TaxTMI 
TaxTMI 
2016 (5) TMI 1628
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....lged in practice of giving accommodation entries of share application money and unsecured loan. These companies namely M/s. Lunkad Securities Ltd., Lunkad Media and Entertainment Ltd., West End Management Technologies (P) Ltd., Rajveer Marketing and Investment Ltd and M/s Lagoon Resorts (P) ltd. are situated at 13-Race Course Road, Indore. All these companies are being run in one room of the said survey premised by Shri Vijay Lunkad & his sons Shri Sanjeev Lunkad and Shri Ritesh Lunkad. Other than these, family members namely Smt. Sarla Lunkad, Smt. Sneha Lunkad, Smt. Rachna Lunkad and staff members namely Shri Rajesh Patel and Shri Ghanshyam Jagtap are also involved as directors. Modus Operandi Shri Vijay Lunkad, Shri Sanjeev Lunkad & Shri Ritesh Lunkad floated several companies (refer para 3) and associated themselves, their family and staff members as directors. Through these companies they started the alleged business of providing entries of unsecured loan, share application money, investment in real estate for needy persons who are actual beneficiaries: These persons used to give cash either directly to Lunkad or through mediators (refer para 4). These huge amount in cas....
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....t & Finance Ltd. Vijay Lunkad / G. Jagtap Lunkad House, 13-Race Course, Indore 07 Historic Arts & Exports (P) Ltd. Vijay Lunkad / G. Jagtap Lunkad House, 13- Race Course, Indore 08 Rajveer Marketing & Investment Ltd. Sanjeev Lunkad/ Ritesh Lunkad Lunkad House, 13- Race Course, Indore 09 West-End Management Technologies P. Ltd. Vijay Lunkad/Sanjay Bindal Lunkad House, 13- Race Road 10 Rajveer Biotech (P) Ltd. Sanjeev Lunkad/ Ritesh Lunkad Course Lunkad House, 13- Race Course, Indore 11 Prateek Reality (P) Ltd. Sanjeev Lunkad Ritesh Lunkad Lunkad House, 13- Race Course, Indore 12 Alpine Eisen Ltd. Sanjeev Lunkad/ Sneha Lunkad Lunkad House, 13- Race Course, Indore 13 Indore Biosoft (Pvt) Ltd. 14 Ritesh Investment (P) Ltd. Vijay Lunkad/ G. Jagtap Lunkad House, 13- Race Course, Indore 15 Celerity Capital Market & Finvest (P) Ltd. Vijay Lunkad / G. Jagtap Lunkad House, 13- Race Course, Indore - 16 Alpine Agrotech Ltd. Sanjeev Lunkad / Sneha Lun....
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..... Bank of Rajasthan Centurion Bank 16 Alpine Aarotech Ltd. Centurion Bank 17 Alpine Infosys Ltd. Bank of Rajasthan Centurion Bank 18 Himalya Grah Nirman Sahakari Samiti Maryadit. Bank of Rajasthan, Centurion Bank 6. Commission on entries: - On perusal of documents impounded during the survey, it is evident that on these alleged transactions, the assessee has charged commission ranging from 2% to 3%. The list of the company and corresponding charge of commission is as under: - S.No. Name of the Company Commission Remarks 1 Budharia Securities & Finvest Ltd. 3% Ref: Page 25-29, LPS 20, Survey document. 2. Parkson Holding Pvt Ltd. 2.75% -do- 3. LV. Modi Securities Ltd. 3% -do- 4. Ronima Finance & Investment Pvt Ltd 2.4% -do- 5. Krishna Krina Holdings Pvt Ltd. 2.75% -do- 6. Lagoon Resorts Pvt Ltd. 2.75% -d o- Authenticity of Documents: - Loose papers (page-38 OF LPS-34) containing details of payments in cash were impounded during the survey on Lunkads. Consequent to this a survey was further conducted on the business premises of M/s. Sachin Leasing (P) Ltd. & M/....
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.... "East" stands for East-West Finvest Ltd. The above chart as / appearing in the survey document clearly indicates how cash has moved from mediator / parties to the ultimate beneficiary through the companies of Lunkads. Thus the modus operandi is very clear and simple. The whole group opened a series of bank accounts in the name of companies whose taxable income is peanut. They started depositing cash in one bank account (this is confirmed with the help of impounded documents during the course of Survey proceedings in the Lunkad Group and as referred earlier). After depositing cash in one account, to give it a color of genuine transaction, through cheque a web is created giving multiple entries in multiple Bank Accounts and shown in the respective companies either - share capital, share premium or unsecured loans. But when one try to see these transactions in totality it appears that it is a facade to bring the unaccounted cash available in the hands of various in the system. From the angle of nature of Business of the loan provider and the amount of income tax they are paying, it i~ clear from the P/L account of above four companies that these interest receipt and taxabl....
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....tisfaction recorded. 6. The matter carried to the ld. CIT(A) and the ld. CIT(A) has confirmed the addition by observing as under :- "6. Ground no. 6 of appeal is against addition of Rs. 5 lakh u/s 68 of the Income-tax Act, 1961. Held as unexplained loan by AO. This loan is taken from M/s. K.K. Patel Finance Limited. According to AO, in a survey action conducted at premises of "Lunkad Group" it was found that they are rotating huge unaccounted cash of various beneficiaries or fellow entry provides and finally giving entries of loan/share capital to various beneficiaries. In the cash book seized from Lunkad Group some part of which is reproduced in assessment order it could be seen that as per point 3B reproduced on pages 7 & 8 of this order, AO observed that some companies including K.K. Patel Finance Limited (Anil Saini) has taken voluminous entries from Lunkad group of companies and finally routed these entries to ultimate beneficiaries. Since these findings pertains to same assessment year i.e. assessment year 2007- 08 and appellant could not controvert such facts either by furnishing any affidavit or relevant bank accounts of K.K. Patel Finance Limited & that of Lunk....
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....N no. and registered with Registrar of Companies and it filed its return of income, which proves the identity of the creditor. The transaction was routed through Banking channel, interest have been paid, tax has been deducted and proper disclosure was made in the books of both the parties also confirmation of party, copy of bank account of creditor proved the genuineness of the transaction. The copy of bank account shows that the creditor has sufficient fund in the bank account before advancing loan of Rs. 5,00,000/- to the assessee. No cash or cheque has been deposited in to the account to affect the loan transaction of Rs. 5 lakhs on 01.09.2006, which proved the creditworthiness of the transaction. The primary onus of Section 68 has been discharged by the assessee as the assessee has given all the details. If the AO has any doubt regarding genuineness, then he should have done further enquiry. The AO has treated that his cash credit is unexplained only on the basis of survey conducted at Lunkad Group on 02.05.2006 and no finding has been given for treating this transaction as unexplained credit. The assessee was not given any opportunity that Lunkad Group was associates of the as....
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....in the books maintained by the assessee. Such creditor has put a sum during the year and the assessee offers no explanation about the nature and source of such credit or explanation offered by the assessee not in the opinion of assessing authorities satisfactorily, then sum so credited may be charged to tax as income of the assessee's previous year. As per Section 68 of the Act, once there is credit in the books maintained by the assessee, the primary onus is on the assessee to offer explanation as to the nature and source of the credit. When the assessee produced the identity of the creditor, the genuineness of the transaction was established. The primary onus, which rested with the assessee to discharge, but the Revenue does not satisfy with the source of the fund in the hands of the assessee. It was the Revenue to take the appropriate action. The burden of proof in loan transaction, it is well settled law that while considering the question whether the alleged loan taken by the assessee was genuine transaction, the initial onus always upon the assessee and if no explanation is given or explanation given by the assessee is not satisfactory, the AO can disbelieve the alleged trans....