TaxTMI 
TaxTMI 
2025 (4) TMI 1964
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....respective hands of these assessees, on different dates for the assessment years mentioned against their respective names. The impugned orders arise from the assessments made by the Learned Deputy Commissioner of Income Tax/Assistant Commissioner of Income Tax, Central Circle-7(3), Mumbai [hereinafter referred to as "Ld. AO"]. The dates of the appellate orders, assessment orders and the section under which the assessments were framed are tabled below: ASSESSEE & APPEAL NO FILED BY ASSESSMENT YEAR DATE OF APPEAL ORDER ASSESSMENT U/s DATE OF ASSESSMENT ORDER 1 Lotus Logistic & Developers Pvt Ltd. ITA No. 3697/Mum/2019 AY 2008-09 28-03-2019 143(3)/147 29-03-2016 Assessee 2 ITA No. 4058/Mum/2019 Revenue 3 ITA No. 6920/Mum/2019 Revenue 2016-17 29-10-2024 143(3) 28-12-2018 4 ITA No. 6921/Mum/2019 Revenue 2017-18 29-10-2024 143(3) 29-12-2019 5 ITA No. 4057/Mum/2019 Revenue AY 2014-15 28-03-2019 153A/143(3) 30-12-2016 6 ITA No. 3698/Mum/2010 As....
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.... received by these assessees are only accommodation entries. Consequent to the search operations, the assessments of the assessees herein for various years were reopened u/s 153A of the Act. The AO also reopened the assessment of M/s Lotus logistics and Developers P Ltd relating to AY 2008-09 by issuing notice u/s 148 of the Act. 2.1 In the reopened assessments, the unsecured loans or share capital received by these assessees were added by the AO to the total income u/s 68 of the Act treating them as unexplained cash credits on the reasoning that they are not real, but represent accommodation entries received by these assessees. The relevant interest expenditure claimed on the above said loans was assessed as unexplained expenditure u/s 69C of the Act. All these assessees had received loans or share capital from one or more of the following entities: - (1) Bhavana Computers Pvt Ltd (BCPL); (2) Rowland Trexim Pvt Ltd (RTPL); (3) Divine Tradecom Pvt Ltd (DTPL); (4) Satyam Projects Pvt Ltd (SPPL) (5) Anandomayee Merchandise Pvt Ltd, (6) M/s Santosh Gems Pvt Ltd, (7) M/s RatnagarFinlease Pvt Ltd, (8) M/s Anglo CommotradePvt Ltd and ....
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....d u/s. 153A of the Act for A.Y'rs. 2014-15 and 2015-16. The assessments in the case of M/s. A. M. Developers & Realtors and Mis. A.M. Constructions were concluded u/s. 147 r.w.s 143(3) of the Act. 3. In all the assessments referred above, there are common issues on the basis of which assessed income is determined. The variation to the returned income is on account of addition u/s. 68 of the Act on account of advances/loans, share capital/share premium received from paper companies based in Kolkata. There are 4 entities based in 2. Search assessments in the case of Lotus group of entities were concluded us. 153A the IT Act (hereinafter referred as "Act") consequent to search action u/s. 132 of the Act in Lotus/Kamdhenu/Green Valley Group conducted on 09.10.2014. The additions made in the assessments of the group entities were on account of accommodation entries received from companies based in Kolkata in the guise of unsecured loans/advances and share capital/premium. The entities were assessed based on incriminating evidences seized during the course of search, statements recorded us. 132(4)/131 of the Act of the relevant persons which have been taken reference in the asse....
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....ces/loans, share capital/share premium received from paper companies based in Kolkata. There are 4 entities based in Kolkata from which accommodation entries have been arranged through entry operators based in Mumbai and Kolkata. These entities are: i. Bhavana Computers Pvt. Ltd. (hereafter referred as BCPL). ii. Rowland Trexim Pvt. Ltd.(hereafter referred as RTPL). iii.DivineTradecom Pvt. Ltd. (hereafter referred as DTPL). iv. Satyam Projects Ltd. (hereafter referred as SPPL). 4. The evidences gathered during the course of search with respect to accommodation entries availed by the entities of Lotus Group from the abovementioned paper companies discussed in the Assessment order are elaborated here below for kind consideration in the context of appeals filed by the Department, listed in the reference. 4.1 In the course of search action in Lotus Group of cases, registered offices of BCPL in Kolkata were covered. There were two premises which were located at: i. 932/A/74, Jessor Road, Meghdoot Apartment, Ground Floor, Sarada Pally, Kolkata, ii. 52/2, Ram Lochan Shire Street, Belurmath, Howrah. The premis....
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....ectors of these companies or the entry operator associated with these companies have accepted before the department that they are providing accommodation entries. The DDIT(Inv) has further analyzed the income profile of all the 126 entities for FY. 2007-08 and 2008-09 and found that 11 companies have not filed their Return of Income for FY. 2008-09 and 6 companies were non-filers. Further, only 4 companies out of 126 have income more than 5 lakhs in either FY. 2007-08 or 2008-09. Based on such analysis, it was clear that the advances/share capital provided to BCPL. DCPL and RTPL were not out of genuine business operations or accumulated profits but again the funds were routed by way of share capital or unsecured loans from other paper companies. This establishes the fact that money which has flown as share capital/premium or advances from BCPL, DCPL and RTPL to Lotus group of entities are not genuine funds but accommodation entries routed through a web of shell companies. It was also noted that the majority of the source companies have common Directors and common communication address. The facts such as dummy Directors, common directors across multiple companies, poor operational r....
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....declared their business activities as NBFC's and it is not understood as to why their activities are limited only to investment and no other business operations. 4.5 A careful analysis of the entire transactions as elaborated in the previous paragraphs reveal that the initial shareholders of BCPL, DCPL and RTPL have brought in huge capital at unjustified share premium, transferred the substantial portion of such capital as loan/advances/share premium to Lotus group and finally transferred 100% shareholding of these entities to the members of Lotus group itself at a huge discounted price. This very fact clearly establishes that the apparent is not real and hence the AO was justified in lifting the corporate veil and unearth the truth while making addition u/s. 68 of the Act in the hands of the end recipients of funds through banking channel routed through these three paper concerns in the garb of loans/advances and share premium. 4.6 The AO has also analyzed the financials of BCPL, DCPL and RTPL for the years in which advances/share capital/share premium has been received by Lotus group of entities to bring on record that the alleged entities do not have funds ....
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....t on the nature of business activities. their address, key persons involved in the group etc. during the course of search it is surprising that the Lotus group of companies have received huge unsecured loans/share capital/share premium but its promoter is totally unaware of the whereabouts and basic details regarding the Directors of such closely held entities subscribing share premium of the entities of Lotus group. 4.12 Investigation specific to M/s. Satyam Projects Ltd: Statements of Shri Hitesh Thakkar, Mr. Jignesh Mavadiya and Shri Uday Shankar Mahavar; in the course of search proceedings, statement of Shri Hitesh Thakkar was recorded u/s. 131 of the Act, on 10.10.2014. His statement was recorded in the capacity of Managing Director of M/s. Satyam Projects Ltd. an entity based on kolkata. Shri Hitesh Thakkar admitted to be a name sake director in M/s. Satyam Projects Ltd. and said company is a shell company used for providing accommodation entries. He also revealed the fact that the company was acquired by Shri Bhagvanji Patel (one of the key individuals of Lotus Group) in may 2014. He has admitted fact that he is ignorant about the basic details of the company such a....
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....inay Shah has accepted to have taken accommodation entries from M/s. Satyam Projects Ltd. This corroborates the fact that not only Lotus group but there are other beneficiaries who have benefitted from accommodation entries provided by M/s. Satyam Projects Ltd and not only the persons who were at the helm of affairs of M/s Satyam Projects Ltd, but independent beneficiaries have also admitted to the fact of indulgence in illegitimate paper transactions and being in hand in glove with entry operators. The facts looked in entirety leaves no scope for any scope for assesses to claim relief by taking shelter of retraction statements of the entry operators which would be clearly an after thought aimed at misleading and misguiding the appellate authorities. 4.15 The Ld.CIT(A) has deleted the addition made u/s.68 of the Act with respect to loans and advances/share capital/share premium broadly on two grounds: i. The Ld.CIT(A) has relied on apparent documents filed by the assessee such as PAN card, copies of ITR, bank statements, share application form, offer letter etc. of the investor entities. ii. The Ld.CIT(A) has relied on the retraction statements of various....
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....legitimacy of such transactions. 4.17 The Ld.CIT(A) was not justified in allowing relief to the assessee relying on statements of retraction of entry providers provided by the assessee. Merely because the statement is retracted, it cannot become as involuntary or unlawfully obtained. For any retraction it is necessary to establish in the eyes of law that earlier recorded statements do not state the true facts or that there was coercion, inducement or threat while recording earlier statements. It is well settled law that in case of retraction, assessee needs to provide legally acceptable evidence that permission or confession in the statement during search or survey was involuntary or was tendered under coercion or duress. In this regard reliance is placed on the following decisions: 1. A self serving retraction, without anything more cannot dispel statement made under oath under section 132(4). (CIT vs. O. Abdul Razak 20 Taxmann, com 48(Kerala)) 2. Whether assessee retracted from his earlier statement without demonstrating any evidence to establish that statement recorded earlier was incorrect; an allegation of compulsion or coercion must not be accepted ....
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....appeals assessee wise:- LOTUS BUILDSPACE LLP. ITA No. 1485/Mum/2010 (AY 2014-15) & ITA No. 1593/Mum/2010 (AY 2015-16) 4. Both these appeals have been filed by the revenue, wherein the relief granted by Ld CIT(A) in respect of addition made u/s 68 of the Act is being challenged in both the years. 4.1 The addition made in the hands of this assessee by the AO in both the years is related to the 'capital introduced' by the partner, M/s Satyam Projects Pvt Ltd (SPPL). The Ld.AO fully relied on the report of the Investigation Department and the statement recorded from Shri Uday Shankar Mahawar, Shri Hitesh Thakkar, Shri Jignesh Mavadia and Shri Parbat Gothi to arrive at the conclusion that the capital introduced by the said partner SPPL was out of accommodation entry received by it from different companies. Accordingly, the AO made addition of capital introduction of Rs. 2,22,25,000/- in AY 2014-15 and Rs. 20.87 crores in AY 2015-16. The Ld CIT(A) has deleted the above said additions made in both the above said years. Hence the revenue has filed these appeals. 5. The Ld.DR, in his argument, stated that the addition was made by the AO on the basis of the statements given by....
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.... Name of Party Dt of statement taken Dt. of retraction 1. Uday Shankar Mahawar 25/08/2014 27/02/2015 2. Hitesh Thakkar 10/10/2014 16/10/2014 3. Shri Jignesh Mavadia 09/10/2014 16/10/2014 4. Shri Parbat Gothi 12/10/2014 18/10/2014 The Ld A.R submitted that the Ld CIT(A) has duly considered all the evidences and documents furnished by the assessee and accordingly deleted the addition. 6. We heard the rival submissions and considered the documents. We notice that the Ld CIT(A) has passed a detailed order on this issue by duly examining the various documents furnished by the assessee to discharge the burden placed upon the assessee u/s 68 of the Act. We notice that the ld CIT(A) has rendered his decision by applying applicable case law on this issue. Accordingly, we feel it convenient to extract the same below:- "7.3. I have carefully considered the assessment order and the submissions of the Learned Counsel. The assessee was covered under search of Lotus group conducted on 09.10.2014. During the course of search, statement of Mr. Jignesh Mavadia was recorded on 09.10.2014 wherein he stated that he was a mere names....
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....t Ltd, Impression Distributors Pvt Ltd, Deesha Dealer Pvt Ltd and Aashiana Tie-up Pvt Ltd on 15.12.2010 (i) Assessment order of the aforesaid 6 companies (j) Form 2 filed by investor company with ROC for increase in authorised capital in Feb, 2011 (k) Copy of Due diligence Report carried out prior to merger (l) Copy of scrutinizer report dtd. 26.09.2015 on e-voting process (m) Copy of Internal audit report for FY 15-16 (n) Copy of secretarial report (o) Copy of quarterly compliance report (p) Copy of prospectus issued by investor company 7.5. I have perused the aforesaid documents. It is observed that the assessee company is a registered NBFC since 1998 which has been later merged with 8 companies through a scheme of amalgamation duly sanctioned by the Hon'ble Calcutta High Court. By providing the aforesaid documents, the assessee submits that the investor M/s. Satyam Projects Ltd is a genuine company which has carried out so many compliances regularly with RBI/ Auditors and has also been sanctioned merger with the approval of the Hon'ble Calcutta High Court. From the records, it is no....
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....ojects Ltd could be given by Bhagwanji Patel. He has further stated that the overall affairs of the company are being looked after by Shri. Bhagwanji M Patel. He ultimately agreed that the said company is a paper company. Similarly, Shri. Jignesh Thakkar in the course of statement u/s. 131 of the Act on 09.10.2014 has stated that he was a clerk in Prince Ply Agency Pvt Ltd and he was a namesake director in Satyam Projects Ltd. He was unaware about the other directors of the investor company. In his statement, Shri Uday Shankar Mahawar u/s. 131 on 25.08.2014 has also stated that he opened around 200 bogus jamkharchi companies which were used to provide bogus accommodation entries One of Such companies as stated in his statement was Satyam Projects Ltd. However, the AR states that all the aforesaid statements relied upon by the AO are retracted by the said parties on the ground that they were based on influence and coercion of search party. The retraction affidavits of these parties have been placed in the course of assessment as well as before me. In the course of assessment proceedings, Shri. Uday Shankar Mahawar was produced before the Id. Assessing Offi....
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....ate the transactions undertaken by the assessee are non-genuine. Thus, the section deals with an equilibrium of onus of proof and must be viewed to evaluate as to whether the evidences brought by the assessee or AO weigh more and accordingly in whose favour the equilibrium bends. In the present case, on one hand, the assessee has placed evidence in the form of voluminous documents in relation to RBI compliances, ROC compliances, audit compliances and merger sanctioned by the Hon'ble Calcutta High Court Further, the assessee has also placed on record the assessment orders of 6 merged companies for the A.Y 2010-11 and also that of the alleged investor- M/s. Satyam Projects Ltd for A.Y. 2010-11. I have also gone through the confirmation, ITR Acknowledgement financial statements of the investor company and bank statements relating to the alleged transaction of partner's contribution received of Rs. 2,25,25,000/- by the assessee during the year under consideration. It is observed that the investor company is formed in 1981 and is registered NBFC since 1998 engaged into the business of finance and investment in the year under consideration. The investor company has shown substant....
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....g the active status of the company in the website of Ministry of Corporate Affairs. On going through various detailed filed by the assessee, we find that there is no reason for the AO to doubt the genuineness of transactions of creditworthiness of the parties. We further notice that all 9 companies are active in the website of ROC and also they have filed their balance-sheet upto 3103-2016 and in some cases upto 31-03-2017. We further notice that the AO has furnished a report accepting the fact that all these companies are active in the website of MCA and none of the companies' name is struck off from the list published by the MCA as shell company. We further notice that the assessee has filed balance-sheet of all 9 subscribers wherein they have huge share capital and reserves and surplus to establish creditworthiness of the parties. On perusal of the balance-sheet filed by the assessee, we find that the aggregate of share capital and reserves of 9 companies is at Rs. 333.67 crores, whereas investment in assessee company is only Rs. 12 crores. We further notice that all companies are having regular business ranging from 2 to 3 crores. The assessee also furnished copies of sales....
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....t case, no such finding is brought on record. (f) In that case, summons was either not served or served but not complied with whereas notice u/s. 133(6) of the Act has been duly complied by the investor company in the present case. (g) Whereas in the present case, the amalgamating companies which merged with the investor company have been assessed and copy of assessment orders provided alongwith order of amalgamation of the High Court thereby establishing the genuineness of the transaction and the creditworthiness of the lender which was absent in the case before the Hon'ble Delhi High Court. (ii) Major Metals Ltd v. UOI [2012] 19 taxmann.com 176 (Bom HC) The said decision was in relation to proceedings before the Hon'ble Settlement Commission. The decision is rendered in relation to huge share premium received from the companies with no credentials and creditworthiness nor even any past performance that could justify such payment. Further, this decision was also in relation to the order passed by the ITSC which had decided its view based on the peculiar facts and material with therm. Further, the said decision has been impliedly overrule....
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....he amount by way of RTGS. Banks certificate certifying the receipt of the amount through Banking channels." 6. On going through the documents which have been produced which are basically from the public offices, which maintain the records of the Companies. The documents also include assessment Orders for last three preceding years of such Companies 7. The Appellants have failed to explain as to how such Companies have been assessed though according to them such Companies are not existing and are fictitious companies. Besides the documents also included the registration of the Company which discloses the registered address of such Companies. There is no material on record produced by the Appellants which could rebut the documents produced by the Respondents herein. In such circumstances, the finding of fact arrived at by the authorities below which are based on documentary evidence on record cannot be said to be perverse. Learned Counsel appearing for the Appellants was unable to point out that any of such findings arrived at by the authorities below were on the basis of misleading of evidence or failure to examine any material documents whilst coming to s....
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.... be discarded merely on the basis of two individuals who have given their statements contrary to such public documents. 10. We find no infirmity in the findings arrived at by the ITAT as well as CIT Appeals on the contentions raised by the Appellants-Revenue in the present case and, as such, the question of interference by this Court in the present proceedings under Section 260A of the Income Tax Act would not at all be justified. Apart from that, as rightly pointed out by the learned Counsel appearing for the Respondents, the CIT Appeals had also noted that proceedings under Section 147 of the Income Tax Act cannot lead to re- verification of the records. These findings of the CIT Appeals have not been assailed before the Income Tax Appellate Court 11. In such circumstances, we find that there is no case made out by the Appellants-Revenue for any interference in the impugned Orders passed by the Courts below. 12. Hence, the Appeal stands rejected. The SLP filed against the said order of the High Court is also dismissed by the Hon'ble Apex Court in [2018] 93 taxmann.com 84 (SC). 8.9. I find that the addition u/s. 68 of the Act is unc....
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....hiness) when the loan was given or investment was made. It is the finding of the Ld CIT(A) that they were having sufficient balance in their bank accounts, which in turn, would prove the credit worthiness. Hence, we are of the view that the AO was not justified in relying upon the statements given by the third parties disregarding the documents, which show the position otherwise. 7. In view of the above, we are of the view that there is no infirmity in the orders of the Ld.CIT(A) in deleting the above said additions in both the years. Accordingly, both the appeals of the revenue in ITA No. 1485/Mum/2019 relating to AY 2014-15 and in ITA No. 1593/Mum/2019 relating to AY 2015-16 are dismissed. M/s A.M. CONSTRUCTIONS ITA No. 3040/Mum/2019 (AY 2012-13) & 3115/Mum/2019 (AY 2011-12) (Revenue's Appeal) 8. The revenue has filed these appeals, wherein it is contending the relief granted by Ld CIT(A) in respect of addition made by the AO u/s 68 of the Act in both the years. 8.1 The addition made in both these years by the AO are related to investment of Rs. 2.76 crores and Rs. 12.96 crores made by M/s Divine Telecom P Ltd (DTPL) respectively in the years relevant to AY 2011-12....
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.... under section 131 of the Act to Shri Pradeep Poddar and he appeared in response to the same on 22/12/2014. In response thereto, he appeared before the AO and the AO also recorded a statement on oath on 22/12/2014, wherein Mr. Poddar affirmed the retraction affidavit dated 09/12/2014. The Ld A.R submitted that the assessee has furnished all the documents to discharge the burden placed upon it u/s 68 of the Act. He further submitted that the assessment of above said investor M/s Divine Tradecom P Ltd was completed after conclusion of search in the hands of the assessee, wherein its books of accounts have been accepted. Accordingly, he submitted that the AO could not have relied upon the statement alone disregarding the evidences furnished by the assessee to discharge the burden u/s 68 of the Act and also disregarding the assessment order passed in the hands of M/s Divine Tradecom P Ltd. 11. We have heard rival contentions and perused the record. We notice that the Ld CIT(A) has passed a detailed order on this issue. The relevant discussions made by Ld CIT(A) in paragraphs 8.12. to 8.14 of his order are extracted below:- "8.12 In the light of the above, it is now importan....
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....ement of Shri Anand Sharma is relevant only to the lender company as alleged by the AO that accommodation entries from various companies of Shri Anand Sharma were obtained by M/s Divine Tradecom Pvt. Ltd. Thus, what is relevant is the fact that M/s Divine Tradecom Pvt. Ltd might have obtained accommodation entries, which in fact gets overruled, in view of the re-assessment order passed for AY 2008-09 wherein no addition in this regard have been made in hands of M/s Divine Tradecom Pvt. Ltd. Further, the AO has not made any further enquiry in the assessment proceedings to establish such allegations. Merely on the basis of statement of Shri Anand Sharma without any corroborative evidences brought on record, the AO has failed to discharge his onus in alleging the genuineness of transaction with M/s Divine Tradecom Pvt. Ltd. Statement of Shri Ashok Agarwal The AO has referred to the statement of Shri Ashok Agarwal who is the chairman of the Lotus group. He has stated that the source of the lender company to make investments in group is its old reserves and surplus; however, he doesn't know how these reserves have been created in the books of accounts. I find that ....
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....ght by the assessee or by bringing new evidence that indicate the transactions undertaken by the assessee are non-genuine. Thus, the section deals with an equilibrium of onus of proof and must be viewed to evaluate as to whether the evidences brought by the assessee or AO weigh more and accordingly in whose favour the equilibrium bends. In the present case, on one hand, the assessee has placed evidence in the form of ledger confirmation, bank statement, ITR acknowledgement, Computation of Income, signed financials of the investor company, reassessment order of the investor company and copy of the MOU entered into between the investor company and the appellant firm. 8.14 It is the contention of the Assessing Officer that the on-money generated by the assessee group has been brought back as loans and share capital through Kolkata companies but inspite of the search undertaken in the appellant's group nothing incriminating was found during the search and no evidence of either receipt of on-money or generation of any other kind of unaccounted income was found. No evidence of any cash transaction has been brought out either by the Investigation wing or by the Assessing Offi....
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....s given by the third parties disregarding the documents, which show the position otherwise. It is also stated that the assessment of M/s Divine Tradecom P Ltd was completed subsequently and its books of accounts have been accepted. 11.3 Accordingly, we do not find any infirmity in the decision of the Ld.CIT(A) in deleting the addition in both the years. Accordingly, no interference is required on this issue in both the years. 12 Accordingly, both the appeals of the revenue bearing ITANo. 3115/Mum/2019 relating to AY 2011-12 and ITA No. 3040/Mum/2010 relating to AY 2012-13 are dismissed. M/s LOTUS LOGISTICS & DEVELOPERS PVT LTD 13 This assessee has filed appeals for AY 2008-09 and 2015-16. The revenue has filed appeals for AY 2008-09, 2014-15, 2015-16, 2016-17 and 2017-18 in respect of this assessee. 14. We shall first take up the appeals filed by both the parties for AY 2008-09 in ITA No. 3697/Mum/2019 (Assessee) & ITA No. 4058/Mum/2019 (Revenue). 14.1 The assessment of this year was reopened by the AO. The Ld A.R raised a legal contention with regard to the validity of reopening of assessment. Since this legal issue goes to the root of the matter, we prefer to ad....
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.... only accommodation entries, meaning thereby, the share applicants have not really given money to the assessee, i.e., the assessee has introduced its own money through the accommodation entries. He also said that the AO has duly applied his mind and accordingly reopened the assessment. 14.4 We heard rival contentions and perused the record. Since all contentions revolve around the reasons recorded by the AO for reopening of assessment, we extract below the same:- "Reason for re-opening the case u/s, 148: A letter received from the Office of the Dy. Director of Income-tax (Inv.)Unit-3(1) & 3(2), Mumbai bearing No, DDIT(Inv.) Unit 3(1) & 2/T,B, matter/2014-15 dated 05.03.2015 wherein it has been stated that a Search / Survey action was conducted on lotus/Kamdhenu/ Green Valley group by his charge on 09.10.2014. During the Search/Survey it has been noticed that M/s. Lotus Logistics & Developers Pvt. Ltd. had received Share Application Money of Rs. 14,76,10,000/- from various Kolkata based Company during the F.Y-2007-08. Out of this Rs. 1,00,00,000/- had been received from the Divine Tradecom Pvt. Ltd. Rs. 1,16,50,000/- was received from Rowland Trexim Pvt. Ltd. St....
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....tertained belief about escapement of income on the basis of borrowed satisfaction without independent application of mind. Hence, we are of the view that the reopening of assessment of Asst. Year 2008-09 is bad in law. We take support of the decision rendered by Hon'ble Delhi High Court in the case of PCIT vs. Meenakshi Overseas (P) Ltd (2017)(82 taxmann.com 300)(Delhi). In this case also, the AO reopened the assessment on the basis of information received from the investigation wing that the above said assessee has received accommodation entries in the form of loans. The AO reopened the assessment on the basis of said information. The Hon'ble Delhi High Court held as under:- "19. A perusal of the reasons as recorded by the AO reveals that there are three parts to it. In the first part, the AO has reproduced the precise information he has received from the Investigation Wing of the Revenue. This information is in the form of details of the amount of credit received, the payer, the payee, their respective banks, and the cheque number. This information by itself cannot be said to be tangible material. 20. Coming to the second part, this tells us what the AO did with....
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.... various decisions and finally held as under:- "34. Recently in Agya Ram (supra), it was emphasized that the reasons to believe "should have a link with an objective fact in the form of information or materials on record..." It was further emphasized that "mere allegation in reasons cannot be treated equivalent to material in eyes of law. Mere receipt of information from any source would not by itself tantamount to reason to believe that income chargeable to tax has escaped assessments." 35. In the decision of this Court dated 16th March 2016 in W.P. (C) No. 9659 of 2015 (Rajiv Agarwal) it was emphasized that "even in cases where the AO comes across certain unverified information, it is necessary for him to take further steps, make inquiries and garner further material and if such material indicates that income of an Assessee has escaped assessment, form a belief that income of the Assessee has escaped assessment." 36. In the present case, as already noticed, the reasons to believe contain not the reasons but the conclusions of the AO one after the other. There is no independent application of mind by the AO to the tangible material which forms the basis ....
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....ver, the Hon'ble jurisdictional held that, if from the reasons, no case of failure to disclose is made out, then certainly assumption of jurisdiction u/s 147 and 148 would be ultra vires. In the instant case, we noticed earlier that the AO has simply repeated the information received by him from the investigation wing, which would only lead to suspicion and not belief. It could not also be culled out from the reasons recorded by the AO that there was failure on the part of the assessee to disclose all material facts truly and fully. 14.7 Hence, the reopening of assessment of AY 2008-09 is liable to be quashed for more than one reason as discussed above. We order accordingly. In view of the above, we set aside the order passed by Ld CIT(A) in AY 2008-09 and quash the assessment order. 14.8 Since we have quashed the assessment order itself, there is no necessity to adjudicate the other grounds urged by both parties in their respective parties. 15. In the result, appeal of the assessee bearing ITA No. 3697/Mum/2019 is allowed & appeal of the revenue bearing ITA No. 4058/Mum/2019 is dismissed. M/s LOTUS LOGISTICS & DEVELOPERS PVT LTD ITA No. 3698/Mum/2019 (Assessee) & IT....
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....tor (m) Financial statement of the investor company. (n) Confirmations of the investor company and the assessee of the three properties (o) Copy of Cancellation Deed of LTC Building of all three properties i.e 1006, 1301 and 1005A along-with allotment letters, (p) Bank Statement of the investor for AY 2015-16 (q) Order of Hon'ble Calcutta High Court evidencing merger of 2 companies viz. Aisley Dealers Pvt Ltd and Appollane Mercantile Pvt Ltd alongwith the assessee on 26.06.2008 (r) Order of Hon'ble Calcutta High Court evidencing merger of 6 companies viz. GoldmoonMerchandise Pvt Ltd, Jaldham Suppliers Pvt Ltd, Impression Distributors Pvt Ltd, Deesha Dealer Pvt Ltd and Aashiana Tie-up Pvt Ltd on 15.12.2010 (s) Assessment order of the aforesaid 6 companies (t) Form 2 filed by investor company with ROC for increase in authorised capital in Feb,2011 (u) Copy of Due diligence Report carried out prior to merger (v) Copy of scrutinizer report dtd. 26.09.2015 on e-voting process (w) Copy of Internal audit report for FY 15-16 (x) Copy of secretarial report (y) Copy of....
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..... Uday Shankar Mahawar and Shri Parbat Gothi. In this regard, the appellant contends that the statements were not provided to it and hence the same cannot be used against it. The appellant also contends that no opportunity of cross examination of the aforesaid parties has been accorded to the assessee. The assessee further stated that the aforesaid parties have given the statement under coercion and influence of the search party and have subsequently retracted the statements which were made by them. In his statement u/s. 133A of the Act on 10.10.2014, Shri. Hitesh Thakkar, managing director of the investor company has stated that Bhagwanji Patel has acquired M/s. Satyam Projects Ltd in May 2014 and that he was a director for name sake only and detailed explanation in relation to Satyam Projects Ltd could be given by Bhagwanji Patel. He has further stated that the overall affairs of the company are being looked after by Shri. Bhagwanji M Patel. He ultimately agreed that the said company is a paper company. Similarly, Shri. Jignesh Thakkar in the course of statement u/s. 131 of the Act on 09.10.2014 has stated that he was a clerk in Prince Ply Agency Pvt Ltd and he ....
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....t the additions were made by the AO on the basis of statements recorded from Shri. Jagdish Purohit, Shri Hitesh Thakkar, Mr. Jignesh Mavadiya, and Shri Uday Shankar Mahavar. He submitted that the Ld CIT(A) should not have recognized the retraction of these statements. He reiterated his contentions that the apparent documentary evidences should be ignored and the addition made by the AO should be confirmed. On the contrary, the ld A.R submitted that the Ld CIT(A) has passed a detailed order with proper reasoning and hence the same does not call for any interference. 18.2 Having heard rival submissions, we are of the view that the order passed by Ld CIT(A) on this issue does not call for any interference. We notice that the Ld CIT(A) has given a clear finding that the assessee has discharged the initial burden placed upon it by proving the identity of the investor, the credit worthiness of investor and the genuineness of the transactions. Further, the above said investor is one of the partners in a group concern of the assessee. We notice that the AO has placed reliance on the statements given by certain persons, which has later been retracted. One of the persons has confirmed the....
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....nce 1994 till date (g) Retraction Statement of Shri Jagdish Purohit dated 30.01.2015 (h) CBDT Letter F.No.286/98/2013-IT (lnv II) dt. 18.12.2014 (i) Judgement of Hon'ble Gujrat High Court (Ramanbhai B Patel and Chetnabhen J Shah) 7.6 I have perused the aforesaid documents and found that the appellant company has furnished all the relevant documents in support of the transaction entered with M/s. RatangarFinlease Pvt. Ltd and M/s Anglo Commotrade Pvt Ltd to establish the identity, genuineness and creditworthiness. During the course of appellate proceedings, it was argued by the Id. counsel of the appellant that the unsecured loan taken from the alleged lender companies was interest bearing and the loan of Rs. 20,00,000/- taken from M/s RatangarFinlease Pvt Ltd was repaid back on 20.01.2017 and Rs. 30,00,000/taken from M/s Anglo Commotrade Pvt Ltd was repaid back on 23.06.2016. On the « contrary, it is seen that the AO has not pointed out any discrepancies or deficiencies In the evidences so filed, though he has analyzed the financials of the lender companies and stated that the accumulated profits of the lender company are just a meagre ....
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.... Name of concern Unsecured loan Interest paid Operator name 1 Aarohi Commodities P Ltd - 7,83,333/- Shri Pravin Jain 2 AnandomayeeMerchandise P Ltd - 15,06,833/- Shri Jagdish Purohit 3 Anglo Commotrade P Ltd 30,00,000/- 12,16,667/- Shri Jagdish Purohit 4 RatangarFinlease P Ltd 20,00,000/- 12,30,667/- Shri Jagdish Purohit Total 50,00,000/- 47,37,500/- 20.1 The Ld CIT(A) noticed that the addition made by the AO in the earlier years in respect of loans taken from M/s Aarohi Commodities P Ltd (in AY 2014-15) and M/s Anandomayee Merchandise P Ltd(in AY 2010-11 and 2012-13) had been deleted by him. In the instant year, the Ld CIT(A) has deleted the addition relating to loan taken from M/s Ratangar Finlease P Ltd. Accordingly, the Ld CIT(A) deleted the interest disallowance relating to the above said three loans. In the instant year, the Ld CIT(A) had confirmed the loan taken from M/s Anglo Commotrade P Ltd. Accordingly, he confirmed the interest disallowance of Rs. 12,16,667/- relating to that loan. Hence both the parties are aggrieved. 20.2 In the earlier paragraphs, we have deleted the additio....
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....is appeal. 23. The first and second issue relates to the addition made u/s 68 of the Act. During the year relevant to AY 2014-15, the assessee had received share application money of Rs. 26,59,63,357/- from M/s Divine Tradecom Pvt Ltd (DTPL). It had also received loan of Rs. 1.60 crores from M/s Arohi Commodities P Ltd and Rs. 2.00 crores from M/s Valaka Engineering P Ltd, both aggregating to Rs. 3.60 crores. The AO noticed that the report given by the investigation wing contained the statements given Shri Ashok Agarwal, Shri Amal Mondal & Shri C Parbat Gothi, wherein they had admitted to have given accommodation entries in the form of Share application money and unsecured loans. Accordingly, the AO held that the share application money and unsecured loans (referred above) received by the assessee are liable to be assessed as unexplained cash credit under section 68 of the Act. 23.1 The third issue relates to the disallowance of interest expenses. Since the above said loans were assessed as unexplained income, the AO disallowed related interest expenses of Rs. 21,26,400/- as unexplained expenditure u/s 69C of the Act. 23.2 Aggrieved, the assessee filed an appeal before the....
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....aragraphs. 25. The Ld.AR submitted that the assessee has submitted all the relevant documents to discharge the burden placed upon it u/s 68 of the Act by proving the identity of the creditor, credit worthiness of the creditor and the genuineness of transactions. But the Ld.AO without disproving those documents, have proceeded to assess the share application money and unsecured loans as unexplained income under section 68 of the Act. 26. We heard rival contentions and perused the record. We notice that the Ld.CIT(A) deleted the addition relating to Share application money with the following observations:- "7.3 I have carefully considered the assessment order and the submissions of the learned counsel. As per the Appraisal Report, specific information was received by the AO revealing that Shri Pradeep Poddar has admitted in his statement that unsecured loan taken from M/s. Divine Tradecom Pvt. Ltd. is nothing but an accommodation entry. In the impugned assessment order, the AO has also referred to the statement of Shri Anand Sharma who has admitted that he has created 500 companies to provide accommodation entries and these companies do not have creditworthiness of its....
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....nd creditworthiness. On the contrary, it is seen that the AO has not pointed out any discrepancies or deficiencies in the evidences so filed, though he has analysed the financials of the investor company and stated that the accumulated profits of the investor company are just a meagre amount and has also relied on statements of certain parties to allege that the transactions entered with the alleged company was in the form of accommodation entry. 7.6 In its rebuttal, the AR of the appellant submitted that mere low income cannot be the criteria to dislodge the creditworthiness of the so-called investor and that due consideration should be given to the net worth of the investor company viz. M/s. Divine Tradecom Pvt. Ltd which is Rs. 48,96,35,742/- for the year under consideration. The gross receipt of the alleged company for the year under consideration was Rs. 38,13,202/-, and the returned income was Rs. 11,58,940/-, TDS had also been paid of Rs. 3,81,320/- respectively. I find merit in this contention of the appellant, since the net worth of the alleged investor company is much greater than the amount invested. In this very perspective, the allegation of the AO that the in....
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....e assessee's explanation, A.O. must make proper enquiries and in the absence of proper enquiries, addition cannot be sustained. 7.9 Further, in the case of Nemichand Kothari vs. CIT [264 ITR 254] [Gau], the Hon'ble High Court had held that: ".....Hence, the harmonious construction of section 106 of the Evidence Act and section 68 of the Income-tax Act will be that though apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor, the burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. What follows, as a corollary, is that it is not the burden of the assessee to prove the genuineness of the transactions between his creditor and sub-creditors nor is it the burden of the assessee to prove that the sub-creditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been, eventually, received by the assessee. It, therefore, further logically follows ....
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....s as well. 7.12 In light of above, it is now important to examine the validity of addition based on the various statements relied upon by the AO. * Statement of Shri Pradeep Poddar The AO has referred to the statement of Shri Pradeep Poddar dated 02.12.2014 wherein it is alleged that share application received from M/s Divine Tradecom Pvt Ltd is in the nature of accommodation entry. The assessee submits that the statement of Shri Pradeep Poddar was recorded under duress and coercion and he was subjected to tremendous mental torture and trauma by the Investigation Officer which is quite evident from the fact that Shri Pradeep Poddar had also filed a police compliant against the Investigation Officer immediately on the very next day of the statement on oath i.e on 03.12.2014. Moreover, it is observed that Shri Pradeep Poddar has also retracted his statement so recorded vide his affidavit dated 09.12.2014 sworn before the learned Metropolitan Magistrate at Kolkata which is within a week from which the statement was recorded. Thus, the statement which has been retracted cannot be held as evidence in isolation without any corroborative evidence against the ass....
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....se reserves have been created in the books of accounts. I find that the statement given by Shri Ashok Agarwal regarding the source of the lender company cannot be relied upon as M/s. Divine Tradecom Pvt. Ltd as it has already been reassessed after the search was conducted on the assessee group and hence the source of source stands explained and accordingly statement has no relevance. Also, he has denied all the statements of the alleged entry providers which he was confronted with and affirmed that the transactions are genuine. * Statement of Shri Ankit Poddar The AO has placed reliance on the statement of Shri Ankit Poddar who has no connection with the appellant firm. He has mentioned that he was not aware about the business activities of of M/s. Bhawna Computers P.Ltd., M/s Divine Computers P. Ltd. & M/s. Rowland TreximP.LtdInfact he only receives letters of the said companies and hands over the same to Shri Pradeep Poddar, who is the Director in those companies and accordingly the statement of Shri Ankit Poddar has no relevance with the case of the appellant firm. * Statement of Shri Amal Mondal The statement of Shri Amal Mondal is in relatio....
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....ervations:- "8.3 I have carefully considered the assessment order and the submissions of the learned counsel. The assessee was covered under search of Lotus group conducted on 09.10.2014. During the course of assessment proceedings, statement of Shri Pravin Kumar Jain and Shri Praveen Agarwal were relied upon wherein they had confessed of being accommodation entry providers and is involved in the work of giving bogus accommodation entries. The appellant also submits that firstly, there is no relevance of the statement of Shri Pravin Kumar Jain and Shri Praveen Agarwal as they are no way connected to these two entities either as director or shareholder or partner. Also, Shri Pravin Kumar Jain has already retracted his statement. 8.4 The appellant company claims that no addition of Rs. 3,60,00,000/- is called for as it has completely established the three ingredients viz. identity, genuineness and creditworthiness as envisaged u/s. 68 of the Act, whereas the AO has treated the same to be unexplained and added the same u/s. 68 of the Act solely on his surmises. Thus, the only issue is with regard to the unsecured loan received by the appellant company from M/s. Valak....
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....teria to dislodge the creditworthiness of the so-called lenders and that due consideration should be given to the net worth of the lender companies viz. M/s.Aarohi Commodities Pvt Ltd which is Rs. 1,40,50,173/- and M/s Valaka Engineering Pvt Ltd which is Rs. 50,32,81,820/- for the year under consideration. The turnover of the M/s Aarohi Commodities was Rs. 7,84,24,392/- and M/s Valaka Engineering Pvt Ltd was Rs. 9,41,36,630/- for the year under consideration, profit of M/s Aarohi Commodities was Rs. 8,09,644/- and M/s Valaka Engineering Pvt Ltd was Rs. 41,29,003/- and the returned income of M/s Aarohi Commodities was Rs. 8,54,700/- and M/s Valaka Engineering Pvt Ltd was Rs. 39,87,830/-. TDS had also been paid of M/s Aarohi Commodities amounting to Rs. 2,77,742/- and M/s Valaka Engineering Pvt Ltd amounting to Rs. 11,90,996/respectively. I find merit in this contention of the appellant, since the appellant company had sufficient own funds for advancing the funds. In this very perspective, the allegation of the AO that the income of the lender companies in the year under consideration is very low without giving due consideration to the overall net worth of the company is totally misp....
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....264 ITR 254] [Gau], the Hon'ble High Court had held that: ".....Hence, the harmonious construction of section 106 of the Evidence Act and section 68 of the Income-tax Act will be that though apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor, the burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. What follows, as a corollary, is that it is not the burden of the assessee to prove the genuineness of the transactions between his creditor and sub-creditors nor is it the burden of the assessee to prove that the sub-creditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been, eventually, received by the assessee. It, therefore, further logically follows that the creditor's creditworthiness has to be judged, visa-vis, the transactions, which have taken place between the assessee and the creditor, and it is not the business of the assessee to f....
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....ine the validity of addition based on the various statements relied upon by the AO. * Shri Pravin Kumar Jain The AO has referred to the statement of Shri Pravin Kumar Jain wherein he had allegedly confessed of being an accommodation entry provider and is involved in the work of giving bogus accommodation entries. However, it was nowhere mentioned in the assessment order regarding the relevant extracts of the Statement on oath recorded of Shri Pravin Kumar Jain on which the AO has placed reliance for treating unsecured loan as alleged and a sham transaction. Also, the copy of the statement of Shri Pravin Kumar Jain on which the AO has relied has also not been provided to the appellant company and there is no statement in relation to transaction of unsecured loans between the aforesaid party and the assessee and hence; the statement of Shri Pravin Kumar Jain is not relevant. Further, Shri Pravin Kumar Jain was also not a director or a shareholder in the alleged company, had no role to play in the affairs of the business of the alleged company and thus had no locus standi to give a statement in relation to the alleged company, therefore, his statement cannot be consi....
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.... inference can be drawn merely based on some third party without any corroborative evidence who even does not have any locus standi to comment upon. The assessment order of M/s Aarohi Commodities Pvt Ltd for AY 2014-15 clearly states that the said concern is in the business of supply of uniform to Poddar Group of School and have also examined the unsecured loans taken by them. 8.15 Section 68 is not a charging section but a deeming fiction dealing with the burden of proof. The section casts initial onus u/s. 68 of the Act on the assessee to prove identity, genuineness and creditworthiness of the transaction to the satisfaction of the AO. If the assessee fails to do so or the explanation offered by him is not satisfactory to the AO, the AO is empowered to add the same to the total income of the assessee. The said power is to be exercised judiciously by the AO. Thus, once the initial onus is discharged by the assessee, the onus shifts on the AO to bring out fallacies in evidence brought by the assessee or by bringing new evidence that indicate the transactions undertaken by the assessee are non-genuine. Thus, the section deals with an equilibrium of onus of proof and must be....
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....hich, inter alia, have been noted at Para 3 of the Judgment of the CIT Appeals which reads thus: "The assessment is completed without rebutting the 550 page documents which are unflinching records of the companies. The list of documents submitted on 09.03.2015 are as follows: 1. Sony Financial Services Ltd. - CIN U74899DL1995PLC068362- Date of Registration 09/05/1995 Memorandum of Association and Article of Association Certificate of Incorporation Certificate of Commencement of Business Acknowledgment of the Return of Income AY 08-09 Affidavit of the Director confirming the investment Application for allotment of shares Photocopy of the share certificate Audited account and Directors report thereon including balance sheet, Profit and Loss Account and schedules for the year ended 31.03.2009. Audited account and Directors report thereon including balance sheet, Profit and Loss Account and schedules for the year ended 31.03.2010 The Bank Statement highlighting receipt of the amount by way of RTGS. Banks certificate certifying the receipt of the amount through B....
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....urden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises." 9. This Court in the Judgments relied upon by the learned Counsel appearing for the Respondents, have come to the conclusion that once the Assessee has produced documentary evidence to establish the existence of such Companies, the burden would shift on the Revenue Appellants herein to establish their case. In the present case, the Appellants are seeking to rely upon the statements recorded of two persons who have admittedly not been subjected to cross examination. In such circumstances, the question of remanding the matter for re-examination of such persons, would not at all be justified. The Assessing Officer, if he so desired, ought to have allowed the Assessee to cross examine such persons in case the statements were to be relied upon in such proceedings. Apart from that, the voluminous documents produced by the Respondents cannot be discarded merely on the basis of two individuals who have given their statements contrary to ....
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....s year also. 28.1 Since the unsecured loans received by the assessee have been accepted as genuine, the disallowance of corresponding interest payment of Rs. 21,26,400/- to the above said loan creditors made by the AO will not survive. Accordingly, we uphold the decision of Ld CIT(A) in deleting the disallowance of interest expenditure. 29. In the result, appeal of the revenue bearing ITA No. 4057/Mum/2019 relating to AY 2014-15 is dismissed. M/s LOTUS LOGISTICS & DEVELOPERS PVT LTD ITA No. 6921/Mum/2024 (AY 2017-18) 30. We shall take up the appeal filed for AY 2017-18 in ITA No. 6921/Mum/2024. The revenue has raised the following grounds of appeal:- "1. "On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 20,00,000/- made u/s. 68 of the Act on account of unsecured loan received from M/s Santosh Gems Pvt Ltd and addition of Rs. 77,02,6897-made u/s. 69C of the Act, on account of disallowing the interest expenses paid on unsecured loan to Mis. Anandomayee Merchandise Pvt Ltd, M's Santosh Gems Pvt Ltd, M/s RatangarFinicase Pvt Ltd, Mis Anglo Coomotrade Pvt Ltd and Mis 1 Valaka Engineering Pvt. Ltd without ....
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.... concerned entry operators, who had facilitated those transactions of providing accommodation entries to the assessee. The Ld.DR prayed for upholding the order of the Ld.AO on these two issues. 31.2 The Ld.AR submitted that the addition was made by the Ld.AO on the basis of statement recorded from different parties. However, the assessee has furnished all the documents to discharge the initial onus placed upon it u/s 68 of the Act. Further, this loan has been repaid in the month of May, 2018. The assessee has also paid interest expenses after deducting TDS there from. Accordingly, he submitted that both the additions made by the AO was rightly deleted by Ld.CIT(A). 31.3 We heard the parties on this issue and perused the record. We notice that the Ld CIT(A) has deleted this addition with the following observations:- "8. DECISION: I have considered the facts of the case discussion made in the Assessment Order and submissions of the appellant. 8.1. The first ground of appeal is that the assessment order passed u/s. 143(3) by the Ld. AO is without jurisdiction, invalid, bad in law and in violation of the principals of natural justice. This ground of app....
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....nd has argued that the interest has been actually paid after deducting the TDS amount. The appellant brought to my notice that the additions made in its case on account of unsecured loans from these parties have been deleted in the first appeal. It is also mentioned that similar additions were made in the case of the appellant for AY 2016 17 with respect to loans taken from M/s Anandomayee Merchandise Pvt. Ltd., M/s Santosh Gems Pvt. Ltd., M/s Ratangar Finlease Pvt. Ltd. and M/s Valaka Engineering Pvt Ltd. First Appeal has been decided by me in favour of the appellant on merits. Considering that the addition u/s 68 on account of bogus loans stands deleted, the interest paid on such loans cannot be disallowed. Accordingly, the addition of Rs 77,02,687/- is deleted. Ground No.2 is decided of the favour of the appellant." 31.4 We notice that the assessee has discharged its onus placed upon it u/s 68 of the Act in respect of loan of Rs. 20.00 lakhs taken from M/s Santosh Gems P Ltd. The assessing officer has not discharged the burden shifted upon his shoulders, but simply relied upon the third party statements. Accordingly, we are of the view that the Ld CIT(A) was justified in dele....
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....ellant has realized revenue of Rs. 15,49,20,711/- against which it has shown the revenue of Rs. 13,71,88,943/- in the year under consideration. During the assessment proceedings, the appellant explained that the it had written off the sundry balances of Rs. 1,77,31,770/- and therefore, the revenue recognized was reduced to that extent. The explanation of the appellant was not found convincing and the said amount was added to its income as 'suppression of revenue receipts'. 8.3.1. During the appellate proceedings, appellant has submitted following documents in support of the bad debts of Rs 177,31,770/ Copy of details of revenue from operations Copy of details of sundry balance w/off Rs. 1,71,31,770/- along-with the copy of ledger accounts of the customers duly reflecting the sales, advance received, and balances written off. * Copy of P&L account of respective years duly reflecting the sale of flats * Copy of details of revenue from operations * Copy of details of sundry balance w/off of Rs. 1,71,31,770/- along-with the copy of ledger accounts of the customers duly reflecting the sales, advance received, and balances written off * Copy o....
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....es of the case and verifying the documents as submitted, I am of the view that the said claim of Rs. 1,77,31,730/is 5.7% of overall sales offered appears to be in order. As per section 36(2)(i) of the Act, no deductions of bad debts shall be allowed unless such debts or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debts or part their or is written off or of any, previous year. Two conditions for claiming bad debts are that the said amount should have been offered as income in earlier years and the said amount should be written off as bad debts in the books of accounts. In the present case, the appellant has offered these amounts as income in earlier years and has written them as bad debts in the year under consideration. Thus, it can be said that the appellant has fulfilled the twin conditions for claiming bad debts. In view of the same, the addition of Rs. 1,77,31,730/- as suppression of revenue cannot be sustained. Grounds no. 3 & 4 are allowed." The revenue is aggrieved. 32.2 We have heard the parties on this issue and examined the documents available on record. We agree with the assessee ....
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....0,000 60,16,439 5,00,16,439 34.1 The AO assessed the above said loans aggregating to Rs. 4.40 crores as unexplained income of the assessee u/s 68 of the Act. Accordingly, he disallowed the relevant interest expenditure totaling to Rs. 60,16,439/- u/s 69C of the Act. The ld CIT(A) deleted both the additions and hence the revenue is aggrieved. 35 We shall first take up the addition of loan of Rs. 4.40 crores taken from four persons mentioned above. The assessing officer had assessed the above said loans u/s 68 of the Act on the basis of report given by the investigation wing. The Ld CIT(A), however, deleted the loans on noticing that the assessee has furnished all the relevant documents to prove the cash credits, viz., the identity of the creditor, the credit worthiness of the creditor and the genuineness of transactions as observed by us in the appeals of other years. Accordingly, the Ld CIT(A) deleted the addition made by the AO in this year also u/s 68 of the Act. 35.1 We have upheld the decision rendered by Ld CIT(A) on identical issues in the earlier years, since it is noticed that the assessee had discharged the burden placed upon it u/s 68 of the Act by proving ....
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....4/- thereon. He submitted that the TDS was deducted from above said interest amount. He submitted that the assessee has furnished relevant documents to prove the cash credit in terms of sec.68 of the Act. Accordingly, he submitted that the Ld CIT(A) was justified in deleting both the additions. The ld DR, on the contrary, reiterated the submissions made by him in the earlier years and said that all those arguments would equally apply to this year also. 38.2 We heard rival contentions and perused the record. We notice that the Ld CIT(A) has dealt with this issue in paragraphs 7.3 to 8 of his order and the same are extracted below:- "7.3. I have carefully considered the assessment order and the submissions of the learned counsel. As per the appraisal report of the search/survey action conducted on Lotus/Kamdhenu/Patni group on 09.10.2014 by the DDIT(Inv) Unit III, Mumbai, information was received by the AO revealing that Shri Hitesh Thakker, Shri Jignesh Mavadia and Shri Uday Shankar Mahawar have admitted in their statements that M/s Satyam Projects Limited is a paper/shell company used for providing accommodation entries. Also, Shri Jignesh Mavadia had admitted that he w....
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....rm 2 filed by lender company with ROC for increase in authorised capital in Feb, 2011 (k) Copy of Due diligence Report carried out prior to merger (l) Copy of scrutinizer report dtd. 26.09.2015 on e-voting process (m) Copy of Internal audit report for FY 15-16 (n) Copy of secretarial report (o) Copy of quarterly compliance report (p) Copy of prospectus issued by lender company 7.5. I have perused the aforesaid documents. It is observed that the assessee company is a registered NBFC since 1998 which has later merged with 8 companies through a scheme of amalgamation duly sanctioned by the Hon'ble Calcutta High Court. By providing the aforesaid documents, the assessee submits that the lender -M/s. Satyam Projects Ltd is a genuine company which has carried out so many compliances regularly with RBI/ Auditors and has also been sanctioned merger with the approval of the Hon'ble Calcutta High Court. From the records, it is noticed that the alleged lender was served a notice u/s. 133(6) of the Act by the AO which was duly complied. The assessee therefore submits that there is no adverse finding in this regard b....
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....ompany is a paper company. Similarly, Shri. Jignesh Thakkar in the course of statement u/s. 131 of the Act on 09.10.2014 has stated that he was a clerk in Prince Ply Agency Pvt Ltd and he was a namesake director in Satyam Projects Ltd. He was unaware about the other directors of the lender company. In his statement, Shri Uday Shankar Mahawar u/s. 131 on 25.08.2014 has also stated that he opened around 200 bogus jamkharchi companies which were used to provide bogus accommodation entries One of Such companies as stated in his statement was Satyam Projects Ltd. In this statement, Shri Parbat Gothi u/s 131 on 12.10.2014 has admitted that M/s Hawa Realty Pvt Ltd had also indulged in obtaining bogus accommodation entry of unsecured loans from M/s Satyam Projects Limited. However, the AR states that all the aforesaid statements relied upon by the AO are retracted by the said parties on the ground that they were based on influence and coercion of search party. The retraction affidavit of these parties have been placed in the course of assessment as well as before me. In the course of assessment proceedings, Shri Uday Shankar Mahawar was produced before t....
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....Attention is also invited to the fact that due to extreme mental pressure, Shri. Hitesh Thakkar had signed the statement without even understanding what was written by the tax authorities. He has accordingly immediately after the search vide his affidavit dated 16-10-2014 clarified that the statement is incorrect and has accordingly retracted his statement. c. Statement of Shri. Jignesh Mavadia The statement of Shri. Jignesh Mavadia has been recorded on 09-10-2014 wherein allegedly he has accepted that he was a namesake director in M/s. Satyam Projects Ltd. Your Honour may note that Shri. Jignesh Mavadia in his affidavit dated 16-102014 while retracting the said statement has sworn on oath that his statement was recorded under extreme mental pressure and it was signed by him without understanding the contents thereof. d. Statement of Shri. Parbat Gothi The statement of Shri. Parbat Gothi was recorded u/s. 131 on 12-10-2014 wherein he has accepted that M/s. Hawa Realty Pvt Ltd had indulged in obtaining accommodation entry of unsecured loans from M/s. Satyam Projects Ltd. Your Honour may appreciate that Shri. Parbat Gothi vide his affidavit 18-10-2....
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....mpanies for the A.Y. 2010-11 and also that of the alleged lender - M/s. Satyam Projects Ltd for A.Y. 2010-11. I have also gone through the confirmation, ITR Acknowledgement, financial statements of the lender company and bank statements relating to the alleged transaction of unsecured loan of Rs. 2,60,00,000/- taken by the assessee during the year under consideration. It is observed that the lender company is formed in 1981 and is registered NBFC since 1998 engaged into the business of finance and investment and has also engaged into trading in cloth in the year under consideration. The lender company has shown substantial turnover of Rs. 8.27 crores with an income of Rs. 21,32,680/- offered in its return of income. The transaction are also carried out through account payee cheques. Even, in the subsequent years, it is seen that the lender company has earned substantial income as under: A.Y. Returned Income 2013-14 51,81,018/- 2014-15 1,81,13,093/- 21015-16 1,16,80,862/- Accordingly, the assessee has discharged its onus u/s 68 of the Act by substantiating even the source of source of alleged lender company. On the contrary, the Assessing Of....
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.... accepting the fact that all these companies are active at the website of MCA and none of the companies name is struck off from the lid published try the MCA s shell company. We further notice that the assesses has field balance-sheet of subscribers wherein they have huge share capital and reserves and surplus to extatist creditworthiness of the parties. On perusal of the balance-sheet fled by the assesses, we fed that the aggregate of share capital and reserves of a companies is at Rs. 333.67 crores, whereas investment in assessee company is only PRs. 12 crores. We further notice that all companies are having regular business ranging from 2 to 3 crores. The assessee also furnished copies of sales-tax returns filed with Commercial Tax Department to prove the business activity of the assessee. All these evidences go to prove an unduutted fort that these companies are not paper companies and recognized with business activity We further observe that the assessee also filed affidavit form the directors of subscriber companies, wherein thy have explained the reasons for not receiving communication send by the AD w/s 133(6) of the Act. They further stated in the affidavit that they have ....
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.... of the transaction and the creditworthiness of the lender which was absent in the case before the Hon'ble Delhi High Court (ii) Major Metals Ltd v. UOI [2012] 19 taxmann.com 176 (Bom HC) The said decision was in relation to proceedings before the Hon'ble Settlement Commission. The decision is rendered in relation to huge share premium received from the companies with no credentials and creditworthiness nor even any past performance that could justify such payment. Further, this decision was also in relation to the order passed by the ITSC which had decided its view based on the peculiar facts and material with them. Further, the said decision has been impliedly overruled by the decision of the Hon'ble Bombay HC in the case of Vodafone India Services (P.) Ltd. v. CIT [2014] 388 ITR 1 (Bom.). The said view of the decision being overruled was again accepted by the Hon'ble Bombay HC in the case of Khubchandani Healthparks (P.) Ltd v. ITO [2016] 68 taxmann.com 91 (Bom). Accordingly, the decision relied upon by the AO in impugned order does not support the case of the AO. On the contrary, the assessee has relied upon plethora of judgements, I f....
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....ded the registration of the Company which discloses the registered address of such Companies. There is no material on record produced by the Appellants which could rebut the documents produced by the Respondents herein. In such circumstances, the finding of fact arrived at by the authorities below which are based on documentary evidence on record cannot be said to be perverse. Learned Counsel appearing for the Appellants was unable to point out that any of such findings arrived at by the authorities below were on the basis of misleading of evidence or failure to examine any material documents whilst coming to such conclusions. Under the guise of the substantial question of law, this Court in an Appeal under Section 260A of the Income Tax Act cannot re-appreciate the evidence to come to any contrary evidence. Considering that the authorities have rendered the findings of facts based on documents which have not been disputed, we find that there are no substantial question of law which arises in the present Appeal for consideration 8. The Apex Court in the case of Orissa Corpn. (P.) Ltd. (supra), has observed at Para 13 thus "13 In this case the assessee had given th....
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....r Section 147 of the Income Tax Act cannot lead to re- verification of the recortts. These findings of the CIT Appeals have not been assailed before the Income Tax Appellate Court. 11. In such circumstances, we find that there is no case made out by the Appellants-Revenue for any interference in the impugned Orders passed by the Courts below 12. Hence, the Appeal stands rejected The SLP filed against the said order of the High Court is also dismissed by the Hon'ble Apex Court in [2018] 93 taxmann.com 84 (SC). 7.9. I find that the addition u/s. 68 of the Act is uncalled for in the present facts and circumstances of the case in view of the discussion made above. Accordingly, the addition of Rs. 2.60,00,000/- made by the AO deserves to be deleted. This ground of appeal is accordingly allowed. 8.0. The Ground of appeal no.3 relates to the disallowance of interest of Rs. 5,39,384/ Since, I have allowed the ground on unsecured loan from Satyam Projects Ltd in favour of the appellant and considered the loan as genuine, the interest paid thereon of Rs. 5,39,384/- is also allowed for the reasons and discussion specified as above. Hence, the g....