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10-07-2019, Jamini Industries, Section 68, 131, 133(6), Tribunal Mumbai

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3 months 3 days ago #10042 by amit
Section - 68, 131, 133(6), 250(4)
Order Date - 10-07-2019
Favouring - Allowed for statistical purposes
Court - Tribunal Mumbai
Appellant - DCIT
Respondent - Jamini Industries Pvt. Ltd.
Justice - SANDEEP GOSAIN JM & N.K. PRADHAN AM
Citation - 719Taxpundit136
Appeal No. - ITA No. 5516/MUM/2017
Asstt. Year - 2014-15

Order

PER : N.K. PRADHAN, AM

This is an appeal filed by the Revenue. The relevant assessment year is 2014-15. The appeal is directed against the order of the Commissioner of Income Tax-9, Mumbai [in short ‘CIT(A)’] and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the ‘Act’).

2. The ground of appeal filed by the revenue reads as under: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing relief to the assessee on account of bogus unsecured loans even though there was a conclusive finding that the loan creditors have not been found at the addresses given by the assessee.

3. Briefly stated, the facts are that the assessee filed its return of income for the Assessment Year (AY) 2014-15 on 29.11.2014 declaring total loss of Rs.57,20,251/-. The assessee-company is engaged in hand processing and printing of textiles on job basis. During the course of assessment proceedings, the Assessing Officer (AO) sent a commission to the Deputy Director of Income Tax (Inv.), Unit 1(2), Kolkata (in short ‘DDIT’) for verification of 11 loan parties. The details are as under: The DDIT has given a report to the AO stating that out of 11 companies, 9 are not found at the given address and the rest two companies i.e. M/s Onkarmal Consultancy Pvt. Ltd. (Director-Mr. Rajkumar Bajaj) and Cyndrella Tie-Up Pvt. Ltd. (Director-Mr. Amit Khemka) are just the entry provider as per the statement on oath given by Mr. Amit Khemka during the search. Thereafter, the AO provided to the assessee a copy of the commission report along with the show-cause notice dated 23.12.2016. In response to it, the assessee submitted a reply on 26.12.2016. The AO was not convinced with the said reply of the assessee for the reason that the loan parties could not be traced at the giving address and the assessee failed prove the primary onus i.e. is the existence of the parties. Further observing that 2 companies out of the said list of 11 companies had not received any interest on the loan given to the assessee, the AO held that the said companies were just entry providers.

Further, the AO verified and found that the loan parties have high reserve and surplus in their balance sheet but it was only because of share premium amount and not due to profit and loss during the year. In fact the said companies, whose financials had been submitted, had very low income in their P&L account. Thus the AO observed that it is beyond comprehension how such companies, with meagre income had given such huge loans to the assessee. The AO tabulated the financials of the said loan parties, which is as under:

During the course of assessment proceedings, the assessee had submitted banks statements along with confirmation of the above companies. The AO observed that the mere receipt of loan through electronic means is not enough to prove the genuineness of transaction. Thus taking into account the above facts and the findings of the commission sent u/s 131, the AO made an addition of Rs.4,54,62,081/- which includes interest of Rs. 49,62,081/- u/s 68 of the Act.

4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). In the order dated 27.06.2017, the Ld. CIT(A) observed that (i) it is settled position that the source of source cannot be questioned and the AO has not verified the amount of paid-up capital of

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