TMI Blog2022 (1) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... st of 9%. The same has been repaid on 07.01.2014 along with the interest agreed upon. The date of search in the group was conducted on 26.08.2015. Having examined the receipt of loan independently disregarding the date of search, we find that the assessee discharge the onus, proved the receipt and repayment of the loan received along with the interest and the same is also been brought before the Assessing Officer during the assessment proceedings. Hence, the reasons given by the revenue authorities for treating the loan amount u/s 68 is factually and legally not valid. Hence, we hereby direct the addition made be obliterated. Unsecured loan received from Cindy Goods Supply Pvt. Ltd. - ITAT [ 2020 (2) TMI 1224 - ITAT DELHI] has duly considered the identity of the company and found it to have been incorporated in the year 1995, the amounts have been accepted as genuine during the assessments completed u/s 143(3), the returned income range from ₹ 1.4 crores, ₹ 75 lacs, ₹ 11 lacs for the A.Y. 2012-13, A.Y. 2013-14 and A.Y. 2015-16 respectively proving that the lender company cannot be considered as a accommodation entry provider/paper company. The company has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r For the Assessee : Sh. Rajiv Khandelwal, CA For the Revenue : Ms. Deepshikha Sharma, CIT DR ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: The present appeals have been filed by the assessee and the assessee against the orders of the ld. CIT(A), Kanpur-4 dated 19.07.2021. 2. Since, the issues involved in all these appeals are identical, they were heard together and being adjudicated by a common order. 3. In ITA No. 925/Del/2021, following grounds have been raised by the assessee: 1. The Commissioner of Income-tax (Appeals) - 4, Kanpur (hereinafter referred to as the CIT(A)) erred in upholding the action of the Deputy Commissioner of Income tax, Central Circle, Noida (hereinafter referred to as the Assessing Officer)in issuing notice under section 153 A of the Act. The appellants contend that on the facts and in the circumstance of the case and in law, the notice issued under section 153A is ab initiovoid inasmuch as the jurisdictional conditions for the issue of the said notice have not .been complied with and consequently, the assessment framed is bad in law and needs to be quashed. The appellants further, cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. A search seizure operation u/s 132 of the Income Tax Act, 1961 was conducted on 26.08.2015 at the premises of the assessee comprising IITL Nimbus Group of cases. The assessee was engaged in real estate business in and around NCR. 5. Consequent to the search operation, notices u/s 153A have been issued to the assessee. In response, the assessee filed its return showing income of ₹ 1,78,02,041/- for A.Y. 2010-11, ₹ 3,40,02,769/-for A.Y. 2011-12, ₹ 2,89,00,780/- for A.Y. 2012-13, ₹ 5,88,11,000/- for A.Y. 2013-14 ₹ 1,13,46,070/-for A.Y. 2014-15. The assessments have been completed u/s 153A making the following adjustments to the income of the assessee. 6. Addition made by the AO: A.Y. Head of addition Addition Reference to seized material: yes/No Date of filing of original return Nimbus Projects Ltd. 2010-11 Unsecured loan 34,00,000 No 20.09.2010 2011-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six assessment years in which both the disclosed and the undisclosed income would be brought to tax . (iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment 'can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this section only on the basis of seized material. (v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word 'reassess' to complete assessment proceedings. (vi) In sofar as pend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney or bullion etc. which represents wholly or partly the income or property which has not been and which would not be disclosed for the purpose of assessment, called as undisclosed income or property. We find that the provision in section 132 (1) does not use the word incriminating document . Clauses (a) and (b) of section 132(1) employ the words books of account or other documents . For harmonious interpretation of this provision with provision contained in section 153A, all the three conditions on satisfaction of which a warrant of search can be issued will have to be taken into account. 51. Having held so, an assessment or reassessment u/s 153A arises only when a search has been initiated and conducted. Therefore, such an assessment has a vital link with the initiation and conduct of the search. We have mentioned that a search can be authorized on satisfaction of one of the three conditions enumerated earlier. Therefore, while interpreting the provision contained in section 153A, all these conditions will have to be taken into account. With this, we proceed to literally interpret to provision in 153A as it exists and read it alongside the provision contained in sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the AO. (b) In respect of non-abated assessments, the assessment wilt be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search. 54. It may be mentioned here that Ld. Counsel for All Cargo Global Logistics Ltd. was questioned about the scope of pending assessments as it was his contention that all six assessments are to be made, if necessary, on the basis of undisclosed income discovered in the course of search. He was specifically questioned about the jurisdiction of the AO to make original assessment along with assessment u/s 153A, merging into one. However he took an evasive view submitting that this question need not be decided in his case although the question of jurisdiction u/s 153A was vehemently pressed on account of which ground No. 1 in the appeal for assessment year 2004-05 was admitted as additional around. He also wanted the additional ground to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersigned would like to differ with the submission of the appellant, because section 153A of the Act clearly provides the power to AO to assess/reassess the cases of person searched u/s 132(1) of the Act for immediately six preceding years. Section 153A of the Act does not provide existence of incriminating material as essential requirement. In the opinion of the undersigned, the action u/s 132/132A of the Act would automatically trigger the provisions of section 153A of the Act for computation of total income of the appellant. This provision does not restrict the Assessing Officer to take action in those cases where assessment has already been completed. Since, the AO has rightly exercised his powers to assess/reassess the case u/s 153A of the Act. The undersigned finds no force in the submission of the appellant and therefore, this ground is dismissed. 8.3 The contention of the id. A.R. is also not acceptable after placing reliance on following judicial pronouncements: In the case of E.N. Gopakumar Vs. CIT (2016) 75 taxmann.com 215 (Kerala)], Hon'ble Kerala High Court held that assessment proceedings generated by issuance of a notice under section 153A(1)(a) can be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if assessment order had already been passed in respect of all or any of those six assessment years, either under section 143(1)(a) or section 143(3) prior to initiation of search/requisition, still Assessing Officer is empowered to reopen those proceedings under section 153A without any fetters and reassess total income taking note of undisclosed income, if any, unearthed during search. In the case of Filatex India Ltd Vs. CIT (49 taxmann.com 465)- Hon'ble Delhi High Court held that during assessment under section 153A, additions need not be restricted or limited to incriminating material, found during course of search. 8.4 In view of the detailed discussion mentioned here-in-above and considering the judicial pronouncements cited here-in-above, legal grounds of appeal of the appellant are hereby dismissed for all assessment years. 12. At the end of the arguments, the ld. AR submitted that owing to the different ratio laid down by the different Hon ble High Courts, the legal issue would not be pressed if the matter is decided on merits of the case. Since, the Bench decided on merits of the case, the jurisdictional/legal issue is not required to be adjudicated. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven address. 17. The report also indicates that summons could not be served. 18. The ld. CIT(A) held that the total income in the ITR for the relevant assessment year of the lender company was ₹ 45,540/- and since the credits preceded the debits in the bank account on the same dates, the creditworthiness of the lender cannot be considered as genuine. The ld. CIT(A) has relied on the judgments of various Courts which are as under: CIT Vs Maithan International 375 ITR 123 (Cal.) B.R. Petrochem (P.) Ltd. Vs. ITO 81 taxmann.com 424 (Madras) Rick Lunsford Trade Investment Ltd Vs. CIT 2016-TIOL-207-SC-IT Navodava Castle Pvt. Ltd. Vs. CIT 230 Taxman 268 (SC) PCIT Vs. Vikram Singh (2017) 85 taxmann.com 104 (Del.) CIT Vs. N.R. Portfolio Pvt. Ltd. in ITA No. 1018, 1019/2100 (Del.) Pragati Financial Management Pvt. Ltd. Vs. CIT in C.A. 887 998 of 2016 others CIT vs. Nova Promoters Finlese (P) Ltd. 342 ITR 169 (Del.) CIT vs. D.K. Garg 84 taxmann.com 257 (Del.) and many other judgments which have been duly perused. In nutshell, the ld. CIT(A) has confirmed the addition solely based on A. The returned income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree Ram Hard Coke Allied Industries 1 MTC 780 ITO vs. M.S. Advance (P.) Ltd. 188 Taxation 181 (Trib.) Vinod Kumar Bhandari vs. ACIT 174 Taxation 49 (Trib.) Addl. CIT vs. Bahri Bros. (P.) Ltd. 154 ITR 244/22 CIT vs. Gangeshwari Metal Pvt. Ltd. (ITA No. 597/ 2012) (Del.) Nemichand Kothari vs. CIT 264 ITR 254 (Gau.) 22. Heard the arguments of both the parties and perused the material available on record. 23. From the record, we find that the sole reason for confirming the addition was low income tax return in the year of issue whereas it was contended that it is not the case for the subsequent years. During the assessment proceedings, the lender has furnished that all the details in response to the notice issued by the Assessing Officer u/s 133(6). The reply dated 21.12.2017 filed before the AO has been perused. Subsequent to the receipt of the reply from the lender, the AO did not conduct any further enquiry. The report of the DDIT(Inv.), Kolkata relied upon by the ld. CIT(A) and the AO was much before 21.12.2017 i.e. with response to the letter issued by the DDIT(Inv.), Noida on 14.10.2015. It is apparent from the facts on record, while as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t during the post search proceedings, the statement of Shri Anshul Mittal, one of the directors of Cindy Goods Services Pvt. Ltd., Pabla Leasing Finance company and Giri Financial Services Pvt. Ltd. was recorded on 20.10.2015 and he admitted that he is dummy directors of several companies from which the loans/ share applications have been received by the IITL Nimbus Group of companies. Further, other directors of the group company Shri Vipul Kumar, brother of Shri Anshul Mittal during statement u/s 131 of the Act on 20/10/2015 admitted the fact that he is dummy director in the companies controlled and managed by Shri Bipin Aggrwal. The AO held that, 1. On tracing the trail backward to locate the original source of funding in Nimbus group .from such lender companies, it was observed that such funds have been routed through many other paper companies/firms/concerns/individuals which were also raised loans to other group entities as depicted in their bank statements. It has been observed that all such entities involved in layering of funds are located at various addresses in Delhi and Kolkata, which are known for being used for providing various accommodation entries, as reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be proved. Mere filing of confirmation or transaction through banking channel is not enough to prove the genuineness of cash credit and it can be assessed. Creditworthiness must also be proved and the transactions should also invite confidence of normal business principle of profit. 30. The AO held that with regard to provisions of Section 68, the onus is upon the assessee to prove the three ingredients, i.e., identity, creditworthiness of the person from whom the monies were taken and the genuineness of the transaction and held that assessee has routed its money from one paper based company into another with colouring device of unsecured loan. Therefore, an addition of ₹ 1,50,00,000/- is made u/s 68 of the Act. 31. Aggrieved the assessee filed appeal before the ld. CIT(A). 32. With regard to the Cindy Goods Supply Pvt. Ltd., the ld. CIT(A) while confirming the order of the Assessing Officer has duly considered the report of the Inspector of the Kolkata Investigation Unit which is as under: As directed by the DDIT(Inv.), Unit-2(2), we visited the place at the given address of Cindy Goods Supply Pvt. Ltd. at Room No. 418A, 4th Floor, Marshall House, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice issued u/s 133(6) of the Act filed by M/s CG SPL Copy of Bank statement of the lender disclosing source of loan Confirmation of accounts of appellant in books of lender etc. 36. Further, it was argued that the lender company is in existence from 1995 and the returned income for the A.Y. 2012-13 was ₹ 1,40,89,252/- and it cannot be assumed that any paper company giving accommodation entry would pay tax on the amount of ₹ 1,40,89,252/-, the fact itself indicates that it cannot be taken or presumed that the lender company to be a non-existing, bogus company. 37. Thus, it was argued that it is clearly evident that the assessee has discharged its onus of proving the tenets of Section 68 of the IT act i.e. identity of party, genuineness of the transaction and creditworthiness of the party by providing extensive evidences. It was further argued that the observation of the revenue that the lender M/s CG SPL was being operated by fictitious person is not on correct facts on record. 38. Further, the ld. AR brought to our notice that the identity, genuineness and creditworthiness of the lender namely, CG SPL has been widely examined in detail dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Kishore Kumar vs. DCIT, the AO made addition of ₹ 29,50,00,000/- to the total income of the assessee being the amount of share capital and share premium of ₹ 15 crore received from M/s Pabla Leasing Finance Pvt. Ltd., and ₹ 14,50,00,000/- being the share capital and share premium received from M/s Cindy Goods Supply Pvt. Ltd. Para 13 - So far as the addition of ₹ 15 crores in A.Y. 2013-14 and ₹ 2.51 crore in respect of M/s Pabla Leasing Finance Pvt. Ltd., ₹ 14.50 crore from M/s Cindy Goods Supply Pvt. Ltd. in A.Y. 2013-14 and ₹ 18 crore from M/s Giri Financial Services in A.Y. 2014-15 is concerned, the ld. Counsel for the assessee drew the attention of the Bench to the various details of the parties from whom the assessee has received non-cumulative redeemable share capital during the year. Referring to various pages of the paper book, the ld. Counsel for the assessee drew the attention of the Bench to the copies of the income-tax returns, balance sheets, copy of annual reports of the companies, bank statements, copies of the assessment orders of those companies, etc., and submitted that the assessee has discharged the onus c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the orders of the AO, CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO, in the instant case, made addition of ₹ 29,50,00,000/- to the total income of the assessee being the amount of ₹ 14,50,00,000/- from M/s Cindy Goods Supply ITA Nos.929 930/Del/2019 Pvt. Ltd., and ₹ 15 crores from M/s Pabla Leasing Finance Pvt. Ltd., on account of non-genuine share premium/share capital. Similarly for A.Y. 2014-15, the AO made an addition of ₹ 20,51,00,000/- being an amount of ₹ 2,51,00,000/- received from M/s Pabla Leasing Finance Pvt. Ltd. and ₹ 18 crores from Giri Financial Services Pvt. Ltd. treating the same as non-genuine and by invoking the provisions of section 68 of the IT Act. We find the ld.CIT(A) upheld the addition so made by the AO. It is the submission of the ld. Counsel for the assessee that the assessee has filed the requisite details such as copy of the bank account, copy of the Income-tax returns, copy of confirmations, details of allotment of shares, etc. before the AO to substantiate the identity and credit worthiness of the investor co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue authorities holding that the identity, genuineness and creditworthiness of the lender company could not be proved is contrary to the facts on record. Hence, the addition made by the revenue authorities is liable to be obliterated. 43. In the result, the appeal of the assessee in ITA No. 926/Del/2021 for A.Y. 2011-12 and ITA No. 927/Del/2021 for A.Y. 2012-13 is allowed. ITA No. 928/Del/2021 for A.Y. 2013-14 ITA No. 929/Del/2021 for A.Y. 2014-15 44. During the A.Y. 2013-14 and A.Y. 2014-15, the assessee company issued 8% non-convertible, non-participating compulsory remediable preference shares to the companies whose details are furnished as under: For the A.Y. 2013-14 Sl. No. Name of the investor No. of shares Share Cap Share Premium Total 1. Giri Financial Services Pvt. Ltd. 3700000 37000000 148000000 185000000 2. Pabla Leasing Finance Pvt. Ltd. 2000000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a dummy Director in the companies controlled and managed by Sh. Vipin Agarwal. 47. The AO was in receipt of report from the DDIT(Inv.), Unit-2(2), Kolkata with regard to the above two investors company namely, Giri Financial Services Pvt. Ltd. and Pabla Leasing Finance Pvt. Ltd. The report of the DDIT(Inv.) with regard to these two entities which have contributed to 8% non-convertible, redeemable preference shares is as under: As directed by the DDIT(Inv.), Unit-2(2), we visited the given addresses of Pabla Leasing Finance Pvt. Ltd. and Giri Financial Service Pvt. Ltd. The entities have not been found at the given addreses. On visiting the spot at the given address of the Intellectual Securities Pvt. Ltd., Padma Estates Pvt. Ltd .. it has been found that a notice been hanged indicating the shifting of the said three companies to a new address at 277, B.B. Ganguly Street, 3rd Floor, Room No. 306, Kolkata-700012. On visiting the new address a signboard at the entrance of the single room office reflecting the names of all the 5 (five) companies has been noticed. It was found that few computers were placed in that room indicating that some accounts were being maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, it was again reiterated that the details have already been filed and the transactions within the ITTL Nimbus group for companies are bona-fide and genuine. Since, the company does not have any physical set up at the given address, the address given is only a postal address and the same address is used as postal address for multiple companies indulging in to the same activity of providing accommodation entries. The directors of the companies are non-existent or even if they exist, they are illiterate or semi illiterate individuals who do not have competence or credibility to operate any investment company. The company is receiving huge amount as loan and giving the same to other concerns without any apparent motive of conducting any actual business and the directors of the company are not even aware of such huge transactions made by the company for, considering the doctrine of business purposes. In the view of above, it is held that in case of credits in the name of third parties, it is the duty of the assessee to prove identity or credits, capacity of creditor to advance money and genuineness of transaction. In the instant case capacity of creditor could not be proved. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,60,00,000 Total 5,70,00,000 22,80,00,000 4,20,00,000 16,80,00,000 Grand Total ₹ 28,50,00,000 (5,70,00,000 + 22,80,00000) ₹ 21,00,00,000 (4,20,00,000 + 16,80,00,000) It was noted by the AO in detailed and elaborate assessment orders that, the entities to whom non-cumulative preference share were issued are the paper entities involved in providing accommodation entries. AO has depicted the enquiry and investigation report in case of these alleged entities, as conducted by the investigation wing of the department at Kolkata, wherein, the directors of the alleged entities have accepted in the sworn statements that, their concerns are involved in the business of providing accommodation entries in the form of share premium/share capital/non-cumulative preference share/unsecured loans. It was also noted by the AO that, each debit entry in the Bank statements of the alleged creditors is preceded by the equivalent amount of credit on the same or on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilding at Kolkata with only a computer and table. There were no evidence of any business activities being carried by these alleged creditor entities. ii) Alleged creditor companies are identified paper companies of known accommodation entry operators. iii) Statement of entry operators have been recorded on oath to evidence that, these alleged entities are carrying on the business of providing accommodation entries on commission basis in relation to share premium/share capital/non-cumulative preference share/unsecured loans. iv) Principal Officer or the director to whom summons u/s 131 of the Act were issued on the known address of the alleged creditor entities, they did not attend in response to summons. 10.5 Further, during the post search investigations, statement of Shri Anshul Mittal one of the Director of the M/s. Pabla leasing Finance Pvt. Ltd. and M/s. Giri Financial Services Pvt. Ltd. was recorded on 20.10.2015 and Shri Anshul Mittal has admitted in the sworn statements that, he is a dummy director of the alleged creditor companies from which, loans/snare application/share premium have been received by IITL- Nimbus group of companies. Further, other di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total credits (including share capital/ premium) Total income disclosed in ITR AY 2013-14 AY 2014-15 AY 2013-14 AY 2014-15 1. M/s Pabla leasing Finance Pvt. Ltd. 10,00,00,000 16,50,00,000 30,85,542 Nil 2. M/s Giri Financial Services Pvt. Ltd. 18,50,00,000 4,50,00,000 3,39,176 9,16,779 From the above table, it is evident that the entities advancing huge money to appellant company are having very meager income to substantiate such huge share capital/premium. For example, M/s Girl Financial Services Pvt. Ltd., having income of only 9,00,000/- odd has advanced huge sum in the form of preference share of ₹ 4,500, 000/-, which appears to be beyond human probability. The case of other creditor is no different, as could be evidenced from the above mentioned table. Thus, it can be concluded that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,00,000 08.02.2013 25,00,000 10. -do- 24.01.2013 50,00,000 08.02.2013 25,00,000 11. -do- 05.02.2013 50,00,000 08.02.2013 25,00,000 12. -do- 07.02,2013 50,00,000 11 02.2013 25,00,000 13. -do- 08.02.2013 50,00,000 27.02.2013 25,00,000 14. -do- 08.02.2013 50,00,000 27.02.2013 25,00,000 15. -do- 08.02.2013 25,00,000 01.03.2013 25,00,000 16. -do- 11.02.2013 25,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 32 -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 33 -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 34. -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 35. -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 36. -do- 02.04.2013 1,00,00,000 30.03.2013 80,00,000 37. -do- 03.04.2013 1,20,00,000 02.04.2013 50,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -do- - - 25.01.2013 10,00,000 52. -do- 28.01.2013 35,00,000 28.01.2013 20,00,000 53. -do- 29.01.2013 30,00,000 08.02.2013 25,00,000 54. -do- 09.02.2013 25,00.000 11.02.2013 50,00,000 55. -do- 12.02.2013 30,00,000 11.02.2013 40,00,000 56. -do- 12.02.2013 35,00,000 11.02.2013 35,00,000 57. -do- 12.02.2013 30,00,000 18.02.2013 55,00,000 58. -do- 12.02.2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,00,000 73. -do- 12.03.2013 25,00,000 12.03.2013 20,00,000 74. -do- 12.03.2013 25,00,000 13.03.2013 25,00,000 75. -do- 12.03.2013 50,00,000 13.03.2013 25,00,000 76. -do- 12.03.2013 25,00,000 13.03.2013 20,00,000 77. -do- 13.03.2013 25,00,000 13.03.2013 30,00,000 78. -do- 13.03.2013 25,00,000 14.03.2013 25,00,000 79. -do- 14.03.2013 25,00,000 18.03.2013 40,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30,00,000 23.03.2013 25,00,000 95. -do- 23.03.2013 50,00,000 25.03.2013 25,00,000 96. -do- 23.03.2013 50,00,000 25,03.2013 30,00,000 97. -do- 30.03.2013 10,00,000 25.03.2013 30,00,000 98. -do- 26.03.2013 22,00,000 99. -do- 26.03.2013 37,57,878 100. -do- 26.03.2013 30,00,000 101. -do- 26.03.2013 35,00,000 102. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,00,000 13.03.2013 40,00,000 117. -do- 14.03.2013 25,00,000 14.03.2013 25,00,000 118. -do- 15.03.2013 25,00,000 119. M/s Giri Financial Services Pvt. Ltd. Punjab National Bank, A/c No. - 0954002100021187 02.04.2013 35,00,000 26.03.2013 37,57,878 120. -do- 02.04.2013 20,00,000 26.03.2013 30,00,000 121. -do- 02.04.2013 35,00,000 26.03.2013 35,00,000 122. -do- 02.04.2013 35,00,000 26.03.2013 35,00,000 123. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the balance sheet of the creditor companies that, they do not possesses any tangible or intangible fixed assets to conduct business activities. Thus, it is concluded that, genuineness of the transaction and credit capacity of the creditors stands unsubstantiated. Appellant, on the other hand has not placed any material before the undersigned to dislodge the finding of the AO. Therefore, considering the totality of facts and circumstances of the case, it is concluded that, appellant has miserably failed to prove the credit capacity and genuineness of the transaction. 10.8 It is a settled preposition of law u/s. 68 of the IT Act that the initial burden of proof rests upon the appellant to establish the identity, credit capacity of the creditor and to establish the genuineness of transaction. For the sake of clarity provision of section 68 of the Act as amended reads as under: 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act on account of unsecured loans was not justified, where initial onus of proving the creditworthiness of the lenders were not discharged by the assessee. Also, Hon'ble Gujarat High Court in the case of Pawan Kumar Sanghvi [2018] SO taxmann.com 290 has held that, where assessee received loan from two companies, in view of fact that on date of advancing loan to assessee 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. Hon'ble Delhi High Court in the case of Seema Jain Vs ACIT [2018] 96 taxmann.com 307 (Delhi) has held that, where AO made addition to assessee's income in respect of loan availed, in view of fact that lender company did not have tangible or intangible fixed assets and, moreover, it had declared a meager income and, thus, it was not in a position to give such a huge loan to assessee, impugned addition was to be confirmed. Further, Hon'ble Delhi High Court in the case of CIT Vs Ultra Modern Exports (P.) Ltd [2013] 40 taxmann.com 458 (Delhi)/[2014] 220 Taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that even if transaction of loan is made through cheque, it cannot be presumed to be genuine in absence of any agreement, security and interest payment. Mere submission of the PAN and bank statements of the creditor does not establish the authenticity and genuineness of huge loan transaction particularly when the ITR of the lender does not inspire such confidence. Mere submission of ID proof and the fact that the loan transaction were through banking channel does not establish the authenticity of transaction. The loan entries are generally masked to pump the black money into the banking channel and such practices continued to plague Indian Economy. Further, in the case of CIT Vs. N.R, Portfolio Pvt. Ltd. (ITA No. 1018, 1019/2100 dated 22.11.2013) Hon'ble Delhi High Court has observed and held that: mere production of incorporation details, PAN Nos. or the fact that third persons or company had filed income tax details in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial they collect will have to be placed before the tax - paying assessee, if adverse inference is going to be drawn audi alteram partem is a well -known principle of natural justice. This principle is established by the judgment of the Supreme Court in Dhakeswari Cotton Mi l ls Ltd. v. CIT (26 ITR 775,783), and applied by that court in Kishinchand Chellaram vs. CIT (125 ITR 713), where an assessment based on the result of private inquiries conducted behind the back of the assessee was set aside because the evidence so gathered was not placed before the assessee. In Gunda Subbayya vs. CIT (7 ITR21, 28), Hon'ble Madras High Court has held: Information which the Income-Tax Officer has received may not always be accurate and it is only fair when he proposes -to act on material which he has obtained from an outside source that he should give the assessee an opportunity of showing, if he can, that the Income Tax Officer has been mis informed; but the Income-Tax obviously not bound to disclose the source of his information 10.13 Further, jurisdictional Hon'ble Allahabad High Court in the case of Motilal Padampat Udyog Ltd. Vs. CIT 293 1TR 656 has laid down the cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . and Intellectual Securities Pvt. Ltd., are used by different accommodation entry operators to facilitate accommodation entry operators. Further, the Di rectors of these companies have admitted that they were involved in providing accommodation entries on commission basis to IITL Nimbus group of companies. Para 9 - So far as A.Y. 2014-15 is concerned, the AO made addition of ₹ 20,51,00,000/- being the amount of share capital received from M/s Pabla Leasing Finance Pvt. Ltd. of ₹ 2,51,00,000/- and the amount of share capital received from M/s Giri Financial Services Pvt. Ltd. of ₹ 18 crores. Para 13 - So far as the addition of ₹ 15 crores in A.Y. 2013-14 and ₹ 2.51 crore in respect of M/s Pabla Leasing Finance Pvt. Ltd., ..and ₹ 18 crore from M/s Giri Financial Services in A.Y. 2014-15 is concerned, the ld. Counsel for the assessee drew the attention of the Bench to the various details of the parties from whom the assessee has received non-cumulative redeemable share capital during the year. Referring to various pages of the paper book, the ld. Counsel for the assessee drew the attention of the Bench to the copies of the income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Giri Financial Services Pvt. Ltd. treating the same as non-genuine and by invoking the provisions of section 68 of the IT Act. We find the ld.CIT(A) upheld the addition so made by the AO. It is the submission of the ld. Counsel for the assessee that the assessee has fi led the requisite details such as copy of the bank account, copy of the Income-tax returns, copy of confirmations, details of allotment of shares, etc. before the AO to substantiate the identity and credit worthiness of the investor companies and the genuineness of the transaction. It is also his submission that the di rectors of the investor companies were produced before the AO whose statements were recorded u/s 131 in which they have confirmed to have invested in the shares of the assessee company. It is also his submission that in the preceding and subsequent assessment years, such share capital at high premium has been accepted by the AO in the order passed u/s 153A/143(3) and no adverse view has been taken. Further, it is also his submission that such non-cumulative non- participating optionally convertible redeemable preference shares were redeemed to the investor companies in the F.Y. 2014-15 much before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, we find that the observation of the revenue authorities holding that the identity, genuineness and creditworthiness of the lender company could not be proved is contrary to the facts on record. Hence, the addition made by the revenue authorities is liable to be obliterated. 59. In the result, the appeal of the assessee in ITA No. 928/Del/2021 for A.Y. 2013-14 and ITA No. 929/Del/2021 for A.Y. 2014-15 is allowed. ITA No. 923/Del/2021 for A.Y. 2012-13 Nimbus Multicommodity Brokers Pvt. Ltd. 60. During the year, the assessee received unsecured loans from three entities which are as under: Sr. No. Name of Party Amount(Rs.) 1. Cindy Goods Suppliers 2,00,00,000/- 2. Newways Finance Pvt . Ltd. 1,05,00,000/- 3. RCJ Investment Trust Ltd. 70,00,000/- Total 3,75,00,000 61. The AO has made addition under Section 68 of the IT Act on account of the u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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