Referred Sections:
Section 68 of the Act
Section 133(6) of the Act
Section 40(b) of the Act.
Section 143(3) of the Act
Section 194A of the Act
Section 40(a)(ia) of the Act.
Referred Sections:
Pavankumar M. Sanghvi vs. ITO (2018) 97 taxmann.com 398 (SC)
Principal Commissioner of Income Tax vs. NRA Iron and Steel (P) Ltd. (2019) 103 taxmann.com 48 (SC)
Orissa Cement Corporation vs. CIT reported in 159 ITR 78
CIT vs. Excel Industries Ltd. 358 ITR 295 (SC).
IN THE INCOME TAX APPELATE TRIBUNAL
DELHI BENCH "F": NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI O.P. KANT, ACCOUNTANT MEMBER
ITA No. 7280/Del/2018
A.Y. : 2015-16
M/S RADIUS INDUSTRIES, vs. ACIT, CIRCLE 28(1),
S-57, F.I.E.E., NEW DELHI
OKHLA INDUSTRIAL AREA,
PHASE-2,
NEW DELHI
(PAN: )
(Assessee) (Respondent)
AND
ITA No. 7622/Del/2018
A.Y. : 2015-16
ACIT, CIRCLE 28(1), VS. M/S RADIUS INDUSTRIES,
NEW DELHI S-57, FIEE, OKHLA INDUSTRIAL
AREA, PHASE-2, NEW DELHI
(ASSESSEE) (RESPONDENT)
Assessee by : Sh. Gautam Jain, Adv., Sh. Lalit
Mohan, Adv. & Sh. Piyush Kamal,
Adv.
Department by : Sh. Surender Pal, Sr. DR.
ORDER
PER H.S. SIDHU, JM
These are the cross appeals filed by the Assessee and Revenue
emanate out of the Order of the Ld. Commissioner of Income Tax (Appeals)-
10, New Delhi dated 09.01.2018 pertaining to assessment year 2015-16.
Since the issues involved in these appeals are common and identical, hence,
1
the appeals were heard together and are being consolidated by this common
order for the sake of convenience, by first dealing with Assessee's Appeal
No. 7280/Del/2018 (AY 2015-16) wherein the Assessee has raised the
following grounds:-
"1. That the Ld. CIT(A) has erred both in law and on facts in
upholding addition of Rs. 62,50,000/- representing alleged
unexplained unsecured loans raised by the assessee from
the following parties brought to tax under section 68 of
the Act:-
S.No. Name of parties Amount (Rs.)
i) M/s Multi Brand Trading 27,50,000/-
Corporation
ii) GST Corporation Ltd. 30,00,000/-
iii) Prem Dua 5,00,000/-
Total 62,50,000/-
1.1 That while upholding the addition, the learned
Commissioner of Income Tax (Appeals) has failed to
appreciate that once the assessee had placed on record
confirmation alongwith income tax particulars and, the
loans had been raised by account payee cheques and
interest thereon had already been duly credited to the
account of the payees, the initial burden of the assessee
stood discharged and therefore, addition sustained on the
ground that the assessee has not been able to prove
creditworthiness of the above party or they had not
complied with notice under section 133(6) of the Act is not
based on correct appreciation of the facts and
circumstances of the case of the assessee and statutory
provisions of law and hence untenable.
2. That the learned Commissioner of Income Tax (Appeals)
has further erred both in law and on facts in sustaining
disallowance of Rs. 18,00,000/- representing the alleged
excess partners' remuneration paid to the partner by
invoking clause (v) of section 40(b) of the Act.
2.1 That the finding of the learned Commissioner of Income
Tax (Appeals) that "the partnership deed mentions the
maximum amount payable under section 40(b)(v) but not
2
the amount that has been mutually agreed to be paid as
remuneration. The quantum of remuneration to be paid to
the individual partners is left undecided, unstipulated and
left to the discretion of the two partners to be decided at a
future pint in time" is factually and legally misconceived
and untenable.
2.2 That the learned Commissioner of Income Tax
(Appeals) has failed to appreciate that the remuneration
paid to the partners was in terms of the deed of
partnership dated 01.04.2013 which had been allowed
consistently in preceding and succeeding assessment years
in assessments framed under section 143(3) of the Act and
therefore, disallowance made is illegal, invalid and
untenable.
3 That the learned Commissioner of Income Tax
(Appeals) 31, New Delhi has erred both in law and on facts
in upholding a disallowance of a sum of Rs. 7,69,097/-
representing interest paid by the assessee by invoking
section 40(a)(ia) of the Act.
3.1 That the learned Commissioner of Income Tax
(Appeals) has failed to appreciate that, provisions uls
40(a)(ia) of the Act read with section 194A of the Act were
inapplicable and as such, disallowance so made is not in
accordance with law.
3.2 That in any case since the payee had paid the taxes on the
interest paid by the assessee, no disallowance was
warranted in view of second proviso to section 40(a)(ia) of
the Act.
4 That the learned Commissioner of Income Tax (Appeals)
has also erred in failing to appreciate that the learned
Assistant Commissioner of Income Tax while framing the
assessment had acted in excess of jurisdiction and made
additions which are beyond the scope of assessment in as
much as additions had to be restricted to the issues under
the computerized aided selection of scrutiny cases and, as
the additions made beyond the said matrix were without
jurisdiction.
It is therefore, prayed that addition/disallowances made by
the learned Assessing Officer and sustained by the learned
3
Commissioner of Income Tax (Appeals) may kindly be deleted
and appeal of the assessee be allowed."
2. Brief facts of the case are that the assessee filed e-return for the
assessment year 2015-16 on 26.09.2015 declaring an income of
Rs. 1,13,43,620/-. The Assessing Officer processed the return u/s. 143(1) of
the Income Tax Act, 1961 (in short "Act") electronically at returned income
and case was selected for Limited Scrutiny through CASS. The case was
selected for Compulsory scrutiny through CPC as per guidelines / procedure
for selection of cases for scrutiny. Accordingly, statutory notice under
section 143(2) of the Act was issued on 19.9.2016. Subsequently, AO
issued notice u/s. 142(1) of the Act and in response to the same the AR for
the Assessee appeared from time to time and submitted various details/
information called for and examined the same. During the year under
consideration, the assessee has derived its income under the heads Income
from Business & Profession only. As per details filed in Form 3CD, the firm
has two partners, namely, Sh. Maninder Jit Singh Bindra and Sh. Inderpreet
Singh Bindra. The partners have a profit share ratio of 60% and 40%
respectively. The list of 15 persons from whom unsecured loans of
Rs. 10,25,00,362/- have been taken during the year is mentioned at page
no. 2 of the assessment order. The AR for the assessee vide notice u/s.
142(1) dated 23.8.2017 was asked to file the confirmations of all persons
from whom unsecured loan were taken and justify their creditworthiness to
advance loan but the AR of the Assessee failed to produce any information
within time. Therefore, penalty u/s. 271(1)(b) was imposed on 24.10.2017.
Thereafter, the AR of the assessee filed reply dated 08.11.2017 whereby
ITRs are attached with the confirmations of the parties except few. The AR
of the assessee vide notice u/s. 142(1) dated 10.11.2017 was again
specifically asked to file copy of ITR of parties whose ITR have not been
filed. In response to the same, the AR of the assessee filed reply vide letter
dated 16.11.2017 wherein the AR of the assessee asked for some more time
4
to file the required details. In the meantime, notices u/s. 133(6) all dated
10.11.2017 were issued to all the parties from whom unsecured loans have
been taken. Some notices have been received back as unserved. Only two
parties namely GST Corporation Ltd. And Mudit Jain confirmed the
transactions made with assessee but refused to accept that they provided
any unsecured loan to the assessee. There was no response from remaining
parties for the notices u/s. 133(6) issued to them. In the meantime, the AR
of the assessee produced the ITR of most of the parties as asked in the
notice dated 10.11.2017. The ITRs of the parties were perused and the
creditworthiness of the parties was not found to be lacking as their returned
income was not sufficient to finance such huge amount of loans. There were
four remaining parties in whose return not furnished by the assessee either.
Like other parties (except two mentioned above), they also did not responds
to the notice issued u/s. 133(6). Further, the confirmations from either of
these parties were never produced till the fag end of the year. Finally, the
assessee vide notice dated 06.12.2017 was show caused as to why the
unsecured loans amounting to Rs. 8,22,70,000/- taken during the year from
08 parties mentioned at page no.3 of the assessment order should not be
disallowed u/s. 68 of the I.T. Act as the creditworthiness of the parties is not
established. In response to the same, the AR of the assessee did not offer
any explanation. Assessee was given several opportunities in this regard
earlier too, vide note sheet entry dated 24.10.2017, notice u/s. 142(1)
dated 1.11.2017 and final show cause notice dated 06.12.2017. AO
observed that Assessee never bothered to explain and justify the
creditworthiness and completely overlooked statutory notices in this regard.
AO further observed that assessee has nothing more to say about such
transactions. As per AO, Assessee clearly failed to justify the genuineness
and creditworthiness of the unsecured loan taken from the parties. The AR
of the assessee neither filed the copy of ITR nor filed the bank statement of
5
the parties. None of the parties except two (which also refused that any
unsecured loan being given) as mentioned above, replied to the notice u/s.
133(6). Hence, the AR of the assessee has not only failed to furnish the
desired details but also failed to establish the creditworthiness and
genuineness of the said unsecured loans. Therefore, Rs. 8,22,70,000/- was
added to the income of the assessee u/s. 68 of the Act. Further, the AO
observed that assessee has debited remuneration amounting to Rs.
18,00,000/- to the P&L account and the same is not admissible for deduction
as per the provisions of section 40(b)(ii) of the Income Tax Act, 1961.
Therefore, expenditure of Rs. 18,00,000/- on account of remuneration was
disallowed as per the provisions of section 40(b)(ii) of the Income Tax Act,
1961 and added to the total income of the assessee. Further, the AO
observed that in terms of provisions of Section 40(a)(ia) of the Act, the
TDS was not deducted in respect of payment of Rs. 25,63,657/- and 30% of
the said amount which comes to Rs. 7,69,097/- was disallowed u/s.
40(a)(ia) of the Act. Accordingly, the assessment was completed by the AO
at Rs. 9,61,82,720/- u/s. 143(3) of the Act vide order dated 23.12.2017.
Against the assessment order, assessee appealed before the Ld. CIT(A), who
vide his impugned order dated 24.09.2018 has partly allowed the appeal of
the assessee by confirming some additions. Aggrieved with the impugned
order dated 24.9.2018, assessee is in appeal before the Tribunal.
3. Ld. Counsel for the assessee submitted that Ld. CIT(A) has erred in
upholding addition of Rs. 62,50,000/- representing alleged unexplained
unsecured loans raised by the assessee from the following parties brought
to tax under section 68 of the Act:-
S.No. Name of parties Amount (Rs.)
i) M/s Multi Brand Trading 27,50,000/-
Corporation
ii) GST Corporation Ltd. 30,00,000/-
iii) Prem Dua 5,00,000/-
6
Total 62,50,000/-
3.1 Ld. Counsel for the assessee further submitted that learned
Commissioner of Income Tax (Appeals) has failed to appreciate that once
the assessee had placed on record confirmation alongwith income tax
particulars and, the loans had been raised by account payee cheques and
interest thereon had already been duly credited to the account of the
payees, the initial burden of the assessee stood discharged and therefore,
addition sustained on the ground that the assessee has not been able to
prove creditworthiness of the above party or they had not complied with
notice under section 133(6) of the Act is not based on correct appreciation of
the facts and circumstances of the case of the assessee and statutory
provisions of law and hence untenable and needs to be deleted. He further
submitted that learned Commissioner of Income Tax (Appeals) has further
erred in sustaining disallowance of Rs. 18,00,000/- representing the alleged
excess partners' remuneration paid to the partner by invoking clause (v) of
section 40(b) of the Act. It was further submitted that learned Commissioner
of Income Tax (Appeals) further erred in holding that "the partnership deed
mentions the maximum amount payable under section 40(b)(v) but not the
amount that has been mutually agreed to be paid as remuneration. The
quantum of remuneration to be paid to the individual partners is left
undecided, unstipulated and left to the discretion of the two partners to be
decided at a future pint in time" is factually and legally misconceived and
untenable. He further submitted that the remuneration paid to the partners
was in terms of the deed of partnership dated 01.04.2013 which had been
allowed consistently in preceding and succeeding assessment years in
assessments framed under section 143(3) of the Act and therefore,
disallowance made is illegal, invalid and untenable and needs to be deleted.
He further submitted that the learned Commissioner of Income Tax
7
(Appeals) has erred in upholding a disallowance of a sum of Rs. 7,69,097/-
representing interest paid by the assessee by invoking section 40(a)(ia) of
the Act. It was submitted that provisions uls 40(a)(ia) of the Act read with
section 194A of the Act were inapplicable and as such, disallowance so made
is not in accordance with law. That in any case since the payee had paid the
taxes on the interest paid by the assessee, no disallowance was warranted in
view of second proviso to section 40(a)(ia) of the Act. It was further
submitted that the additions which are beyond the scope of assessment in as
much as additions had to be restricted to the issues under the computerized
aided selection of scrutiny cases and, as the additions made beyond the said
matrix were without jurisdiction, hence, the same may be deleted. In
support of his contention, he filed a copy of Synopsis containing pages 1-48
and relied upon the various case laws cited therein. He further filed a Paper
Book-II which are the copies of various decisions on the issue of burden of
assessee stood discharged as entire evidence stood furnished; that once part
interest has been allowed as deduction, credits cannot be added u/s. 68 of
the Act; that revenue has accepted the transactions of interest payment and
repayment of principal amount to lenders in subsequent years and, thus in
such circumstances no addition is permissible and alleged excess
remuneration paid to the partners and disallowed by invoking clause (v) of
Section 40(b) of the Act.
4. Ld. DR relied upon the order of the Ld. CIT(A) on the issues in dispute
and relied upon the decision of the Hon'ble Supreme Court of India in the
case of Pavankumar M. Sanghvi vs. ITO (2018) 97 taxmann.com 398 (SC)
wherein the Hon'ble Supreme Court of India has dismissed the SLP ruling
that where assessee received loan from two companies, in view of the fact
that on date assessee was given loan there were credit entries of almost
similar amounts and balance after these transactions was a small amount
and moreover assessee failed to produce these lenders for verification,
8
impugned amount was rightly brought to tax under section 68. He further
relied upon the decision of the Hon'ble Supreme Court of India in the case of
Principal Commissioner of Income Tax vs. NRA Iron and Steel (P) Ltd.
(2019) 103 taxmann.com 48 (SC) wherein the Hon'ble Supreme Court
reverses the order of the lower authorities holding that where there was
failure of assessee to establish credit worthiness of investor companies, AO
was justified in passing assessment order making additions under section 68
for share capital / premium received by assessee company. Merely because
assessee company had filed all primary evidence, it could not be said that
onus on assessee to establish creditworthiness of investor companies stood
discharged.
5. We have heard both the parties and perused the records, especially
the impugned order; Synopsis; Paper Book filed by the Assessee's counsel
and case laws relied by both the parties. As regards sustaining of addition of
Rs. 62,50,000/- on account of sums received as unsecured loan is
concerned, we find that the AO has made sum of Rs. 8,22,70,000/- on
account of sum received from 08 parties as mentioned in the assessment
order at page no. 3 and in appeal Ld. CIT(A) has partially deleted the
addition and sustained the addition of Rs. 62,50,000/-. We note that the
unsecured loan received by the assessee has been fully substantiated not by
substantial documentary evidence including copy of audited financial
statement, acknowledgement of return of income, confirmation from lender,
bank statement of lender, therefore such sum could not in law or on fact be
held to be unexplained cash credit u/s. 68 of the Act. It is noted that no
material has been led by the AO to even allege that such amount
representing unsecured loan are emanating from the coffers of the assessee
company. It is further noted that the lenders are corporate entities duly
assessed to tax and, have made unsecured loans through banking channels,
which fact has neither been denied and, nor rebutted in the assessment
9
order, which is also duly confirmed by each of the lender. In view of above,
we are of the considered view that assessee has furnished complete details
and evidences to discharge the burden in respect of unsecured loan
reflecting in the financial statement of the assessee company. This view is
supported by the Hon'ble Supreme Court of India decision in the case of
Earthmetal Electrical (P) Ltd. In Civil Appeal No. 618 of 2010 dated
30.7.2010 wherein the assessee's SLP was allowed by holding that if the
share application money is received by the assessee company from alleged
bogus shareholders, whose names are given to the AO, then the department
is free to proceed to reopen their individual assessment in accordance with
law, but it cannot be regarded as undisclosed income of the assessee
company. Further in the decision of the Hon'ble Supreme Court of India in
the case of Orissa Cement Corporation vs. CIT reported in 159 ITR 78 it has
been held that it is for the department to pursue a creditor particularly once
the assessee had duly furnished the complete particulars of the person from
whom monies have been received by the assessee. In absence of such a
burden having been discharged, the AO could not have mechanically
proceeded to make impugned addition in the instant case. It is a settled law
that non-compliance of notice issued u/s. 133(6) of the Act to all the entities
giving unsecured loan cannot be a basis to make the addition u/s. 68 of the
Act. The nature of income and source of income can be examined only by
the AO of the lenders and not by the AO of the assessee. In this case there
is lack of enquiry by the AO to rebut the burden discharged by the assessee
as no enquiries were made either from corporate entity providing unsecured
loan or enquiry from AO of such corporate entity or its banker or Registrar of
Companies by issuing notice u/s. 131 of the Act. We further note that The
judicial decisions relied upon by the Ld. DR have been duly considered. In
our considered view, we do not find any parity in the facts of the decisions
relied upon with the peculiar facts of the case in hand. In view of above,
10
we delete the addition of Rs. 62,50,000/- on account of sums received as
unsecured loan and erroneously held as unexplained cash credit under
section 68 of the Act, which was confirmed by the Ld. CIT(A) and
accordingly, we allow the ground no. 1 to 1.1 raised by the assessee.
5.1 Apropos ground no. 2 to 2.2 relating to confirmation of addition of Rs.
18,00,000/- on account of alleged excess remuneration paid to the partners
and disallowed by invoking clause (v) of section 40(b) of the Act is
concerned, we find that this amount was disallowed by holding that, the
partnership deed does not specify the amount of the remuneration payable
to the partners and as such, the same is not allowable in view of the section
40(b)(v) of the Act. The AO was of the view that the expenditure incurred
cannot be allowed as deduction unless the partnership deed either specifies
the amount of remuneration payable to each individual working partner or
lays down the manner of quantifying such remuneration and similarly, Ld.
CIT(A) in appeal has sustained this disallowance. We note that in the
instant case, remuneration to the working partners are duly authorized by
the Partnership deed dated 1.4.2013 (page 1-12 of the Paper Book) and
such payment has been made as per clause 7 and 8 of the deed of
partnership, `working partners' and the amount of remuneration payable and
the manner of quantifying such remuneration is to be decided mutually
between them from time to time. We further note that this disallowance is
contrary to the principle of consistency as no disallowance made in the
preceding years i.e. from assessment year 2010-11 to 2014-15 and only
from the instant assessment year i.e. AY 2015-16 the addition was made
which action is not tenable. This view is fortified by the decision of the
Hon'ble Supreme Court of India in the case of CIT vs. Excel Industries Ltd.
358 ITR 295 (SC). Respectfully, following the aforesaid precedent, the
addition confirmed by the Ld. CIT(A) is hereby deleted and accordingly, the
ground no. 2 to 2.2 raised by the assessee are allowed.
11
5.2 Apropos ground no. 3 to 3.2 relating to confirmation of addition of
Rs. 7,69,097/- by invoking section 40(a)(ia) of the Act is concerned, we
note that since assessee is not liable to deduct TDS on in interest payment
on borrowed loan and the second proviso to section 40(a)(ia) of the Act is
retrospective, therefore, the provisions u/s 40(a)(ia) of the Act read with
section 194A of the Act were inapplicable and as such, disallowance so made
is not in accordance with law. In any case since the payee had paid the
taxes on the interest paid by the assessee, no disallowance was warranted in
view of second proviso to section 40(a)(ia) of the Act. Accordingly, the
addition confirmed by the Ld. CIT(A) is hereby deleted and accordingly, the
ground no. 3 to 3.2 raised by the assessee are allowed. Accordingly, the
appeal filed by the Assessee is allowed.
REVENUE'S CROSS APPEAL
6. The Revenue has raised the following grounds:-
1. On the facts and circumstances of the case, the Ld. CIT(A)
erred in deleting addition of Rs. 7,60,20,000/-. All these
parties did not respond to the notice issued u/s. 133(6). It
needs to be that genuineness, creditworthiness and
identity of lender/ creditors are deeper and obstructive
than mere completion of paperwork or documentation.
2. On the facts and circumstances of the case, the Ld. CIT(A)
erred in not appreciating the fact that during the course of
assessment proceedings two parties namely GST
Corporation Ltd. And Mudit Jain did not confirm the
transaction and denied that any unsecured loan was given
to the assessee which was also confirmed during the
appellate proceedings affirms that assessee furnished
inaccurate particulars of income.
3. The assessee craves leave to add, alter or amend any of
the grounds of appeal before or during the course of
hearing of the appeal.
12
7. The brief facts in this case have already been discussed in Assessee's
appeal, as aforesaid, hence, the same are not repeated here for the sake of
brevity.
8. Ld. DR relied upon the order of the AO and stated that Ld. CIT(A)
erred in deleting addition of Rs. 7,60,20,000/-, because all these parties did
not respond to the notice issued u/s. 133(6). He further submitted that it
needs to be that genuineness, creditworthiness and identity of lender/
creditors are deeper and obstructive than mere completion of paperwork or
documentation. It was further submitted that Ld. CIT(A) erred in not
appreciating the fact that during the course of assessment proceedings two
parties namely GST Corporation Ltd. and Mudit Jain did not confirm the
transaction and denied that any unsecured loan was given to the assessee
which was also confirmed during the appellate proceedings affirms that
assessee furnished inaccurate particulars of income. In view of above, he
requested to cancel the Ld. CIT(A) order on the issue in dispute and restore
the order of the AO by allowing the appeal of the Revenue.
9. Ld. Counsel for the Assessee has relied upon the order of the Ld.
CIT(A) on the issue in dispute.
10. We have heard both the parties and perused the records, especially
the impugned order passed by the Ld. CIT(A). We find that the AO has
observed that only two parties namely G.S.T Corporation Ltd and Mudit Jain
confirmed the transactions made with assessee but refuse to accept that
they provided any unsecured loans to the assessee. There was no response
from the remaining parties in response to notice u/s 133(6). It was
mentioned in the assessment order that ITRs of most of the parties were
furnished. It was observed by the AO that on perusal of ITRs that the
creditworthiness of the parties was lacking and they did not have the
capacity to finance such huge amounts of loans. It was also mentioned in
13
the assessment order that the AR of the assessee did not file the bank
statement or ITR of the parties. The AO has concluded that the assessee has
failed to establish the genuineness of the transactions and the
creditworthiness of the loan-givers. The assessee filed list of unsecured loan
along with address detail, confirmation of loans along with copy of ledger
account, bank statement and ITR acknowledgements. It was submitted by
the assessee that onus was discharged by the assessee after the necessary
evidence was filed by them. It was further submitted that assessee had
verbally explained in the course of hearing that burden upon assessee has
been discharged having regards to evidence placed on record. Further, it
was submitted that out of sum of RS.8,22,70,000/-, the sum of
RS.5,85,20,000/- are either from the partners or relatives of partners (Jiya
Bindra, M.S. Bindra (HUF) and Preetinder Kaur Bindra) and the remaining
amount of Rs.2,37,50,000/- was raised from five outside parties. Out of the
said five parties, a sum of RS.1.45 crores was raised from Shri Amrik Singh
Chawla alone and interest of RS.17.17 lacs paid to him was allowed by the
AO. It was stated that the loan was also raised in preceding year from the
said person which was accepted by the AO and therefore no adverse
inference could drawn. Further, in respect of the remaining four parties
namely Prem Dua, Multi Bond Trading Corporation, JBL Intervention
Associates and G.S.T. Corporation sum aggregating to Rs.92,50,000/- was
raised which was repaid also during the year. It was further contended that
in respect of sum received from related parties including partners and one
outside party in the respect of whom there was closing outstanding balance
at the end of year, assessee has paid interest in instant year and previous
years and which was duly allowed in assessment order in the instant year
and the previous years. It is noticed that the assessee
had submitted loan confirmations, the bank statements and the ITRs of the
14
arties before the AO. The issue was examined in respect of unsecured loans
taken as under:-
Ms. Preetinder Kaur Bindra -
The assessee has shown unsecured loan of Rs.1,41,00,000/- taken during
the year from Ms. Preetinder Kaur Bindra and the closing balance as on
31.03.2015 has been shown at RS.2,78,12,418/-. It was noted that she was
the erstwhile partner in the assessee firm and has shown returned income of
Rs.41 ,05,429/-. She is covered as a related party u/s 40A(2)(b) of the Act
in the tax audit report. Further, interest of Rs.28,61,325/- paid to her has
been allowed by the AO. On perusal of her computation of income for A.Y.
2015-16, it is noticed that she has shown interest from Radius Industries at
Rs.28,61,325/-. On perusal of her balance sheet, it was noted that total of
her assets amounted to RS.15,71,52,466/- which included loans and
advances of Rs.13,74,54,992/-. In the list of loans and advances, the loan of
Rs.2,78,12,418/- (closing balance as on 31.03.2015) given to Radius
Industries is appearing. The assessee has also submitted her bank
statement reflecting the loan given to the assessee. The assesee has also
submitted copy of ledger account of the above creditor in the books of the
assessee. It appears that the AO made addition u/s 68 of the Act in respect
of the above loan only because the said creditor did not respond to 133(6)
notice. Considering the facts mentioned above, we find that Ld. CIT(A) has
rightly observed that the assessee has been able to explain the identity,
genuineness of the transaction and the creditworthiness of the creditor and
therefore addition of RS.1,41,00,000/- was deleted, which does not need
any interference on our part.
2. M.S. Bindra & Company (HUF)
The assessee has shown unsecured loan of RS.1,55,00,000/- taken during
the year from M.S. Bindra & Company (HUF) and the closing balance as on
15
31.03.2015 has been shown at Rs.4,84,39,657/-. It was noted that Sh. M.S.
Bindra, Karta of M.S. Bindra & Company (HUF), is the partner in the
assessee firm and has shown returned income of RS.31,83,161/-. He is
covered as a related party uls 40A(2)(b) of the Act in the tax audit report.
Further, interest of RS.31 ,76,786/- paid to HUF has been allowed by the
AO. On perusal of computation of income of HUF for AY. 2015-16, it is
noticed that HUF has shown interest from Radius Industries at
RS.31 ,76,786/-. On perusal of balance sheet as on 31.03.2015, it was
noted that total of assets of HUF amounted to RS.10,52,31,554/- which
included loans and advances of Rs.4,84,39,657/- (closing balance as on
31.03.2015) given to Radius Industries. The assessee has also submitted
bank statement of HUF reflecting the loan given to the assessee. The
assessee has also submitted copy of ledger account of the above creditor in
the books of the assessee. It appears that the AO made addition uls 68 of
the Act in respect of the above loan only because the said creditor did not
respond to 133(6) notice. Considering the facts mentioned above, we find
that Ld. CIT(A) has rightly observed that assessee has been able to explain
the identity, genuineness of the transaction and the creditworthiness of the
creditor and therefore addition of RS.1,55,00,000/- was deleted, which does
not need any interference on our part.
3. Jiya Bindra
The assessee has shown unsecured loan of RS.2,89,20,000/- taken during
the year from Ms. Jiya Bindra and the closing balance as on 31.03.2015 has
been shown at RS.2,04,31,760/--. It is noted that she is the relative of the
partner of the assessee firm. She is covered as a related party uls 40A(2)(b)
of the Act in the tax audit report. She has shown her returned income at
RS.18,44, 152/-. Further, interest of RS.18,76,115/- paid to her has been
allowed by the AO. On perusal of her computation of income for AY. 2015-
16, it is noticed that she has shown interest from Radius Industries at
16
Rs.18,76,115/-. On perusal of her balance sheet, it was noted that total of
her assets amounted to Rs.6,22,59,617/- which included loans and
advances of RS.5,79,48,284/-. In the list of loans and advances, the loan of
Rs.2,04,31,760/-. (closing balance as on 31.03.2015) given to Radius
Industries is appearing. The assessee has also submitted her bank
statement reflecting the loan given to the assessee. The assessee has also
submitted copy of ledger account of the above creditor in the books of the
assessee. It appears that the AO made addition uls 68 of the Act in respect
of the above loan only because the said creditor did not respond to 133(6)
notice. Considering the facts mentioned above, we find that Ld. CIT(A) has
rightly observed that assessee has been able to explain the identity,
genuineness of the transaction and the creditworthiness of the creditor and
therefore addition of RS.2,89,20,000/- was deleted, which does not need
any interference on our part.
4. Amrik Singh Chawla
The assessee has shown unsecured loan of RS.1,45,00,000/- taken during
the year from Amrik Singh Chawla and the closing balance as on 31.03.2015
has been shown at RS.55,00,000/-. It is noted that Sh. Amrik Singh Chawla
has shown returned income of RS.80,82,860/-. Further, interest of
Rs.17,17,396/- paid to him has been allowed by the AO. On perusal of his
computation of income for AY. 2015-16, it was noticed that he has shown
interest from Radius Industries at Rs.17,17,396/-. The assessee has also
submitted his bank statement reflecting the loan given to the assessee. The
assessee has also submitted copy of ledger account of the above creditor in
the books of the assessee. It appears that the AO made addition u/s 68 of
the Act in respect of the above loan only because the said creditor did not
respond to 133(6) notice. Considering the facts mentioned above, we find
that Ld. CIT(A) has rightly observed that assessee has been able to explain
the identity, genuineness of the transaction and creditworthiness of the
17
creditor and therefore addition of RS.1,45,00,000/- was deleted, which does
not need any interference on our part.
5. J.B.L. Intervention Associates, New Delhi
The assessee has shown unsecured loan of RS.30,00,000/- taken during the
year from J.B.L. Intervention Associates and the closing balance as on
31.03.2015 as been shown at NIL. It was noted that J.B.L. Intervention
Associates is propriety concern of Kapil Aggarwal HUF has shown returned
income of RS.24,81,920/-. On perusal of the balance sheet of J.B.L.
Intervention Associates as on 31.03.2015, it was noted that total assets
amounted to RS.29,08,75,855/- which included loans and advances of
Rs.28,59,66,313/-. The assessee has also submitted bank statement of the
concern reflecting the loan given to the assessee. The assessee has also
submitted copy of ledger account of the above creditor in the books of the
assessee. It is noted that the said loan was taken on 13.12.2014 and the
same was re-paid on 16.12.2014. It appears that the AO made addition u/s
68 of the Act in respect of the above loan only because the said creditor did
not respond to 133(6) notice. Considering the facts mentioned above, we
find that Ld. CIT(A) has rightly observed that assessee has been able to
explain the identity, genuineness of the transaction and the creditworthiness
of the creditor and therefore addition of RS.30,00,000/- was deleted, which
does not need any interference on our part.
10.1 Keeping in view of the aforesaid discussions, we do not find any
infirmity in the order of the Ld. CIT(A) on the issues in dispute, hence, we
uphold the same and accordingly, reject the grounds raised by the Revenue.
18
11. In the result, the Appeal filed by the Assessee stands allowed and
appeal filed by the Revenue stands dismissed.
Order pronounced on 17/09/2019.
Sd/- Sd/-
[O.P. KANT] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date: 17/09/2019
SRBhatnagar
Copy forwarded to: -
1. Assessee 2. Respondent 3. CIT 4.CIT (A) 5. DR, ITAT
Assistant Registrar, ITAT, Delhi Benches
19
|
