TaxTMI 
TaxTMI 
2026 (3) TMI 1612
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....of Rs 1,62,00,000/- received from its sister concern Vidhata Contractors u/s 68 of the Act; Rs 56,66,440/- as unexplained credit for share premium u/s 56(2)(viib) of the Act and cash deposit of Rs 71,00,000/- as unexplained cash credit u/s 68 of the Act. 3. Aggrieved the assessee appealed before the CIT(A) who deleted all the additions made as follows: The appellant vide submissions has stated that the source of making advance to appellant was from the legit income earned from business of construction activities carried out by lender and submitted the confirmation letter from lender, copies of ITR form and audited financials of lender and bank statements of lender. 5.4.4 Although, the AO observed that the entries made by the appellant in its books of account are not in commensurate with the entries appearing in the bank account No.1273368149 of the appellant and in bank A/c No.864420100224 of M/s Vidhata Contractors & Builders Pvt Ltd and stated that both the sister concerns and the appellant have failed to explain the reasons for variation & mismatch of entries in terms of name of persons, name of item, opening of new bank account for deposit of cash and credi....
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....tated that the transactions are not apparently in the form of loans but they have been made under arrangement of accommodation entries in form of loan under the modus operandi of the assessee for getting routed the transactions through the bank account of its sister concern out of unexplained source of cash receipts. 5.4.7 I have carefully examined the assessment order and submissions and documents furnished by the appellant during appeal proceedings. The appellant has provided documentary evidence establishing the identity of the lender, M/s Vidhata Contractors & Builders Pvt. Ltd., which includes a valid PAN and audited financial statements and bank statements. These documents were verified, and the existence of the lender as a business entity was established. Additionally, the lender responded to notices under Section 133(6) issued by the AO and confirmed the loan transaction. The financial capacity of the lender can be established through submission of its income tax returns and audited financial statements. The appellant contention that the loan was routed through regular banking channels and corroborated by bank statements and also, the lender's funds were source....
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....in this regard and submission of the appellant. In this context, it is observed that the basic observation of the AO on rejection of the fair market value of shares is that the valuation adopted by the appellant is based on the report obtained from the Chartered Accountant whereas Chartered Accountant has been omitted in the law for the purpose of valuation under Rule 11UA vide Notification dated 24/05/2018. **** 5.5.5 I have also gone through the notification no. 23/2018 dated 24.05.2018 of CBDT. The relevant extract of the same is reproduced hereunder for ready reference: "NOTIFICATION New Delhi, the 24th May, 2018 INCOME-TAX S.O. 2087(E). In exercise of the powers conferred by sub-section (2) of section 56 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following rules further to amend the Income-tax Rules, 1962, namely: 1. (1) These rules may be called the Income-tax (6th Amendment), Rules, 2018. (2) They shall come into force from the date of their publication in the Official Gazette. 2. In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), in....
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....ractice due to labor requirements and procurement from vendors who prefer cash transactions. 5.6.4 The AO has observed that the appellant failed to explain the source of cash credits with cogent and credible evidence. However, the appellant has submitted multiple replies on various dates explaining the source of the cash deposits and submitting supporting documentary evidence, including bank statements reflecting cash withdrawals and cash books maintained in the ordinary course of business. The bank statements submitted by the appellant reflect clear cash withdrawals which correspond to the cash deposits made during the year. 5.6.5 The appellant contended that the cash withdrawals were made to meet the operational needs of the construction business, which involves handling cash across multiple sites for labor payments, material procurement, and contingency purposes. The existence of cash balances is verified from the audited books of accounts, and no inconsistency has been pointed out by the AO in this regard. The cash book has been consistently maintained by the appellant, and the AO has not established any contradiction in the records presented. Further, the ava....
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....he assessee failed to furnish satisfactory explanation for additions made u/s 68 of the Act. 5. Per contra, the Ld AR of the assessee relied on the decision of the CIT(A). 6. We have heard the rival submissions and have carefully perused the materials on record. On the issue of addition of loan from the sister concern M/s Vidhata Contractors & Builders Pvt. Ltd, of Rs. 1,62,00,000/- u/s 68, we find that the CIT(A) found that the assessee discharged its onus by providing documentary evidences such as PAN and audited financial statements and bank statements to establish the identity of the lender, genuineness of transaction and creditworthiness of the lender and also noted that the lender responded to notices under Section 133(6) issued by the AO and confirmed the loan transaction. The ld Dr did not controvert the findings of the CIT(A). We therefore find no reason to interfere with the decision of CIT(A). Ground 1 and 2 are dismissed. 7. With respect to deletion of addition made under section 56(2)(viib), we find that the only reason for disallowance was that the assessee got the valuation of shares under Rule 11UA(2)(b) certified by a Chartered Accountant and not Merchant ....