AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 354
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....he Act to the tune of Rs.5,05,00,000/- and confirmed the balance amount of addition of Rs.30,00,000/-. The Ld CIT(A) also granted proportionate relief in respect of interest expenditure disallowed in both the years. Aggrieved, both the parties are in appeal in AY 2013-14. The assessee has filed appeal in AY 2014-15. 3. The facts relating to the addition of Rs.5.35 crores made by the AO in AY 2013-14 have been narrated as under by Ld CIT(A) in the order passed by him for assessment year 2013-14:- "5.2 During the assessment proceedings from the perusal of the balance sheet, the AO noticed that the appellant has taken from various parties detailed below; SN PARTICULARS DIRECTOR LOCATION UNSECURED LOANS (RS) INTEREST 1. AnunayComrnosales Pvt Ltd Rahul Kolkata 1,55,00,000 1 1,22,017 2. Devesh Commosales Pvt Manish Kolkata 1,05,00,000 6,27,141 3. Kingfisher Properties Pvt Ltd Vishal Kolkata 20,00,000 9,469 4. Lity Star Constructions Ltd Umesh Kolkata 20,00,000 14,795 5. Pushpanjali Commo Trade Pvt Umeah Kolkata 10,00,000 7,101 ....
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....assessee. Accordingly, AO held that assessee has not been able to discharge its onus casted as per section 68 of the Act and the credits of Rs.5,35,00,000/- remained unexplained. AO also disallowed the interest paid on the above loans amounting to Rs.25,25,841/-. 4. The AO has also summarized his conclusions with regard to the above said loans as under:- Sr. No. Name of company Paragraph for reference Finding in brief 01 Lona Mercantile Pvt. Ltd. 09 to 09.4 and 13 These companies do not have any business, operated from a very small room with only one employee, source of funds is from share premium and there is no capacity to raise huge share premium. The Director Shri Avinash Jajoo admitted that these are paper concerns. Shri Tushar Sharma, a director of M/s Smart Pay Card Pvt. Ltd. was an employee of Shri Jajoo and is a director in numerous companies and this company does not have creditworthiness to lend huge unsecured loans to assessee. 02 Frank Mercantile Pvt. Ltd. 03 Virgo Mercantile Pvt. Ltd. 04 Smart Pay Card Pvt. Ltd. 05 Kingfisher Properties Pvt. Ltd. Para 10 to 10.8 The Director, Shri Umesh Singh who has signed the ....
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....nt order of the instant appellant by the AC in respect of the above documents submitted by the appellant during the assessment proceedings. As a matter of fact, the financial statements of the above lender companies are also available on the public domain of Ministry of Corporate Affairs, The appellant has received the borrowings from the aforesaid lender companies through banking channels as reflected-in the bank-account of the appellant. Further, it is observed that there is no direct evidence, which has been brought on record by the AO to point out that the said transactions arc accommodation entries. No nexus is established that the funds have been circulated or that cash was paid by the appellant company to the aforesaid lender-companies to obtain the cheques for unsecured loans. 7.4.2 Further, from the perusal of the ledger accounts and bank account statements of bank account of the appellant maintained with Bank of India, Mahalaxmi, Mumbai, I find that the aforesaid loan amounts along with interest has been repaid to the said companies in the financial years, 2013-14 and 2014-15 relevant to assessment year 2014-15 and 2015-16 respectively. The appellant has deducted....
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....ced. There is no material on record to pinpoint that the loans received by the appellant, from M/s. King Fisher Properties Pvt. Ltd. has been given from the funds received from the 'aforesaid two companies in which Shri Umesh Singh was director, Therefore, in view of the above facts, it cannot be concluded that the funds amounting to Rs.20 lakhs received from M/s.Kingfisher Properties Pvt. Ltd. are non-genuine. 7.4.6 Coming to the other two companies namely, M/s. Arm nay Commosale Pvt. Ltd. and M/s. Devesh Commosale Pvt. Ltd., I find that the AO formed the opinion that the aforesaid two lender companies are no I creditworthy and proceeded to make the addition u/s.68 solely on the basis of low income earned during the concerned year. In this respect, the fact remains that these lender companies had sufficient funds of their own to lend the loans to the appellant as can be observed from the balance sheet which is brought out in the above table. Further, the assessment order in these companies show that the AO of these lender companies has accepted the financial statements declared by the aforesaid lender companies in their Returns filed as genuine. Therefore, contention ....
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....on forms, allotment letters and share certificates, so also the books of account The balance sheet and profit and loss account of those persons disclosed that they had sufficient funds in their accounts for investing in the shares of the assessee, In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the assessee. Therefore, the addition was liable to be deleted." (c) CIT vs. Creative World Telefilms Ltd 333 1TR 100 (Bombay HC): "In the case in hand, it was not disputed that the assessee had given the details of name and address of the shareholder, their PAN/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and rea.ch the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement 'not traceable'. The Assessing Officer ought to have found out their details through PAN cards, bank account details or from their' bankers so as to reach the shareholders since all the relevant material details and ....
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....ddition on sound reasoning and accordingly contended that the Ld CIT(A) was not justified in deleting the above said addition. The Ld A.R, on the contrary, submitted that the Ld CIT(A) has deleted the addition on noticing that the assessee has discharged the initial burden placed upon its shoulders. He further submitted that the Ld CIT(A) has duly addressed various other reasoning given by AO for making the addition. Accordingly, he submitted that there is no reason to interfere with the order passed by Ld CIT(A) in respect of addition of Rs.5.05 crores. 7. With regard to the addition of Rs.30 lakhs made by Ld CIT(A), the Ld A.R submitted that the assessee has taken above said amount as loans from M/s Lity Star Constructions Ltd (Rs.20.00 lakhs) and M/s Pushpanjali Commo Trade P Ltd (Rs.10.00 lakhs) and it has discharged initial burden placed upon it in respect of above said loan of Rs.30.00 lakhs by furnishing all the details relating thereto. He submitted that both the above said companies have duly responded to the notice issued by the AO u/s 133(6) of the Act. Both the companies have supplied necessary information in response to the summon issued u/s 131 of the Act also. Acc....