumstances in the instant case as well as the ass ssee's inability to discharge its own burden of proof to substantiate the genuineness of introduction of unsecured loans, it is held that the purported unsecured loans aggregating to Rs. 2 60,67,315/- are nothing but the assessee's own money conduced under the garb of fresh unsecured loans into the assessee's business. Therefore, Rs. 2,60,67,315/-. is hereby treated as unexplained cash credit found in the books of the assessee during the A.Y 2013-14 and acco dingly added back to the total income of the assessee.”
8. Aggrieved, the assessee preferred an appeal before the ld. CIT(A), who was pleased to delete the addition. Aggrieved, the revenue is before us.
9. The Learned Departmental Representative ( in short, the ld. DR) assailing the action of the ld. CIT(A) contended that since the AO could not trace out the loan creditors in the addresses furnished by the assessee, the AO had no other alternative to make the addition. According to him, since the loan creditors were not traceable, they are non-existent. Therefore, according to him, the loan is nothing, but camouflage to bring the assessee’s unaccounted money and therefore, the AO has rightly added the bogus loan. According to him, the ld. CIT(A) failed to take note of this fact that the twelve(12) loan creditors could not be traced out in the addresses furnished by the assessee and therefore, while deciding the appeal he simply should not have accepted the averments made by the assessee and should not have simply believed the