The Principal Commissioner Of Income Tax-25 v. Aarhat Investments

Digitally signedUDAYby UDAYSHIVAJIJAGTAPSHIVAJIDate:JAGTAP2022.03.3114:31:55+0530 - Chitra Sonawane IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 156 OF 2018 The Principal Commissioner of Income Tax-25 .. Appellant Vs. Aarhat Investments .. Respondent ..... Mr. Akhileshwar Sharma i/b Ms. Mamta Omle for the appellant Mr. Ajay R. Singh for the respondent …. CORAM : K. R. SHRIRAM & N.R. BORKAR, J.J. DATED : 25[th] MARCH, 2022 P.C. 1.Following two questions of law are proposed in this appeal :- “AWhether, on the facts and in the circumstances of the caseand in law, the Hon’ble Tribunal is justified in upholding theorder of CIT(A) in deleting the addition of Rs.7,00,00,000/- andRs.6,50,00,000/- in respect of monies received from M/s. WallStreet Capital Markets Pvt. Ltd. and M/s. Novel Finvest Pvt. Ltd.respectively made by the Assessing Officer under Section 68 ofthe Act? B.Whether on the facts and in the circumstances of the caseand in law, the Hon’ble Tribunal is justified in deleting theaddition of Rs.5,07,68,100/- in respect of monies received fromM/s. Ganesh Barter Pvt. Ltd. made under Section 68 of the Act? 2.Assessing Officer had added these three amounts mentioned in two questions of law u/s 68 of the Act, on the basis thatsubstantial amounts have been received by the assessee asunsecured loans and without being charged any interest.Therefore, the Assessing Officer had proceeded on assumptionthat this must be assessee’s own money circulated through threeentities mentioned in the two questions of law.substantial amounts have been received by the assessee asunsecured loans and without being charged any interest.Therefore, the Assessing Officer had proceeded on assumptionthat this must be assessee’s own money circulated through threeentities mentioned in the two questions of law. 3. Facts in brief are that the assessee received a sum ofRs.7,00,00,000/- from Wall Street Capital Markets Pvt. Ltd. (forbrevity “Wall Street”), a sum of Rs. 6,50,00,000/- from NovelFinvest Pvt. Ltd. (for brevity “Novel Finvest), a sum ofRs. 5,07,68,100/- from one Ganesh Barter Pvt. Ltd. (for brevity“Ganesh Barter”) and a sum of Rs. 13,50,00,000/- from oneAsian Finance Services. Admittedly, the amount ofRs.7,00,00,000/- received from Wall Street was repaid in thesame year. Likewise, amount received from Novel Finvest wasalso repaid in the same year. So also in case of Asian FinanceServices. In the case of Ganesh Barter, there was an amountoutstanding as at close of the assessment year. Rs.7,00,00,000/- from Wall Street Capital Markets Pvt. Ltd. (forbrevity “Wall Street”), a sum of Rs. 6,50,00,000/- from NovelFinvest Pvt. Ltd. (for brevity “Novel Finvest), a sum ofRs. 5,07,68,100/- from one Ganesh Barter Pvt. Ltd. (for brevity“Ganesh Barter”) and a sum of Rs. 13,50,00,000/- from oneAsian Finance Services. Admittedly, the amount ofRs.7,00,00,000/- received from Wall Street was repaid in thesame year. Likewise, amount received from Novel Finvest wasalso repaid in the same year. So also in case of Asian FinanceServices. In the case of Ganesh Barter, there was an amountoutstanding as at close of the assessment year. 4. There seems to be no issue regarding the amount received and paid back to Asian Finance Services. 5. The Commissioner of Income Tax (Appeals) [for brevity “CIT(A)”], in so far as amount received from Wall Street andNovel Finvest, set aside the order of the Assessing Officer. TheCIT(A), as regards amount from Ganesh Barter did not interferewith the order of the Assessing Officer. Both Revenue as well asthe Assessee carried the matter in appeal to Income Tax AppellateNovel Finvest, set aside the order of the Assessing Officer. TheCIT(A), as regards amount from Ganesh Barter did not interferewith the order of the Assessing Officer. Both Revenue as well asthe Assessee carried the matter in appeal to Income Tax Appellate 4. There seems to be no issue regarding the amount received and paid back to Asian Finance Services. 5. The Commissioner of Income Tax (Appeals) [for brevity “CIT(A)”], in so far as amount received from Wall Street andNovel Finvest, set aside the order of the Assessing Officer. TheCIT(A), as regards amount from Ganesh Barter did not interferewith the order of the Assessing Officer. Both Revenue as well asthe Assessee carried the matter in appeal to Income Tax AppellateNovel Finvest, set aside the order of the Assessing Officer. TheCIT(A), as regards amount from Ganesh Barter did not interferewith the order of the Assessing Officer. Both Revenue as well asthe Assessee carried the matter in appeal to Income Tax Appellate Tribunal (ITAT) and ITAT disposed both the appeals by orderpronounced on 30.11.2016. The Revenue’s appeal was dismissedand the assessee’s appeal was allowed. The Assessing Officer hadnot added the amount that the assessee had received from AsianFinance Services u/s 68 of the Act and, therefore, this was neverthe subject matter of consideration before the Appellate Court. The ITAT while upholding the finding of CIT(A) with regard tothe amounts received from Wall Street and Novel Finvest, setaside the order of CIT(A) as regards Ganesh Barter. The ITATobserved the factual position as noted by CIT(A) as well as thatthe amounts received from Wall Street and Novel Finvest wererepaid during the year itself; that there was no dispute that thetransactions were through banking channels and both theseparties were assessed to income tax. Even their identity was notin dispute. The ITAT rightly held that Section 68 of the Act caststhe onus on the assessee to explain the nature and source of thecredit appearing in the books of account. It can be discharged ifthe assessee is able to establish the identity and creditworthinessof the creditors and the genuineness of transaction. The ITATalso observed that the Assessing Officer had issued commissionsof enquiry u/s 131(1)(d) of the Act to the Investigating Wing inresponse to the independent enquiries made by the AssessingOfficer wherein, statements of Director of Wall Street and NovelFinvest have been recorded and nobody has disputed thetransactions were in the nature of loans per-se. The CIT (A) aswell as ITAT were also satisfied with the credit worthiness ofthese two parties. on 31.03.2009. The Assessing Officer had accepted the identityof the creditor but was not satisfied with the credit worthiness ofthe Creditor and genuineness of the transaction. The CIT(A) onthe other hand, was also satisfied with the credit worthiness ofthe creditor but was not satisfied with the genuineness oftransaction. Hence, he had not interfered with the findings of theAssessing Officer so far as Ganesh Barter was concerned. TheITAT came to the conclusion that the implied view emanatingfrom the order of CIT (A) that transaction is to be held as notgenuine, if money is not returned when the purpose for which itwas given was not achieved, would be simply based on suspicionand without properly evaluating genuineness of transactions. Weagree with the conclusions of ITAT that just because in the end ofthe year money was yet to be repaid means the transaction itselfhas to be doubted is not correct particularly, when explanationrendered by the assessee has not been found to be false. 8.In our view, the ITAT has not committed any perversity or appliedincorrect principles to the given facts and when the facts andcircumstances are properly analysed and correct test is applied todecide the issue at hand, then, we do not think that questions aspressed raises any substantial questions of law.incorrect principles to the given facts and when the facts andcircumstances are properly analysed and correct test is applied todecide the issue at hand, then, we do not think that questions aspressed raises any substantial questions of law. 9.The appeal is devoid of merit and is dismissed with no order as tocosts. costs. (N.R. BORKAR, J.) 8.In our view, the ITAT has not committed any perversity or appliedincorrect principles to the given facts and when the facts andcircumstances are properly analysed and correct test is applied todecide the issue at hand, then, we do not think that questions aspressed raises any substantial questions of law.incorrect principles to the given facts and when the facts andcircumstances are properly analysed and correct test is applied todecide the issue at hand, then, we do not think that questions aspressed raises any substantial questions of law. 9.The appeal is devoid of merit and is dismissed with no order as tocosts. costs. (N.R. BORKAR, J.) (K.R. SHRIRAM, J.)