AI Structured Summary
Not yet generated for this judgment
Judgment
PER AMITABH SHUKLA, AM:
This appeal filed by the Revenue is directed against the order of Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, New Delhi, dated 06.03.2025 arising out of assessment order dated 25.12.2018 passed by the Deputy Commissioner of Income Tax, Special Range-12, New Delhi, under section 143(3) for the Assessment Year 2016-17. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The assessee has raised following grounds of appeal:-
1.The Ld. CIT(A) has erred in law in by deleting the addition of Rs.13,32,42,2351- made u/s 6g of the Income Tax Act,1961, 0n account of unsecured loan in spite of the fact that the assessee failed to substantiate the test of identity and credit worthiness of loan creditors and genuineness of loan transactions during the course of assessment proceedings.
2.The Ld. CIT(A) has erred in 1aw in admitting the additional evidence in the absence of the fulfillment of the conditions mentioned in Rule 46A.’’
The Registry has identified a delay of 261 days in the case, in filing of this appeal before the tribunal. The ld. DR submitted that the delay in filing the appeal has occurred due to administrative reasons. The proposal for filing further appeal was initiated in the normal course and was processed through the prescribed administrative channel. It was also submitted by the ld. DR that the jurisdiction of the case was transferred from circle 34(1), Delhi to circ6e 61(1), Delhi during the relevant period. Ld. DR submitted that the delay in filing the appeal was thus occasioned due to administrative processing, transfer of jurisdiction, and procedural requirements involved in obtaining statutory approvals. All these activities contributed to the delay which was neither intentional nor due to negligence or inaction on the part of the Department. We have considered the justification put forth by the ld. DR and we are satisfied with their adequacy. The ld. Counsel for the assessee does not pose any serious objection to the revenue’s request for condonation of delay. We are also conscious of the fact that no litigant gains by intentionally delaying its own matters. Accordingly, we hereby condone the delay and proceed to adjudicate this appeal.
Brief facts of the case are that the Return of Income of the assessee was filed on 21.09.2016 declaring total income from business & profession at Rs.4,03,27,680/-. The case of the assessee was selected for limited scrutiny under CASS with the reasons; ‘whether outward foreign remittance is from disclosed sources and appropriate withholding and reporting obligations have been complied with, whether loans and advances received are genuine and from disclosed sources. Notice u/s 143(2) was issued online by ACIT, Circle-36(1) on 10.07.2017 and 08.09.2017 and duly served upon the assessee. Notices u/s 142(1) of the Income Tax Act, 1961 along with questionnaire was issued to the assessee. The ld. Assessing Officer noted from the tax audit report that the appellant had taken unsecured loans of Rs.14,76,54,339/- from certain parties and issue notices of enquiry qua identity, genuineness and creditworthiness of the lenders. According to ld. Assessing Officer in para-4.1, the submission of details from the assessee was not full and complete and that the same was deficient. Accordingly, the ld. Assessing Officer proceeded to make an addition of Rs.13,34,42,235/- in respect of seven parties, in respect of whom deficient compliance was made by the assessee and also non-compliance u/s 133(6) of the Act by the parties. Relevant observations have been made by the assessee on pages 10 to 15 of his assessment order. The assessee preferred appeal before the ld. CIT(A) along with additional evidences qua impugned loans which could not be provided to the ld. Assessing Officer. The ld. CIT(A) gave due opportunity to the ld. Assessing Officer to submit his remand report and after considering the impugned remand report as well as assessee’s counter rejoinder proceeded to delete the impugned addition of Rs.13,34,42,235/-. The ld. CIT(A), inter alia, observed as under on pages 89-93 of his order :-
“The appellant has stated that it had filed confirmed copies of accounts with PANs and addresses of the lenders, copies of return of income with computation & bank statement of all the lenders to the Assessing Officer. Further, all the lenders furnished reply in response to notices issued u/s 133(6) of the Act However, Aditya Rayon, Rishabh Enterprises & Vaishnomata Advisory services LLP, did not submit their balance sheets but the same have been filed now as additional evidences.
Further, the appellant contended that the Assessing Officer in respect of loan received from Surendra Kumar HUF has stated that as per bank statement, the lender has received one credit entry of Rs.59,00,000/- on 08.02.2016 and same day the amount has been transferred to the appellant which raised doubt about the transaction. The appellant stated that in response to notice u/s133(6), the lender sent the reply on 04.12.2018 by speed post which was delivered to DCIT on 10:12.2018 as per official website of postal department. The lender submitted its balance sheet and bank statement which clearly reflects loan of Rs. 59,00,000/- was received by it from one Sh. Sandeep Sisodiya. The appellant in appeal has also submitted bank statement of Sandeep Sisodiya. It is also stated by the appellant that though as per law, in case of unsecured loans, details of source of source cannot be called but even then, acknowledgement of IT of Sandeep Sisodiya has been filed during appeal proceeding.
In case of Deepak Jawahar Kothari& Bhawani Texo Twist, the appellant stated that these lenders have submitted details/ documents vide letter dated 24.12.2018 sent by speed post on 25.12.2018. Evidences of sending the same have also been submitted by the appellant. However, the same were received by Assessing Officer after completion of assessment Therefore, the appellant has furnished the documents as additional evidences in appeal. Further, the appellant stated that loan received from Vaishnomata Advisory services LLP and Rishab Enterprises were squared off completely during the same year and major portion of loan taken from Aditya Rayon and Surendra Kachhara were also repaid during the year itself. Also, the camed forward loans have also been repaid during A.Y. 17-18 in respect of Aditya Rayon, Bhawani Texo Twist, Deepak Jawahar Kothari and Surendra Kachhara Copies of bank statement have been filed by the appellant in this regard.
It was also contended by the appellant that all the lenders have furished reply which proves the identity of the lender and all have filed return of income for the year under consideration which proves the creditworthiness and since all the payments and repayments of loan were made through banking channels, therefore, the genuineness of the transaction is also established it is. Further submitted by the appellant that no notice u/s 133(6) was ever issued by the Assessing Officer to the appellant and it was never asked to prove the creditworthiness of the lenders. Further, it is contended that income of the year under consideration is no sole criterion to judge the creditworthiness of the person to advance the loan, as the loan can be from accumulated income/ funds or borrowed funds. In support of the same, the appellant has cited various jurisdictional Tribunal and High Court decisions. The appellant has further submitted that all the documents submitted clearly prove creditworthiness of all the lenders. As regards to identity of the lenders, the PANs with addresses of the lenders were submitted and all the notices issued u/s 133(6) were also served upon all the lenders, who all also replied and hence, their identity had been sufficiently proved. As regards to genuineness of the transactions, all transactions were received/ repaid: wherever, through regular banking channels
Comment made by Assessing Officer in remand report The Assessing Officer stated that appellant has only filed ITR & confirmed copies of accounts of M/s Aditya Rayon, M/s Rishabh Enterprises and Vaishnomata Advosiry services LLP, and balance sheet were not filed before Assessing Officer and are now being filed as additional evidences. It is further submitted by the Assessing Officer that reply was not filed by lenders against notice issued u/s133(6). Further, the contention of the appellant that loan was squared up during the year in the case of Vaishnomata Advosiry services LLP is an afterthought only.
Regarding the loans received from Deepak Jawahar Kothari & Bhawani Texo Twist, the Assessing Officer stated that reply in response to notice u/s133(6) was not received till the completion of assessment and now the appellant has filed the documentary evidences in respect of loan received from the aforesaid parties as additional evidences. It was also contended by the Assessing Officer that confirmation received from these lenders matches with confirmation received from other lenders in respect of similar handwritings and were enclosed in similar envelopes.
Further, in case of Surendra Kachhara, the Assessing Officer stated
that creditworthiness of the lender is still not being established.
Submission of appellant in rejoinder
Regarding the unsecured loan of Rs. 3,00,00,000/from Aditya Rayon & Rs.2,60,00,000/- from Rishabh Enterprise, the appellant has stated that the Assessing Officer ignored the replies filed by the lenders in response to notice u/s 133(6) and simply made addition doubting the creditworthiness of the parties in absence of balance sheet and P& LA/c. Further, in remand report also, the Assessing Officer has not checked the documentary evidence filed and has simply rejected the additional evidences without verifying the facts from records that reply in response to notice uls 133(6) had been received. Further all documents viz confirmed copy of ledger account, copy of return of income with computation, copy of bank statement, details of interest paid and TDS deducted, balance sheet of the lenders to substantiate the identity, genuineness and creditworthiness of the lenders is already available on record. It was also stated by the appellant that major portion of loan taken from Aditya Rayon was repaid in the year itself and balance loan was squared off in AY.2017-18 & loan taken from Rishabh Enterprises was also squared off during the year under consideration which is evident from the bank statements furnished by the appellant.
In connection to Unsecured loan of Rs. 50,00,000/- received from M/s Vaishnomata Advisory services LLP, the appellant stated that the Assessing Officer ignored the reply filed by the lender in response to notice issued w/s133(6) of the Act and made addition on the basis of absence of balance sheet The appellant submitted balance sheet as additional evidence which the Assessing Officer vide remand report has simply rejected without verifying the facts from records that reply in response to notice u/s 133(6) had been received and without perusing the same. Further, the appellant contended that AD’s observation that loan being squared off as an afterthought is unjustified as the appellant has submitted confirmed copy of ledger account, copy of ITR with computation of income, bank statement regarding receipt and repayment of loan, details of interest paid and TDS deducted, copy of balance sheet.
Regarding loan received from Deepak Jawahar Kothari & Bhawani Texo Twist, the appellant has stated that reply in response to notice u/s 133(6) were sent by the lenders vide letter dated 24.12.2018 sent by speed post on 25.12.2018. However, the order was passed on 25.12.2018. The appellant has submitted confirmed copies of accounts, copy of /TR with computation of income, bank statement, details of interest paid and TDS deducted, copy of balance sheet. Further, these loans taken from both the parties were also repaid in A.Y. 2017-18. Copy of bank statement was submitted by the appellant Regarding, the Assessing Officer’s observation that handwriting was same in the confirmation filed, the appellant stated that if Assessing Officer had doubts about the sanctity and genuineness of the documents, he should have summoned the lenders and verified the documents.
Regarding loan taken from Surendra P Kachhara HUF, the appellant stated that Assessing Officer has simply rejected the additional evidence without considering the same. The appellant has filed copy of return of income with computation of income, confirmed ledger account, bank statement, balance sheet, bank statement of source of source ie. Sandeep Sisodiya from whom Rs. 59,50,000/- was transferred to the account of Surendra P Kachhhara, return of Sandeep Sisodiya but the Assessing Officer has simply ignored all the documents.
Decision
On perusal of details submitted by the appellant, it is noticed that appellant has submitted return of income with computation of all the parties to the Assessing Officer. Further, the Assessing Officer made addition only on the basis that some parties did not file balance sheet in reply to notice u/s133(6) of the Act and in one particular case of Surendra P Kachhara, there was credit entry from other person before giving loan to the appellant. In the remand report also, the Assessing Officer without considering the documents filed by the appellant has rejected the same as additional evidence. The observation of the Assessing Officer that in some confirmation of different persons, handwriting is same is also without any logic and substance in it. The Assessing Officer has not brought any relevant finding on record to establish that identity, creditworthiness and genuineness of the creditors were not established. It is noticed that the appellant has filed relevant documents like ITR with computation of income, balance sheet showing creditworthiness of lenders, confirmed ledger account, bank statements regarding receipt and repayment of loans, details of interest paid and TDS deducted. Further, the lenders furnished reply through speed post in response to notices issued u/s 133(6) of the Act and evidences thereof have also been filed and the same were received by the Assessing Officer as per official website of postal department. However, Aditya Rayon, Rishabh Enterprises & Vaishnomata Advisory services LLP, did not submit their balance sheets but the same have been Tiled as additional evidences. Further, all the lenders have furnished reply which proves the identity of the lenders and all have filed return of income for the year under consideration and balance sheets of all the lenders have also been filed which proves the creditworthiness and since all the payments and repayments of loan were made through banking channels, therefore, the genuineness of the transaction is also established. Further, no notice us 133(6) was ever issued by the Assessing Officer to the appellant and it was never asked to prove the creditworthiness of the lenders. Further, as per various judicial pronouncements by jurisdictional High Court Tribunal, income of the year under consideration is no sole criterion to judge the creditworthiness of the person to advance the loan, as the loan can be from accumulated income/ funds or borrowed funds.. The appellant has further submitted that all the documents which clearly prove creditworthiness of all the lenders. As regards to identity of the lenders, the PANs with addresses of the lenders were submitted and all the notices issued u/s 133(6) were also served upon all the lenders, who all also replied and hence, their identity had been sufficiently proved. As regards to genuineness of the transactions, all transactions were received/ repaid wherever, through regular banking channels. Therefore, the identity and creditworthiness of the lenders and the genuineness of the transaction has been established by the Appellant and accordingly, the addition made by Assessing Officer is unwarranted in respect of these lenders.
5.23Therefore, considering the facts of the case, submission made by the appellant ; remand report of the Assessing Officer, Rejoinder submitted by the appellant to the Remand report, Documents available on record and various judicial pronouncements including Jurisdictional High Court/ Tribunal, I am of the view that identity, creditworthiness of the lenders and genuineness of the transactions in respect of unsecured loan taken by the appellant in respect of all the loan creditors for loans taken during the year has been established by the appellant as discussed in detail in earlier paras above and therefore, addition made by Assessing Officer us 68 is unwarranted in this case. Accordingly, addition of Rs.13,34,42,235/-u/s 68 of the Act made by Assessing Officer is hereby deleted. Ground No.2 of the appeal is allowed….”
We have heard rival submissions in the light of material placed on records. The only issue contested by the appellant revenue through its grounds of appeal is the relief accorded by ld. CIT(A) of Rs.13,34,42,235/- by violating provisions of Rule-46A. It is the case of the Revenue that the ld. CIT(A) has erred in admitting the additional evidences since the conditions prescribed for admission of additional evidences under Rule-46A in the case were not satisfied. It is the case of the appellant revenue that the ld. CIT(A) has violated provisions of Rule-46A and consequently it has given excessive and erroneous relief to the assessee by admitting additional evidences.
At this stage, we deem it necessary to reproduce the statutory prescription of Rule-46A of Income Tax Rules, 1962.
Production of additional evidence before the 83[Joint Commissioner] (Appeals) and Commissioner (Appeals).
46A. (1) The appellant shall not be entitled to produce before the 83[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely :—
(a)where the Assessing Officer has refused to admit evidence which ought to have been admitted ; or
(b)where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer ; or
(c)where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal ; or
(d)where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.
(2)No evidence shall be admitted under sub-rule (1) unless the 84[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission.
(3)The 84[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity—
(a)to examine the evidence or document or to cross-examine the witness produced by the appellant, or
(b)to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.
(4)Nothing contained in this rule shall affect the power of the 84[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271.
Thus, it is clear that a Commissioner of Income Tax(Appeals) is entitled to admit as additional evidence, any evidence which the assessee was asked by the Assessing Officer during assessment proceedings and which could not be produced. We have noted that the ld. Assessing Officer in the assessment order and the remand report clearly stated that the assessee was asked certain evidences which were not produced. In fact one of the objections of the Assessing Officer in the remand report was that the additional evidences cannot be admitted because they were not provided u/s 133(6). Thus, the fact of Assessing Officer calling for information and assessee not providing information is clearly made out. Consequently, we do not find that the ld. CIT(A) has committed any mistake which becomes fatal to the decision of providing relief to the assessee. We have further noted from the order of the ld. CIT(A) extracted hereinabove, that he has observed that the ld. Assessing Officer has considered the evidences. He has observed that the ld. Assessing Officer has not given any adverse comments on the evidences per se save that the same were not produced u/s 133(6). Mere non -production of any evidence u/s 133(6) during assessment stage does not automatically bars its production as an additional evidence under Rule-46A.
As regards the merits of the addition, we have noted from the order of the ld. CIT(A) extracted hereinabove, that he has evenly demonstrated that the assessee has submitted evidences including additional evidences, so as to vividly demonstrate satisfaction of identity, creditworthiness and genuineness in respect of the seven parties for whom the ld. Assessing Officer made the impugned addition. It is trite law that no addition can be made in respect of loans for which the assessee satisfies all the conditions laid down u/s 68 of the Act. We have noted that during the remand proceedings also the ld. Assessing Officer has failed to bring any material on records so as to allude any tainted nature of the impugned unsecured loans. Upon consideration thereof, we are of the considered view that the order of the ld. CIT(A) is based upon correct understanding and appreciation of the facts of the case and does not require any intervention at this stage. We therefore confirm the order of the ld. CIT(A) and dismiss the appeal of the Revenue.
In the result, the appeal of the Revenue is dismissed.