TMI Blog2011 (12) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... of the fact, which course is more beneficial to the Revenue. A person lawfully liable to be taxed can claim no immunity because the Assessing Officer has taxed the said income in the hands of another person contrary to law. In the instant case, there is no dispute to the identity in so far as Lunkad Group is also on Department s record and a survey has been carried out at premises of Lunkad Group. The genuineness of transaction of the loans become doubtful in view of the incriminating documents found during survey at Lunkad Group. Applying the proposition of law been laid down by the Hon'ble Supreme Court in the case of Smt. Taradevi [ 1972 (11) TMI 2 - SUPREME COURT] to the facts of the instant case, we can safely conclude that the ld. CIT(A) was not justified in deleting the addition in the hands of the assessee company merely on the plea that the same amount has been added in the hands of the creditor company. We found that in case of Lunkad Group addition was made in respect of cash received by it from persons, whose name, address and other particulars could not be furnished before AO. This addition is mothering to do with the genuineness of loan received by asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order in case of Narmada Extrustion indicating party-wise and assessment-wise details of peak credit in respect of loans from Lunkad Group of companies. As per Annexure I, we found that the peak amount of loan was in the AY 2005-06 amounting to ₹ 2.58 crores, however, the total addition in respect of total peak credit as made by the AO amounts to ₹ 7,59,50,000/- starting from AY 2002-03 to 2007-08. Thus, as per this Annexure the peak amount of the credit was ₹ 2.58 crores. The peak credit of ₹ 2.58 lacs as mentioned by AO in Annexure I appears to be wrong. In the paper book, we find one more date-wise statement of loan taken by the assessee (Narmada Extrusions Limited) from various Lunkad Group Companies starting from 10th July, 2001 to 31st March, 2007. As per this statement, the peak amount of loan is ₹ 6,44,37,338/- as on 29th June, 2006. We, therefore, direct the AO to reverify and recompute the peak amount of loan and to restrict the addition to the extent of peak amount of the loan. We direct accordingly. In the result, all the appeals of the Revenue are allowed, whereas cross objections are allowed in part for statistical purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the cross-objections, the following common grounds have been raised: - 1. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the act of AO in issuing notice u/s 153A of the I.T. Act for the years under consideration even when no incriminating documents were found and seized from the possession of the assessees during the course of search. Thus the notices as issued u/s 153A of the I.T. Act and assessments framed accordingly require to be quashed on this account. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the act of AO in making additions in the case of assessees in respect of cash credit even when the entire amounts of cash credit were duly recorded in the regular books of accounts of the assessees prior to the date of search and no incriminating documents were found and seized from the possession of the assessees. Thus, the additions made in the case of the assessees in respect of cash credits on the basis of inferences and presumptions and that too in the 153A proceedings are wrong. The same require to be deleted in full. 4. Common grounds raised by the Revenue in all the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and submitted as under :- (i) That you have asked from the assessee to produce the Director of Rajvir Marketing and Investment P.Ltd. and Rajvir Biotech (P) Ltd. from whom unsecured loan were taken during the year. In this respect, we have to submit as under :- (i) Confirmations letters in respect of loan taken from the above party is enclosed. (ii) Affidavit of the above party duly notarized confirming the above/transactions are enclosed. (iii) That the assessee has received the entire amount of loan through account payee cheques. That when the amounts of loan were received by the assessee through account payee cheques and confirmation letters duly signed by the creditors have been filed and more so when they are assessed to tax, the assessee has discharged its onus lying on him. That if you have any doubt about the genuineness of the said transaction, you are requested to directly collect necessary information from both the parties. Without Prejudice to the above (iii) That Hon'ble Jurisdictional High Court has consistently held that once the assessee has furnished confirmation letters duly supported by Affidavits and identity of the creditors stands prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanjeev Lunkad/Sanjay Bindal 21-Amber, M.G. Road, Indore. 06 Saokar Investment Finance Limited Vijay Lunkad/G.Jagtap Lunkad House, 13, Race Course, Indore 07 Historic Arts Exports (P)Ltd. Vijay Lunkad/G.Jagtap Lunkad House, 13, Race Course, Indore 08 Rajveer Marketing Investment Ltd. Sanjeev/ Lunkad/Ritesh Lunkad Lunkad House, 13, Race Course, Indore 09 West-End Management Technologies (P) Ltd. Vijay Lunkad/Sanjav Bindal Lunkad House, 13, Race Course, Indore 10. Rajveer Biotech (P) Ltd. Sanjeev/ Lunkad/Ritesh Lunkad Lunkad House, 13, Race Course, Indore 11 Prateek Reality (P) Ltd. Sanjeev/ Lunkad/Ritesh Lunkad Lunkad House, 13, Race Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,700 4/4/2006 Darak 1,000,000 4/4/2006 Darak 1,000,000 4/4/2006 Bank 150,000 4/4/2006 Chopraji 500,000 4/4/2006 Bhabhi 10,000 4/4/2006 Bank 1,000 4/4/2006 Bindal 19,000 4/4/2006 Bank 99,000 4/4/2006 Daddy 33,500 4/4/2006 Petrol getz 1,000 4/4/2006 Recharge (1850) 2,000 4/4/2006 dewas 10,000 5/4/2006 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/4/2006 Darak packet ret 10,000 8/4/2006 Laxminarayan 7,000 8/4/2006 Ananya bus 5,000 8/4/2006 Sanju personal 2,000 10/4/2006 Mehtaji 2,000,000 10/4/2006 Darak short re 10,000 10/4/2006 Bank 990,000 10/4/2006 Bank 995,000 10/4/2006 Audit 2,000 10/4/2006 Air conditioner 1,000 10/4/2006 Ritesh personal 1,000 10/4/2006 Form 1,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14/4/2006 Hotel 14/4/2006 Bantihiaji 14/4/2006 Sanjay bindal 15/4/2006 Bank 980,000 17/4/2006 Darak 2,500,000 17/4/2006 Anilji 1,500,000 17/4/2006 Darak 500,000 17/4/2006 Darak 1,500,000 17/4/2006 Bank 3,585,000 17/4/2006 Sunil 500,000 18/4/2006 Darak 43,000 18/4/2006 200 pack rec 10,000 18/4/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tesh personal 2,500 22/4/2006 Bracket 3,000 24/4/2006 Darak 1,050,000 24/4/2006 Bank 1,990,000 24/4/2006 Sunil 250,000 24/4/2006 Plants dhar 10,000 24/4/2006 Sanju dhar 8,000 24/4/2006 Getz pet 2,000 25/4/2006 Narmada 300,000 25/4/2006 Bank 1,795,000 25/4/2006 Bank 50,000 25/4/2006 Opel repair 2,000 25/4/2006 Sunshine society 10,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29/4/2006 Narmada 5,00,000 29/4/2006 Uncle 50,000 29/4/2006 Bank 950000 29/4/2006 Sachin 608000 29/4/2006 Amit 100,000 29/4/2006 Sunil 300,000 1/5/2006 Narmada 850,000 1/5/2006 Amit 100,000 1/5/2006 Sanjay return 26,000 1/5/2006 Narmada 150,000 1/5/2006 Bank 995,000 1/5/2006 MOBILE RECHARGE 1,100 1/5/2006 P.G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of Rajasthan, Centurion Bank 8. In view of the above discussion, the AO held that the loan transactions with M/s. Rajvir Marketing Investment P.Ltd. and M/s. Rajvir Biotech (P) Ltd, are merely accommodation entries. The cash has been received by the said company from the assessee and after being routed through various companies, this amount was given by cheques to the assessee. The assessee s submission that loan received is genuine is not at all admissible. The non attendance/non co-operation and failure to explain the source of the fund utilized by the loan creditor further confirm the mens rea. Hence, the amount of ₹ 60,00,000/- received from the said companies (Calculated on the basis of Peak credit as discussed here under ) is treated as unexplained cash credit and shall be added to the income of the assessee u/s 68 of Income-tax Act. 9. By the impugned order, the ld. CIT(A) deleted the addition by observing as under :- 4.2.3 In the context of the facts and findings as given in the Lunkad Group of cases, It has been held that the Lunkad group had failed in discharging its onus to explain the source of huge share capital introduced year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search in assessee s group. The survey had revealed that Lunkad Group was involved in providing accommodation entries to various needy persons i.e. beneficiaries. The incriminating documents so found during survey at Lunkad Group even though pertaining to one month only indicated receipt of cash from companies/ persons to whom amount was again passed through cheques either in the form of share capital or unsecured loans or capital gains. The AO observed that the Lunkad Group did not cooperate during survey proceedings in explaining the entries found in incriminating documents regarding receipt of cash and giving of cheques to various beneficiaries. The Directors of Lunkad Group did not appear to substantiate the entry of loans given to the group companies of assessee. The documents so found during survey conducted at Lunkad Group shows that Lunkad Group has acted as accommodation entry provider. Even during course of assessment proceedings, the assessee had filed loan confirmation letters alongwith affidavit of Lunkad Group to substantiate the loan taken and repaid by it, but could not produce the alleged creditors in person to substantiate the same. It was contended by the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of M/s. Lunkad Media and Entertainment Limited for the assessment year 2001-02. In view of these facts, he contended that Mittal Group is a leading business group whereas Lunkad Group is merely an accommodation entry provider earning commission on such accommodation from beneficiaries, out of which Mittal group was one of the beneficiaries. We found that in various different bank account of Lunkad Group in which cash was deposited prior to issue of cheques to the beneficiaries. In some instances, the cheques were not directly issued to the concerned parties, who has given cash but was routed through various concerns of Lunkad Group but ultimately credited in the account of beneficiaries. List of Bank account held by the Lunkad Group was also given in the assessment order where cash is deposited. 12. The ld. CIT(A) in his appellate order in the case of Narmada Extrusion Limited for assessment year 2002-03 relied on his order passed in the case of M/s. Lunkad Media and Entertainment Limited for the assessment year 2004-05, wherein entire addition was sustained by the ld. CIT(A) in the hands of Lunkad Group on the plea that they have failed to explain source of huge share ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s advanced by them. C) The AO himself has not doubted about the amount as received by the assessee however, the search assessment order was passed in the case of assessee group by the Assessing Officer prior to the survey order passed in the case of Lunkad Group. For this reason, the AO in the case of Assessee group i.e. Narmada Extrusion Group has added entire amount of loan as income of the assessee by treating the same as nongenuine. That reason for disbelieving the loan amount was the presence of alleged cash book D) That it is settled position of law that the assessee can explain source of its credit however it cannot be expected from the assessee to explain the source of source. The assessee in the present case has properly explained the source of credit appearing in its books of account and the same was also substantiated with the Confirmation Letters and Balance sheet of the loan creditors. The assessee has filed affidavits simply to reconfirm its contention otherwise it has filed affidavit simply to reconfirm its contention otherwise it has properly discharged its onus by filing the confirmation letter and balance sheet of the loan creditors. Thus, there is no reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Lunkad Group of also of the assessee. The ld. CIT(A) confirmed the additions in the case of Lunkad Group of companies and deleted the additions in the case of the assessee company and other members of the Mittal group. List of the appeal of Lunkad Group as discussed by the ld. CIT(A) in his order as passed for the assessment year 202-03 in para 2.2 on page no.5 of the appellate order. I) That in view of the above and as explained by us vide our earlier submission it is once again submitted that the ld. AO is not right in adding the amount of loan as received by the assessee from Lunkad group of companies even when the assessee has properly discharged onus lying on it. J) We would also like to draw your honour s kind to the last para in respect of decision of Agrawal Coal Corpn. P.Ltd.(I.T.A.No. 151/Ind/2009) as relied upon by the ld. CIT DR in his submission dated 21.11.2011 filed before the Hon'ble Bench. We respectfully like to submit the said decision is in fact in favour of the assessee since the identity of the Lunkad Group is beyond doubt and Department has rather conducted a survey at its premises on 02.05.2006 which confirms the identity of Lunkad Group. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rect decision of Hon ble Supreme Court in the case of ITO vs. CH Atchaiah, 218 ITR 239, wherein it was observed that no option has been given under the 1961 Act, and it has been specifically provided that tax has to be levied on right person notwithstanding the fact that the amount has already been added in the hands of some other person. Meaning thereby addition should be made in the hands of the right person and the same cannot be deleted only on the plea that the same amount has been added in the hands of some other person. It was observed by the Supreme Court that there is no option under the 1961 Act, unlike the one given under 1922 Act and the AO must tax the right person and right person only. By right person is meant the person, who is liable to be taxed according to the law with respect to a particular income. The expression Wrong Person is obviously used as opposite of the expression right person . Merely because a wrong person is taxed with respect to a particular income, the AO is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact, which course is more beneficial to the Revenue. A person lawfully liable to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of account prior to the search and no incriminating documents were found and seized from the possession of the assessee. Accordingly, the additions made in the hands of the assessee in respect of the cash credit were contended to be not justified. 19. We have considered the rival contentions and found from record that the assessee company has taken loan from Lunkad group since assessment year 2002-03 onwards. Not only loan was taken but it was also repaid either during the year or in subsequent year. The assessee has taken loan through account payee cheques as per its business requirement, paid interest thereon and also deducted TDS on such interest payment. In all these years, the assessee had filed loan confirmation letters. These loan transactions have been accepted by the Department either u/s 143(1) or 143(3) of the Income-tax Act, 1961. The whole problem arose due to the survey at business premises of Lunkad Group on 2.5.2006, wherein certain documents for the month of April, 2006, was found and impounded, which indicated that Lunkad Group had received cash from various persons including assessee. Even though full name of assessee was not mentioned on the papers so impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the month of April, 2006, and there was no incriminating material for any period other than month of April, 2006, indicating that the assessee has given any cash to Lunkad Group for taking loan entry from 1.4.2001 to 31.3.2007. He further contended that at the most additions could be made only with respect to the entries in the impounded documents, which indicated any cash being given by the assessee to Lunkad Group and not beyond it. He further contended that Assessing Officer had no where related the cash entries on these documents as having been deposited in bank account for issue of cheque to assessee, nor made any efforts to relate such cash deposit as having been utilized for issue of cheque in assessee s favour nor anything was brought on record by Assessing Officer suggesting return of cash to assessee whenever assessee had repaid the loan so taken from Lunkad Group. On the other hand, contention of the ld. CIT DR was that incriminating documents as mentioned by Assessing Officer in his assessment order even though pertained to one month, it indicated the modus operandi of Lunkad Group for advancing loans to the assessee , therefore, the Department has applied the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of all the earlier years, the assessee might have given cash to the Lunkad Group for getting unsecured loan, is not justified. All the loans were received by assessee through account payee cheques and also repaid through account payee cheques. Assessee had also filed even confirmation letters and affidavits to substantiate the loan transactions. Only because of incriminating document pertaining to period 1.4.2006 to 1.5.2006, the Department doubted the genuineness of all the loan transactions pertaining to period starting from 1.4.2001 to 31.3.2007. Before making addition or disallowing the cash credit, on the plea of genuineness, the Department is required to bring on record some evidence to indicate that the assessee has paid cash in consideration of the cheques so issued. Without any evidence, much less a cogent evidence, it is not legally justified to doubt the genuineness of loan transaction or make addition in the hands of the assessee company for which no material much less a cogent material is in possession of Department. In the interest of justice and fair play, we restore the grounds raised by the assessee in the cross objection to the file of the Assessing Officer for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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