TaxTMI 
TaxTMI 
2024 (12) TMI 1709
X X X X Extracts X X X X
X X X X Extracts X X X X
..../10/2018 u/s. 139(1) declaring 'Nil' income and current loss was shown at Rs. (-)4,75,457/-. The said return of income was accepted vide intimation u/s. 143(1). A search and seizure action was conducted on assessee on 17/04/2018 and accordingly, notice u/s.153A dated 15/11/2019 was issued and in response to which assessee filed return of income on 27/11/2019 declaring same income i.e. 'Nil' and current year loss of Rs. (-) 4,75,457/-. During the course of assessment proceedings ld. AO noted that assessee had shown unsecured loans from the following parties :- Name of the party PAN Amount (Rs.) Prarthna Pvt. Ltd AABCP5029J 30,18,00,000 Kyora Mettaliks Pvt. Ltd. AAGCK6497G 34,45,00,000 Pakhul Traders Pvt. Ltd. AAJCP2581K 25,80,00,000 Total 90,43,00,000 4. In order to verify the genuineness of the claim of the assessee regarding the aforesaid loans, ld. AO issued notices u/s. 133(6) to the above parties. In response, all the parties have furnished copy of acknowledgment of return of income, audited accounts and financial statements, ledger confirmation, copy of ledger account. Ld. AO noted that as per audited finan....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... observed that it has a negative net worth. He then issued summons to Prarthna Pvt. Ltd for production of books of accounts and furnishing of explanation as to the source of funds for advancing the loan to the assessee before the ld. AO. The assessee's representative furnished the explanation regarding the source of funds in the amounts received from Prarthna Pvt. Ltd., however, AO noted that complete details have not been provided. Their loans have been advanced are partly from the funds borrowed from the other parties and entire chain of flow of funds have not been provided. He observed that funds have been transferred directly from one Group Company to other group company and there is funds transfer from one entity to other to prove the source of the loan. He further observed that assessee has failed to establish the creditworthiness and genuineness of the parties by not furnishing any correspondence, emails, copy of agreements, fund messages exchanged before the loan was received. Further, there are very frequent debit and credit transactions involving these amounts between the assessee group and Prarthna Pvt. Ltd within a short span of time. Ld. AO further inferred that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llant has submitted that this company is assessed to tax with Income lax Officer Ward-8(3) Kolkata Hence, the identity of the party is proved. Regarding creditworthiness, the appellant has submitted that the assessment in case of M/s Prarthna Put. Ltd for AY 2017-18 has been completed u/s 143(3) of the IT Act by ITO Ward-8(3), Kolkata on 23.12.2019 wherein no addition has been made This order is passed after the date of search action on the appellant, that is 17.04.2018, and hence, it clearly proves creditworthiness of the party, as no adverse inference has been drawn by the A.O Regarding genuineness of the transactions, the appellant has submitted that there are regular transactions between the appellant and Prarthna Put. Ltd and the entire loan has been repaid in the financial year 2020-21 24.2 Before me, in support of its claim, the appellant has submitted following documents i. Ledger account of M/s Prarthna Put. Ltd in the books of the appellant. ii. Loan confirmation letters from M/s Prarthna Pvt. Ltd. iii. Bank statement of appellant reflecting loan transactions iv Bank statement of M/ S Prarthna Pvt. Ltd v. Copy of Incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gular transactions of loan with this company and the entire loan has been repaid in the F.Y. 2019-20. 25.2 Before me, the appellant has submitted following documents in support of its claim: i. Ledger account of M/s Kyora Mettaliks Put. Ltd the books of the appellant. ii. Loan confirmation letters from M/ s Kyora Mettaliks Pvt Ltd. iii. Bank statement of appellant reflecting loan transactions. iv. Bank statement of M/ s Kyora Mettaliks Pvt ltd. v. Copy of income tax returns filed by M/s Kyora Mettaliks Put ltd along with the copy of audit report. vi. Copy of Assessment order passed u/s 143(3) in case of M/s Kyora Mettaliks Pvt ltd for A. Y 2018-19 25.3 From the perusal of ledger account, it is that there are regular transactions of loan between the appellant firm and M/s Kyora Mettaliks Pvt. Ltd. The details of the same are as under: A.Y. Opening Balance Loan taken during the year Loan Repaid during year the Closing balance 2018-19 NIL 34,45,00,000 7,67,00,000 26,78,00,000 2019-20 26,78,00,000 NIL 13,20,15,000 13,57,85,000 2020-21 13,57,85,000 NIL 13,5....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,000 2021-22 11,29,85,000 NIL 11,29,85,000 NIL From the above, it is seen that the appellant has taken loan of Rs, 25.8 crores in the F.Y 2017-18, thereafter Rs. 3.2 crores was repaid in the F.Y 2018-19 Rs. 11,30,15,000/- was repaid in F.Y 2019-20 and the remaining amount of Rs. 11,29,85,000/- has been repaid in the F.Y 2020-21. Thus, the entire loan has been repaid in the F.Y. 2020-21. 26.4 It is also a fact that the assessment in case of M/s Pakhul Traders Pvt. Ltd., for A.Y 2018-19 has been completed u/s 143(3) of the I.T. Act on 25.02.2021 accepting the returned income. The source of funds has not been doubted by the A.O. 26.5 In view of the above, I hold that the appellant has discharged its onus of proving the identity and creditworthiness of the lender and genuineness of transaction. 27. From the above discussion, it can be seen that in the present case, the loans have been accepted through banking channels and have also been repaid through the banking channels. There are several judicial decisions wherein it is held that in case of repayment of loan through the banks, addition cannot be made u/s. 68 of the I.T Act. 9. We....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he ld. CIT(A) for each of the parties. Thus, assessee has not only discharged the burden for proving the source of loan but also source of the source. 11. On the other hand ld. DR after referring to the various observations of the ld. AO submitted that the source of funds in the hands of the parties where inter-transfer of funds from other group companies and there are layering of companies and the source of funds are strange in providing bogus purchase and sales. Notices given by the AO for each of the party have neither been rebutted nor have been satisfactorily explained by the assessee. Thus, the order of the ld. AO should be confirmed. 12 We have perused various documents and annexures including income tax returns, copy of balance confirmations and bank statements of the three parties highlighting the transaction of loan received by the assessee from the said three parties, provided in the paper book before us from pages 1 to 163, which also contains relevant bank statement of the lender companies and the source of funds for each company shown in their audited financial statement and balance sheet. It is not the case of the ld. AO that in any of the case the some kind....