ASSISTANT COMMISSIONER OF INCOME TAX-6(3)(2), MUMBAI v. KAIZEN ENGINEERING PRIVATE LIMITED , MUMBAI

ITA 2899/MUM/2019 | 2009-2010
Pronouncement Date: 04-03-2021 | Result: Dismissed

Appeal Details

RSA Number 289919914 RSA 2019
Bench Mumbai
Appeal Number ITA 2899/MUM/2019
Duration Of Justice 1 year(s) 9 month(s) 28 day(s)
Appellant ASSISTANT COMMISSIONER OF INCOME TAX-6(3)(2), MUMBAI
Respondent KAIZEN ENGINEERING PRIVATE LIMITED , MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 04-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 04-03-2021
Last Hearing Date 09-11-2020
First Hearing Date 09-11-2020
Assessment Year 2009-2010
Appeal Filed On 06-05-2019
Judgment Text
M/S KAIZEN ENGG. SYSTEMS PVT. LTD. ASSESSMENT YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH MUMBAI BEFORE HONBLE SHRI SAKTIJIT DEY JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.2899/MUM/2019 ( / ASSESSMENT YEAR: 2009-10) A CIT - CIRCLE - 6(3) (2) AAYKAR BHAVAN ROOM NO.576 M.K. ROAD MUMBAI-400 020. / VS. M/S. KAIZEN ENGINEERING SYSTEMS PVT. LTD. 67 SHANTA PRASAD HINDU COLONY LANE 01 DADAR MUMBAI-400 014. PAN/GIR NO. AADCK - 1418 - N ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) & C.O. NO.34/MUM/2020 (ARISING OUT OF ITA NO. 2899/MUM/2019) ( / ASSESSMENT YEAR: 2009-10) M/S. KAIZEN ENGINEERING SYSTEMS PVT. LTD. 67 SHANTA PRASAD HINDU COLONY LANE 01 DADAR MUMBAI-400 014. / VS. ACIT - CIRCLE - 6(3)(2) AAYKAR BHAVAN ROOM NO.576 M.K. ROAD MUMBAI-400 020. PAN/GIR NO. AADCK - 1418 - N ( '# /APPELLANT ) : ( $%'# / RESPONDENT ) ASSESSEE BY : SHRI MADHUR AGGARWAL-LD. AR REVENUE BY : SHRI GURBINDER SINGH -LD.SR.DR / DATE OF HEARING : 09/12/2020 / DATE OF PRONOUNCEMENT : 04/03/2021 M/S KAIZEN ENGG. SYSTEMS PVT. LTD. ASSESSMENT YEAR: 2009-10 2 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR (AY) 2009-10 CONTESTS THE ORDER OF LD. COMMISSIONER OF INCOME TA X (APPEALS)-12 MUMBAI [CIT(A)] DATED 17/01/2019 ON FOLLOWING EFFE CTIVE GROUNDS. 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CTT (A) HAS ERRED IN RESTRICTING THE ADDITION TO 5% INSTEAD OF 100% BEING RS.4 70 00 643/- MADE BY THE AO U/S.69C OF THE ACT OUT OF THE BOGUS PURCHASE TRA NSACTION ACCOMMODATION ENTRY OBTAINED BY ASSESSEE FROM 3 PARTIES -M/S. NATASHA E NTERPRISES ATHARVA BUSINESS PUT LTD AND DUKE BUSINESS PVT LTD (JPK TRADING I PVT. LTD) THE ENTITIES CONTROLLED AND OPERATED BY SHRI PRAVEEN KUMAR JAIN. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW LD.CIT(A) HAS ERRED IN DELETING THE ADDITION U/S. 69C BY HOLDING THAT OPPO RTUNITY OF CROSS-EXAMINATION IS NOT PROVIDED TO THE ASSESSEE IGNORING THE FACT THAT AT PARA 4.2 OF THE ASSESSMENT ORDER THE AO HAS CATEGORICALLY MENTIONED THAT FURTHER TO THE NON SERVICE OF NOTICE ISSUED U/S. 133(6) BY POSTAL AUTHORITY THE ASSESSEE WAS ALSO ASKED TO PR ODUCE PARTIES FOR VERIFICATION WHICH THE ASSESSEE DID NOT COMPLY WITH AND THEREFORE LD.CJT( A) FAILED TO APPRECIATE THAT THE ONUS TO PROVE GENUINENESS IS NOT DISCHARGED BY ASSESSEE. 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW ID. CIT(A) HAS ERRED IN DELETING THE ADDITION U/S. 68 OF THE ACT IN VIOLATI ON OF RULE 46A OF THE I.T.RULES BY NOT REMANDING TO THE AO TO AFFORD OPPORTUNITY OF CROSS- EXAMINATION TO THE ASSESSEE. 2.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW ID.CJT(A) HAS ERRED IN DELETING THE ADDITION U/S. 68 OF THE ACT DISREGARDI NG THE HON'BLE DELHI HIGH COURT DECISION IN THE CASE OF CIT V/S JANSAMPARK ADVERTISING & MAR KETING (P) LTD 375 JTR 373 (DELHI) WHEREIN HON'BLE COURT WHILE REMANDING THE MATTER HE LD THAT TWO APPELLATE AUTHORITIES VIZ. COMMISSIONER (APPEALS) AND TRIBUNAL ARE ALSO FORUM S FOR FACT-FINDING IN EVENT OF ASSESSING OFFICER FAILING TO DISCHARGE HIS FUNCTION S PROPERLY OBLIGATION TO CONDUCT PROPER INQUIRY ON FACTS WOULD NATURALLY SHIFT TO DOOR OF S AID APPELLATE AUTHORITIES AND THEY HAVING NOTICED WANT OF PROPER INQUIRY CANNOT CLOSE CHAPTE R SIMPLY BY ALLOWING APPEAL AND DELETION ADDITIONS MADE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW ID.CIT(A) HAS ERRED IN DELETING THE QUANTUM ADDITION IGNORING THAT THE INF ORMATION ON ACCOUNT OF ACCOMMODATION ENTRY OF BOGUS PURCHASE OF RS.4 70 00 643/- IS RECE IVED FROM THE INVESTIGATION WING MUMBAI OF INCOME TAX DEPARTMENT; THAT DURING THE SE ARCH ACTION U/S.132 OF THE ACT CARRIED OUT ON 01/10/2013 IN THE CASE OF PRAVEEN KUMAR JAIN & GROUP ARE THE ENTRY OPERATORS AND THAT THEY HAD PROVIDED ACCOMMODATION ENTRIES IN THE FORM OF BOGUS PURCHASES TO THE ASSESSEE COMPANY THROUGH THE COMPANIES UNDER HIS CO NTROL. 4. ON THE FACTS AND M THE CIRCUMSTANCES OF TH E CASE AND IN LAW LD.CIT(A) HAS ERRED IN RESTRICTING THE QUANTUM ADDITION IGNORING THAT THE INFORMATION ON ACCOUNT OF BOGUS PURCHASES IS RECEIVED FROM THE DIT(INVESTIGATION) U NIT-2 MUMBAI THAT THE ASSESSEE HAD RECEIVED ACCOMMODATION ENTRY FROM -NATASHA ENTERPRI SES ATHARVA BUSINESS PVT LTD. AND DUKE BUSINESS PVT LTD. (JPK TRADING I PUT LTD) THE CONCERN CONTROLLED BY SHRI PRAVEEN KUMAR JAIN. M/S KAIZEN ENGG. SYSTEMS PVT. LTD. ASSESSMENT YEAR: 2009-10 3 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW ID.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.2 61 53 918/- AND THE I NTEREST RS.69 203/- U/S.68 OUT OF THE UNSECURED LOAN FROM NINE PARTIES AS THE ID.CIT(A) F AILED TO APPRECIATE THAT DURING THE ASSESSMENT PROCEEDINGS AO HAD SPECIFICALLY ASKED AS SESSEE TO FILE THE SUPPORTING DOCUMENTS OF THE LOAN TRANSACTIONS. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW ID.CIT(A) HAS ERRED IN DELETING THE ADDITION OF DELAY IN DEPOSITING EMPLOY EES' CONTRIBUTION OF PF & ESIC WITHOUT APPRECIATING THAT IT IS SPECIFICALLY COVERED BY SEC TION 36(1)(VA)OF THE ACT. 7. THE APPELLANT PRAYS THAT THE ORDER OF THE C IT (APPEALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. THOUGH THE ASSESSEE HAS PREFERRED CROSS-OBJECTION HOWEVER NO SUBSTANTIAL ARGUMENTS HAVE BEEN MADE THEREIN AND TH E SAME HAS NOT BEEN PRESSED DURING THE COURSE OF HEARING BEFORE US . AS EVIDENT THE REVENUE IS AGGRIEVED BY CERTAIN REL IEF PROVIDED TO THE ASSESSEE BY LD. CIT(A) ON ACCOUNT OF ALLEGED BOGUS PURCHASE AS WELL AS DELETION OF ADDITION U/S 68. 2. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING WRITTEN SUBMI SSIONS AND DOCUMENTS PLACED IN THE PAPER BOOK. THE JUDICIAL PRECEDENTS A S RELIED UPON DURING THE COURSE OF HEARING HAVE DULY BEEN DELIBERATED UP ON. OUR ADJUDICATION TO THE SUBJECT MATTER WOULD BE AS GIVEN IN SUCCEEDI NG PARAGRAPHS. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED AS TECHNOLO GY SOLUTION PROVIDER WAS ASSESSED FOR THE YEAR UNDER CONSIDERAT ION U/S. 143(3) R.W.S. 147 ON 29/03/2016 WHEREIN IT WAS SADDLED WITH FOLL OWING ADDITIONS WHICH ARE THE SUBJECT MATTER OF APPEAL BEFORE US: - 1. BOGUS PURCHASES : RS.470 LACS 2. UNEXPLAINED CASH CREDIT U/S.68 : RS.261.53 LAC S 3. INTEREST ON UNSECURED LOANS : RS.0.69 LACS 4. DISALLOWANCE U/S. 36(1)(VA) : RS.1.16 LACS M/S KAIZEN ENGG. SYSTEMS PVT. LTD. ASSESSMENT YEAR: 2009-10 4 3.2 THE ORIGINAL RETURN OF INCOME FILED BY THE ASSE SSEE WAS PROCESSED U/S. 143(1). PURSUANT TO RECEIPT OF CERTAIN INFORMA TION FROM DGIT (INVESTIGATION) IT WAS ALLEGED THAT ASSESSEE PROCU RED BOGUS PURCHASE BILLS FOR RS.470 LACS FROM 3 ENTITIES THE DETAILS OF WHICH ARE EXTRACTED IN PARA-3 OF THE ASSESSMENT ORDER. ACCORDINGLY CASE W AS RE-OPENED VIDE NOTICE U/S. 148 DATED 05/02/2015 WHICH WAS FOLLOWED BY STATUTORY NOTICES U/S 143(2) & 142(1) WHEREIN ASSESSEE WAS DIRECTED T O FILE REQUISITE DETAILS & DOCUMENTARY EVIDENCES. ALTHOUGH ASSESSEE DEFENDED THE PURCHASE TRANSACTIONS BUT LD. AO DISALLOWED ENTIRE PURCHASES AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE AS UNE XPLAINED INCOME U/S 69C. THE PRIMARY FACTOR TO DISALLOW THE SAME W AS THAT NOTICES ISSUED U/S 133(6) TO THE TAINTED SUPPLIED DID NOT E LICIT SATISFACTORY RESPONSE. 3.3 THE ADDITION U/S 68 STEM FROM THE FACT THAT THE ASSESSEE OBTAINED UNSECURED LOAN AGGREGATING TO RS.261.53 LACS FROM 9 ENTITIES AS TABULATED IN PARA-7 OF THE ASSESSMENT ORDER. IN THE ABSENCE OF DOCUMENTARY EVIDENCE TO DEMONSTRATE FULFILMENT OF P RIMARY INGREDIENTS OF SEC.68 THESE LOANS WERE ADDED AS UNEXPLAINED CASH CREDIT U/S 68. CONSEQUENTLY INTEREST OF RS.0.69 LACS PAID ON THES E LOANS TO 2 ENTITIES WAS ALSO DISALLOWED. 3.4 THE LAST ADDITION AROSE ON ACCOUNT OF ASSESSEE S DEFAULT IN PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PF (EPF) AND ESIC. THE SAME AGGREGATED TO RS.1.16 LACS WHICH WAS DISALLOWE D U/S 36(1)(VA) AND ADDED BACK TO THE INCOME OF THE ASSESSEE. APPELLATE PROCEEDINGS & OUR ADJUDICATION 4.1 DURING APPELLATE PROCEEDINGS THE ASSESSEE INT ER-ALIA CHALLENGED THE VALIDITY OF REASSESSMENT PROCEEDINGS. HOWEVER SAME GOT REJECTED IN M/S KAIZEN ENGG. SYSTEMS PVT. LTD. ASSESSMENT YEAR: 2009-10 5 TERMS OF DECISION OF HON'BLE SUPREME COURT IN RAYMOND WOOLLEN MILLS LTD. V/S ITO (236 ITR 34). 4.2 REGARDING ADDITION OF ALLEGED BOGUS PURCHASES THE ATTENTION WAS DRAWN TO THE FACT THAT IN SUPPORT OF PURCHASE TRANS ACTIONS THE ASSESSEE HAD ALREADY FILED COPIES OF PURCHASE INVOICES LEDG ER EXTRACTS STOCK REGISTER EXTRACTS AND COPIES OF BANK STATEMENTS EVI DENCING PAYMENT THROUGH BANKING CHANNELS AND THEREFORE ADDITIONS W OULD NOT BE JUSTIFIED MERELY BECAUSE NOTICES COULD NOT BE SERVED. THE ASS ESSEE ALSO PLACED ON RECORD ITEMISED SUMMARY OF PURCHASES AND CORRESP ONDING SALES MADE AGAINST THESE PURCHASES WHICH ARE ALREADY EXTR ACTED IN PARA 3.2 OF THE IMPUGNED ORDER. 4.3 THE LD. CIT(A) CONCURRED THAT INVOCATION OF SEC .69C WOULD NOT BE PROPER SINCE THE SOURCE OF TAINTED PURCHASES WAS AS SESSEES BANK ACCOUNT. FURTHER THE ASSESSEE HAD PLACED ON RECORD ALL POSSIBLE EVIDENCES TO ESTABLISH THE GENUINENESS OF THE TRANS ACTIONS. THE SALES WERE NOT DISTURBED OR DOUBTED. THEREFORE NON-SERVI CE OF NOTICE COULD NOT BE THE SOLE BASIS TO MAKE ADDITIONS. HOWEVER ON TH E FACTS OF THE CASE THE ASSESSEE MAY HAVE MADE PURCHASES FROM GREY MARK ET BUT IT PROCURED BOGUS BILLS AND THEREFORE THE PROFIT ELEME NT EMBEDDED IN THESE TRANSACTIONS WAS TO BE ESTIMATED. THE ESTIMATION WA S MADE @5% OF THESE PURCHASES WHICH REDUCED THE IMPUGNED ADDITION TO RS.12.61 LACS. AGGRIEVED THE REVENUE IS IN FURTHER APPEAL BEFORE US. HOWEVER THE ASSESSEE HAS NOT PRESSED THIS GROUND BEFORE US AND ACCEPTED THE VERDICT OF LD. CIT(A). 5. UPON CAREFUL CONSIDERATION OF FACTUAL MATRIX AS ENUMERATED IN PRECEDING PARAGRAPHS IT IS EVIDENT THAT THE ASSESS EE WAS IN POSSESSION OF PURCHASE INVOICES AND IT PLACED ON RECORD CONFIR MATION OF ACCOUNTS. M/S KAIZEN ENGG. SYSTEMS PVT. LTD. ASSESSMENT YEAR: 2009-10 6 THE PAYMENTS TO THE SUPPLIERS WERE THROUGH BANKING CHANNELS. THE ASSESSEE PRODUCED STOCK REGISTER EXTRACT AND CORREL ATED THE TAINTED PURCHASES WITH SALES TRANSACTIONS. THERE COULD BE N O SALE WITHOUT ACTUAL PURCHASE OF MATERIAL KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS. THE SALES HAVE NOT BEEN DISPUTED OR DISTURBED BY TH E REVENUE. IN SUCH A CASE THE APPROACH OF LD. CIT(A) IN ESTIMATING THE ADDITIONS @5% IS QUITE FAIR & REASONABLE. WE CONCUR WITH THE SAME AN D THEREFORE THIS GROUND RAISED BY THE REVENUE STAND DISMISSED. 6.1 REGARDING ADDITION U/S 68 THE ASSESSEE SUBMITT ED ADDITIONAL EVIDENCES U/R 46A WHICH WERE SUBJECTED TO REMAND PR OCEEDINGS. THE REMAND REPORT WAS DULY CONFRONTED TO THE ASSESSEE A ND THE ASSESSEE ASSAILED THE FINDINGS OF LD. AO BY DRAWING ATTENTIO N TO THE DOCUMENTARY EVIDENCES AS PLACED ON THE RECORD DURING REMAND PR OCEEDINGS AS WELL AS DURING APPELLATE PROCEEDINGS IN SUPPORT OF THE TRANSACTIONS. THE ASSESSEE SUBMITTED THAT THE LOANS WERE TAKEN FROM D IRECTORS AND THEIR RELATIVES FOR MEETING WORKING CAPITAL REQUIREMENTS. DURING APPELLATE PROCEEDINGS THE CONFIRMATIONS OF THE LENDERS WERE SUBMITTED ALONG WITH COPY OF PAN BANK STATEMENTS AND THEIR RESPECTIVE I NCOME TAX RETURNS TO ESTABLISH THE IDENTITY & CREDITWORTHINESS OF THE LENDERS AS WELL AS THE GENUINENESS OF THE TRANSACTIONS. 6.2 AFTER DUE CONSIDERATION OF MATERIAL ON RECORD REMAND REPORT AND ASSESSEES SUBMISSIONS LD. CIT(A) RENDERED FACTUAL FINDINGS AND DELETED THE IMPUGNED ADDITIONS BY OBSERVING AS UNDE R: - 4.3 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER SUBMISSIONS MADE BY THE APPELLANT ISSUES RAISED BY THE AO AGAINST THE ADDI TIONAL EVIDENCE FILED BY THE APPELLANT IN THE REMAND REPORT AND THE REJOINDER TO THE REMAND REPORT. IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT THE AO ASKED ONLY FO R THE DETAILS OF LOANS TAKEN DURING THE YEAR BY THE APPELLANT WHICH WERE PROVID ED BY THE APPELLANT AT THE TIME OF THE ASSESSMENT PROCEEDINGS. AFTER ASKING FOR INITIA L DETAILS FOR WHICH THE REPLY WAS FILED IT WAS INCUMBENT UPON THE AO IF HE WAS NOT SATISFIED WITH THE DETAILS TO CALL FOR M/S KAIZEN ENGG. SYSTEMS PVT. LTD. ASSESSMENT YEAR: 2009-10 7 MORE DETAILS AS REQUIRED BY HIM. THE AO DID NOT ISS UE SHOW CAUSE NOTICE PROPOSING THE ADDITION. IT IS EXPECTED AS PER THE PROCEDURE TO GIVE A PRE-ASSESSMENT SHOW CAUSE NOTICE WHICH THE AO FAILED TO FOLLOW. IT IS SEEN FROM THE ASSESSMENT ORDER ITSELF THAT THE AO NEITHER CALLED FOR ANY FURTHER DETAILS NOR ISSUED A SHOW CAUSE NOTICE BUT CONCLUDED THE ASSESSMENT BY MAKING ADDIT ION OF THE ENTIRE LOANS APPEARING IN THE BOOKS OF ACCOUNTS. DURING THE APPE AL PROCEEDINGS THE APPELLANT FILED PETITION UNDER RULE 46A OF THE IT RULES REQU ESTING FOR ADMISSION OF ADDITIONAL EVIDENCE ON THE GROUND THAT THE AO DID NOT ASKED FO R FURTHER DETAILS ALLEGING THAT NO SHOW CAUSE NOTICE SPECIFICALLY REQUIRING THE APPELL ANT TO ESTABLISH THE IDENTITY SOURCE AND CREDITWORTHINESS. REMAND REPORT HAS BEEN CALLED FOR AND THE REJOINDER OF THE ASSESSEE IS ALSO TAKEN ON RECORD. 4.4 THE APPELLANT CONTENDED THAT THE LOANS WERE TAK EN FOR MEETING THE WORKING CAPITAL REQUIREMENTS OF ITS AHMEDABAD JANMARG LIMIT ED OF AHMEDABAD MUNICIPAL CORPORATION POPULARLY KNOWN AS BRTS. THE APPELLANT VIDE ADDITIONAL EVIDENCE FURNISHED THE COPY OF PAN ALONG WITH THE SIGNED COP Y OF THE LOAN CONFIRMATION; OF THE ALL THE LENDERS. FURTHER THE APPELLANT HAS PRO DUCED COPY OF BANK STATEMENTS REFLECTING THE SAID LOAN AMOUNTS AND INCOME TAX RET URN OF ALL THE LENDERS EXCEPT MR. RAMJI SHAH AND MRS. RATANBAI RAMJI SHAH AND MR. RAN JIT KAMAT. IT IS FURTHER OBSERVED THAT BOTH THE LENDERS I.E. MR. RAMJI SHAH AND MRS. RATANBAI RAMJI SHAH EXPIRED ON 04.06.2010 & 17.07.2014 RESPECTIVELY. TH IS FACT IS CONFIRMED BY THEIR LEGAL HEIR (SON) MR AJIT SHAH IN HIS SIGNED LOAN C ONFIRMATION SUBMITTED BY THE APPELLANT. HENCE THE APPELLANT COULD NOT PRODUCE TH E BANK STATEMENT AND THE COPY OF ITR FOR LATE MR. RAMJI SHAH AND LATE MRS. RATANB AI RAMJI SHAH. FURTHER IT IS OBSERVED THAT THE LOAN FROM MR. & MRS. SHAH HAVE BE EN REPAID ALONG WITH INTEREST DURING THE PREVIOUS YEAR RELEVANT TO NEXT ASSESSMEN T YEAR. OWING TO THESE FACTS THE UNSECURED LOANS ARE CONSIDERED GENUINE AND DIRECTED TO BE ACCEPTED AS THERE IS NO WAY BY WHICH THE APPELLANT COULD HAVE PRODUCED ANY FURTHER DETAILS TO SUBSTANTIATE HIS CLAIM. 4.5 ALSO IN CASE OF UNSECURED LOANS TAKEN FROM THE LENDER MR. RANJIT KAMAT ITR HAS NOT BEEN PRODUCED BY THE LENDER. IT IS SUBMITTE D THAT MR. RANJIT KAMAT IS SON OF MR. PRAKASH KAMAT PROMOTER DIRECTOR OF THE APPELLA NT COMPANY AND THE ONWARD REMITTANCE CERTIFICATE CERTIFIED BY THE BANK FOR TH E SAID LOAN AND THE SELF-CERTIFICATE FOR SOURCE OF INCOME IN UK AND ACADEMIC QUALIFICATI ON HAVE BEEN SUBMITTED DURING THE APPELLATE PROCEEDINGS. THIS ESTABLISHES THE CRE DITWORTHINESS OF THE LENDER. THE LENDER WAS EMPLOYED IN LONDON AND EARNING SALARY IN COME WHICH WAS ADVANCED AS LOAN TO APPELLANT COMPANY. THEREFORE THE UNSECURED LOAN TAKEN FROM THE SON OF THE DIRECTOR IS CONSIDERED GENUINE AND DIRECTED TO BE A CCEPTED. 4.6 SHRI. PRAKASH KAMAT IS THE ONE OF THE DIRECTOR WHO IS MANAGING THE COMPANY SHRI BHARAT CHORAMLE IS ANOTHER DIRECTOR WHO IS AL SO A DIRECTOR OF SMART IT SOLUTIONS P. LTD. SHRI. BHARAT CHORAMLE ATTENDED BE FORE THE AO AND CONFIRMED THE LOAN GIVEN BY HIMSELF AND HIS COMPANY SMART IT SOL UTIONS P. LTD. BHARAT CHORAMLE NOT HAVING THE DETAILED KNOWLEDGE OF THE ASSESSEE COMPANY IS NOT RELEVANT FOR THE ISSUE AS FAR AS THE THREE CRITERIA REQUIRED U/S 68 ARE FULFILLED. THE ASSESSEE HAD FILED POINT WISE REPLY TO ALL THE OBSERVATIONS MADE BY TH E AO IN THE REPORT WHICH IS EXTRACTED ABOVE. AFTER GOING THROUGH THE OBSERVATIO NS OF THE AO AND THE REJOINDER OF THE ASSESSEE I AM OF THE CONSIDERED OPINION THAT T HE ISSUES RAISED BY THE AO HAVE BEEN SATISFACTORILY EXPLAINED BY THE APPELLANT AND FOUND TO BE ACCEPTABLE. THE CASE LAWS RELIED BY THE AO ARE NOT RELEVANT TO THE FACTS ON RECORD AS THE AO FAILED TO GIVE PROPER OPPORTUNITY MAKE PROPER ENQUIRIES. HOWEVER THE APPELLANT HAS COMPLIED WITH THE BASIC REQUIREMENTS OF SECTION 68 OF THE AC T IN ESTABLISHING THE IDENTITY AND M/S KAIZEN ENGG. SYSTEMS PVT. LTD. ASSESSMENT YEAR: 2009-10 8 CREDITWORTHINESS OF THE LENDERS AND THE GENUINENESS OF THE TRANSACTIONS BY FILING THE NECESSARY DOCUMENTS. RELIANCE IS PLACED ON FOLLOWIN G JUDICIAL PRONOUNCEMENTS. 1. DY. CIT VS. ROHINI BUILDERS (2002) 256 ITR 360 (GUJ)(HC) [SLP DISMISSED BY SC (2002) 254 ITR (ST.) 275 ] 2. CIT V. JAI KUMAR BAKLIWAL (2014) 366 ITR 217 ( RAJ.)(HC). 3. ORIENT TRADING CO. LTD. VS. CIT (1963) 49 ITR 723 (BOM)(HQ 4. CIT VS. CHANDELA TRADING CO. P. LTD. (2015) 37 2 ITR 232 (CAL.)(HC) 5. ACIT V. SANJAY M. JHAVERI (2015) 168 TTJ 751(MU M.)(TRIB.) 4.7 CONSIDERING THE EVIDENCE BROUGHT ON RECORD BY T HE APPELLANT COMPANY REGARDING THE LOANS TAKEN DURING THE YEAR THE EXPLANATIONS F URNISHED AND AFTER CONSIDERING THE CASE LAWS ON THE ISSUE THE ADDITION MADE BY THE AO IS FOUND TO BE UNWARRANTED. THEREFORE THE ADDITION OF RS.2 61 53 918 MADE U/S 68 OF THE ACT IS HEREBY DELETED. APPELLANT GETS RELIEF. GROUND NUMBER 1 TO 4 AND 10 ARE ALLOWED. CONSEQUENTLY THE INTEREST PAID AGAINST THESE LOANS WAS ALSO ALLOWED. AGGRIEVED THE REVENUE IS IN FURTHER APPEAL BEFORE US. 7. FROM THE AFORESAID FACTUAL FINDINGS RENDERED BY LEARNED FIRST APPELLATE AUTHORITY THE UNDISPUTED POSITION THAT E MERGES IS THAT LD. AO WITHOUT CALLING FOR REQUISITE INFORMATION FROM THE ASSESSEE CHOSE TO MAKE IMPUGNED ADDITIONS DURING ASSESSMENT PROCEEDIN GS. DURING APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED DOCUM ENTARY EVIDENCES TO DEMONSTRATE THE FULFILMENT OF PRIMARY INGREDIENT S OF SEC.68. THE CONFIRMATIONS OF THE LENDER BANK STATEMENTS INCOM E TAX RETURNS PAN ETC. WERE DULY FILED IN SUPPORT OF THE TRANSACTIONS . IT IS ANOTHER FACT THAT MOST OF THE LOANS HAS BEEN TAKEN EITHER FROM DIRECT ORS OR THEIR RELATIVES AND THEREFORE THE IDENTITY OF THE LENDER COULD NOT BE DOUBTED. THE CREDITWORTHINESS WAS ESTABLISHED BY ADDUCING THE BA NK STATEMENTS AS WELL AS INCOME TAX PARTICULARS. THE GENUINENESS GOT ESTABLISHED BY CONFIRMATION OF ACCOUNTS. SINCE THE ASSESSEE DISCH ARGED THE PRIMARY ONUS AS CASTED UPON HIM IN TERMS OF SEC. 68 OF PR OVING THESE TRANSACTION THE IMPUGNED LOANS COULD NOT BE TERMED AS ASSESSEES UNACCOUNTED MONEY. THEREFORE NO FAULT COULD BE FOU ND IN THE APPROACH M/S KAIZEN ENGG. SYSTEMS PVT. LTD. ASSESSMENT YEAR: 2009-10 9 OF LD. CIT(A) IN DELETING THE ADDITION U/S 68 AS WE LL AS INTEREST DISALLOWANCE. THE GROUND THUS RAISED BEFORE US STAN D DISMISSED. 8. THE LAST ADDITION U/S 36(1)(VA) WAS DELETED BY L D. CIT(A) BY RELYING UPON THE BINDING JUDICIAL PRECEDENT IN THE SHAPE OF DECISION OF HONBLE BOMBAY HIGH COURT IN CIT V/S HINDUSTAN ORGANIC CHEMICALS LTD. (366 ITR 1). SINCE NO CONTRARY DECISION IS ON RECORD OUR INTERF ERENCE IS UNCALLED FOR. GROUND NO.6 STAND DISMISSED. CONCLUSION 9. THE APPEAL AS WELL AS CROSS-OBJECTIONS STAND DIS MISSED. ORDER PRONOUNCED ON 04 TH MARCH 2021 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04/03/2021 SR.PS:-JAISY VARGHESE '# $# / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. + $- - / DR ITAT MUMBAI 6. ./0 / GUARD FILE / BY ORDER / (DY./ASSTT.REGISTRAR) / ITAT MUMBAI.