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TMI Blog2019 (6) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... utir Pvt Ltd Rs. 1.50 crores iii) New KMS Finance Ltd Rs. 1.50 crores 6. The assessee was asked to establish the identity, genuineness and credit worthiness of the aforesaid parties. 7. In response, the assessee submitted confirmations of the parties, copies of income tax returns, relevant pages of the bank statements, balance sheets and profit and loss account of the aforementioned three companies. The relevant details, as extracted by the Assessing Officer, at page 2 of his order is as under: Name PAN Address Income declared in ITR/ Tax payable Share Capital Share Premium Accumulated Profit as on 31.3.2013 Revenue from operations Glorious Holding Pvt Ltd AACCG4244K 3, Saklat Place, Kolkata - 700072 2,10,687/65,103 1. ,28,79,000 2. 72,94,21,000 3. 2,27,573 46,43,721 Kallol Kutir Pvt Ltd AABCK3979L 40, Weston Street, Bowbazar, Kolkata - 700012 8378/2589 1. 6,30,000 2. 2,30,30,000 3. 197 2,23,562 New KMS Finance Ltd AABCN8389D Ram Garh Road, Vijaypur, Jammu - 180012. Jammu & Kashmir 29110/9000 1. 1,47,26,800 2. 72,00,02,000 3. (2,27,114) 3,90,137 8. The Assessing Officer was of the opinion that these t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt entries. All these companies have given unsecured loan from the funds taken other companies." 11. The Assessing Officer proceeded by making further enquiry and the notices u/s 133(6) of the Act were issued to all the three companies on 29.02.2016. The Assessing Officer observed that all such notices have been received back as unserved. 12. Since the notices returned back unserved, enquiry was conducted through the commission u/s 131(1)((d) of the Act dated 04.03.2016 issued to the DDIT (Inv), Unit 2(4), Kolkata to examine the identity, genuineness and creditworthiness of the transactions entered into by the assessee company with M/s Glorious Holding Pvt Ltd. 13. The DDIT (Inv), submitted a detailed report in which it was stated that M/s Glorious Holding Pvt Ltd is managed and controlled by a known entry operator of Kolkata Shri Binod Agarwala. It was also stated that this company runs only on paper and does not have any substantial business operations. Alongwith his report, the DDIT (Inv), annexed a copy of the statement of Shri Binod Agarwala recorded during the course of survey operations on 07.02.2015. 14. The Assessing Officer confronted the report of the DDIT (Inv), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to substantiate that initial onus has been discharged. 18. After considering the facts and detailed submissions, the ld. CIT(A) observed that the Assessing Officer during the proceedings had duly verified and analysed the documents submitted by the assessee. The first appellate authority concurred with the findings of the Assessing Officer that the lenders have miniscule amount of revenue and negligible income in their Income tax returns. The first appellate authority further observed that even the report of the DDIT, INV alongwith the statement of Shri Binod Agarwala clearly establishes that the lenders have provided accommodation entries, and, therefore, the assessee has failed to discharge the initial onus. 19. The CIT(A) further observed that he himself had examined the documents produced before the Assessing Officer and came to the conclusion that instead of supporting the case of the appellant, these documents only reinforce the findings of the Assessing Officer which are based on his detailed and wide analysis of the facts and circumstances of the case and is in congruence with the detailed set of observations and factors pointed out by the DDIT INV Wing. The CIT(A) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant 24. In our considered opinion, the income may be a criteria for deciding the issue. But the income is not to be all and end all of everything. For example, a person having a salary of Rs. 12 lakhs per annum purchases a flat for Rs. 50 lakhs. Merely on the basis of his level of income, the addition of Rs. 50 lakhs cannot be made as unexplained investment without understanding the facts. It may be possible that the person might have taken a housing loan of Rs. 45 lakhs and that source would justify his investment. Similarly, income of the lender company cannot be the sole basis for making addition without going into the facts and without understanding the financial statements of the lender companies. Glorious Holding Pvt Ltd 25. The balance sheet of this company, exhibited at page 122 of the paper book reveals that it has non-current investments in the form of trade investments as unquoted equity shares amounting to Rs. 63,38,30,000/- as on 31.03.2012 [immediately preceding F.Y.] and the same stands at Rs. 52,19,30,000/- as on 31.03.2013 [the year under consideration], which means that this company had liquidity available amounting to Rs. 11,19,00,000/-. 26. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,00,000/- Rs. 50,00,000/- Rs. 50,00,000/- 20.12.2014 04.02.2015 21.01.2016 16.02.2016 18.02.2016 294725 061025 853697(RTGS) 853709(RTGS) 853723(RTGS) 2,01,205 5,32,603 5.44.438 5.44.438 5,32,602 5,38,520 5.44.438 5,42,957 4,63,562 4,48,767 362600 112780 001402 061057 060966 018334 294775(RT GS) 294749(RT GS) 689544(RT M/s New 25.01.2013 Rs. 50,00,000/- 20.12.2014 294726 3,21,534 GS)362586 KMS Finance 30.01.2013 Rs. 50,00,000/- 04.02.2015 061033 29,589 121290 Private 06.02.2013 Rs. 25,00,000/- 16.02.2016 853708(RTGS) 5,32,603 112778 Limited 06.02.2013 Rs. 25,00,000/- 18.02.2016 853721(RTGS) 5.44.438 5.44.438 5,32,602 5,38,520 5.44.438 5,42,957 4,63,562 4,48 ,767 001399 061063 060967 018336 294776 294731 294856 689559 30. Considering the facts as explained hereinabove, we do not find any merit in discarding the financials of the lender company. iii) Report of the DDIT, INV, alongwith the statement of Shri Binod Agarwala conclusively proves that the lender companies is involved in providing accommodation entry. 31. At para 4.3.1 at page 4 of the assessment order, the Assessing Officer refers to the commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 2013-14 alongwith computation of income. iii) Source of unsecured loan given to Well Intertrade Pvt Ltd during A.Y 2013-14. iv) Copy of bank account from which unsecured loan transaction took place between the lender company and the appellant company 35. As mentioned elsewhere, though the summons were serviced, but were not complied. The Assessing Officer should have forced the attendance of Principal officer/Director, which was well within his powers but not exercised. The documents required by the Assessing Officer were very much before him during the assessment proceedings itself. 36. We have already discussed the source of funds available with lender companies from which the loan of Rs. 1.50 crores each would have been lended by the lender companies, as explained elsewhere. Bank statements are available at pages 120 of the paper book in respect of Glorious Holding Pvt Ltd, at page 134 is the bank statement of Kalol Kutir Pvt Ltd and page 156 is the bank statement of New KMS Finance Pvt. Ltd. These bank statement clearly show that the transactions have been done through banking channel and no cash was found to be deposited prior to issue of cheques. Therefore, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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