AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 354
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....s ISRPL have admitted in their statements that it is a paper entity involve in providing accommodation entries and the same has been corroborated by evidence in the form of transfer of fund from bogus entities of KRBL Group to entities of Jagat Group including M/s ISRPL was found during search at KRBL Group. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 11.54,00,000/- by holding the transaction of fund transfer between assessee company and M/s ISRPL as regular business transaction without appreciating the fact that assessee company has not received any interest on the loans given by it to M/s ISRPL which is not a normal business practice. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the source of fund of M/s ISRPL which was share capital & share premium received during A.Y. 2007-08, 2008-09 & 2010-11 has already been held clear by appellate authorities and confirmed by Hon'ble High Court without appreciating the fact that evidences unearthed during search & survey at M/s KRBL Group, M/s ISRPL, its directors & ....
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....e company. Enquiries into the bank account of ISRPL alluded that the account is mainly used for routing debit credit entries i.e amounts are credited on one day and the same are debited by way of onward transmission. The Ld.AO initiated proceedings u/s 148 against the assessee through notice dated 30.03.2017. Based upon statement of the two directors of ISRPL to the investigation authorities, the Ld.AO concluded that the said ISRPL was a conduit company engaged in providing accommodation entries. Consequently, he proceeded to add the amount of Rs. 11,54,00,000/- appearing in the bank accounts of assessee, which was received from ISRPL as undisclosed income of the assessee. 4.0 Per contra, the Ld.DR relied upon the order of lower authorities and requested for confirming their orders. 5.0 The Ld.Counsel for the assessee vehemently argued in favour of the order of Ld. First Appellate Authority. It was contended that the same is based upon correct understanding of the facts of the case. The Ld.Counsel argued that it had challenged the order of Ld.AO both on legal grounds as well as deficient merits of the impugned addition of Rs. 11,54,00,000/-. The Ld.Counsel argued that the Ld.....
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....assessment. 2.3 28.03.2013: That learned DCIT framed an order of the assessment at a total income of Rs. 2,52,00,596/- as against the declared income of Rs. 2.30.96,210/- by making disallowance of interest and bank charges of Rs. 21,04,496/ (see page 140-141 of PB). While making the aforesaid disallowance, learned AO observed as under: "4. Issue of disallowance of Bank Interest payments: The assessee has claimed in the profit and loss account expenses of Rs. 21,04,386/- against "Bank Interest & Charges". Vide query letter dated 08.02.2013 at point no. 7, it was specifically asked that the assessee company has given loan/advances to its subsidiary company/Radhey Shyam Dang of Rs. 19.06 crores during the year. It was further asked why interest payment should not be disallowed as no interest is charged from the subsidiary company, M/s Index Securities & Research Pvt. Ltd./Radhey Shyam Dang. Moreover the assessee has taken secured loan from banks. As such, the assessee has advanced interest bearing funds for non business purposes." 2.4 That being aggrieved against the aforesaid order of assessment, assessee filed an appeal before the learned CIT(A), ....
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....as specifically submitted that sum of Rs. 11,63,00,000/- was received from M/s Index Securities and Research Pvt. Ltd which sum was also repaid during the year and after the repayment, assessee has given an advance of Rs. 13,06,00,000/- which was duly reflected in the balance sheet, as such, allegation made in the reasons to believe, that aforesaid transaction has not been disclosed is factually incorrect and hence initiation of the reassessment proceedings is clearly without application of mind and hence beyond jurisdiction. 2.10 14.12.2017: The objections filed by the appellant was disposed off. It was held for the reopening of the case, only prima facie material is required and sufficiency of the reasons cannot be examined and at the time of the reopening there was enough material in the form of statement of directors of M/s Index Securities & Research Pvt. Ltd wherein it has been admitted by them that this company is not doing any real business and is engaged only in the business of providing accommodation entry. It is submitted that it is not the contention of the appellant that material on the basis of the proceedings were initiated were insufficient, and on the cont....
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....ojects Ltd. is the unaccounted income of the appellant and hence he computed the income of the appellant at Rs. 13,84,96,210/- as against the returned income of Rs. 2,30,96,210/-....." 7.0 We have further noted that as regards the legal challenge raised to 148 proceedings the Ld.CIT(A) has given his findings in para 4.2 to 4.2.1 of his order on pages 31 to 33. After carefully analyzing the various facets of the case he concluded that.. ".....Further these facts were available in the last assessment completed u/s 153A on 28.03.2013 also. In such circumstances, I am of the view that reasons to believe is not based on complete facts and it appears that before reopening of the assessment, AO has not verified the complete facts. In fact, in subsequent assessment year also appellant has claimed to advance further sum of Rs. 1,52,47,00,000/- to M/s Index Securities and Research Pvt. Ltd and had received a sum of Rs. 89,36,10,000/- from the aforesaid company. Hence it is seen that the appellant had running transactions with the aforesaid company. The transactions of receipt of the sum from the aforesaid company is not a solitary transaction but such transactions are spread for ....
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....0/- from ISRPL & repaid amounts (primarily from 12.12.2009 to 31.03.2010) aggregating to Rs. 24,69,00,000/- to ISRPL, and at the end of FY 2009- 10 as on 31.03.2010, an amount of Rs. 13,06,00,000/- was receivable by appellant from M/s ISRPL. This might be the reason the AO could not find the loan of Rs 11.54 cr. from M/s ISRPL under the head "loans" on liability side of balance sheet of appellant, as this amount was squared up during the year and additional amount of Rs 13.06 cr. was advanced by the appellant to M/s ISRPL. Infact the running loan account also appear in next financial year wherein the appellant had taken amounts of Rs. 89.36 cr. from M/s ISRPL and repaid the amount of Rs. 152.47 cr. during the year, leaving a closing credit balance of the appellant of Rs. 76.17 cr. with M/s ISRPL. The transactions had been made through banking channels and flow of funds are in both the directions between these two companies during the year. 4.3.2 Further the appeal of the Index Securities and Research Pvt. Ltd. for assessment year 2010-11 against the order u/s 147 r.w.s. 153A wherein, on the basis of above reasons, it was held by AO that ISRPL is providing accommodation ent....
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....paper company providing accommodation entries, however the directors may be paper directors just following the directions of major shareholders and doing various compliances. Thus the addition made by the AO @2% commission charged of Rs 2.56 crore on all advances is hereby deleted and appeal of the appellant is allowed." 4.3.3 Thus the facts & inferences drawn in the appeal of M/s ISPRL as reproduced above coupled with the facts on loans by the appellant are summarized as under: (i) The source of funds in M/s ISRPL had been share capital & share premium received in the assessment years 2007-08, 2008-09 and 2010-11. This share capital and premium were added in the assessments of M/s ISRPL in these respective years. However, these additions could not stand the test of appeal and Hon'ble High Court had confirmed the deletion made on technical grounds as well as on merits by CIT(A) for these years. Thus the source of capital once taxed (although subjudice), considering it as receipt of accommodation entry, in M/s ISRPL, becomes clean for any further application of that money. Hence the subsequent entries cannot be termed as accommodation entries unless corroborate....