The Principal Commissioner Of Income Tax (Central),Ahmedabad v. Ambe Tradecorp Private Limited

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 306 of 2022 ==========================================================THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL),AHMEDABAD Versus AMBE TRADECORP PRIVATE LIMITED ========================================================== Appearance: MR MANISH BHATT. SR ADVOCATE with KARAN SANGHANI for M R BHATT & CO.(5953) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIAandHONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 05/07/2022ORAL ORDER (PER : HONOURABLE MR. JUSTICE N.V.ANJARIA) Heard learned senior advocate Mr.Manish Bhatt withlearned advocate Mr.Karan Sanghani for M.R.Bhatt & Co. forthe appellant. 2.The revenue seeks to raise grievance about deletion onpart of the Appellate Tribunal of addition of Rs.32,20,00,000/-made under Section 68 of the Income Tax Act on the count ofunexplained cash credit. It is in this respect that the substantialquestions of law is proposed as to whether the AppellateTribunal has committed an ex-facie perverse error in deletingthe said addition. 2.1Section 68 of the Act deals with the cash credits, itprovides that where any sum is found credited in the books of anassessee maintained for any previous year and the assesseeoffers no explanation about the nature and source thereof or the explanation offered by him, is not in the opinion of the assesseeofficer satisfactory, the sum so credited may be charged to theIncome Tax. 3.The issue in this case arose in respect of the assessmentyear 2012-2013. It appears that the two loan transactions ofRs.8,50,00,000/- and Rs.23,70,00,000/- received by respondentassessee from one M/s. J.A Infracon Private Limited and M/s.Satya Retail Private Limited were treated by assessing officer tobe sham in the sense that the creditworthiness etc. of the giverof the loan were not established. Accordingly, the assessingofficer made addition under Section 68 of the Act. 3.1While the assessing officer dealt with unexplained cashcredit from the M/s. Satya Retail Private Limited and from M/s.J.A Infracon Private Limited in his order in paras 5.1 and 5.2respectively, the Commissioner of Income Tax in the appealpreferred by assessee found on facts and the material before itthat the said two cash creditors had been holding there identity,creditworthiness and genuineness in respect of the loantransactions. 3.2The appellate authority observed that, “In this regard, ithas been noticed that ledger accounts and confirmations of theaforesaid two parties have been provided by the appellant to theAO in the assessment proceedings. Thereafter, the AO alsocarried out the independent inquiries u/s. 133(6) of the I.T. Actand in compliance thereto both the companies have submittedthe requisite information.” 3.3The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded alsoto arrive at a finding that the unsecured loans to the aforesaidparties have been paid by account payee cheques from the bankaccount of the assessee which was not in dispute, muchless indoubt. The accounts were finally settled with the repayment ofthe loan to the lender companies. 3.2The appellate authority observed that, “In this regard, ithas been noticed that ledger accounts and confirmations of theaforesaid two parties have been provided by the appellant to theAO in the assessment proceedings. Thereafter, the AO alsocarried out the independent inquiries u/s. 133(6) of the I.T. Actand in compliance thereto both the companies have submittedthe requisite information.” 3.3The information supplied by assessee was duly noticed by appellate authority and facts in that regard were recorded alsoto arrive at a finding that the unsecured loans to the aforesaidparties have been paid by account payee cheques from the bankaccount of the assessee which was not in dispute, muchless indoubt. The accounts were finally settled with the repayment ofthe loan to the lender companies. 3.4When the revenue preferred appeal before the AppellateTribunal, the Tribunal confirmed the findings recorded by theAppellate Authority. The Tribunal referred to the decision ofDurga Prasad More (82) ITR 540 and also in Sumati Dayal(214) ITR 801, to further record on the basis of the facts thatthe assessee had furnished the details such as copy of ledgeraccount, bank statements, income tax returns, balance sheet etc.It was also recorded that notice under Section 133(6) of the Actwas issued to the said parties which were duly responded bythem. The identity of the parties could not be, thereforedisputed, recorded the tribunal. The aspect was also noticed thatthe assessee was not beneficiary of the loan received by it andthe loan was repaid by the assessee in the subsequent year. Itled to unacceptable conclusion that the impugned transactionwas a business transaction between the assessee and the loanparties and that they could not be doubted for their genuineness. 3.5While the revenue has tried to put up a case that thetransactions were in the nature of accommodation entries, thiscase has only presumptive and assumptive value not supportedby any factual data. On the contrary, on the basis of the materialbefore the authorities, the transactions were found to begenuine. 4.Learned advocate for the appellant attempted toemphasize that for the purpose of application of Section 68 ofthe Act, three ingredients were necessary. Firstly identity of theparties to the transaction of loan, second is the creditworthinessof such parties and thirdly the genuineness of the transaction. Itwas submitted in vain that neither of the ingredients weresatisfied. 5.As discussed above, since the requisite material wasfurnished by assessee showing the identity and since theassessee was not beneficiary when the loan was repaid in thesubsequent year, even the ingredients of creditworthiness andgenuineness of transaction were well satisfied. 6.The Tribunal rightly recorded in para 29 of the judgment, “Once repayment of the loan has beenestablished based on the documentary evidence,the credit entries cannot be looked into isolationafter ignoring the debit entries despite the debitentries were carried out in the later years.Thus, in the given facts and circumstances,were hold that there is no infirmity in the orderof the Ld.CIT-A. ” 7.For the reasons recorded above, no question of lawmuchless substantial questions arises in this appeal. It standsmeritless and accordingly dismissed. (N.V.ANJARIA, J) Manshi (BHARGAV D. KARIA, J)