TaxTMI 
TaxTMI 
2022 (9) TMI 1244
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....panies are primarily Kolkata based with low capital, high reserves, high turnover and no income which are typical traits of sheet companies. 2. On the facts and in the circumstances of the case, the CIT(A) erred in not appreciating the outcome of the investigation and enquiries conducted by the high-level team of the department on the addresses of the aforesaid companies wherein it is categorically stated that the above companies were not available at the given addresses and the no information was available with respect to the identity & genuineness of these companies. 3. On the facts and in the circumstances of the case, the CIT(A) erred in relying upon the decision in the cases of R.K Transport & Construction P Ltd. and R.K Ferro Alloys P Ltd. and without appreciation the HC decision on similar issue in N Tarika Properties Investment P Ltd. (2013) 40 taxmann.com 525 (Delhi HC), NR Port folio P Ltd. 214 taxmann.com 291 and Nipuna Builders & Developers P. Ltd. (2013) 30 taxmann.com 292 ( Delhi HC)." 2. Succinctly stated, the assessee company which is engaged in the business of trading in land and that of a builder had e-filed its return of income for A.Y.2013-1....
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....ee in its reply that all the aforementioned lender companies were holding PAN and were regularly filing their respective returns of income. It was the claim of the assessee that now when the aforementioned lender companies had sufficient financial means a/w. regular source of income, therefore, no adverse inferences as regards their creditworthiness could have been drawn. It was further submitted by the assesee that the loans in question were received from the aforementioned companies out of their respective bank accounts and copies of the same were filed before the A.O. 3.1 However, the A.O was not persuaded to subscribe to the claim of the assesee of having raised genuine loans from the aforementioned companies. It was observed by the A.O that a perusal of the documents filed by the assesee revealed that the companies from whom loans were claimed to have been raised were in fact paper companies as their physical presence could not be established. As regards, the bank account of the aforementioned companies from where loans were claimed to have been received by the assessee, it was observed by the A.O that a perusal of the same revealed that immediately prior to the advancing o....
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....espective confirmations, it was observed by the CIT(Appeals) that the respective lender companies had duly confirmed the source from which the loans were advanced by them to the assesee company a/w. the complete details of their tax credentials and addresses. Also, it was observed by the CIT(Appeals) that in the confirmations of the lenders the company master data as was extracted from the official website of the Ministry of Corporate Affairs was mentioned. Apart from that, it was observed by the CIT(Appeals) that all the loans in question that were raised by the assessee from the aforementioned seven parties had been repaid a/w interest @12% p.a (on which tax was deducted at source) by the assessee in the immediately succeeding year i.e. during the period relevant to A.Y.2014-15. The CIT(Appeals) after considering the bank statements of the lender companies and their financial statements was of the view that their creditworthiness i.e. availability of sufficient funds with them for advancing the respective loans was duly evidenced. Apart from that, it was observed by the CIT(Appeals) that the assessee company which was one of the group companies of "Bohra Group" was subjected to s....
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....e Ld. Authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the ld. AR to drive home his contentions. 7. Admittedly, it is a matter of fact borne from record that the assessee had during the year under consideration raised loans aggregating to Rs.3,07,50,000/-(approx.) from the aforementioned seven Kolkata based companies. At the very outset, we may herein observe that though the A.O had held the interest bearing loans in question that were raised by the assessee from the aforementioned parties as bogus, however, he had not drawn any adverse inferences as regards the interest that was claimed by the assessee company in its profit & loss account to have been paid to the said respective lenders @12% per annum during the year. On a perusal of the orders of the lower authorities, it transpires that as observed by the CIT(Appeals) and, rightly so, though the A.O had drawn adverse inferences based on his observation that the team which was constituted to carry out verifications about the authenticity of the loans that were....
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.....4,115,478/- plus other income of Rs. 4,074,698/-and Rs.99,725/- totaling to Rs. 83,29,901/- out of which loan of Rs. 25,00,000/- has been given. In the case of Star land Procon Pvt Ltd the revenue from sales has been shown at Rs.19,029,761/- plus interest income of Rs. 2,231,262/- totaling to Rs.21,261,023/- out of which a loan of Rs. 1.25 Crores has been given. Coming to Suryakiran Tradecom Pvt. Ltd the turnover has been shown at Rs. 19.89 crores and loan given is of Rs.25,00,000/- In the case of Vinsher Commercial Pvt. Ltd. the revenue from operations has been shown at Rs.23,165,442/- plus other income of Rs.17,272/- totaling Rs.23,182,714/- out of which loan of Rs. 20,00,000/- has been given." As observed by the CIT(Appeals) and, rightly so, the respective lenders had not only confirmed the loan transactions in question but had also substantiated the source of source i.e. the source out of which the respective loans were advanced by them. Admittedly, the bank accounts of the respective lenders though reveals credit of amounts through RTGS/transfers prior to advancing of the respective loans by them to the assessee company, but in case of neither of....
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....rementioned lender companies, it transpires that the respective amounts in question were advanced by the lender companies out of the funds which were received by them through RTGS/bank transfers and not by way of any cash deposits. No material had been placed on record by the A.O which would reveal that any amount credited in the bank account of either of the lender was in the nature of an amount received to facilitate providing of an accommodation entry. In fact, it is not even the case of the department before us that either of the aforementioned seven lender companies is a blacklisted company. Another aspect which duly substantiates the authenticity of the loan transactions in question is the fact that majority of amounts of the outstanding loans had been repaid by the assesee company through banking channels prior to selection of its case for scrutiny assessment vide notice issued u/s.143(2), dated 02.09.2014. The details of the repayment of the outstanding loans by the assessee company to the aforementioned lender companies is culled out as under: Sr. No. Particulars Amount 1. Apnapan Mercantile Pvt. Ltd. Loan repaid (including interest) on 01.06.2013 ....
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....tisgarh in the case of Pawan Kumar Agrawal (supra) though the A.O remained under a statutory obligation to have carried out necessary verifications by exercising the powers vested with him u/s.133(6) or u/s.131 of the Act for disproving the assessee's claim of having raised genuine loans from the aforementioned parties, but we find that nothing had been done by the AO in the case before us. In fact, we would mince no words in observing that there had been no attempt on the part of the AO in even carrying out any exercise to dislodge the authenticity of the loan transactions in question. Also, our aforesaid view that in case the A.O had any doubts as regards the authenticity of the loan transactions under consideration then he ought to have exercised the powers vested with him u/s.131 of the Act and summoned the said lenders and made requisite enquiries from them is supported by the judgment of the Hon'ble High Court of Karnataka in the case of G. Shubha Devi Vs. ITO, 307 CTR 536 (Kar.). 11. On the basis of our aforesaid deliberations, we concur with the view taken by the CIT(Appeals) that as not only the assessee had duly substantiated the authenticity of the transaction to the ....