TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 1406
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....rch by invoking the provisions of section 69A read with section 115BBE of the Act. The addition confirmed is unjustified and bad in law. 2. That on the facts of the case, in law and under the circumstances, the Commissioner of Income Tax (Appeal)4, Kanpur erred to confirm the action of the assessing officer to make an addition of Rs. 20,44,870/- (1/3" of Rs. 61,34,610/- treated as unexplained jewellery) by invoking the provisions of section 69A read with section 115BBE of the Act under section ignoring the plea that jewellery belonging to the daughter is also kept in the house. The addition confirmed by Hon'ble Commissioner of Income Tax (Appeal)-4, Kanpur is unjustified, unwarranted based on surmises, conjectures, and the same is bad in law. 3. That on the facts of the case, in law and under the circumstances, the Commissioner of Income Tax (Appeal)4, Kanpur erred to confirm the action of the assessing officer to make an addition of Rs 92,00,000/- to the incomer of the appellant for the alleged loan figures jotted on the rough paper bearing number Z-1, of Annexure LP-3, page number 27 by invoking the provisions of section 69A of the Act, while no such loan was ever receive....
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.... Pvt. Ltd., addition of Rs. 50,00,000/- made by the AO as unexplained loan u/s 68 of the Act, is justified. 3. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by Assessing Officer of Rs. 25,00,000/- on account of unexplained loan u/s 68 of the IT Act, 1961 without considering that lender company namely M/s Moral Sales Pvt. Ltd. does not have the creditworthiness to pay huge amount of loan i.e. Rs. 25,00,000/- to the assessee as the lender company had declared income of Rs. 1,05,690/- only during the year. Only transaction through banking channel does not make a transaction genuine. Further, the assessee had not shown the amount of loans forwarded to the assessee in its balance sheet. Since the assessee failed to prove the genuineness of her receipt of loan from M/s Moral Sales Pvt. Ltd., addition of Rs. 25,00,000/- made by the AO as unexplained loan u/s 68 of the Act, is justified." 4. In ITA No. 2125/Del/2022, following grounds have been raised by the Revenue: "1. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by Assessing Officer of Rs. 1,50,00,000/- on account of une....
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....ogus entity and merely working for providing accommodation entries to various entities. In such facts and circumstances, the creditworthiness of lender and genuineness of the loan received by the assessee from M/s KG Finvest Pvt. Ltd. could not be proved. 2. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by Assessing Officer of Rs. 37,00,000/- on account of unexplained loan u/s 68 of the I.T Act, 1961 without considering that as the lender company M/s Sarvottam Securities Pvt. Ltd. does not have the creditworthiness to pay huge amount of loan i.e. Rs. 37,00,000/- to the assessee as the lender company had declared income of Rs 9,99,730/- only during the year. Further, enquiries were made by the Investigation Wing and it was found that the company is a bogus entity and merely working for providing accommodation entries to various entities. In such facts and circumstances, the creditworthiness of lender and genuineness of the loan received by the assessee from M/s Sarvottam Securities could not be proved. 3. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by Assessing Offic....
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.... that the lender company namely M/s Sarvottam Securities Pvt. Ltd. does not have the creditworthiness to pay huge amount of loan i.e. Rs. 1,00,00,000/- to the assessee as the lender company had declared income of Rs 19,89,470/- only during the year. Further, enquiries were made by the Investigation Wing and it was found that the company is a bogus entity and merely working for providing accommodation entries to various entities. In such facts and circumstances, the creditworthiness of lender and genuineness of the loan received by the assessee from M/s Sarvottam Securities could not be proved. 2. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by Assessing Officer of Rs. 3,30,00,000/- on account of unexplained donation u/s 68 of the I.T Act, 1961 without considering that the doner doner companies namely M/s Moral Sales Pvt. Ltd. & M/s Amsoft Global Pvt. Ltd. do not have the creditworthiness to pay huge amount of loan i.e. Rs. 2,80,00,000/- & Rs. 50,00,000/- respectively to the assessee as the doner companies had declared very low incomes during the year. It had also not furnished its financial statement to prove its net worth ....
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.... been inherited and received in marriages of the family members. However, the source of jewellery has not been properly explained by the assessee. In order to follow principles of natural justice, the CBDT's instruction No. 1916 dated 11/05/1994 and press release dated 01/12/2016 regarding the eligible amount of jewellery that can be kept by the family members is applied. The family of the assessee consists of the following members who are eligible to claim benefit of above said jewellery to the extent of limit as prescribed in the above said circular. Sl. No. Name of the family member Eligible Weight of jewellery to be claimed 1. Sh. Ganga Saran Sharma (Father) 100 GMS 2. Smt. Shashi Sharma (Mother) 500 GMS 3. Sh. Ankur Sharma (Brother) 100 GMS 4. Smt Nidhi Bansal (Sister in law) 500 GMS 5. Sh. Ankit Sharma (Self) 100 GMS 6. Smt Neha Goel (Wife) 500 GMS 7. Kiaara Sharma (Daughter) 250 GMS 8. Advay Sharma (Nephew) 100 GMS 9. Adyant Sharma (Nephew) 100 GMS Total 2250 GMS The remaining gold jewellery of 1627.5 Grams amounting to Rs. 61,34,610/- remains unexplained. Therefore, considering the facts of the case and CBDT's instruction No. 1916 d....
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....is of withdrawals as well as deposits of cash in various bank accounts of the family members, use of drawings for other household expenses has not been taken into consideration while making a claim that total withdrawals of Rs. 13.50 crores have been made by various family members in their bank accounts. Therefore, the ld. CIT(A) held that the submission is quite vague and lacks specificity in providing the evidence and proving the source of the jewellery found in the residential premise. The bills of purchase, the wealth tax evidences, valuation certificates along with date of purchase could not be furnished in case of jewellery found in the residential premise, which are considered as clinching evidences to prove the time as well as source of the purchase of jewellery. The ld. CIT(A) held that the AO has already considered as explained the jewellery of 2250 grms in accordance to CBDT Instruction No. 1916 dt. 11.05.1994 pertaining to all male and female members of the family and has been reasonable enough to add only 1627.5 grms jewellery valuing Rs. 61,34,610/- and divided the same in the hands of main family members i.e. the appellant, his father and brother. The ld. CIT(A) held....
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....s. 10 Cr. The assessee stated that the income for all the years had fallen into the highest tax bracket which shows that the assessee has been earning substantial Income clearly establishing the status. It has time and again been held that due credit of the same has to be allowed by the assessing officer looking and appreciating the status, customs, and traditions relating to the family. Reliance is being placed upon following decisions: Ashok Chaddha vs. ITO, 14 taxmann.com 57 (Delhi) Vibhu Aggarwal vs. DCIT, 93 taxmann.com 275 (Delhi - Trib.) Tara Devi Goenka vs. CIT 122 ITR 14 (Cal) Ms. Pooja Shree Chouksey Vs. ACIT in ITA No. 572/lnd/2018 CIT Vs. Kailash Chand Sharma 198 CTR 201 (Raj) Suneela Soni Vs. DCIT in ITA No. 5259/DEL/2017 DCIT Vs. Shri Haroon Mohd. Unni in ITA No. 463/M/2012 Susan Suresh Chandra Tilwa Vs. DCIT in ITA No. 270/RJT/2015 DCIT, CC-8(3), Mumbai Vs. Shri Manekchand Kothari ITA No. 194/Mum/2018 16. The Hon'ble Delhi High Court in the case of Ashok Chaddha vs. Income-tax Officer 14 taxmann.com 57 (Delhi) held that collecting jewellery of 906.900 gms by a woman in a married life of 25 years in form of stree dhan or on other occasions is not ab....
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....ench of ITAT Delhi in the case of Vibhu Aggarwal vs. DCIT 93 taxmann.com 275 (Delhi - Trib.) held that where Assessing Officer under section 69A made addition on account of jewellery found in search of assessee, since assessee belonged to a wealthy family and jewellery was received on occasions from relatives, excess jewellery was very much reasonable and, thus, no addition under section 69A was called for. The operative part of the judgment is reproduced below: "2. The brief facts of the case are that a search & seizure operation under section 132 of the IT Act was conducted at the business premises of M/s Best Group and as well as in the residential premise of the Directors on 28.03.2011, in consequence to which the case of the assessee was taken up for scrutiny. The AO has completed the assessment by making an addition of 30,73,373 on account of unexplained investment in jewellery and addition of Rs. 1.87,082/- on account of unexplained investment in property. The total jewellery found during the course of search was 2531.5 gms, out of which the AO has given assessee the benefit of 950 gms, as per the CBDT Instruction No. 1916 dated 11.4.1994 on account of wife and two childre....
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....at this document is an estimate seem to be finalized on 21.09.2018 and as such pertains to the assessment year 2019-20. It is explained that the family trust by the name of Jai pal Singh Sharma Trust had been in the process of establishing and running medical college at Pilukhwa since 2013-14. However, in spite of best efforts, the society could not get medical seats for pretty long time and had been running in to heavy losses as will be apparent from the Income Tax returns filed by the trust year after year. It was somewhere for the end of financial year 2018 the trustees were approached by group of persons through a common family friend to work out a proposal to take over the college on 'as and where' basis. The trustees' held several round of meetings and an estimated proposal was being worked out on the sheet alleged to be page number 27 and after considering losses suffered, the investment was required for around 130 crores inclusive of bank liabilities. However, the proposal could not get through, because still, the allocation of medical seats was yet to be approved. The real estate sector had been passing through heavy recession and looking to the quantum of investme....
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....the ld. CIT(A), the appellant has submitted that addition of Rs. 92,00,000/- based on the seized paper Z-1, LP-3, page No. 27, is unjustified since no such loan was ever received by the appellant. In this regard the AO observes that this page contains the details of unsecured and secured loans taken from various persons and entities at different rates of interest. Almost all the loans were found as reflected in the books of Sh. Jaipal Singh Sharma Trust and only two amounts were found in the books of Sh. Ankur Sharma (loans from Sh. P. C. Sharma and Sh. Ankit Vijh) and one amount in the books of Sh. Ganga Saran Sharma (loan from Sh. P. C. Sharma). However loan amounts of Rs. 30,00,000/- from Sh. Vaibhav Tyagi and Rs. 62,00,000/- from Sh. Vibhor Tyagi were not found reflected in the books of any of the group entities, therefore Rs. 92,00,000/- were added as unaccounted income u/s 69A of IT Act in the hands of Sh. Ankit Sharma, secretary of the trust. In this regard the AR submits that this document is just a proposal prepared by the family to sell the hospital and the college on account of heavy losses suffered by the trust during this period and further a setback of not getting app....
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....taken by him. It is also submitted that the search was also conducted in the official and residential premises of Sh. Vaibhav Tyagi and Sh. Vibhor Tyagi on 03.11.2016 and no corroborative evidences could be found which may link these entries with Sh. Ankit Sharma, i.e. the appellant. The ld. CIT(A) held that the presumption of section 132(4A) and 292C of IT Act applies in case of a seized paper which means that the contents of this paper i.e. page No. 27 of Annexure LP-3 are correct. The ld. CIT(A) held that from the facts of the case it is clear that the seized page contains overall situation of loans taken from Banks and other persons by Sh. Jaipal Singh Sharma trust. The ld. CIT(A) held that the AR successfully explained all the entries of this page but the two entries appearing in serial No. 10 & 11 in the names of Mr. Vaibhay Tyagi (Rs. 30,00,000/-) and Mr. Vibhor Tyagi (Rs. 62,00,000/-) which sum-up to Rs. 92,00,000/- could not be successfully explained by the appellant." 23. Aggrieved, the assessee filed appeal before the Tribunal. 24. During the hearing before us, the ld. AR relied on the submissions and the arguments taken up before the revenue authorities and the ld. ....
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.... During the year, the assessee received loans from two entities namely, M/s. Sarvottam Securities Pvt. Ltd. and M/s. Aspire Sales Pvt. Ltd. The AO held that the amounts received from these entities are bogus, conversely the ld. CIT(A) held that they cannot be considered so. 30. Proceedings before the Assessing Officer: M/s. Sarvottam Securities Pvt. Ltd. "On perusal of details available on the system, it was seen that Sh. Ankur Goel, CA of M/s NJ & Associates, F-36, Gali No. -1, Madhu Vihar, Patparganj, Delhi has audited the books of accounts of this company for the AY-2017-18. Accordingly, on 19.02.2019, summons were issued, by the Investigation wing, in his name and got served. In response to this Sh. Ankur Goel attended this office on 10.06.2019 and his statement was recorded u/s 131(1A) of IT Act, 1961. He stated that he had audited the books of accounts of M/s K.G. Finvest Pvt. Ltd., M/s Sarvottam Securities Pvt., Ltd. and M/s Upaj Leasing and Finance Pvt. Ltd. during the FY-2015- 16 & 201617. When he was asked about the various directors of these companies during different FYs, he stated that he did not know these persons. He accepted that he had audited books of accoun....
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....hrough the above, statement recorded, the auditor of the company Sh. Ankur Gupta has himself admitted, in reply to Q.40, that the entities M/s Sarvottam Securities Private Ltd, M/s Upaj Leasing and Finance Company Ltd. and M/s KG Finvest Pvt. Ltd. provide accommodation entries to various entities." 33. The AO held that the statements have not been retracted or withdrawn during the search, post search or assessment proceedings. The AO held that the declared income of the loan party was Rs. 9,99,730/-. Hence, he treated the amounts received of Rs. 1.50 Cr. as bogus. Aspire Sales Pvt. Ltd.: 34. With regard to the loan received from, the AO held that the entity has declared returned income of Rs. 6,36,870/- and the NBFCs has issued total loan of Rs. 1 Cr. to the assessee as well as to Ms. Nidhi Sharma the other family member. This NBFCs has no other business activity and in the succeeding year, the loans given were of Rs. 1,83,359/- and in the preceding year it was Rs. 3,07,520/- and hence, the credibility of the loan party is not proved. Proceedings Before the ld. CIT(A): 35. The submissions of the assessee before the ld. CIT(A) are as under: SARVOTTAM SECURITIES PVT LTD. ....
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.... respect of this property is also enclosed. Unfortunately as is well known, rental market operates in such a way that the owners do not rent out the property under an agreement for a period of more than 11 months fearing title disputes in long period agreements. A4. The company had shifted its office to the other address and copy of the rent agreement between the company and the land lord is enclosed in evidence. How could the company foresee, the issue of any notice from the department and further, the appellant had never been informed as to 'which address, the Income Tax Inspector had visited. Accordingly, the contention of the investigation wing as incorporated in the body of the assessment order is based on mere assumptions and whims of the officer concerned and thus cannot be relied upon to doubt the genuineness of the lender company. B. The appellant has been further required to explain the contents of last paragraph at page 3 of the assessment order where it is rendered that the investigation wing had summoned and examined Shri Ankur Goel, the Chartered Accountant who has claimed to have audited the books of account of the company for the year under consideration. Th....
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....udit report has been already filed before your honour. It is thus explained that once, the assessing officer has made independent enquiries, he cannot brush aside the material information collected by her simply to follow the agenda set by investigation wing. C1. The evidence filed had been complete in all respects and no defect was pointed out in the documents submitted on records by the respective lender companies in compliance to notice served under section 133(6) of the Act nor any further query is raised. The balance sheet of the company Sarvottam Securities Pvt. Ltd. for the assessment year 2016-17 reflects total assets of Rs. 107,60,35,346/- and an amount of Rs. 105,85,84,049/- is shown as short term loan and advances. The trading account of the company shows total revenue receipts of Rs. 1,70,73,910/-. Accordingly, the requirement of section 68 stands fully complied with, the identity of the company is proved, the genuineness of transaction stands proved and the creditworthiness of the company is proved beyond any doubts. REGARDING ASPIRE SALES PRIVATE LIMITED D. On the last date of hearing, appellant was required to explain the objections recorded by the assessing o....
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....vt. Ltd. have been examined separately. In the matter of unsecured loan of Rs. 75,00,000/- taken from M/s. Sarvottam Securities Pvt. Ltd. the AO observes that as per ITR this loan creditor has shown the income of only Rs. 9,99,730/-. The AO observes that the loan creditor lacks the creditworthiness. In the assessment order, the AO records that during post search proceedings, summons were issued in the name of Sh. Ankur Gupta and Sh. Prem Nath, both directors in M/s. Sarvottam Securities Pvt. Ltd., however the inspectors could not find the given address at Plot No. 246/68, SF East School Block, Mandawali Delhi 92. The AO further observes that the summons could also not be served at the residential address of Sh. Ankur Gupta at D-1/245, Block D-1, Buddha Vihar, Phase-1, Delhi. It is observation of the AO that Sh. Ankur Goel CA of M/s. NJ and Associates, F-36, Gali No. 1, Madhu Vihar, Patpad Ganj, Delhi has audited the books of this company for AY 2017-18 and his statement was recorded u/s 131(1A) of IT Act on 10.06.2019 and he stated that he had audited the books of M/s. KG Finvest Pvt. Ltd., M/s. Sarvottam Securities Pvt. Ltd. and M/s. Upaj Leasing and Finance Pvt. Ltd. for FY 2015-....
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....ld not be served. More so, the letters were wrongly addressed to second floor while the office of the company had been functioning from the first floor. The AR brings to the notice that the lender company had again shifted its office in the year 2019 to the new address and proper rent agreement was executed finally on 18.02.2019 with Shri K. Pandey son of Shri R.D. Pandey owner of the property bearing unit number 114, Vardhman, Mayur Market, CSC, Mayur Vihar, Phase-3, Kondli, Gharoli, Delhi-110096. Copy of rent agreement in respect of this property has also been enclosed. 6.6 The AR claims that in AY 2016-17, the books of this loan creditor i.e. M/s. Sarvottam Securities Pvt. Ltd. have been audited by Shenu Aggarwal, chartered accountant, prop, of M/s. Shenu Aggarwal and Company and the books of the creditor' company were not audited by Sh. Ankur Goel, chartered accountant and there is no evidence on record to prove that Ankur Goel may be partner of Shenu Aggarwal. The AR claims that all the assertions of Sh. Ankur Goel that lender company is bogus and entry provider are totally false and seem to be given out of professional jealousy. He submits that the investigation wing fa....
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....lly returned by various concerns of appellant Group. 6.7 From the records it has been found that Sh. Ankur Goel has not audited the books of accounts of M/s. Sarvottam Securities Pvt. Ltd. in the year under consideration. Infact the books have been audited by Shenu Aggarwal, Chartered accountant who is prop, of Shenu Aggarwal and Company. Further the notices issued by the AO have been complied and all the requisite details have been filed on behalf of loan creditor M/s. Sarvottam Securities Pvt. Ltd. From the return of income it has been found that the address of M/s. Sarvottam Securities Pvt. Ltd. is Plot No. 246/68, 1st Floor, East School Block, Mandawali, Delhi-110092. The appellant has also furnished the registered rent agreement between Smt. Dimple Verma and M/s. Sarvottam Securities Pvt. Ltd. dt. 21.05.2016 as an evidence. The AR claims that the inquiry was conducted on the 2nd floor of this premise as is mentioned in the assessment order. The AR further claims that the office of the company was shifted in 2019 at 114, Vardhman, Mayur Market, CSC, Mayur Vihar, Phase-3, Kondli, Gharoli, Delhi-110096. The copy of rent agreement of this premise is also furnished. Therefore the....
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.... that stand added to the document/promissory notes .and further with advance assurance for repayment of loan amount by issuing undated cheques. It has been emphasized that trust had been facing grave financial crisis in the absence of sanction of medical batches and the trust had been extending its medical facilities on the OPD slip of Rs. 10/- only. The trust had been following and pursuing its charitable objectives and due to the same, the trust had suffered losses to the tune of around more than Rs. 20 Crores. Therefore the circumstances indicate that, the trust needed actual money to run the hospital smoothly in view of the mounting losses and not mere accommodation entries. There is force in the argument of the AR that the circumstantial evidences lead to the conclusion that the Trust needed actual money and there was no such big cash generating other business activity from which excess cash was being generated for which family members of the searched group would have resorted to accommodation entries to introduce the unaccounted income. The statement given by Sh. Ankur Goyai, CA after more than 5 months of the search, has been found incorrect in the light of the fact that the....
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....f the balance sheet and ITR had been furnished along with copies of loan agreements and other supporting documents. The AR further omits that the net income declared in the ITR is not the sole criteria to judge the creditworthiness of any lender company, the trading account of the lender company shows Revenue from operations at Rs. 9,54,76,041/- and the balance sheet reflects total assets/investments at Rs. 5,21,41,882/- that includes trade receivables at Rs. 1,63,85,283/- besides Rs. 1,83,359/- reflected under 'short term loan and advances'. The AR explains that every auditor has his own system of indicating advances and/or receivables in the balance sheet, he clarifies that the loan received stands reflected in the list of Trade Receivable' and necessary confirmation is enclosed. The assessing officer in the body of the assessment order has wrongfully mentioned the figure of Rs. 1,83,359/- only to indicate the financial health of the company. Accordingly, it is stated that the financial health of the entity is very sound and the bank account does not reflect any cash deposit at all and the assessing officer has not made out the case of entry in lieu of cash with sufficient docu....
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....-Trib [2020] 185 ITD 236 (Mumbai-Trib.[12-03-2020) Ancon Chemplast (P) Ltd. vs ITO, Ward-2(4), New Delhi, [2021] 127 taxmann.com 150 (Delhi - Trib.)2022) 93 ITR(T) 167 (Delhi - Trib.).[2021] 189 ITD 156 (Delhi-Trib [30-04-2021] PCIT vs. E Smart Systems (P) Ltd. (2019) 105 taxmann.com 158 [Del.-HC]. PCIT vs. Hi-Tech Residency (P) Ltd., [2018] 96 taxmann.com 402 [Del-HC] Mod Creations (P.) Ltd. vs. ITO [2013] 354 ITR 282 [Del.-HC] Flourish Builders & Developers (P) Ltd. vs. DCIT (2019) 176 ITD 409 [Del Tribe] ACIT vs. Vikrant Puri [2015] 47 ITR (T) 708 [Delhi-Tribu.] Rajesh Bhatia vs. DCIT [2017] 88 taxmann.com 350 (Delhi-Tribu.] CIT vs. Diamond Products Limited [2009] 177 Taxman 331 [Delhi-HC). Prayag Tendu Leaves Processing Co. vs. CIT [2017] 88 taxmann.com 23 [Jharkhand HC) PCIT vs. Veedhata Tower Pvt. Ltd. [2018] 403 ITR 415 [Bombay-HC] 38. We have gone through evidences collected by the Assessing Officer, the reply submitted by the assessee before the AO and the ld. CIT(A), examination of each issue and contention raised by the revenue with reference to the facts relied upon by the ld. CIT(A) and reports of the investigation. The ld. CIT(A) cogently brought ....
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.... family members in its balance sheet. Thus, the AO held that the genuineness of the transaction is not established. 43. The AO held that during the post search proceedings, summons were issued by the investigation wing in the name of Sh. Vivek Dutta and Sh. Har Dayal both Directors in M/s Moral Sales Pvt. Ltd for compliance. However summon could not be served at the registered office of the company in this case as the premises were found locked and no whereabouts of the company could be known. Since, the office of the company as reported by the ITIs was locked, accordingly, ITIs were again directed to serve these summons and submit their report. Again the summons could not be served and it was reported that the premises is the office of M/s Rajesh Vipin and Associates CA. And, Sh. Bijendra Chauhan working in their office told that neither there is any person with the name Sh. Hardayal nor M/s Moral Sales Pvt. Ltd., exists at this address. Summon was also sent, by the investigation wing, through speed post. In response to summon, the authorized signatory of the company submitted the written submission through speed post. In this reply the authorized signatory of M/s Moral Sales Pvt....
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....ked, how does this prove that the company does not exists. Further, the address where the inspectors were sent by the investigation wing too is not mentioned at all. As such, it does not lead to negative conclusion by the assessing officer. E2 It is further noted in the second last para at page 10 of the order, that the notices were again sent through ITI but it could not be served. Finally in the last para at page number 10, it is recorded that the summons were sent through speed post by the investigation wing and reply received through authorized signatory of the company Moral Sales Private Limited that matter being of the old, period, need 15 days time- to furnish information. from observation recorded in last paragraph at page 10 of the assessment order, it has become absolutely clear that the notice stands served on the company moral sales private limited, how the investigation wing has concluded that it is paper entity with no office and engaged in providing accommodation entries only. E3. To sum up, the assessing officer had also issued notice under section 133(6) of the Act to the lender Moral Sales Private Limited. The notice had been properly received by the company a....
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....pany and books of other two companies Amsoft Global Private Limited and moral sales private limited have been audited by Deepak Jain, chartered accountant. Necessary evidence in support of this contention is enclosed and and as such there is no partnership between the two professional chartered accountants namely Shenu Aggarwal and Ankur Goel. the statement is a mere in professional jealous y and deserves to be discarded. It is strange that the assessing officer relied upon the statement of some CA Shri Ankur Goei s recorded by the investigation wing, not to the knowledge of the appellant, but regretfully, the mandatory notice under section 142(1) of the Act is not served, the statement of the said third person never confronted to the appellant before using the same against the appellant for making addition nor the said witness/person was allowed to be cross-examined to arrive at the bottom of the matter. The recording of the statement was kept under wraps fearing the truth may not surface, if the copy of the statement is provided to the appellant. Reference is invited to the judgment delivered by the Income Tax Appellate Tribunal Chandigarh Bench, Chandigarh in the case of Nir....
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....lace to stress upon the fact that the assessing officer had made discreet enquiries by sending notices under section 133(6) of the Act The notices were served and received by the lender companies and the desired documents, confirmations, balance sheets and copies of the bank statements were furnished in compliance to the requirements as raised in the notice issued under section 133(6) of the Act. 48. The ld. CIT(A) after examination of the loan held that the matter of unsecured loan of Rs. 25,00,000/- taken from M/s. Moral Sales Pvt. Ltd., the AO observes that this entity has declared income of only Rs. 1,05,690/-, however the total loan of Rs. 80,00,000/- is advanced to the appellant and his family members during the year. The AO accepts that the notice issued u/s 133(6) of IT Act has been complied. However the AO observes that from the balance sheet of this lender company it has been found that it has shown total loans and advances of only Rs. 52,97,148/- hence the total loans of Rs. 80,00,000/- given to the appellant and his family does not appear genuine. The AO observes that summons u/s 131 of IT Act were issued and in compliance to the same Sh. Santosh Gupta CA attended and ....
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.... and balance sheet reflects total investments at Rs. 5,03,45,177/- that includes accumulated profits/reserve and surplus at Rs. 4,94,41,908/- and trade receivables at Rs. 1,44,23,653/- besides short term-long term loan and advances at Rs. 52,97,148/-. The AR clarifies that every auditor has his own system of indicating advances and/or receivable in the balance sheet. The breakup of the figure of loan and advances declared at the net amount of Rs. 52,97,148/- is provided with the clarification of auditor Sh. Deepak Jain that this is net amount of advance to others/ receivables of Rs. 2,32,68,050/- less unsecured loan/ payables of Rs. 1,80,00,000/- and TDS amount of Rs. 29,098/-. Thus the AR submits that the AO has wrongly concluded that the loans and advances given to the appellant group amounting to Rs. 80,00,000/- are way more than the loans and advances shown by the lender at Rs. 52,97,148/- with the following gross situation of the advances and receivables as net off to loans/ payables: 49. In the FY15-16, in the balance sheet of Moral Sales Private Limited, short term loans and advances was shown after netting off of unsecured loan payable/receivable. Advance to others & Rece....
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....Amsoft Global Pvt. Ltd. For the A.Y. 2017-18 1. Loan from Sarvottam Securities Pvt. Ltd. 2. Donation from Amsoft Global Pvt. Ltd. 3. Donation from Moral Sales Pvt. Ltd. 53. The issue of receipt of monies from Sarvottam Securities Pvt. Ltd. and Moral Sales Pvt. Ltd. have already been dealt above in the case of Nidhi Sharma in ITA No. 2124/Del/2022. With regard to K.G. Finvest Pvt. Ltd., the facts and the arguments of the revenue and the assessee are similar to that of Sarvottam Securities Pvt. Ltd. Hence, the same ratio applies in the case of Jaipal Singh Sharma Trust. 54. Hence, receipt of monies from Amsoft Global Pvt. Ltd. and Upaj Leasing & Finance Company Pvt. Ltd. are being dealt now. M/s Upaj leasing and Finance company Pvt. Ltd. 55. The relevant part of the Assessment Order is as under: "During the year, the assessee has received loan of Rs. 80,00,000/- from the company. The lender company has declared income of Rs. 13,63,530/- during the year. In respect of the above, firstly the lender company does not have the creditworthiness to pay huge amount of loan to assessee and its family members. Only transacting through banking channel does not make a transaction....
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....ed that he did not know these persons. He accepted that he had audited books of accounts of above three companies without knowing the directors of these companies. Sh. Ankur Goel was asked to state whether all loan agreements of above three NBFCs were put before him during audit of the books of accounts of these companies. In response to this he stated that loan agreements made by these companies were not put before him during the audit of books of accounts of these companies. From the statement of Sh. Ankur Goel, it is also seen that the directors are not the shareholders of the company. It is also observed that the directors appear to be only for namesake as they have low income ITRS. Shri Ankur Goel has further stated that all directors are dummy for namesake and are there only to sign documents. From the ongoing, it is clearly seen that these companies are bogus. When Sh. Ankur Goel was asked about the nature of entries made by the above mentioned NBFCs to Shri Jaipal Singh Sharma Trust, he clearly stated that these entries were Bogus. The relevant portion of his statements is as under: .......................... In his statement Shri Ankur Goel accepted that the loans adva....
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....ty can rely upon and though not conclusive, is decisive of the matter unless unsuccessfully withdrawn or proved erroneous. 4.1 From the above discussion on the unsecured loans received by the assessee trust during the FY 2015-16, it is clear that undisclosed funds have been routed through different entities and ultimately received by assessee. Thus the unsecured loans received by the assessee during the year are not genuine and received as loan which is a colourable device. Thus, the bogus unsecured loans to the tune of Rs. 3,72,00,000/- are added to the income of the assessee under section 68 of IT act, 1961." 56. Before the ld. CIT(A), the assessee filed written submission which are reproduced as under: "C. It has been recorded by assessing officer that during year under reference, assesse has received loan of Rs. 80,00,000/- from M/S Upaj Leasing and Finance Company Pvt. Ltd. and the lender company has declared income of Rs. 13,63,530A only for the year. In respect of the above, the assessing officer without first looking at her own investigation recorded that the lender company does not have the creditworthiness to pay huge amount of loan to assesse. C1. It is explained ....
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.... Accountant who has claimed to have audited the books of account of the company for the year under consideration. The appellant on the last date of hearing had been also required by your Honour to explain the contention of the Auditor Ankur Goel that the directors are not known to him and the company is a bogus entity engaged in providing accommodation entries only and that the directors being dummy, the beneficial directors are Himanshu Verma and Hari Shankar Yadav. D1. Respected Sir, it is explained that for assessment year 2016-17, the books of account of the company were Audited by Shri Shenu Aggarwal, Chartered Accountant, Proprietor of M/s Shenu Aggarwai & Company. The books of account of the company were never audited by Shri Ankur Goel, Chartered Accountant and there is no evidence on record to prove that Ankur Goel may be partner of Shenu Aggarwal. Necessary confirmation from Shenu Aggarwal, CA is enclosed and if desired, Shenu Aggarwal can be examined. Accordingly, all the assertions by Ankur Goel that lender company is bogus and entry provider is totally false and seems to be given out of professional jealously only. Since, books are not audited by Ankur Goel, CA for....
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....R CONSIDERATION AND THAT BOOKS FOR THESE COMPANY WERE AUDITED BY SHENU AGGARWAL, BEING THE PROPRIETOR OF HIS COMPANY NAMELY SHENU AGGARWAL & COMPANY. NECESSARY EVIDENCE IN SUPPORT OF THIS CONTENTION IS ENCLOSED AND AS SUCH THERE IS NO PARTNERSHIP BETWEEN THE TWO PROFESSIONAL CHARTERED ACCOUNTANTS NAMELY SHENU AGGARWAL AND ANKUR GOEL THE STATEMENT IS A MERE IN PROFESSIONAL JELOVSY AND DESERVES TO BE DISCARDED. It is strange that the assessing officer relied upon the statement of some CA Shri Ankur Goel s recorded by the investigation wing, not to the knowledge of the appellant, but regretfully, the mandatory notice under section 142(1) of the Act is not served, the statement of the said third person never confronted to the appellant before using the same against the appellant for making addition nor the said witness/person was allowed to be cross-examined to arrive at the bottom of the matter. The recording of the statement was kept under wraps fearing the truth may not surface, if the copy of the statement is provided to the appellant." 57. The ld. CIT(A) after going through the submissions of the assessee deleted the addition made by the Assessing Officer. For the sake of ready....
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....ree entities i.e. M/s. KG Finvest Pvt. Ltd., M/s. Sarvottam Securities Pvt. Ltd. and M/s. Upaj Leasing and Finance Pvt. Ltd. provide accommodation entries. The creditworthiness of M/s. Upaj Leasing and Finance Company Pvt. Ltd. was also concluded to be insufficient due to its meager income of Rs. 13,63,530/- in A.Y. 2016-17 against the loan of Rs. 80,00,000/-. 8.2 On the other hand the AR submits that notice under section 133(6) was issued to the lender company on 18.12.2020 by the assessing officer to verify the genuineness of the loan received by the company and in response to the same, the lender company furnished reply along with confirmation, ITR, and bank statement. Further summons under section 131 were issued to the company on 08.09.2021 and, in response, the authorized representative of the company Shri Pankaj Walia, Advocate appeared along with copy of the power of attorney issued on e-stamp paper by the Director of the company Shri Shree Ram Yadav and the copy of the loan agreement with the trust and he stated that the source of loan was out of accumulated profits and loan has been repaid by the trust to the company. The AR submits that the AO mentioned that the summon....
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....rust had been extending its medical facilities on the OPD slip of Rs. 10/- only. He claims that the Trust had been following and perusing its charitable objective in true spirits and for the same, the motive was to raise money for meeting charitable obligations and therefore actual money was needed and not accommodation entries that are generally taken in the event of heavy surplus income that may be needed to be brought back to the books of account. He claims that the Trust and the family had been running in to heavy losses in excess of more than Rs. 20 crores and since the actual funds/money were needed to run the hospital, there was no cause to indulge into accommodation entries. 8.4 From the records it has been found that Sh. Ankur Goel has not audited the books of accounts of M/s. Upaj Leasing and Finance Company Pvt Ltd. in the year under consideration. In-fact the books have been audited by Shenu Aggarwal, Chartered accountant who is prop, of Shenu Aggarwal and Company. Further the notices and summons issued by the AO have been complied and all the requisite details have been filed on behalf of loan creditor M/s. Upaj Leasing and Finance Company Pvt. Ltd. Therefore the AO ....
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....ues. It has been emphasized that trust had been facing grave financial crises in the absence of sanction of medical batches and the trust had been extending its medical facilities on the OPD slip of Rs. 10/- only. The trust had been following and perusing its charitable objectives and due to the same, the trust had suffered losses to the tune of around more than Rs. 20 Crores. Therefore the circumstances indicate that, the appellant trust needed actual money to run the hospital smoothly in view of the mounting losses and not mere accommodation entries. There is force in the argument of the AR that the circumstantial evidences lead to the conclusion that the Trust needed actual money and there was no such big cash generating other business activity from which excess cash was being generated for which family members of the searched group would have resorted to accommodation entries to introduce the unaccounted income. The statement given by Sh. Ankur Goyal, CA after more than 5 months of the search, has been found incorrect in the light of the fact that the books of the accounts of these three concerns i.e. M/s. Sarvottan Securities Pvt. Ltd., M/s. K G Finvest Pvt. Ltd. and M/s. Upaj....
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....i)[14-03-2017], Bini Builders (P.) Ltd. vs DCIT, Central range-7(3), [2020] 118 taxmann.com 447 (Mumbai - Trib.)/[2020] 185 ITD 236 (Mumbai - Trib.)[12-03-2020]. Ancon Chemplast (P.) Ltd. vs ITO, Ward-2(4), New Delhi, [2021] 127 taxmann.com 156 (Delhi - Trib.)/[2022] 93 ITR(T) 167 (Delhi - Trib.).[2021] 189 ITD 156 (Delhi - Trib.)[30-04-2021], PCIT vs. E Smart Systems (P.) Ltd., [2019] 105 taxmann.com 158 [Del.-HC], PCIT vs. Hi-Tech Residency (P) Ltd., [2018] 96 taxmann.com 402 [Del.-HC], Mod Creations (P.) Ltd. vs. ITO [2013] 354 ITR 282 [Del.-HC], Flourish Builders & Developers (P.) Ltd. vs. DCIT [2019] 176 ITD 409 [Del. Tribu.]. ACIT vs. Vikrant Puri [2016] 47 ITR (T) 708 [Delhi-Tribu.]. Rajesh Bhatia vs. DCIT [2017] 88taxmann.com 350 [Delhi-Tribu.] CIT vs. Diamond Products Limited [2009] 177 Taxman 331 [DelhiHC]. Prayag Tendu Leaves Processing Co. vs. CIT [2017] 88 taxmann.com 23 [Jharkhand HC]. PCIT vs. Veedhata Tower Pvt. Ltd., [2018] 403 ITR 415 [Bombay-HC] 58. Having gone through evidences collected by the Assessing Officer, the reply submitted by the assessee before the AO and the ld. CIT(A), examination of each issue and contention raised by the rev....
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....m this company M/s Amsoft Global Pvt. Ltd. are not genuine. Also, during post search investigation, enquiries were made by the investigation wing and it was found that the company is a bogus paper company and the transaction of giving loan to the assessee trust is bogus. To enquire about genuineness of such corpus donation, on 06.02.2019, summons were issued, by Investigation wing, in the name of Ms. Mamta Pandey and Mrs. Sweta Saurabh Gupta both directors in Amsoft Global Pvt. Ltd. for compliance on 13.02.2019. The ITIs who were sent to serve the summon reported that the office was locked and after making enquiries from Sh. Ramesh Kalra, CA, present in the same building in his office told that in this locked office Sh. Deepak Ji, Chartered Accountant works here but he does not know more about M/s Amsoft Global Pvt. Ltd. Thus summons in this case could not be served. On going through the details obtained from the system, it is seen that Sh. Deepak Jain, M/s Jain Deepak & Company, 2, Narinder Bhawan, 448, Ring Road, Azadpur, Delhi has audited the books of M/s Amsoft Global Pvt. Ltd. during the FY 2016-17 and 2017-18. Accordingly, on 11.02.2019, summon was issued in his name,....
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....voluntary donation and not corpus donation. The AO observes that in compliance to the notice issued u/s 133(6) of IT Act, the donor companies have claimed that these were corpus donations The AO has also brought to the fore that M/s. Moral Sales Pvt Ltd. had meager income of Rs. 1,64,630/- in this year but gave donation of Rs. 2,80.00.000/- and further M/s Amsoft Global Pvt. Ltd. had meager income of Rs. 82,120/- but gave donation of Rs. 50,00,000/-. The AO further observes that in compliance to the summons issued u/s 131 of IT Act, the director of M/s. Moral Sales Pvt Ltd, complied but did not furnish specific details however the director of M/s. Amsoft Global Pvt. Ltd., did not comply. The AO has also produced the findings of investigation wing to make a case that these donor companies are bogus and lack creditworthiness since they had very small incomes in FY 2014-15, 201516 and 2016-17. On the other hand the AR submits that all the donations received were utilized strictly to achieve the objects of the appellant Trust to provide free treatment to poor irrespective of caste, creed and colour and donation in complete were taken to the income and expenditure account and as such,....
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....of the companies. It is submission of the appellant that even if the observation made by the assessing officer in assessment order is considered to be correct for the sake of argument, the appellant has not played any fraud upon the revenue system, the appellant has transferred corpus donation to receipt account as voluntary donation and not otherwise The 'corpus donation' represents 'capital receipt while, the voluntary donations' are always part of the 'revenue receipts' and if the conditions laid down in section 11 and 12 are not complied with, the 'revenue receipts' in the form of 'voluntary donations' if any, would become taxable. In view of this legal proposition, the appellant has not committed any fraud upon the revenue and that too in the back ground of the fact that there was no specific direction attached to 'corpus donation' and no such narration has been pointed out by the assessing officer after deep examination of the confirmations and certificate of corpus donations submitted by the donors. In this case, the verifications of the records have been made by calling for the records from the Olo DCIT Central Circle, Ghaziab....