TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 678
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....he 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 the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 12,44,12,690....
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....f 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 corrugated boxes was much higher in the preceding year vis-a-vis the current year, and therefore, the quantum of expenses cannot be accepted on face value. 3.On ....
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.... 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, in dismissing the reliance placed by the AO on various case-laws while ignoring the facts and circumstances of the case in its entirety. (iii) M/s Famous Vanijya Pvt. Ltd, ITA No.773/Ind/2019, Assessme....
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....g 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 in deleting the aforesaid addition of Rs. 8,80,000/-, by making factually incorrect conclusion that the same AO has made assessment u/s 147/143(3) in the case of M/s Etiam Emedia Ltd. (the lender company) and has drawn no negative inference. Actually, in para 2 of the assessm....
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....he 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. 143(2) on 03.12.2018. The AO then issued a notice on 12.12.2018 u/s. 142(1) to the assessee. In terms of the Notice, the assessee was required to establish identity of the creditors, capacity of the creditors and genuineness of the transactions, in respect of fresh unsecured loans taken by it during the rel....
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....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 the Tribunal. 10. Since, all the seven grounds taken by the Revenue are inter connected and directed against the action of the Ld. CIT(A) in deleting the addition of Rs. 12,44,12,690/- made by the AO u/s. 68 of the Act, we consider it appropriate to adjudicate all the grounds simultaneously. 11. Ld. CIT-DR for the Revenue vehemently argued at length. The main c....
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.... 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 holding that while making the separate assessments in the hands of the lender companies, no adverse findings were given. In sum and substance, as per the Ld. CIT(DR), all the lender companies were paper companies and the directors of such companies were also dummy directors acting merely on the instruction of Shri Anand Bangur a key person of the Shriji Polymers Group. 12....
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....pportunity 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. 169 of the assessee's submission for NVPL, 165 for FVPL AND 161 for DFL Despite making specific request, the AO did not conduct any independent enquiry by himself. 7 During the course of the assessment proceedings, the assessee had duly established the identity of the creditors, genuineness of the transactions, creditworthiness of the lenders and as also, the sources of availability of funds in the hands o....
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....e 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 and Articles of Association 171 to 224 Main object is Financing 285 to 300 Shri Amit Kedia was neither a promoter nor a director of FVPL as alleged by the AO. 463 to 476 Shri Amit Kedia was neither a promoter nor a director of NVPL as alleged by the AO. 3 Certificate for Commencement of Business 225 - - - - - 4 Certificate for Change of Name 226 Name got changed to Dwarkesh Finance Ltd. - - - - 5 Letter dated 23-02-2005 issued by the Vadodara Stock ....
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....en 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 returned income shown by NVPL has been accepted at Rs. 10,78,290/- and thus, the genuineness of NVPL has not been doubted. 10 Order passed by the ld. CIT(A) on an earlier occasion in case of a group company wherein similar issue of unsecured loan from lender company was treated as unexplained cash credit u/s. 68 - - - - 585 to 606 In the case of one of the group entities namely M/s. Arpit Plastics Pvt. Ltd. for A.Y. 2010-11, an addition of Rs. 46.62 lakhs was made in respect of unsecured loan received from NVPL. The ld. CIT(A), while adjudicating the appea....
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....dited 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 643 NVPL has paid substantial amount of tax. For A.Y. 2018-19, it has shown taxable income of Rs. 2,25,20,162/- and paid the tax of Rs. 47,09,735/- as per the CIT(A)'s findings at page no. 88 of his Order. 19 The lender companies were having sufficient funds by way of share capital and share premium raised by them in earlier years. - - 304 to 306 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 clearly stated that the FVPL had raised share capital and share premium amounting to Rs. 51.60 lakhs and Rs. 961.40 lakhs respectively whi....
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.... 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 banker. 22 Copies of Bank Statements of the sub-creditors for the relevant period 274 to 276 AND 280 In the bank statements of the sub-creditors namely M/s. Vyanktesh Plastics & Packaging Pvt. Ltd. [PB 274 to 276] and M/s. Shriniwas Polyfabrics & Packwell Pvt. Ltd. [PB 280], repayment of loan by them on various dates to DFL are getting clearly reflected. Incidentally, even in the bank statements of both the sub-creditors, no cash deposits were made. 440 to 442; 446 & 447 On a perusal of the bank statements of two sub-creditors namely M/s. Vyanktesh Corrugators Pvt. Ltd. and M/s. Shree Packers (MP) Pvt. Ltd., it may be observed that repayment of loan by them o....
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....(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 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 (....
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....d 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 Investigation Wing. The opportunity of cross-examination of any of the witnesses of the AO was not given; (vi) 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, but such request was not adhered to; (vii) During the course of the assessment proceedings, the assessee had duly established the identity of the creditors, genuineness of the transactions, creditworthiness of the lenders and as also, the sources of availability of funds in the hands of the lender companies for making loans to the assessee company; (viii) Loan Transactions from two of the lenders viz. FVPL & NVPL have got completely repaid during the relevant previous year itself; (ix) All the lender companies have duly shown interest income from the assessee company and have also claimed TDS; (x) None of the findings given by the AO is relevant for making the impugned add....
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....3,83,277/- 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:- (a) The AO erred in making additions merely on the basis of statements of third parties recorded by the Investigation Wing and without providing opportunity of their cross 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. 18. Through Ground No. 1, the Revenue has challenged the finding of the Ld. CIT(A) in deleting the addition of Rs. 12,44,12,690/- made u/s. 68 of the Act on the ground of cross examination, without appreciating the fact that the persons whose statements were ....
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....TR 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) further relied upon the decision of Hon'ble High Court of Gujarat in the case of CIT vs. Indrajeet Singh Suri (2013) 33 Taxmann 281 (Guj.) in which the Hon'ble Court held that where additions have been made on the basis of statements of persons who are not allowed to be cross examined by the assessee, additions were not sustainable. The Ld. CIT(A) further held that non providing the opportunity of cross examination was a serious flaw on principles of natural justice which renders the order a nullity. 20. We find that during the course of the search/survey operations carried out in the various entities of the Shriji Polymer Group, including the case of the assessee company, no incriminating material or loose paper was found from which it could have been inferred that the loan transactions carried out by the appellant company with the subject three lender companies were not genuine and that the lender companies were merely paper companies. In the entire body of the assessment order, there is no mention of any independent inquiry con....
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....cise 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. We find that recently the Coordinate 'D' Bench of ITAT Ahmedabad in the case of ACIT vs. E I Dorado Biotech Pvt. Ltd. (2020) 60 CCH 0233 (Ahm. Trib), at para (33) has held that if AO intends to rely, for the purpose of making addition to the total income of an assessee, on the basis of statement of third party as a witness, then he has to summon such witness, record his statement, offer that witness to the assessee for cross examination. The Coordinate Bench, Ahmedabad at para (36) has held as under: " In other words where AO wants to rely on the statement of a witness (such as statement of entry operator recorded by investigation wing) to hold that share application money received by the assessee is not genuine but is only an accommodation entry then he has to provide copy of such statement to the assessee. Where the AO does not provide the copy of the statement of the witness then it is violation of principle of natural justice, and entire addition solely based on such statement is likely to be deleted." 22. Respectfully relyi....
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..... The ld. CIT(A) has further acknowledged the filing of various documentary evidences by the assessee in support of identity of lenders, creditworthiness of lenders and genuineness of the transactions. At para (4.3.2), the ld. CIT(A) has stated that the assessee has challenged the arbitrary approach of the AO mainly on four major counts i.e. (a) the AO made additions merely on the basis of statements of third parties recorded by Investigation Wing and without providing opportunity of cross examination; (b) the AO erred in converting the limited scrutiny case into complete; (c) the AO erred in making additions on suspicion, surmise and conjecture without having any incriminating material on record found from premises of the assessee; and (d) the AO erred in not considering the documentary evidences filed by the assessee. Further, from page no. 74 to 91, the ld. CIT(A) has discussed in detail the assessee's contentions made before him on the aforesaid four counts. At page nos. 81 to 91, the ld. CIT(A) has also discussed and described each and every documentary evidence filed by the assessee in support of establishing the identity of the loan creditor companies, creditworthiness of th....
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....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 of the transaction, cash has been found deposited in bank account of lenders. Furthermore, during the survey proceeding, no incriminating material or any other evidence was found from which it could have been inferred that the assessee had provided any fund to the lender companies before obtaining loans. Finally, at para (4.3.5), the ld. CIT(A), keeping in view the facts of the case, the documentary evidences filed and the case laws relied upon by the assessee, held that the AO was not justified in making addition of Rs. 12,44,12,690/- on account of unsecured loans taken by the assessee from the lender companies. 24. We observe that Ld. CIT(A) has thoroughly examined various documentary evidences filed by the assessee to prove the identity and creditworthiness of the lenders and genuineness of the transaction. Relevant extract of Ld. CIT(A) finding examining the 3 cash creditors namely M/s DFL, M/s FVPL and M/s NVPL is mentioned below:- (d) The AO erred in considering the documentary evidences filed in support of creditworthiness of the lender an....
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....mitted that all the transactions by the appellant with DFL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. Appellant in support has filed copy of bank account statement of DFL. Further, copy of ledger account of the appellant in the books of DFL and copy of loan confirmation has also been filed. The appellant had duly credited a sum of Rs. 4,95,678/- in the unsecured loan account of DFL on account of interest and in respect of such interest, the appellant company has also paid TDS of Rs. 49,567/-. Further, the DFL had duly offered the receipt of interest income of Rs. 4,95,678/made by them from the appellant company, in respect of loan transactions, in their return of income for the year under consideration and in respect of such income, the DFL has not only got duly assessed but has also availed credit of TDS on such income. The appellant has also submitted that it has borrowed sum aggregating to Rs. 83,00,000/- from DFL in earlier years and the genuineness of such borrowing have never been doubted in any of the assessment proceedings carried out in earlier years. In support of his claim appella....
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....per the objects contained in its Memorandum of Association, under which it has got incorporated. Initially, the registered office of the F VPL was situated at 67-B, Metcalfe Street, Kolkata, W.B., but subsequently, w.e.f. 17-09-2013, the registered office of the- company got shifted to a new place situated at 125, Dawa Bazar, Madhav Club Road, Ujjain (M.P.) which is also accepted by the AO. The FVPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. In the case of FVPL for AY 2011-12 and for AY 2016-17 order u/s 147 rws 143(3) and u/s 143(3) has been passed by the same as of the appellant. Thus, from the above it is very clear that identity of the company FVPL 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 FVPL. Appellant has also filed copy of ledger account of appellant in the books of FVPL showing each and every transaction relating to unsecured loan. A copy of confirmation l....
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....ns aggregating to a sum of Rs. 2,05,00,000/- from its four creditors (i) M/s. Vyanktesh Corrugators, (ii) M/s. Shree Packers (MP) Pvt. Ltd, (iii) Shri Sujit Lodha and (iv) Shri Nikhilesh G. Rathi, HOP. Further, FVPL long back has issued its 5,16,000 equity shares of face value of Rs. 10/- each for a total consideration of Rs. 51 ,60,0001- by charging total share premium of Rs. 9,61,40,000/- during the financial year 2007-08 relevant to A.Y. 2008-09 which has also been accepted by the ITO Ward- 5(4), Kolkata who framed assessment order under s. 143(3)/147 of the Act in the case of FVPL for A.Y. 2008-09 on 30-04- 2010. However, a fresh assessment was done in pursuant to order u/s 263 of the Act and a fresh assessment under s. 143(3)/263/143(3)/147 of the Act has been framed in the case of FVPL for A.Y. 2008-09 by the ITO-5(4), Kolkata on 26-03-2014 by making an addition of Rs. 10,12,00,000/- in the hands of the FVPL, on account of acceptance of fresh share capital and share premium and thereby, framing the assessment at Rs. 1 0, 12,22,570/-. Thus, FVPL has surplus funds to advance the same to appellant company in relevant assessment year. *M/s Navyug Vayapar Pvt Ltd PAN-AACCNl168M ....
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....he above, the company NVPL had duly offered the receipt of interest income of Rs. 5,36,975/- made by them from the appellant company, in respect of loan transactions, in their return of income for the year under consideration and in respect of such income and has also availed TDS credit on such income. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of NVPL the appellant has filed copies of audited financial statements of NVPL along with Auditors' Report, for AY 2015-16 & 2016-17. On perusal of audited balance sheet for AY 2015- 16, it was observed that the company NVPL has owned funds of Rs. 15.77 crores by way of share capital and reserves & surplus and for AY 2016-17 has net owned funds of Rs. 25.56 crores by way of share capital and reserves & surplus. NVPL is a regular income tax payer which can also be seen from copies of return of income filed by the appellant. The NVPL had shown taxable inc....
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....ome earned by the lender companies on the loans given by them has been accepted and assessed by the same AO in their assessments. All the three lenders are sister associated companies of the appellant company taking loan from the company which is having surplus funds is one of the features of the group. The funds transfer is taking place from one company to other company. 26. After referring the relevant paper documents which included the loan confirmations, copy of bank accounts, proof of filing Income Tax Returns, financial statements, copies of the assessment orders of preceding years Ld. CIT(A) has held that the assessee had duly explained the source of cash credits from the alleged three companies in the books of account and the relevant observation of Ld. CIT(A) in this regard reads as follows:- i. Identity of the creditors - the creditors are income tax payer and filed the loan confirmations and two of them are assessed by the same AO. ii. Genuineness of the transaction- the appellant has taken the loan through banking channel. The appellant is in the receipt of loan by cheque. Copies of bank statements of lender companies are placed on record and perused. There has bee....
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....se for the AO to hold it as non-existent, non-functional and a shell/paper company. From the above it is clear that the appellant has satisfied all the three conditions required for genuineness of the transaction. The same view has been upheld by Honb'le ITAT in the following cases:- 1.Umesh Electricals v/s Asst. CIT(2011) 18 ITJ 635 (Trib.Agra): (2011) 131 ITD 127 : (2011) 141 TTJ Establishment of identity and credit-worthiness proved- Assessee produced the bank account of creditor in his bank account on the same day on which loan was given- Assessee furnished the cash flow statement of creditor-Based on inquiry, AO noted that creditor was engaged in providing accommodation entries-HELD- In group cases, it has been held that there was no evidence against the creditor to prove that he was providing accommodation entries- Further, mere deposit of money by the creditor on the same day, does not establish that the loan is not genuine-Assessee has proved the source of credit and also the source of source -Addition cannot be made. 11.Aseem Singh v/s Asst. CIT (2012) 19 ITJ 52 (Trib.-Indore) Identity and credit-worthiness proved-Assessee took loan of Rs. 1,00,0001- confirma....
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....per companies. 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 companies is self proven from the fact that the assessments in the case of the lender companies have been framed either by the AO himself or by some other assessing officer. Non compliance of the commission issued at a wrong address cannot be viewed adversely for adjudging the identity of such lender companies, especially in a situation when the statements of the directors of the lender companies was duly recorded by the Investigation . 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 companies. Also find that the lender companies were having sufficient net owned funds for making advances to the appellant or anyone also. The appellant has been able to establish even the source of the source in the hands of the lender companies. The lender companies are assessed to Income Tax. In none of the loan transaction any cash has been found deposited in the bank account of the lenders....
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....by holding as under: "56. As regards the addition of unsecured loans is concerned, we note that assessing officer has accepted that assessee had submitted the confirmation, ITR, Bank Statement of parties. However, he rejected by simply observing that investigation wing at Kolkata has reported that some of the entry operators are providing bogus loans at Kolkata. The assessing officer did not make any enquiry of his own and only referred to the date of the confirmation of the unsecured loan and give adverse inference.... 57. We find that by simply referring to the general findings of the Investigation Wing at Kolkata entry operators providing bogus loans, the revenue authorities cannot fasten liability of unsecured loans upon the assessee, unless the assessing officer makes enquiries of his own and rebut the documentary evidences submitted by the assessee. The assessee has duly discharged its onus of submitting the loan confirmation, Income Tax Returns and Bank Statements and Financial Statements of the loan creditors. Without making inquiry of his own, the assessing officer has rejected them which is totally unsustainable." 30. We observe that the Ld. AO issued the commission ....
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.... also furnished the necessary documentary evidences such as the copies of bank accounts, financial statements and Income-Tax Returns of the sub-creditors. We find that all the aforesaid documentary evidences have also been furnished by the assessee before us in Paper Books filed in two volumes and the relevant aforesaid documents are placed at Page No. 170 to 676 of the Paper Book. 32. We also observe that in the instant case, although the AO has disputed the identity and genuineness of the loan transaction carried out by the assessee with the Dwarkesh Finance Ltd., Famous Vanijya Pvt. Ltd. and Navyug Vyapar Pvt. Ltd., but, in respect of the share capital transactions aggregating to a sum of Rs. 6,37,00,000/- carried out by the same three companies with the assessee company in the same financial year, the same AO has accepted the genuineness of the transactions and as also the identity of these companies. Thus, the AO has adopted two different approaches for two different kind of transactions carried out by the assessee in the same companies in the same financial year which in our view is not permissible. 33. We further observe that one of the lender companies namely, Navyug Vya....
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....appellant had also filed the copy of the return of income of M/s. Bhuwania Bros Pvt. Ltd. as well as copy of information letter. The appellant having proved the identity and creditworthiness of the party as well as the genuineness of the transaction had discharged its burden and it was for the revenue to conduct an enquiry and to prove that the transaction in question was not genuine and the identity of the creditor was not established and it had no credit worthiness. In the instant case, the revenue has not conducted any enquiry and has failed to discharge its burden. In view of preceding analysis, we answer the substantial question of law Nos. (i), (ii) and (iii) in the negative and in favour of the assessee and against the revenue." 36. We also observe that the various screenshots and cash trail pointed out by the CIT(DR), from the findings given by the AO in respect of one of the lenders namely, Navyug Vyapar Pvt. Ltd. pertain to the year 2010 only and therefore, they cannot be said to be having any nexus with the loan transactions carried out by the assessee during the year under consideration. From the Paper Book filed by the assessee, it is appearing that the case of afores....
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....case, respectfully following the judgments and decisions referred herein above and being satisfied with the documentary evidences filed before us are of the view that the assessee has successfully discharged its onus to prove the identity and creditworthiness of the three cash creditors i.e. M/s DFL, M/s FVPL and M/s NVPL and the genuineness of transaction of unsecured loan taken by the assessee company from these three companies. Thus there remains no reason to interfere in the detailed finding of Ld. CIT(A) deleting the impugned addition of Rs. 12,44,12,690/- made by the Ld. A.O invoking provisions of Section 68 of the Act for unexplained cash credit. Ground No.2 to 7 of the Revenue stands dismissed. 40. Accordingly appeal of the revenue in the case of M/s Ariba Foods Pvt. Ltd raised vide ITA No.736/Ind/2019 for Assessment Year 2016-17 stands dismissed. 41. Now we take up revenue's appeal No.ITA/737/Ind/2019 in the case of M/s Vyanktesh Plastics and Packaging Pvt. Ltd pertaining to Assessment Year 2015-16. In this appeal revenue has raised 9 grounds of appeal but the issues raised therein challenging the finding of Ld. CIT(A) can be summarized as follows:- (i) Deletion of add....
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....ion and surmises which the Ld. CIT(A) has rightly deleted. Since there is no inconsistency in the finding of Ld. CIT(A) Ground No.2 of Revenue's appeal stands dismissed. 45. As regards Ground No.3 to 9 the grievance of the revenue is with regard to deletion of addition made u/s 68 of the Act for unsecured loan of Rs. 3,44,79,554/- taken from following two companies:- Name of Company Amount (Rs.) i) M/s Dwarkesh Finance Ltd (DFL) 3,39,01,393/- ii) M/s. Navyug Vyapar Pvt. Ltd (NVPL) 5,78,161/- Total 3,44,79,554/- 46. Brief facts are that Ld. A.O was not satisfied with the identity, genuineness and creditworthiness of the above stated two cash creditors and accordingly made addition u/s 68 of the Act which was thereafter deleted by Ld. CIT(A) who on the basis of documentary evidence was satisfied with the identity and creditworthiness of the cash creditors and genuineness of the transaction. Now the revenue is in appeal before the Tribunal. 47. Ld. Departmental Representative vehemently argued supporting the finding of Ld. A.O and making same submission as were made in the case of M/s Ariba Foods Pvt. Ltd in ITA No.736/Ind/2017 mentioned in the preceding paras, since simila....
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....ds raised by the revenue in appeal vide ITA No.737/Ind/2017 for Assessment Year 2015-16 stands dismissed. 52. Now we take up revenue's appeal in the case of M/s Famous Vanijya Pvt. Ltd vide ITA No.773/Ind/2017 for Assessment Year 2015-16. 53. Brief facts of the case as called out from the records are that the assessee is a company, duly incorporated on 25.10.2007 and stated to be engaged in investment and financing activities. 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, u/s. 139(1), on 30.09.2011 declaring total income at Rs. 35,700/-. Thereafter, the then AO found that the assessee had bogus investment/transactions with Dummy/Bogus Concerns such as M/s. Etima Emedia Ltd. and therefore, notice u/s. 148 was issued on 30.03.2018. The assessee, in reply on 05.09.2018 has furnished return of income declaring total income at Rs. 35,700/-. The AO, while framing assessment u/s. 147 r.w.s. 1....
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....e laws cited above, the addition made by the AO amounting to Rs. 4,16,15,000/- is Deleted. Therefore, appeal on these grounds are Allowed. 55. Now, the Revenue is in appeal before the Tribunal. 56. Since, all the eleven grounds taken by the Revenue are inter connected and directed against the action of the Ld. CIT(A) in deleting the addition of Rs. 4,16,15,000/- made by the AO u/s. 68 of the Act, we consider it appropriate to adjudicate all the grounds simultaneously. 57. Ld. CIT-DR for the Revenue vehemently argued at length. The main contention of the Ld. CIT-DR was that the assessee, in its books of accounts, had shown to have received a refund aggregating to a sum of Rs. 4,07,35,000/- out of the alleged investments made in earlier years, but, the assessee failed to discharge its onus of establishing identity and creditworthiness of the creditor parties and genuineness of the transactions. The CIT(DR) also contended that during the relevant year, the assessee had taken unsecured loan of Rs. 8,80,000/- from yet another dummy entity namely, M/s. Etima Emedia Ltd. but, during the course of the survey action in the premises of the aforesaid company, it was found that such company....
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....nvestments made and sources thereof vide the only notice dated 07-09-2018, no further information or evidences were called for. 87, 91 to 93, 94, 95 to 98 The assessee had made full compliance of the notice and had furnished the desired details vide its letter dated 21-12-2018 placed at page no. 91 to 93 of the Paper Book. The assessee had also furnished the complete details of the disinvestments made the proceeds wherefrom were utilized for making fresh investments [kindly refer PB Page No. 94]. Further, in evidence of receipts of sale proceeds, the assessee had also produced the copy of relevant bank statements [kindly refer PB Page No. 95 to 98]. 3 The making of investments in shares in earlier years, which have been disinvested during the previous year under consideration, is evident from the copy of the audited balance sheet of the assessee for F.Y. 2009-10 [A.Y. 2010- 11] 105 In such audited balance sheet, investment amounting to Rs. 10,10,89,960/- as on 31-03- 2010 and as also, as on 31-03- 2009 is getting clearly reflected. 4 The assessee company had made investments aggregating to Rs. 10,10,89,960/- in earlier years out of share capital and share premium rece....
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....also, corresponding credit for TDS claim has been granted. Thus, no adverse cognizance has been taken in the cases of the lender company. 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. - On a perusal of the only Notice issued u/s. 142(1) placed at page no. 87 & 88 of the Paper Book, it may be gathered that 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. 6 The assessee had established identity of the lender company by furnishing all the necessary documents before the ld. CIT(A). 121 to 170 All these documents establish the identity of the lender company, the genuineness of the loan transactions and as also, the creditworthiness of the lender company. 7 None of the findings given by the AO is relevant for making the impugned additions - The AO's findings and the assessee's re....
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....i) ITO vs. Vaibhav Cotton Pvt. Ltd. (2012) 19 ITJ 113 (Trib.-Indore) xxxiii) Shri Sumati Kumar Kasliwal, Shri Parth Kasliwal, Smt. Sharda Kasliwal, M/s. Nishant Finance Pvt. Ltd., Shri Manoj Kasliwal and M/s. Pumarth Infrastructure Pvt. Ltd. vs. ACIT (Central)-1, Indore 2019 (5) TMI 338 (ITAT-Indore) 60. The crux of the arguments of the Ld. Counsel of the assessee on the issue of Disinvestment, for which the addition amounting to Rs. 4,07,35,000/- was made by the AO, are that; (i) the addition so made was not an issue for reopening the assessment as is evident from the copy of the statement of reasons; (ii) during the entire assessment proceedings, except calling for the information of fresh investments made and sources thereof vide the only notice dated 07.09.2018, no further information or evidences were called for and in reply the assessee had furnished complete details and copy of the relevant bank statement in which the proceeds of disinvestment were credited; (iii) The making of investments in shares in earlier years, which have been disinvested during the previous year under consideration, is evident from the copy of the audited balance sheet of the assessee for F.Y. 2009....
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....he Ld. Counsel for the assessee also relied upon the plethora of judicial pronouncements as noted down in the preceding para. 62. We have heard rival contentions and perused the records produced before us and carefully gone through the judgments referred to by both the parties. 63. Through Ground Nos. 1 to 4, the Revenue has challenged the finding of the Ld. CIT(A) in deleting the addition of Rs. 4,07,35,000/- made by the AO u/s. 68 of the Act by disbelieving the assessee's claim that during the relevant previous year, the appellant had received refunds out of genuine investment made in earlier years. The Revenue agitated that the CIT(A) completely ignored that the assessee had failed to establish the link between the said amount of disinvestment and share capital and share premium amount received in earlier years and also did not appreciate that the assessee had failed to show as to how the share capital and share premium amount was liquidated and translated to the refund of Rs. 4,07,35,000/- . The Revenue also agitated that when the assessee itself had filed appeal against the addition made on account of share capital and share premium amount, then assessee was not eligible to ....
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....roperly appreciating the facts of the case and merely on extraneous considerations. The assessee company in its audited balance sheet had shown making of investment to the extent of Rs. 10,10,89,960/- as on 31.03.2010 and such fact has not been disputed or doubted by the AO. The assessee company in its audited financial statements as of 31.03.2010 has shown its own funds amounting to Rs. 51,60,000/- and Rs. 9,61,40,000/- respectively by way of Equity Share Capital and Share Premium. Thus, the sources of making the investments in the earlier years cannot be disbelieved or doubted. The assessee company had raised such share capital and share premium aggregating to a sum of Rs. 10,12,00,000/- during the F.Y. 2007-08 relevant to A.Y. 2008-09 and such receipt of money had already been subjected to assessment in the concerned year. 67. In respect of the funds received by way of share capital and share premium, the assessee company has already been subjected to tax u/s. 68 of the Act in pursuance to an order of assessment passed for A.Y. 2008-09, u/s. 143(3)/263/143(3)/147 of the Act by the ITO Ward - 5(4), Kolkata (copy of the assessment order placed at page no. 112 to 120 of the paper....
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....ability of funds raised in the aforesaid year cannot be denied. 71. We therefore in the given facts and circumstances of the case and the factual matrix are of the considered view that the source of alleged amount was from liquidation of investment made in the earlier years. The dispute about the source of fund utilized for making the investment in earlier years before the tax authorities in itself cannot be the sole basis to make the addition in the hands of the assessee as unexplained cash credit for the amount received from liquidating the investments made in the shares of unlisted companies which were invested in the earlier years and were duly appearing in the audited balance sheet. The alleged sum is received from sale of shares appearing as opening balance in the investment account. There is no dispute about the identity, genuineness and creditworthiness of these companies, the equity shares of which were sold by the assessee during the year and the funds were thereafter utilized to make the fresh investments. It is a simple case of switch over of investments from one company to another and is not the case of fresh loan received during the year. We thus find no substance in....