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2022 (5) TMI 1094 - AT - Income TaxAddition u/s 68 - Bogus unsecured loan - Investigation wing of Kolkata establishes that the loan creditors are accommodation entry provider - onus to prove - paper concerns only for providing accommodation entry for commission - HELD THAT:- In closely held companies/firm where unsecured loan is raised from close knit circles mostly known to partners/owners, onus required under section 68 is very heavy on such firms to prove identity as well as creditworthiness of lenders and genuineness of transaction; mere submission of name and address of creditor, income tax returns, Balance Sheet/statement of affairs of creditor and bank statement of creditor is not sufficient. On perusal of the bank account of the lenders it is revealed that average bank balance maintained by lender in its aforesaid bank account is a very meagre amount. Thus average bank balance maintained by lenders in the aforesaid bank account are very meagre sum, while huge amounts of money suddenly comes into this bank accounts which immediately finds its exit into some other bank accounts, which is another peculiar feature of a shell company engaged in laundering money by providing bogus accommodation entries through a web of shell companies and bank accounts. The orders of the authorities below have been carefully gone through and the assessee is not able to discharge its onus as is casted under section 68 as the assessee could not prove genuineness of the unsecured loan taken and underneath sources for making these investments. The assessee no doubt has produced bank statement/confirmation of the entities from which the money found its place in the bank account of the assessee to be further used in its business but the genuineness of these transactions could not be proved as the assessee did not bring on record cogent evidences to substantiate the unsecured loans taken. Merely bringing confirmations and showing that the payments were made through banking channel is not sufficient. As discussed above about the specifics of lender’s financials it can be reasonably concluded that out of three essential ingredients, i.e. Identity of Creditor, Genuineness of the Transaction and Creditworthiness of the lender, only Identity can be assumed to be established. Rest of the 2 essential elements, i.e. Genuineness and Creditworthiness not established. Hence Addition made by AO u/s. 68 of the Act upheld and order of Ld. CIT (A) is set-aside. Accordingly, ground no.1 to 4 of the Revenue is allowed Addition u/s 69A - on-money received on sale of flats by the appellant - estimation of profit - CIT held no undisclosed cash belonging to the appellant was found during course of survey and on considering the statements recorded during course of survey u/s 131 of the working partners Shri Ghanshyam Sompura and Shri. Govind Patel who had stated of having incurred the labour payments, extra work, etc and on considering the other documents related to expenses found during survey, hold that it would be fair and reasonable to estimate the profit.- HELD THAT:- As considering the fact that the appellant’s housing project is of re-development project of 14 flats and since no undisclosed cash was found during course of survey and on considering the profit disclosed by the appellant on housing project of 5.47%, Ld. CIT (A) correctly hold that it would be reasonable to estimate the profit @ 10 % on the on-money/undisclosed consideration.
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