TaxTMI 
TaxTMI 
2021 (1) TMI 678
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.... ITA No.736/Ind/2019 Assessment Year 2016-17 1.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 12,44,12,690/- made u/s 68 of the LT. Act, on the ground of cross examination, without appreciating the fact that the persons whose statements are relied upon in the assessment order are the very persons who own, control, manage, operate & run the assessee-group including the assessee-company; and therefore, in the name of natural justice, the assessee-group cannot claim to cross-examine itself. 2.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 12,44,12,690/- made uls 68 of the LT. Act, while insisting that since the lender parties were making some paper formalities, they are not dummy concerns. The Ld. CIT(A) has failed to appreciate that all the dummy/shell/bogus/paper/briefcase entities used to be perfect in papers; otherwise, how will they achieve their desired purposes. Therefore, genuineness of an entity cannot be judged by the heap of papers it has created, but only through its activities. 3.On the facts and in the circumstances of....
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....t of interest on alleged loans, and repayment of the alleged loans cannot make the transactions as genuine, when the activities of the entire group had been carried out in such a fashion to route and rotate the unaccounted cash. 7.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 12,44,12,690/- made u/s 68 of the LT. Act, in dismissing the reliance placed by the AO on various case-laws while ignoring the facts and circumstances of the case in its entirety. (ii) M/s Vyanktesh Plastics and Packaging Pvt. Ltd ITA No.737/Ind/2019 Assessment Year 2015-16 1.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 52,552/- made u/s 36(l)(va) of the LT. Act, while completely ignoring para-5 of the CBDT's Circular No. 2212015 dated 11th December 2015. 2.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 4,50,000/- out of total expenses claimed on account of power & fuel expenses, while completely ignoring the fact that with almost equal amount of claimed expenses, the production of corrug....
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.... order in the case of the assessee. 7.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 3,44,49,554/- made u/s 68 of the I.T. Act, while stating that nothing incriminating was found in the course of search and seizure and survey actions in the assessee-group, which could warrant such an addition. He has ignored that incriminating material/information were indeed found during such actions, and the same are elaborately discussed in the body of the assessment order while making the addition : 8.On the facts and in the circumstances of the case, the Ld. CJT(A) has erred in deleting the addition of Rs. 3,44,49,554/- made u/s 68 of the LT. Act, while not appreciating that merely making transactions through banking channels, payment of interest on alleged loans, and repayment of the alleged loans cannot make the transactions as genuine, when the activities of the entire group had been carried out in such a fashion to route and rotate the unaccounted cash. 9.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 3,44,49,554/- made u/s 68 of the I.T. Act,....
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....tural justice, the assessee-group cannot claim to cross-examine itself. 6 On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the aforesaid addition of Rs. 8,80,000/-, while insisting that since the lender party was making some paper formalities, it is not a dummy concern. The Ld. CIT(A) has failed to appreciate that all the dummy/shell/bogus/paper/briefcase entities used to be perfect in papers; otherwise, how will they achieve their desired purposes. Therefore, genuineness of an entity cannot be judged by the heap of papers it has created, but only through its activities. 7 On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the aforesaid addition of Rs. 8,80,000/-, while stating that the addition was made on the basis of guess work, assumption and presumption and on mere suspicion. He actually ignored that the very content of the assessment order establishes beyond doubt that the lender company was a dummy/shell/bogus/paper/briefcase entity, and the assessee's claimed transactions with it was merely an eye-wash. 8 On the facts and in the circumstances of the case, the Ld. CIT(A) erred ....
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....as called out from the records are that the assessee is a company and stated to be a food processing concern, engaged in manufacturing of various food stuffs. The assessee is one of the various entities of Shriji Polymers (India) Ltd. Group in which search and seizure operations u/s. 132 were carried out by the DDIT(Inv.)-II, Indore on 27/07/2017. However, in the case of the assessee, only survey proceedings u/s. 133A were initiated on the same day. The assessee filed its original return of income on 17/11/2016 declaring total income at Rs. Nil and claiming current year loss at Rs. 1,19,76,320/-. Subsequently, the assessee furnished a revised return on 22/08/2017 declaring total income at Rs. Nil and reducing the current year loss at Rs. 23,07,528/-. In pursuance of the revised return filed by the assessee, the case got selected for Limited scrutiny under CASS and accordingly, Notices u/s. 143(2) of the Act were issued by the ACIT - 1(1), Indore on 13.08.2018 and 25.09.2018. Thereafter, the case of the assessee got centralized u/s. 127 of the Act from the ACIT - 1(1), Indore to the ACIT (Central Circle) - Ujjain and then, the ACIT (Central Circle) - Ujjain issued a fresh notice u/s....
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....s examination before making the impugned addition; (b) The AO erred in converting case selected for limited scrutiny to complete scrutiny; (c) The AO erred in making additions on suspicion, surmise and conjecture basis and without having any incriminating material on record found from the residential premises of the appellant relating to the year in which additions have been made; (d) The AO erred in 'considering the documentary evidences filed in support of creditworthiness of the lender and genuineness of the transaction including explaining source of source. 8. Ld. CIT(A) after being satisfied by the documentary evidences filed by the Ld. Counsel for the assessee in order to prove the identity, genuineness and creditworthiness also placed reliance on various judgments and decisions including that of Co-ordinate Bench, Agra in the case of M/s Umesh Electricals V/s ACIT 131 ITD 127, the decision of this Tribunal in the case of Aseem Singh V/s ACIT (2012) 19 ITJ 52 and also relying on the judgment of Hon'ble Jurisdictional High Court in the case of CIT V/s Metachem Industries (2000) 245 ITR 0160 (M.P). 9. Now, the Revenue is in appeal before....
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....ation entries. As regard non providing of opportunity of cross-examination to the assessee of the persons whose statements were relied upon by the AO, the Ld. CIT vehemently argued that all the persons whose statements were relied upon by the AO were close associates of the assessee company and therefore, the assessee company was supposed to be aware of the statements given by such persons and therefore, there was no necessity for giving any specific opportunity of cross examination. During the course of the hearing, the Ld. CIT-DR also filed one Paper Book vide letter dated 18.12.2020. Along with the Paper Book, the Ld. CIT-DR also furnished a copy of letter dated 17.12.2020 addressed by the present AO to the Ld. CIT(DR) which inter alias include the comments of the AO on the Ld. CIT (A)'s Order. In the Paper Book furnished by the Ld. CIT(DR), copies of the assessment orders passed in the cases of lender companies and as also the copy of the appeal memo filed before the ITAT have been furnished. By making a reference of the assessment orders passed in the cases of the lender companies, the Ld. CIT(DR) reiterated the contention of the AO that the Ld. CIT(A) was not correct in holdi....
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....me shown by the lender companies from the assessee company and as also, corresponding credit for TDS claim has been granted. Thus, no adverse cognizance has been taken in the cases of the lender companies. 5 During the course of the assessment proceedings, the AO of the assessee had not whispered a single word regarding the so-called enquiries and statements recorded by the Investigation Wing. The opportunity of cross-examination of any of the witnesses of the AO was not given. 138 to 141 being the only Notice u/s. 142(1) dated 12- 12-2018 On a perusal of the Page No. 139 of the Paper Book, it may be gathered that except asking certain documents, the AO had not uttered any single word regarding the alleged enquiries and other materials referred to by him in the body of the assessment order. Thus, the question of giving any cross-examination does not arise. The relevant findings of the ld. CIT(A) are at para (4.4.2)(a) on page no. 74 to 77 of his Order. 6 The assessee had specifically requested the AO for either giving the opportunity to produce the creditors or to issue summons u/s. 131(1) or letters u/s. 133(6) to the lender companies. Sub-para (E) at Page No.....
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....eness of the share capital transactions. When the share capital transactions have been accepted, then, there was no justification to form an adverse view in respect of the loan transactions with the same companies. 13 In earlier years too, the assessee company had accepted the loans from lender companies and the same were duly accepted by the Revenue. PB Page No. 244 - Copy of Account of DFL in books of assessee showing the opening balance The ld. CIT(A) has also given a finding to this effect at page no. 82 of his Order. G. Manner of Discharging the Initial Onus by the Assessee: S. No. Nature of Document For Dwarkesh Finance Ltd. [DFL] Addition - Rs. 15,26,111/- For Famous Vanijya Pvt. Ltd. [FVPL] Addition - Rs. 2,15,03,302/- For Navyug Vyapaar Pvt. Ltd. [NVPL] Addition - Rs. 10,13,83,277/- PB Page No. Remarks PB Page No. Remarks PB Page No. Remarks I. FOR IDENTITY: 1 Certificate of Incorporation 170 Originally Incorporated in the name of 'Richmore Finance & Leasing Ltd.' in the year 1992. 284 An old company incorporated on 25-10-2007 462 An old company incorporated on 09-11-2004 2 Memorandum an....
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.... the DFL has also not been disputed. The AO, at para (5), accepted the activities claimed by DFL. 304 to 399 i) In the Order of Assessment of FVPL [PB Page No. 304], u/s. 143(3)/147, for A.Y. 2008-09, the then AO at last para at internal page no. 1 of the Order, has stated that the FVPL had raised share capital and share premium amounting to Rs. 51.60 lakhs and Rs. 961.40 lakhs respectively which automatically proves the creditworthiness of FVPL. ii) In the Order of Assessment of FVPL for A.Y. 2012-13 [PB Page No. 307], the genuineness of FVPL has not been doubted. iii) Simultaneous assessment proceedings u/s. 143(3)/147 by the same AO were carried out for A.Y. 2011-12 and the AO nowhere alleged that the FVPL is merely a paper company. 483 to 584 i) In the Order of Assessment of NVPL [PB Page No. 483], u/s. 143(3), for A.Y. 2006-07, the then AO at last para at internal page no. 1 of the Order, has stated that the NVPL had raised fresh share capital and share premium amounting to Rs. 48.02 lakhs and Rs. 1152.48 lakhs respectively which automatically proves the creditworthiness of NVPL. ii) In the Order of Assessment of NVPL for A.Y. 2015-16 [PB Page No. 485], the returne....
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....sions. 617 to 622 All the payments have been made by the NVPL either by obtaining refunds of loans from various entities given on earlier occasions or by obtaining overdraft facility against FDR from bank or from issuing fresh share capital. III. FOR CREDITWORTHINESS: 16 Acknowledgement of Income- Tax Return for A.Y. 2016-17 228 - 301 - 477 - 17 Audited Financial Statements of lender company for F.Y. 2015-16 [A.Y. 2016-17] 260 & 261 i) DFL is having huge owned funds of Rs. 1438.77 lakhs which proves its creditworthiness ii) DFL has shown profit before tax at Rs. 5.97 lakhs 425 As per the audited balance sheet, before making loan to the assessee, the FVPL was having substantial owned funds of Rs. 1025.52 lakhs as on 31-03-2015. 632 & 633 i) As per the audited balance sheet, before making loan to the assessee, the NVPL was having substantial owned funds of Rs. 1577.23 lakhs as on 31- 03-2015. ii) NVPL has shown profit before tax at Rs. 95.72 lakhs 18 Statement showing details of taxable income and tax paid for last 8 years. 272 DFL has paid substantial amount of tax 438 FVPL has paid substantial amount of tax ....
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....s of Immediate Source of unsecured loan given by the lender company. 273 DFL had provided loan to the assessee company by taking the refund of loans given earlier to two other entities namely M/s. Vyanktesh Plastics & Packaging Pvt. Ltd. [AAACV6547J] and M/s. Shriniwas Polyfabrics & Packwell Pvt. Ltd. [AARCS5889F] 439 FVPL had provided loans to the assessee company by taking the refund of loans given earlier to four entites. Two of these entites namely M/s. Vyanktesh Corrugators Pvt. Ltd. and M/s. Shree Packers (MP) Pvt. Ltd. [aggregate sum of Rs. 1,90,00,000/ -] are group concerns of the assessee 644 i) A substantial sum of Rs. 4.60 crores was received by the NVPL from the assessee company itself against the loan given on earlier occasions. ii) A substantial sum of Rs. 6 crores was received by NVPL by way of issuance of share capital and genuineness of such share capital have duly been accepted in the assessment proceedings u/s. 143(3) of NVPL for A.Y. 2016-17 [PB Page No. 583]. iii) A sum of Rs. 1 crore was received by NVPL from another group company namely M/s. Vyanktesh Plastics iv) A sum of Rs. 2.75 crores was received by NVPL by availing OD facility from their ban....
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....of NVPL), have shown taxable income of more than Rs. 20 crores in their respective ITRs for A.Y. 2016-17. 13. The Ld. Counsel for the assessee also placed reliance on the following decisions; i) ACIT vs. EI Dorado Biotech Pvt. Ltd. (2020) 60 CCH 233 (Ahd-Trib) Order dated 11-11-2020. [In this case, addition u/s. 68 deleted on the ground that opportunity of cross examination was not given. In this case too, the assessee had furnished the similar documentary evidences] ii) CIT vs. Metachem Industries (2000) 245 ITR 0160 (MP) iii) Nemichand Kothari vs. CIT (2003) 264 ITR 254 (Gau.) iii) CIT vs. Mehrotra Brothers (2004) 270 ITR 0157 (MP) iv) Ashok Pal Daga vs. CIT (1996) 220 ITR 0452 (MP) v) DCIT vs. Rohini Builders (2002) 256 ITR 360 (Guj) vi) CIT vs. STL Extrusions Pvt. Ltd. (2011) 333 ITR 269 (MP) vii) CIT vs. Devi Prasad Khandelwal & Company Ltd. (1971) 81 ITR 460 (Bom.) viii) CIT vs. Orissa Corporation P. Ltd. (1986) 159 ITR 0078 (SC) ix) Orient Trading Co. Ltd. vs. CIT (1963) 49 ITR 0723 (Bom) x) CIT vs. Taj Borewell (2007) 291 ITR 0232 (Mad.) xi) Addl. CIT vs. Bahri Bro....
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....course of the survey/search was made and thus, the assessee was not confronted with any material gathered behind his back and in such circumstances, the opportunity of cross examination of the Revenue's witnesses were not afforded to the assessee which was mandatory as per the settled legal position; (ii) all the three subject lender companies from whom the assessee had taken loans are the group companies of the Bangur Group itself to which the assessee belongs. In respect of which simultaneous survey proceedings u/s. 133A were carried out. Further, the directors of the lender companies were found on given address and their statements were also recorded; (iii) During the course of the search/ survey, in the assessee company as well as lender companies, not a single incriminating material or document was found giving any iota of assessee having obtained non-genuine loans; (iv) In respect of all the lender companies, simultaneous assessment proceedings got completed for A.Y. 2011- 12 u/s. 147/143(3) of the Act; (v) During the course of the assessment proceedings, the AO of the assessee had not whispered a single word regarding the so-called enquiries and statements recorded by the In....
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....ee was not given the opportunity to cross examine which thus denied the opportunity of natural justice and secondly Ld. CIT(A) erred on merits in accepting the identity, genuineness and creditworthiness of the three cash creditors namely M/s DFL, M/s FVPL and M/s NVPL. 16. We observe that the assessee was subjected to survey u/s 133A of the Act on 27.7.2017. In the assessment proceedings carried out through CASS assessee was directed to explain the fresh unsecured loan taken during the year. Detalied replies were filed by the assessee which could partly satisfied the Ld. A.O and he was of the view that unsecured loan taken from following 3 companies could not be explained by the Ld. A.O and thus provision of Section 68 of the Act are applicable. Name of Company Amount (Rs.) i) M/s.Dwarkesh Finance Ltd.[(In short) 'DFL'] 15,26,111/- ii) M/s. Famous Vanijya Pvt. Ltd.[ .[(In short) 'FVPL'] 2,15,03,302/- iii) M/s. Navyug Vyapar Pvt. Ltd. [(In short) 'NVPL'] 10,13,83,277/- Total 12,44,12,690/- 17. Against the addition assessee preferred appeal before Ld. CIT(A) and succeeded who deleted the addition on the basis of the following 4 observations:- ....
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....Notices or questionnaire issued time to time. The AO has completely drawn his findings on the basis of these statements which were recorded behind the back of the assessee and no opportunity of cross examination of these persons were provided to the assessee. Then the Ld. CIT(A) relied upon the decision of the Hon'ble Supreme Court in the case of Andaman Timber Industries vs. Commission of Central Excise Kolkata, in Civil Appeal No. 248 of 2006 for the proposition that in absence of cross examination of parties, the assessment proceedings are required to be quashed. The Ld. CIT(A) further relied upon the decision of the Hon'ble High Court of Gujarat in the case of Praful Chunnilal Patel vs. M.J. Makwana [236 ITR 832 (Guj.)] and JCIT & Ors. vs. George Williamson (Assam) Ltd. 258 ITR 126 (Guj.) for holding that the statement of third party cannot be relied upon without having any corroborative evidence. The CIT(A) also relied upon the decision of the Hon'ble Supreme Court in the case of Kishanchand Chellaram vs. CIT 125 ITR 713 (SC) in which the Apex Court held that adverse inference cannot be drawn against the assessee from the statement of third parties. The Ld. CIT(A) furthe....
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....quirement of confronting the assessee with such statements could not have been dispensed with and the Ld. AO was duty bound to provide an opportunity to the assessee to comment upon the statement of such persons and to cross examination of them, if requested by the assessee. We find that during the course of the assessment proceedings, the assessee had specifically requested the AO to issue summons/letters u/s. 131/133(6) to the loan creditor companies, but, the AO remained silent and did not even apprise the assessee that the statements of the directors of these companies had already been recorded by the Investigation Wing. Thus, the AO, placed absolute reliance upon the statements/ material gathered behind the back of the assessee without confronting the same to the assessee at any stage which is impermissible in view of the judicial pronouncements made by the Hon'ble Apex Court in the cases of Kishanchand Chellaram vs. CIT (1980) 125 ITR 0713 (SC); and again in the case of Andaman Timber Industries vs. Commission of Central Excise Kolkata (2016) 15 SCC 785 (SC) and by Hon'ble High Court of Rajasthan in the case of CIT vs. Sunita Dhadda & Ors. (2018) 406 ITR 0220 (Raj.). 21. W....
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..../- made u/s. 68 of the IT Act, 1961, contending it that all the dummy/shell/bogus/paper/briefcase entities used to be perfect in papers and therefore, merely for the reason that such companies were making paper formalities or merely for the reason that the transactions were made through banking channels, payment of interest was made on alleged loans and repayment of the alleged loans were also made, the genuineness of the transactions cannot be accepted. The Revenue also agitated that in the case of the lender companies, while framing assessment orders in their hands, negative inference was also drawn and has lastly agitated that the CIT(A) was not justified in dismissing the reliance placed by the AO on various case laws. The Ld. CIT(A) has dealt with this issue from para (4.3) on page no. 69 to para (4.3.5) at page nos. 96 of his appellate order. At para (4.3), the Ld. CIT(A) has narrated the background of the issue. At para (4.3.1), the Ld. CIT(A) has reproduced the chart containing the findings of the AO and rebuttal of the assessee thereon. The ld. CIT(A) has further acknowledged the filing of various documentary evidences by the assessee in support of identity of lenders, cre....
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....ss of the loan creditors have also been established beyond all doubts. The Ld. CIT(A) held that the identity of the lender companies is self proven from the fact the assessments in the case of the lender companies have been framed either by the AO himself or by some other officer. The Ld. CIT(A) observed that non compliance of the commission issued at a wrong address cannot be viewed adversely for adjudging the identity of the lender companies specially in a situation where the statements of the directors of lender companies were duly recorded by the Investigation Wing itself. The Ld. CIT(A) also observed that the genuineness of the transactions also gets fully established as the transactions have taken place through banking channels and these have been confirmed by the lender companies. The Ld. CIT(A) held that the lender companies were having sufficient net owned funds for making advances to the appellant or anyone also. The Ld. CIT(A) further observed that the assessee had been able to establish even the source of the sources in the hands of the lender companies and all the lender companies are also assessed to Income Tax. Further, the ld. CIT(A) also stated that in none o....
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....es on 24-06-1992. The original name of company got subsequently changed to Dwarkesh Finance Limited vide Certificate of Change of Name granted by the concerning Registrar of Companies on 23-06-1995. Initially, the registered office of the DFL was situated at 201, Laxmi Gopal Building, 2nd Floor, Dandiya Bazar, Baroda, Gujarat-390001, but subsequently, w.e.f. 29-09-2017, the registered office of the company got shifted to a new place situated at 415-416, 4th Floor, pushpam Mall, Opp. Seema Ha1l, Anand Nagar Road, Satellite, Ahmedabad. Besides holding the registered office at Ahmedabad, the DFL is also holding one administrative office at 126, Dawa Bazar, Ujjain which was also confirmed by the AO. The DFL was listed with Vadodara stock Exchange Limited. The DFL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA) , Government of India. Further, DFL for AY 2011- 12 has been reassessed by the ITO-1(1)(2), Vadodara by determining the total income at Rs. 16,20,690/- Regarding the genuineness of the transaction the appellant submitted that all the transactions by the appellant with DFL had taken place through account payee ch....
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....that DFL has also made investment in the shares of the appellant company to the extent of Rs. 2,34,OO,OOO/-- and the AO has already accepted the same. The AO cannot judge two similar things with different view. On one hand the AO is doubting the genuineness and source of unsecured loan and on other hand has accepted the share capital investment by the same company in same previous year. Further, DFL has surplus funds to advance the same to appellant company in relevant assessment year. M/s Famous Vaniiya Pvt ltd (PAN-AABCF1483G) [in short FVPL]:Regarding the identity of FVPL the appellant submitted that the FVPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 25-10-2007, vide registration No.U51109WB2007PTC120050 of 2007-2008. Presently, the company IS having Unique Corporate Identification Number i.e, CIN as U 511 09MP2007PTC031640. The FVPL was incorporated with the objects of carrying out the business of trading in various commodities, financing and investment as per the objects contained in its Memorandum of Association, under which it has....
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....tatements of FVPL along with Auditors' Report, for FY 2014-15 (AY 2015-16). On perusal of audited balance sheet it was observed that the company FVPL has owned funds of Rs. 10.26 crores by way of share capital and reserves & surplus and has net owned funds of Rs. 16.28 crores by way of share capital and reserves & surplus as on 31.03.2016 (AY 2016-17). FVPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. On perusal of balance sheet of FVPL it was further observed that FVPL has also made investment in the shares of the appellant company for Rs. 1 ,58,00,000/- and the AO has already accepted the same. The AO cannot judge two similar things with different view. On one hand the AO is doubting the genuineness and source of unsecured loan and on other hand has accepted the share capital investment by the same company in same previous year. Appellant has also explained source of source and submitted that a sum Rs. 2,08,00,000/- was provided to the appellant company, through banking channel, immediately before providing the loan to the company, the FVPL had recovered loans aggregating to a sum of Rs. 2,05,00,000/- from ....
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....ear A.Y. 2011-12 and A.Y. 2016-17 have been passed by the same AO as of the appellant. Thus, from the above it is very clear that identity of the company NVPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of NVPL. Appellant has also filed copy of ledger account of appellant in the books of NVPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by directors of NVPL has also been filed by the appellant. The appellant further has brought some other facts to light and stated that the AO has made addition of Rs. 10,13,83,277/- on account of unsecured loan, however, the appellant has availed loan of Rs. 10,09,00,000/- only and balance amount represents interest i.e. of Rs. 4,83,277/-. The appellant has duly credited a sum of Rs, 5,36,975/- in the unsecured loan account of FVPL on account of interest and in respect of such interest TDS of Rs. 53,698/- was also deducted. Apart from the above, the company ....
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....ining refund of loan of Rs. 4,60,OO,OOO/- from the appellant company itself; and (iv) obtaining share capital money aggregating to Rs. 6,00,00,000/- from various persons. It is also submitted that dividend income so received by the NVPL has duly been shown by it in its return of income for A.Y. 2016-17. Further, the genuineness of receipt of share capital money aggregating to Rs. 6,OO,OO,OOO/- has duly been accepted by the AO who framed an assessment under s. 143(3) in the case of NVPL for A.Y. 2016-17. Furthermore, the factum of refund of loan by the appellant to NVPL is evident from the copy of ledger account of NVPL in the books of account of appellant for the relevant year. It was further submitted that receipt of refund of loan of Rs. 1,15,00,000/-- from the various entities as made by the NVPL can be verified from Note-8 of the audited financial statements of NVPL for the financial year 2015-16 in which under the column of previous year, the making of loans and advances by NVPL to various persons at Rs. 5,31,40,967/- has been clearly reflected. Thus, NVPL has surplus funds to advance the same to appellant company in relevant assessment year Further,....
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....any. iii. Creditworthiness of the creditors - the creditors are income tax payer and filing the income tax return. The companies have not only given the loan to the appellant but to other parties also. DFL is a Public Limited Company and has been duly registered with Ministry of Corporate Affairs. FVPL and NVPL are duly registered private limited company which can also be verified from web site of Ministry of Corporate Affairs. The lender companies has sufficient surplus and share application money which was received far long back and has already been accepted by their concerned Assessing Officer. The AO on the contrary has held that these lender companies are non-existent, non-functional and a shell/paper/briefcase company. The AO has drawn his belief on the basis of investigation carried out by DDIT(Inv), Kolkata, who was unable to trace the lender companies. In the case of DFL it was explained that the company has been planning to shift its office to Ahmadabad and therefore, the said company was not traceable at Vadodara. In the case of FVPL and NVPL both the companies has changed their address from Kolkata to Ujjain and this fact is also duly addressed by the AO while ....
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....ation and were assessed by the same AO under section 147 rws 143(3) and u/s 143(3). Hence, the AO had before him all the records and documents of the lender companies including those of the directors for verification of the facts and documents presented in support of his contention. Thus, the AO has erred totally, in overlooking the key facts and documents on record and in continuously stressing merely on the statements of third parties recorded behind the back of the appellant. 27. We are also in conformity with the finding of Ld. CIT(A) dealing with various case laws relied by Ld. A.O and distinguishing the same being not applicable to the assessee on the basis of observation that the assessee has duly proved the genuineness of the transaction and creditworthiness of the cash creditors which support the evidence. The crux of the finding of Ld. CIT(A) after thoroughly examining the facts in the light of settled judicial position is mentioned in para 4.3.4 and 4.3.5 of the impugned order which reads as follows; 4.3.4 In my considered view, the AO except relying upon the findings of the Investigation Wing could not bring on record any cogent material to establis....
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....s. 133A of the Act and during the course of such survey proceedings, the lender companies and their directors were duly found in existence. During the course of the search/survey operations, no incriminating material or evidence was found. In the entire body of the assessment order, as also, in the paper book filed by the Revenue before us, there is no reference of any incriminating document. In the Paper Book filed before us, the Revenue has merely filed the copies of assessment orders passed in the cases of lender companies and in our considered view, such assessment orders on the contrary strengthen the case of the assessee inasmuch it establishes beyond all doubts that the lender companies were in existence and were assessed to Income-Tax. 29. We find that the entire assessment order is based upon some statements recorded by the Investigation Wing or by some other authorities on some earlier occasions, and the AO has not conducted any independent inquiry at his own from the lender companies, despite the assessee's making a specific request to him to issue summons u/s. 131 or letters u/s. 133(6) to the lender companies. Recently, the Coordinate Bench of Mumbai in the case of ....
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....of directors of all the lender companies for establishing the identity of the lender companies. For establishing the genuineness of the transactions, the assessee had also furnished the copies of ledger accounts of the lender companies in the books of the assessee company and vice versa, copies of confirmation letters duly given by the lender companies, copies of the relevant bank statements of the lender companies and as also of the assessee company demonstrating that all the transactions had taken place through banking channels only. Further, in order to establish the creditworthiness of the loan creditors before the AO, the assessee had furnished copies of the audited financial statements of the lender companies, copies of assessment orders passed in the cases of the lender companies and as also statement showing details of the taxable income and tax paid by the lender companies in the last eight years. Although, the transactions being loan transactions and not the transactions relating to the share capital, the assessee was not required to establish the source of the source as contemplated under proviso to Section 68 of the Act, but, despite such fact, the assessee had not only....
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....mous Vanijya Pvt. Ltd. had also provided funds to the assessee company out of funds procured by it from other group companies namely, M/s. Vyankatesh Corrugators, Shree Packers M.P. Private Limited, etc. Thus, by any stretch of imagination, the trail of the funds in the hands of the assessee company emanated from the lender companies cannot be disputed or doubted. The Ld. AO could not rebut the genuineness of the various documentary evidences furnished by the assessee before him for establishing the genuineness of the loan transactions. Thus, the assessee had discharged its onus of proving the genuineness of the sum credited in its books of accounts as contemplated u/s. 68 of the Act and since, no inquiry was conducted by the AO, the addition was not sustainable as held by the Hon'ble Karnataka High Court in the case of M/s. Kumar Nirman and Nivesh Pvt. Ltd. vs. the Assistant Commissioner of Income Tax Bangalore 2020 (3) TMI 340 (Karn. HC). Their Lordships at para (7) of the Order were pleased to hold as under: "In the background of aforesaid well settled legal principles, the facts of the case may be seen. In the instant case, the assessee in support of identity, genui....
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....ns. 38. Further we do not find any substance in the ground of the revenue that no consideration is required to be given to the various documentary evidences but the facts should be on the groups of the assessee and group companies working as dummy paper companies. It is a trite law that a suspicion howsoever strong it may be cannot substitute the legal proof especially when such legal proof remains uncontroverted. The addition made by the Ld. A.O are more on the basis of the theory adopted on the basis of some investigation carried out in the preceding years which either may had its fate by way of additions in the hands of the respective companies in those years. Had there been additions in the hands of those companies in the preceding years then there remains no reason to make any additions in the hands of other assessee(s) in the subsequent years and in case in the preceding years if no addition could be made by the revenue authorities in other lender companies or assessee company that could not be a basis with the revenue authorities to tax such untaxed income in the hands of the in the subsequent assessment years because it is well established rule that each assessment year ....
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.... ITM 6777. We thus find no reason to interfere in the finding of Ld. CIT(A) and accordingly dismiss revenue's Ground No.1. 43. As regards Ground No.2 relating to adhoc disallowance of Rs. 4,50,000/- deleted by Ld. CIT(A), brief facts are that the assessee claimed power and fuel expenses at Rs. 18,04,136/- are the corrugated boxes manufactured during the year are 2912200 whereas in the preceding year it manufactured 4065639 corrugated boxes and expenses on power and fuel were incurred at Rs. 18,02,721/-. Since the manufacturing was less but the expenses remained the same. Ld. A.O made an adhoc disallowance of Rs. 4,50,000/-. However Ld. CIT(A) deleted this disallowance observing that the same has been made by the Ld. A.O purely on lump sum and presumption basis and without finding any incriminating material on record. 44. We have heard rival contentions and perused the records placed before us and carefully gone through the submissions. We observe that the payment for power and fuel has been made through banking channel to Madhya Pradesh Kshetriya Power Vitaran Nigam (Government undertaking). The Ld. A.O has failed to find any defect in the books of accounts as the same has no....
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....issues raised in the case of another group concern M/s Ariba Foods Pvt. Ltd for Assessment Year 2016-17 ITA No.736/Ind/2017, similar issue of unexplained cash credit from various cash creditors was under consideration. Some of the unsecured loans in the case of M/s Ariba Foods Pvt. Ltd were also taken from the alleged two cash creditors namely M/s Dwarkesh Finance Ltd (In Short 'DFL') and M/s. Navyug Vyapar Pvt. Ltd (In short'NVPL'). We after examining the records placed before us and the detailed finding of Ld. CIT(A) considering relevant judicial decisions were satisfied with the identity and creditworthiness of the cash creditors namely M/s DFL and M/s FVPL and also with regards to the creditworthiness of these two lender companies since they were having sufficient funds to provide loans including that to the assessee. We thus taking consistent view and applying our own decision taken in the case of M/s Ariba Foods Pvt. Ltd vide ITA No.736/Ind/2017 as held in para 22 of this order are of the considered view that Ld. A.O was not justified in making addition for unexplained cash credit u/s 68 of the Act at Rs. 3,44,79,554/- for the loans taken from M/s DFL and M/s FVPL. Thus we fi....
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.... any cogent material to establish that the lender company from whom appellant had claimed to have received loan was non-existent or bogus or paper company. In my view, the appellant could be able to fully discharge its onus of proving the genuineness of the loan transaction beyond all doubts. The identity of the lender company is self proven from the fact that the assessments in the case of the lender company have been framed by the AO himself. The genuineness of the transactions also gets fully established as the transactions have been taken place through banking channels and these have been confirmed by the lender company. Also find that the lender company was having sufficient net owned funds for making advances to the appellant or any one also. The lender company is assessed to Income Tax and by same AO. In none of the loan transaction any cash has been found deposited in the bank account of the lender company. During the course of the search/survey no incriminating material or any other evidence was found from which it could have been inferred that the appellant had provided any fund to the lender company before obtaining loans. 4.2.5 Therefore, in view of the above d....
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.... thereon, the copy of the assessment order u/s. 147/143(3) dated 29.12.2018 for A.Y. 2011-12 in the case of the lender company and Grounds of Appeal raised before us. 58. Per Contra, Ld. Counsel for the assessee also made his arguments at length by making a reference of the various documentary evidences furnished by him in a Paper Book, running from Page No. 1 to 170. The Ld. Counsel for the assessee also filed before us a copy of the written synopsis by making reference of various findings of the AO, the Ld. CIT(A) and various documentary evidences furnished in the Paper Book. The relevant abstract of the Synopsis filed by the Counsel of the assessee is reproduced as under: "F. Key Points of Assessee's Submission and Relevant Pages of Paper Book : [in respect of addition of Rs. 4,07,35,000/- for Disinvestment] S. No. Submission in Brief Relevant Pages of Paper Book Remarks 1 The addition so made was not an issue for reopening the assessment as is evident from the copy of the statement of reasons 60 & 61 While recording the reasons, it was wrongly assumed that the assessee made investment amounting to Rs. 10,12,02,256/- during the year u....
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.... taxation is not permissible - Since in respect of the sources of original investments, the assessee has already been taxed in A.Y. 2008-09, then upon change of the spice of such investments, no further addition can be made. D. Key Points of Assessee's Submission and Relevant Pages of Paper Book : [in respect of addition of Rs. 8,80,000/- for Loan from Etima Emedia Ltd. ] S. No. Submission in Brief Relevant Pages of Paper Book Remarks 1 The addition has been made on an issue which was not the subject matter of reopening u/s. 148 60 & 61 While recording the reasons, the AO had merely formed the belief qua the investments and loans given by the assessee and not in respect of any unsecured loan claimed to have been taken by the assessee. 2 The lender company from whom the assessee accepted loan is one of the group companies of the Bangur Group itself to which the assessee belongs. - Para (2.0) on page no. 18 of the AO's Order 3 In respect of the lender company, simultaneous survey proceedings u/s. 133A were carried out. Further, the directors of the lender company were found on given address and their statements were al....
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.... 81 ITR 460 (Bom.) viii) CIT vs. Orissa Corporation P. Ltd. (1986) 159 ITR 0078 (SC) ix) Orient Trading Co. Ltd. vs. CIT (1963) 49 ITR 0723 (Bom) x) CIT vs. Taj Borewell (2007) 291 ITR 0232 (Mad.) xi) Addl. CIT vs. Bahri Brothers (P) Ltd. (1985) 154 ITR 0244 (Pat) xii) CIT vs. Hanuman Agarwal (1985) 151 ITR 150 (Pat) xiii) Jalan Timbers vs. CIT (1997) 223 ITR 11 (Gau) xiv) CIT vs. Dalmia Resorts International (2007) 290 ITR 508 (Del) xv) Lalitha Jewellery Mart P. Ltd. vs. DCIT (2017) 399 ITR 0425 (Mad) xvi) CIT vs. Jai Kumar Bakliwal (2014) 366 ITR 217 (Raj) xvii) CIT vs. Shri E.S. Jose (2014) 220 Taxman 0032 (Ker) xviii) CIT vs. Kamdhenu Steel & Alloys Ltd. & Ors. (2014) 361 ITR 0220 (Del) xix) Mr. Gaurav Triyugi Singh vs. ITO 2020 (1) TMI 1153 (BomHC) xx) M/s. Kumar Nirman and Nivesh Pvt. Ltd. vs. ACIT 2020 (3) TMI 340 (KarHC) xxi) ACIT vs. M/s. Jay Enterprise 2019 (4) TMI 1811 (ITAT Rajkot) xxii) Pr.CIT vs. M/s. Jay Enterprise 2020 (1) TMI 657 (GujHC) xxiii) ITO vs. M/s. Riddhi Siddhi Corporation 2017 (2) TMI 1129 (ITAT Ahd.) xx....
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....r s.143(3)/263/143(3)/147 of the Act by the ITO, Ward-5(4), Kolkata, vide his Order dated 26-03-2014; (vi) It is a settled law that the sources of funds emanating from realization of old debtors or disinvestments, shown in the audited balance sheets of earlier years, cannot be disputed or doubted; (vii) Double taxation is not permissible as the sources of funds for making investment by the assessee company have already been taxed in the F.Y. 2007-08, again the addition in respect of the proceeds of disinvestment of such investments cannot be made. 61. Further, in respect of addition of Rs. 8,80,000/- made on account of unsecured loan taken by it from M/s. Etima Emedia Ltd., the Ld. Counsel for the assessee argued that: (i) The addition has been made on an issue which was not the subject matter of reopening u/s. 148; (ii) The lender company from whom the assessee accepted loan is one of the group companies of the Bangur Group itself to which the assessee belongs; (iii) In respect of the lender company, simultaneous survey proceedings u/s. 133A were carried out. Further, the directors of the lender company were found on given address and their statements were also recorded; (iv) I....
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....riminating material. Even in the paper book filed before us, there is no mentioning of any incriminating material or document. 65. From the copy of the audited balance sheet of the assessee filed at page no. 49A of the Paper Book, we observe that as on 31.03.2011 and 31.03.2010, the assessee company has shown investments amounting to Rs. 7,53,89,960/- and Rs. 10,10,89,960/- respectively. During the course of the assessment proceedings, the AO vide his questionnaire annexed to the notice u/s. 142(1) dated 07.09.2018, placed at page no. 87 of the Paper Book filed by the assessee, had only required the assessee to furnish information regarding all kinds of investments made during the year with sources of funds. In response, the assessee had furnished the details of investments/disinvestments made during the year and had duly demonstrated that how the amount of investments as on 01.04.2010 at Rs. 10,10,89,960/- reduced to Rs. 7,53,89,960/- on 31.03.2011. The assessee also demonstrated that during the relevant previous year, it had made some fresh investments and had also received refund aggregating to a sum of Rs. 4,07,35,000/- out of the investments made in the earlier years. Th....
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....n 68 of the Act. 68. We are in full agreement with the findings of the Ld. CIT(A) that in view of the ratio laid down by the Hon'ble Supreme Court in the case of CIT vs. Laxmipat Singhania 72 ITR 291 (SC) double taxation is not permissible in Law. Ld. AO took an adverse view solely on the basis of his assumptions and presumptions that the investment made by the appellant is bogus. We also concur with the findings of the CIT(A) that additions made in the absence of incriminating material are unjustified and since, during the course of the survey/search proceedings in the case of the assessee and other group concerns, no incriminating material was found, no addition could have been made. 69. In our considered view, when the assessee is in a position to demonstrate making of the investment in earlier years out of the explained/already taxed sources viz. share capital and share premium claimed to have been received during the F.Y. 2007-08 relevant to A.Y. 2008-09, and has also demonstrated that the sales proceeds were received through banking channels, then without any cogent material on record, the explanation of the assessee cannot be disbelieved. 70. We find no substance in....
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.... unexplained cash credit of Rs. 4,07,35,000/- and thus find no inconsistency in the finding of Ld. CIT(A) deleting the addition. Accordingly 1,2,3 & 4 of revenue's appeal in the case of Famous Vanijya Pvt. Ltd vide ITA No.725/Ind/2017 stands dismissed. 72. As regards Ground No. 5 to 11 which relate to the deletion of addition of Rs. 8,80,000/- made by the AO u/s. 68 of the Act in respect of unsecured loan claimed to have been received by it from M/s. Etima Emedia Ltd., we observe that the assessee had furnished before the AO, copy of PAN, bank account statement of the lender company, audited financial statement, profit and loss account statement, certificate of incorporation, copy of MOA and AOA, details collected from website of Ministry of Corporate Affairs and confirmation of lender. All these documents have also been furnished by the assessee in its paper book from page nos. 121 to 170. We find that the Ld. CIT(A) has dealt in depth with the various documentary evidences furnished by the appellant and reached to the conclusion that the appellant had been able to satisfy all the three condition required for genuineness of transactions u/s. 68 of the Act. We find that the Ld. ....