TaxTMI 
TaxTMI 
2025 (2) TMI 935
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....see could not prove the repayment of the unsecured loans along with sources of repayment and reasons there for " 2. "On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in allowing the appeal of the assessee despite the fact that assessee could not prove the creditworthiness of the lenders and the genuineness of the transactions." 3. "On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in allowing the appeal of the assessee despite the fact that assessee could not prove any satisfactory explanation about the nature and source of the amount credited in its books of accounts. Therefore, the assessee held that the amounts totaling to Rs 43,90,00,000/- found credited in the books of accounts of the assessee during the year under consideration as unsecured loans are nothing but accommodation entries." 4. "On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in allowing the appeal of the assessee despite the fact that assessee could not prove that the entire chain of flow of funds is not provided and there is a complex layering. It is claimed that some of the funds advanced....
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....of the company and he was made to sign documents such as Letter of Credit from banks for the companies by Shri P.C. Lodha of Topworth Group of Companies. These companies did not have any actual purchase or sales and all the transaction were bogus without any movement of goods. He has also made a reference to the statement of Shri Raj Kumar Goel another Director and shareholder of the company wherein he has admitted that company had not done any genuine business activities and that all the entries reflected in its books are merely accommodation entries. The ld. AO has also observed that Central Bureau of Investigation (CBI) has also had filed an FIR in a case relating to bank fraud, wherein M/s. Asuti Trading Pvt Ltd. was an accused along with senior officials of Union Bank of India. The fraud was in the form that some private limited companies in connivance with the bank officers by way of opening of letters of credit (LC) without processing, appraisal, assessment, internal rating and regular sanction of the competent authority and without proper mortgage. Thus, AO has referred to certain allegation made by the CBI. He also noted that in the course of search and post search proceed....
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....nished the ledger account of this party in its books of account, statements of bank accounts of the appellant and Duli Trade & Commodities Private Limited, copies of audit report and income tax returns of Duli Trade & Commodities Private Limited. From the perusal of ledger account, following transactions are found Opening balance as on 01-04-2016 Loan taken during the year Loan repaid during the year Closing Balance as on 31-03-2017 NIL 14,90,00,000/- 14,90,00,000/- NIL It can be seen that the appellant has taken loan of Rs. 14.9 crores during the assessment year under consideration and the same has been repaid in the assessment year under consideration itself. The closing balance as on 31.03.2017 is nil. 18.2.2 Further, it is seen that the assessment u/s 143(3) in case of Duli Trade & Commodities Pvt. Ltd for A.Y 2017-18 has been completed on 30.03.2022 wherein the A.O has made addition of Rs. 38.16 crores. On Page no. 87 of this assessment order, the A.O has discussed the issue of rejection of books of accounts u/s 145 of the I.T. Act. After rejecting the books of accounts, the income is computed @ 5% of sales of Rs. 581....
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....ities Pvt. Ltd is unexplained. The same AO, i.e. DCIT-CC -7(1), Mumbai, has subsequently completed the assessment in case of Duli Trade & Commodities Pvt. Ltd. for the same A.Y. 2017-18, wherein he has not made any addition on account of sources of funds received by Duli Trade & Commodities Pvt. Ltd. In fact, he has given a finding that the source of funds is from the bank. As the source of loan advanced to the appellant has been accepted by the same A.O, no addition in the hands of the appellant can be made u/s. 68 of the I.T. Act. 18.3 Elecmec Engineering and Projects Private Limited - 18.3.1 Before me, the appellant has furnished the ledger account of this party in its books of account, statements of bank accounts of the appellant and Elecmec Engineering and Projects Private Limited, copies of audit report and income tax returns of Elecmec Engineering and Projects Private limited. From the perusal of ledger account following transactions are found to have taken place between the appellant and the above party. Opening balance as on 01-04-2016 Loan taken during the year Loan repaid during the year Closing Balance as on 31-03- 2017 NIL 14,90,00,0....
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....unted incomes like Bill Discounting incorne Interest received, Discounts, income on account of suppression of GPetc Further no adjustment on account of existing gross profit is being given to the assessee company since the assessee company has suppressed GP to very miniscule and meagre level, and no specific GP information as per the books of the assessee on account of transactions in question is available. Therefore, the estimated additional Income in the case of the assessee company is 5% of Rs 460,95 89,290/- which comes to Rs 23,04,79,464/- Therefore Rs. 23,04,79 464/- is added to the total income of the assessee company" 18.3.3 The A.O has made addition of Rs 14 9 crores in the case of the appellant on account of unsecured loan received from this party. The assessment of Elecmec Engineering & Projects Pvt. Ltd has been completed by the A.O, DCIT- CC-7(1), Mumbai, which is the same A.O who has completed the assessment of appellant. On one hand, the A.O makes addition u/s 68 on account of loan received from this party, whereas on the other hand, the A. O accepts the source of funds in the case of this party as from the bank. No addition in this regard has been mad....
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....mited- 18.5.1 Before me, the appellant has furnished the ledger account of this party in its books of account, statement of bank accounts of the appellant and Asuti Trading Private Limited, copies of audit report and income tax returns of Asuti Trading Private Limited. From the perusal of ledger account following transactions are found Opening balance as on 01-04-2016 Loan taken during the year Loan repaid during the year Closing Balance as on 31-03- 2017 14,78,04,461/- 2,10,00,200/- 16,25,30,647/- NIL It can be seen that the appellant has taken loan of Rs. 2.1 crores during the assessment year under consideration and the entire loan including opening balance has been repaid in the same assessment year. The closing balance as on 31.03.2017 is shown as nil 18.5.2 Further, the assessment in the case of Asuti Trading Pvt. Ltd has been completed u/s 153A rws 144 on 13,07/2021, wherein after rejecting the books of accounts the income is estimated @ of 5% on total sales turnover. The A.O has not made any addition on account of funds received by these companies. This assessment has been completed by the DCIT-CC-7(1), Mumbai, who is ....
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....rd both the parties at length and perused the voluminous documents filed before us and the relevant material referred at the time of hearing. The main case of the Revenue before us is that, all these entities from whom assessee has taken loan were found to be dubious entities without carrying out any actual business. Once they have been admitted to be a shell company, therefore, the entire transaction of loan cannot be treated genuine. Ld. DR further submitted that even if assessee may not be linked directly with these companies but the fact of the matter is that assessee has taken huge loans of several Crores from these dubious entities of Jatia group, Lloyds group and other groups who were covered under the search. Once these group and entities were found to be doing fraudulent practice to de-fraud the bank and did not have any actual business, then how the transaction of giving loan to the assessee can be accepted to be genuine. Thus, the order of the ld. AO should be confirmed. 11. On the other hand ld. Counsel for the assessee strongly referred and relied upon the order of the ld. CIT(A) and pointed out that, this case all these companies assessee had shown their creditwort....
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.... Crores and also reflected huge funds available in the balance sheet and also duly shown the loan in their balance sheet. Similarly, Elecmec Engineering and Projects Pvt. Ltd. it had shown reserves and surplus of Rs. 14.10 Crores and Lloyds Steel Industry had shown more than Rs. 25.26 Crores as reserves and surplus and had shown huge operations from revenue. In all these cases it is seen that these companies have filed their bank statements which huge flow of funds. Source of these funds have not been doubted by the AO. 14. To prove the genuineness, assessee had filed a copy of their bank statements wherein the amounts have been transferred through clearing and it is not the case that some unknown clearing has come from where they have given loan to the assessee. It appears that they had huge funds available in the form of credit balance and there has been regular transaction of business from where these parties had given loans to the assessee. Another important fact is that these loans were repaid either in the same assessment year or in the subsequent assessment year and the closing balance was nil. The loan has been repaid back through banking channels in a short span. This f....