TMI Blog2021 (10) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... . B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the orders of ld. CIT (A)-27, New Delhi dated 30.12.2015. 2. Heard the arguments of both the parties and perused the material available on record. 3. The assessee is an India Private Limited company. The assessee has filed its return of income declaring an income of ₹ 1,33,04,450/- u/s 139(1) electronically on 19.10.2012. The AO assessed the total income of the assessee at ₹ 25,11,04,450/- on protective basis. 4. The excerpt from the Assessment Order is as under: Return of income declaring total income at ₹ 1,33,04,450/- was filed electronically on 19.10.2012. The same was processed under sec. 143(1) of the I.T. Act, 1961. The case was selected and statutory notice under sec. 143(2) of the I.T. Act was issued on 23.09.2013 and served upon the assessee. Due to change in incumbent, notice u/s 143(2) of the I.T. Act was issued on 30.09.2013. Further, notice u/s 142(1) of the I.T. Act along with detailed questionnaire was issued on 11.12.2013. In pursuant to restructuring the Central Circle -16 is restructured as Central Circle-20 vide order No. of The Chie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l arrears 1. Citylife Promoters Pvt. Ltd. 2/128, First Floor, Geeta Colony, Delhi AADCC8143J 26500 10 990 265000 2. Timely Solutions Pvt. Ltd. 14A/33, Basement Wea, Channa Market, Karol Bagh Delhi-5 AADCT4113F 5000 10 990 50000 3. Tradelink Pvt. Ltd. A-34, Phase- 1, Jai Vihar, Near Solanki Public school, Najafgarh Road, New Delhi AABCF1758J 12500 10 990 125000 4. Grace Exim pvt. Ltd. 2262/2, 3rd floor Mandir Wali Gali, patel Nagar Delhi AADCG6021H 16000 10 990 160000 5. Hope Real Tech Ltd. Pvt. 81/2, Guruclwara Road, NO. 13, Mohan Garden, Littam Nagar, Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch proceedings statement of Himanshu verma was taken on oath, in his statement Himanshu Verma has accepted that all the above mentioned entities are manage and controlled by him. Books of accounts of a number of entities included in the list mentioned above, bank statements etc. were found in his laptop. After going through the bank accounts of the entities manage and controlled by Himanshu verma it is also revealed that the transactions in all the bank accounts are interlinked. Himanshu Verma used bank accounts of the abovementioned entities to deposit cash received from the beneficiaries and for the routing of transaction of the cash and cheque among the above mentioned entities. Statements of directors / partners/ proprietors of concerned entities were also recorded on oath. They all admitted that their entities were solely engaged in providing accommodation entries in the shape of bogus share capital, unsecured loans and bogus sale/purchase. They also admitted that these concerns are managed and controlled by Shri Himanshu Verma only. 5. Background of the case: On the basis of enquiries made by the Investigation Wing, as conducted on Sh. Himanshu Verma on 29.03.2012. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither this amount was used to be withdrawn immediately or this amount was routed through a number of other entities of Himanshu Verma. In this was ultimately cash was given back to the beneficiary party. 5(2) Statement of Himanshu Verma was taken on oath not only during the search operation but also during the post search proceedings. In his statement during the search operation and during the post search proceedings, he admitted that he was doing business of providing accommodation entries in the shape of share capital, unsecured loans, bogus sale and purchase etc. In the statement taken on oath on 14/4/2012, he clearly stated the modusoperandi of his business of providing accommodation entries. The relevant portion of the statement of Himanshu Verma dated 14/4/2012 is reproduced as under: Q.9 What are the modes of entries provided by you? Ans. As I stated in my earlier statement taken during the course of search operation dated 29/3/2012. The modes of entries provided by me are as follows. 1) We receive cheques and RTGS from the companies in the shape of loans etc. The same were deposited in different companies account maintained by us. After touting it from o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the commission was charged by you for providing accommodation entry and how this commission is received by you? Ans. The commission is charged at the rate which I have already stated in my statement. The commission is charged quarterly or six monthly on all the accommodation entries provided through the particular C.A./middleman in the shape of share capital and after a year on the accommodation entries provided in the shape of unsecured loan. Commission is received always in cash. 6. The CIT(A)-XXVII vide Appeal No.152/14-15 CIT(A)- XXVII/2014-15 dated 26.12.2014 in the case of Himanshu Verma for the A.Y.2012-13 as per para 16 has that: 16. I have gone through the assessment order and written submissions and considered to them. I have also perused the citations of the case laws referred by the AR. From the material on record, there is no dispute regarding the appellant being an entry operator who provided accommodation entries to various beneficiaries through various intermediary companies acting as conduits to transfer money to the beneficiaries by way of cheque in lieu of cash. The appellant also brought on record the modus operandi executed by him through thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Atul Khandelwal Rohini 9810121160 11. Mohit Vohra Delhi 9810020637 12. Sanjay Gupta Shalimar Bagh 9871188000 13. Vijay Gupta Palam 981174091 Cash is delivered by the concerned middleman a day before the issue of accommodation entry cheque in the name of the beneficiary person by me. The cash was delivered personally by the concerned CA/middleman in our office. After receiving the cash we issue cheques of the same amount from any one of our fifteen to twenty company which are managed and controlled by us for providing accommodation entries. The cheques are delivered to the same CA/middleman who brings the cash. Sometimes instead of issuing the cheques funds are transferred through TRGS from all account of any one of 15-20 companies. The cheques provided to the beneficiaries are kept with us and these are the blank signed cheques duly signed by the Authorized signatory/Director of the relevant company and we onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings unambiguously indicates that Sh. Atul Khandelwal had colluded with Mr. Himanshu Verma, an entry operator and was instrumental at arranging the accommodation entries for M/s Varrenyam Securities Pvt. Ltd. from various shell companies owned and controlled by the Himanshu Verma Group in lieu of commission. 11. Further statement of Sh. K.K. Munjal, Director of the M/s Varrenyam Securities Pvt. Ltd. assessee company had repeatedly evaded with the compliance of summons issued by this office, but when his statement was finally recorded by holding camp office at his residence, certain explicit assertions were made by Sh. Munjal concerning the role of Mr. Atul Khandelwal, which brings to bear many intriguing issues. Relevant portions of the statement of Shri Munjal recorded u/s 131(1A) on 2nd February, 2013 are reproduced herein as under:- Q8. Kindly explain the name of the companies to whom your company lends money on interest. In lieu of the loans so granted what securities are obtained or pledged with the company and in this regard furnish details of any agreement entered into with the borrowers and documentary evidences if any. Ans. Shri Atul Khandelwal does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, 1 st Floor, Beadon Pura, Karol Bagh, New Delhi as its Registered Office in the documents filed with the Ministry of Corporate Affairs. On the date of survey, the survey party could not find a single instance of any worthwhile business activity of the captioned assesses company being performed from its registered office. Through discreet inquiries it was gathered that M/s Varrenyam Securities Pvt. Ltd. had shown its business address which was the office premises of one Chartered Accountant Shri Atul Khandelwal, Proprietor of M/s A. Khandelwal Co. During the course of inspection u/s 133A of the IT Act, 1961 at the premise, it was found that no semblance of an office activities of the company was available or could be found at the address as furnished to the Ministry of Corporate Affairs. Statutory documents which are mandated to be kept and maintinaed at the registered office of any company as per the Companies Act, 1965 could not be located. (vii) On the contrary it was learnt that Sit. Atul Khandelwal, CA had taken the premises bearing No. 10/2442 on lease and had sublet it to M/s Varrtenyam Securities Pvt. Ltd. No signboard indicating the existence of any company or ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orized signatories. Statement of Shri Ganesh Gupta recorded on 01.03.2013 is reproduced as under: Q14. Whether any agreement has been entered into with M/s Varrenyam Securities Pvt. Ltd. entailing the terms and condition of the rate of interest, date of settlement and penalty provisions, etc.? Ans. There was no agreement with Varrenyam but there was a verbal commitment of 9% p.a. interest on loan and it agreed that the loan period was three years. Q.18 As per information available with the ROC M/s Varrenyam Securities Pvt. Ltd. was incorporated on 20.4.2011 and within a week of incorporation, the company has lend ₹ 26.85 cr. To M/s Sidhvandnn Enterprises Pvt. Ltd. In light of this please explain as to how is this transaction possible and secondly whether your company has done due diligence to ascertain the credit worthiness of the lending company. Please explain? Ans. It was not in our knowledge that when Varrenyam was formed and incorporated in ROC and how they have arranged the funds to Sidhvandan. We never fry to ascertain to know the credit worthiness of M/s Varrenyam Securities Pvt. Ltd. Q.19. During a survey action conducted at the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction and is proved beyond doubt that amount of ₹ 26.86 crores has been introduced by assessee which has been received from M/s Varrenyam Securities (P) ltd. from dubious companies owned and operated by Shri Himanshu Verma. 16. In the present case, it is significant that the persons involved in the credits which have been added u/s 68, have been found to be engaged in giving bogus accommodation entries. Specific information was received as a result of inquiries by the investigation Wing, about the bogus accommodation entries taken by the appellant. The appellant has not denied that they received cheques from these persons. The modus operand in such cases is well known. In the face of this information, a heavy burden lay on the appellant to prove that the credits were genuine. The onus had clearly shifted to the appellant. It is incorrect to say that the burden was on the A.O. to prove that these credits were unexplained. In such matters, the A.O. cannot be asked to prove the impossible and the addition is to be tested on the anvil of 'preponderance of probabilities, and not of 'beyond reasonable doubt'. The information received as a result of inquiries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained cash credit u/s 68 of the Income Tax Act on protective basis in the hands of the assessee company. I am also satisfied for initiating penalty proceedings u/s 271(1)(c)of Income-tax Act for filing inaccurate particulars of income. 5. The ld. CIT (A) upheld the addition holding that the AO was justified in including the sum of ₹ 24.78 Crores being unexplained credit in the books of the assessee by invoking Section 68 of the Income Tax Act, 1961. 6. The ld. CIT (A) categorically held that the proceeds of the share capital arranged through the accommodation entries were used by the appellant legitimately to provide business loans to its borrowers through banking channel and such loans were duly repaid by the appellant s borrowers through banking channels. The assessee has also received interest and shown the interest in their return of income and also claimed business expenses against that income which was duly assessed by the Assessing Officer. 7. From the order of the Co-ordinate Bench of the ITAT in the case of DCIT Vs. M/s Sidhvandan Enterprises Pvt. Ltd. in ITA No. 1177/Del/2016 vide order dated 12.12.2019, we find that the addition made in the hands of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation regarding the nature and source of the credit or the explanation offered is not sat is factory. She also submitted that it places no duty upon AO to point to the source from which the money was received by the assessee. She also relied upon the decision of the Hon ble Hon ble High Court of Delhi in the case of CIT vs. Navodaya Castles (P) Ltd. (2014) 50 taxmann.com 110 (Delhi) and the Hon ble Supreme Court of India in the case of Navodaya Castle (P) Ltd. vs. CIT (2015) 56 taxmann.com 18 (SC). In view of above, she requested to allow the appeal of the Revenue. 5. On the contrary, Ld. Counsel for the assessee relied upon the impugned order passed by the Ld. CIT(A) and stated that Ld. CIT(A) has passed well reasoned order which does not need any interference. In support of his contention, he also filed two paper books i.e. Paper Book-I containing pages 1-54 in which the assessee has attached the documents of M/s Varrenyam Securities Pvt. Ltd. ₹ 26,85,00,000/- i.e. copy of assessment order AY 2012-13 (assessed at ₹ 25,11,04,450/-); copy of audited financial statement; copy of PAN card; copy of bank account statement; certified ledger a/c of Varrenyam in boo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (55- 59, RP-59) ITAT dismissed the appeal of Verrenyam, hence the addition of ₹ 24.78 Cr. remains sustained in the hands of Verrenyam, which position continuous even as on date (54-55) It is the same 24.78 Cr. which was given by Verrenyam to assessee, which is the part of total addition of ₹ 26. 85 Cr. made in the hands of assessee (A.O. Pg.15, Para-12) Hence, ₹ 24.78 Cr. since already stands added in the hands of Verrenyam and the same amt. has been reed. by the assessee, therefore in the hands of the assessee, the source of said amt. stands fully explained w.r.t. provisions of Sec.68 of the I.T. Act. Under these facts, to make addition for the same amt. of ₹ 24.78 Cr. in the hands of Verrenyam and then again in the hands of assessee will tantamount to double addition of the same amt. Reg. bal. amt. of ₹ 2.07 Cr. (26.85 - 24.78), the A.O. of Varrenyam has not doubted the source in the hands of Varrenyam to the extent of ₹ 2.0 Cr. therefore he has not made any addition in the hands of Varrenyam u/s.68 (1-18, RP-18) Even in the asstt. of assessee, the A.O. has doubted for only those receipts which have been reed. by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank statements (31-39) Ledger A/c (40-43) Certificate of Incorporation (44) CASE LAWS For - if loan re turned, it is an evidence for the loan being genuine DIT VS. MODERN CHARTIABLE FOUNDATION 335 ITR 105 (DEL.) we may also record the submissions of the Ld. Counsel for the respondent that in sofar as un - secured loans are concerned, they were paid back in subsequent years, which shows that these were genuine loans taken by the assessee. CIT VS. KINETIC CAPITAL FINANCE LTD. 202 TAXMAN 548 (DEL.) Held that - Where assessee has furnished details with respect to deposits and investors had acknowledged fact that money has been returned to them, further, interest has been received by the investors and TDS has been deducted, thus, assessee had discharged its initial onus and was not require to prove genuineness of transaction with the creditor and source of income of creditor. CIT VS. AYACHI CHANDRASHEKHAR NARSANGI 221 TAXMAN (GUJ.). (MAGZ.) 146 Loans - A.Y. 2006 - 2007 AO framed Asstt. U/s. 143 (3) wherein he made addition of ₹ 1.45 crores u/s. 68 on ground that loan taken from one 'lA' was not explained satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DCIT, CC-20, New Delhi (the same AO in the case of the assessee) determining its total income at ₹ 25,11,04,450/ - vide his order u/s 143(3) of the I.T. Act, 1961 dated 24.03.2015 (the date on which AO also framed the assessment order for assessee). It is also noted that the assessee in support of the genuineness of the aggregate of the loans taken had filed the Copy of PAN Card of the Lender; Copy of Bank Statement of the Lender showing all above entries; Confirmation of the Lender in writing for giving the loan; ROC Registration, Lender is filling regular various documents with ROC; Lender name is in ROC record; Copy of ITR of the Lender. Record shows that the Lender filling papers with IT Department regularly and Copy of Audited Final Accounts' of the Borrower. It is also noted that M/s Varrenyam Securities Private Limited is a much bigger company than the assessee company and the loan taken by the assessee company was partly repaid by the assessee to the extent of ₹ 18,25,00,000/- through banking had paid interest at 9% per annum amounting to ₹ 1,95,68,047/- (net of TDS deducted at 10%) and the aforesaid interest was claimed by the assessee and allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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