Itat/175/2023 Ia No: Ga/1/2023 Principal Commissioner Of Income Tax-5, Kolkata v. Panchdeep Construction Ltd

OD-3 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION ORIGINAL SIDE ITAT/175/2023IA NO: GA/1/2023PRINCIPAL COMMISSIONER OF INCOME TAX-5, KOLKATAVSPANCHDEEP CONSTRUCTION LTD. BEFORE : THE HON’BLE THE CHIEF JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 28[th] August, 2023 Appearance :Mr. Prithu Dudhoria, Adv.…for appellant Mr. Avra Mazumdar, Adv.Mr. Samrat Das, Adv.Mr. Suman Bhowmick, Adv.….for respondent The Court : - This appeal filed by the revenue under Section 260A of theIncome Tax Act, 1961 (the Act) is directed against the order dated 4[th] June,2023, passed by the Income Tax Appellate tribunal “A” Bench, Kolkata (theTribunal) in ITA/557/2020 for the assessment year 2017-18. The revenue hasraised the following substantial question of law for consideration :- “Whether on the facts and in the circumstances of the case the LearnedIncome Tax Appellate Tribunal was justified in holding that burden ofproving creditworthiness under Section 68 is discharged by the Assesseeeven after multiple instances of irrational nature of financial affairs of the loan creditors and their sources had been identified by the AssessingOfficer and duly recorded in the Assessment Order ?” We have heard Mr. Prithu Dudhoria, learned standing Counsel for theappellant/revenue and Mr. Avra Mazumder, learned Advocate appearing for therespondent/assessee. During the assessment proceeding the assessee was called upon tofurnish the details of unsecured loans raised during the year underconsideration (A.Y. 2017-18) with regard to five companies. The assesseesubmitted details as called for and the Assessing Officer discussed the matterwith the assessee on several dates and completed the assessment by order dated30.12.2019, holding that the unsecured loan was raised by way ofaccommodation entry through brokers and entry operators. The AssessingOfficer added the sum under Section 68 of the Act and treated the same asunexplained expenditure under Section 69C of the Act and added the sum to thetotal income of the assessee. Aggrieved by such order, the assessee filed the appeal before theCommissioner of Income Tax , Appeals (V), Calcutta, [CIT(A)]. Before the CIT[A]the assessee contended that the Assessing Officer sought for details ofunsecured loans taken by the assessee from five companies and the detailsalong with confirmation, ITR acknowledgement, balance sheet, source of funds,bank statement, MCA, Master Data etc. were filed. It was further contended thatthe Assessing Officer had issued notice under Section 133(6) of the Act to theparties and those parties complied with the direction and filed necessarydocuments. Aggrieved by such order, the assessee filed the appeal before theCommissioner of Income Tax , Appeals (V), Calcutta, [CIT(A)]. Before the CIT[A]the assessee contended that the Assessing Officer sought for details ofunsecured loans taken by the assessee from five companies and the detailsalong with confirmation, ITR acknowledgement, balance sheet, source of funds,bank statement, MCA, Master Data etc. were filed. It was further contended thatthe Assessing Officer had issued notice under Section 133(6) of the Act to theparties and those parties complied with the direction and filed necessarydocuments. Before the CIT[A] the assessee had filed voluminous documents to supporttheir contention that the view taken by the Assessing Officer was erroneous. TheCIT[A] after considering the submissions made by the assessee and in particular,the evidence which was submitted while replying to the notice under Section133(6) of the Act and the supporting documents, found that the assessee hadfiled copies of the added accounts for the financial year 2016-17 of all five lendercompanies and the accounts revealed that the company was having substantialown funds in the form of capital and reserve which were several times more thanthe loan granted to the assessee. By way of illustration the case concerningKonark Commercial Limited was taken into consideration and the net worth ofthe company was Rs. 21.26 Crore as on 31.03.2017, whereas the loan to theassessee was 29.25 Lakhs with interest at 1.37 per cent. Similarly, the othercompanies’ net worth was also discussed. Furthermore, the CIT[A] noted thatthough the Assessing Officer thought fit to issue notice under Section 133(6) ofthe Act to the loan creditors and creditors complied with the direction in notice,the Assessing Officer did not deem it proper to issue notice under Section 131 ofthe Act for personal appearance of the loan creditors. Further, the CIT[A] notedthat assessing officer has not alleged non compliance of notice by any of them.Furthermore, the CIT[A] observed that there is no falsity of findings recorded bythe Assessing Officer as regards any falsity or infirmity in the document whichwere placed before the Assessing Officer. After discussing the factual issue theTribunal took note of various decisions of the Tribunal as well as of this Courtand allowed the appeal filed by the assessee. The revenue filed appeal before theTribunal. Once again before the learned Tribunal the assessee placed a paper book containing all the documents and furnishing details and explanation forthe allegations made against the assessee as was done before the CIT[A]. The Learned Tribunal after taking note of the factual matrix affirmed theorder passed by the CIT(A) holding that the findings are elaborate and reasonshave been assigned by the CIT(A) to allow the appeal of the assessee. Thus, we find that the entire matter, which has travelled upto the Tribunaland to this Court, are completely factual and we find no question of law, muchless substantial questions of law, arising for consideration. Accordingly, the appeal fails and is dismissed. The stay application IA No: GA/1/2023 is also dismissed. (T.S. SIVAGNANAM) CHIEF JUSTICE (HIRANMAY BHATTACHARYYA, J.)