TaxTMI 
TaxTMI 
2024 (4) TMI 312
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..... CIT(A) failed to appreciate that the credits in the name of Shri. Umed Mehta and his floated concerns [Umedmal (HUF), Chakra Exports and Pranav Enterprises] are not genuine, inasmuch as Shri. Umed Mehta accepted that the entire transaction relating to M/s. Kawarlal group was only accommodation in nature. 2.3. The ld. CIT(A) erred in holding the impugned transactions with Umedmal (HUF), Chakra Exports and Pranav Enterprises were taxed in the hands of the appellant's group concern at source, without appreciating that the offer made for A.Y 2009-10 before the Income-Tax Settlement Commission (ITSC), Chennai, did not cover the impugned transactions and that the transaction with Pranav Enterprise was never offered for transaction in any of the assessment years. 3. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of Id. CIT(A) may be set aside and that of the Assessing Officer be restored. As is evident, the sole issue that arises for our consideration is addition of unexplained cash credit for Rs. 2.47 Crores as made by Ld. AO while framing an assessment for this yea....
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.... 2. Unsecured loan received from M/s.Chakra Exports: The assessee Company has received a sum of Rs. 75,00,000/- from M/s Chakra Exports (one of the floated proprietory concern of Shri Umed Mehta) a) Amount received from Kawarlal & sons by Kesaria Marketing Pvt Ltd (Umed Mehta group) Rs. 97,53,700/- Amount received from D.K. Enterprises by Kesaría Marketing Pvt Ltd (Umed Mehta group) Rs. 51,00,570 Rs. 1,48,54,270 b) From the above, amount diverted to Vim Mines & Minerals Rs. 1,25,00,000 c) Out of this Rs. 1.25 Crores a sum of Rs. 75 Lakhs is diverted by Vim Mines & Minerals to M/s Chakra Exports. d) From the above, the assessee company received back Rs. 75 lakhs as unsecured loan from M/s Vim Mines & Minerals. 3. Unsecured loan received from M/s. Pranay Enterprises: Finally, the assessee Company has received Rs. 39,00,000/- from M/s. Pranav Enterprises (one of the floated propriety concern of Umed Mehta group) which is nothing but the money given to Shri Umed Mehta. The assessee has shown outstanding amount as Rs. 42,00,000/- including the interest payable ....
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.... Umed Mehta wherein he surrendered an additional income of Rs. 970.02 Lacs towards transactions with the concerns of Umed Mehta group. The Ld. AO made impugned addition in the hands of the assessee on account of unsecured loans received from concerns of Shri Umed Mehta out of commission paid to the assessee's group concerns viz. M/s Kawarlal & Sons and M/s D.K. Enterprises. Since, now both these entities offered additional income and paid taxes under settlement, the same could not be taxed in the hands of the assessee. In support, ledger copies of both these entities were also enclosed. The assessee also tabulated the commission & interest expenditure in its written submissions. The assessee also established chain of flow of funds in support of its claim. 4.2 Concurring with assessee's submissions as well as working, Ld. CIT(A) deleted the impugned additions as under: - 7. I have gone through the facts of the case and the material available on record. The Assessing Officer had added Rs. 1,30,00,000 towards unsecured loan received from C. Umedmal HUF; Rs. 75,00,000 from M/s. Chakra Exports and Rs. 42,00,000 from M/s. Pranav Enterprises. The appellant contended that the a....
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....e loan from M/s. Pranav enterprises which is also reckoned as a transaction routed through the concerns of Umed Mehta out of the commission and expenditure claimed by the appellant's group and has the appellant's group has offered the entire sum of money as commission and expenditure from concerns of Umed Mehta, that is evident from the table supra, I am of the view that the impugned sum is part of the offer of additional income disclosed before the Hon'ble ITSC . 9. In view of the foregoing discussions and in view of the facts of the determination of total income arrived at by the Hon'ble ITSC wherein the source for the impugned credits brought to tax by the Assessing Officer has been subjected to tax, l am of the view that the impugned additions of Rs. 2,47,00,000 [Rs.1,30,00,000 from C. Umedmal HUF; Rs. 75,00,000 from M/s. Chakra Exports and Rs. 42,00,000 from M/s. Pranav Enterprises] are untenable. The AO is therefore directed to delete the additions. 10. In the result, the appeal for A Y 2009-10 is allowed. The Ld. CIT(A) has rendered clear finding that the impugned credits brought to tax by Ld. AO had already been subjected to tax in settlemen....
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....group transferred the amounts so received to the concerns run by Shri Umed Mehta, the Kartha of C. Umedmal (HUF) and thereafter out of the same, a sum of Rs. 1,25,00,000/- was transferred to the assessee company as unsecured loans. 7. Similarly, it has been submitted that out of the sum of Rs. 1,48,54,270/- transferred to M/s Kesaria Marketing Pvt. Ltd. from the amounts received from Kawarlal & Sons and M/s D.K. Enterprises, sum of Rs. 1,25,00,000/- was diverted to M/s Vim Mines & Minerals. It has been further submitted that out of this amount only a sum of Rs. 75,00,000/- was transferred to M/s Chakra Exports which was in turn transferred to the assessee company. 8. It has also been submitted that out of the amounts so transferred to Umed Mehta concerns only, a sum of Rs. 39,00,000/- was transferred from M/s Pranav Enterprises to the assessee as unsecured loan. But such nexus to the above amount declared is not proved. There is no declaration before the ITSC about transaction with or through Pranav Enterprises. There is no information in the Settlement. 9. All the above are only claims of the assessee in the appeal proceedings and the assessee has not pr....
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....ITSC is the ultimate source for the unsecured loans received by it. However, we find that these submissions run contrary to the very basis of Ld. AO making impugned addition in the assessment order. In the assessment order, the Ld. AO has noted the chain of flow of funds and finally rendered a finding that unsecured loan as received by the assessee was nothing but device adopted by the assessee to introduce its own unexplained money into the account. The entire transaction was a sham transaction since assessee's money was routed through different accounts and was received back as unsecured loan. It was the admission during survey operation that Shri Umed Mehta had floated various concerns to accommodate the receipts from M/s. Kawarlal & Sons. It was also alleged that the assessee used circular route to receive the loan on its account and the same was merely a device being used to evade taxes. Therefore, the same was brought to tax. The remand report is in contradiction to the findings in the assessment order and therefore, the same could not be accepted by us. 7. As against this, it could be seen that the assessee established complete chain of flow of funds by way of elabora....