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TMI Blog2014 (1) TMI 984X X X X Extracts X X X X X X X X Extracts X X X X ..... d, to alter, or amend any grounds of the appeal raised above at the time of the hearing. 3. Apropos ground no. 1 - Nature of loss on share transaction The assessee in this case is engaged in the business of trading in stocks and shares and acting as a sub-broker. The Assessing Officer noted that in trading and profit and loss account, the assessee has claimed a sum of Rs. 66,35,210/- on account of clearing difference. The AO held that the same being speculative is separated from other business loss for the purpose of set off and carry forward. 4. Before the Ld. CIT(A) assessee has made elaborate submissions. Considering the submissions, Ld. CIT(A) held as under:- "I have carefully considered the submissions made on behalf of the appellant and the findings recorded by the Id. AO. On consideration, I find that the clearing difference of Rs. 6635210/- has been determined by the appellant on the basis of statement of purchase and sales of shares and securities made on his behalf by M/s. Indus Portfolio (P) Ltd. A perusal of the ledger account of Indus Portfolio (P) Ltd. maintained in the books of the appellant and the contract notes issued by the said company clearly reveals that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er also there is no cogent basis to treat these transactions as speculative transactions. Accordingly, we affirm the order of the Ld. CIT(A). 7. Apropos issue of unsecured loans amounting to Rs. 15,55,00,000/-. In this case the AO found that assessee has borrowed unsecured loans from following parties:- a) Labh Tronices Overseas (P) Ltd. Rs. 5,00,000/- b) M/s Paras Infotech (P) Ltd. Rs. 3,00,000/-. c) M/s Salwan Developers & Promoters Pvt. Ltd. Rs. 10,00,000/-. d) M/s Bhalotia Agro Industires Ltd. Rs. 12,00,000/- e) M/s First Hi Fin Ltd. Rs. 30,00,000/-; f) M/s Monisha Impex P Ltd., Kolkata Rs, 21,00,000/- g) UP Electrical Ltd. Rs. 74,00,000/- Total Rs. 1,55,00,000/- 7.1 The assessee was asked to provide details, confirmations, copies of bank accounts, copies of returns in respect of these parties. From the submissions of the assessee, Assessing Officer was not satisfied and he held as under:- "A. There were loans from 2 parties viz. M/s Labh Tronices Overseas (P) Ltd. Rs. 5,00,000/- and M/s Paras Infotech (P) Ltd., Rs. 3,00,0001-. These two parties appear in the list of Accommodation Entry providers as detected and investigated by the Delhi Investigation Wing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmodation entries. Assessee was asked but he failed to produce these parties for examination. It is thus observed that the assessee is not in a position to prove the identity, credit worthiness and genuineness of these four parties hence the amounts received are treated as unexplained cash credits in the books of the assessee. In the case of above six parties having local address (except Monisha Impex (P) Ltd., Kolkata), upon enquiry conducted through the Income Tax Inspectors of this circle, these parties were found not existing / functioning at their addresses given by the assessee. The genuineness of confirmations said to be of the above mentioned parties as filed by the assessee is also doubtful as in all the confirmations from the signatures put on them, it is not verifiable as what is the name of the person who has signed these confirmations and in what capacity he has signed. Besides, their unexplained nature, the assessee has not paid/provided any Interest in respect of all above loans, therefore, the same also suffer from defects as regards the provisions contained in Section 56(2)(vi) in the sense that the same are without consideration and therefore, required to be adde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements reveals that the AO has also raised issue of immediate source of money paid to the appellant to which specific replies have been given by the representatives of the creditor companies in their statements. For instance, Sh. Jitender Kumar, appearing on behalf of M/s. Bhalotia Agro Inds. (P) Ltd., has stated that "the amount has been transferred from the cancellation of pay order amounting to Rs. 50 lacs on 05.02.2007 out of which Rs. 12 lacs was paid as loan to Sh. Lalit Kumar Poddar." Similarly, Sh. Hariom, appearing on behalf of M/s. Paras Infotech (P) Ltd., has stated that "he has invested on behalf of Mis. Paras Infotech (P) Ltd. a sum of Rs. 3 lacs in FY 2006-07." Similar statement has been given on behalf of Monisha Impex (P) Ltd., Salwan Developers & Promoters (P) Ltd., M/s. UP Electricals Ltd. and M/s. First Hi-Fin Ltd. In the case of M/s. UP Electricals Ltd. and First Hi-fin Ltd., it was also stated by Sh. Pramod kumar that the loans were not given interest free and interest @10% was chargeable. As regards, observation of the AO that the creditor companies had negligible /insignificant incomes in the respective years, I find that copies of balance sheets of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements have been recorded. Further, we note that the parties are registered with the Registrar of Companies (ROC) and are income tax assessees. Therefore, merely because at a particular point of time they were not found at the given addresses would not be sufficient to hold that the said companies are non-existent entities and the transactions are bogus. 10.1 Thus, we note that all the creditors have appeared before the AO and in the statements recorded by them confirmed the money lending to the assessee and the repayment thereof in the subsequent financial year itself. The fact that the amounts borrowed have been repaid in the next financial year has not been doubted by the Revenue. Upon perusal of the statements by the parties the Ld. CIT(A) observed that AO has raised issue of immediate source of money paid to the assessee to which specific replies has been given by the representative of the creditors company in their statements. Further, as regards the AO's observation that the creditor company have negligent/insignificant income, we find that the Ld. CIT(A) has duly examined the balancesheet of these parties and from the analysis of the same, it was found that the parties wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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