TaxTMI 
TaxTMI 
2020 (7) TMI 566
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....tails were called for and submission of the assessee was received. The Assessing Officer thereafter observed that from the details furnished and on going through the Balance Sheet of the assessee, it was seen that during the years under consideration, the assessee had inter alia received following unsecured loans from financial year 2005-06 to financial year 2011-12 tabulated as below:- Unsecured loans introduced in A.Y. 2006-07 to 2012-13 S.No. Name 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 Rajesh Poddar HUF 103892792 73234516 145195000 3100000 650000 74169250 2 Dhanidevi Processors Pvt. Ltd. 851597 3 Indian Tube Traders 3650000 4 Shree Ram International 808036 5 Ganayaka Steels Pvt. Ltd. 20320000 900000 10000 6 S.B. Metal 3600000 7 Varun Sales Pvt. Ltd. ....
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....ot been established by the assessee. In view of the same, the assessee was asked to explain and show cause as to why loans standing in books of assessee from the parties as stated above should not be treated as unexplained cash credits u/s.68 of the I.T. Act, 1961. Thereafter the Assessing Officer further observed that during the course of assessment the assessee has submitted that these are loans taken by the assessee from various companies which are not having any source of their own. The Assessing Officer referred to the relevant extract from the reply of the as under :- "In respect of loan received from following parties; 1. Rajesh Poddar HUF 2. Dhanidevi Processor Pvt. Ltd 3. Indian Tube Traders 4. Shree Ram International 5. Ganayaka Steel Pvt. Ltd. 6. S.B. Metal 7. Varun Sales Pvt. Ltd. 8. Ajaydev Steels 9. Bhavna Ispaat Pvt. Ltd. 10. Shivam Ispaat 11. V.K. Shah Steels Pvt. Ltd. 12. Pawanjyoti Steels Pvt .Ltd. 13. Bride Steels It is sub mitted that unsecured loan received from the above mentioned parties during the period from 2005-06 to 2011-....
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....ring the year) 2010-11 5,25,03,957 (received during the year) 2011-12 - 2012-13 7,51,79,250 (received during the year) 6. Thereafter the Assessing Officer held that without prejudice to the above the amount is taxable in hands of the assessee as deemed dividend u/s. 2(22)(e) of the Act. For this the Assessing Officer stated that the assessee in its submission has stated that the money is routed through various bogus entities as unsecured loans in balance sheet of the assessee and these loans are actually the money of Loha Ispaat Ltd. The Assessing Officer further noted that Loha Ispaat Ltd. is not a company in which public are substantially interested. He noted that the assessee is holding beneficial ownership of shares in the company. He noted that for the concerned assessment year there were sufficient accumulated profits. Thereafter the Assessing Officer observed that the loans have been taken by the assessee through the conduit of the dummy companies. He referred to the decision of Hon'ble Supreme Court in the case of CIT, Kolkata Vs. Mukandray Shah (209 ITR 433). That in such circumstances provisions of section 2(22)(e) of the Act shall apply. Hence, h....
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....as obtained from assessee confirming the same. 9. Against this order the assessee is in appeals before us. 10. We have heard both the counsel and perused the records. Learned counsel of the assessee submitted that the assessee has already stated during the course of assessment itself that money has originated from the company Loha Ispaat Ltd. That the amount has already been added in the hands of the Loha Ispaat Ltd. He submitted that the entire amount which has been taxed on substantive basis in this year in the hands of Loha Ispaat Ltd. and taxed again on the assessee on substantive basis. Hence, he submitted that same amount cannot be again added. He submitted that in the statement submitted by the assessee, the assessee has himself stated that this amount has been sourced from Loha Ispaat Ltd. and has been further introduced in Loha Ispaat itself. Learned counsel submitted that the authorities below are relying upon the assessee's statement that the source of this loan cannot be proved in as much as it was sourced from Loha Ispat Ltd. However, they are rejecting the statement given by the assessee in the same breath that this amount has come from Loha Ispaat Ltd. and have....
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.... year. On a perusal of the aforesaid orders, we have noticed that these orders have been passed after completion of the assessment in case of the assessee. Moreover, prima-facie, it appears that they have not been submitted before the learned Commissioner (Appeals) either. Thus, these documents, in our view, have to be examined by the Departmental Authorities to find out whether they have bearing on the issue of genuineness of the unsecured loan. Further, the assessee should also get a fair opportunity to prove the genuineness of the loan transaction on the basis of aforesaid documentary evidence. Keeping this in view, we are inclined to restore the matter back to the file of the Assessing Officer for deciding afresh." 13. Referring to the above learned Departmental Representative submitted that the assessment made in the case of M/s Loha Ispat Ltd., Shri Rajesh Poddar (HUF) and M/s Dhanidevi Processors Pvt. Ltd. for the respective assessment years have an important bearing on the genuineness of the unsecured loans in the case of the assessee too, since the assessee has received loans from the aforesaid parties as well. He pointed out that these appeals are pending adjudicati....
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....,930 70,51,378 In addition to above M/s Loha Ispat Ltd. has admitted unaccounted sale of Rs. 3,28,810/- for F.Y. 2004-05 and Rs. 14,22,18,089/- for F.Y. 2011-12. Thus M/s Loha Ispaat Ltd. has declared unaccounted sales of Rs. 37,75,92,809/-, in total from F.Y. 2004-05 to F.Y. 2011-12 (Para 5.2,6 on Page 37 of the assessment order in the case of M/s Loha Ispaat Limited. 14. From the above he submitted that total funds available to Loha Ispaat Ltd. on account of undisclosed income from cash sales are much less and not adequate to explain the source of share application received from the assessee alone. That even the entire unaccounted cash sales cannot cover unsecured loan of the assessee. Thereafter learned Departmental Representative referred to the decision of Hon'ble Delhi High Court in the case of CIT Vs. Harjeev Aggarwal (70 taxmann.com 95) for the proposition that the statement recorded on oath u/s. 132(4) of the Act has evidentiary value. Finally learned Departmental Representative submitted that in the present case addition made by the Assessing Officer to the income of the assessee was exclusively and solely on the basis of the disclosure made by....
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....dition made by the Assessing Officer to the total income of assessee as unexplained cash credits, deserves to be sustained." 16. We have heard both the Counsel and perused the records. We note that assessment in this case has been framed pursuant to search and seizure action. Assessment up to AY 10-11 has been framed under section 153A of the income tax act. It is settled law that in such cases where assessment is not abated no addition can be made dehorse incriminating material seized in the search. We note that the assessing officer has referred that there is search action in Lodha Ispat group. However with regard to the issue of unsecured loans he has mentioned that it was from the details furnished and going through the balance sheet of the assessee he has found that assessee has received unsecured loans from financial year 2005-06 to financial year 2011- 12. Thereafter the assessing officer has referred that during search carried out in Loha Ispat group it was found that the company is also carrying on various transactions of purchases/sales/loans etcetera with the parties from whom assessee has obtained unsecured loan that the company on being confronted with huge evidence....
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....s very much conscious of assessee's grievance and he has adjudicated the same against the assessee for assessment year 11-12 and 12-13. However as he found that for the other assessment years no assessment is pending he observed that he is not going to adjudicate the issue in absence of a ground. In this regard we note that it is settled law that in the interest of justice issue can be raised before quasi judicial authorities without any specific ground raised in grounds of appeal. This is particularly so for legal ground. Moreover no tax can be levied except that leviable as per the provisions of law. It is also settled law that there is no estoppel as to law. If an amount is not exigible to tax as per the provisions of law the same cannot be brought to tax on the ground of concession or otherwise. Moreover as noted above this issue was very made before the learned CIT(A). 19. From the discussion above and observation of learned CIT(A) in this regard it is manifestly clear that the assessment years for assessment year 10- 11 and years preceding to this were not pending at the time of search. Hence assessment for these assessment years did not abate. Hence no addition in thes....
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.... a loan provider did not have their own source of fund. The loan so generated in the hand of assessee is forming part of accommodation transactions of sales & purchases of Loha Ispaat Limited." 21. The learned Departmental Representative in his submission has also stated that addition has been made exclusively and solely on the basis of disclosure made by the assessee himself and M/s. Loha Ispat Ltd. 22. From the above it is apparent that assessee has duly stated that above loans are results of accommodation/accommodation debtors in the books of Loha Ispat Ltd. The above statement has been interpreted by the assessing officer as acceptance that these parties who have provided the unsecured loan do not have their own source. In this regard there is no material on record as to on what basis the assessing officer is coming to the conclusion that these parties do not have source of their own other than the statement attributed to the assessee that these are accommodation entries originating from Loha Ispat. The Assessing Officer in his order stated that the assessee as MD of Loha Ispat in his stated during search has admitted that these concerns have provided loan by receiving ca....
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....ot obtained their financials and commented upon their creditworthiness on the basis of the financials. 27. We also note that the assessing officer was also himself aware of the real import of the assessee's statement wherein it was submitted that the unsecured loans have their origin in Loha Ispat Ltd. Hence assessee officer has made an alternative argu ment, though he has not made the addition under section 2 (22)e that the said sum is also liable to be taxed in the hands of the assessee under section2 22 e as deemed dividend. In this regard the assessing officer has placed reliance upon honourable Supreme Court decision in the case of CIT Vs. Mukundray K. Shah (Civil Appeal No. 1873 of 2007 dated 10.4.2007). 28. In this regard we note that the assessing officer's reliance upon the said decision of the Supreme Court is not applicable on the facts of the present case. In the said case investment by the assessee were discovered in search. Honourable Supreme Court has noted that the company had granted funds to the partnership firms where the concerned assessee was a partner and from current account of partner the assessee had received funds for these investments and the same w....