M/s. Food Pharma India Pvt. Ltd. v. The Income Tax Officer 6 (2) (3), Mumbai
[Citation -2016-LL-1007-84]

Citation 2016-LL-1007-84
Appellant Name M/s. Food Pharma India Pvt. Ltd.
Respondent Name The Income Tax Officer 6 (2) (3), Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 07/10/2016
Assessment Year 2008-09
Judgment View Judgment
Keyword Tags application for adjournment • deduction of tax at source • assessment proceeding • partial disallowance • professional charges • business of trading • processing of food • unaccounted income • motor car expenses • transport charges • unexplained cash • business purpose • succeeding year • capital account • unsecured loan • interest paid • loans in cash • cash payment • tax payment
Bot Summary: Needless to say, as revealing from the impugned order, the appellant did not furnish any evidence before the A.G. in this regard and also did not justify the reasons for not availing the opportunity before the A.O. During the appellate proceedings, the appellant attempted to treat these payments as salary payments on the basis of untenable and false evidences in the form of 'appointment letters'. 4.1.2 Warehousing expenses- The A.O. observed that the appellant had claimed warehouse expenses of Rs.85,028/- in which the appellant had included a sum of Rs.60,OOO/- on account of repairs maintenance charges, for which the appellant could not produce any original document(s)/ bill(s), except for ledger account and that the appellant could not even explain this journal entry of Rs.60,OOO/-. 4.1.3 Repairs maintenance- The A.O. observed that the appellant had claimed to have incurred a sum of Rs.1,13,862/- under this head. However, the appellant could not produce any original document / bills, except for ledger account. 8 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO 4.1.4 Professional expenses- The A.O. observed that out of the expenditure of Rs.1,77,850/-, the appellant has incurred the sum of Rs.30,OOO/- only by cheque and the balance expenditure of Rs.1,47,850/- has been incurred in cash only and the appellant could not even produce any original bill(s) or any other supporting documentary evidence so as to clarify the reason of making such payment of RS.1,47,850/-. Even during the present proceedings; the appellant has brought on record merely ledger accounts, which cannot be stated to be the primary evidences to justify claims made by the appellant, especially when all these payments are stated to have been made in cash only. Except for contending that the appellant has to incur such expenses and that the payment to labour is an essential and vital for its business, the appellant could not substantiate its claim with any cogent piece of evidence. The learned A.R. of the appellant emphasized that all these loans are raised for the genuine business need of the appellant and the same are of the amount not exceeding Rs.20,OOO/- each.


IN INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, AM AND SHRI SANDEEP GOSAIN, JM I.T.A. No. 1804/Mum/2014 ( Assessment Year: 2008-09) M/s. Food Pharma India Pvt. Ltd. A- Income Tax Officer 6 (2) (3), 200, 1st Floor, TTC Industrial Area, Mumbai. MIDC, Khairne, Vs. Navi Mumbai-400 705. PAN/GIR No. AAACF 4694A ( Appellant) : (Respondent) Appellant by : None Respondent by : Shri Radha Katyal Narang : 03/10/2016 Date of Hearing : 07/10/2016 Date of Pronouncement O R D E R Per Sandeep Gosain, Judicial Member: Present Appeal has been filed by assessee against order of Commissioner of Income Tax (Appeals)- 12, dated 22.01.2014 on grounds of appeal mentioned herein below. 2 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO 1. Under facts and circumstances of case and in law, Learned Commissioner of Income Tax (Appeals), erred in upholding disallowance of below mentioned expenses of Rs. 4,95,185/ - u/ s 40 (a) (ia) of Income Tax Act, 1961, being alleged expenses on which TDS was required to be deducted ignoring submission and explanations made by Assessee. i. Rent expenses of Rs.3,00,000/-. ii. Accounting Charges of Rs.65,000/- paid to two employees by allegedly terming them as Professional Fees. iii. Salary paid of Rs.45,000/- by allegedly terming them as Legal Expenses. iv. Accounting Charges of Rs.55,185/-. v. Transport Charges of Rs.30,000/- 2. Under facts and circumstances of case and in law, Learned Commissioner of Income Tax (Appeals), erred in upholding disallowance of below mentioned expenses of Rs. 8,51,774/- u/s 37 (1) of Income Tax Act, 1961, being alleged expenses not wholly and exclusively incurred for business purpose ignoring submission and explanations made by Assessee. i. Water Charges of Rs.79,078/-. ii. Warehousing Expenses of Rs.60,000/-. iii. Transport Charges of Rs.1,79,100/-. iv. Repairs & Maintenance Expenses of Rs.88,466/- v. Professional Expenses of Rs.29,750/-. vi. Processing Expenses of Rs.3,67,406/- vii. Packaging Expenses of Rs.31,170/- viii. Motor Car Charges of Rs.14,118/- ix. Brokerage /Commission Expenses of Rs.32,436/- 3. Under facts and circumstances of case and in law, ,the Learned Commissioner of Income Tax (Appeals), erred in upholding disallowance of labour charges of Rs. 4,93,570/- u/s 37 (1) of Income Tax Act, 1961, being alleged expenses not wholly and exclusively for business incurred purpose ignoring submission and explanations made by Assessee. 4. Under facts and circumstances of case and in law, Learned Commissioner of Income Tax (Appeals) , erred in upholding disallowance of unsecured loans of Rs.7,72,001/- u/s 68 of Income Tax Act, 1961, by considering such loans as alleged unexplained loans ignoring submission and explanations made by Assessee. 5. Appellant craves leave to add, amend, modify, alter or delete any of above grounds of appeal. 3 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO 2. brief facts of case are that Assessee Company is in business of trading and processing of food grains, spices, natural gums etc. assessee has also developed property at New Mumbai. return of income for A.Y. 2008-09 was filed on 02.10.2008 declaring total income at Rs. Nil. return was processed u/s 143(1) and case was selected for scrutiny. After serving statutory notices and seeking reply of assessee, AO passed order of assessment dated 30.12.2010 thereby making additions/ disallowances u/s 40(ia) of Rs.4,95,185/-, u/s 37(1) of Rs.8,51,774/-, cash payment u/s 37(1) of Rs.4,93,570/- and addition on account of unsecured loan of Rs.7,72,001/-. 3. Aggrieved by order of AO, assessee filed appeal before CIT(A) and CIT(A) after considering case of assessee dismissed appeal of assessee vide order dated 22-01-2014. 4. Aggrieved by order of CIT(A), assessee filed present appeal before us on grounds mentioned herein above. 5. At very outset, it is noticed that even in spite of several notices, none has appeared on behalf of assessee and on perusal of order sheet we have noticed that nobody was appearing on behalf of assessee. or dates were being sought by moving applications. Even today assessee has not preferred to appear and even no application for adjournment was moved. On other hand ld. DR is present in court and is ready with arguments. Therefore we have decided to proceed with 4 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO hearing of case ex-parte with assistance of ld. DR and material on record. Ground No.1 6. We have heard ld. DR and we have also perused material placed on record as well as orders passed by revenue authorities. Before we decide merits of case it is necessary to evaluate orders passed by CIT(A) while dealing with issue operative para is reproduced below: 3.2 Findings & decision thereon- From Ground No.1, it is noticed that appellant has challenged disallowance u/s.40(a)(ia) in respect of rent, professional charges and legal charges. Thus, in its 1st Ground of Appeal, appellant has not agitated disallowance u/s.40(a)(ia) of Act in respect of accounting charges of Rs.55,185/- and transport charges of Rs.30,000/-, which are also part of disallowance made by A.O. u/s.40(a)(ia) of Act. However, in Additional Grounds of Appeal filed in complex manner, which are in form of general averments, appellant has stated in general manner that A.G. had erred in making disallowances of expenses u/s.40(a)(ia) of Act. During appellate proceedings, learned A.R. has net brought on record any material to rebut findings of learned A.O. It is undisputed that in spite of two opportunities provided by learned A.O., as specifically mentioned in impugned order, appellant did not care to explain queries raised by A.O. Even during appellate proceedings, learned A.R. failed to explain same. In his Paper Book, learned A.R. furnished no deduction certificate in name of some other assessee and pleaded that rent of Rs.3,00,000/- paid to Kalyanji Walji Private Limited did not fall within purview of provisions of Section 194-I of Act, contention of learned A.R.' is not acceptable for reason that said Certificate did not pertain to appellant and also not furnished before A.O. in spite of sufficient opportunities. Regarding professional expenses of Rs.65,000/- paid to Mr.Vikram Gaikwad, learned A.R. relied upon page No.81 & 82 of his Paper Book, which reveals appointment letter of Mr.Vikram Gaikwad and that of his wife. learned AR. could not establish that these evidences were furnished before A.O. Moreover, as per appointment letter relied upon by learned AR., Mr.Vikram Gaikwad was appointed OR 01.02.2008 (i.e. only for last 2 months of financial year) at monthly salary of Rs.17,500/- whereas instant payment involves amount of Rs.65,OOO/-. 5 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO learned A.R. was asked to furnish necessary evidence as to professional tax payment to Maharashtra Government in respect of employment of Mr.Vikram Gaikwad, if any. learned A.R. could not furnish any evidence as to payment of professional tax, which can establish that impugned payment was made as and by way of salary. Moreover, page No.94 of Paper Book, ledger account clearly establishes that payments to Mr.Vikram Gaikwad were on account of professional expenses. In said ledger account titled as 'professional expenses', there are various payments made to advocates / professionals, which also includes instant payment made to Mr.Vikram Gaikwad. Therefore, contention of learned AR is false in so far as it .Is evident from ledger account itself, which is relied upon by learned A.R., that this payment of Rs.65,OOO/ - is in form of 'professional fees' only and not 'salary'. Accordingly, disallowance on this count is also justified. same facts apply in case of legal expenses of Rs.45,OOO/- paid to Mr.Vijay Devji, which is evident from ledger account titled as 'legal expenses'. Accordingly, disallowance on this count is also justified. Similar facts apply to accounting charges of Rs.55,185/- paid to Mr.Gangaram. ledger account titled 'accounting expenses' clearly reveals that they are in nature of professional fees for accounting services. Accordingly, disallowance u/s.40(a)(ia) of Act is justified for reason of non- deduction of tax qt source on these payments. Needless to say, as revealing from impugned order, appellant did not furnish any evidence before A.G. in this regard and also did not justify reasons for not availing opportunity before A.O. During appellate proceedings, appellant attempted to treat these payments as salary payments on basis of untenable and false evidences in form of 'appointment letters'. As discussed hereinabove, ledger accounts clearly reveal true nature of payments. During appellate proceedings, learned A.R. was specifically asked to furnish evidences in respect of professional tax payments and return of professional tax in respect of employment of these persons, which he could not furnish. Having regard to all these facts, disallowance made by A.D. invoking provision of .Section 40(0)(ia) of Act, is sustained. It would be worth to mention here that by virtue of non- cooperation by appellant before A.O., appellant had prevented A.G. to examine genuineness of these expenses in detail and also as to whether these expenses were incurred for purpose of business of appellant company. These facts as whole lead' to adverse inference as' to genuineness of expenses and also as to whether such expenses were incurred for purpose of business at all. For this reason also, expenses claimed by appellant are not allowable per se. 6 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO No new circumstance have been brought on record before us in order to controvert or rebut findings recorded by learned CIT (A). Moreover, there are no reasons for us to deviate from findings recorded by learned CIT (A). Therefore, after hearing DR and analyzing impugned order we are of considered view that findings recoded by learned CIT (A) are judicious and well reasoned. Accordingly, we uphold same and dismiss this ground of appeal. Ground No.2 7. CIT(A) has dealt with this issue in its order and operative para is reproduced below for sake of reference: 4. Point No.2 - Ground No.2-Disallowance u/s.37(1) amounting to Rs.8,51,774/- 4.1 A.O. made disallowance u/s.37(1) of Act amounting to Rs. 8,51,774/-, which includes expenses claimed in respect of water charges of Rs.79,078/-, warehousing expenses of Rs.60,OOO/-, transport charges of Rs.1,79,100/-, repairs & maintenance of Rs.88 ,466/ -, professional expenses of Rs.29 ,750/ -, processing expenses of Rs.3,67,406/-, packing charges of Rs.31,170/-, motor car charges of Rs.14,118/- and brokerage / commission of Rs.32,436/-. 4.1.1 Vide para 6 of impugned order, A.O. observed that on being asked to produce original books of account and original bills and vouchers for verification, appellant's A.R. produced self-made vouchers only and that no original bills and vouchers were produced. A.O. observed that except for electricity and telephone expenses, no 'bills in respect of any other head of expense were available with appellant. appellant had only self-made vouchers where cash payment was made and some of those vouchers were either signed or thumb-impressed by receiving parties, veracity of which was not at all verifiable and that most of them were even not signed or vouched. A.O. further observed that all were computer generated vouchers, giving short narrations and amount of cash paid. 4.1.1 Water charges- 7 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO A.O. observed that appellant had made cash payment of Rs.79,078/- to private party viz. Kalyanji Walji & Co. towards water charges. A.G. observed that appellant could not explain as to how payment on account of water charges has been made to private part'!. Therefore, A.G. disallowed same u/s.37(l) of Act as having been incurred not wholly and exclusively for purpose of business. 4.1.2 Warehousing expenses- A.O. observed that appellant had claimed warehouse expenses of Rs.85,028/- in which appellant had included sum of Rs.60,OOO/- on account of repairs & maintenance charges, for which appellant could not produce any original document(s)/ bill(s), except for ledger account and that appellant could not even explain this journal entry of Rs.60,OOO/-. Therefore, A.G. disallowed sum of Rs.60,OOO/- u/s.37(1) of Act as having been incurred not wholly and exclusively for purpose of business. 4.1.2 Transport charges- appellant could not produce original bills in respect of transport charges shown as 'payable'. A.O. observed that these amounts ought to have been accounted for under head 'sundry creditors', however, it was explained by appellant before A.O. that it was erroneously. shown under head 'unsecured loans'. On being asked to produce original bills, it was stated that there are no actually not been paid during year and moreover all payments are just below amount applicable for TDS. Therefore, A.O. drew adverse inference as to non-genuine character of such expenses. Hence, A.O. made disallowance @ 50% of these expenses, invoking provision of Section 37(1) of Act. 4.1.3 Repairs & maintenance- A.O. observed that appellant had claimed to have incurred sum of Rs.1,13,862/- under this head. However, appellant could not produce any original document / bills, except for ledger account. appellant could not explain as to how and why sum of Rs.80,OOO/- has been paid under this head to Kalyanji Walji Private Limited. Therefore, A.O. made disallowance of said sum of Rs.8O,OOO/- for non-verifiability of this expenditure and also for noncompliance of TDS provisions. Further, out of balance sum of Rs.33,862/- [1,13,862 - 8O,OOO], A.O. mad disallowance @ 25% thereof, amounting to Rs.8,466/-. Thus, A.O. made disallowance totaling Rs.B8,466/- on this count. 8 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO 4.1.4 Professional expenses- A.O. observed that out of expenditure of Rs.1,77,850/-, appellant has incurred sum of Rs.30,OOO/- only by cheque and balance expenditure of Rs.1,47,850/- has been incurred in cash only and appellant could not even produce any original bill(s) or any other supporting documentary evidence so as to clarify reason of making such payment of RS.1,47,850/-. Therefore, AO. made disallowance @ 20% of these expenses, amounting to Rs.29,5701-, for want of due verification. 4.1.5 Processing expenses- AO. observed that appellant had claimed to have made payment under this head amounting to Rs.7,34,812/- to 16 different persons, which are just below minimum amount applicable for TDS provisions. A.O. observed that these payments have not been actually made during year but same are shown as payable under head 'unsecured loans' instead of 'sundry creditors'. appellant could not bring on record any documentary evidence in original, except for ledger account. Therefore, A.O. made disallowance on this count @ 50% of expenses claimed, amounting to RS.3,67,406/-, for want of due verification. 4.1.6 Packing charges- AO. observed that out of sum of Rs.1,66,777/- claimed under this head, appellant had made only payment of Rs.10 ,927/ - and balance sum of Rs.1,55 ,850/ - was payable. A.O. observed that appellant could not produce original bills to substantiate claim. Therefore, 'the A.O. made disallowance on this count @ 20% of such expenses, amounting to Rs.31,170/- for want of verification of original documents. 4.1.7 Motor Car expenses- A.O. observed that as no bills could be produced by appellant in respect of its claim of motor car expenses of Rs.70,589/-, he made disallowance @ 20%, amounting to Rs.14,118/-. 4.1.8 Brokerage & commission expenses- A.O. observed that appellant could not file any details with regard to these expenses amounting to Rs.1,62,182/- and that all these payments remain 9 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO unpaid as at end of year. Therefore, in absence of any detail or documentary evidence in support thereof, A.O. made disallowance on this count @ 20% of these expenses, amounting to Rs.32,436/-. Thus, A.O. made total disallowance of Rs.8,51,774/- u/s.37(1) (including Rs.80,OOO/- u/s.40(a)(ia) of Act for expense claimed under head 'repairs & maintenance expenses'), which comprised of disallowances under different heads discussed heretofore. 4.2 A.O. has made partial disallowances in respect of appellant's claim under different heads of expenses. A.O. has categorically stated in impugned order that appellant could not substantiate its claims by producing relevant original documentary evidences. Even during present proceedings; appellant has brought on record merely ledger accounts, which cannot be stated to be primary evidences to justify claims made by appellant, especially when all these payments are stated to have been made in cash only. Further, appellant also could not bring on record documentary evidence with regard to deduction of tax at source in respect of disallowance of Rs.8O,OOO/- claimed under head repairs and maintenance expenses'. Thus, appellant could not rebut findings of learned A.O. in course of present proceedings. Therefore, I do not find any reason to interfere in action of A.O. of making disallowance of various expenses totaling Rs.8,51,774/- u/s.37(1) of Act. Thus, Ground No.2 of Appeal stands dismissed. No new circumstance has been brought on record before us in order to controvert or rebut findings recorded by learned CIT (A). Moreover, there are no reasons for us to deviate from findings recorded by learned CIT (A). Therefore, after hearing DR and analyzing impugned order we are of considered view that findings recoded by learned CIT (A) are judicious and are well reasoned. Accordingly, we uphold same. Resultantly, this ground raised by Revenue stands dismissed. 10 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO Ground No.3 8. CIT(A) has dealt with this issue in its order and operative para is reproduced below for sake of reference: 5. Point No.3 - Ground No.3 - Disallowal1ce u/s.37{1) of Rs.4,93,570/- in respect of labour charges paid in cash- 5.1 A.O. observed that appellant had claimed direct expenses under labour charqes of Rs.14,88,040/-, lobour charges balance of Rs.7,72,471/- and labour expenses of Rs.2,52,340/-. appellant filed only ledger account of all these expenses. appellant could not produce original bills / vouchers for same. appellant merely produced computer generated vouchers, some of which are signed / thumb impressed and most of them are blank. All these payments are stated to have been paid in cash. Except for contending that appellant has to incur such expenses and that payment to labour is essential and vital for its business, appellant could not substantiate its claim with any cogent piece of evidence. A.O., therefore, concluded that it is difficult 1'0 verify as to how appellant keeps control over incurrence of such expenditure and as to how these expenses could be verified by their auditor or by revenue authorities. A.O. observed that appellant, having gross turnover of more than RS.5 crore, has to have some checks and balances so far as such expenses are concerned, Therefore, A.O. made disallowance of Rs.4,93,570/- being 20% of total expenses of Rs.24,67,851/- claimed by appellant under this head. 5.2 This is adhoc disallowance @ 20% of expenses of Rs.24,67,851/- claimed under head 'labour charges'. On being specifically asked for by A.O., appellant could not substantiate its claim with documentary evidence in form of original bills / vouchers. Even during appellate proceedings, appellant merely furnished ledger accounts to substantiate its claim. Moreover, ledger accounts reveal payments in cash for a" payments. If payments are made on account of labour charges, there has to be statutory registers / records, which are required to be maintained under provisions of Labour Laws, viz. Minimum Wages Act, 1948, Payment of Wages Act, 1936 and Contract Labour (Regulation and Abolition) Act, 1970. In given facts and circumstances, genuineness of these claims cannot be verified in absence of relevant documentary evidence. However, A.O. has taken lenient view by making only partial disallowance on this count. Thus, appellant could not rebut findings of learned A.O. in course of present proceedings. Therefore, I do not find any reason to 11 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO interfere in action of A.O. of making disallowance on this count. Thus, Ground No.3 of Appeal stands dismissed. No new circumstance have been brought on record before us in order to controvert or rebut findings recorded by learned CIT (A). Moreover, there are no reasons for us to deviate from findings recorded by learned CIT (A). Therefore, after hearing DR and analyzing impugned order we are of considered view that findings recoded by learned CIT (A) are judicious and well reasoned. Accordingly, we uphold same and dismiss this ground of appeal. Ground No.4 9. CIT(A) has dealt with this issue in its order and operative para is reproduced below for sake of reference: 6. Point No.4 - Ground No.4 - Addition of Rs.7, 72, 001/- on account of unexplained loans u/s.68 of Act- A.O. observed that appellant had claimed 'unsecured loans at Rs.2,63 ,24,893/ . A.0., asked appellant to substantiate claim, having regard to identity end creditworthiness of lenders vis-a-vis genuineness of transactions. appellant was specifically asked to furnish copy of lenders' acknowledgement of returns of income filed for year as well as for year in which such loans had been brought in books, certified cop)' of their Balance Sheet, Profit & Loss Account, Capital Account, Income & Expenditure Account of year as well as of year in which such amount was brought to books, copy of bank statements with bank book I narration of entries of complete financial year in which amount was given by them to appellant. In response, appellant merely filed certain confirmations and stated names of 119 persons with respective amounts of unsecured loans. appellant contended before A.G. that amounts due to certain parties were for supply of goods and services and not for any financial dues but these were wrongly taken under head 'unsecured loons'. appellant further contended that all these creditors are genuine and bonafide and have 12 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO been fully paid in succeeding year and that there are no-balances outstanding in their names. 6.1.2 A.O. did not find- explanation of appellant as satisfactory and, therefore; made addition of Rs:7,72,OO/- being unexplained unsecured loans, invoking provision of Section 68 of Act. A.O., vide para 6.3 of impugned order, observed that out of unsecured loans of Rs.2,63,24,8921-, fresh loans during year stood at Rs.52,38,206/-, out of which Rs.31,78,452/- were bank loans during year. Thus, there remained balance sum .otRs.20,59,754/- out of which appellant had claimed sundry expenses wrongly claimed under head 'unsecured loans' amounting to Rs.12,87,753/-. Thus, considering this plea of appellant, A.O. made net disallowance at Rs.7,72,001/- [20,59,754 - 12,87,753]. relevant portion of A.O s finding in para 6.2 of impugned order is reproduced hereunder; "As can be seen instead of filing proof as called for, assessee has made empty statement of genuineness of loans. To top it all, it has on second last date of time limit, submits that it be conveyed of any further information or explanation which may be required It is travesty. It has been explained that certain expenses debited in P&L A/c and are not paid has wrongly been shown as unsecured loans instead of same being shown as sundry creditors. details filed during assessment proceeding - although not verifiable for absence or non-production of original bills - confirm explanation of assessee. Hence, same is considered. Thus, A.O. made net addition of Rs.7,72,001/- u/s.68 of Act. 6.2 During appellate proceedings, learned A.R. of appellant furnished photocopies of confirmations of loan parties, which were also brought on record before A.O. However, A.O. held that merely furnishing 'the confirmations of loan parties does not suffice as genuineness of transactions 'Vis-a- vis creditworthiness of loan parties cannot be verified merely on basis of confirmations of loan' parties e , During appellate proceedings, appellant has contended that its business compels it to raise such immediate cash loans from immediate business circle and that generally these loans are hand loans from close circles and are repaid in due course when fund is available with it. learned A.R. of appellant emphasized that all these loans are raised for genuine business need of appellant and same are of amount not exceeding Rs.20,OOO/- each. It is undisputed that appellant had raised such loans in cash from different parties, for which appellant could not produce relevant documentary evidences called for by A.O., such as loan parties' acknowledgement of returns of income filed for year as well as for year in which such loans had been brought in books, certified copy of their Balance Sheet, Profit & Loss Account, Capital Account, Income 13 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO & Expenditure Account of year as we" as of year in which such amount was brought to books, copy of bank statements with bank book / narration of entries of complete financial year in which amount was given by them to appellant. appellant also could not bring on record any documentary evidence with regard to interest paid / payable to any of such parties during year or subsequent year(s), despite specific query raised during present proceedings. In response, appellant merely filed certain confirmations and stated names of 119 persons with respective amounts of: unsecured loans. Even, in present proceedings, appellant could not bring on record relevant documentary evidences, which it could not produce before A.O. Thus, in absence of same identity and creditworthiness of loan parties vis-a-vis genuineness of transactions cannot be verified even at appellate stage. All these facts as whole clearly establish that neither financial capacity of alleged lenders nor genuineness of transactions stand proved. On contrary, it immensely transpires that it is used as tool of money laundering to camouflage unaccounted income of appellant under garb of "loans". It is established proposition of law that for valid credit, financial capacity of contributor / giver has to be established beyond doubt. Similarly, genuineness of such transactions has to be established which can be ascertained from surrounding circumstances and financial capacity of creditors. Thus, in light of .aforesaid facts, r do not find any reason to interfere in action of A.O. of making addition of Rs.7,72,OO1/- treating cash loans as unexplained cash credits purported to have been sourced through cash loans obtained from various parties. I, therefore, uphold addition of Rs.7,72,OO1/-. Thus, Ground No.4 of Appeal stands dismissed. No new circumstance have been brought on record before us in order to controvert or rebut findings recorded by learned CIT (A). Moreover, there are no reasons for us to deviate from findings recorded by learned CIT (A). Therefore, after hearing DR and analyzing impugned order we are of considered view that findings recoded by learned CIT (A) are judicious and well reasoned. Accordingly, we uphold same and dismiss this ground of appeal. 14 ITA No. 1804/Mum/2014(A.Y. 2008-09) M/s. Food Pharma India Pvt. Ltd. vs. I TO 10. In result, assessee s appeal is dismissed. Order pronounced in open court on 7th October, 2016. Sd/- Sd/- (Jason P. Boaz) (Sandeep Gosain) Accountant Member Judicial Member Mumbai; Dated :07.10.2016 Ps. Ashwini Copy of Order forwarded to : 1. Appellant 2. Respondent 3. CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai M/s. Food Pharma India Pvt. Ltd. v. Income Tax Officer 6 (2) (3), Mumbai
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