TaxTMI 
TaxTMI 
2025 (3) TMI 1434
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..../concerns and provides mainly accommodation entries to various beneficiaries. It was observed that there was no actual business carried on by these companies and it is only paper companies. It was found that M/s Cityzy Infraheights Pvt Ltd was also controlled and managed by Shri Verma. AO observed that the assessee also taken entry of Rs. 50 lakhs dated 9/7/2015 and since the same was provided by the Shri Verma, based on the above the AO formed the opinion that the income escaped assessment to the extent of Rs. 50 Lakhs in this assessment year within the meaning of section 147 of the Act. Accordingly, notice u/s 148 was issued and served on the assessee. In response, the assessee filed the return of income declaring the same income as original return of income. The notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee. 3. During the assessment proceedings, it was also noticed from the information received from DDIT (Inv), Ghaziabad that the assessee has also taken unsecured loan from CEA Consultants Pvt. Ltd of Rs. 50 lakhs. Notices were issued to submit the detail of these transactions. In response, the assessee submitted vide letter as under :- ....
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.... attached copy of account in our books, copy of our bank statement, where we have received money as well as repaid the money in the form of unsecured loan Citzy Infraheights Pvt Ltd as Annexure-6. 8. Further, please find enclosed herewith copy of statement of accounts of CEA Consultants Pvt Ltd, where we have attached copy of account in our books, copy of our bank statement, where we have received money, copy of bank statement of M/s CEA Consultants Pvt Ltd from which account, CEA Consultants Pvt Ltd has paid money to assessee company as Annexure-4. 9. Further, please find enclosed herewith copy of statement of accounts of Citzy Infra heights Pvt Ltd, where we have attached copy of account in our books, copy of our bank statement, where we have received money as well as repaid the money in the form of unsecured loan Citzy Infraheights Pvt Ltd as Annexure-5. 10. Further you have intimated to interest credited to the account amounting to Rs. 2,62,356, I am pleased to draw your attention that, this amount is not being received from the unsecured loan suppliers. We have credited the amount to these parties account on account of interest and deducted TOS on th....
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..... 8,56,22,493/- out Of which Reserve surplus are Rs. 8,45,59,543/-. Total Assets Rs. 8,56,22,493/- out of which Short Term loans and advances are Rs. 6,84,59,404/- and Current investments in unquoted Shares at Rs. 1,64,35,463/-. It is crystal clear from these financials that both the creditor companies, do not have any tangible assets and not' having any actual business as capital in shape of Reserves and Surpluses are loaded in both these companies and again which these companies have extended bogus accommodation credit entries in shape of long/short term loans or purchase of unquoted shares. Hence, the objections furnished by the assessee are found to have no merit and assessment is finalized as per assessment order." 4. After considering the above submissions, AO rejected the same and based on the statements and findings of respective accommodation providers assessments, he came to conclusion that the assessee has taken accommodation entries from the dummy or paper companies controlled by the accommodation providers, Shri Verma and Shri Anil Agarwal. He analysed the financial statements submitted by the assessee of the above said two companies, both comp....
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.... proceedings u/s 147 of the IT Act, solely on the basis of borrowed satisfaction. 5. On the facts and circumstances of the case, the learned Ld. CIT (A) New Delhi has erred, both on facts and in law, in sustaining the assessment of the appellant at income of Rs. 1,07,07,524/- as against the income of Nil declared by the appellant. 6. That the Ld. CIT(A) has erred, both on facts and in law, in sustaining the addition of Rs. 1,00,00,000/- u/s 68 of the Act, considering the same as unexplained credit without appreciating the fact. 7. That the Ld. CIT(A) has erred, both on facts and in law, in sustaining the addition of Rs. 3,07,524/- u/s 69C of the Act assuming that the interest expenses incurred is not genuine as it is on bogus accommodation credit entry without appreciating the fact. 8. That the Ld. CIT(A) has erred, both on facts and in law, in sustaining the addition of Rs. 4,00,000/- u/s. 69C of the Act assuming it as commission expenses @4% of Rs. 7,00,00,000/- without appreciating the fact. 9. On the facts and circumstances of the case, the learned Ld. (A) New Delhi has erred, both on facts and in law, in sustaining the assessment or....
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....appellant company with interest long before the issue of the notice u/s 148. The appellant wishes to rely upon the following judicial pronouncements: * ITO v. Leena Haresh Harde 2020 TaxPub(DT) 3167 (Mum-Trib), Assessing officer received information from investigation wing as to assessee being one of the beneficiaries to entries provided by Gautam Jain & Ors. as they had confessed in search proceedings. Accordingly, assessing officer treated loan amount received by assessee as unexplained credit under section 68 and made addition. Assessee by furnishing loan confirmations, financials, bank statements, copies of ITR of all the creditors discharged her onus to prove identity, and creditworthiness of loan creditors and genuineness of loan transactions. Assessing officer merely relying on statement of third party whose statement was not even provided to assessee treated creditors as non-genuine without making any sort of enquiries. In such situation, addition made under section 68 could not be upheld. The same has been held in the below mentioned decisions :- a) CIT v. Shri Lekh Raj Educational & Charitable Trust 2020 TaxPub(DT) 1942 (Chd-Trib) ....
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....ans from five persons who were its directors and shareholders - Payments were made through banking channels - During assessment proceedings, assessee furnished income-tax returns and bank statements of said creditors along with their affidavits stating therein source of funds which were used in lending amounts to assessee -Assessing Officer, however, held that both, genuineness of transactions as also creditworthiness of creditors remained unexplained and added amount of aforesaid credits to assessee's income - Whether, on facts, assessee had discharged initial onus placed on it and if revenue still had a doubt with regard to genuineness of transactions in issue or as regards creditworthiness of creditors, it would have had to discharge onus which had shifted on to it - Held, yes- Whether no such exercise having been undertaken by revenue authorities, addition under section 68 in hands of assessee was unjustified - Held, yes [In favour of assessee]. * In CIT vs Kamdhenusteel & alloys ltd 206 taxman 254 DELHI hon'ble Delhi High Court has held that Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 2004-05 - Whether once adequate evidenc....
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....k the assessee to explain the source and nature of the those sums received by it on account of share capital and burden of proof would be on assessee to provide nature and source of these receipts- held yes -whether this burden of proof can be discharged by producing PAN card and bank statement of the creditor/subscriber showing that it had sufficient balance in its account to enable it to subscribe to share capital and thereafter it is for the AO to scrutinize the same and in case he nurtures any doubt about the veracity of those documents, to probe matter further-Held yes- whether opinion of AO for not accepting the assessee's explanations not being satisfactory has to be based on proper appreciation of material and other attending circumstances available on record-Held Yes" * In CIT vs. Makhni and Tyagi (P) Ltd. 267 ITR 433 (Del) it was held by Hon'ble Jurisdictional High Court as under: "If the AO felt that their examination was absolutely necessary then he could have enforced their attendance as pointed out by Allahabad High Court in Nathu Ram Premchand v. CIT(1963) 49ITR 561 (All) and E.M.C. (Works) (P) Ltd. v. ITO(1963) 49ITR 650 (All). Thi....
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....ls produced were the Income Tax Returns and the PAN card details of the eight companies. Even if the Directors of these companies did not respond to the summons issued by the AO, it was not impossible for the AO to make proper enquiries to ascertain the genuineness of these entities and satisfy himself of their creditworthiness. As pointed out by the CIT(A), the AO failed to make any effort in that direction. He did not take to the logical end the half-hearted attempt at getting the Directors to appear before him. He did not even seek the assistance of the AOs of the concerned companies whose ITRs and PAN card copies had been produced". * In the case of M/S. Umbrella Projects Pvt. Ltd., vs Ito, New Delhi on 23 February, 2018, ITA No. 5955/DEL/2014, it is held that_ "De horse the non-receipt of the reply, even for the sake of argument we assume that the AO has not received the reply, still the fact remains that 133(6) notice were served on these four shareholders. On going through the assessment order we note that it is not the case of the AO that notices have come back unserved or these shareholders were not available at the address given by the assessee. If that ....
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.... the share applicants where they were assessed to income tax and hence, the onus which ITA Nos. 4991 & 4853/Del/2014 26 lay on the assessee to prove the identity, genuineness and creditworthiness of the share subscriber Companies stood duly discharged. * The judgment of Jurisdictional Delhi High Court in the case of CIT vs. Laxman Industrial Resources Pvt. Ltd.[2017] 397 ITR 106 where the Hon'ble High court has held as under: "This Court notices that the assessee had provided several documents that could have showed light into whether truly the transactions were genuine. It was not a case where the share applicants are merely provided confirmation letters. They had provided their particulars, PAN details, assessment particulars, mode of payment for share application money, i.e. through banks, bank statements, cheque numbers in question, copies of minutes of resolutions authorizing the applications, copies of balance sheets, profit and loss accounts for the year under consideration and even bank statements showing the source of payments made by the companies to the assessee as well as their master debt with ROC particulars. The AO strangely failed to conduct an....
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....). Assessee by furnishing evidences such as PAN, balance-sheet, IT and bank statement of lenders and confirmation of accounts etc., had proved identity and creditworthiness of lenders and genuineness of impugned loan transactions, however, in the absence of any independent inquiry and any adverse findings recorded by assessing officer to rebut evidences filed by assessee, addition of loan amount made by assessing officer under section 68 could not be sustained. * CIT v. Minda Industries Ltd. 2012 TaxPub(DT) 3331 (Del-Trib). "With the submission of details of net worth copy of income-tax returns and permanent account number of creditors, requirement of identity, genuineness and creditworthiness was fulfilled and therefore, addition made under section 68 was not Justified." 27. It may kindly be appreciated that the assessee has furnished complete details about the transactions along with related documents. All the transactions have been carried out through regular banking channels. The identity and the capacity of the lender is clearly established through the documents already submitted. Therefore, the allegation that the assessee company received accommoda....