TaxTMI 
TaxTMI 
2021 (10) TMI 448
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....ry notice under sec. 143(2) of the I.T. Act was issued on 23.09.2013 and served upon the assessee. Due to change in incumbent, notice u/s 143(2) of the I.T. Act was issued on 30.09.2013. Further, notice u/s 142(1) of the I.T. Act along with detailed questionnaire was issued on 11.12.2013. In pursuant to restructuring the Central Circle -16 is restructured as Central Circle-20 vide order No. of The Chief Commissioner of Income Tax (Central), New Delhi vide F.No.33/CCIT(C)/T & P/14-15/4059 dated 15.11.2014, for the same notice u/s. 143(2) was issued on 11.11.2014 along with intimation regarding change in jurisdiction was sent to the assessee. 2. In response to the statutory notices Shri Atul Khandelwal, CA & AR of the assessee attended the assessment proceedings, filed power of attorney and furnished necessary details, in formation & documents called for from time to time. 3. A survey operation u/s 133A of the Income Tax Act were conducted at following premises of the Varrenyam Securities Pvt. Ltd. on 17.10.2012: S.No. Address Name of the Entity 1. 2442, 1s t floor, Gail No. 10, Karol Bagh, New Delhi - 110005 VARRENYAM SECURITY PVT. LTD. (Registere....
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....800 10 990 238000 9. Om Expo Enterprises Pvt. Ltd. 1410, Bazar Sitaram, Opp. Lal Darwaza, Delhi AAACO8604R 25000 10 990 250000 10. Panchshee I portfolio Consultants Pvt. Ltd. 1398, Bazar Sitaram, Opp. Lal Darwaza, Delhi AA FC P3066R 25000 10 990 181000 11. Rising Portfolio India Pvt. Ltd. B-62/11, Second Floor, Naraina Industrial Area, Delhi AAACR1677D 27000 10 990 270000 12. Veritable Township Pvt. Ltd. 8-62/11, Second Floor, Naraina Industrial Area, Delhi AADCV5115H 250000 10 990 2500000 13. VS Import Pvt. Ltd. 2262/2, 3rd floor Mandir West Patel Nagar, Delhi AACCV5762B 17000 10 990 170000 Total 250000 4. During the course of search operation and post search proceedings statement of Himanshu verma was taken on oath, in his statement Himanshu Verma has accepted that all the above mentioned entities are manage and controlled by him. Books of accounts of a number of entities included in the list mentioned above, bank statements etc. were found in his laptop. After going through....
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....Pvt. Ltd. Company. (b) Cash received from beneficiary group of companies or individual, the same deposited in the bank account of the firm, proprietary concerns managed and controlled by Himanshu Verma. After routing it through the bank accounts of different firms and companies managed and controlled by Himanshu Verma, the same was transferred to one of the entity of the beneficiary group in the shape of share capital and loans. (c) Money received from the entities against sale/purchase. Shri Verma was also providing accommodative purchase entries to some of the beneficiaries. In this mode, he used to issue sale bills from some of partnership firms managed and controlled by him. These bills were mostly of clothes and fabrics. In actually, no goods used to be actually delivered against those bills. The beneficiary party used to make payment through cheque or RTGS. Either this amount was used to be withdrawn immediately or this amount was routed through a number of other entities of Himanshu Verma. In this was ultimately cash was given back to the beneficiary party. 5(2) Statement of Himanshu Verma was taken on oath not only during the search operation....
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....erma has received brokerage/commission from the beneficiaries. As per the statement taken on oath during the course of search operation, Himanshu Verma has accepted that he has received brokerage/commission from the beneficiary @ 0.75% to 1.50% of the amount of accommodation entries provided by him. The mode of receiving brokerage/commission from the beneficiary was in the form of cash. The relevant portion of statement dated 29/3/2012 of Himanshu Verma is reproduced as under: Q.10 Please state how the beneficiary company / entity / firm / person approaches you getting accommodation entries? Ans. Whenever any company/concern who wish to take accommodation entries from us approaches us through various C.A. operating In this field. We receive cash from them and give them entries through cheque from any of our controlled company. We receive commission in the range of 0.75% to 1.50%. Q.12 Please state how the commission was charged by you for providing accommodation entry and how this commission is received by you? Ans. The commission is charged at the rate which I have already stated in my statement. The commission is charged quarterly or six monthl....
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.... 2. Prakash Hirawa Laxmi Nagar 9891253533 3. Narender Gupta Faridabad 9810705094 4. Dinesh Agrawal Faridabad 9811195852 5. Dinesh Jain Panipat 9812025885 6. Sandeep Garg Ghaziabad 9899055146 7. Deepak Agrawal Nirman Vihar 9811072652 8. Sameer Agrawal Faridabad 9811597073 9. Mahavir Guta Faridabad 9810484612 10. Atul Khandelwal Rohini 9810121160 11. Mohit Vohra Delhi 9810020637 12. Sanjay Gupta Shalimar Bagh 9871188000 13. Vijay Gupta Palam 981174091 Cash is delivered by the concerned middleman a day before the issue of accommodation entry cheque in the name of the beneficiary person by me. The cash was delivered personally by the concerned CA/middleman in our office. After receiving the cash we issue cheques of the same amount from any one of our fifteen to twenty company which are managed and controlled by us for providing accommodation entries. The cheques are delivered to the same CA/middleman who brings the cash. Sometimes instead of issuing the cheques funds are transferred through TRGS from all account of any one of 15-20 ....
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....s with Varrenyam Securities Pvt. Ltd. but I have knowledge that Mr. Himanshu Verma is engaged in entry operation business. 10. Perusal of various statement of Shri Atul Khandelwal, CA which were recorded during the survey proceedings unambiguously indicates that Sh. Atul Khandelwal had colluded with Mr. Himanshu Verma, an entry operator and was instrumental at arranging the accommodation entries for M/s Varrenyam Securities Pvt. Ltd. from various shell companies owned and controlled by the Himanshu Verma Group in lieu of commission. 11. Further statement of Sh. K.K. Munjal, Director of the M/s Varrenyam Securities Pvt. Ltd. assessee company had repeatedly evaded with the compliance of summons issued by this office, but when his statement was finally recorded by holding camp office at his residence, certain explicit assertions were made by Sh. Munjal concerning the role of Mr. Atul Khandelwal, which brings to bear many intriguing issues. Relevant portions of the statement of Shri Munjal recorded u/s 131(1A) on 2nd February, 2013 are reproduced herein as under:- Q8. Kindly explain the name of the companies to whom your company lends money on intere....
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....andan Enterprises Pvt. Ltd. (v) No semblance of any worthwhile business activities being performed by M/s Varrenyam Securities Pvt. Ltd. coupled with the absence of any employees aiding and assisting the company in its day to day affairs. (vi) The company had shown 2442/10, 1^st Floor, Beadon Pura, Karol Bagh, New Delhi as its Registered Office in the documents filed with the Ministry of Corporate Affairs. On the date of survey, the survey party could not find a single instance of any worthwhile business activity of the captioned assesses company being performed from its registered office. Through discreet inquiries it was gathered that M/s Varrenyam Securities Pvt. Ltd. had shown its business address which was the office premises of one Chartered Accountant Shri Atul Khandelwal, Proprietor of M/s A. Khandelwal & Co. During the course of inspection u/s 133A of the IT Act, 1961 at the premise, it was found that no semblance of an office activities of the company was available or could be found at the address as furnished to the Ministry of Corporate Affairs. Statutory documents which are mandated to be kept and maintinaed at the registered office of any company as ....
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....company. Any relevant information pertaining to the terms of settlement of loan, date of settlement could only be explained by Sh. Ganesh Gupta, elder brother of Sh. Sumit Gupta and that the role of directors in this company was only confined to signing other pay orders in the capacity of authorized signatories. Statement of Shri Ganesh Gupta recorded on 01.03.2013 is reproduced as under: Q14. Whether any agreement has been entered into with M/s Varrenyam Securities Pvt. Ltd. entailing the terms and condition of the rate of interest, date of settlement and penalty provisions, etc.? Ans. There was no agreement with Varrenyam but there was a verbal commitment of 9% p.a. interest on loan and it agreed that the loan period was three years. Q.18 As per information available with the ROC M/s Varrenyam Securities Pvt. Ltd. was incorporated on 20.4.2011 and within a week of incorporation, the company has lend Rs. 26.85 cr. To M/s Sidhvandnn Enterprises Pvt. Ltd. In light of this please explain as to how is this transaction possible and secondly whether your company has done due diligence to ascertain the credit worthiness of the lending company. Please e....
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....ompanies which are part of Himanshu Verma. 15. I have considered the contention of assessee reply to show cause which hold no ground as the assessee has miserable failed to prove three ingredients of Section 68 viz. (i) identify of the creditor, (ii) creditworthiness of the creditor and (iii) the genuineness of the transaction and is proved beyond doubt that amount of Rs. 26.86 crores has been introduced by assessee which has been received from M/s Varrenyam Securities (P) ltd. from dubious companies owned and operated by Shri Himanshu Verma. 16. In the present case, it is significant that the persons involved in the credits which have been added u/s 68, have been found to be engaged in giving bogus accommodation entries. Specific information was received as a result of inquiries by the investigation Wing, about the bogus accommodation entries taken by the appellant. The appellant has not denied that they received cheques from these persons. The modus operand in such cases is well known. In the face of this information, a heavy burden lay on the appellant to prove that the credits were genuine. The onus had clearly shifted to the appellant. It is incorrect to say ....
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....source of the credit or the explanation offered is not satisfactory. It places no duty upon assessing officer to point to the source from which the money was received by the assessee. 19. Therefore the said amount of Rs. 24.78 crores (Rupees twenty four crores Seventy eight lakhs) taken from 13 companies is added to the total income as unexplained cash credit u/s 68 of the Income Tax Act on protective basis in the hands of the assessee company. I am also satisfied for initiating penalty proceedings u/s 271(1)(c)of Income-tax Act for filing inaccurate particulars of income." 5. The ld. CIT (A) upheld the addition holding that the AO was justified in including the sum of Rs. 24.78 Crores being unexplained credit in the books of the assessee by invoking Section 68 of the Income Tax Act, 1961. 6. The ld. CIT (A) categorically held that the proceeds of the share capital arranged through the accommodation entries were used by the appellant legitimately to provide business loans to its borrowers through banking channel and such loans were duly repaid by the appellant's borrowers through banking channels. The assessee has also received interest and shown the interest in thei....
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....addition in dispute. Against the impugned order, Revenue is in appeal before the tribunal. 4. At the time of hearing, Ld. CIT(DR) relied upon the order passed by the Assessing Officer and stated that Section 68 of the Act permits the AO to add the credit appearing in the books of account of the assessee if the latter offers no explanation regarding the nature and source of the credit or the explanation offered is not sat is factory. She also submitted that it places no duty upon AO to point to the source from which the money was received by the assessee. She also relied upon the decision of the Hon'ble Hon'ble High Court of Delhi in the case of CIT vs. Navodaya Castles (P) Ltd. (2014) 50 taxmann.com 110 (Delhi) and the Hon'ble Supreme Court of India in the case of Navodaya Castle (P) Ltd. vs. CIT (2015) 56 taxmann.com 18 (SC). In view of above, she requested to allow the appeal of the Revenue. 5. On the contrary, Ld. Counsel for the assessee relied upon the impugned order passed by the Ld. CIT(A) and stated that Ld. CIT(A) has passed well reasoned order which does not need any interference. In support of his contention, he also filed two paper books i.e. Pape....
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....t is for this reason that the A.O. added Rs. 26.85 Cr. the loan reed. from Verrenyam u/s.68 The case of Verrenyam of A.Y.12-13 was completed u/s.143(3) (1- 18) In the case of Verrenyam, the said amt. Rs. 24.78 Cr. taken from 13 companies by Verrenyam has been added u/s.68 (RP - 17-18) CIT(A) in Verrenyam, sustained the said addition ofRs. 24.78 Cr. (55- 59, RP-59) ITAT dismissed the appeal of Verrenyam, hence the addition of Rs. 24.78 Cr. remains sustained in the hands of Verrenyam, which position continuous even as on date (54-55) It is the same 24.78 Cr. which was given by Verrenyam to assessee, which is the part of total addition of Rs. 26. 85 Cr. made in the hands of assessee (A.O. Pg.15, Para-12) Hence, Rs. 24.78 Cr. since already stands added in the hands of Verrenyam and the same amt. has been reed. by the assessee, therefore in the hands of the assessee, the source of said amt. stands fully explained w.r.t. provisions of Sec.68 of the I.T. Act. Under these facts, to make addition for the same amt. of Rs. 24.78 Cr. in the hands of Verrenyam and then again in the hands of assessee will tantamount to double addition of the ....
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....f varrenayam * ITR (45) * PAN (30) * Financial statements (19-29) * Bank statements (31-39) * Ledger A/c (40-43) * Certificate of Incorporation (44) CASE LAWS For - if loan re turned, it is an evidence for the loan being genuine DIT VS. MODERN CHARTIABLE FOUNDATION 335 ITR 105 (DEL.) "we may also record the submissions of the Ld. Counsel for the respondent that in sofar as un - secured loans are concerned, they were paid back in subsequent years, which shows that these were genuine loans taken by the assessee." CIT VS. KINETIC CAPITAL FINANCE LTD. 202 TAXMAN 548 (DEL.) Held that - Where assessee has furnished details with respect to deposits and investors had acknowledged fact that money has been returned to them, further, interest has been received by the investors and TDS has been deducted, thus, assessee had discharged its initial onus and was not require to prove genuineness of transaction with the creditor and source of income of creditor. CIT VS. AYACHI CHANDRASHEKHAR NARSANGI 221 TAXMAN (GUJ.). (MAGZ.) 146 Loans - A.Y. 2006 - 2007 - AO framed Asstt. U....
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.... of Income for Assessment year 2012-13 declaring a total income of Rs. 1,33,04,450/- and assessment of M/s Varrenyam Securities Private Limited was framed by DCIT, CC-20, New Delhi (the same AO in the case of the assessee) determining its total income at Rs. 25,11,04,450/ - vide his order u/s 143(3) of the I.T. Act, 1961 dated 24.03.2015 (the date on which AO also framed the assessment order for assessee). It is also noted that the assessee in support of the genuineness of the aggregate of the loans taken had filed the Copy of PAN Card of the Lender; Copy of Bank Statement of the Lender showing all above entries; Confirmation of the Lender in writing for giving the loan; ROC Registration, Lender is filling regular various documents with ROC; Lender name is in ROC record; Copy of ITR of the Lender. Record shows that the Lender filling papers with IT Department regularly and Copy of Audited Final Accounts' of the Borrower. It is also noted that M/s Varrenyam Securities Private Limited is a much bigger company than the assessee company and the loan taken by the assessee company was partly repaid by the assessee to the extent of Rs. 18,25,00,000/- through banking had paid ....