TaxTMI 
TaxTMI 
TaxTMI 
2019 (5) TMI 1442
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....t and, therefore, the judicial decisions relied upon by both the representatives will be considered, if we find parity in the facts with the facts of the case in hand. 5. Facts emanating from the records show that the assessee company is engaged in teaching students accommodated by the National Institute for Entrepreneurship and Small business under the Ministry of Micro, Small and Medium Enterprises, Government of India. The return of income for the year was filed on 16.02.2013 which was selected for scrutiny assessment and, accordingly, statutory notices were issued and served upon the assessee. 6. During the course of scrutiny assessment proceedings, the AO found that the assessee has received unsecured loans amounting to Rs. 1.14 crores from the following companies: S.No. Name of Lenders Amount 1. M/s AVS Alloy India Pvt. Ltd. 6,50,000/- 2. M/s PHV Securities Pvt. Ltd. 22,50,000/- 3. M/s Royal Mirage Financial Consultant Pvt. Ltd. 35,00,000/- 4. M/s SNG Securities Pvt. Ltd. 30,00,000/- 5. M/s Super Sine Technologies Pvt. Ltd. 20,00,000/- Total 1,14,00,000/- 7. The assessee was asked to justify the unsecured loans in the light of the p....
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....ery nominal, and the annual turnover declared by these companies in their P&L account is in no way commensurate with the voluminous financial 13. Having observed as hereinabove, the AO further found that these lender companies are operated by one Shri Himanshu Verma who had admitted himself as entry provider in his statement recorded an oath by the Investigation Wing, Delhi during the course of search and seizure operation conducted on 29.03.2012. 14. The AO finally concluded by holding that the assessee has failed to discharge its onus of establishing the identity, genuineness and creditworthiness of the source of funds introduced in his books of account and added Rs. 1.14 crores u/s 68 of the Act. 15. Assessee carried the matter before the CIT(A) and once again furnished the relevant documentary evidences. The CIT(A) considered the submissions and the documentary evidences and examined each lender company as under: (a) "AVS Alloy India Private Limited The appellant company has received unsecured loan of Rs. 6,50,000/- from M/s AVS Alloy India Pvt. Ltd. The appellant company submitted the copy of bank statement, income tax return, PAN and audited financial statements for th....
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....plicant company in support of its claim. Confirmed ledger account of lender company as appearing in the books of accounts of the appellant has also been submitted. On perusal of balance sheet of the lender company it was noticed that the company has owned funds in the form of share capital, reserve & surplus of Rs. 12,85,25,493.27 and debt funds of Rs. 13,50,000/-. The appellant company has also submitted the copy of bank statement of the lender company with Axis Bank, Delhi and highlighted the amount received by it on account of unsecured loans. The particulars of the bank statement have been verified by the AO from the banker itself u/s 133(6) of the Act. There are no cash deposits in bank a/c of the lender company before issue of funds to the appellant. The lender company is assessed to tax under PAN AAECR6098N and has filed Income Tax Return of the year under consideration wherein gross total income of Rs. 62,414/- for the AY 2012-13 has been declared. (d) SNG Securities Private Limited] The appellant company has received unsecured loan of Rs. 30,00,000/- from M/s SNG Securities Pvt. Ltd. The appellant company submitted the copy of bank statement, income tax return, PAN....
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....iven by these companies to the assessee have been explained. 17. The CIT(A) further analyzed the statement of Shri Himanshu Verma and found that nowhere Shri Verma had stated to have given any accommodation entry in the form of unsecured loan to the assessee. After discussing certain judicial decisions, the CIT(A) deleted the addition. 18. We have also thoroughly examined the financial accounts of the five lender companies. At the very outset, we have to state that that income may be a good reason for examining the source of a person but it is certainly not the "be all end all". Let us take an example, if person is drawing salary of Rs. 10 lakhs p.a. and purchases a residential flat of Rs. 50 lakhs. Can merely on the basis of his income addition be made as unexplained investment? The answer is evidently "No" because that person may have taken housing loan of Rs. 40 lakhs to purchase the residential flat. 19. By the same analogy on examining the balance sheet of each of the lender company which are exhibited from pages 233 to 330 of the Paper Book. We find that each of the lender company has generated either short term borrowings or have liquidated current assets which are more ....