×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
These cross appeals have been filed by the Revenue as well as Assessee against the impugned order of the Ld. CIT(A)-38, New Delhi relating to assessment year 2014-15. Since the issues involved in these appeals are identical, hence, the appeals were heard together and are being disposed of by this common order for the sake of convenience, by first dealing with Revenue’s Appeal i.e. ITA No. 5970/Del/2017 (AY 2014- 15).
2. The brief facts of the case are that the assessee filed its return of income on 29.11.2014 declaring income at Rs. 9,95,10,311/-. The case was selected for limited scrutiny. Notice u/s. 143(2) of the Income Tax Act, 1961 (in short “Act”) dated 28.8.2015 were issued. Subsequent notice u/s. 142(1) of the Act dated 26.4.2016 alongwith questionnaire fixing the case on 5.5.2016. In response to notices, the AR of the assessee attended the proceedings from time to time and filed necessary details which were called for and the same were examined by the AO. Subsequently, the case was transferred to Special Range-7, New Delhi vide order u/s. 127(1) of the Act dated 09.08.2016 Notice u/s. 142(1) dated 29.8.2016 was issued. The assessee company is in the business of manufacturing of Color Master Batches (plastic granules). It is a manufacturers, and suppliers of roto foam masterbatch, color masterbatches, polymer processing aid masterbatches, carbon black masterbatches, additive masterbatches, prafil compound, pracol colour, black masterbatches, roto foam powder, white master batches. During the year under consideration, an examination of the balance sheet of the assessee company as on 31.3.2014 revealed that it had received
unsecured loan of Rs. 47,59,50,000/- during the FY 2013-14 from various 45 parties/lenders, to all of whom AO issued notice u/s. 133(6) letter dated18.10.2016. Replies were received from 32 persons, notices were returned unserved in 5 cases and AO issued fresh notices u/s. 133(6) dated 08.10.2016 to 13 persons from whom reply to notice u/s 133(6) dated 18.10.2016 were not received. After further investigations AO treated an amount of Rs. 9,46,00,000/- shown by the assessee as unsecured loan received during AY 2014-15 as undisclosed income of the assessee u/s. 68 of the Act. During appellate proceedings assessee submitted that the figure of disallowance u/s. 68 actually comes to RS. 10,46,00,000/-. In appeal filed by the Assessee, Ld. CIT(A) deleted the addition of RS. 1,10,00,000/- in respect of I World Business Solutions Pvt. Ltd. and Rs. 15,00,000/- in respect of KG Embroidery Mills Ltd. vide order dated 28.6.2017. Aggrieved with the aforesaid action of the Ld. CIT(A) in deleting the additions, Revenue is in appeal before the Tribunal.
3. On the other hand, Ld. DR relied upon the order of the Assessing Officer. He submitted that Ld. CIT(A) has wrongly deleted the addition of Rs. 1,11,00,000/- u/s. 68 of the Act as unsecured loan from M/s I World Business Solutions Pvt. Ltd., and deleted the addition of Rs. 15,00,000/- u/s. 68 of the Act, despite the fact that identity, creditworthiness of lender and genuineness of transaction neither been established before the AO nor before the Ld. CIT(A). In view of above, he requested that order of the Ld. CIT(A) may be set aside by upholding the order of the Assessing Officer on the issues in dispute.
4. On the other hand, Ld. counsel for the assessee relied upon the order of the Ld. CIT(A) and stated that the lenders had sufficient income at their disposal to provide loans to the assessee which is substantiated by their return of income. He further submitted that the lenders are either Pvt. Ltd. Company or a Public Company whose details are available on public domain The loans have been advanced by the companies through banking channels or from their own funds. There is no allegation of the AO that there was cash desoits in the bank accounts by these lenders before providing loans to the assessee and there was no
adverse information with the AO in respect of the lenders. In view of above submissions, he submitted that Ld. CIT(A) has given the wellreasoned finding and thus rightly deleted the additions in dispute made by the AO, which does not need any interference.
5. We have heard both the parties and perused the records especially the impugned order. We find that Ld. CIT(A) has elaborately discussed the issues in dispute vide para no. 2.2.11 & 2.2.12 at page no. 25 & 26 of the impugned order. For the sake of clarity, we are reproducing the relevant finding of the Ld. CIT(A) as under:-
“2.2.11 I World Business Solutions Pvt. Ltd. 30/1 East Patel Nagar, New Delhi And 208, Vikram Tower, Rajendra Place New Delhi - 110008 Notice u/s 133(6) of the Income Tax Act, 1961 was issued by assessing officer on 18.10.2016 to this company regarding loan of Rs. 1,11,00,000/- to M/s Prayag Polytech Pvt Ltd for AY 2014-15 and reply was received. The returned income of M/s I World Business Solutions Pvt. Ltd, is Rs. 2,98,40,410/-. AO issued summon u/s 131 of the Income Tax Act, 1961 on 01.12.2016 in response to which there was no compliance on behalf of M/s I World Business Solutions Pvt. Ltd. as a result of which AO held that the identity is not established by the assessee creditworthiness is doubtful and the genuineness of the transaction is also suspicious. However, it is seen that M/s I World Business Solutions Pvt. Ltd. had reported income of Rs. 2,98,40,410/- for AY 2014-15, which was higher than the figure of loan to appellant. I hold that in this case the creditworthiness and identity of lender and the genu neness of transaction have been proved. Therefore, AO is directed to delete amount of Rs. 1.11 Cr. from the undisclosed income u/s 68 of the appellant computed by order u/s 143(3) for AY 2014-15 dated 24.12.2016.
2.2.12 M/s K G Embroidery Mills Ltd. , 3463 Gali Lallu Mishar, Sadar Bazar, Delhi- 110006 Notice u/s 133(6) of the Income Tax Act, 1961 was issued by assessing officer on 18.10.2016 to this company regarding loan of Rs. 15,00,000/- to M/s