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TMI Blog2011 (12) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... ittal, Kapil Mittal, Pravin Mittal, Smt. Shardadevi Mittal, M/s. Malwa Laminators, Omprakash Mittal HUF, Smt. Urmila Mittal, Pravin Mittal, Kapil Mittal, Narmada Extrusion Ltd. For the Appellant : Shri Keshave Saxena, CIT(DR) For the Respondent : S/Shri S.N. Agrawal and Ritesh Jain, CAs ORDER PER BENCH These appeals & cross-objections are filed by the Assessees and Revenue against the different orders of ld. CIT(A)-Ujjain, dated 22.3.2011 for the Assessment Years as mentioned above in the matter of orders passed u/s 153A r.w.s. 143(3) of the I.T. Act, 1961. 2. In departmental appeals, the following common grounds have been raised: - "On the facts and in the circumstances of the case, the ld. CIT(A) erred in: - 1. Deleting the addition made by the AO on account of unsecured loan u/s 68 of the I.T. Act by way of accommodation entries obtained by the assessee from Lunkad Group. 2. Deleting the addition made by the AO on account of interest expenses being paid for accommodation entries obtained from Lunkad Group which has been received back in cash from the operator. 3. Deleting the addition made u/s 69A of the I.T. Act on account of unexplained source of expenses incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p on 02.05.2006 i.e. few months prior to the date of search in assessee group [Mittal group] of cases. The survey had revealed the modus operandi adopted by Lunkad group in providing accommodation entries to various needy persons i.e. beneficiaries. 6. During the course of assessment u/s 153A for assessment year 2002-03 in case of Narmada Extrusion Limited, the AO observed that unsecured loan received by the assessee was as under :- S.No. Name of the Company Unsecured loans during assessment year 2002-03 Interest on it 1. Rajvir Marketing & Investment Pvt.Ltd. Rs. 22,00,000 16,701 2. Rajvir Biotech (P)Ltd. Rs. 38,00,000 41,983 Total Rs. 60,00,000 58,684 That during the course of assessment proceedings the assessee vide order sheet entry was asked to produce the directors of above companies for ascertaining the sources of loan taken and to prove the genuineness and creditworthiness of the loan, transaction/creditor as per Section 68 of the Income-tax Act, 1961. The assessee could not produce the creditors and submitted as under :- (i) That you have asked from the assessee to produce the Director of Rajvir Marketing and Investment P.Ltd. and Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were found to be involved as directors. These alleged companies are :- S.No. Name of Company Directors Correspondence/ Regd.Office Remarks 01. Lunkad Securities Ltd. Sanjeev/ Lunkad/Ritesh Lunkad Lunkad House, 13, Race Course, Indore. 02. Lunkad Media & Entertainment Limited/Lunkad Real Estate Limited Sanjeev/ Lunkad/Sneha Lunkad/Rachna Lunkad Lunkad House, 13, Race Course, Indore. 03 Parkson Securities Limited 04 Lagoon Resorts (P)Ltd. Vijay Lunkad/Sharad darak Lunkad House, 13, Race Course, Indore. 05 Parth Credit & Capital Market Limited 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; 7,50,000 7/4/2006 Ritesh return 4,000 7/4/2006 Ritesh personal 5,000 7/4/2006 Banthiaji 29,800 7/4/2006 Bank 9,75,000 7/4/2006 Bank 9,50,000 7/4/2006 Bank 5,50,000 7/4/2006 Bank 5,00,000 7/4/2006 p.g. 5,50,000 7/4/2006 Anilji 2,00,000 8/4/2006 mehtaji 2,000,000 8/4/2006 Darak 500,000 8/4/2006 Bank 2,530,000 8/4/2006 Bank 700,000 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 10/4/2006 Cable 500 10/4/2006 Bindal 2,000 10/4/2006 Dhar 25,000 12/4/2006 mehtaji 12/4/2006 Bank 12/4/2006 Darak car 12/4/2006 Sunil 12/4/2006 Salary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... da 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 25/4/2006 ICICI Bank 25,000 25/4/2006 Dhar 30,000 25/4/2006 p.g. 500,000 25/4/2006 p.g. 1,500,000 25/4/2006 Swati ticket 5,000 26/4/2006 Ajay 1,000,000 26/4/2006 Darak 4,000,000 26/4/2006 Bank 995,000 26/4/2006 Anjli challan 2,000 26/4/2006 Sanju 50,000 26/4/2006 Bank 750,000 27/4/2006 Bank 1,990,000 27/4/2006 Bank 10,000 27/4/2006 Sanjay Agrawal on a/c 41,000 27/4/2006 p.g. 354,350 28/4/2006 Darak 450,000 28/4/2006 Mehtaji 1000,000 28/4/2006 Bank 2,350,000 28/4/2006 Sunil 300,000 28/4/2006 Dewas 200,000 28/4/2006 Bank 250,000 28/4/2006 Uncle 50,000 29/4/2006 Dewas garlic 41,500 29/4/2006 Narmada 900,000 29/4/2006 Narmada 1,100,000 29/4/2006 Narmada 5,00,000 29/4/2006 Uncle 50,000 29/4/2006 Bank 950000 29/4/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lized by the loan creditor further confirm the mens rea. Hence, the amount of Rs. 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 after year in their group companies. The documents impounded during the survey in the Lunkad group of cases, though, for the limited period only, do suggest the modus operandi adopted by them in providing entries to the beneficiaries. But this has not been accepted by the Lunkad group so far. Rather, they (Lunkad group) have issued confirmatory letters to the various beneficiaries in support of having given genuine loan and share application money. Had they accepted the modus operandi of providing only entries, then the required course would have been confirming the additions m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding 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. CIT DR that since Lunkad Group could not be produced before any of the authorities, the source of huge cash deposits in their Bank account could not be explained, so as to establish the genuineness and creditworthiness of loans advanced by them to assessee. From the record, we also found that the assessee Mittal Group is engaged in manufacturing of HDPP/PE Bags and one of the leading concerns in this line of business. The ld. CIT DR also drew our attention to the fact that loose papers found during search in this group dated 5.10.2006 showed huge cash loan of Rs. 1.20 crores advanced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerns 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 capital received by them and they have issued confirmation letters to various parties to whom loan was given. Following this decision, the addition of unsecured loan to the assessee Mittal Group including that of Narmada Extrusion Limited were deleted by CIT(A). The CIT(A) observed that since addition made in the hands of Lunkad Group has been sustained on substantive basis in the case of Lunkad Group of Companies, confirming the addition on same issue in the hands of beneficiaries would amount to double addition though in different hands. Accordingly, he deleted the additions so made by the Assessing Officer in the hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to tax the loan amount as received from different companies of the Lunkad Group in the case of the assessee. E.1) The AO while passing the order in the case of Lunkad Group of companies for survey year after detailed examination of papers impounded form its premises has added the entire amount of credit as reflected in the Balance sheet and entire credit as shown in the alleged cash book as found from its premises as income of the Lunkad Securities Limited on substantive basis. E.2) As we understand the assessment order of the survey year was passed with the prior approval of the JCIT/Addl. CIT. That once the Department has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see 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." 15. First, we take up the preliminary objection raised by the ld. Authorized Representative to the effect that since question of fact has been decided by the CIT(A), the Revenue should not have filed the appeal before the Tribunal. For this purpose, he relied on various circular of C.B.D.T. From the order of the CIT(A), it is clear that he has deleted the addition in the hands of the assessee company on the plea that addition in the hands of creditor company (Lunkad Group) has been confirmed on substantive basis. As per CIT(A), if he confirmed the same addition in the hands of the assessee company, it will amount to double addition in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be taxed can claim no immunity because the Assessing Officer has taxed the said income in the hands of another person contrary to law. Similar provision has been laid down by the Hon'ble Supreme Court in the case of Smt. Taradevi, 88 ITR 323. The proposition so discussed above as laid down by the Hon'ble Supreme Court has been followed by the I.T.A.T. Special Bench in the case of Pradeep Agencies, 111 TTJ 346. 16. Applying the above proposition of law 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 impounded but the Assessing Officer inferred that name of "Narmada" as relating to assessee company, namely, "Narmada Extrusion Limited". The Lunkad Group was asked to explain these incriminating documents indicating receipt of cash from various parties, but the Lunkad Group could not explain the same and dispute arose between the Lunkad Group and Department with regard to survey conducted at Lunkad Group. The Lunkad Group has also filed a writ petition in the M.P.High Court against the Department for the survey so conducted and the records so impounded. This writ petition is still pending in the Court. It was also brought to our notice that Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 same conclusion even with respect to the loans, which were taken and also repaid in earlier years for which no incriminating document was found either at the business premises of the assessee or at Lunkad Group. 20. After analyzing all the documents placed on record, we found that additions have been made by Assessing Officer in respect of all the loans which even though taken and repaid by assessee in earlier years starting from 1.4.2001. Conention of Assessing Officer was that since the assessee could not produce the creditor in person, therefore, the confirmation and the affidavits filed by the creditors cannot be relied upon. We found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment 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 deciding afresh in terms of our above discussion and as per law. 21. Notwithstanding the above, as per our considered opinion, the addition in the hands of assessee company should be restricted with respect to the peak amount of loan outstanding during the entire period ranging from 1.4.2001 to 31.3.2007, rather than taking total of the loans received and paid back. Since the transactions pertains to taking the loan and repaying the same, again taking the loan and repaying the same, total of all these transactions cannot be said to be unaccounted money of the assessee. For example, if the assessee had unaccounted money of Rs. 2 lakhs by payi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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