The Principal Commissioner Of Income Tax 1 v. Gopal Heritage P. Ltd

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 243 of 2021 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX 1 VersusGOPAL HERITAGE P. LTD. ==========================================================Appearance: MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1========================================================== CORAM: HONOURABLE MS. JUSTICE SONIA GOKANIand HONOURABLE MR. JUSTICE RAJENDRA M. SAREEN Date : 13/09/2021 ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. Following are the substantial questions of law raised inthe present appeal: - “(A)Whether the Appellate Tribunal has erred inlaw on facts in deleting the addition of Rs.3,25,29,000/- made under Section 68 of the Act onaccount of unexplained cash credit in the nature ofunsecured loan received from three entities,namely, Shaan Leisure Ltd., GSM Infra ProjectsLtd. and Manibhadra Tradelink Pvt.Ltd.? (B)Whether the Appellate Tribunal has erred innot appreciating that mere factum of filing return ofincome does not ipso facto lends credence to thecreditworthiness of a party? (C)Whether the Appellate Tribunal has erred inlaw and on facts in deleting the addition by ignoringthat the lenders had filed Return of Incomedeclaring very meagre taxable/operational incomewhich casts aspersions on the capacity of suchlenders to advance such huge amounts to the assessee?” 2.The brief facts leading to the present appeal are asfollows: - 2.1.The Assessing Officer had made an addition ofRs.4,03,34,000/- under Section 68 of the Income Tax Act,1961 (hereinafter referred to as ‘the Act’) in respect of sixparties. The Revenue is aggrieved by the decision of theAppellate Tribunal only in respect of unsecured loans receivedfrom Shaan Leisure Limited, GSM Infra Projects Limited andManibhadra Tradelink Private Limited. 2.2.According to the Assessing Officer, the assessee had notbeen able to prove the immediate source of cash in the handsof the party. From the audit balance sheet and profit and lossaccount of the previous year, it held that the company had nofund of its own and the net worth of the company wasnegative. Thus, Assessing Officer was of the opinion that theassessee was not in a position to establish the capacity andcreditworthiness of the depositor and thus, made an additionof Rs. 1,25,64,000/- in case of Manibhadra Tradelink PrivateLimited. The Assessing Officer observed that the depositorhad filed return of income on 18.12.2013 declaring the incomeof Rs. 15,426/- only and the assessee failed to file the audited balance sheet and profit and loss account of the depositorcompany. 2.3.In GSM Infra Projects Limited, according to theAssessing Officer, there is no explanation regardingimmediate source of funds in the hands of the depositorcompany till the depositor had declared the income atRs.4,334/-. 2.4.When challenged before the CIT(Appeals), it deleted theaddition by making following observations: (i) the depositorwas regularly assessed to tax and filing of its return ofincome. There is no evidence brought by the Assessing Officeron record which could support the contention that the amountreceived from the depositor was income of the assessee; (ii)that the loans have been granted through banking channelsand, in support, copy of the bank statement was provided bythe assessee; (iii) in the event of any doubts with regard to thecash deposits in the banks of the depositors, the action can betaken against them, but, no adverse view could be taken atthe ends of the assessee. It held that once the assesseedischarges the primary onus cast upon it by submitting thecopy of supporting documents in form of confirmation, copy ofbank statement and return of income, the onus would shift upon the Assessing Officer to make further inquiries throughissuing summons and notices under Section 133(6). 2.5.When challenged before the Appellate Tribunal, itconcurred with the view of the CIT (Appeals). The same hasbeen challenged before this Court with the aforementionedsubstantial questions of law. 3.We have heard both the sides. At the outset, the decisionof the Apex Court in case of Omar Salay Mohamed Sait vs.Commissioner Of Income-Tax, reported in (1959) 37 ITR151 (SC) requires reference which holds that the ITAT is afact finding tribunal and once it arrives at any conclusion afterdue consideration of evidence, this Court is not to interfere.What is required is to consider every fact with due care andthe Tribunal is required to give its findings on the questionswhich arise for determination along with the evidence pro andcontra in regard to each one of them. The findings reached onthe evidence on record before it and the conclusions reachedby the Tribunal should not be coloured by any irrelevantconsiderations or prejudice and if there are any circumstanceswhich are required to be explained by the assessee, theassessee should be given an opportunity of so doing. 4.We could notice that the assessee and the Revenue preferred cross appeals against the order of CIT(Appeals),Ahmedabad-II for the assessment year 2012-13. In Revenue’sappeals, the Tribunal examined the grievance of the Revenueof CIT(Appeals) having deleted the addition of Rs.4,03,34,000/- which was added by the Assessing Officer withthe aid of Section 68 of the Act. It was revealed to theAssessing Officer that assessee had taken unsecured loans ofthe said amount from the following persons: - (1) Mit G. Shah– Rs. 5,75,000/-, (2) Sejal Shah – Rs. 67,30,000/-, (3) ShaanLeisure Ltd. - Rs. 1,07,05,000/-, (4) GSM Infra Projects Ltd. -Rs. 92,60,000/-, (5) Yuva Sports Academy Pvt. Ltd. - Rs.5,00,000/-, and (6) Manibhadra Tradelink Pvt. Ltd. - Rs.1,25,64,000/-. The Assessing Officer directed to submit theidentity of the creditors, their creditworthiness andgenuineness of the transactions and since when hedisbelieved the creditworthiness of the creditors, he made theadditions. 4.1.The CIT(Appeals), as could be noticed, threadbareexamined the entire material in case of each of these personsand entities and eventually held that the identity of thedepositors had been proved as they had filed the return ofincome along with the PAN. Moreover, loans have beengranted through banking channels and in respect of the same copy of the bank statement also has been provided and hence,genuineness also has been believed by the CIT(Appeals) andfurther the return of income had been filed by the saiddepositors and hence, the creditworthiness also has beenproved. The appellant provided a copy of audited balancesheet and profit and loss account for the year underconsideration in respect of depositors to the Assessing Officerand after verification, the Assessing Officer has the onlyobjection that the company was not having fresh funds in itsbooks of accounts and negligible operational income wasderived. 4.2.The CIT(Appeals) has rightly opined that since thedepositor company had duly recorded the deposits/loans givento the appellant in its books of accounts out of its own fundsor borrowed funds, no addition in the hands of the appellant ispermissible so far as the transactions are recorded in thebooks of depositor company. 4.3.It relied on the judgment of the Apex Court in case ofCIT vs. Orissa Corporation Pvt. Ltd. reported in 1986(159) ITR 0078 to hold that once the appellant dulydischarges the primary onus cast upon it by making availablethe details and copies of supporting documents in the form of 4.2.The CIT(Appeals) has rightly opined that since thedepositor company had duly recorded the deposits/loans givento the appellant in its books of accounts out of its own fundsor borrowed funds, no addition in the hands of the appellant ispermissible so far as the transactions are recorded in thebooks of depositor company. 4.3.It relied on the judgment of the Apex Court in case ofCIT vs. Orissa Corporation Pvt. Ltd. reported in 1986(159) ITR 0078 to hold that once the appellant dulydischarges the primary onus cast upon it by making availablethe details and copies of supporting documents in the form of conformation, copy of bank account and return of income, it isfor the Assessing Officer then to make further inquiresthrough issuing summons and notices under Section 133(6) tothe depositors for further verification, which in the instantcase, has not been done and for which the appellant could notbe held responsible. In case of every person and entity, it hasgone into these details and accordingly allowed the appeal ofthe appellant. 4.4.The ITAT on detailed representation of this, concludedthus: - “11. A perusal of the finding of the ld. CIT(A)extracted (supra) it would reveal that the ld. CIT(A)has examined each transaction in detail in the lightof conditions enumerated in section 68. Forexample, in the case of Shri Mit Gopalbhai isconcerned a sum of Rs. 5,75,000/- was taken by theassessee as unsecured loan during this year. Theld. CIT(A) as a matter fact found that there was anopening balance as on 1.4.2011 at Rs.1,77,24,000/-. Source of this opening balance wasnot doubted in the earlier assessment year. He hasconfirmed the transaction. He has given hisidentity and other details. The ld. CIT(A) was of theview that when such a huge amount received fromthis person in the last year can be treated asgenuine, then why to doubt a small amount of Rs.5,75,000/- in this year. It is also pertinent to notethat the assessment order of Shri Mit G. Shah forthe Asstt. Year 2012-13 passed under section143(3) r.w.s. 147 of the Act has been placed onrecord by the ld. DR. This order has been passedon 3.10.2019 i.e. after decision of the ld. CIT(A)and nothing adverse could be collected by the AO.Similarly, the ld. CIT(A) has examined the factswith regard to Sejal G. Shah and observed that the assessee has fulfilled all necessary conditionscontemplated in section 68 of the Act. We also findthat the ld. CIT(A) has examined these details inlight of decisions of the Hon’ble Gujarat High Courtas well as of Hon’ble Supreme Court. The ld.CIT(A) has made reference to the ratio of law laiddown in all these decisions from pages no. 22 to 27of the impugned order, and we have gone throughthe proposition in these decisions and examined asto how the ld. CIT(A) has appreciated the facts ofthe assessee’s case in the light of thesepropositions. After looking to the well reasonedfinding of the ld. CIT(A) coupled with absence ofany incriminating evidence in the subsequentassessment orders of the creditors, we are of theview that no interference is called for in the findingof the ld. CIT(A). This ground of Revenue isdismissed.” 5.We could notice the concurrent findings of both theauthorities on facts which deserve no interference from thisCourt. The ITAT as a final fact finding body, in absence of anymaterial under Section 133(6) with the AO, has chosen touphold the version of CIT(Appeals) which also elaboratelytreated the material evidence and concluded with soundreasoning. We do not see any reason for us to interfere asaddition contemplation was under Section 68 of the IT Actwhich provides that any sum found credited in the books ofaccount of an assessee maintained for any previous year and ifthe assessee does not offer any explanation about the natureand source thereof or even when explanation is given and theAssessing Officer (AO) is dissatisfied, the sum shown credited 5.We could notice the concurrent findings of both theauthorities on facts which deserve no interference from thisCourt. The ITAT as a final fact finding body, in absence of anymaterial under Section 133(6) with the AO, has chosen touphold the version of CIT(Appeals) which also elaboratelytreated the material evidence and concluded with soundreasoning. We do not see any reason for us to interfere asaddition contemplation was under Section 68 of the IT Actwhich provides that any sum found credited in the books ofaccount of an assessee maintained for any previous year and ifthe assessee does not offer any explanation about the natureand source thereof or even when explanation is given and theAssessing Officer (AO) is dissatisfied, the sum shown credited in the accounts can be questioned by him. All the ingredientscontemplated under Section 68 have been duly satisfied onthe aspect of identity of the creditors, genuineness of thetransactions and their creditworthiness. 6.We see no reason to entertain this Tax Appeal which isin limini dismissed. (SONIA GOKANI, J) Bhoomi (RAJENDRA M. SAREEN,J)