TaxTMI 
TaxTMI 
2023 (10) TMI 1406
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....nexplained gold ornaments found at the time of search 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 provision....
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....e assessee failed to prove the genuineness of his receipt of loan from M/s Aspire Sales 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.....
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....- 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 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.....
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....n deleting the addition made by Assessing Officer of Rs. 1,00,00,000/- on account of unexplained loan u/s 68 of the I.T Act, 1961 without considering 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 ....
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.... sources of the above said cash, along with documentary evidences. In response to the show cause, the AR of the assessee vide reply furnished on 06.08.2021, has stated that the jewellery has 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) ....
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....s unexplained. After going through the submissions of the assessee, the ld. CIT(A) held that the appellant has relied on withdrawals of various family members in last 10 years but only withdrawals cannot explain the use of the cash in purchase of jewellery. Complete analysis 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. 191....
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....,44,669 46,68,812 44,59,800 37,43,180 35,00,511 Ankit Sharma 22,92,434 23,08,783 24,27,493 20,56,646 19,79,056 19,96,871 Ankur Sharma 36,78,301 29,59,519 20,18,119 22,99,113 29,74,995 25,33,227 15. The total withdrawals of the family over the period of assessments was to the tune of more than Rs. 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 N....
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....of Ash ok Chadha vs. ITO reported in 14 taxmann.com 57 (Delhi.)/202 Taxman 395, the explanation given by the assessee's counsel is accepted. Accordingly the orders of the authorities below are cancelled and addition made by the AO and confirmed by the Ld. CIT(A) amounting to Rs. 10,65,312/- on account of purported unexplained Jewellery claimed by the assessee is deleted. 7. In the result, Assessee's appeal is allowed." 18. The Co-ordinate Bench 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....
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....use notice dated 23.02.2021, the assessee was specifically asked to explain the above document and furnish the details of loans mentioned in the above documents alongwith documentary evidences. Vide reply dated 14.06.2021, the AR of the assessee has stated that: "That vide this query, a document has been scanned in the notice, bearing page number 27 of Annexure LP-3, the assessee has been required to explain the nature and contents of this document, and in this regards, it is stated that 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....
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....tioned in the above page. These loans have also not been reflected in the books of the trust and the family members of Dr. Ankit Sharma. Also, no details in respect of these loans have been filed. Hence, in absence of any explanation and documentary evidences the loans received from Sh. Vaibhav Tyagi - Rs. 30,00,000/- and Sh. Vibhor Tyagi - Rs. 62,00,000/- amounting to a total of Rs. 92,00,000/- are added to the income of the assessee u/s 69A of the IT Act, 1961." 22. Proceedings before the ld. CIT(A): "Before 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 amo....
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....he ld. AR submitted that the appellant has explained the contents of this page to AO and the AO has accepted that this contains the details of loans from various persons and also the secured and unsecured loans from banks and other institutions by Sh. Jaipal Singh Sharma Trust. However the loans amounting to Rs. 92,00,000/- taken from Mr. Vaibhav Tyagi and Vibhor Tyagi were added in the hands of the appellant. The ld. AR submitted that there is no logic to consider this amount as income of Sh. Ankit Sharma since no loan has been 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. Jaip....
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....of petrol pump the business could not start. On the other hand, the revenue has not brought anything on record to prove that the loan has been extended to Dr. Ankit Sharma. The ld. CIT(A) at para 8.3 also observes that the loans have been taken by Sh. Jaspal Singh Sharma Trust. Even on that count also, the addition ought not to have been made in the hands of the assessee. Thus, keeping in view that the above twin facts into consideration, we hold that no addition can be made in the hands of the assessee. The appeal of the assessee on this ground is allowed. ITA No. 2125/Del/2022 (Revenue Appeal) ACIT Vs. Ankit Sharma Unsecured Loans: 29. 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 aud....
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....h is received including commission from client and money is transferred to the account of client through RTGS, NEFT from the accounts of these three NBFCs. * Blank cheques are singed by the Directors of the companies and kept with Sh. Hari Shankar Yadav. 32. The Assessing Officer held that, "In his statement Shri Ankur Goel accepted that the loans advanced by M/s Sarvottam Securities Pvt. Ltd., also M/s Upaj Leasing and Finance Company Limited and M/s KG Finvest Private Limited are bogus. He also stated that the directors of the companies are dummy directors and actual beneficial owners of the company are two other persons, namely, Sh. Himanshu Verma and Sh. Hari Shankar Yadav. Through 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....
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....x Inspector and/or as the case may be. It is submitted that the investigation wing never informed the appellant in regard to the fact that summons could not be served. And it cannot be presumed that in one premises, there cannot be more than one tenant more so, the letters were wrongly addressed to second floor while the office of the company had been functioning from the first floor. A3. It is further stated that 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 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 ....
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....and is marred by professional jealously only. Regarding other two entities, Upaj Leasing and Finance Company Ltd and K.G. Finvest Pvt. Ltd., necessary reply shall be filed in the relevant year. C. On the other hand, the assessing officer has personally conducted discreet enquiries on the issue and at page number 2 of assessment order admitted that total information in respect of unsecured loan raised from these entities has been submitted in compliance to notice issued under section 133(6) of the Act and summons issued under section 131 of the Act in the name of the Company/Directors that has been sewed as well that goes to prove the identity, genuineness and creditworthiness of the loans received. The loan confirmation, copy of bank account, ITR, balance sheet and audit 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 resp....
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....l 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 documents and corroborative evidence on record. 36. After going through the entire evidences, the ld. CIT(A) deleted the addition. For the sake of ready reference and brevity, the relevant part of the order of the ld. CIT(A) is reproduces as under: "I have carefully perused the observations of the AO and the submission of the appellant. In the assessment order, the issues of unsecured loans of Rs. 75,00,000/- taken from M/s. Sarvottam Securities. Pvt. Ltd., Rs. 50,00,000/- taken from M/s. Aspire Sales Pvt. Ltd. and Rs. 25,00,000/- taken from M/s. Moral Sales Pvt. 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 sear....
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....nder company is situated on the first floor of the same premise and not on the second floor where the letter seems to have been sent. The address can be verified from the copy of the ITR. The AR further submits that this place was taken on rent from Smt. Dimple Verma vide rent agreement dated 21.05.2016, copy of the rent agreement and copy of the electricity bill in the name of Smt. Dimple Verma has been enclosed in evidence. From the copy of the rent agreement and electricity bill, the address 246/68, First Floor, East School Block, Mandawali, Delhi-110092 stands proved. It clearly establishes that the correct address was not explored either through post or through Income Tax Inspector and/or as the case may be. It is submission of the AR that the investigation wing never informed the appellant in regard to the fact that summons could 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 ....
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....s. He further claims that this NBFC has given loans to so many large number of other persons and the same can be verified from the schedules of balance sheet. The AR further claims that the relied statement of Sh. Ankur Goel, who was neither the director nor the auditor of the concern, has also not been provided by the Investigation Wing or by the AO to the appellant. He claims that there was no partnership between two professional chartered accountants i.e. Shenu Aggarwal and Ankur Goel and Sh. Shenu Aggarwal was prop, of M/s. Shenu Aggarwal and Company and he only audited the books of M/s. Sarvottam Securities Pvt. Ltd. therefore the statement of Sh. Ankur Goel is false and prejudiced and marred with professional rivalry and thus the same cannot be relied to fasten the appellant with tax liability of those loans which have been substantially 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....
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....t proceedings and also filed in the appellate proceedings, it has been found that at the time of accepting loan, an agreement was executed, the appellant also executed promissory note as security and the appellant issued undated crossed cheque in the name of the lender company as additional security. Further the submission of the AR has been found correct that overall analysis of accounts various-years i.e. AY 2015-16 to 2018-19 of Sh. Jaipal Singh Sharma Trust and of various family members leads to the conclusion that whatever loans were raised by the appellant and other family members, the major portion of the amount is transferred and deposited with the trust to meet the charitable goal of the trust. It had been specifically stipulated in the loan document that if the loan is not repaid within the time frame, the interest element shall come in to play 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....
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....33(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. 1,83,359/- hence the total loans of Rs. 1,00,00,000/- 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 the same were not complied. Therefore the AO concludes that the lender suffers from creditworthiness and hence the genuineness of loan of Rs. 50,00,000/- given by M/s. Aspire Sales Pvt. Ltd. has not been accepted by the AO. 6.10 On the other hand the AR submits that in the matter of M/s. Aspire Sales Pvt. Ltd., the notices issued u/s 133(6) of IT Act were duly complied, however the summons issued u/s 131 could not be complied due to Covid-19 situation throughout the country. The AR submits that copies of 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 oper....
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.... company i.e. M/s. Aspire Sales Pvt. Ltd. had share' capital and reserves of more than Rs. 5.21 crores on 31.03.2016 and the company has revenue from operations of Rs. 9.54 crores in FY 2015-16. He claims that company with such a huge turn-over and such a good creditworthiness cannot be claimed as Bogus by the AO." 37. The ld. CIT(A) has diligently relied upon the following case laws as applicable to the facts of the cases before us: Abhijavala developers (P.) Ltd. vs ITO 9(1)(1), Mumbai, [2021] 124 taxmann.com 72 (Mumbai - Trib.)/[2021[ 187 ITD 222 (Mumbai - Trib.)[03-12- 2020], Moongipa Dev. & Inf. Ltd. vs DCIT, Mum. [2021] 127 taxmann.com 808 (Mumbai - Trib.)/[2021] 189 ITD 388 (Mumbai - Trib.) [03-05-2021] PCIT-5 vs Laxman Industrial Resources Ltd., [2017] taxmann.com 648 (Delhi)/(2017) 397 ITR 106 (Delhi[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 150 (Delhi - Trib.)2022) 93 ITR(T) 167 (Delhi - Trib.).[2021] 189 ITD 156 (Delhi-Trib [30-04-2021] ....
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....own total loans and advances given of only Rs. 52,97,148/- during the year. No other loans and advances have been mentioned in the balance sheet. Also, no additional investments has also been shown by the company. Henceforth, the total loans of Rs. 80,00,000/- which has been forwarded to the assessee and his family members is not reflected in the Balance sheet of the lender company during the year under consideration which does not prove the genuineness and creditworthiness of the above loan transaction. 42. Hence, Summons u/s 131 were also issued to the company on 08.09.2021. In response the authorized representative of the company Sh. Santosh Gupta, CA and internal auditor in the company appeared alongwith copy of power of attorney issued by the Director of the company Sh. Har Dayal and copy of loan agreements. He stated that the source of loans was out of accumulated profits and loans of the company. However, as mentioned in the preceding paras the company has not shown the amount of loans forwarded to the assessee and her 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 ....
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....he ld. CIT(A), the assessee submitted as under: REGARDING MORAL SALES PRIVATE LIMITED "E. On the last dale of hearing, the appellant had been required to explain the reason as to why during post search enquiry, the summons issued by the investigation wing in the name of Shri Vivek Dutta and Shri Har Dayal, both Directors of the company Moral Sales Private Limited could not be served at their registered office that was found to be locked. E1. It is respectfully explained that the report/observation of the investigation wing is absolutely wrong and mis-conceived. It is stated that neither Shri Vivek Dutta nor Shri Har Dayal is the director of the company Moral Sales Private Limited. The copy of the balance sheet audited by CA Deepak Jain has been already submitted before your honour. The name of the directors as incorporated on the balance sheet are Shri Arun Kumar Sharma and Vishal Jain. It clearly proves that the investigation wing has messed up the number of cases in their appraisal report in order to demonstrate their might. Further if the office is found locked, how does this prove that the company does not exists. Further, the address where the inspec....
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....ntity is very sound and bank account does not reflect any cash deposit at all and the Assessing Officer has failed to prove the allegation of entry in lieu of cash with sufficient documents and corroborative evidence on record excepting that the AO has tried to toe the line drawn by investigation wing. F. How any CA like Ankur Goel who is not auditor of any of the aforesaid companies for the relevant year can give statement that it is a mere paper company. It is for this reason that neither of the two, investigation wing and the assessing officer took steps to provide the copy of the statement of Shri Ankur Goel to the appellant before using the same to complete the assessment after making uncalled for additions. F1. Accordingly, it is explained that Shri Ankur Goel has given only self serving statement to damage the professional work of others in the field. Shri Ankur Goel has not at all audited the balance sheet of Savottam Securities Pvt. Ltd. for the year under consideration and that books for this company were audited by Shenu Aggarwal, being the proprietor of his company namely Shenu Aggarwal & Company and books of other two companies Amsoft Global Private L....
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....orroborate statement-' addition made by assessing officer unsustainable. 322 ITR 396; Delhi High Court; Commissioner of Income Tax vs. Ashwani Gupta; Search and Seizure-Block assessment-copies of seized material not proved to assessee nor assessee given an opportunity to cross examination of person on whose statement assessing officer relied uponviolation of natural justice-fatal to proceedings-Income Tax Act, 1961 The tribunal confirmed the order passed by the Commissioner of Income Tax (Appeals) which held the entire addition made by the assessing officer to be invalid and had to be deleted it on the ground of the assessing officer had passed the assessment order in violation of the principles of natural justice in as much as he had neither provided copies of the seized material to the assessee nor had he allowed the assessee to cross examine the person on the basis of whose statement the addition was made. The alleged statement of Shri Ankur Goei CA recorded by the investigation wing had been not taken to its logical conclusion by bringing corroborative evidence on record to support the self-serving statement. Further it is not out of place to stre....
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....he report/observation of the investigation wing is absolutely wrong since neither Shri Vivek Dutta nor Shri Har Dayal was the director of the company Moral Sales Private Limited The copy of the balance sheet audited by CA Deepak Jain has been submitted as an evidence, from the same it is claimed that the names of the directors are Sh. Arun Kumar Sharma and Vishal Jain. The ld. CIT(A) was inconfirmity with the argument of the ld. AR that in the assessment order itself the AO has accepted that the summons sent through speed post by the investigation wing were duly served and reply received through authorized signatory of the company i.e. M/s. Moral Sales Private Limited. It is claim of the AR that the assessing officer had also issued notice under section 133(6) of the Act to the lender Moral Sales Private Limited and this notice had been property received by the company and in response, the lender company furnished reply. This fact stands admitted by the assessing officer in last paragraph at page number 2 of the assessment order. The AR claims that the trading account of the lender company M/s. Moral Sales Private Limited shows Revenue from operations at Rs. 5,21,45,340/- and balan....
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....ompany has revenue from operations of Rs. 5.21 crores in FY 2015-16. He claims that company with such a huge turn-over and such a good creditworthiness cannot be claimed as Bogus by the AO. Holding thus, the ld. CIT(A) deleted the addition. 51. 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 revenue with reference to the facts relied upon by the ld. CIT(A) and reports of the investigation, the ld. CIT(A) cogently brought on record that the loans received by the assessee could not be treated u/s 68 as the identity, genuineness and creditworthiness of the parties has been duly proved. In view of the above facts and the ratio given by the ld. CIT(A), no interference is called in the well reasoned order of the ld. CIT(A). Jaipal Singh Sharma Trust ITA No. 2126/Del/2022 : A.Y. 2016-17 ITA No. 2127/Del/2022 : A.Y. 2017-18 52. The amounts received by the trust are as under: For the A.Y. 2016-17 1. Loan from Sarvottam Securities Pvt. Ltd. 2. Loan from K.G. Finvest Pvt. Ltd. 3. Loan from Upaj Leasing....
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....rectors in this company. These summons neither could be served at the registered office of the company nor at the residential address of the directors. 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 also for the AY -2017-18. Accordingly, summons was served upon him. The statement of Shri Ankur Goel was recorded wherein he has accepted that the loans advanced by M/s Upaj Leasing and Finance Co. (P), Ltd. are bogus. 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 M/s Shri Jaipal Singh Sharma Trust -A. Y. 2016-17 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. FinvestPvt. Ltd., M/s Sarvottam Securities Pvt., Ltd. and M/s Upaj Leasing and Finance Pvt. ....
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....ear personally while summons were issued for confronting the above facts unearthed during the search investigation. From the above discussions, it is very much clear that M/s Upaj Leasing and Finance Company Ltd., has provided accommodation entries in the form of loan of Rs.80,00,000/- during the year, to Shri Jaipal Singh Sharma Trust. The creditworthiness of lender and genuineness of the loan received by the assessee from M/s Sarvottam Securities Pvt. Ltd. is not proved. In connection with the above lenders, the statements recorded as mentioned above in all the three cases have not been retracted or withdrawn during the search, post search and assessment proceedings. Further the statements recorded have a nexus with the surrounding circumstances of the case wherein the creditworthiness has not been proved in case of the above parties. In case of B. Kishore Kumar Vs. Deputy Commissioner of Income Tax, Central Circle-IV (1), Chennai (2014) 52 taxmann.com 449[madras) HC has ruled that where income, same was to be levied tax on basis of admission without scrutinizing documents, This decision has been confirmed by apex court vide order dated July, 02, 2015 [2015] 62 ....
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....and Shri Prem Nath both directors in the company. These summonses could not be served. IT IS EXPLAINED THAT PREM NATH IS NOT THE DIRECTOR OF THE COMPANY. FURTHER IT IS NOT MENTIONED AS TO WHICH ADDRESS, THE SUMMONS WERE SENT WHILE THE AS PER ITR OF THE RELEVANT YEAR, THE ADDRESS OF THE COMPANY IS NOTED AS 224, SECOND FLOOR, VARDHMAN CITY CENTRE, GULABI BAGH, SHAKTI NAGAR, NEAR RAILWAY UNDER BRIDGE, DELHI-110052. C3 Sir, in continuation it is further explained that the trading account of the lender company shows Revenue from operations at Rs. 6,97,44,205/- and balance sheet reflects total assets/investments at Rs. 137,51,20,593/- that Includes accumulated profits/reserve and surplus at Rs. 64,23,32,817/ and also short term loan and advances at Rs. 135,56,29,534/-. 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 failed to prove the allegation of entry in lieu of cash with sufficient documents and corroborative evidence on record excepting, that AO has tried to toe the line drawn by investigation wing. D. The appellant during the course....
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....t before using the same to complete the assessment after making uncalled for additions. D3. It may be pointed out that the trust had been facing grave financial crises to run the hospital for charitable objects while the medical college did not get sanction of the medical seats and thus day by day, the financial situation was getting bad to worst while 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 objective in true spirits. THE MOTIVE WAS TO RAISE MONEY FOR MEETING CHARITABLE OBLIGATIONS UNDERTAKEN BY THE FAMILY. THE ACTUAL MONEY WAS NEEDED AND NOT ACCOMODATION ENTRIES THAT ARE GENERALLY TAKEN IN THE EVENT OF HEAVY SURPLUS INCOME THAT MAY BE NEEDED TO BE BRTOUGHT BACK TO THE BOOKS OF ACCOUNT HERE THE TRUST AND THE FAMILY HAD BEEN RUNNING IN TO HEAVY LOSSES IN EXCESS OF MORE THAN Rs. 20 CRORES. Since the actual funds/money were needed to run the hospital, and it is absolutely wrong to allege that the appellant trust raised accommodation entries only. In the run up to mounting losses of more than Rs. 20 crores, how the trust can be labelled to be engaged in accepting acc....
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....d findings of the investigator wing and observed that the post search investigation inquiries concluded that the lender company was bogus paper entity. In the assessment order, the AO records that during post search proceedings, summons were issued in the name of Sh. Ravinder Kumar Yadav and Sh. Premnath, both directors in M/s. Upaj Leasing and Finance Company, however the inspectors could not serve the summons either on the registered office of the company or at the residential address of the directors. 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(1 A) 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 F.Y. 2015-16 and F.Y. 2016-17. Sh. Ankur Goel stated that he audited books of these three concerns without knowing their directors and that loan agreements made by these companies were not put before him during the audit of books of these companies. Fie claimed that the directors of ....
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....entity is very sound and the bank account does not reflect any cash deposit at all and the assessing officer has failed to prove the allegation of entry in lieu of cash with sufficient documents and corroborative evidence on record excepting that AO has tried to toe the line drawn by investigation wing. 8.3 The AR submits that for AY 2016-17, the books of account of the company were audited by Shri Shenu Aggarwal, Chartered Accountant, Proprietor of M/S Shenu Aggarwal & Company and that the books of account of the company were not 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, as an evidence, confirmation from Shenu Aggarwal, CA has been enclosed. The AR claims that all the assertions by Ankur Goel, CA that lender company is bogus and entry provider is totally false and seems.-to be given put of professional jealously since, books are not audited by him. The AR submits that the investigation wing even failed to summon and record the statement of Himanshu Verma and Hari Shankar Yadav and as such the contention of CA Sh. Ankur Goel lacked corroborative evidence. The AR draws atten....
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....been proved by furnishing all the relevant details and the loans have been paid back by the trust. The reliance placed by the appellant on various judicial pronouncements has been found correct in the sense that the appellant has discharged his onus by proving identity and creditworthiness of the loan creditor along with genuineness of transaction, which is proved since all the loans of advanced through banking channels. 9.1 From the details furnished by the appellant in the assessment proceedings and also filed in the appellate proceedings, it has been found that at the time of accepting loans from these concerns, an agreement was executed, the appellant also executed promissory note as security and the appellant issued undated crossed cheque in the name of the lender company as additional security. Further the submission of the AR has been found correct that overall analysis of accounts of various years i.e. AY 2015- 16 to 2018-19 of Sh. Jaipal Singh Sharma Trust and of various family members leads to the conclusion that whatever loans were raised by the appellant and other family members, the major portion of the amount is diverted and deposited with the trust to meet t....
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....nd he has not been auditor of the NBFC lenders in the year under consideration, in-fact he was partner of NJ Associates and M/s. NJ Associates has been auditor of these lender companies in FY 2016-17 only and as per his clarification in the statement on oath, Sh. Ankur Gupta has just signed the audited records and has not been involved in the actual audit process. 9.2 The appellant has explained the 'source' of the creditor in its books by filing the confirmation and financial statement of loan creditor. As per the financial statements/ Bank Statements of the loan creditor, it had the availability of the fund. Under section 68 of the Act, what is material in the 'source' of the fund. The source need not to be from the current year's income only. The source can be income, owned funds, borrowed funds or other funds available with the creditors. Under such situation, if the AO still .doubts the source of loan given by the loan creditors, adverse inference can be drawn in the case of loan creditor and not in case of the appellant company. The AR has concluded his submission by placing reliance on the following judgments: Abhijavala developers (P.) Ltd. vs ITO....
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....from corpus donations to voluntary donations and filed amended Form 10B. The same was confronted to the assessee. In this regard, vide reply dated 26.03.2021, the assessee has stated that the donation was voluntary donation and not corpus donation. To verify the above contention of the assessee, Notice u/s 133(6) was issued to the donor company. As per the reply filed, the donor company has categorically stated that it has provided 'corpus donations' to the assessee. Henceforth, the contention of the assessee is not acceptable as corpus donations are given for a specific purpose and with a specific clause of going towards corpus fund of the trust. During the course of search the donation was shown as received as corpus donation. The assessee cannot arbitrarily change the nature of donations from corpus to voluntary at his whims and fancies. Further the creditworthiness and genuineness of the above transaction was also analyzed During the AY 2017-18, the donor company has filed ITR of only Rs. 82,120/- while it has given donation of Rs. 50,00,000/- to the assessee trust. Thus, clearly the company does not have creditworthiness to forward such huge amount of....
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....17-18. This is beyond common comprehension that a company having very low income of it will make any genuine donations of such huge amounts. The financial statements of the company have also not been produced to establish the net worth and creditworthiness of the company. Substantial donations of Rs. 50 lakhs in each year were made to Shri Jaipal Singh Sharma Trust in FY 2015-16 and FY 2016-17. From the perusal of above table, it is seen that the gross total income of the company during FY 2014-15 to 2016-17 is below Rs. 1.5 lakhs in each FY. Further, juxtaposition of income profile to the outcome of enquiries made regarding genuineness of the company make it amply clear that such donations received by Shri Jaipal Singh Sharma Trust from M/s Amsoft Global Pvt. Ltd. are bogus and liable to be added to the income of assessee. Thus, the total donation of Rs. 3,30,00,000/- received by the trust from abovementioned entities are bogus and liable to be added to the income of the assessee u/s 68 r.w.s 115BBE of IT Act, 1961." 60. After going through the submission, the ld. CIT(A) deleted the addition made on account of the donation received from Amsoft Global Pvt. Ltd.....
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....en enclosed with the Income Tax Return submitted in response to the notice issued under section 153A of the Act and this return had been made basis for completing cases after search. Necessary details about the donations transferred from the corpus fund to the voluntary donation in the Receipt and Expenditure account had been also submitted with the assessing officer. The assessing officer has made these documents such as Balance Sheet, Receipt and expenses account as the base for the completing case. Accordingly, the voluntary donations form part of the income. The AR submits that during the year under reference, the appellant had received total donations to the tune of Rs 5,95,36,000/- and these donations at the time of submitting return originally inadvertently and under bonafide belief were adjusted under the corpus donations but after the receipt of notice under section 153A of the Act, the appellant scanned all the documents connected with the donations received, the language in most of the confirmation were not very specific and took a prudent decision to consider and consequently declare all the donations aggregating to Rs. 5,95,35,000/- to the revenue account for ....