TaxTMI 
TaxTMI 
2020 (7) TMI 281
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....firmed by the ld. CIT (Appeals) of Rs. 5 crores under Section 68 of the Act being loan received by the assessee during the year from M/s . Maharasaa Visions Pvt Ltd on 18/09/2015 holding that assessee failed to establish the creditworthiness of the lender and genuineness of the transaction. 03 The brief facts of the case shows that the assessee is a company engaged in the business of real estate development deriving income from business as well as other sources. The assessee filed its return of income on 13.10.2016 declaring income of Rs. 4,32,810/-. Revised return was also filed on 18.02.2017 declaring income of Rs. 15,29,040/-. 04 During the course of assessment proceedings, ld AO made an addition of Rs. 5 crores on account of loan received from M/s. Maharaasa Visions Pvt. Ltd. on 18.09.2015 under Section 68 of the Act. The ld. Assessing Officer dealt with the whole issue as per under:- " Unsecured Loan : 4.1 A perusal of details filed by the assessee reveals that the assessee has availed a loan of Rs. 5,00,00,000/-(Rupees Five Crores only) from M/s Maharaasa Visions Private Limited on 18.09.2015. Vide notice u/$ 142(1) of the act dated 27.11.2018, the ass....
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....sion in the succeeding paragraphs. From evidence on record, it is seen that the assessee company has received unsecured loan from M/s Maharaasa Visions Pvt Ltd on 18.09.2015. It is seen that M/s Maharaasa Visions Pvt Ltd has filed return of income declaring Nil income for AY 2016-17. The lender company has no source of income and no income generating apparatus in place. Further, it is noted that source of M/s Maharaasa Visions Pvt Ltd is unsecured loan received from M/s MKT Investments Pvt Ltd. A perusal of bank account statement of M/s Maharaasa Visions Pvt Ltd bearing number 10927630000274 with FIDFC bank reveals that loan from M/s MKT Investments has been received on 07.09.2018. The account has negligible transactions. On the same day i.e. 07.09.2018, a cheque is issued in favour of M/s Supreme Build Cap Private Limited. The transactions in the said account over a period of 07.09.2018 to 18.09.2018 are reproduced below:- Date Narration Debit Credit Balance Balance as on 07.09.2015 2411 07.09.2015 Incoming funds from MKT Investments Pvt Ltd 50000000 50002411 07.09.2015 Cheque issued 50000000 2411 ....
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....llant was asked vide notice li/s 142(1) of the Act to prove genuineness of unsecured loan and creditworthiness of the lender. As there was no response the appellant was issued show cause notice as to why section 68 of the Act should not be invoked in relation to the unsecured loan transaction. 1 he AO carefully examined the reply to the show cause notice but found it unacceptable. On analysis of the evidences on record the AO noticed that the lender company M/s Maharaasa Visions Pvt. Ltd. had filed return of income declaring Nil income for AY 2016-17. the AO found that the tender company has no source of income and no income generating apparatus in place. The AO noted that source of M/S Maharaasa Visions Pvt. Ltd. is unsecured loan received from M/s MKT Investments Pvt. Ltd. A perusal of bank account statement of M/s Maharaasa Visions Pvt. Ltd. bearing number 10927630000274 with HDFC bank revealed that loan from M/s MKT Investments has been received on 07.09.2018. The AO further noticed that the said account has negligible transactions. On the same day i.e. 07.09.2018. a cheque was issued in favour of the appellant. On further perusal it is noticed that the said cheque was cancelle....
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....in issue raised by the AO in the assessment order. Neither during the assessment proceedings nor in the appellate proceedings, the appellant has been able to establish creditworthiness of the lender company. In the absence of creditworthiness of the lender the genuineness of the transaction is also not established. The AO has analysed the bank statements of the lender company M/s Maharaasa Visions Pvt. Ltd. and M/s MKT Investment Pvt. Ltd. and exposed the true nature of the transaction and conclusively held that the unsecured loan availed from M/s Maharaasa Visions Pvt. Ltd. was not genuine. In this connection reliance is placed on the following judgements : i. In the case of M/s Sanraj Engineering Pvt. Ltd. Vs CIT (ITA 79/2016) (Delhi) the Ilon'ble Delhi High Court held that addition made u/s 68 on account of unsecured loans was justified where initial onus of proving the creditworthiness of the lenders was not discharged by the asscssee. ii. In the case of PC1T Vs Bikram Singh [20171 85 taxmann.com 104 (Delhi)/(2017[ 250 Taxman 273 (Delhi)/]2017[ 399 ITR 407 (Delhi) the Hon'ble Delhi High Court held that even if a transaction of loan is made through cheque, ....
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.... of the Act is fully justified and therefore, addition of Rs. 5,00,00,000/- made by the AO under Section 68 of the Act on this account is confirmed. Accordingly, Ground Nos. 11 to 15 are dismissed. " 06 Thus, assessee, aggrieved has preferred this appeal. 07 The ld AR submitted that a. Assessee has received the above loan from M/s. Maharassa Visions Pvt. Ltd., which is one of the group concerns. b. Assessee has discharged its onus by providing the complete details with respect to the above company such as (1) Confirmation of the company, (2) Its annual accounts, (3) Its Income Tax returns and (4) The bank statement of the depositor, (5) Source of the funds received by the lender from MKT Investments Pvt Ltd (Another Group Company) with the annual accounts and bank statement of that party (MKT Investments P Ltd) who provided funds to the lender (6) source of the source of the funds is appellant itself, Assessee deposited money with MKT Investments Pvt Ltd which was given to the lender and in turn lender deposited with the assessee. Bank account/ statements of all these parties, audited accounts of all thes....
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....ssessee by lender. However as in the group concerns there were accounting entries at the time of receipt of money, same needs to be reversed, in next year assessee returned this money to lender, lender returned, money to MKT Investments and In turn MKT Investments returned money to the appellant. He explained the whole cycle of the fund movement. j. He submitted that as the project for which the company was formed by the group, did not fructify, there are no assets and liabilities of that company. Above Transactions were sole accounting entries in the books of the company as per above transactions explained. There was unsecured loan from the MKT Investments as Liability, Loans, and advances in assets to the appellant in the books of lender. He submitted that when the above flow of fund is seen, there is clear cut source of funds are available, It is not necessary that there should be income always or assets always with lender. In these peculiar circumstances, it is not. He also submitted that directors are also same group is apparent. He submitted that creditworthiness of the lender is qua transactions. Otherwise, a loss making company cannot give any loan to anybody. With....
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.... Subsequently, assessee returned the money to the lender, the lender returned money to the MK investments private limited and MKT investments private limited returned the loan taken from the assessee. Therefore, there is a complete trace of the transaction of the above loan received. To substantiate the above transaction the assessee has submitted a bank statement of the assessee, MKT Investments Pvt Ltd and lender i.e. Maharasaa Vision Pvt Ltd. The assessee by production of the balance sheet has shown that these are transactions from a group company and more precisely subsidiary of the appellant. It is shown by the balance sheet that appellant is owned by Mr Mithlesh Tripathy and his family as shareholders. Appellant company owns 51% share in the lender company as on 31st of March 2016. As on March 2015, in the lender company Mr. Mithlesh Tripathy and Mr Anmol Tripathy owned 50% each. From the above it is apparent that the year in which the loan was received the appellant company was holding 51% share in the lender company. In the balance sheet of the lender, it is apparently shown that there is an unsecured loan received from a related party i.e. MKT Investments Pvt Ltd and un....