TMI Blog2019 (4) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... been brought out from previous financial year. In this case, it is undoubtedly proved that those companies are hawala operators involved in providing accommodation entries. When facts gathered during the course of assessment proceedings clearly proves that these are accommodation entry providers, the ratio laid down by Hon’ble Delhi High Court USHA STUD AGRICULTURAL FARM LTD. [2008 (3) TMI 91 - DELHI HIGH COURT] cannot be applied to delete additions. Accordingly, we are of the considered view that Ld. CIT(A) was erred in deleting additions made towards loans from M/s Chandimata Management Pvt. Ltd. and M/s Max Worth Project Pvt. Ltd. Hence, we reverse findings of the CIT(A) and sustained additions made towards loan taken from above two companies. DR failed to controvert the findings recorded by the CIT(A) in light of evidences filed by the assessee in respect of parties. On the other hand, AR for the assessee has also failed to file further evidence in respect of three parties, where the CIT(A) has confirmed addition to justify loans taken from the above parties. Therefore, we are of the considered view, there is no error in the findings recorded by the CIT(A) in respect of uns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings. 3. The Id. CIT(A) has erred on fact and in law, in view of the Hon'ble Delhi High Court in the case of Commissioner of Income-Tax ......vs M/s La Medica, Delhi on 15 March, 2001 [2001 VAD Delhi 931, 92 (2001 DLT 406, 2001(59) DRJ 404] wherein the Hon'ble court has upheld the 100% disallowance of bogus purchases. 4. The Id. CIT(A) has erred on fact and in law and in the circumstances of the case in deleting and addition of ₹ 1,56,77,456/- made on account of unexplained cash credit and unproved loans u/s 68 of the I.T. Act, 1961. 5. The appellant prays that the order of Ld.CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 2. The brief, facts of the case are that the assessee is engaged in the business of manufacturing of paper covered aluminium wires, stripes, bars, etc, filed its return of income for AY 2012-13 on 27/09/2012, declaring total income of ₹ 14,16,658/-. The case was selected for scrutiny and assessment was completed u/s 143(3) of the Income Tax Act, (hereinafter the Act ) on 30/03/2015 determining total income at ₹ 4,05,53,550/- by making additions towards disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, accordingly, after analyzing the book results of the assessee and also considering net profit declared for the year under consideration came to the conclusion that purchases claimed to have been made from above parties are not proved and hence rejected the books of accounts u/s 145(3) of the Act and added 25% unverifiable purchases u/s 69C of the Act. 4. The Ld. DR submitted that the Ld. CIT(A) was erred in deleting the addition made by the AO towards 25% of unverifiable purchases without appreciating the fact that the assessee not even able to file latest address of the dealer when notice issued u/s 133(6) of the Act, were returned un-served. The Ld. DR further submitted that the AO brought out clear facts to the effect that the assessee has declared nominal net profit percentage which works out 0.61% of its sales, therefore, the AO was right in rejected books of accounts and making additions towards unverifiable purchases, but the Ld. CIT(A) merely for filing certain supporting evidence accepted purchases from above parties as genuine. 5. The Ld. AR for the assessee on the other hand, strongly supported order of the Ld. CIT(A) and submitted that the Ld. CIT(A) has rightl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed categorically finding of the fact that no contrary evidence has been brought on record by the AO to prove that purchases from above two parties are non-genuine except nonservice of notice u/s 133(6) of the Act. On the other hand, the assessee has filed complete details along with stock register execise audit report and transportation documents to prove that these purchases are genuine. Therefore, we are of the considered view that there is no error in the findings recorded by the Ld. CIT(A) in deleting the additions towards 25% of unverifiable purchases. Hence, we reject the ground taken by the Revenue. 7. The next issue came up for consideration is additions towards unsecured loans u/s 68 of the Act. During the assessment proceedings, the AO observed that the assessee has shown outstanding unsecured loans aggregating to ₹ 3,87,59,796/- from 53 parties as on 31/03/2012. The corresponding figure of outstanding unsecured loans as on 31/03/2011 was at ₹ 2,80,77,650/- from 46 parties. In order to verify the genuineness of the unsecured loan, the AO called upon the assessee to submit confirmation letter from the lenders along with their ITR copies, bank statement and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, on the other hand, strongly supported the order of the Ld. CIT(A). The Ld. CIT(A), recorded categorical findings in the light of various details filed during the course of assessment and appellate proceedings, as per which, the assessee has discharged its initial burden cast upon u/s 68 of the Act, including identity, genuineness of the transaction and creditworthiness of the parties. The Ld. AR further submitted that the assessee has filed various details including confirmation from the parties and their financial statements along with bank statement to prove that they have sufficient source of income to explain loans given to the assessee. The Ld. CIT(A) after considering the details, rightly deleted additions made towards unsecured loans including loans taken during the previous financial year, as provisions of section 68 of the Act is applicable to only credits found in the books accounts for the year under consideration but not to the opening balance brought forward from earlier year. In so far as unsecured loans confirmed by the Ld. CIT(A), the Ld. AR submitted that in respect of three parties, the assessee has filed confirmation, however, could not file bank statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO to go behind creditors to ascertain true nature of transactions but credits cannot be considered as undisclosed income of the assessee. In a case like hawala operators, mere furnishing proof of identity or certain documents is not sufficient enough to come out the provisions of section 68 of the Act. In this case, the AO has brought out clear fact to the effect that those companies are paper companies involved in providing accommodation entries. Therefore, we are of the considered view that the Ld. CIT(A) was erred in deleting additions made by the AO towards loan taken from of M/s Pushpanjali Commotrade Pvt. Ltd. and M/s Radiant Merchandise Pvt. Ltd.. Accordingly, we reverse findings of the Ld. CIT(A) and upheld additions made by AO. 11. Coming to loans taken from M/s Chandimata Management Pvt. Ltd. and M/s Max Worth Project Pvt. Ltd.. The AO has recorded categorical finding in assessment order that Shri Umesh Singh, director of the above company, in his statement recorded u/s 131 had admitted that he was dummy director only working on the instruction of Shri Pravin Aggarwal. He further admitted that these companies are just paper/shell companies used for Jama-Kharchy/shell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has discharged initial onus cast upon u/s 68 of the Act by proving identity of the creditors by giving their complete address, PAN and copies of assessment orders where ever readly available. The assessee also proved the capacity of the creditor by showing the amounts received through banking channels. When the identity and creditworthiness have been proved, merely for the reason that non-appearance of parties before the AO, no additions could be made u/s 68 of the Act. Therefore, he came to conclusion that the AO was not justified in making additions towards loans taken from Vikash Sharma, Umarao Prasad and other parties. The Ld. CIT(A) further observed that wherever the assessee could not furnish even confirmation letters from the parties, especially in the case of Sonal S. Agarwal, Suresh Reengusia and Naresh Jain, he confirmed additions made by AO to the extent of ₹ 3,43,000/-. The Ld. DR failed to controvert the findings recorded by the Ld. CIT(A) in light of evidences filed by the assessee in respect of above parties. On the other hand, Ld. AR for the assessee has also failed to file further evidence in respect of three parties, where the Ld. CIT(A) has conf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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