TaxTMI 
TaxTMI 
2023 (2) TMI 82
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....ilable on record. The assessee is a private limited company engaged in land development and construction. The return of income for the A.Y. 2017-18 was filed by the assessee company on 07/11/2017 declaring total loss of Rs 6,64,33,728/- which was duly processed u/s 143(1) of the Act. A survey u/s 133A of the Act was carried out in the premises of the assessee company on 20/09/2016 wherein the assessee came forward to make some disclosure of income in the sum of Rs 6 crores under Income Declaration Scheme (IDS) on 20/09/2016 and further sum of Rs 12,12,40,800/- was declared by the assessee being on money received at Rs 400 per square feet on 303102 square feet on the project 'Amar Harmony' at Taloja. Hence the total disclosure made by the assessee during survey proceedings worked out to Rs 18,12,40,800/- for the year under consideration. 3.2. The ld. AO observed that the assessee company had made cash deposits during the demonetization period as under:- 10.11.16 - 25,00,000 - Abhyudaya Co-op Bank, Vashi Branch 10.11.16 - 25,00,000 - SDC Bank, Vashi Branch 24.11.16 - 3,50,00,000 - SDC Bank, Vashi Branch 25.11.16 - 3,00,00,000 - SDC Bank, Vashi Branch 09.12.16 -....
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....s and hence is not available as a source for making cash deposits into bank. From 20/09/2016 (i.e the date of survey) till 08/11/2016, the assessee had made cash deposits only to the extent of Rs 75,00,000/- and substantial sums were deposited only during the demonetization period. The ld. AO acknowledged the fact of assessee offering a sum of Rs 12,12,40,800/- in the return filed for the A.Y.2017-18 but observed that the said income was offered under the head 'any other income' of nature 'income declared under IT survey'. The ld. AO observed that though Rs 12,12,40,800/- being on money received from customers by the assessee was offered to tax by the assessee, the details of customers with name, address, PAN, amount received was not filed during the survey proceedings by the assessee. The ld. AO observed that there was substantial gap between the income offered during survey proceedings and subsequent cash deposits made during demonetization period. The ld. AO also observed that disclosure made in IDS, 2016 and during survey proceedings were not brought into the books of accounts of the assessee and hence availability of cash balance with the assessee cannot be believed. With thes....
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....ecord by the revenue that this income was not available in the form of cash balance with the assessee in the instant case. 3.8. Further we find that the assessee also declared a sum of Rs 12,12,40,800/- being on money received at Rs 400 per square feet on 303102 square feet on the project 'Amar Harmony' at Taloja. We find that this sum of Rs 12,12,40,800/- was already offered as income in Schedule 19 of the Profit and Loss Account for the year ended 31/03/2017 by the assessee. The assessee had further explained that post demonetization on 08/11/2016, the assessee company had deposited Rs 10,20,38,500/- during the period 09/11/2016 to 31/12/2016. Out of the said amount deposited, a sum of Rs 4,76,70,050/- pertains to amount declared during survey proceedings and the balance of Rs 6 crores pertains to amount declared under IDS, 2016. The balance cash of Rs 7,35,70,750/- (60000000+121240800-107670050) was already advanced to various parties and the same was grouped in the financial statements under Sundry Assets in the Balance Sheet as on 31/03/2017 in Schedule 17 'Other Current Assets'. 3.9. We find that the cash book for the period 01/04/2016 to 31/03/2017 relevant to A.Y. 2017-18....
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....e with the assessee company which explains the total cash deposits made during 22/09/2016 to 31/03/2017 which includes the demonetization period of 09/11/2016 to 31/12/2016 also. 3.12. In view of the aforesaid observations, we have no hesitation to hold that the entire cash deposits made by the assessee company stood properly explained by way of available cash balance and hence there is no scope of making any addition towards unexplained cash deposits. The ld. AO is hereby directed to delete the addition made in the sum of Rs 10,20,38,500/-. Accordingly, the Ground No.2 raised by the assessee is allowed. 4. The next issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the addition made u/s.68 of the Act in respect of unsecured loans of Rs.43,27,42,916/- in the facts and circumstances of the instant case. 4.1. We have heard rival submissions and perused the materials available on record. During the year under consideration the assessee had received the following loans from the following parties:- Name of lender PAN Loan received during year Outstanding balance as on end of FY Kundan Tieup Pvt. Ltd. AADCK0926E 8,06,00,000 6,31,00,0....
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....2015-16, 2016-17, 2017-18, 2018-19 and 2019-20 of this lender company. The ld. AO observed that this lender company was owned by M/s. Deepesh Vanijya Pvt. Ltd. and M/s. Jas Deep Tradecom Pvt. Ltd which are also having the same address of the assessee company herein. Accordingly, the ld. AO concluded that Gami family (belonging to assessee group) had already acquired the shareholding of this lender company. The ld. AO observed that this lender company had meager income in its income tax returns filed for A.Y.2017-18 and no interest has been paid by the assessee on this loan. The ld. AO observed that lender company had substantial amount of share capital and share premium in its balance sheet which was also invested in various entities including the assessee company. Finally, the ld.AO concluded that creditworthiness of the lender company had not been proved by the assessee company herein. Hence, to be treated as unexplained cash credit u/s.68 of the Act. It is pertinent to note that the ld. AO had added the sum of Rs.6,31,00,000/- being the outstanding balance at the end of the year with regard to this lender company u/s.68 of the Act as against the amounts of loans received during ....
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....any is established beyond doubt. In the instant case this has duly been satisfied by the assessee. Hence, all the three ingredients of Section 68 of the Act has been proved beyond doubt in the instant case. In any case, this loan was already repaid by the assessee in full in A.Y.2018-19 as stated supra. Hence, we direct the ld. AO to delete the addition made u/s.68 of the Act in respect of this lender company. (ii) Astute Advisors Pvt. Ltd. Loan received during the year - Rs.2,35,00,000/- Loan outstanding at the end of Financial Year - Rs.3,46,42,916/- 4.7. The assessee has furnished the following documents before the ld. AO. (a) Financial statements of this lender company for the Asst Years 2015-16 to 2019-20. (b) Details of shareholders of this lender company for the Asst Years 2015-16 to 2019-20. (c) Ledger account of lender company as appearing in the books of assessee company for the period 1.4.2016 to 31.3.2017 together with the confirmation of the lender by mentioning its PAN details. (d) Bank statements of the lender company for the relevant dates on which loan has been advanced to the assessee company proving the immediate source of credit. (e) ITR acknowle....
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....s scenario, the only logical conclusion that could be derived is that the assessee company had duly discharged its onus by furnishing all the requisite documentary evidences proving the three necessary ingredients of Section 68 of the Act and that the ld. AO had not drawn any adverse inference on the same. In view of this, we direct the ld. AO to delete the addition made in the sum of Rs.3,46,42,916/- in respect of loan received from M/s. Astute Advisors Pvt. Ltd. (iii) RG BJ Traders Pvt Ltd 1.Loan received during the year - Rs 11,17,00,000/- 2.Loan outstanding at the end of the year - Rs 2,92,00,000/- 5. We find that assessee had submitted the following documents before the ld. AO with regard to this lender company. (a) Financial statements of this lender company for the Asst Years 2015-16 to 2019-20. (b) Details of shareholders of this lender company for the Asst Years 2015-16 to 2019-20. (c) Ledger account of lender company as appearing in the books of assessee company for the period 1/4/2016 to 31/3/2017 together with the confirmation of the lender by mentioning his PAN details. (d) Bank statements of the lender company for the relevant dates on which loan has bee....
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.... was a change in shareholding of the lender company and hence the amount given to the assessee by them is undisclosed income of the assessee. This allegation of the Revenue is absolutely without any basis. In this regard, we hold that merely because there has been change in shareholding of the company, it does not mean automatically that the new shareholders have introduced their undisclosed income for acquiring shares. We find that the ld. AO had stated that no interest is paid on the loans borrowed by the assessee company to the lender company. This was countered by the ld. AR by stating that the loan was borrowed in March 2017 and hence, no interest was paid during the year under consideration. However the assessee had paid interest in immediately succeeding year i.e Financial Year 2017-18 including the interest payable for F.Y.2016-17 i.e the year under consideration. In this regard, the ld. AR submitted that the interest paid by the assessee company in A.Y.2018-19. Further, the assessee has repaid the loans commencing from December 2020 and finally repaid on 8.6.2021, which fact is evident from page 748 of the paper book filed before us. 5.3. We find from the perusal of the r....
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....hare premium in its books ; that the shareholders of DTPL are nothing but shell entities as they have no capacity to pay such huge premium to DTPL ; that Moon Rise Distributors Pvt. Ltd. and Buds Dealers Pvt. Ltd. are being controlled by Gami Family from 2017 onwards and hence, two companies which held shares of 92.86% in DTPL had sold its shares to the Gami Family ; that by this process, the assessee company and DTPL became related entities ; that Shri Shanker Kumar Khetan had provided accommodation entries to various companies which are listed in pages 17-19 of the assessment order and had earned commission income thereon and this commission income was agreed to be offered to tax pursuant to the search by Shri Shanker Kumar Kethan in the statement recorded u/s.132(4) of the Act. Based on these observations, the ld. AO concluded that all the entities which received funds through the assistance of Shri Shanker Kumar Khetan are shell entities wherein they have received accommodation entries and given accommodation entries to various companies and ultimately that money had flown to the assessee company, hence, the entire genuineness of transactions and creditworthiness of the lenders....
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....hed, imaginary and unbelievable considering that the asset (loan/ Advance) has been acquired in 2016-17. It was argued that in the period of 2010-11 M/S SGPIL or any member of Gami Family had no interest whatsoever in the alleged benamidar Company or it's alleged share premium contributors. It was argued that the loan & advances were made by DTPL to SGIPL only in 2015 (2.7 crore) & 2016 (27.88). It was also stated that member of Gami Family became shareholder of M/s Moonrise Dist Pvt & M/s Buds Deals Pvt Ltd only in 2016-17. It was therefore argued that prior to 2015-16, there was no nexus of the involvement of SGIPL or members of Gami Family in the transaction of DTPL, and/ or its shareholder companies. This fact is not disputed, however the IO had argued that the share premium of Rs 33 crore is the sources of the said asset and as Shri Gami was not able to prove the genuineness of the companies providing the fund (share premium), the apparent source of the share premium from shareholders can't be accepted and it is logical presumption that the same has been arranged by him/SGIPL. I.O had relied on the financial affairs and capacity of the shareholders companies & their pr....
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....s" is not correct, this proposition can't be accepted. 34. The IO Invocation of 2(9)(D) requires that consideration for advances made to M/s SCPIL have been arranged from "non- traceable" or "fictitious" person. In the instant case, the direct source of this Advance to M/s SGPL is M/s DTPL which is existing corporate entity albeit controlled by "Gami Family". The M/s DTPL had in its various assets as on the day of making this advances including Loans & Advances given to other entities (under old management). Actually earlier composite grouping of "Loan & Advances" and "current Investments" has been replaced by new advance of Rs 33.58 Cr to M/s. SGIPL. Thus under no circumstance can it be said that the consideration has been received from non traceable and fictitious persons. 35. If we can manage to see the "woods" instead of "trees" we can appreciate that the Initiating Officer is probably correct when he says that M/s DTPL & its Share Holder entities were created in 2010-11 with the purpose to provide accommodation entities to the "willing customers. The whole structure was created in 2010-11 and Capital of Rs 33 Cr Approx. was made available for disbursing accommodation e....
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....eration, DTPL had received back those loans and advances and investments and that money has been utilized by DTPL to make advances to assessee company. The assessee company enters the scene in respect of the financial transaction only in this year by way of receipt of loans and accordingly during the years 2011-2016, whatever financial transactions that were undertaken by DTPL either by way of receipt of monies or by payment of monies, the assessee company was not at all involved. This fact is quite evident on perusal of order of the Adjudicating Authority dated 21/09/2021 which is reproduced supra. There is absolutely no cash trial found with cogent evidences by the ld. AO or by the ld. CIT(A) to prove that unaccounted cash of assessee company had come back in the form of loan from DTPL during the year under consideration. We find that the ld. AO's main grievance is that the shareholders of DTPL had sold their shareholding to Gami Family thereby making assessee company and DTPL related concerns. We are unable to comprehend ourselves as in what way this fact would raise any suspicion or doubt on the impugned loan transactions between DTPL and assessee company. If it is a related co....