TMI Blog2021 (1) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... see s making a specific request to him to issue summons u/s. 131 or letters u/s. 133(6) to the lender companies. Recently, the Coordinate Bench of Mumbai in the case of Smt. Kalpana Mukesh Ruia vs. DCIT [ 2021 (1) TMI 93 - ITAT MUMBAI] has deleted the addition made u/s. 68. Source of alleged amount was from liquidation of investment made in the earlier years. The dispute about the source of fund utilized for making the investment in earlier years before the tax authorities in itself cannot be the sole basis to make the addition in the hands of the assessee as unexplained cash credit for the amount received from liquidating the investments made in the shares of unlisted companies which were invested in the earlier years and were duly appearing in the audited balance sheet. The alleged sum is received from sale of shares appearing as opening balance in the investment account. There is no dispute about the identity, genuineness and creditworthiness of these companies, the equity shares of which were sold by the assessee during the year and the funds were thereafter utilized to make the fresh investments. It is a simple case of switch over of investments from one company to anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned appeals filed at the instance of revenue pertaining to Assessment Year 2011-12, 2015-16 and 2016-17 are directed against the order of Commissioner of Income Tax (Appeals)- 3 (in short Ld.CIT ], Bhopal dated 02.05.2019, 02.05.2019 and 04.04.2019 which are arising out of the order u/s 147 r.w.s. 143(3), u/s 143(3) r.w.s. 144C and u/s 143(3) of the Income Tax Act 1961(In short the Act ) dated 28.12.2018, 27.12.2018 and 26.12.2018 respectively framed by ACIT(Central), Ujjain. 2. Revenue has raised following grounds of appeal :- (i) M/s Ariba Foods Pvt. Ltd ITA No.736/Ind/2019 Assessment Year 2016-17 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 12,44,12,690/- made u/s 68 of the LT. Act, on the ground of cross examination, without appreciating the fact that the persons whose statements are relied upon in the assessment order are the very persons who own, control, manage, operate run the assessee-group including the assessee-company; and therefore, in the name of natural justice, the assessee-group cannot claim to cross-examine itself. 2.On the facts and in the circumstances of the case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of search and seizure and survey actions in the assessee-group, which could warrant such an addition. He has ignored that incriminating material information were indeed found during such actions, and the same are elaborately discussed in the body of the assessment order while making the addition. 6. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 12,44,12,6901- made u/s 68 of the LT. Act, while not appreciating that merely making transactions through banking channels, payment of interest on alleged loans, and repayment of the alleged loans cannot make the transactions as genuine, when the activities of the entire group had been carried out in such a fashion to route and rotate the unaccounted cash. 7.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 12,44,12,690/- made u/s 68 of the LT. Act, in dismissing the reliance placed by the AO on various case-laws while ignoring the facts and circumstances of the case in its entirety. (ii) M/s Vyanktesh Plastics and Packaging Pvt. Ltd ITA No.737/Ind/2019 Assessment Year 2015-16 1.On the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s erred in deleting the addition of ₹ 3,44,49,554/- made u/s 68 of the l.T. Act, by making factually incorrect conclusion that the same AO has made assessment u/s 1471143(3) in the case of M/s Famous Vanijya Pvt. Ltd. (one of the lender companies) and has drawn no negative inference. Actually, from para 2.0 to para 2.7 of the assessment order u/s 1471143(3) dated 28112/2018 for A.Y. 2011-12 in the case of Mls Famous Vanijya Pvt. Ltd., the said AO has made the similar observations/conclusion (i.e. negative inference) as made in the assessment order in the case of the assessee. 7.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of ₹ 3,44,49,554/- made u/s 68 of the I.T. Act, while stating that nothing incriminating was found in the course of search and seizure and survey actions in the assessee-group, which could warrant such an addition. He has ignored that incriminating material/information were indeed found during such actions, and the same are elaborately discussed in the body of the assessment order while making the addition : 8.On the facts and in the circumstances of the case, the Ld. CJT(A) has erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive manner and on the sweet will of the assessee. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of ₹ 8,80,000/- (out of total addition of ₹ 4,16,15,000/-) made u/s 68 of the I.T. Act while accepting the assessee s ground of cross examination, without appreciating the fact that the persons whose statements are relied upon in the assessment order are the very perons who own, control,manage, operate run the assesseegroup including the assessee-company; and therefore, in the name of natural justice, the assessee-group cannot claim to cross-examine itself. 6 On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the aforesaid addition of ₹ 8,80,000/-, while insisting that since the lender party was making some paper formalities, it is not a dummy concern. The Ld. CIT(A) has failed to appreciate that all the dummy/shell/bogus/paper/briefcase entities used to be perfect in papers; otherwise, how will they achieve their desired purposes. Therefore, genuineness of an entity cannot be judged by the heap of papers it has created, but only through its activities. 7 On the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sues raised in various grounds and facts involved are mostly common, we have heard these appeals together. Since there is no objection by both the parties, all these appeals are being disposed off by this common order for the sake of convenience and brevity. As submitted by Ld. Counsel for the assessee and also by Ld. Departmental Representative M/s Ariba Foods Pvt. Ltd is the lead case. 4. First we take up Revenue s Appeal No.ITA/736/Ind/2019 for Assessment Year 2016-17 in the case of M/s Ariba Foods Pvt. Ltd. 5. Brief facts of the case as called out from the records are that the assessee is a company and stated to be a food processing concern, engaged in manufacturing of various food stuffs. The assessee is one of the various entities of Shriji Polymers (India) Ltd. Group in which search and seizure operations u/s. 132 were carried out by the DDIT(Inv.)-II, Indore on 27/07/2017. However, in the case of the assessee, only survey proceedings u/s. 133A were initiated on the same day. The assessee filed its original return of income on 17/11/2016 declaring total income at Rs. Nil and claiming current year loss at ₹ 1,19,76,320/-. Subsequently, the assessee furnished a rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before CIT(A) and filed detailed submissions along with necessary evidences to prove the identity, genuineness and creditworthiness of the three cash creditors M/s DFL, M/s FVPL and M/s NVPL. Ld. CIT(A) after examining the facts narrated by the Ld. Counsel for the assessee as well as in view of the fact that in preceding years the alleged cash creditors have been assessed U/s 143(3)/147 of the Act and the Ld. A.O has not taken any adverse view. Further Ld. CIT(A) deleted the impugned addition of ₹ 12,44,12,690/- based on the following four reasons:- (a) The AO erred in making additions merely on the basis of statements of third parties recorded by the Investigation Wing and without providing opportunity of their cross examination before making the impugned addition; (b) The AO erred in converting case selected for limited scrutiny to complete scrutiny; (c) The AO erred in making additions on suspicion, surmise and conjecture basis and without having any incriminating material on record found from the residential premises of the appellant relating to the year in which additions have been made; (d) The AO erred in 'considering the documentary evidences filed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were directors and merely stated that they were acting on the instruction of Shri Anand Bangur, the key person of Shriji Group. The Ld. CIT-DR also pointed out that at page no. 18 of the assessment order, the AO has given the trail of the loans which establish that cash were being deposited in certain bank accounts and subsequently, those were layered in the lender companies and then to the assessee company. The Ld. CIT-DR also made reference of various tally screen shots which were reproduced by the AO in the body of the assessment order and contended that the screenshots of various vouchers and ledger accounts clearly proves that all the lender companies were paper companies indulged in providing the accommodation entries. As regard non providing of opportunity of cross-examination to the assessee of the persons whose statements were relied upon by the AO, the Ld. CIT vehemently argued that all the persons whose statements were relied upon by the AO were close associates of the assessee company and therefore, the assessee company was supposed to be aware of the statements given by such persons and therefore, there was no necessity for giving any specific opportunity of cross exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) First sub-para of Para (6.1) on page no. 12 of the AO s Order for NVPL. ii) Para (6.2) on page no. 34 36 of the AO s Order for FVPL. iii) Last sub-para of Para (6.3) on page no. 42 of the AO s Order for DFL. 3 During the course of the search/ survey, in the assessee company as well as lender companies, not a single incriminating material or document was found giving any iota of assessee s obtaining non-genuine loans. - - 4 In respect of all the lender companies, simultaneous assessment proceedings got completed for A.Y. 2011-12 u/s. 147/143(3) of the Act. NVPL Order at 488 to 490; FVPL Order at 309 to 396; and DFL Order at 233 to 243 i) Assessment Order of FVPL for A.Y. 2011-12 is also a subject matter of separate Appeal before this Hon ble Bench. ii) Framing of the Assessments in the hands of lender companies establish the identity of the lender companies. iii) Interest income shown by the lender companies from the assessee company and as also, corresponding credit for TDS claim has been granted. Thus, no adverse cogniza ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for making the impugned additions - The AO s findings and the assessee s rebuttal on each of the findings of the AO have been reproduced by the ld. CIT(A) at para (4.3.1) on page no. 70 to 73 of his Order. 11 During the course of the assessment proceedings, the assessee had furnished all the necessary documentary evidences for establishing (i) identity of the loan creditors; (ii) genuineness of the loan transactions; (iii) creditworthiness of the loan creditors; (iv) sources of funds in the hands of the loan creditors; (v) relevant documentary evidences regarding the identity creditworthiness of the sub-creditors Page No. 170 to 283 for DFL; 284 to 461 for FVPL and 462 to 676 for NVPL None of the documentary evidences have been rebutted or contravened by the ld. AO. 12 The share capital transactions carried out by all the lender companies with the assessee company during the relevant previous year have been accepted by the same AO while framing the impugned assessment. PB 103 copy of the audited Balance Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Certificate for Commencement of Business 225 - - - - - 4 Certificate for Change of Name 226 Name got changed to Dwarkesh Finance Ltd. - - - - 5 Letter dated 23-02-2005 issued by the Vadodara Stock Exchange Limited 227 The lender company is a company in which the public is substantially interested and earlier it was listed on Stock Exchange. Such fact speaks about the genuineness of the company. - - - - 6 Acknowledgement of Income-Tax Return for A.Y. 2016-17 228 Substantial Taxable Income of ₹ 4.18 lakhs shown by DFL 301 Taxable Income of ₹ 4.07 lakhs shown by FVPL 477 Taxable Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings u/s. 143(3)/147 by the same AO were carried out for A.Y. 2011-12 and the AO nowhere alleged that the FVPL is merely a paper company. 483 to 584 i) In the Order of Assessment of NVPL [PB Page No. 483], u/s. 143(3), for A.Y. 2006-07, the then AO at last para at internal page no. 1 of the Order, has stated that the NVPL had raised fresh share capital and share premium amounting to ₹ 48.02 lakhs and ₹ 1152.48 lakhs respectively which automatically proves the creditworthiness of NVPL. ii) In the Order of Assessment of NVPL for A.Y. 2015-16 [PB Page No. 485], the returned income shown by NVPL has been accepted at ₹ 10,78,290/- and thus, the genuineness of NVPL has not been doubted. 10 Order passed by the ld. CIT(A) on an earlier occasion in case of a group company wherein similar issue of unsecured loan from lender company was treated as unexplained cash credit u/s. 68 - - - - 585 to 606 In the case of one of the group entities namely M/s. Arpit Plastics Pvt. Ltd. for A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olyfabrics Packwell Pvt. Ltd. 412 to 415 All the payments have been made by the FVPL by obtaining refunds of loans from various entities given on earlier occasions. 617 to 622 All the payments have been made by the NVPL either by obtaining refunds of loans from various entities given on earlier occasions or by obtaining overdraft facility against FDR from bank or from issuing fresh share capital. III. FOR CREDITWORTHINESS: 16 Acknowledgement of Income- Tax Return for A.Y. 2016-17 228 - 301 - 477 - 17 Audited Financial Statements of lender company for F.Y. 2015-16 [A.Y. 2016-17] 260 261 i) DFL is having huge owned funds of ₹ 1438.77 lakhs which proves its creditworthiness ii) DFL has shown profit before tax at ₹ 5.97 lakhs 425 As per the audited balance sheet, before making loan to the assessee, the FVPL was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch share capital receipt from DFL has not been doubted by the AO framing the subject assessment order. PB 103 copy of the audited Balance Sheet and PB 143 assessee s sub mission before AO During the relevant previous year, the assessee company had received a sum of ₹ 1,58,00,000/ - from FVPL by way of share capital and genuineness of such share capital receipt from FVPL has not been doubted by the AO framing the subject assessment order. PB 103 copy of the audited Balance Sheet and PB 143 assessee s sub mission before AO During the relevant previous year, the assessee company had received a sum of ₹ 2,45,00,000/- from NVPL by way of share capital and genuineness of such share capital receipt from NVPL has not been doubted by the AO framing the subject assessment order. IV. FOR SOURCE OF THE SOURCE: 21 Statement showing details of Immediate Source of unsecured loan given by the lender company. 273 DFL had provided loan to the assessee company by taking the refund of loans given earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sits were made. 23 Copies of Ledger Accounts of lender company in the books of the sub-creditors 277 281 The sub-creditors are confirming the refund of loans taken by them from DFL 443, 448 The sub-creditors are confirming the refund of loans taken by them from FVPL 646, 650, 656, 661, 666, 670 - 24 Copies of Confirmation Letters by the sub-creditors confirming their transactions with the lender company 278 282 - 444, 449, 451 A, 452 A - 647, 651, 657, 662, 667, 671, 674 - 25 Copies of Acknowledgments of Income-Tax Returns of sub-creditors for A.Y. 2016-17 279 283 The subcreditor namely M/s. Vyanktesh Plastics Packaging Pvt. Ltd. has shown substantial taxable income of ₹ 22.60 lakhs in its return of income for A.Y. 2016-17. 445, 450, 451 B, 452 B The sub-credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhi Siddhi Corporation 2017 (2) TMI 1129 (ITAT Ahd.) xxiv) ITO vs. M/s. RE N Raga Media Pvt. Ltd. 2019 (6) TMI 651 (ITAT Mum.) xxv) Mahipal Ishwarlal Sottany vs. ITO 2019 (10) TMI 1161 (ITAT Ahd.) xxvi) ITO vs. M/s. Celebrity Lifespace Pvt. Ltd. 2019 (12) TMI 1157 (ITAT Mum.) xxvii) DCIT vs. M/s. Chetan R. Shah (HUF) 2020 (1) TMI 1239 (ITAT Mum.) xxviii) ITO vs. M/s. MJD Financial Services Pvt. Ltd. 2020 (10) TMI 651 (ITAT Mum.) xxix) DCIT vs. M/s. Manba Finance Ltd. 2020 (1) TMI 645 (ITAT Mum.) xxx) ACIT vs. Mittal Appliances Ltd. (2016) 27 ITJ 120 (Trib.-Indore) xxxi) ACIT vs. Shree Sai Vihar (2016) 28 ITJ 158 (Trib.-Raipur) xxxii) ITO vs. Vaibhav Cotton Pvt. Ltd. (2012) 19 ITJ 113 (Trib.-Indore) xxxiii) Shri Sumati Kumar Kasliwal, Shri Parth Kasliwal, Smt. Sharda Kasliwal, M/s. Nishant Finance Pvt. Ltd., Shri Manoj Kasliwal and M/s. Pumarth Infrastructure Pvt. Ltd. vs. ACIT (Central)-1, Indore 2019 (5) TMI 338 (ITAT-Indore) 14. The crux of the arguments of the Ld. Counsel for the assessee are that; (i) the AO framing the assessment had not conducted any independent inquiry and he had merely relied upon certain so called inqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings given by the AO is relevant for making the impugned additions; (xi) During the course of the assessment proceedings, the assessee had furnished all the necessary documentary evidences for establishing (a) identity of the loan creditors, (b) genuineness of the loan transactions, (c) creditworthiness of the loan creditors, (d) sources of funds in the hands of the loan creditors, (e) relevant documentary evidences regarding the identity creditworthiness of the sub-creditors; (xxii) The share capital transactions carried out by all the lender companies with the assessee company during the relevant previous year have been accepted by the same AO while framing the impugned assessment; (xxiii) In earlier years too, the assessee company had accepted the loans from lender companies and the same were duly accepted by the Revenue. Besides making the contentions as above, the Ld. Counsel for the assessee also relied upon the plethora of judicial pronouncements as noted down in the preceding para. 15. We have heard rival contentions and perused the records produced before us and carefully gone through the judgments referred to by both the parties. In the instant case of M/s. Ariba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source. 18. Through Ground No. 1, the Revenue has challenged the finding of the Ld. CIT(A) in deleting the addition of ₹ 12,44,12,690/- made u/s. 68 of the Act on the ground of cross examination, without appreciating the fact that the persons whose statements were relied upon in the assessment order are the persons who own, control, manage, operate and run the assessee group, including the assessee company and therefore, in the name of natural justice, the assessee group could not have claimed to cross examine itself. 19. We observe that the Ld. CIT(A) has dealt with the issue of cross examination at para 4.3.2 (a) of his order. We find that the Ld. CIT(A) has given a categorical finding that despite having on record the correct new address of one of the lender companies namely, M/s. Navyug Vyapar Pvt. Ltd. being at Shop No. 126, Dawa Bazar, Madhav Club Road, Ujjain, the AO had sent commission for the old address to DDIT(Inv.) Kolkata. The Ld. CIT(A) further observed that the AO has made reference of the salaries drawn by the directors of the lender companies for adjudging the capacity of lending by the lender companies, but, the AO failed to appreciate that the loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inferred that the loan transactions carried out by the appellant company with the subject three lender companies were not genuine and that the lender companies were merely paper companies. In the entire body of the assessment order, there is no mention of any independent inquiry conducted by the AO himself and the Ld. AO has made reference of some statements of various persons recorded either during the course of the search/survey in the Shriji Polymer Group or even prior to that. The Ld. AO has made reference of some statement of Amit Kumar Kedia recorded by the DDIT (Inv.) Kolkata, u/s. 131, on 26.08.2014. As the previous year relevant to the instant case is F.Y. 2015-16 and the statement of Shri Amit Kumar Kedia has no direct nexus with the loan transactions carried out by the assessee company during the year. Even from the statements of various persons recorded during the course of search/survey in the various business premises of Shriji Polymers Group, we could not find any adversity in the statements of Directors of the lender companies to support the assumption of the Ld. AO that the loan transactions carried out by the assessee company with them were not genuine. Rathe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry then he has to provide copy of such statement to the assessee. Where the AO does not provide the copy of the statement of the witness then it is violation of principle of natural justice, and entire addition solely based on such statement is likely to be deleted. 22. Respectfully relying upon the recent decision of the Coordinate Bench of Ahmedabad Tribunal in the case of ACIT vs. E I Dorado Biotech Pvt. Ltd (supra) and as also various judicial pronouncements, referred to hereinabove, we find no infirmity in the findings given by the Ld. CIT(A) on the issue of cross examination. However, from the appellate order, we find that the Ld. CIT(A) has not deleted the addition merely on the legal issue of cross examination, but, the Ld.CIT(A) has also dealt with the entire addition on merits also which will be dealt by us in the subsequent paras while examining the facts of the case and the documentary evidences placed before us and also before the lower authorities in order to prove the identity and creditworthiness of the cash creditors and genuineness of the transaction. Thus we find no infirmity in the finding of Ld. CIT(A) deleting the addition for unexplained cash credit of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detail the assessee s contentions made before him on the aforesaid four counts. At page nos. 81 to 91, the ld. CIT(A) has also discussed and described each and every documentary evidence filed by the assessee in support of establishing the identity of the loan creditor companies, creditworthiness of the lender companies and genuineness of the loan transactions. At page no. 91 92, the ld. CIT(A) has relied upon the decision of the ITAT Agra Bench in the case of Umesh Electricals vs. ACIT (supra) and the decision of the ITAT Indore Bench in the case of Aseem Singh vs. ACIT (supra). Thereafter, on the same page, the ld. CIT(A) has stated that the assessee has furnished all the required details in order to provide the identity of lenders, genuineness of transactions and creditworthiness of creditors. The ld. CIT(A) has also relied upon the decision of the Hon ble MP High Court in the case of Metachem Industries (supra) to the effect that the law does not cast any obligation on the assessee to explain the source of the source for the amount borrowed. At para (4.3.3) on page no. 93 to 95, the ld. CIT(A) has referred to the case laws relied upon by the AO and has stated that none of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and creditworthiness of the lenders and genuineness of the transaction. Relevant extract of Ld. CIT(A) finding examining the 3 cash creditors namely M/s DFL, M/s FVPL and M/s NVPL is mentioned below:- (d) The AO erred in considering the documentary evidences filed in support of creditworthiness of the lender and genuineness of the transaction including explaining source of source:- Appellant before the AO as well as before me has filed copies of PAN, bank account statement of lenders, audited balance sheet, profit and loss statement, certificate of incorporation, copy of MOA, details collected from website of Ministry of Corporate Affairs, and confirmations of lenders. The brief details of these lender companies are as under :- M/s Dwarkesh Finances Ltd PAN-AABCD7162N in short DFL :- Regarding the identity of the company the app e1l ant submitted that originally, the DFL was incorporated in the name of Richmore Finance and Leasing Limited , as a public limited company, duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, Gujarat, on 09-06-1992 vide registration No.04-17790 of 1992- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... got duly assessed but has also availed credit of TDS on such income. The appellant has also submitted that it has borrowed sum aggregating to ₹ 83,00,000/- from DFL in earlier years and the genuineness of such borrowing have never been doubted in any of the assessment proceedings carried out in earlier years. In support of his claim appellant has placed reliance on the decision of Hon'ble ITAT, Lucknow Bench, in the case of Dwarikadhish Sugar Industries Vs. ITO (2012) 149 TTJ 0401 (Luk), wherein it has been held that part acceptance of loan indicates identity and genuineness of the creditors and, therefore, no adverse inference in respect of such creditor can be drawn. In order to prove credit worthiness of the creditor, the appellant has filed copies of audited financial statements of DFL along with Auditors' Report, in respect of the financial year ended 315t March 2016. On perusal of the sane it was found that DFL has duly shown an amount of ₹ 83,00,000/- and ₹ 15,26,111/- in the name of appellant company as on 31.03.2015 and 31.03.2016 respectively. Further, DFL as on 31.03.2015 has net owned fund of ₹ 14.34 crores by way of share capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of FVPL. Appellant has also filed copy of ledger account of appellant in the books of FVPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by director of FVPL has also been filed by the appellant. The appellant further has brought some other facts to light and stated that the AO has made addition of ₹ 2,15,03,302/- on account of unsecured loan, however, the appellant has availed loan of ₹ 2,08,00,000/- only and balance amount represents interest i.e. of ₹ 7,03,302/-. The appellant has duly credited a sum of ₹ 7,81,447/- in the unsecured loan account of FVPL on account of interest and in respect of such interest TDS of ₹ 78,145/- was also deducted. Apart from the above, the company FVPL had duly offered the receipt of interest income of ₹ 7,81,447/- made by them from the appellant company, in respect of loan transactions, in their return of income for the year under consideration and in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act has been framed in the case of FVPL for A.Y. 2008-09 by the ITO-5(4), Kolkata on 26-03-2014 by making an addition of ₹ 10,12,00,000/- in the hands of the FVPL, on account of acceptance of fresh share capital and share premium and thereby, framing the assessment at ₹ 1 0, 12,22,570/-. Thus, FVPL has surplus funds to advance the same to appellant company in relevant assessment year. M/s Navyug Vayapar Pvt Ltd PAN-AACCNl168M in short NVPL :- Regarding the identity of NVPL the appellant before AO as well as before me submitted that NVPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal, on 09-11-2004 vide registration No. U51909 WB2004PTC100365. Presently, the company is having Unique Corporate Identification Number i.e. CIN as U51909MP2004PTC031641. The NVPL was incorporated with the objects of carrying out the business of trading in various commodities, financing and investment as per the objects contained in its Memorandum of Association, under which it has got incorporated. Initially, the registered office of the NVPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... VPL along with Auditors' Report, for AY 2015-16 2016-17. On perusal of audited balance sheet for AY 2015- 16, it was observed that the company NVPL has owned funds of ₹ 15.77 crores by way of share capital and reserves surplus and for AY 2016-17 has net owned funds of ₹ 25.56 crores by way of share capital and reserves surplus. NVPL is a regular income tax payer which can also be seen from copies of return of income filed by the appellant. The NVPL had shown taxable income, under s. 115JB of the Act at ₹ 92,02,584/- and had paid tax amounting to ₹ 17,78,752/-, for A.Y. 2016-17. Further, NVPL for the A.Y. 2018-19 has shown a taxable income of ₹ 2,25,20,162/- and on such income has also paid a substantial amount of tax of ₹ 47,09,735/-. On perusal of balance sheet of NVPL it was further observed that NVPL has also made investment in the shares of the appellant company to the extent of ₹ 2,45,00,000/- and the AO has already accepted the same. The AO cannot judge two similar things with different view. On one hand the AO is doubting the genuineness and source of unsecured loan and on other hand has accepted the share capital investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duly explained the source of cash credits from the alleged three companies in the books of account and the relevant observation of Ld. CIT(A) in this regard reads as follows:- i. Identity of the creditors - the creditors are income tax payer and filed the loan confirmations and two of them are assessed by the same AO. ii. Genuineness of the transaction- the appellant has taken the loan through banking channel. The appellant is in the receipt of loan by cheque. Copies of bank statements of lender companies are placed on record and perused. There has been repayment of loan by the appellant to FVPL through banking channel. From perusing the bank statements of the lender companies as furnished in the paper book, it is found that no cash was deposited in the bank account prior to issuance of cheque to the assessee for the loan given. Moreover, there are few cash transactions of meager amount in the bank statements and it is found that all the amounts are received and paid through account payee cheques. Appellant has made repayments of the loan taken per his convenience of fund availability as is evident from loan confirmation letters and ledger statements of the lender co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Based on inquiry, AO noted that creditor was engaged in providing accommodation entries-HELD- In group cases, it has been held that there was no evidence against the creditor to prove that he was providing accommodation entries- Further, mere deposit of money by the creditor on the same day, does not establish that the loan is not genuine-Assessee has proved the source of credit and also the source of source -Addition cannot be made. 11.Aseem Singh v/s Asst. CIT (2012) 19 ITJ 52 (Trib.-Indore) Identity and credit-worthiness proved-Assessee took loan of ₹ 1,00,0001- confirmation of creditor was filed-Lower authorities made addition uls 68 holding that amount was deposited in cash in the bank account of lender immediately prior to date of loan - HELD- Assessee has established the identity- The party has confirmed the transaction-If AO doubted the transaction, AO should have called creditor u/s 131- Addition cannot be made. Thus, appellant has furnished all the required details in order to prove identity of lenders, genuineness of the transaction and creditworthiness of the creditor. Hon'ble jurisdictional MP High Court in the case of Metachem Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly recorded by the Investigation . The genuineness of the transactions also gets fully established as the transactions have been taken place through banking channels and these have been confirmed by the lender companies. Also find that the lender companies were having sufficient net owned funds for making advances to the appellant or anyone also. The appellant has been able to establish even the source of the source in the hands of the lender companies. The lender companies are assessed to Income Tax. In none of the loan transaction any cash has been found deposited in the bank account of the lenders. During the course of the search/survey no incriminating material or any other evidence was found from which it could have been inferred that the appellant had provided any fund to the lender companies before obtaining loans. 4.3.5 Therefore, in view of the above discussion, the AO was not justified m making addition of ₹ 12,44,12,690/- on account of unsecured loan from DFL, FVPL and NVPL. In fact the appellant has availed unsecured loan of ₹ 10,80,000/- from DFL, Rs.N 2,08,00,000/- from FVPL and ₹ 10,09,00,000/- from NVPL and the balance addition made the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referring to the general findings of the Investigation Wing at Kolkata entry operators providing bogus loans, the revenue authorities cannot fasten liability of unsecured loans upon the assessee, unless the assessing officer makes enquiries of his own and rebut the documentary evidences submitted by the assessee. The assessee has duly discharged its onus of submitting the loan confirmation, Income Tax Returns and Bank Statements and Financial Statements of the loan creditors. Without making inquiry of his own, the assessing officer has rejected them which is totally unsustainable. 30. We observe that the Ld. AO issued the commission in respect of one of the lender companies at the old address whereas, in the body of the assessment order itself, he has brought on record the copy of the Notice of the Extra Ordinary General Meeting held by one of the lender companies for changing its address from Kolkata to Ujjain. In the similar circumstances, their lordships of the Hon ble Bombay High Court in the case of PCIT vs. Shree Rajlaxmi Textile Park Pvt. Ltd. (2020) 268 TAXMAN 0405 (Bom.) was pleased to upheld the order of the Tribunal deleting the addition u/s. 68 of the Act where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Dwarkesh Finance Ltd., Famous Vanijya Pvt. Ltd. and Navyug Vyapar Pvt. Ltd., but, in respect of the share capital transactions aggregating to a sum of ₹ 6,37,00,000/- carried out by the same three companies with the assessee company in the same financial year, the same AO has accepted the genuineness of the transactions and as also the identity of these companies. Thus, the AO has adopted two different approaches for two different kind of transactions carried out by the assessee in the same companies in the same financial year which in our view is not permissible. 33. We further observe that one of the lender companies namely, Navyug Vyapar Pvt. Ltd. had provided loans to the assessee company for an aggregate sum of ₹ 10,13,83,277/- and before providing loan to the assessee company, the lender company had raised substantial amount of ₹ 9,00,45,000/- by way of issuance of Share Capital and the Shareholders subscribing the shares in such lender companies were having taxable income of more than ₹ 20 Crores as per their personal income tax returns for A.Y. 2016-17 and this fact strongly goes in favour of the assessee and its cash creditor company about th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any enquiry and has failed to discharge its burden. In view of preceding analysis, we answer the substantial question of law Nos. (i), (ii) and (iii) in the negative and in favour of the assessee and against the revenue. 36. We also observe that the various screenshots and cash trail pointed out by the CIT(DR), from the findings given by the AO in respect of one of the lenders namely, Navyug Vyapar Pvt. Ltd. pertain to the year 2010 only and therefore, they cannot be said to be having any nexus with the loan transactions carried out by the assessee during the year under consideration. From the Paper Book filed by the assessee, it is appearing that the case of aforesaid lender company, an assessment u/s. 143(3) r.w.s. 147 of the Act was framed post survey event in the assessee s group on 24.12.2018 for A.Y. 2011-12 and the AO framing such assessment has not found any irregularity or infirmity in the transactions pointed out by the present AO. 37. It is also not disputed that all the lender companies are assessed to tax and they have duly shown the interest income earned by them on the loans provided to the assessee company in their returns of income for the concerning asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) deleting the impugned addition of ₹ 12,44,12,690/- made by the Ld. A.O invoking provisions of Section 68 of the Act for unexplained cash credit. Ground No.2 to 7 of the Revenue stands dismissed. 40. Accordingly appeal of the revenue in the case of M/s Ariba Foods Pvt. Ltd raised vide ITA No.736/Ind/2019 for Assessment Year 2016-17 stands dismissed. 41. Now we take up revenue s appeal No.ITA/737/Ind/2019 in the case of M/s Vyanktesh Plastics and Packaging Pvt. Ltd pertaining to Assessment Year 2015-16. In this appeal revenue has raised 9 grounds of appeal but the issues raised therein challenging the finding of Ld. CIT(A) can be summarized as follows:- (i) Deletion of addition of ₹ 52,552/- for delay in depositing employees contribution of PF and ESIC. (ii) Adhoc disallowance of ₹ 4,50,000/- on account of power and fuel expenses. (iii) Addition for unexplained cash credit u/s 68 of the Act at ₹ 3,44,49,554/- for the unsecured loan taken from following two companies:- Name of Company Amount (Rs.) i) M/s DFL 3,39,01,393/- ii) M/s. NVPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan of ₹ 3,44,79,554/- taken from following two companies:- Name of Company Amount (Rs.) i) M/s Dwarkesh Finance Ltd (DFL) 3,39,01,393/- ii) M/s. Navyug Vyapar Pvt. Ltd (NVPL) 5,78,161/- Total 3,44,79,554/- 46. Brief facts are that Ld. A.O was not satisfied with the identity, genuineness and creditworthiness of the above stated two cash creditors and accordingly made addition u/s 68 of the Act which was thereafter deleted by Ld. CIT(A) who on the basis of documentary evidence was satisfied with the identity and creditworthiness of the cash creditors and genuineness of the transaction. Now the revenue is in appeal before the Tribunal. 47. Ld. Departmental Representative vehemently argued supporting the finding of Ld. A.O and making same submission as were made in the case of M/s Ariba Foods Pvt. Ltd in ITA No.736/Ind/2017 mentioned in the preceding paras, since similar type of addition made by the Ld. A.O in this case also for the unsecured loan taken from same lender companies. 48. Ld. Counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the result all the grounds raised by the revenue in appeal vide ITA No.737/Ind/2017 for Assessment Year 2015-16 stands dismissed. 52. Now we take up revenue s appeal in the case of M/s Famous Vanijya Pvt. Ltd vide ITA No.773/Ind/2017 for Assessment Year 2015-16. 53. Brief facts of the case as called out from the records are that the assessee is a company, duly incorporated on 25.10.2007 and stated to be engaged in investment and financing activities. The assessee is one of the various entities of Shriji Polymers (India) Ltd. Group in which search and seizure operations u/s. 132 were carried out by the DDIT(Inv.)-II, Indore on 27/07/2017. However, in the case of the assessee, only survey proceedings u/s. 133A were initiated on the same day. The assessee filed its original return of income, u/s. 139(1), on 30.09.2011 declaring total income at ₹ 35,700/-. Thereafter, the then AO found that the assessee had bogus investment/transactions with Dummy/Bogus Concerns such as M/s. Etima Emedia Ltd. and therefore, notice u/s. 148 was issued on 30.03.2018. The assessee, in reply on 05.09.2018 has furnished return of income declaring total income at ₹ 35,700/-. The AO, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, the documentary evidences filed by the appellant and the case laws cited above, the addition made by the AO amounting to ₹ 4,16,15,000/- is Deleted. Therefore, appeal on these grounds are Allowed. 55. Now, the Revenue is in appeal before the Tribunal. 56. Since, all the eleven grounds taken by the Revenue are inter connected and directed against the action of the Ld. CIT(A) in deleting the addition of ₹ 4,16,15,000/- made by the AO u/s. 68 of the Act, we consider it appropriate to adjudicate all the grounds simultaneously. 57. Ld. CIT-DR for the Revenue vehemently argued at length. The main contention of the Ld. CIT-DR was that the assessee, in its books of accounts, had shown to have received a refund aggregating to a sum of ₹ 4,07,35,000/- out of the alleged investments made in earlier years, but, the assessee failed to discharge its onus of establishing identity and creditworthiness of the creditor parties and genuineness of the transactions. The CIT(DR) also contended that during the relevant year, the assessee had taken unsecured loan of ₹ 8,80,000/- from yet another dummy entity namely, M/s. Etima Emedia Ltd. but, during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment was made during earlier years which is evident from the copy of the audited balance sheet for F.Y. 2009-10 [A.Y. 2010-11] placed at page no. 105 of the Paper Book. 2 During the entire assessment proceedings, except calling for the information of fresh investments made and sources thereof vide the only notice dated 07-09-2018, no further information or evidences were called for. 87, 91 to 93, 94, 95 to 98 The assessee had made full compliance of the notice and had furnished the desired details vide its letter dated 21-12-2018 placed at page no. 91 to 93 of the Paper Book. The assessee had also furnished the complete details of the disinvestments made the proceeds wherefrom were utilized for making fresh investments [kindly refer PB Page No. 94]. Further, in evidence of receipts of sale proceeds, the assessee had also produced the copy of relevant bank statements [kindly refer PB Page No. 95 to 98]. 3 The making of investments in shares in earlier years, which have been disinvested during the previous year under consideration, is evident from the copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of any unsecured loan claimed to have been taken by the assessee. 2 The lender company from whom the assessee accepted loan is one of the group companies of the Bangur Group itself to which the assessee belongs. - Para (2.0) on page no. 18 of the AO s Order 3 In respect of the lender company, simultaneous survey proceedings u/s. 133A were carried out. Further, the directors of the lender company were found on given address and their statements were also recorded. - Para (2.6) on page no. 63 of the AO s Order. 4 In respect of the lender company, simultaneous assessment proceedings got completed for A.Y. 2011-12 u/s. 147/143(3) of the Act. 159 to 164 i) Framing of the Assessment in the hands of lender company establish the identity of the lender company. ii) Interest income shown by the lender company from the assessee company and as also, corresponding credit for TDS claim has been granted. Thus, no adverse cognizance has been taken in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Pat) xiii) Jalan Timbers vs. CIT (1997) 223 ITR 11 (Gau) xiv) CIT vs. Dalmia Resorts International (2007) 290 ITR 508 (Del) xv) Lalitha Jewellery Mart P. Ltd. vs. DCIT (2017) 399 ITR 0425 (Mad) xvi) CIT vs. Jai Kumar Bakliwal (2014) 366 ITR 217 (Raj) xvii) CIT vs. Shri E.S. Jose (2014) 220 Taxman 0032 (Ker) xviii) CIT vs. Kamdhenu Steel Alloys Ltd. Ors. (2014) 361 ITR 0220 (Del) xix) Mr. Gaurav Triyugi Singh vs. ITO 2020 (1) TMI 1153 (BomHC) xx) M/s. Kumar Nirman and Nivesh Pvt. Ltd. vs. ACIT 2020 (3) TMI 340 (KarHC) xxi) ACIT vs. M/s. Jay Enterprise 2019 (4) TMI 1811 (ITAT Rajkot) xxii) Pr.CIT vs. M/s. Jay Enterprise 2020 (1) TMI 657 (GujHC) xxiii) ITO vs. M/s. Riddhi Siddhi Corporation 2017 (2) TMI 1129 (ITAT Ahd.) xxiv) ITO vs. M/s. RE N Raga Media Pvt. Ltd. 2019 (6) TMI 651 (ITAT Mum.) xxv) Mahipal Ishwarlal Sottany vs. ITO 2019 (10) TMI 1161 (ITAT Ahd.) xxvi) ITO vs. M/s. Celebrity Lifespace Pvt. Ltd. 2019 (12) TMI 1157 (ITAT Mum.) xxvii) DCIT vs. M/s. Chetan R. Shah (HUF) 2020 (1) TMI 1239 (ITAT Mum.) xxviii) ITO vs. M/s. MJD Financial Services Pvt. Ltd. 2020 (10) TMI 651 (ITAT Mum.) xx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een taxed in the F.Y. 2007-08, again the addition in respect of the proceeds of disinvestment of such investments cannot be made. 61. Further, in respect of addition of ₹ 8,80,000/- made on account of unsecured loan taken by it from M/s. Etima Emedia Ltd., the Ld. Counsel for the assessee argued that: (i) The addition has been made on an issue which was not the subject matter of reopening u/s. 148; (ii) The lender company from whom the assessee accepted loan is one of the group companies of the Bangur Group itself to which the assessee belongs; (iii) In respect of the lender company, simultaneous survey proceedings u/s. 133A were carried out. Further, the directors of the lender company were found on given address and their statements were also recorded; (iv) In respect of the lender company, simultaneous assessment proceedings got completed for A.Y. 2011-12 u/s. 147/143(3) of the Act; (v) During the course of the assessment proceedings, the AO of the assessee had not whispered a single word regarding the socalled enquiries and statements recorded by the Investigation Wing. The opportunity of cross-examination of any of the witnesses of the AO was not given; (vi) The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of the assessment proceedings, the AO vide his questionnaire annexed to the notice u/s. 142(1) dated 07.09.2018, placed at page no. 87 of the Paper Book filed by the assessee, had only required the assessee to furnish information regarding all kinds of investments made during the year with sources of funds. In response, the assessee had furnished the details of investments/disinvestments made during the year and had duly demonstrated that how the amount of investments as on 01.04.2010 at ₹ 10,10,89,960/- reduced to ₹ 7,53,89,960/- on 31.03.2011. The assessee also demonstrated that during the relevant previous year, it had made some fresh investments and had also received refund aggregating to a sum of ₹ 4,07,35,000/- out of the investments made in the earlier years. The assessee had furnished the complete details of the amount realized from sale of investments made in earlier years before the AO and the same is also placed in its paper book at page no. 94. In order to establish its claim that the entire sale proceeds had been received through banking channels, the assessee has also furnished copies of its relevant bank statements at page no. 95 to 98 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is bogus. We also concur with the findings of the CIT(A) that additions made in the absence of incriminating material are unjustified and since, during the course of the survey/search proceedings in the case of the assessee and other group concerns, no incriminating material was found, no addition could have been made. 69. In our considered view, when the assessee is in a position to demonstrate making of the investment in earlier years out of the explained/already taxed sources viz. share capital and share premium claimed to have been received during the F.Y. 2007-08 relevant to A.Y. 2008-09, and has also demonstrated that the sales proceeds were received through banking channels, then without any cogent material on record, the explanation of the assessee cannot be disbelieved. 70. We find no substance in the ground taken by the Revenue that since the assessee has agitated the addition qua the share capital and share premium shown to have been received by it during the F.Y. 2007-08 relevant to A.Y. 2008-09, by filing an appeal, the assessee cannot claim the availability of such funds for making the investments. In our view, once, it is found that the assessee company had re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 of the Act in respect of unsecured loan claimed to have been received by it from M/s. Etima Emedia Ltd., we observe that the assessee had furnished before the AO, copy of PAN, bank account statement of the lender company, audited financial statement, profit and loss account statement, certificate of incorporation, copy of MOA and AOA, details collected from website of Ministry of Corporate Affairs and confirmation of lender. All these documents have also been furnished by the assessee in its paper book from page nos. 121 to 170. We find that the Ld. CIT(A) has dealt in depth with the various documentary evidences furnished by the appellant and reached to the conclusion that the appellant had been able to satisfy all the three condition required for genuineness of transactions u/s. 68 of the Act. We find that the Ld. CIT(A) has rightly placed reliance upon the decision of Umesh Electricals vs. ACIT (2011) 18 ITJ 635 (Trib. Agra) and as also on the decision of Aseem Singh vs. ACIT (2012) 19 ITJ 52 (Trib. Indore) and Ld. CIT(A) has rightly distinguished the various decision relied upon by the Revenue. 73. We thus find that the assessee had discharged its onus of proving the gen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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