TMI Blog2020 (7) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... above unsecured loan. - ITA No. 8476/Del/2019 - - - Dated:- 9-7-2020 - Shri Sudhanshu Srivastava, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Rohit Tiwari, Adv.; For the Department : Shri Saras Kumar, Sr. D. R.; ORDER PER PRASHANT MAHARISHI, AM: 01 This appeal is filed for Supreme BuildCap Private Limited [Appellant or Assessee] against the order of The Commissioner of Income Tax (Appeals)-24, New Delhi [The Ld CIT (A)], dated 13th August 2019. The ld. CIT (Appeals) passed order in appeal filed against the order of The Asstt. Commissioner of Income Tax, Central Circle-05, New Delhi,[ The Ld AO ] passed on 17.12.2018 under Section 143(3) of the Income Tax Act, 1961 (the Act) for assessment year 2016-17 wherein the returned income of the assessee amounting to ₹ 15,29,040/- was assessed at ₹ 5,44,34,780/-. 02 Assessee has preferred the 2nd ground of appeal, which is only substantive ground, against the addition made by the ld. Assessing Officer and confirmed by the ld. CIT (Appeals) of ₹ 5 crores under Section 68 of the Act being loan received by the assessee during the year from M/s . Mahara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Visions Pvt. Ltd. has received the loan from MKT Investments Private Limited, which has been extended to the Assessee Company. It is pertinent to note here that MKT Investments Private Limited is a company engaged in the business of making investments in securities etc and of granting loans / advances to parties. From the bank statements, your good-self would note that nowhere cash has been credited in the books. The Assessee has received the loan through proper banking channels only. The Assessee has passed necessary entry in the books of accounts. By producing the documentation, the assessee has evidenced and established the identity of the lender. The assessee has no-where hidden the identity of the lender. The assessee has also established the genuineness of the transaction by producing ample documentation. The assessee has clearly explained the nature and source of credit though producing the bank statements of parties. 4.3 The reply of the assessee has been carefully examined but found not tenable in view of the discussion in the succeeding paragraphs. From evidence on record, it is seen that the assessee company has received unsecured loan from M/s Maharaasa Vision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions related to issue under examination took place:- Date Narration Debit Credit 07.09.2015 Incoming funds from Supreme Build Cap Private Limited 50000000 07.09.2015 Outgoing funds to Maharaasa Visions Pvt. Ltd. 50000000 From the above two tables, it is evident that the assessee company has routed its own money in the garb of unsecured loan. In view of the foregoing, it is held that the lender company has no creditworthiness and explanation offered by the assessee regarding the transaction is not satisfactory and I consider it an insufficient and unsatisfactory explanation u/s 68. Accordingly, it is held that unsecured loan availed from M/s Maharaasa Visions Pvt Ltd is not genuine and by invoking' provisions of section 68 of the act, the same is added to income of the assessee. Addition : ₹ 50000000/- 05 Against this order, the assessee preferred an appeal before the ld. CIT (Appeals). The ld. CIT (Appeals) vide para Nos. 5.4.1 to 5.4.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 5,00,00.000/- from the appellant which was transferred to M/s Maharaasa Visions Pvt. Ltd. on the same date. It was evident that the appellant company has routed its own money in the garb of unsecured loan. The AO held that the lender company has no creditworthiness and explanation offered by the appellant regarding the unsecured loan transaction is not satisfactory. The AO further concluded that the unsecured loan availed from M/s Maharaasa Visions Pvt. Ltd. is not genuine and thereafter added the same as unexplained cash credit u/s 68 of the Act. 5.4.3 During the appellate proceedings the appellant in his written submission contended that it has explained the source of credit by producing the bank statements, income tax returns, financial statements and confirmations of the parties before the AO. The lender company received the loan from M/s MKT Investment Pvt. Ltd. which was extended to the appellant. It has been submitted that from the bank statements it has been established that nowhere cash has been credited in the books of accounts. The appellant received the loan through proper banking channel and passed necessary entry in the books of accounts. By producing do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible fixed assets and, moreover, it had declared a meagre income of few thousand rupees and, thus, it was not in a position to give such a huge loan to assesses, impugned addition was to be confirmed. iv. In the case of PRATHAM TELECOM INDIA PVT LTD VS DCIT 2018-T1OL- 1983-HC-MUM-IT the Hon ble Bombay High Court held that mere production of PAN numbers bank statements is not sufficient enough to discharge the burden on taxpayer to escape the realms of Section 68. v. In the case of Pavankmnarm Sanghvi Vs ITO [2018] 90 taxmann.com 386 (Gujarat) the Hon ble Gujarat High Court Held that where assessee received loan from two companies, in view of fact that on date assessee was given loan there were credit entries of almost similar amounts and balance after these transactions was a small amount and moreover assessee failed to produce these lenders for verification, impugned amount was rightly brought to tax under section 68. vi. In the case of Sitaram Ramchanddas Patel Vs. ITO (2018) 95 taxmann.com 290 (Gujarat) the Hon ble Gujarat High Court held that where assessee failed to prove capacity of concerned persons who alleged to have given unsecured loan and/or gift, impugned a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submitted the bank account of M/s MKT Investments Pvt. Ltd. where-from M/s. Maharaasa Visions Pvt. Ltd. received the sum. He submitted that the bank account of M/s MKT Investments Pvt. Ltd., which clearly demonstrated flow of transaction from the bank account of M/s MKT Investments Pvt. Ltd. f. Filed two different paper books wherein several documents with respect to the lender, the assessee as well as MKT Investments private limited including their bank statements, annual accounts, the list of directors, and the shareholding of the respective companies. g. These documents were shown to demonstrate that the lender is a group company, the source of money is also the group company, and the amount is through banking channel where the word transaction is traced out, source of funds available with the lender, the funds received by the assessee company. h. There is no allegation that any third party is involved or there is any malafide intention of the assessee. He submitted that there is no allegation at all that it is an accommodation entry. He submits that funds flow is not at all doubted. i. He submitted that Lender Company was for specific purposes of filing a real e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction. He submitted that the lender does not have any income or income earning apparatus to give an unsecured loan to the assessee company. In fact, the assessee has routed its own money through the group companies. He further referred to the order of the learned and CIT A who confirmed the above addition. In view of this, he supported the orders of the lower authorities. 09 We have carefully considered the rival contention and perused the orders of the lower authorities. In this case, the assessee has received an unsecured loan from one of the group concern M/s Maharassa Visions Pvt Ltd of ₹ 5 crores on 18 September 2015. During the course of assessment proceedings, assessee was asked to substantiate the identity, creditworthiness of the lender as well as genuineness of the transaction. In support of this contention assessee submitted, that it has received the loan from a group concern, which was repaid in subsequent year. To substantiate its claim the assessee submitted the copy of the income tax return of the lender, bank statement, confirmation as well as the financial statements in the form of balance sheets of the lender. The assessee also submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransferred the money to MKT investment private limited, which in turn granted the loan to the lender company i.e. Maharasaa Visions Pvt Ltd. as the bidding did not happen; therefore, the money was available with the group concern, which was returned by the lender to the appellant, as there was no use of the group money in the books of lender. Creditworthiness not necessarily mean that company should have given the money out of profits only. It is merle ascertainment of the fact that when the lender deposits the money it has valid and genuine source available with it or not. In this case, the source of money lent is loan from another group company; group company received money from the assessee itself, the transactions is duly reflected in the balance sheets of respective companies. Even the assessing officer himself has stated that source of money lent to the assessee is the assessee itself. If the view of the ld AO is to be believed then, NBFC companies who have limited earning but lent the money out of the money borrowed will never pass the test of section 68 of the act. Thus, merely filing Nil return by lender, if the sources are clearly established with overwhelming evidences o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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