TaxTMI 
TaxTMI 
2026 (3) TMI 678
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by Shri Praveen Jain through various Companies and Firms controlled, managed and operated by him and his associates, observed that the Assessee Company has also received an amount of Rs. 3,80,00,000/- in total, by way of Share Application Money, during the financial year under consideration, from the following parties: Sr. No. Name of the Bogus Concern Operated by Praveen Kumar Jain PAN of the Bogus Concern Operated by Praveen Kumar Jain Amount of Transaction (in Rs. ) 1 Falak Trading Co P.Ltd AABCF5837A 5,000,000 2 Olive Overseas P Ltd (Realgold Trading Co P Ltd) AACCR4512K 8,000,000 3 Olive Overseas P Ltd (Realgold Trading Co P Ltd) AACCR4512K 5,000,000 4 Sumukh Commercial Pvt Ltd (Capetwon Mer. P Ltd) AACCC7400M 5,000,000 5 Viraj Mercantile P Ltd AADCV3852H 5,000,000 6 Duke Business P Ltd (JPK Trading | Pvt Ltd AABCJ6245N 5,000,000 7 Olive Overseas P Ltd (Realgold Trading Co P Ltd) AACCR4512K 2,500,000 8 Sumukh Commercial Pvt Ltd (Capetwon Mer. P Ltd) AACCC7400M 2,500,000 TOTAL 38,000,000 4. Thus, on the aforesaid information, the case of As....
X X X X Extracts X X X X
X X X X Extracts X X X X
....M/s. Olive Overseas Pvt. Ltd., were not found at the given addresses. Further, the summons u/s. 131 of the Act dated 15.03.2016 issued to the following parties namely, M/s. Duke Business Pvt. Ltd., and M/s. Viraj Mercantile Pvt. Ltd., were duly served on the given parties on 17.03.2016. 11. The Assessing Officer further observed that nobody attended him on the given date, as per above issued summons. Further notices under Section 133(6) of the Act dated 15.03.2016, issued to M/s. Falak Trading Co. Pvt. Ltd. and M/s. Pragati Gems Pvt. Ltd., calling various details, were returned back by the Postal department. 12. Thereafter the Assessee, furnished its submissions dated 17.03.2016. The Assessing Officer though considered the aforesaid submissions of the Assessee, however, found the same as untenable and unacceptable and on perusing the details filed by the Assessee, observed more or less as under: "That the Assessee had obtained unsecured loan amounting to Rs. 38,000,000/- from the above mentioned parties and has been debiting interest on these outstanding loan during the year under consideration. However, on verification of Copy of returns of income and audit report o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e addition of Rs. 3,80,00,000/- as unexplained cash credit, within the meaning of Section 68 of the Act and added the same to the total income of the Assessee. 17. The Assessing Officer, also made a disallowance of Rs. 32,588/- under Section 14A of the Act, read with Rule 8D of the Income Tax Rules, 1962 (in short Rules), as well as disallowance of Rs. 86,99,072/- being proportionate interest @ 15% on interest free loans and advances amounting to Rs. 57,993,185/- 18. The Assessee being aggrieved challenged the aforesaid additions/disallowances by filing 1st appeal before the Ld. Commissioner. 19. The Assessee before the Ld. Commissioner has claimed as under: " 4.2 During the course of appellate proceedings, it is submitted by the appellant that the company has taken the alleged unsecured loan from the following parties - 1. Falak Trading Co P LId. AABCF5837A Rs. 50,00,000 2. Olive overseas P Ltd. AACCR4512K Rs. 1,55,00,000 3. Sumukh Commercial P Ltd. AACCC7400M Rs. 75,00,000 4. Viraj Mercantile P Ltd. AADCV3852H Rs. 50,00,000 5. Duke Business P Ltd. AABCJ6245N Rs. 50,00,000 4.2.1 It is further su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncing, supported with evidence in the form of books of accounts, including the purchase, stock register, sale bills, cash book and reconciled bank entries, which were not disputed by the A.O .. The AO also neither pointed out any defect nor rejected the books of accounts. 21. The Ld. Commissioner also observed that the Assessee company has fully discharged the burden of proof and explained the source of unsecured loan by establishing the identity and credit worthiness of the parties and genuineness of the transaction by banking instruments, along with documentary evidence. In the assessment order, AO made the disallowance on account of unsecured loans merely in the absence of bank statements of the lenders which could not be submitted due to non-availability of bank statements with the Assessee company during the course of assessment proceedings. However, during the course of appellate proceedings, in support of unsecured loan creditors viz. Falak Trading Co. Pvt. Ltd., Olive Overseas Pvt. Ltd., Sumukh Commercial Pvt. Ltd., Viraj Mercantiles Pvt. Ltd. and Duke Business Pvt. Ltd., the Assessee had filed the confirmations, copy of ledger accounts, copy of relevant bank statements,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the deduction claimed u/s 36(1)(iii) of the Act, ignoring the decision of Hon'ble Madras High Court in the case of A Murali & Co.(P.) Ltd. Vs. ACIT, Company Circle-1(1) reported in [2013] 36 taxmann.com 126 (Madras) wherein it was held that if the borrowed fund is not utilized for business purpose, then authorities are right in rejecting assessee's claim for deduction of interest on borrowed capital under section 36(1)(iii)." 25. Ground No. 1 pertains to the deletion of the addition made under Section 68 of the Act, on the basis of details/clarification/evidences filed by the Assessee during the first appellate proceedings before the Ld. Commissioner, ignoring the provisions of Rule 46 A of the Income Tax Rules, 1962, wherein it is mandated that the CIT (A) must call for remand report from the Assessing Officer, if any, in view of the details/clarification/evidences produced by the Assessee during the CIT (A) proceedings. 26. As observed above, the Assessee had taken unsecured loan of Rs. 3,80,00,000/- in total from the parties mentioned above. Therefore, in order t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fore, it is submitted that the appellant company are enclosing the following Additional Evidences before your honour: a) Relevant Bank Statement of Duke Business Pvt Ltd highlighting the transaction with the appellant company for AY 2013-14 and AY 2014-15. b) Relevant Bank Statement of Falak Trading Co Pvt Ltd highlighting the transaction with the appellant company for AY 2013-14 and AY 2014-15. c) Relevant Bank Statement of Olive Overseas Pvt Ltd highlighting the transaction with the appellant company for AY 2013-14 and AY 2014-15. d) Relevant Bank Statement of Sumukh Commercial Pvt Ltd highlighting the transaction with the appellant company for AY 2013-14 and AY 2014-15. e) Relevant Bank Statement of Viraj Mercantiles Pvt Ltd highlighting the transaction with the appellant company for AY 2013-14 and AY 2014-15. f) Copy of Acknowledgement of Income Tax Return and Financial Statement of Duke Business Pvt Ltd for AY 2014-15. g) Copy of Acknowledgement of Income Tax Return and Financial Statement of Falak Trading Co Pvt Ltd for AY 2014-15. h) Copy of Acknowledgement of Income Tax Return and Financial Statement of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which pertains to non-granting of opportunity to the Assessing Officer for examining the additional evidences filed by the Assessee before the Ld. Commissioner, in the appellate proceedings. 34. No doubt, Rule 46 A prescribes certain conditions for allowing the additional evidences, such as where the Assessing Officer refused to admit evidences, which ought to have been admitted. Secondly, where the Assessee was prevented for sufficient cause from producing the evidences, which he was called upon to produce by the Assessing Officer, or where the Assessee was prevented by sufficient cause from producing before the Assessing Officer any evidence, which is relevant to any ground of appeal or where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the Assessee to adduce evidences relevant to any ground of appeal. Rule further prescribes that no evidence shall be admitted under Sub-rule (1), unless the Ld. Commissioner records, in writing the reasons for its admission. Further, sub-rule (4) of Rule 46A prescribes that nothing contained in this Rule shall affect the power of the Ld. Commissioner to direct the production of any document ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cision of the case and substantial justice, we deem it appropriate to remand the instant issue to the file of the Assessing Officer, just for verification of the aforesaid additional evidences, without making any roving enquiry. Thus, it is ordered accordingly. 38. Coming to grounds no. 2 & 3, which pertains to proportionate disallowance of Rs. 86,99,072/-, we observe that the Assessee before the Ld. Commissioner, has claimed that total advances given by the Assessee company was of Rs. 2,79,05,485/- and out of said amount, the Assessee has given various deposits and advances towards the premises and therefore, the same cannot be considered for the purpose of interest free loans, as the same were directly related to the business of the Assessee company. The Assessee further claimed that the Assessee company has sufficient own and interest free funds available to the tune of Rs. 37,74,59,171/- as on 31.03.2013. 39. The Ld. Commissioner by considering such claim of the Assessee has observed that in the present case, the Assessee has advanced interest free loans towards the premises, etc. as the same were directly related to the business of the Assessee company and therefore, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rted and not utilized for the purpose of business. 42. We further observed that the Ld. Commissioner, not only considered the peculiar facts and circumstances, but in fact also considered the judgments of the Hon'ble Apex Court referred to above, while adjudicating the issue under consideration. Even otherwise, we could not find any reason or material to contradict the findings of the Ld. Commissioner in deleting the aforesaid addition of Rs. 86,99,072/- and thus, the order of the Ld. Commissioner on this aspect/ground is upheld and grounds no. 2 & 3 raised by the Revenue are dismissed. 43. In the result, the revenue's appeal is partly allowed in the above terms. Order pronounced in the open court on 13.02.2026. ============= Document 1 Name of Address of the party/parties Falak Trading Co. Pvt Ltd Remarks Submission dated 15.09.2015 Details of Unsecured Loans - Copy of Confirmation Accounts for the period from 01.04.2012 to 31.03.2013 Submission dated 13.01.2016 - Copy of Confirmation Accounts for the period from 01.04.2012 to 31.03.2013. - Copy of Ledger Account in the books of the appellant company for the period from 01.04.2012 to 31.0....