TaxTMI 
TaxTMI 
2023 (5) TMI 27
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....ed in the business of real estate and has derived income from the same. The Ld. AO considered investigation wing letter with regard to information in the print media that certain allegedly bogus companies operated by Mukesh Kumar and Deepak Aggarwal were giving accommodation entries. Search and seizure operation was carried out at different residential and office premises of these persons and based on the evidences collected it was found that the assessee company had also received Rs. 1,75,00,000/- lakhs from M/s. Arti Securities & Services Ltd.( referred hereinafter as 'Lender'), which is run and controlled by these two alleged accommodation entry providers. The Ld. AO, were considering these facts raised query with the assessee company. The assessee company had filed confirmation of loan creditor along with ITR and bank statement of M/s. Arti Securities and Services P. ltd. However, notices issued by Ld. AO were not served, therefore, assessee company was asked to produce the party. The assessee company however failed to produce the Director of M/s. Arti Securities and Services P. ltd. Accordingly, after issuing show cause, the unsecured loan of Rs. 1,75,00,000/- from M/s. Arti S....
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....n of the AO cumulatively about the identity and capacity/creditworthiness of the creditors along with the genuineness of the transaction. All the constituents are required to be cumulatively satisfied. If one or more of them is absent, then the AO can make the additions u/s 68 of the Act as an income. The fact remains that the company is private company in which public are not substantially interested these type of companies are mostly family controlled companies for which the onus as required u/s 68 of the Act is very heavy to prove identity and capacity of the shareholders and genuineness of the transaction. In view of the above discussion, I am of the considered view that merely submission of the name and address of the share subscriber, income tax returns, Balance sheet/statement of affairs of the share subscriber and bank statement is not sufficient as the AO is to be satisfied as to their identity and creditworthiness as well as to the genuineness of the transaction entered into. The alleged share holders were not found to be genuine and thus, the onus shifts back to the appellant to produce the shareholders before the AO and if the appellant falters, the additions can be mad....
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....umption and surmises and CIT(A) is not justified in confirming the same. 3. That observation of A.O. regarding personal appearance of party are highly uncalled for and same are without proper appreciation of legal procedure and opportunity to the same. 4. That the Assessing Officer has erred in charging interest u/s 234A, 234B, 234C without application of mind and proper opportunity. 5. That the orders of the lower authorities are not justified on facts and the same are bad in law. 6. That the assessee craves leave to add, amend, alter or forgo any or all of the grounds as may be necessary and in the interest of justice." 4. Heard and perused the record and considered the submissions. The brief synopsis filed on behalf of the assessee was taken on record while supplying a copy of the same to the Ld. DR. Based upon the same, the determination of grounds is as follows :- 4.1 The Ground no. 1; is not pressed on behalf of the assessee accordingly disposed off. 5. Ground no. 2 and 3; Primarily on merits, the fundamental submission of Ld. AR was that the Ld. Tax Authorities have not disputed the genuineness of the documents placed on record of M/s. Arti Securities and Services....
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....ddress of the company of M/s. Arti Securite is and Services Pvt. Ltd. was Gautam Budh Nagar, Noida and not Shalimar Bagh, Gaziabad, where notices u/s 131 of the Act were issued by the Ld. AO. That indicates that maybe the notices envelope with report, "Left", was correct and does not mean that there was no company in existence at all to say that the identity of lender was doubtful. 8. Next, it comes up that the ld. AO in his assessment order has taken into account all the relevant documentary evidence produced by the assessee. The same includes following :- "8. In support of the loan received from M/s Arti Securities & Services Limited, we have placed following documents on record: i. Certificate of registration as Non-Banking Financial Institution of M/s Arti Securities enclosed at page 78 of the paper book. ii. ITR Ack. & Audited Balance Sheet of the lender for A.Y. 2015-16 enclosed at page 79 - 98 of the paper book. iii. Ledger Account of the lender showing the loan received and subsequent repayment along with Interest enclosed at page 99 -102 of the paper book. Iv Confirmation from the lender company enclosed at page 103 - 105 of the paper book. V Bank Statement of....
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....proof. The Ld. Tax Authorities have fallen in error in citing suspicion alone instead of sifting truth from the evidence produced before it. 9. The matter of fact is that M/s. Arti Securities and Services Pvt. Ltd. has filed its return for year ending 31.03.2015 wherein the interest income was shown at Rs. 3,50,05,402/-. The intimation u/s 143(1) dated 11.10.2016, available at page no. 189-194 of the paper book, establish that return of Arti Securities and Services Pvt. ltd. for A.Y. 2015-16, showing income of Rs. 50,43,390/- has been accepted. This is prior to impugned order of Ld. AO in case of assessee dated 27/12/17. Thus when the interest income of M/s. Arti Securities and Services Pvt. Ltd. stands accepted by the Department, then the loan disbursed by it to earn that income cannot be considered to be tainted, by attributing suspicion to the identity or creditworthiness of sources of M/s. Arti Securities and Services Ltd. as a lender. 10. Further, the assessee has also provided the copy of order of Ld. CIT(A) in case of M/s. Arti Securities and Services P. Ltd. for A.Y. 2014-15 available at page no. 112-134 of the paper book which shows that Ld. CIT(A) has deleted an additio....