TaxTMI 
TaxTMI 
2022 (4) TMI 1652
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....ive, arbitrary and bad-in-law. 2. That, the learned CIT (A) grossly erred, both on facts and in law, in confirming the AO's action of making the impugned additions in the appellant's income for the relevant assessment year without considering the material fact that having already furnished original return of income under s. 139 of the Act, on the date of initiation of the search under s. 132, no assessment proceeding was pending in respect of the assessment year under consideration and therefore, without having recourse to any seized incriminating document or material, no addition could have been made on any count in view of the settled legal position. 3a). That, the learned CIT (A) grossly erred, both on facts and in law, in confirming the addition to the extent of Rs. 1,50,54,863/-made by the AO in the appellant's income on account of alleged unexplained unsecured loans by invoking the provisions of s. 68 of the Act and payment of interest thereon, without considering the material fact that having already furnished original return of income under s. 139(1) of the Act, on the date of initiation of the search under s. 132, no assessment proceeding was pending....
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....rial fact that the interest expenditure so claimed by the appellant were genuinely incurred by it on the genuine borrowings of the loans made for the purpose of its business. 4. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary." 2.2 Grounds of appeal raised by the Assessee for AY 2014-15 in IT(SS)A No. 71/Ind/2020: "1. That, on the facts and in the circumstances of the case, the action of the learned CIT (A) in confirming the entire additions aggregating to a sum of Rs. 1,89,81,875/-made by the AO in the appellant's income, is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 2. That, the learned CIT (A) grossly erred, both on facts and in law, in confirming the AO's action of making the impugned additions in the appellant's income for the relevant assessment year without considering the material fact that having already furnished original return of income under s. 139 of the Act, on the date of initiation of the search under s. 132, no assessment proceeding was pending in respect of the assessment year under consideration and therefo....
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....st on unsecured loans, claimed by the appellant, by invoking the provisions of s. 69C r.w.s. 115BBE of the Act, without considering the material fact that the interest expenditure so claimed by the appellant, were duly recorded in its regular books of account, and the same have been incurred out of the explained sources and therefore, the provisions of s. 69C could not have been invoked in the instant case. 3f). That, without prejudice to the above, the learned CIT (A) grossly erred in confirming the addition of Rs. 4,81,875/-on account of disallowance of interest on unsecured loans without considering the material fact that the interest expenditure so claimed by the appellant were genuinely incurred by it on the genuine borrowings of the loans made for the purpose of its business. 4. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary." 2.3 Grounds of appeal raised by the Assessee for AY 2015-16 in IT(SS)A No. 72/Ind/2020: "1. That, on the facts and in the circumstances of the case, the action of the learned CIT (A) in confirming the additions to the exte....
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....wings of the loans made for the purpose of its business. 3. That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary." 2.4 Grounds of appeal raised by the Assessee for AY 2016-17 in IT(SS)A No. 73/Ind/2020: "1. That, on the facts and in the circumstances of the case, the action of the learned CIT (A) in confirming the additions to the extent of Rs. 21,52,945/-made by the AO in the appellant's income, is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 2a). That, the learned CIT (A) grossly erred, both on facts and in law, in confirming the addition to the extent of Rs. 21,52,945/-on account of alleged unexplained unsecured loans by invoking the provisions of s. 68 of the Act and payment of interest thereon, without confronting the appellant with any information as regard to the creditors allegedly gathered behind the back of the appellant either in the case of the appellant itself or in the cases of some other assessees and as also, without giving any opportunity of cross-examination to the appellant. 2b). That, the learned CIT....
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.... account of alleged unexplained unsecured loans by invoking the provisions of s. 68 of the Act and payment of interest thereon, without confronting the appellant with any information as regard to the creditors allegedly gathered behind the back of the appellant either in the case of the appellant itself or in the cases of some other assessees and as also, without giving any opportunity of cross-examination to the appellant. 2b). That, the learned CIT (A) grossly erred, both on facts and in law, in confirming the impugned addition to the extent of Rs. 85,44,654/-without considering the material fact that the appellant had duly discharged its initial onus of proving the identity of the loan creditors, the genuineness of the transactions and creditworthiness of loan creditors beyond all doubts by producing all the necessary documentary evidences. 2c). That, the learned CIT (A) grossly erred, both on facts and in law, in confirming the AO's action of making the impugned addition without adhering to the appellant's prayer to issue either summons under s. 131 or letters under s. 133(6) of the Act to the loan creditors. 2d). That, the learned CIT (A) grossl....
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....ee filed returns of income for A.Y. 2012-13 to A.Y. 2016-17 on 14/03/2018. The assessee furnished its regular return of income for A.Y. 2017-18 on 30/03/2018. The details of returns of income for A.Y. 2012-13, A.Y. 2014-15 to 2017-18 are as under: A.Y. Date of filing of Return u/s. 139 Returned income (in Rs. ) Date of filing of Return in response to the notice u/s. 153A Income declared in Return u/s. 153A (In Rs. ) Additional Income offered, if any (In Rs. ) 2012-13 30/11/2012 12,030/- 14/03/2018 12,030/- Nil 2014-15 21/09/2014 1,08,700/- 14/03/2018 1,08,700/- Nil 2015-16 30/10/2015 (-)2,22,987/- 14/03/2018 (-)2,22,987/- Nil 2016-17 31/03/2017 Nil 14/03/2018 Nil Nil 2017-18 30/03/2018 Nil NA NA Nil 3.2 In the case of the assessee, a reference was made for special audit u/s. 142(2A) of the Act and accordingly, the special auditors submitted their report on 20.06.2019. The report of the special auditors, as produced by the assessee, was duly perused and considered by the AO and as also, by the CIT(A). A copy of the Special Auditors Report was also filed by th....
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....r sake of convenience and brevity. 7. Ground No. 1 of the Assessee common for all the assessment years under consideration 7.1 Through this ground of appeal, the assessee has challenged the additions confirmed by the ld. CIT(A). In the written submissions, the assessee itself has submitted that in the Appeal Memos, it has taken separate grounds of appeal in respect of the addition confirmed by the ld. CIT (A) and therefore, no separate adjudication on this Ground is warranted. Accordingly, this ground of appeal for A.Y. 2012-13, A.Y. 2014-15to A.Y. 2017-18 is hereby Dismissed. 8. Ground No. 2 of the Assessee for A.Y. 2012-13& A.Y. 2014-15 8.1 Through the Ground No. 1 taken for A.Y. 2012-13& A.Y. 2014-15, the assessee has challenged the action of the ld. CIT (A) in upholding the additions made by the AO in completed assessment years without having recourse to any incriminating material found during the course of search. 8.2 Before the ld. CIT(A), the assessee furnished the detailed written submissions on the subject ground, which has been reproduced by the ld. CIT (A) at page no. 16 to 24 of his Order. While adjudicating the ground, the ld. CIT (A) held....
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....been framed by the learned Assessing Officer in pursuance of the Search Operations carried out under the provisions of s. 132 in the business premises of the assessee company as well as in the residential premises of its directors. 1.02 That, on the date of initiation of the search under s. 132 of the Act, i.e. on 12-07-2016, no assessment proceedings were pending in respect of the assessment year under consideration. Further, during the course of search operations carried out in the business premises of the assessee and as also in the residential premises of its directors along with the group concerns, not even a single incriminating material or document or valuable article or thing, pertaining to the assessment year under consideration, was found on the basis of which addition has been made by the learned AO in the returned income of the assessee. 1.03 The learned AO has made the impugned additions of Rs. 1,60,32,263/in the assessee's income for A.Y. 2012-13 and that of Rs. 1,89,81,875/-for A.Y. 2014-15. The additions have been made by the AO on account of unsecured loan obtained by the assessee company by invoking provisions of section 68 of the Act a....
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....f section 132 are invoked only when the authorizing officer being the Principal Director General or Principal Director or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner, in consequence of information in his possession, has reason to believe that any person is in possession of some money, bullion, jewellery or other valuable articles or things or books of account or documents which have not been or would not have been disclosed by such person for the purpose of the Income-Tax Act, 1961. The purpose of the provisions of section 132 is not to make any assessment or reassessment but to gather the material necessary for the purpose of making assessment or reassessment. It is submitted that the provisions of section 132 are not aimed for discovery of those assets, books or documents or transactions, which are already in the specific knowledge or domain of the revenue or if required may come in the specific knowledge or domain of the revenue. It shall thus be appreciated that the provisions of section 132 are not meant for verifying the transactions which....
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....were pending shall come to a halt. 2.04 It is submitted that under the provisions of section 153A of the Act, assessment or reassessment of total income of the person searched or requisitioned for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made has to be made by the concerning Assessing Officer. Under the second proviso to section 153A, it has been enjoined that assessment or reassessment, if any, relating to any of the six assessment years which is pending on the date of initiation of the search or making the requisition shall abate. On a plain reading of the proviso, it becomes abundantly clear that only the assessment proceedings which were pending on the date of initiation of search or requisition shall get abate whereas the assessment proceedings for other assessment years, which have attained finality, shall not get abated. Thus, a clear cut distinction has been made in the section itself in respect of those assessment years in respect of which proceedings have attained finality at the AO stage and those assessment years where the assessment proceeding have not so attaine....
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....dl. CIT (2016) 29 ITJ 1 (Indore-Trib) vii) Bhatia International Ltd. vs. Addl. CIT (2016) 29 ITJ 109 (Trib-Indore) viii) Pr. CIT vs. Dharampal Premchand Ltd. (2018) 408 ITR 0170 (Del. HC) ix) Pr. CIT & Ors. vs. Meeta Gutgutia & Ors. (2017) 295 CTR 0466 (Del.) x) Pr. CIT vs. Dipak J Panchal (2017) 397 ITR 0153 (Guj.) xi) Pr. CIT vs. Devangi Alias Rupa (2017) 98 CCH 0051 (Guj.) xii) Rakesh Kumar Jain vs. DCIT (2019) 57 CCH 0098 (Jaipur Trib.) xiii) DCIT vs. SMS SME Ltd. (2019) 57 CCH 0031 (Gau. Trib.) xiv) Rashmi Metaliks Ltd. and ANR vs. DCIT and ANR (2019) 72 ITR (Trib.) 0226 (Kolkata) xv) Amitbhai Manubhai Kachadiya and Ors. vs. DCIT (2019) 56 CCH 0189 (SuratTrib.) xvi) Smt. Sanjana Mittal vs. DCIT (2019) 55 CCH 0644 Asr Trib. xvii) SVM Buildcon Pvt. Ltd. vs. DCIT [IT(SS) A no. 71/Ind/2016 Order dated 26-10-2017] xviii) Chugh Real Estate Pvt. Ltd. vs. DCIT [IT(SS) A no. 60&61/Ind/2016 Order dated 26-10-2017] xix) Kamta Prasad Dwivedi vs. ACIT-1(1), Bhopal 2018 (9) TMI 1746 - ITAT Indore xx) Smt. Rashmi Mujumdar vs. DCIT(Central)-1, Bhopal 2018 (12) TMI 688 ....
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....edings. 5.01 Your Honours, it is humbly submitted that none of the findings given by the ld. CIT (A) is factually correct. It is submitted that during the course of the search proceedings, not even a single incriminating document was found relating to the assessee and even, the ld. AO while making the various additions in the income of the assessee for A.Y. 2012-13 & A.Y. 2014-15 has not made any reference of any seized document. Even further, while submitting his Remand Report, the ld. AO has not rebbuted the claim of the assessee made before the ld. CIT (A) that none of the additions is based upon any seized material. It is submitted that although in the opening lines of para (8.5) at page no. 8 of the assessment order, the ld. AO has mentioned that upon analysis of seized documents, he noticed that some documents were found & seized during the course of the search but, in the entire body of the assessment order, there is not a whisper or mention of any such so called seized document. It is submitted that even in the Show Cause Notices issued to the assessee, as abstracted by the ld. AO himself at para (8.1) of his assessment order, there is no reference of any so called....
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....hey did not get abated in accordance with the second proviso to the provisions of section 153A(1) of the Act, as also held by the ld. CIT(A). 9.3 We also find that the AO, while making the additions on account of non-genuine unsecured loans in the two assessment years viz. A.Y. 201213& A.Y. 2014-15, has not made any single reference to any incriminating material found during the course of the search. We find that in the instant case, the AO has made the additions in the A.Y. 2012-13 & A.Y. 2014-15 on the sole basis of the audited financial statements furnished by the assessee during the course of the assessment proceedings and the entries found made in the tally data containing the regular books of account of the assessee, without making reference of any seized document or any other evidence gathered during the course of search. Before us, the ld. CIT (DR) also could not bring on record any single incriminating material on the basis whereof the additions have been made by the AO in the assessment order for the aforesaid two assessment years. In our considered view, even in respect of the loan transactions claimed to have been carried out by the assessee with various companies op....
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....ence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 9.5 The above stated ratio laid down by the Hon'ble Delhi High Court has been applied by this Tribunal in the case of Kalani Bros. [IT(SS) ....
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....losed or made known in the course of original assessment. In. all these cases no assessments were pending on the date of search for these assessment years. No assessments were abated in terms of second proviso to section 153A of the Act. Hon'ble Delhi High / Court in the case of CIT vs. Kabul Chawla (supra) has considered various High Court decisions relied upon by the learned DR. The Hon'ble Delhi High Court has considered the cases of Canara Housing Development Co. vs. DCfT; Madugula vs. DCIT; CIT vs. Chetandas Laxmandas and CIT vs. Anil Kumar Bhatia (supra). The only decision of the Hon'ble Allahabad High Court in the case of CIT vs. Raj Kumar Arora; 367 ITR 517 relied on by the learned DR was not considered by Hon'ble Delhi High Court while deciding the issue in the case of Kabul Chawla. The Hon'ble Allahabad High Court has reversed the order of the Tribunal and remanded the issue to the Tribunal to consider the appeal of the department on merits. It is a settled legal position that when two views are possible on a particulars issue then the view favourable to the assessee should be followed as held by the Hon'ble Apex Court in the case of CIT v....
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....found to be managed/ controlled directly/ indirectly by a well-known entry provider of Indore namely Shri Sharad Darak and some of the loan creditor companies were self-managed shell companies of the group itself which were used for routing of unaccounted funds, while some of these loans were shown as accepted from employees/ others. Accordingly, the AO issued show-cause notices dated 31/10/2018 and 19/07/2019 to the assessee before as well as after the receipt of Special Audit Report. In reply, the assessee, vide its letters dated 07.12.2018 and 30.07.2019, furnished its detailed explanation along with documentary evidences in support of establishing the identity & creditworthiness of loan creditors and genuineness of loan transactions. The AO, while framing the assessment order, averted that the assessee had accepted unsecured loans from shell/ paper companies and employees. Finally, vide details given in para (8.53), the AO made an addition of Rs. 1,60,32,263/-in A.Y. 2012-13 Rs. 23,00,000/-in A.Y. 2013-14 Rs. 1,89,81,875/-in A.Y. 2014-15 Rs. 20,72,174/-in A.Y. 2015-16 Rs. 21,87,135/-in A.Y. 2016-17 and Rs. 85,76,149/-in A.Y. 2017-18 by holding the ....
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..../-in A.Y. 2014-15] [Interest - Rs. 1,12,500/-in A.Y. 2014-15 Rs. 4,54,058/-in A.Y. 2015-16 Rs. 4,92,202/-in A.Y. 2016-17 Rs. 3,75,948/-in A.Y. 2017-18]; (v) M/s. Ranjit Securities Pvt. Ltd.[loan-Rs. 35,00,000/-in A.Y. 2014-15] [Interest - Rs. 1,44,375/-in A.Y. 2014-15 Rs. 3,15,000/-in A.Y. 2015-16 Rs. 3,49,709/-in A.Y. 2016-17]; (vi) M/s. Suzlon Securities Pvt. Ltd.[loan-Rs. 50,00,000/-in A.Y. 2014-15] [Interest - Rs. 1,12,500/-in A.Y. 2014-15 Rs. 4,54,058/-in A.Y. 2015-16 Rs. 4,92,202/-in A.Y. 2016-17, & Rs. 4,59,970/-in A.Y. 2017-18]; (vii) M/s. East West Finvest India Ltd.[loan-Rs. 3,00,000/-in A.Y. 2016-17] [Interest - Rs. 26,630/-in A.Y. 2016-17 &Rs.62,270/-in A.Y. 2017-18]; (viii) M/s. Zyka Merchandise Pvt. Ltd.[loan-Rs. 10,00,000/-in A.Y. 2017-18] [Interest - Rs. 17,207/-in A.Y. 2017-18] The AO vide para 8.14 of the assessment order has held that all the aforesaid companies are controlled/ managed companies and associated concerns of Shri Sharad Darak, a well known accommodation entry provider. Since the findings in respect of all the aforesaid companies have been commonly given by ....
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....uired to prove the source of the source as contemplated under the proviso to section 68 of the Act; and (x) since the interest expenditure were fully recorded in the books, the provisions of section 69C could not have been invoked. I have carefully considered the findings of the AO, written submissions made by the appellant, Special Audit Report, remand report of the AO and the rejoinder of the appellant thereon. I find that during the course of the appellate proceedings, the appellant has furnished documents for establishing its claim regarding the identity of the loan creditors, genuineness of the transactions and creditworthiness of the loan creditors. The appellant has furnished the documents such as copies of certificates of incorporation, memorandum & articles of association, copies of income-tax returns, copies of master data downloaded from website of MCA, copies of loan confirmation letters duly given by the lender companies, copies of relevant bank statements of the lender companies, copies of the relevant bank statements of the appellant, copies of the audited financial statements of the lender companies, copies of the Affidavits duly sworn by Shri Sharad Darak confirmin....
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....ef of Rs. 9,77,400/-for A.Y. 2012-13 Rs. 23,00,000/-for A.Y. 2013-14 Rs. 3,95,000/-for A.Y. 2015-16 Rs. 34,190/-for A.Y. 2016-17 and Rs. 31,495/-for A.Y. 2017-18. Accordingly, such additions are hereby Deleted. Consequently, the additions to the extent of Rs. 1,50,54,863/-in A.Y. 2012-13 Rs. 1,89,81,875/-in A.Y. 2014-15 Rs. 16,77,174/-in A.Y. 2015-16 Rs. 21,52,945/-in A.Y. 2016-17 and Rs. 14,44,654/-in A.Y. 2017-18 are hereby Confirmed. Therefore, appeal on these grounds is Partly Allowed." 10.4 Aggrieved with the Order of the ld. CIT(A), the assessee is in appeal before us. 10.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO as well as of the ld. CIT (A) on this issue. 10.6 Per Contra, Learned Counsel for the assessee has filed written submission before us. The relevant portion of such written submission is being reproduced as under: "Details of the Additions confirmed by the ld. CIT (A) for which the assessee is in Appeal : A.Y. Name of the Lender Principal Sum Interest Total Relevant Finding by the CIT(A) Remarks 2012-13 M/s. Jayant Security and Fina....
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.... Para (8) at page no. 4 to Para (8.53) at page no. 47. (Operative Para [8.53] at page no. 47) B. Relevant Paras and Page Nos. of the CIT(A)'s Common Order : Para (4.4) at page no. 25 to Para (4.4.10) at page no. 133. (Operative Para [4.4.10] at page no. 133) C. Our Detailed Submissions, on the subject issue, as made before the ld. CIT(A): Page No. 12 to 50 of Paper Book for A.Y. 2012-13 D. Key Points of Assessee's Submission and Relevant Pages of the Paper Books: 1.00 Your Honours, at the outset, it is submitted that the impugned addition of Rs. 1,60,32,263/-so made by the learned AO suffers from the legal infirmity inasmuch such addition has been made by the learned AO merely on the basis of the some entries found in the regular books of account of the assessee without having recourse to any incriminating material found or seized during the course of the search. 1.01 As has already been discussed elaborately, in respect of the Legal ground for A.Y. 2012-13 & A.Y. 2014-15 in the appeals before Your Honours, it is reiterated that on the date of initiation of the search under s. 132,....
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....sment proceedings, the learned AO vide his show-cause notice dated 19-07-2019 [kindly refer Page No. 111 to 114], had required the assessee to furnish its explanation on the subject issue. In response to the aforesaid query, the assessee vide its letter dated 30-07-2019 [kindly refer Page No. 115 to 151], made its very elaborative explanation on the subject issue along with ample of documentary evidences, filed by way of furnishing a separate Volume marked as 'Volume -UL'. By tendering the explanations which were duly supported by all the necessary documentary evidences, the assessee had discharged its initial onus of proving the identity of the loan creditors, the genuineness of the transactions and creditworthiness of loan creditors beyond all doubts and in accordance with the provisions of s. 68 of the Act. Consequently, no addition in the hands of the assessee was warranted under s. 68 of the Act, in respect of the subject loan amounts. 3.02 Your Honours, despite making the explanation as aforesaid, the learned AO made the impugned addition of Rs. 1,60,32,263/-merely on his whims, surmises, presumptions, assumptions and extraneous considerations and also....
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....explained credits of the assessee. Such a failure on the part of the learned AO is not permissible and is bad-in-law. For such proposition, reliance is placed on the following judicial pronouncements : i) CIT vs. Shri Sai Vihar (2016) 28 ITJ 158 (Trib.-Raipur) ii) CIT V Ramesh Chander Shukla 10 ITJ 286 (Madhya Pradesh HC) iii) Manna Lal Murlidhar 79 ITR 540 iv) Radhe Sham Jagdish Prashad 117 ITR 186 v) G. Shubha Devi vs. ITO (2019) 307 CTR 0536 (Kar.) vi) Anil Kumar Midha (HUF) vs. ITO (2006) 100 TTJ 0644 vii) ITO vs. Sanjay Kumar Goel (2007) 108 TTJ 0823 (Del.) viii) Mass Con (India) Pvt. Ltd. vs. ITO (2013) 37 CCH 0143 (Del.) ix) CIT vs. Rajeev Shukla (2007) 207 CTR 0253 (MP HC) 6.00 Your Honours, it is submitted that once the initial onus has been discharged by the assessee the burden to prove the credits as unexplained shifts from the shoulder of the assessee to the taxing authorities. It is submitted that, in the instant case, the learned AO has failed to discharge his onus by failing to substantiate his assertion with the aid of corroborative evidences and thus, there was absolutely no j....
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.... 8.02 Your Honours, the ld. Assessing Officer, at paras (8.12) to (8.20) of the impugned Assessment Order, has given a finding related to entities/ companies allegedly managed/ controlled by Shri Sharad Darak. In the aforesaid paras, the ld. AO has alleged that Shri Sharad Darak through his companies had been involved in providing the accommodation entries to the assessee and to its group companies. It is submitted that the assessee had genuinely borrowed unsecured loans from certain companies and had never got indulged in routing of its unaccounted money, as alleged by the learned AO. It is submitted that during the course of the assessment proceedings, the assessee had duly furnished all the necessary documents for establishing the identity and creditworthiness of the lender companies and as also, the genuineness of the loan transactions carried out by it during the periods under assessment. 8.03 In nutshell, during the course of the assessment proceedings, the assessee had duly discharged its onus of proving the credit entries found recorded in its books of account, as contemplated under the provisions of s. 68 of the Act, by furnishing all the necessary documenta....
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....of the Master Data downloaded from the official website of the MCA is placed at Page No. 266 of our Paper Book. (vi) The JSFL has been maintaining its bank accounts with various banks. During the relevant previous year, the JSFL was maintaining its current account with Axis Bank at its Branch at Indore vide account No. 043010200064479 and with Indusind Bank at its Branch at Indore vide account No. 200001396931. (vii) The physical identity of the lender company gets established from the fact that an assessment u/s. 143(3) of the Act has got duly framed in the case of the JSFL for the A.Y. 2012-13 by the concerning AO who while carrying out the assessment proceedings at his end, had issued notices to the lender company which were duly served upon such company and in response to such notices, the lender company had also made the necessary compliances. A copy of the Assessment Order passed under s. 143(3) of the Act in the case of JSFL for the A.Y. 201213 is placed at Page No. 267 to 269 of our Paper Book. On a perusal of the assessment order, it shall be observed by Your Honours that the learned ACIT-1(1)(2), Baroda has assessed the total income o....
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....loan of Rs. 75,00,000/-given by his company JSFL to the assessee company. Shri Sharad Darak, at paras (4) & (7) of the Affidavit, has stated that the subject loan was given by JSFL out of its own funds only. A copy of the Affidavit of Shri Sharad Darak is placed at Page No. 280 to 282 of our Paper Book for A.Y. 2012-13. The Affidavit so furnished by a director of the lender company also establishes the genuineness of the borrowing made by the assessee from JSFL. For such proposition, reliance is placed on the decision of the Hon'ble High Court of Karnataka in the case of Tam Tam Pedda Guruva Reddy vs. JCIT (2007) 291 ITR 44 (Kar.). (C) CREDITWORTHINESS OF JSFL: (i) For establishing capacity and creditworthiness of JSFL to provide loan to the assessee, during the course of the assessment proceedings, the assessee had duly furnished a copy of the audited financial statements of JSFL along with Auditors' Report, in respect of the financial year ended 31st March 2012. A copy of such audited financial statements is placed at Page No. 283 to 324 of our Paper Book. (ii) On a perusal of the audited financial statements of JSFL, it shall be....
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....om M/s. Jayant Security & Finance Ltd. (JSFL) to be as genuine. The Hon'ble Bench, while upholding the identity of JSFL, has also allowed interest paid on borrowings made from such company. A copy of the said judgment is placed at Page No. 325 to 351 of our Paper Book. (ii) Your Honours, the Hon'ble ITAT, Indore Bench, again, in the case of ACIT vs. Shri Pramod Kumar Sethi (2019) 34 ITJ 39 (Trib.-Indore), by following its earlier decision in the case of ACIT vs. Shri Girish Kumar Sharda (2014) 23 ITJ 701 (Trib.-Indore), vide para 16 & 17 of its Order, has held that the two companies namely 'M/s. Trimurti Finvest Ltd.' and 'M/s. East West Finvest India Ltd.' [also belonging to Mr. Sharad Darak] were genuine companies and unsecured loans obtained from these companies cannot be held to be unexplained under s. 68 of the Act. A copy of the aforesaid judgment is placed at Page No. 352 to 360 of our Paper Book. In the said decision, the aforesaid two companies were also held by the AO to be accommodation entry provider companies. It is submitted that in the instant case too, the subject creditor company M/s. Jayant Security & Finance Ltd. has been alleged to be ....
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.... since its inception, is regularly assessed to income-tax under PAN-AAACJ8822E. The JJIPL had also furnished its return of income for the relevant assessment year. In evidence of such fact, a copy of acknowledgement of return of JJIPL, for A.Y. 2012-13, is placed at Page No. 388 of our Paper Book. (v) The JJIPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. In evidence of such fact, a copy of the Master Data downloaded from the official website of the MCA is placed at Page No. 389 of our Paper Book. (vi) The JJIPL has been maintaining its bank accounts with various banks. During the relevant previous year, the JJIPL was maintaining its current account with Indusind Bank at its Branch at Indore vide account No. 200001124518. (B) GENUINENESS OF THE TRANSACTIONS: (i) As regard the genuineness of the transactions, it is submitted that all the transactions entered into by the assessee with JJIPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. In evidence of such fact, w....
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....on, reliance is placed on the decision of the Hon'ble High Court of Karnataka in the case of Tam Tam Pedda Guruva Reddy vs. JCIT (2007) 291 ITR 44 (Kar.). (C) CREDITWORTHINESS OF JJIPL: (i) For establishing capacity and creditworthiness of JJIPL to provide loan to the assessee, during the course of the assessment proceedings, the assessee had duly furnished a copy of the audited financial statements of JJIPL along with Auditors' Report, in respect of the financial year ended 31st March 2012. A copy of such audited financial statements is placed at Page No. 396 to 419 of our Paper Book. (ii) On a perusal of the audited financial statements of JJIPL, it shall be observed by Your Honours that as on 31-03-2012 [kindly refer PB Page No. 396 to 419], the JJIPL was having huge net owned funds to the extent of Rs. 116.07 Crores by way of share capital and reserves & surplus. (iii) Your Honours, on a perusal of the copy of the bank statement in respect of the bank account maintained by the loan creditor, JJIPL [kindly refer PB Page no. 392], it shall be observed by Your Honours that, in such bank statement, entries regarding issuance of che....
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.... which it has got incorporated. A copy of the Memorandum and Articles of Association of the company is placed at Page No. 66 to 97 of our Paper Book. (iii) The registered office of the OMMPL, at the relevant time, was situated at C-39, Rajnigandha, CH SOC, Ram Mandir Road, Goregaon (W), Near Movie Star Theater, Mumbai (M.H.). Presently, the registered office of OMMPL is situated at GR-76, Harmony Commercial, C-Wing, Near Motilal Nagar, Link Road, Goregaon (W), Mumbai. (iv) The OMMPL, since its inception, is regularly assessed to income-tax under PAN-AABCO1930D. The OMMPL had also furnished its return of income for the relevant assessment year. A copy of the income-tax return of OMMPL for the A.Y. 2014-15 is placed at Page No. 98 of our Paper Book. (v) The OMMPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. In evidence of such fact, a copy of the Master Data downloaded from the official website of the MCA is placed at Page No. 99 of our Paper Book. (vi) The OMMPL has been maintaining its bank accounts with various banks. During the relevant previous ....
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....sion of the Hon'ble High Court of Karnataka in the case of Tam Tam Pedda Guruva Reddy vs. JCIT (2007) 291 ITR 44 (Kar.). (C) CREDITWORTHINESS OF OMMPL: (i) For establishing capacity and creditworthiness of OMMPL to provide loan to the assessee, during the course of the assessment proceedings, the assessee had duly furnished a copy of the audited financial statements of OMMPL along with Auditors' Report, in respect of the financial year ended 31st March 2014. A copy of such audited financial statements are placed at Page No. 106 to 125 of our Paper Book. (ii) On a perusal of the audited financial statements of OMMPL, it shall be observed by Your Honours that as on 31-03-2014 [kindly refer PB Page No. 106 to 125], the OMMPL was having its net owned funds to the extent of Rs. 2.68 crores by way of share capital and reserves & surplus. (iii) Your Honours, on a perusal of the copy of the bank statement in respect of the bank account maintained by the OMMPL [kindly refer PB Page no. 102], it shall be observed by Your Honours that, in such bank statement, entries regarding issuance of cheques for the purpose of providing the subject unsec....
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....icles of Association of the company is placed at Page No. 128 to 155 of our Paper Book. (iii) The registered office of the RRTSPL, at the relevant time, was situated at C-39, Rajnigandha, CH SOC, Ram Mandir Road, Goregaon (W), Near Movie Star Theater, Mumbai (M.H.). Presently, the registered office of RRTSPL is situated at GR-76, Harmony Commercial, C-Wing, Near Motilal Nagar, Link Road, Goregaon (W), Mumbai. (iv) The RRTSPL, since its inception, is regularly assessed to income-tax under PAN-AAECR4394M. The RRTSPL had also furnished its return of income for the relevant assessment year. A copy of the income-tax return of RRTSPL for the A.Y. 2014-15 is placed at Page No. 156 of our Paper Book. (v) The RRTSPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. In evidence of such fact, a copy of the Master Data downloaded from the official website of the MCA is placed at Page No. 157 of our Paper Book. (vi) The RRTSPL has been maintaining its bank accounts with various banks. During the relevant previous year, the RRTSPL was maintaining its current account ....
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...., at paras (4) & (7) of the Affidavit, has stated that the subject loan was given by RRTSPL out of its own funds only. A copy of the Affidavit of Shri Sharad Darak is placed at Page No. 164 to 166 of our Paper Book. The Affidavit so furnished by a director of the lender company also establishes the genuineness of the borrowing made by the assessee from JSFL. For such proposition, reliance is placed on the decision of the Hon'ble High Court of Karnataka in the case of Tam Tam Pedda Guruva Reddy vs. JCIT (2007) 291 ITR 44 (Kar.). (C) CREDITWORTHINESS OF RRTSPL: (i) For establishing capacity and creditworthiness of RRTSPL to provide loan to the assessee, during the course of the assessment proceedings, the assessee had duly furnished a copy of the audited financial statements of RRTSPL along with its Auditors' Report, in respect of the financial year ended 31st March 2014. A copy of such audited financial statements is placed at Page No. 167 to 178 of our Paper Book. (ii) On a perusal of the audited financial statements of RRTSPL, it shall be observed by Your Honours that as on 31-03-2014 [kindly refer PB Page No. 167 to 178], the RRTSPL was h....
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....any is placed at Page No. 179 & 180 of our Paper Book. (ii) The RSL was incorporated with the objects of carrying out the business of trading in various securities, financing and investment as per the objects contained in its Memorandum of Association, under which it has got incorporated. A copy of the Memorandum and Articles of Association of the company is placed at Page No. 181 to 229 of our Paper Book. (iii) The registered office of the RSL is presently situated at 317-318, Transport Nagar Scheme No. 44, Indore (M.P). (iv) The RSL, since its inception, is regularly assessed to income-tax under PAN-AABCR4536J. The RSL had also furnished its return of income for the relevant assessment year. In evidence of such fact, a copy of acknowledgement of return of RSL, for A.Y. 2014-15, is placed at Page No. 230 of our Paper Book. (v) The RSL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. In evidence of such fact, a copy of the Master Data downloaded from the official website of the MCA is placed at Page No. 231 of our Paper Book. (vi) Th....
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....ished a copy of the audited financial statements of RSL along with its Auditors' Report, in respect of the financial year ended 31st March 2014. A copy of such audited financial statements is placed at Page No. 240 to 258 of our Paper Book. (ii) On a perusal of the audited financial statements of RSL, it shall be observed by Your Honours that as on 31-03-2014 [kindly refer PB Page No. 240 to 258], the RSL was having its net owned funds to the extent of Rs. 4.95 crores by way of share capital and reserves & surplus. (iii) Your Honours, on a perusal of the copy of the bank statement in respect of the bank account maintained by the loan creditor, RSL [kindly refer PB Page no. 234 to 237], it shall be observed by Your Honours that, in such bank statement, entries regarding issuance of cheques for the purpose of providing the subject unsecured loan to the assessee are getting clearly reflected. Such entries by themselves, speak in volume, regarding the identity of the loan creditor, genuineness of the loan transaction and as also, creditworthiness of the loan creditor. (iv) Your Honours, on a further perusal of the bank statement of the RSL, it ....
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....ur Paper Book. (v) The SSPL is an active and functionary company as per the records and data of the Ministry of Corporate Affairs (MCA), Government of India. In evidence of such fact, a copy of the Master Data downloaded from the official website of the MCA is placed at Page No. 289 of our Paper Book. (vi) The SSPL has been maintaining its bank accounts with various banks. During the relevant previous year, the SSPL was maintaining its current account with Indusind Banik at its Branch at Mumbai vide account No 200999043730. (B) GENUINENESS OF THE TRANSACTIONS: (i) As regard the genuineness of the transactions, it is submitted that all the transactions entered into by the assessee with SSPL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. In evidence of such fact, we are submitting herewith a copy of loan confirmation letter duly signed by the authorized signatory of the lender company, confirming the transactions of loan given by the SSPL to the assessee, is placed at Page No. 290 of our Paper Book. (ii) The assessee's claim to the effect that....
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....e extent of Rs. 3.74 crores by way of share capital and reserves & surplus. (iii) Your Honours, on a perusal of the copy of the bank statement in respect of the bank account maintained by the loan creditor, SSPL [kindly refer PB Page no. 292], it shall be observed by Your Honours that, in such bank statement, entries regarding issuance of cheques for the purpose of providing the subject unsecured loan to the assessee are getting clearly reflected. Such entries by themselves, speak in volume, regarding the identity of the loan creditor, genuineness of the loan transaction and as also, creditworthiness of the loan creditor. (iv) Your Honours, on a further perusal of the bank statement of the SSPL, it would be observed by Your Honours that SSPL was having sufficient balance in its bank statement before providing the subject loan to the assessee. It shall further be observed by Your Honours that such bank balance in its turn had not got accumulated with SSPL by making cash deposits in bank account. Thus, in such circumstances, the sources of providing loan by SSPL cannot be doubted (v) Your Honours, the creditworthiness of the SSPL also gets substantiate....
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....website of the MCA is placed at Page No. 128 of our Paper Book. (vi) The EWFIL has been maintaining its bank accounts with various banks. During the relevant previous year, the EWFIL was maintaining its current account with Indusind Bank at its Branch at Indore vide account No. 200007892305. (B) GENUINENESS OF THE TRANSACTIONS: (i) As regard the genuineness of the transactions, it is submitted that all the transactions entered into by the assessee with EWFIL had taken place through account payee cheques/ banking channels only and none of the transactions had taken place in the form of cash. In evidence of such fact, we are submitting herewith a copy of loan confirmation letter duly signed by the authorized signatory of the lender company, confirming the transactions of loan given by the EWFIL to the assessee, is placed at Page No. 129 of our Paper Book. (ii) The assessee's claim to the effect that all the loan transactions had taken place through banking channels can be verified from the copy of the relevant statements maintained with the banks in which the transactions relating to receipt of loan by the assessee from EWFIL are cle....
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....nts is placed at Page No. 136 to 166 of our Paper Book. (ii) On a perusal of the audited financial statements of EWFIL, it shall be observed by Your Honours that as on 31-03-2016 [kindly refer PB Page No. 136 to 166], the EWFIL was having its net owned funds to the extent of Rs. 241.94 crores by way of share capital and reserves & surplus. (iii) Your Honours, on a perusal of the copy of the bank statement in respect of the bank account maintained by the EWFIL [kindly refer PB Page no. 131], it shall be observed by Your Honours that in such bank statement, entries regarding issuance of cheques for the purpose of providing the subject unsecured loan to the assessee are getting clearly reflected. Such entries by themselves, speak itself in volume, regarding the identity of the loan creditor, genuineness of the loan transaction and as also, creditworthiness of the loan creditor. (iv) Your Honours, on a further perusal of the bank statement of the EWFIL, it would be observed by Your Honours that EWFIL was having sufficient balance in its bank statement before providing the subject loan to the assessee. It shall further be observed by Your Honour....
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....l. Accordingly, the additions so made by the ld. AO on account of alleged unexplained unsecured loan and disallowance of interest paid thereon deserves to be deleted. (iii) Reliance is also placed on the following judicial pronouncements: i) Shri Rajendra Prasad Agrawal vs. Addl. CIT, Range-1, Indore [ITA No. 327/Ind/2015; Order dated 20-05-2016] ii) M/s. Vajdi Education Society vs. ACIT-2(1), Indore [ITA No. 653/Ind/2013; Order dated 09-02-2018] iii) Chhatrachhaya Nirman Pvt. Ltd. vs. ACIT-2(1), Indore [ITA No. 508/Ind/2018; Order dated 23-01-2020] (vi) Your Honours, during the course of the appellate proceedings, the assessee had furnished all the necessary documents to establish the identity of the loan creditor, genuineness of the transaction and creditworthiness of the creditor but, despite that, the ld. CIT (A) merely on the basis of assumptions confirmed the action of the ld. AO in making the addition. 6.04 LOAN FROM M/S. ZYKA MERCHANDISE PVT. LTD. ['ZMPL']-Rs.10,17,260/-A.Y. 2017-18 [AO's Findings at para (8.53) at page no. 46] [CIT(A)'s Findings at para (4.4.9)[D] at page no. 129 to 132]....
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....ur Paper Book. (ii) The assessee's claim to the effect that all the loan transactions had taken place through banking channels can be verified from the copies of the relevant statements maintained with the banks in which the transactions relating to receipt of loan by the assessee from ZMPL are clearly getting reflected. Copies of abstracts of the relevant bank statements of the assessee are placed at Page No. 281 of our Paper Book. (iii) Further, to establish the fact that loans were genuinely given by ZMPL through their bank account, a copy of relevant bank statement of ZMPL for the relevant period is placed at Page No. 282 of our Paper Book. (iv) Furthermore, it is also submitted that the assessee has paid interest on such loans after making necessary TDS which has duly been incorporated by the ZMPL in its return of income for the relevant assessment year. (v) The genuineness of the loan transaction also gets fortified from a very vital fact that the director of the ZMPL namely Shri Sharad Darak, through his Affidavit, duly sworn before Notary Public, has duly affirmed the transaction of loan of Rs. 10,00,000/-given by his compa....
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....creditworthiness of the ZMPL also gets substantiated from the Affidavit of Shri Sharad Darak, director of ZMPL, wherein he has stated on oath that the unsecured loan of Rs. 10,00,000/-has been given by ZMPL out of its own funds only [kindly refer PB Page No. 283 & 284]. (vi) Your Honours, during the course of the appellate proceedings, the assessee had furnished all the necessary documents to establish the identity of the loan creditor, genuineness of the transaction and creditworthiness of the creditor but, despite that, the ld. CIT (A) merely on the basis of assumptions confirmed the action of the ld. AO in making the addition. 12. 00 Your Honours, the Hon'ble Coordinate 'G' Bench of Mumbai, in the case of JCIT vs.Shalimar Housing and Finance Limited vide its recent pronouncement on 1-06-2021 in Appeal No. ITA 4079/Mum/2019 for A.Y. 2013-14 was pleased to hold the genuineness of the loan transactions carried out by the assessee in that case with various companies of Shri Sharad Darak. 12.00 Your Honours, during the course of the search proceedings carried out under s. 132(1) of the Act in the various business premises of the assessee comp....
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....learned AO has also given the gist of the statement given by such Mr. Dinesh Agrawal. In this regard, at the outset, it is submitted that during the previous year under consideration, the assessee had not carried out any loan transaction with any of the companies in respect of which the above said survey proceedings were allegedly carried out. Secondly, it shall be appreciated that Mr. Dinesh Agrawal whose statements have been referred to by the learned AO had not admitted that the companies run by Mr. Sharad Darak were accommodation entry provider companies. In any case, during the course of the survey proceedings referred to by the learned AO, not a single evidence was found which could have put the slightest doubt on the various financial transactions carried out by the assessee with the so-called Sharad Darak's controlled companies. 12.04 Your Honours, at para (8.17), the learned AO has made a reference of some statement, allegedly given by Shri Sharad Darak, on 21-02-2014, under s. 131 of the Act, in some other proceedings not related to the assessee or any of its associates. In this regard, at the outset, it is submitted that such statement of Shri Sharad Darak, give....
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....essee in the cases of some other assesses. The learned AO in the Assessment Order has referred to the statements of Shri Dinesh Agrawal and Shri Sharad Darak. But while doing so, the learned AO committed gross violation of principles of natural law and justice, firstly, by not confronting the assessee with the copies of all statements, documents and materials which he was intending to use against the assessee and secondly, by not affording any opportunity of cross examination to the assessee of the persons on whose statements the learned AO placed the reliance. In such circumstances, in view of the settled judicial position, the learned AO was not justified in drawing any adverse inference against the assessee merely on the basis of evidences collected behind his back. 13.01 Your Honours, on the issue of cross-examination, the Hon'ble Supreme Court in the case of M/s. Kishinchand Chellaram vs. CIT (1980) 125 ITR 713 (SC) was pleased to hold that the assessing officer is duty bound to confront the material collected by him to the assessee. The Hon'ble Supreme Court again in the case of M/s. Andaman Timber Industries V/s. Commissioner of Central Excise, Kolkatta-II 2016 (15)....
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....005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 7. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice." 13.02 The Hon'ble Supreme Court, again, in the case of Ayaaubkhan Noorkhan Pathan vs. The State of Maharashtra and Ors., 2013 AIR 58 (SC) was pleased to hold as under: "23. A Constitution Bench of this Court in State of M.P. v. Chintaman Sadashiva Vaishampayan AIR 1961 SC 1623, held that the rules of natural justice, require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party. Not providing the said opportunity to cross-examine witnesses,....
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....In the absence of such an opportunity, it cannot be held that the matter has been decided in accordance with law, as cross-examination is an integral part and parcel of the principles of natural justice." [Emphasis supplied] 13.03 The Hon'ble Gujarat High Court in the case of the Principal Commissioner of Income Tax Ahmedabad and Ors. vs. Kanubhai Maganlal Patel 2017 (3) TMI 271 (Guj.) 13.04 The Hon'ble Gujarat High Court, again, in the case of the Commissioner of Income Tax-V vs. Indrajit Singh Suri 2013 (8) TMI 111 (Guj.) 13.05 The Hon'ble Gujarat High Court, again, in the case of the CIT vs. Supertech Diamond Tools Pvt. Ltd. 2013 (12) TMI 1529 (Guj.) 13.06 The Hon'ble Delhi High Court in the case of the Commissioner of Income Tax vs. Ashwani Gupta (2010) 322 ITR 396 (Del.) 13.07 The Hon'ble Gujarat High Court in the case of the ACIT vs. Govindbhai N. Patel 2013 (8) TMI 239 (Guj.) 13.08 The Hon'ble Delhi High Court in the case of the CIT vs.. (2007) 295 ITR 105 (Del.) has held as under: "However, AO paid no heed to such request and proceeded with assessment order-Whether since correctness or otherwise of repo....
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....epartment preferred appeal before the ITAT. The ITAT confirmed the action of the CIT (A) in deleting the addition and held that merely on the basis of a statement given by some person, all the transactions carried out by various companies controlled by such person cannot be held to be non-genuine in a circumstance when the assessee had furnished ample of documentary evidences. 16.00 Your Honours, in the body of the assessment order, the learned AO has made reference of various judicial pronouncements but, none of the pronouncements so referred by the learned AO are applicable in the case of the assessee for the reason that the facts of the assessee's case are quite distinguishable from those referred in the aforesaid pronouncements. 17.00 Your Honours, on the contrary, there are plethora of judgments including those of the Hon'ble Jurisdictional High Court in favour of the assessee which have held that once the identity & creditworthiness of the loan creditors and genuineness of loan transactions are established, no addition can be made in the hands of the loan recipient. The brief notes of such judgments are given below: i) CIT vs. ORISSA CORPORATION P. ....
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.... circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises. It cannot, therefore, be said that any question of law arose in these cases. The High Court was, therefore, right in refusing to refer the questions sought for. (Paras 13 & 15) Reference-Question of fact-Cash Credit-High Court has no power to call upon the Tribunal to state a case if there was some evidence to support the finding recorded by the Tribunal, even if it appears to the High Court that on reappreciation of the evidence, it might arrive at a conclusion different from that of the Tribunal-Tribunal came to the conclusion that the assessee has discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence-High Court was, therefore, right in refusing to refer the questions sought for H....
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....d parties, the ITO is entitled to satisfy himself as to the true nature and source of the amounts entered therein, and if after investigation or inquiry he is satisfied that there is no satisfactory explanation as to the said entries, he would be entitled to regard them as representing the undisclosed income of the assessee. When these credits entries stand in the name of the assessee himself, the burden is undoubtedly on him to prove satisfactorily the nature and source of these entries and to show that they do not constitute a part of his business income liable to tax. Where the entry stands in the name of the assessee's wife or children, or in the name of any other near relation or an employee of the assessee, the burden will lie on the assessee, though the entry is not in his own name, to explain satisfactorily the nature and source of that entry. Where the entry stands not in the name of any such person having a close relation or connection with the assessee, but in the name of an independent party, the burden will still lie upon him to establish the identity of the said party, and to satisfy the ITO that the entry is real and not fictitious. When, however, in a case where....
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....w that Revenue discharged its burden, cash credit could not be treated assessee's suppressed income. iii) ASHOK PAL DAGA vs. CIT (1996) 220 ITR 0452 (MP) Decision in favour of: Assessee Reference-Question of law-Assessee having satisfied the IT authority as to the identity of the third party and also supplied the relevant evidence showing prima facie that the entries were not fictitious, the initial burden can be said to be discharged by the assessee-Treating the cash credits and interest thereon as undisclosed income of assessee gave rise to question of law.-Orient Trading Co. Ltd. vs. CIT (1963) 49 ITR 723 (Bom) : TC 42R.1039 applied iv) CIT vs. KAMDHENU STEEL & ALLOYS LTD. & ORS. (2014) 361 ITR 0220 (DEL) Decision in favour of: Assessee; Income-Cash credit-Share application money-Burden of proof and genuineness-Though initial burden is upon the assessee, once he proves the identity of credits/share applications by either furnishing permanent account numbers or copies of bank accounts and shows the genuineness of the transaction by showing money in the banks is by account payee cheques or by draft, etc., ....
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....of the case, order of remand was not called for v) Ariba Foods Pvt. Ltd. vs. Asstt. Commissiner of Income Tax (2021) 9 TTJ Online 9 (Trib - Indore) CashCredit-Section68oftheIncome-taxAct,1961-A.Y.2015-16- AOmadeadditionsof Rs. 8.80lacsu/s68-CIT(A)deletedtheadditions- HELD-Assesseehasfurnishedcopyof PAN, bank account statement of lender company, audited financial statement, profit and loss account statement, certificate of incorporation, copy of MOA and AOA, etc. - Assessee had discharged its onus of providing the genuineness of the sum credits - ITAT satisfied with the identity and creditworthiness of cash creditor - Thus, ITAT does not find any infirmity in the finding of CIT (A) in deleting the addition. [Refer Para 72, 73 &74] vi) Great Galleon Ventures ltd. vs DCIT Central-2, Indore in Appeal No. IT(SS)A Nos. 114 to 116/Ind/2020 16.8 In the aforesaid facts and circumstances of the case and the various judicial pronouncements as referred to by the assessee in its Synopsis and as also in the light of our detailed findings made in the preceding paras, we are of the considered opinion that the assessee could successfully establish ....
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....ender companies is genuine and deserves to be allowed. 16.02 Your Honours, it is submitted that the assessee company has incurred the interest expenditure for the purposes of its business only and therefore, the entire interest expenditure deserves to be allowed under the provisions of s. 36(1)(iii) of the Act. 16.03 Your Honours, in the instant appeals, the ld. CIT (A) has confirmed the aforesaid additions made by the ld. AO under s. 68 of the Act by way of giving his findings at para (4.3.9)(D) from page no. 129 to 132 of the impugned appellate order. It is submitted that the ld. CIT (A) has although acknowledged furnishing all the necessary documents by the assessee for establishing the genuiness of the loans. However, the ld. CIT (A) without assigning any cogent reason, chose to brush aside all these documentary evidences and rather, placed reliance upon the so called inquiries conducted by the Investigation Wing and various other Income-Tax Authorities. The ld. CIT (A) has not assigned any basis for his drawing the conclusion that Shri Sharad Darak is a de-famous entry provider of Indore. The ld. CIT (A) hinges his findings on the fact that in certain other c....
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....5, the AO has also made addition u/s. 69C in respect of interest payment amounting to Rs. 4,81,875/-to the aforesaid four companies. Thus, in aggregate, for A.Y. 2014-15, the AO vide para (8) of his Order, has made an addition of Rs. 1,89,81,875/-in the income of the assessee. We find that the aforesaid additions for both A.Y. 2012-13 and A.Y. 2014-15 have been made by the AO (i) on the basis of some information available with him regarding procurement of loans by the assessee from some dubious/shell companies (ii) the report of the Special Auditors obtained during the course of the assessment proceedings; (iii) one excel sheet containing the details of loans obtained by the assessee from some lenders, which were found duly recorded in its books of accounts; (iv) statement of Shri Sharad Darak recorded u/s. 131 on 21/02/2014 in relation to the search conducted in the case of some other assessee and (v) statement of some Shri Rajesh Vyas. However, we find that none of the basis taken by the AO during the course of the assessment proceedings has any nexus with any incriminating document or material found during the course of the search operations carried out under s. 132 of....
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....0/-for A.Y. 2012-13 and Rs. 1,85,00,000/-for A.Y. 2014-15 u/s. 68 of the Act and has also made additions amounting to Rs. 54,863/-and Rs. 4,81,875/-respectively for A.Y. 2012-13 and A.Y. 2014-15 on account of unexplained interest payment u/s. 69C of the Act to such loan creditors. Although, in respect of such additions, on the legal ground as discussed in para (11.3) supra, that the assessment years 2012-13& A.Y. 2014-15 were complete assessment years and therefore, for such assessment years, no addition could have been made without having recourse to any incriminating material found during the course of the search. But, even on merits, we find no substance in the additions so made by the AO in respect of all the above named six loan creditors. 11.4.2 We find that in respect of the above named eight lender companies, the AO has given his findings at para (8.12) to para (8.20) of his Order. We find that at para (8.12), the AO has alleged that during the course of the search and post search proceedings, it was found that the assessee had received huge unsecured loans from certain suspicious companies which were directly/indirectly controlled by a well known accommod....
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....en from the above named eight lender companies and further made addition u/s. 69C of the Act for various assessment years, by holding the interest expenditure as unexplained expenditure. 11.4.3 We find that before the ld. CIT(A), the assessee had made a detailed explanation on the subject issue along with the various documentary evidences. We find that copies of the written submission made by the assessee before the ld. CIT (A) have also been furnished by the assessee before us in its Paper Books for various assessment years. 11.4.4 We find that the main grounds of contention of the assessee before the ld. CIT (A) was that (i) during the course of the assessment proceedings, it had furnished all the necessary documents to establish the identity of the loan creditors, the genuineness of the loan transactions and the creditworthiness of the loan creditors, as contemplated under the provisions of s. 68 of the Act; (ii) after having discharged its initial onus of proving during the course of the assessment proceedings, the assessee had specifically requested the AO to issue the summons u/s. 131 / notices u/s. 133(6) to the loan creditors but despite making such specific request, ....
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.... that Shri Sharad Darak was a defamous entry provider of Indore. The ld. CIT (A) further held that in many of the cases, the genuineness of the loans provided by the companies of Sharad Darak have not been accepted. Finally, with the above findings, the ld. CIT (A) concluded that once it is proved that the assessee has taken any loan from any entry provider, then, furnishing of any documentary evidences could not establish the loan transactions as contemplated u/s. 68 of the Act and accordingly, confirmed the various additions for various assessment years, made by the AO on this count. 11.4.6 We find that before us, in respect of the subject loan transactions, the assessee has placed his reliance on the written submissions made before the ld. CIT (A) which are duly placed in the Paper Books of the assessee filed before us for the concerning assessment years. The counsel of the assessee also placed reliance on the various documentary evidences furnished by it before both the authorities below which have also been furnished in the Paper Books for concerning assessment years filed before us. In addition to that, the assessee has also made a written synopsis which has already been r....
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.... our considered view, by furnishing all the necessary documents, such as the certificates of incorporation, copies of Memorandum and Articles of Association, copies of acknowledgement of income tax returns, copies of the master datas downloaded from the official website of the MCA, copies of the PAN Cards, the assessee could be able to establish the statutory as well as the physical identity and existence of all the aforesaid eight loan creditors. We further find from the copies of duly signed letters of confirmation, copy of the relevant abstracts of the bank accounts of the loan creditors that all the loan transactions have been carried out through banking channels which were found duly reflected in the bank statements of the assessee as well as the loan creditors and the copies of the Affidavits given by Shri Sharad Darak, the assessee could be able to establish the genuineness of the loan transactions. Further, from a perusal of the copies of the lender's bank statements placed in the concerning Paper Books for A.Y. 2012-13,A.Y. 2014-15, A.Y. 2016-17& A.Y. 2017-18, we find that in none of the cases, before making remittance to the assessee towards loan transactions, any cash wa....
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....uch companies were not genuine. We find that the AO has also made a reference of some statement u/s. 131 of Shri Sharad Darak recorded by some other assessing officer in the case of some other assessee but again, the copy of such statement was not provided by the AO to the assessee. We find that before the ld. CIT(A), the assessee had duly furnished the copies of Affidavits duly sworn by Shri Sharad Darak before Notary Public. We also find that copies of such Affidavits were also provided by the ld. CIT (A) to the AO under Rule 46A of the Income Tax Rules, 1962, but the AO did not make any further examination or inquiry from Shri Sharad Darak. From the copy of the Remand Report dated 14/09/2020 submitted by the AO to the ld. CIT(A), as placed at page no. 421 to 438 of the assessee's Paper Book for A.Y. 2012-13, we noted that the Affidavits filed by Shri Sharad Darak have been discarded by the AO on the extraneous grounds such as timing of the filing of the Affidavits, generic nature of the Affidavits, without taking any pain to cross-examine Shri Sharad Darak on the Affidavits so furnished. We find that copies of such Affidavits of Shri Sharad Darak in respect of each and every sub....
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....f the statements and wanted to crossexamine, the Adjudicating Authority did not grant this opportunity to the Assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the Assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the Assessee themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the Assessee wanted to cross-examine those dealers and what extraction the Assessee wanted from them. 6. As mentioned above, the Assessee had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relie....
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....005) 10 SCC 634, this Court, while dealing with a case under the Central Excise Act, 1944, considered a similar issue i.e. permission with respect to the cross-examination of a witness. In the said case, the Assessee had specifically asked to be allowed to cross-examine the representatives of the firms concern, to establish that the goods in question had been accounted for in their books of accounts, and that excise duty had been paid. The Court held that such a request could not be turned down, as the denial of the right to cross-examine, would amount to a denial of the right to be heard i.e. audi alteram partem. 28. The meaning of providing a reasonable opportunity to show cause against an action proposed to be taken by the government, is that the government servant is afforded a reasonable opportunity to defend himself against the charges, on the basis of which an inquiry is held. The government servant should be given an opportunity to deny his guilt and establish his innocence. He can do so only when he is told what the charges against him are. He can therefore, do so by cross-examining the witnesses produced against him. The object of supplying statements is that, th....
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.... Ashok Pal Daga vs. CIT (1996) 220 ITR 0452 (MP), CIT vs. Mehrotra Brothers (2004) 270 ITR 0157 (MP), the decision of the Hon'ble High Court of Gujarat in the case of DCIT vs. Rohini Builders (2002) 256 ITR 360 (Guj.), the decisions of the Hon'ble High Court of Delhi in the cases of CIT vs. Kamdhenu Steel and Alloys Ltd. & Ors. (2014) 361 ITR 0220 (Del.) and CIT vs. Dalmia Resorts International (2007) 290 ITR 508 (Del.), the decision of the Hon'ble High Court of Patna in the cases of CIT vs. Hanuman Agrawal (1985) 151 ITR 150 (Patna) and again in the case of Add. CIT vs. Bahari Brothers (P) Ltd. (1985) 154 ITR 0244 (Patna) andthe decision of the Hon'ble Apex Court in the case of CIT vs. Orissa Corporation P. Ltd. (1986) 159 ITR 0078 (SC) we find absolutely no justification in the AO's making the additions in respect of the aforesaid loan creditors, in the income of the assessee either u/s. 68 of the Act or u/s. 69C of the Act for various assessment years. We find that the sole basis for making the addition by the AO was some statements of Shri Dinesh Agrawal and Shri Sharad Darak recorded by some of the Income Tax Authorities in some other cases, but since, neither the copies of su....
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....ansactions carried out by the assessee with East West Finvest India Limited, Jayant Securities and Finance Ltd. and KK Patel Finance Limited, companies controlled by Shri Sharad Darak were genuine. Further, this Bench in the case of ACIT vs. Pramod Kumar Sethi as reported in (2019) 34 ITJ 39 (Trib.Indore) and again in the case of Shri Sanjay Shukla, Indore vs. ACIT, Central Circle-2, Indore as reported in 2022 (4) TMI 385-ITAT, Indore has also upheld the action of the CIT (A) in deleting the additions made by the AO in the assessee's income on account of loans taken by the respective assessees from the various companies controlled by Shri Sharad Darak. In the case of Shri Pramod Kumar Sethi (supra) this Bench has held the loan transactions carried out by the assessee in that appeal with Trimurti Finvest Pvt. Ltd., Purvi Finvest Pvt. Ltd., KK Patel Finance Ltd. and East West Finvest India Ltd. as genuine loan transactions whereas, in the case of Shri Sanjay Shukla (supra), this Bench has held the loan transactions carried out by that assessee with M/s. Jayant Securities and Finance Limited and M/s. Jay Jyoti India Pvt. Ltd. as genuine. 11.4.15 Thus, in terms of the findings given....