IN THE INCOME TAX APPELLATE TRIBUNAL
"A" BENCH, MUMBAI
. . ,
,
BEFORE HON'BLE SHRI C.N. PRASAD, JM AND
HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM
./ I.T.A. No.7065/Mum/2017
( / Assessment Year: 2012-13)
ACIT-30(1) M/s. Arihant Digiprint
C-13, 5th Floor, Room No.503 / 236, Gundecha Indl. Estate
Pratyakshkar Bhavan, BKC (E) Vs. Akurli Road, Opp. Big Bazar
Mumbai-400 051. Kandivli, Mumbai-400 101.
././PAN/GIR No. AAJFA-8412-H
( /Appellant) : ( / Respondent)
Assessee by : Shri Ketan Vajani- Ld. AR
Revenue by : Shri Abdul Hakeem M - Ld.DR
/
: 30/04/2019
Date of Hearing
/
: 06/05/2019
Date of Pronouncement
/ O R D E R
Per Manoj Kumar Aggarwal (Accountant Member)
1. Aforesaid appeal by revenue for Assessment Year [in short referred
to as `AY'] 2012-13 contest the order of Ld. Commissioner of Income-
Tax (Appeals)-33, Mumbai, [in short referred to as `CIT(A)'], Appeal
No.CIT(A)-41/IT/269/2015-16 dated 01/09/2017 on following Grounds of
appeal: -
(i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A)
erred in deleting addition of Rs.70,00,000/- made u/s. 68 of the Income tax
Act, 1961 even though the AO found that there is prima facie evidence against
the assessee viz. the receipt of money, where the genuineness of
transaction as well as creditworthiness of the creditor was questionable."
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(ii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A)
erred in directing the Assessing Officer to delete the addition of
Rs.1,75,726/- on account of interest on loans treated as unexplained cash
credit.
(iii) The appellant prays that the order of the CIT(A) on the above grounds be set
aside and that the order of the AO be restored.
2.1 Facts in brief are that the assessee being resident firm stated to be
engaged in the business of printing & stationery was assessed for
impugned AY in scrutiny assessment u/s 143(3) on 31/03/2015 wherein
the income of the assessee was determined at Rs.113.55 Lacs after
certain additions as against returned income of Rs.41.76 Lacs filed by
the assessee on 28/09/2012.
2.2 During assessment proceedings, upon perusal of assessee's
Balance Sheet, it transpired that the assessee obtained unsecured loans
of Rs.70 Lacs from two persons as per the following details: -
No. Name of Lender Amount (Rs.)
1. Sanjay Sejpal Rs.40 Lacs
2. Natasha A Vora Rs.30 Lacs
Total Rs.70 Lacs
Accordingly, the assessee was asked to prove the identity,
creditworthiness of the two investors and also the genuineness of the
transactions.
2.3 The perusal of replies revealed that although Sanjay Sejpal
confirmed the transactions, however, he had not field return of income
for the impugned AY. In case of Natasha A.Vora, no bank statement was
furnished whereas the return of income was filed at Rs.0.85 Lacs as
against loan of Rs.30 Lacs advanced to the assessee. The said factual
matrix led the Ld. AO to treat the said loans as unexplained cash credit
u/s 68 and accordingly, the same were added to assessee's income. As
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a natural consequence, interest paid on these unproved loans amounting
to Rs.1,75,726/- was also disallowed.
3.1 Aggrieved, the assessee agitated the same with success before Ld.
first appellate authority vide impugned order dated 01/09/2017. During
appellate proceedings, the assessee furnished Additional evidences u/r
46A. These evidences were in the shape of copy of bank statement &
confirmation of loan taken by Sanjay Sejpal from Jinesh A.Matalia along
with copy of bank statement and Income Tax Return of Jinesh A.Matalia.
Similarly, copy of bank statement, loan confirmation and Income Tax
Return of Natasha A.Vora was filed in support of the transaction. All
these evidences were confronted to Ld. AO who, its in remand report
dated 04/02/2017, observed that the assessee furnished source of
source in respect of loans and Sanjay Sejpal has filed the return of
income later on. During remand proceedings, statement u/s 131 of
Sanjay Sejpal was also recorded, wherein it was found that the loan was
advanced by Sanjay Sejpal out of amounts borrowed by him from his
friend Jinesh Ashwin Matalia. The assessee also submitted that the loan
was similarly advanced by Natasha A.Vora out of funds borrowed by her
from her husband Shri Apoorva Vora who had capacity to advance such
loans.
3.2 The Ld. first appellate authority, after perusal of material on record
including assessee's submissions and remand report, inter-alia,
observed that the assessee had paid interest on these loans after
deduction of tax at source and the loans were fully repaid by the
assessee in subsequent assessment years and therefore, addition u/s
68 as well as interest disallowance could not be sustained. Aggrieved,
the revenue is in further appeal before us.
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4. We have carefully heard the rival submissions and perused
relevant material on record. The undisputed position that emerges is the
fact that during remand proceedings, the assessee has established the
source of source of loans obtained by it during impugned AY. The
assessee not only furnished loan confirmations, bank statements of the
lender but also furnished bank statements and loan confirmations of
parties from whom such funds were obtained by the lender. It is also
undisputed fact that the assessee has settled these loans fully in
subsequent years. Nothing on record establishes that any cash was
exchanged between the assessee and the lender. Therefore, no infirmity
could be found in the impugned order qua deletion of addition u/s 68 as
well as interest disallowance.
5. Resultantly, the appeal stands dismissed.
Order pronounced in the open court on 06th May, 2019.
Sd/- Sd/-
(C.N. Prasad) (Manoj Kumar Aggarwal)
/ Judicial Member / Accountant Member
Mumbai; Dated : 06/05/2019
Sr.PS, Jaisy Varghese
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent
3. () / The CIT(A)
4. / CIT concerned
5. , , / DR, ITAT, Mumbai
6. / Guard File
/ BY ORDER,
/ (Dy./Asstt.Registrar)
, / ITAT, Mumbai.
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