TaxTMI 
TaxTMI 
2021 (7) TMI 82
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....the addition of Rs. 1,50,00,000/- made u/s 68 of the Income Tax Act, 1961 on account of unsecured loan relying on the documentary evidences ignoring the key factor that the Shri Shirish C. Shah himself has stated and accepted in various statement given by him on oath and also confirmed by his Key employees that M/s. Prabhav Industries Ltd is engaged in providing accommodation entries against receipt of cash." (3) "On the facts and in the circumstances of the case and in law, the Ld.CIT (A) erred in deleting the addition of Rs. 1,50,00,000/- made u/s 68. of the Income Tax Act, 1961 on account of unsecured loan, without considering the observation made by the Delhi High Court in Nova Promoters and Finlease Pvt. Ltd 18. Taxmann.com 217 wherein the Court has observed that such type of cases cannot be decided only on the basis of documentary evidences and there is need to take into account the surrounding circumstances." (4) "On the facts and in the circumstances of the case and in law, the Ld.CIT (A) erred in deleting the addition of Rs. 1,11,167/- on account of interest expenditure paid on bogus unsecured loan, without appreciating the fact that the interest expendit....
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....50,00,000/- from Prabhav Industries Ltd., one of the entries operated and controlled by Shirish Chandrakant Shah, bogus entry operator. The A.O. held that the assessee did not prove the identity and creditworthiness of M/s. Prabhav Industries Ltd., which is a benami concerns of Shri Shirish Shah as well as genuineness of transaction in the form of unsecured loan of Rs. 1,50,00,000/-. Accordingly, the A.O. made addition of Rs. 1,50,00,000/- as unexplained cash credit u/s. 68 of the Act. Further, the A.O. disallowed interest expenditure of Rs. 1,11,167/- corresponding to the bogus/sham transactions of unsecured loans amounting to Rs. 1,50,00,000/- which were held to be non-genuine. The A.O. also disallowed commission paid of Rs. 2,55,000/- (being 1.5% of Rs. 1,50,00,000/-) in relation to sham transaction of unsecured loans. Aggrieved by this, the assessee company is in appeal. 4. Upon assessee appeal learned CIT(A) sustained the disallowance qua bogus purchase but deleted the disallowance qua bogus purchase unsecured loan. 5. Revenue is in appeal before us against this deletion. 6. Brief facts on the issue in appeal is that the Assessing Officer observed that during the cour....
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....10 Vijaya Bank 684111 50,00,000/- 19th May, 2010 Vijaya Bank 684130 1,00,00,000/- Total (Rs.) 1,50,00,000/- As can be seen from the above the aforesaid loan was borrowed as well as repaid through banking channels only during the years mentioned above which proves the genuineness of the transaction. Relevant parts of Bank statements are enclosed to support our claim which highlights loan borrowed and repaid thereafter respectively. Hence question of taking accommodation entries to adjust the books does not arise. With respect to the identity of M/s. Prabhav Industries Limited we enclose herewith the copy of their certificate of Incorporation alongwith Annual Returns filed for F. Y. 2009-10 as part of supporting evidences Prabhav Industries Limited is a Public Company incorporated in the year 1995 which is currently listed on Bombay Stock Exchange which clearly indicates that the identity of the party is proved and its existence is also proved. As far as the creditworthiness is concerned we are enclosing herewith the photocopy of the audited account of the company which shows that the company is credit worthy having net....
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....anies. He is also unaware of the companies in which these companies have invested. More so, when the investments received and made run into tens and hundreds of crores. c. M/s Prabhav Industries Limited did not have any activities except for issuing of paper bills and looking bogus sales. This company has been making losses or showing marginal profits. d. M/s. Prabhav Industries Ltd. has raised share capital through private placement during the same period i.e. FY 2009-10 e. The BSE compliance of these companies was being looked after by Shri Devang D. Master who was also a trusted employee of Shri Shirish C. Shah. f. Further, corroborative facts with regard to M/s Prabhav Industries Ltd and the companies that have been found to have made investment in Prabhav Industries Ltd., which in turn have made investment in various beneficiaries are shell companies controlled and managed by Shri Shirish Shah. g. The companies investing in the shares of all these companies are common and most of them are part of camouflage of companies managed and controlled by Shri Shirish Shah. 6.5 In view of the above discussion, it is clear that the pa....
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....e Revenue is not doubting all the unsecured loans but doubting only the transactions for which the genuineness could not be proved in view of the gamut of activities being carried out by Shri Shirish Shah and his Group concerns, which is nothing but providing accommodation entries only and which has been Admitted by not only Shri Shirish Shah in his Statement recorded on oath but also by various of the brokers of his concerns. One cannot lose sight of the fact that dark deeds are performed under the cover of darkness and direct evidence can never be available. Sometimes, the facts speak louder and clearer. 6.9 In a judgment of the Hon'ble Supreme Court in Vijay Kunnir Talwar v. CIT (330 ITR 1), the following observation was made;- "24. ...All the authorities below, in particular the Tribunal have observed in unison that the assessee did not produce any evidence to rebut the presumption drawn against him under Section 68 of the Act by producing the parties in whose name the amounts in question had been credited by the assessee in his books of account. In the absence of any cogent evidence, a bald explanation furnished by the assessee about the source of the cre....
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....counts maintained by the assessee have been duly taken into consideration by the authorities below. The transactions though apparent were held to be not real one. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence." 6.12 After carefully going through the submissions of the assessee as well as the data/details/documents available on record, it becomes crystal clear that; (a) The primary onus is on the assessee to establish the genuineness of the transactions recorded by it in its books of account; (b) Since the primary facts are in the knowledge of the assessee, it is the duty of the assessee to provide the correct details with regard to the impugned transactions; (c) If the investigation done by the Department leads to doubt regarding the genuineness of the transactions, it is incumbent on the assessee to produce the parties along with the necessary documents to establish the genuineness of the transaction; which the assessee fails to do so in the instant case and (d) Payment by account payee cheque is not sacrosanct. 6.13 In view of the above dis....
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.... Form 16 A of IDS return filed of IDS deducted on interest paid to loan creditor. 10. Appellant sought information received by AO against your appellant and used against your appellant which was not provided till date. 11. Appellant request to AO to summon loan creditor and allow us to confront the loan creditor by way of cross examination in case information is used against your appellant which was also not provided till date. The AR of the appellant filed the following documents as downloaded from money control website, BSE website and loan creditor web site to substantiate claim of the appellant already made before the AO about the identity of the loan creditor, genuineness of the loan transaction and credit worthiness of the loan creditor. 1. Profile of the company indicating Cl No. ISIN No, name of the directors, address of the company, telephone number of the company, email address of the company, website address of the company, listing with BSE etc. 2. Share price chart downloaded from BSE website. 3. Investor relation page down loaded from the loan creditor namely Prabhav Industries Ltd. Company web site indicating avail....
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....at the creditor company is in this case is a Listed Public Limited Company and in that case, the appellant is fortified by the judgment of Hon'ble Apex Court and Hon'ble Jurisdictional High Court in cases which has been referred above. The Hon'ble Courts have held that in case of Listed Public Limited Company, if there is any doubt regarding any of the ingredients of section 68 then the revenue is free to examine the lender company rather than making addition in the recipient company. Thus, I am constrained to follow the principles laid-down by Hon'ble Supreme Court in case of Lovely Exports (Supra) and Hon'ble Jurisdictional High Court i.e. Bombay High Court in case referred in earlier para. Thus, the addition of Rs. 1,50,00,000/- and other consequential addition i.e. Rs. 1,11,167/- on account of interest payment and Rs. 2,55,000/- on account of alleged commission are directed to be deleted and grounds of appeal filed on these issues are allowed." 10. Against this order Revenue is in appeal before us. 11. We have heard both the parties and perused the records. Learned Departmental Representative relied upon the order of the Assessing Officer. He submitted tha....
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....ation, we find that the assessee has taken unsecured loans which were found to be receipt from bogus entry operators. Findings in the case of search and seizure amply proved that the receipt was from a company which was benami concern of the bogus entry operator. The Assessing Officer has rejected the documents submitted by the assessee in support of the claim of the genuineness of the loan in view of the extensive findings in the case of search and seizure operation. Finding of the Assessing Officer inter alia was that what is apparent is not correct and in substance the transaction is bogus. In this regard he has referred to Hon'ble Supreme Court decision in the case of CIT Vs. P. Mohankala (supra), CIT Vs. Orissa Corporation P. Ltd. (supra), Vijay Kunnir Talwar Vs. CIT (supra) and Bombay High Court in Shri Naresh Pahuja (supra). Although the assessee has made elaborate submission before learned CIT(A), Learned CIT(A) has adjudicated the issue only on the premise that the assessee has submitted necessary papers in support of the loan. That the loans were through banking channels. He only relied upon the case laws from Hon'ble Supreme Court and Hon'ble Bombay Hig....
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....Assessee had discharged its onus of establishing the identity, genuineness and creditworthiness of both the investors as well as the lenders. This has been concurred with by the ITAT in the impugned order which is again an extremely detailed one. 5. The concurrent factual findings of both the CIT (A) and ITAT have not been shown to be perverse by the Appellant. This is virtually the fourth stage of the litigation. 6. Question (1) is accordingly answered in the negative, i.e., in favour of the Assessee and against the Revenue. Question (2) is answered in the affirmative, i.e., in favour of the Assessee and against the Revenue. Question (3) is answered in the affirmative, i.e., in favour of the Assessee and against the Revenue." 14. From the above we note that in the said case Hon'ble High Court has held that identy genuineness and creditworthiness of the investors of the share capital of the assessee as well as lenders was undertaken in an elaborate manner by learned CIT(A). Comments from the Assessing Officer were sought. Thereafter Hon'ble High Court has held that concurrent findings of both learned CIT(A) and the ITAT have not been shown to be pervers....
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....articular the Tribunal have observed in unison that the assessee did not produce any evidence to rebut the presumption drawn against him under Section 68 of the Act by producing the parties in whose name the amounts in question had been credited by the assessee in his books of account. In the absence of any cogent evidence, a bald explanation furnished by the assessee about the source of the credits in question viz., realisation from the debtors of the erstwhile firm, in the opinion of the assessing officer, was not satisfactory. It is well settled that in view of Section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income tax as the income of the assessee of that previous year, if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the assessing officer, not satisfactory." * Hon'ble Supreme Court in the case of CIT Vs. P. Mohankala (291 ITR 278) it has been held as under :- "15. ... When and in what circumstances Section 68 of the Act would come into play? That a bare reading of Section 68 suggests that there has to be credit of amoun....