TMI Blog2020 (10) TMI 1370X X X X Extracts X X X X X X X X Extracts X X X X ..... ct from the very same lender companies namely M/s Aereo Deal Com Pvt. Ltd and M/s Chamak Traxim Pvt. Ltd which were received by another group concern of the assessee namely M/s Agrawal Coal Corporation Pvt. Ltd and Admanum Finance Ltd came for adjudication before the Tribunal wherein the appeal was filed by the revenue challenging the finding of Ld. CIT(A) deciding in favour of the assessee. The Co-ordinate Bench has dealt this issue in Agrawal Coal Corporation Pvt. Ltd [ 2011 (10) TMI 496 - ITAT INDORE] and has confirmed the finding of Ld. CIT(A) thereby confirming the identity of the lenders , genuineness of transactions and accepting the creditworthiness of the lender companies namely M/s ADPL M/s CTPL and holding that the Ld. A.O was not justified in making the addition u/s 68. Thus assessee has duly proved the identity of the cash creditors, genuineness of the transaction and proved creditworthiness of the lender companies which thus do not call for any addition u/s 68 of the Act and the interest paid on such loans should be allowed. Disallowance u/s 14A r.w.r. 8D - CIT(A) held that disallowance of interest was not called for since at the end of the year it earned n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e earned during the year is on the basis of the judgment of Cheminvest Ltd [ 2015 (9) TMI 238 - DELHI HIGH COURT] wherein as confirmed the finding of Tribunal that in the absence of any exempt income disallowance u/s 14A of the Act is not warranted. In view of the above judgment we sustain the disallowance u/s 14A of the Act at Rs. 2,71,120/-. Thus Ground No. 1 of assessee s appeal in case of Admanum Finance Ltd is partly allowed. - Hon ble Kul Bharat, Judicial Member And Hon ble Manish Borad, Accountant Member For the Revenue : Shri K.G. Goyal, Sr. DR. For the Assessee : S/Shri Ajay Tulsiyan Kapil Shah, CAs. ORDER PER BENCH The above captioned appeals filed at the instances of the Revenue assessee(s) and Cross Objection filed by the assessee pertaining to Assessment Year 2010-11, 2009-10 and 2014-15 are directed against the orders of Ld. Commissioner of Income Tax (Appeals)-I (in short Ld.CIT(A) ], Indore dated 18.3.2019, 20.2.18 16.7.2019 which are arising out of the order u/s 143(3) r.w.s. 147 of the Income Tax Act 1961(In short the Act ) dated 29.12.2017, 21.09.2016 and 14.12.2016 framed by ACIT-1(1)/DCIT-1(1), Indore. M/s Agrawal Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case the Learned CIT(A) erred in not appreciating and not accepting the contention of the assessee that the impugned reopening proceedings initiated on the basis of information received by the AO consequent to a search conducted on a third person were bad in law in view of the non-obstante clause in section 153C. 6. The assessee craves leave to add, alter, modify, substitute and/or withdraw all or any of the grounds of appeal at any stage of the appellate proceedings. M/s Admanum Finance Ltd ITA No. 331/Ind/2018 Assessment Year 2009-10 4. The assessee has raised following grounds of appeal 1. That the Learned CIT(A) erred in upholding the action of the AO of initiating the reopening proceedings u/s 147 and u/s 148. That on the facts and in the circumstances of the case and in law the proceedings are wrong bad in law and the consequential assessment order is prayed to' be quashed. 2. That the Learned CIT(A) erred in confirming the addition of Rs. 36,00,000/made by the AO u/s 68 on account of loan taken from M/s Aereo Dealcomm Pvt. Ltd. That on the facts and in the circumstances of the case the addition is wrong and uncalled for and is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order for the sake of convenience and brevity. 7. From perusal of Ground No. 1 2 of Revenue s appeal In the case of M/s Agrawal Transport Corporation Pvt. Ltd (In short ATCPL ) ITA No. 651/Ind/2019 for Assessment Year 2010-11 and Ground No. 2 3 of assessee s appeal in the case of M/s Admanum Finance Ltd (In short ADFL ) Ltd ITA No. 331/Ind/2018 for Assessment Year 2009-10 and Ground No. 2 of Revenue s appeal M/s Available Finance Ltd (In short AFL ), ITA No. 895/Ind/2019 for Assessment Year 2014-15 common issues relating to alleged unexplained unsecured loans u/s 68 of the Act taken from M/s Aereo Dealcom Pvt. Ltd (In short ADPL ) and M/s Chamak Trexim Pvt. Ltd (In Short CTPL ) as well as disallowance of interest paid thereon. Following chart shows the disputed amount of unsecured loan and interest thereon which are challenged before us by the Revenue in case of M/s ATCPL M/s AFL and the assessee M/s ADFL. S.No. Name A.Y Appeal No. Issue Amount CITA) 1 Agrawal Transport Corp. Pvt. Ltd 2010- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act which were completed on 20.3.2013 assessing the income at Rs. 4,15,63,641/-. Thereafter the case of the assessee was reopened u/s 147 of the Act by way of issuing notice u/s 148 of the Act. Assessee again filed its return of income on 1.3.2017. During the course of reassessment proceedings assessee was asked to prove the identity, genuineness and creditworthiness of the cash creditors namely M/s ADPL and M/s CTPL with regard to the unsecured loan of Rs. 2,68,00,000/- and Rs. 3,42,00,000/- taken respectively. The submissions made by the assessee were not found acceptable and the Ld. A.O was of the view that since the assessee could not establish the genuineness of transactions and creditworthiness of the lender the alleged amount of unsecured loan of Rs. 2,68,00,000/- from M/s. ADPL and unsecured loan of Rs. 3,42,00,000/- from M/s. CTPL are liable to the added to the income of the assessee u/s 68 of the Act. Ld. A.O also disallowed the interest on these loan at Rs. 3,66,288/- and Rs. 4,76,137/- paid to M/s. ADPL and M/s CTPL respectively. 10. Aggrieved assessee preferred appeal before Ld. CIT(A) challenging the validity of the reassessment proceedings and also challenging the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led order in the case of M/s Admanum Finance Ltd. 12. Per contra Ld. Counsel for the assessee relied heavily on the finding of Ld. CIT(A) in the case of M/s ATCL which were arrived at after considering the finding of Ld. CIT(A) against the assessee in the case of M/s Admanum Finance Ltd. Ld. Counsel for the assessee further submitted that identity of the lender company is not disputed as they appeared before Ld. DCIT and statements recorded on 1.12.2016 and 8.12.2016. Both the lender companies has sound financial as they are earning sufficient income and paying good taxes and not borrowing from other companies for giving unsecured loans. It was also submitted that the assessment proceedings u/s 143(3) of the Act have been carried out for various years in the case of both the lender companies on account of reopening of the cases for the same reasons as that of the assessee but on the completion of the assessment proceedings no adverse view was taken in the case of lender companies and even the issue of finding of original share certificates during search proceedings have been discussed in the assessment order. The share capital of both the lender companies stands assessed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Assessment Years 2009-10 and 2010-11 were also completed subsequent to the search on Mr. Deepak Kalani, however no adverse view was taken in respect of issue under consideration. 14. Ld. Counsel for the assessee submitted that the additions in the hands of the assessee were made on the basis of observations of the Department in the case of search carried out on Mr. Deepak Kalani and finding of share certificate of M/s CTPL and M/s ADPL and since the above referred assessment orders passed by the Ld. A.O of M/s. CTPL and M/s ADPL post search on Mr. Deepak Kalani not only proves the creditworthiness of the lenders and genuineness of the transaction but also substantiate that the adverse inference drawn by the revenue authorities from the said search proceedings were baseless and wrong and for this simple reason the additions made in the case of the Respondent are rightly deleted by Ld. CIT(A). As regards the decisions referred to by Ld. CIT(A) in his finding against the assessee in the case of M/s ADFL, Ld. Counsel for the assessee claimed that they are not applicable in their cases and also referred to the written submission placed on record wherein the facts of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en from unexplained cash creditors namely M/s. Aereo Dealcom Pvt. Ltd and M/s Chamak Trexim Pvt. Ltd are in dispute before us. 17. At the cost of repetition we are reproducing the chart of the additions made in various assessee s and the action of Ld. CIT(A) which in the case of M/s Agrawal Transport Corporation Pvt. Ltd and M/s. Available Finance Ltd held in favour of the assessee relating to the Assessment Year 2010-11 and Assessment Year 2014-15 respectively and against the assessee in the case of M/s Admanum Finance Limited for Assessment Year 2009-10:- S. No. Name A.Y Appeal No. Issue Amount CITA) 1 Agrawal Transport Corp. Pvt. Ltd 2010-11 No.651/Ind/2019 (Dep.) Aereo Deal Com Pvt. Ltd Loan Aereo Deal Com Pvt. Ltd Interest Chamak Traxim Pvt. Ltd- Loan Chamak Traxim Pvt. Ltd- Interest 2,68,00,000 3,66,288 3,42,00,000 4,76,137 Allowed Allowed Allowed Allowed 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt received from the investigation wing, Indore after the search was carried out on one Shri Deepak Kalani on 04.09.2015 and therefore the reopening is on borrowed satisfaction and not on an independent satisfaction of the AO. The appellant has also stated that the correctness of the information received from the Investigation Wing was not verified and was accepted in mechanical manner and the reasons recorded by the AO are not in accordance with the law in as much as the same are not reasons to believe but are only reason to suspect. The appellant has also stated that the report / information received from Investigation Wing by the AO on the basis of which the present proceedings were initiated was never provided to the appellant. The appellant has also stated that the statement of Shri Deepak Kalani was recorded by the then AO i.e. DCIT 1(1), during the assessment .proceedings of other group concerns of the appellant in December 2016 and the reasons recorded in the present case by the then AO in January, 2017 has not taken in to consideration this factual aspect that Shri Deepak Kalani had presented himself and his statement was recorded. The appellant has also contended th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961 as the escapement can only be ascertained after the verification, for which the reopening is a starting points- At the stage of initiation of the proceedings, the AO is not supposed to have formed a firm belief regarding the nature and extent of the income which could have escaped assessment. The AO was well within law to have initiated the reassessment proceedings after an expiry of four years from the end of the relevant assessment years on the basis of certain information coming to his possession later on after obtaining approval from competent authority. Further, there is no restriction in the Income Tax Act that the case cannot be reopened u/s 14B on the basis of information collected during the search in the case of third person. The appellant's contention that the AO ought to have resorted to proceedings u/s 153C is misplaced and cannot be accepted. 4.3 In view of the above it is held that the reopening proceedings were properly and validly initiated and the objections raised by the appellant have not been found acceptable as such rejected. Therefore, this ground of appeal is dismissed. 5. Ground Nos. 2 3: The second ground of appeal has been raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided loan entries not only to the appellant but also to other group companies of Agrawal Group. Referring to the investigation carried out by the Investigation Wing and drawing support from his detailed discussion made by the AO while rejecting the objection raised by the appellant to the reopening of the assessment u/s 147 of the Income Tax Act, 1961 and observing that Agrawal Group of companies are assessed at Indore however the lender companies have their registered office at Kolkatta and the fact that the companies have provided loans to appellant's group companies. The AO has also observed that both these companies are controlled and managed by the appellant group to bring its unaccounted funds to the books of accounts. The AO, on the basis of these observations, concluded that the appellant could not establish genuineness of transactions and creditworthiness of the lenders and added the impugned loan amounts u/s 68 of the Income Tax Act, 1961 and also disallowed the interest thereon. 5.5 I have gone through the assessment order as well as the written submissions filed by the appellant carefully and after taking into account the arguments of the appellant and reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The copies of various have also been placed on record. All these undisputed facts cumulatively establish the identity of both these companies which has also not been disputed by the A.O. 5.10 Therefore, the issue under consideration has to be decided in respect of the other two conditions stipulated under section 68 of the Income Tax Act, 1961 viz creditworthiness, of the loan creditors and the genuineness of the transactions, which have been doubted, by the AO in the assessment order. Both these issues are discussed here under: 6. A. CREDIT WORTHINESS OF THE LENDER COMPANIES: The facts pertaining to each company are discussed separately as under.- 6.1 I. M/S CHAMAK TREXIM PRIVATE LIMITED: The appellant has filed the financials of this company from FY 2008- 09 till FY 2016-17 at page numbers 1 to 48 of PB-B-I and also enclosed a chart of comparative financial figures of this company at page no.1 It is seen that the share capital of this company is constant from F.Y.2008-09 till 2016-17 and it's own net worth was Rs. 694.55 lacs in FY 2008-09 which increased to Rs. 869.581acs in F.Y. 2016-17 (page 1 of PB-B-1). 6.2 Further the company has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces to some beneficiaries, whose source is doubtful to the tune of Rs 6,50,37,499/- On the information being received from DDIT (Inv)-I,Indore the case was put up for grant of administrative approval 6.6 It seems that the same information which was passed on by the DDIT [Inv]-I, Indore to the AO of the appellant in the present appeal, was also supplied to the AO of Chamak as evident from the above abstract from the assessment order of Chamak. The case of Chamak for this year was reopened by it's AO exactly on the identical information received by him from DDIT (Inv)-I , Indore and on the same reason on which the present case of the appellant was reopened. The AO of Chamak completed the assessment proceedings and in the later part of the assessment order after noting tile compliances made by Chamak during the assessment proceedings, it is further observed by its AO as under: In the course of hearing query regarding seizure and retention of original copies of share certificates by DDIT (INV)-I, Indore related to assessee company made. Shri Vishnu Kr. Singhania said that company was incorporated on 17.03.1994. During AY 2004-05 company received capital and allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate is seized was related its company and furnished list oJ investors to whom share were allotted. Hence, on the circumstances as stated above no adverse view taken. J 6.7 From the above findings in the assessment order of Chamak, it is seen that the case was reopened in identical reasons, the issue of seizure of original share certificates and also the issue of advancing the funds by it, which were suspected to be dubious in nature, was examined by its AO and was found proper and no adverse view was taken. It is also evident that the allegation on Chamak that the company is being used for providing the accommodation entries to various parties of Indore was made in the report sent by the DDlT-lnv(1), Indore , which was not found to be correct by the AO of Chamak. The issue of finding of original share certificates has been discussed at length in the assessment order of Chamak It has also been mentioned by the AO of Chamak that he has verified the share capital which was brought forwarded from AY 2007-08 and no change in the quantum of capital was noticed till 31.03.2016. The bank account of Chamak was also analyzed with respect to the loans and advances made by it. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. (Inv)- I, Indore and on the same reason on which the present case of the appellant was reopened. The AO of Chamak completed the assessment proceedings and in the later part of the order after noting the compliances made by Chamak during the assessment proceedings it is further observed as under: In the course of hearing query regarding seizure and retention of original copies of share certificates by DDIT {INV}- I, Indore related to assessee company made. Sri Vishnu Kr. Singhania said that company was incorporated on 17.03.1994. During AY 2004-05 company received capital and allotment accordingly mode. However, some of the shares certificates lost by shareholders and approached assessee company for issue of duplicate copies of share. Number of duplicate share was to be issued. For same purpose Sri Deepak Kalani one of the directors of M/s Chamak Trexim Private Limited who was also associated as directors in other company located in Indore took the bundle of share certificates from Kolkata to Indore and kept in his office AI R filed letter on supporting document explanation. Regarding volume of transactions seen in statement of bank account AIR said that major source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: The assessee company filed its return of income for the assessment year 2012-13 on 29.09.2012 declaring total income of Rs 38,65,530/-. The return was duly processed u/s 143(1) of the 1.T Act, 1961 on returned income. Subsequently, the case was re-opened on the basis of information received from ACIT (Central)- I, Indore wherein it was alleged that during the financial year 2010-11, the assessee company made advances to Maa Charitable Trust and Available Finance Ltd. sources of which was not explained. Based on above allegations, statutory notices u/s 148, 143(2) and 142(1) of the IT Act, 1961 were issued to the assessee company. In response to the notices as issued above, the assessee company made compliances from time to time. Considering the replies of the assessee and on the basis of documents and papers furnished during the assessment pmceedin9s, total income of the assessee is computed as under: Returned income of the assessee : Rs 38,65,530/- Addition made : Rs. NIL Total assessed Income : Rs 38,65,530/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar. Further, the salary amount paid to employees were not. properly vouched. In the view of the above, I disallow Rs 37,536/- (claim this year Rs. 1,57,236/- claimed last year Rs 1,19,700/-) and added to the assessee's total income. 6.14 Thus in this assessment order, the issue of share capital raised by Chamak in AY 2001-05 was specifically examined by issuing summons and not ice s under section 133(6) of the income Tax Act, 1961 and the capital raised along with share premium stands accepted and assessed. From the records and submission of the appellant, it is further observed that the Chamak has not raised any fresh capital after 2007-08, as also stated by the A.O of Chamak in the Assessment order of A.Y.2010-11 and A.Y.2011-12. 7. II. M/S AEREO DEALCOMM PVT. LTD.: 7.1 The appellant has filed the financials of this company from F.Y.2008- 09 till FY 2015-16 at page numbers 76 to 141 of PBB-I and also enclosed a chart of comparative financial figures of this company at page No. 76. It is seen that the share capital of this company is constant from F.Y.2008-09 till 2016-17. Its own net worth is also in the range of Rs. 638.34 lacs to Rs. 731.061acs in thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such huge sum to pay Share prices including premium. Copies of Bank Accounts of those Share-holders have also been verified to cross-check the transactions they had entered with the assessee Company. In this connection Inspector was entrusted with independent inquiries. From the report submitted by the inspector, nothing objectionable was found; no interference is thus made on this ground. 7.6 Thus in this case also the issue of share capital raised by Aereo Dealcomm Pvt. Ltd. in A.Y.2003-04 was specifically examined by issuing summons and notices under section 133(6) of the Income Tax Act, 1961 and carrying out enquiries through the inspectors and the capital raised along with share premium stand accepted and assessed. 7.7 The assessments of Aereo for A.Y.2009-10 and A.Y.2010-11 were also completed after scrutiny u/s 147 R.W.S 143(3) of the Income Tax Act, 1961 by its jurisdictional AO assessing the income at Rs. 18,42,160/- and Rs. 8,86,387/- respectively, which fact also reaffirms the creditworthiness of this company, 7.8 It is further seen that Mr. Deepak Kalani, director of both the companies appeared before the than AO, during the assessment proceedings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantial own net worth and also considering the profits declared by both the companies and also the fact that both these companies have no borrowings as well as in the light of the facts that assessments- have been carried out of these two companies, particularly for the . assessment years, when they last. raised their share capital, in my opinion the creditworthiness of both the companies stands substantiated properly and there appears no cogent reason to doubt the same. It is held that both the companies were credit worthy of making the advances to the appellant company. 8. B. GENUINENESS OF THE TRANSACTIONS~ Now coming to the next issue of genuineness of the transactions, it is seen from the assessment order that the same has been doubted primarily for the reason that the registered office of both the companies is at Kolkatta whereas the appellant group of companies are based at Indore and further the observation that providing loans only to the appellant group companies raises a doubt that both the lender companies are controlled and managed by the appellant group. Further the AD has also drawn support from his order rejecting the objections of the appellant file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of safety of his investments, his companies advanced loans and made investments in the Agarwal Group of Companies. 8.5 The appellant has also explained that interest is being regularly and properly paid in respect of the funds borrowed from the lender companies at the prevalent market rates and the loans are also repaid from time to time and in these circumstances any lender would look forward to lend to the Agrawal Group, as safe investment. The fact that Agrawal group being amongst the leading business house with substantial revenues and also a prominent tax payer group of Indore also provides further comfort and security to its lenders and the lenders are more than willing to invest in the group. Further considering the business volumes and potential, the Agrawal Group also requires funds within the group. Considering . these facts, the appellant contended that, the fact that the major exposure of both the lender companies is only with Agrawal Group of concerns stand justified and should not have been viewed adversely. 8.6 Considering all the above, i.e. the explanation of Mr. Deepak Kalani and also of the appellant, in my opinion merely on the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s nothing on record to support the contention of the AO that both the lender companies are controlled and managed by the Agrawal Group. The AO has also raised doubts only in this regard without any basis- The management and control of both the companies rest with Mr. Deepak Kalani, which fact is uncontroverted and is also supported by the fact that certain documents relating to both these companies were found from the office of Shri Deepak Kalani during the search. Further he is a director of both the companies and is otherwise an independent person having his own standing. He also appeared before the department time to time, filed various submissions and explanations and placed on record various documents and information of both these companies as required by the officers. It is seen that apart from mere allegations, there is nothing on records to hold that management/ control of these two companies are with the Agarwal Group. 8.10 Finally coming to the issue of rejection of the objections filed by the appel1ant, by the AO it is seen that the AO has rejected the objections primarily on the basis of reasons recorded by the then AO for reopening of the case and the contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beginning which is not correct practice As such these certificate s were not detached from the shore certificate book and were held back and were not issued. Moreover for reissuing duplicate share certificate only name of the present shareholder is mentioned on the face of the share certificate and details of the earlier shareholder need not be endorsed on the back of share certificate. Accordingly duplicate share certificates were prepared after incorporating name of the present share holder on the face of share certificates and were finally issued to the respective shareholders. These issuance of share certificates to any shareholder does not involve any financial transaction with the company. It pertains the financial transaction between the shareholders only which in no case affects the income of the companies whose shares are being issued/reissued. The communication to this effect will be submitted shortly . 8.13 Thus Mr. Kalani explained ID detail the reasons for original share certificates of Chamak and Aereo to be lying at the corporate office of the companies at Indore. He has stated that the share holders of Chamak and Aereo requested for reissuance of the share ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue. It is also seen that the same AO i.e. DCIT 1 (l) Indore who recorded 'reasons' for reopening this case on 10/01/2017 did not consider the explanation and submissions given by Mr. Deepak Kalani in December, '2016, i.e. just few days before the date of recording tile 'reasons' on this issue and went on to record the reasons in a mechanical manner. If at all the AO recording the 'reasons' was not satisfied with the explanation given by Mr. Deepak Kalani in respect of the seizure of original share certificates, for any reason, it was incumbent upon him to have stated his points of dissatisfaction and the reasons thereof, in the 'reasons' recorded by him immediately after receiving the explanation of Mr. Deepak Kalani. In these circumstances the explanation given by Shri Deepak Kalani on this Issue stands uncontroverted and therefore deserves to be accepted. Even otherwise Shri Deepak Kalani has properly explained and substantiated the reasons of finding original share certificates and there is nothing on record to disbelieve the same. Therefore there is no sound basis or reasons for doubt mg the transactions of both these companies with the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he authorities from time to time, recorded his statement furnished detailed written submissions and properly addressed all the concerns and doubts with respect to the genuineness of the transactions. ~ Direct enquiries have also been found conducted by the AO in this case by calling information u/s 133(6) from both the loan creditors (copies are at page 102 to 105 of PB-A), which were also complied with, as mentioned in the assessment order, It is seen that there is no adverse inference recorded in the assessment order with regard to such compliances made by the loan creditors. ~ Most importantly, in this case not only the source but also source of source is very well and properly explained and substantiated on records both by the appellant as well as by- the lender companies. As discussed above and also as evident from the financials of both the companies filed on records, right from the financials of 2007-08, the share capital of both the lender companies has remained unaltered during atleast last ten years which establishes the fact that no fresh funds have been introduced in both these companies. It is also on record that the share capital of both these companies st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficers time and again. There is no defect found and pointed out in the trail of any transactions on records. The transactions have been confirmed by the parties and have been found entered in the commercial manner, interest has been paid on loans and TDS has also been deducted. Shri Deepak Kalani and the lender companies have placed on records their balance sheets and assessment details which substantiate the contentions of the appellants as discussed above. On the contrary, there is no evidence in the hands of the investigation wing or the Assessing Officer which suggests otherwise. Only on finding of the original share certificates from the lender s own office, on which this entire case has been made-up cannot be doubted and concluded that the transactions of concerns of the lenders with the appellant are not genuine. Thus in my considered view, the test of genuineness of the transactions has also been successfully met in this case. 8.19 In view of detailed discussion above, the creditworthiness of the lender parties as well as the genuineness of their transactions with the appellant are properly explained and substantiated and there is nothing on record to doubt the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the appellant and voluminous documents included in compilation in support of grounds of appeal raised are very carefully taken into consideration. 4.1 The first and foremost ground of appeal is directed- against addition of Rs. 6,08,94,415/- crores for Loans taken from 9 Kolkata based companies as per chart included in par a 2.3 of assessment order treated as unexplained The A.O. (Addl.CIT, Range-5) apart from issuing notices u/s 133(6) on 29.11.2010 directly had deputed two Inspectors attached to his Range in making local enquiries at Calcutta in the month of December, 2010; first time for the period 6.12.2010 to 10.12.2010 and then again for the period 20.12.2010 to 25.12.2010. The AO also took assistance of the Investigation Wing of the department based at Calcutta by issuing commission u/s 131(1)(d) on 03.12.2010 to make verification about the existence of these 9 Calcutta based companies from whom the appellant borrowed substantial funds during the year under consideration. The AO has taken note of the enquiry report submitted by DDIT (Inv. Wing) and on page 78 of the assessment order it will be worthwhile to reproduce the report submitted by DDIT (Inv. Wing)13, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lving nominal income in the same range may be acceptable, but can become suspicious and doubtful if the amount advanced runs in millions and crores without there being other verifiable details and evidences of sources of such funds advanced. ......... 4.3 Now the issue of loan taken from Aereo Dealcom Pvt. Ltd. at Rs. 1.88 crores taken up for consideration. The appellant had taken a loan of Rs. 1.88 crores from. the said company at Rs. 8,38,156/- and an amount of Rs. 1,60,590/- was repaid during the year. The AR present pointing out the ledger account of the said party in paper book D at page 392-393 submitted that the loan received from these company stand fully repaid in Nov 2010. The Inspectors in their report as noted on page 3 of assessment order has confirmed about: existence of such company at the given address. The Inspectors have confirmed, as noted on page 7 of the assessment order that the accountant of this company, in the statement recorded by the Inspectors, has confirmed having advanced unsecured loans to the Appellant. Before DDIT (Inv) Kolkatta also against issue of summons u/s 131 compliance were made by filing of copies of audited annual accounts, pho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olders' from whom such fresh share capital was raised. The AR had submitted the list of Share holders to whom shares were allotted during the relevant previous year. Notices u/s 133(6) of the IT Act were issued to some of those new Share-holders on test-check basis for the purpose of verification of the claim made by the assessee Company in this connection. Replies were received from those Share holders and those were considered in the light of their capabilities to invest such huge sum to pay Share prices including premium. Copies of Bank accounts of those Share holders have also been verified to cross-check the transactions they had entered with the assessee Company. In this connection Inspector was entrusted with independent inquiries. From the report submitted by the Inspector, nothing objectionable was found; no interference is thus made on this ground. 4.3.4 In view of above factual and legal position wherein even the sources of the funds of the creditor company have been found and verified by the concerned AO and the transactions duly getting reflected in the audited final accounts of the creditor company, the AO's action in doubting such loan transaction is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uineness of the transactions stand already examined and substantiated earlier in other group cases of the appellant, wherein direct enquiries were got conducted not only by deputing the Inspectors of the department but also through the local Investigation Wing. The CIT(A) - II Indore after examining the issue at length found the creditworthiness of both the parties and also the genuineness of the transactions proved and deleted the addition u/s 68 of the Income Tax Act, 1961 made in respect of loans received from these two companies by the group companies of the appellant, which order was also affirmed by the hon'ble Jurisdictional ITAT in the case of Agrawa1 Coal Corporation Pvt. Ltd in ITA 294/IND/2012. It would be relevant to abstract the observations of the Hon'ble 1TAT made in this regard. We have heard the rival contentions of both the parties. We have gone through the assessment order and also the order of the CIT(A). We have also perused the case laws cited by the Ld. Departmental Representative as well as the Ld. Authorized Representative for the assessee. 21. We find that during the year under consideration the assessee received unsecured loan aggrega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies, Memorandum of Association. The existence of the Company was inspected by the Inspector on 10.12.2010 and the AO has not disputed about the existence. During the course of investigation, statement of accountant was recorded by the Inspector, wherein he has confirmed the loan transaction in assessment year 2002-03. The source of fund of Creditor Company was examined. The AO has also examined the opening balance, which stands accepted, since no addition was made in the assessment year 2007-08. The Company has also shown the interest income o] Rs. 47.83 lacs and profit of Rs. 11.20 Lac s in assessment year 2008-09 reflecting a healthy financial position. 24. During the course of hearing, the Ld: Authorised Representative for the assessee submitted that in the year 2007-08 the opening balance of the company was Rs. 98,73,663/- which has been accepted by the department as no addition was made in that year and this year interest was paid of Rs. 33,04,583/- We find that the loan receipt from this company were repaid in February, 2010. The Inspector has confirmed that the accountant of this company of whom statement was also recorded by the Inspector; has confirmed having ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuineness of transaction. 34. The AO has not been able to rebut, in any manner, voluminous documentary evidences placed on record. In fact, disregarding the documents placed on record, the assessing officer, proceeded to make addition under section 68 of the Act, simply by cherry picking 'certain parts of the reports of the Inspectors of Income Taxi Investigation Wing without appreciating that the reports considered along with ex-parte material/documents collected/received from creditors established, beyond any doubt, the ingredients of section 68 of the Act. 35. Most pertinently, the AO has not specifically dealt with any of the voluminous material/documents available on record. In the assessment order, the assessing officer has simply reproduced the reports furnished, submissions of the assessee and discussion on case laws, without dealing with the same and specifying their applicability vis-a-vis the facts of various creditors. 36. We find that in assessment year 2005-06 in the case of Agrawal Coal Corporation 19 Taxman.com 209 (ITAT Indore), of the same assessee, relied upon by the Ld, Departmental Representative, the creditors were not traceable, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also the same. 106. This issue has already been considered by us hi1e deciding ground nos. 2 to 4 in ITA No. 294/1nd/2012 for the assessment year 2008-09 in the case of M/s Agrawal Coal Corporation Pvt. Ltd. wherein we have dealt with this issue in detail The addition ma.de by the AO u/s 68 in respect of credits received by the assessee from the twelve Kolkata based companies was deleted by the Ld. CIT(A) ho1ding that their identity and creditworthiness and: the genuineness of the transactions was established. We have upheld the decision of the Ld CIT(A] 'and dismissed the said ground of Revenue in that appeal Following the same reasoning we hold that the ITAT has right1y deleted the addition of Rs. 6,08,94,415/- made by the AO in this ease also. Accordingly., this ground of appeal of the departmental appeal is dismissed. 8.23 Thus the additions made under section 68 of the Income Tax Ac 1961 in respect of the transactions of the group concerns of the appellant with Chamak and Aereo in the regular assessment proceedings of AY 2008- 09 and AY 2009-10 were deleted by CIT(A) - II Indore which order was affirmed by Honble ITAT. At this juncture it will be worthwhile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther it is stated that the company has shown the interest income of Rs. 85.30 Lacs and profit of Rs. 14 Lacs in AY 200809 and the entire loan was repaid in February 2010. 8.24 Thus the Hon'ble ITAT finally concluded at para no.37 that the entire additions made u/s 68 is without any basis and 1S legally unsustainable and in Para 38 further held that the loan taken by the assessee was explained, is proper and does not require any interference and the addition was rightly deleted by the CIT(A) who has also rightly deleted the disallowance of interest on the adhoc loans. 8.25 The appellant has also pointed out that its group companies repaid the same loan which was added u/s 68 in the case of it s group companies, to the lender companies during the year under consideration out of which fresh loans were advanced to the appellant, which has again been added in its hands and which is the subject matter of the present appeal. it is also noticed that the Hon'ble ITAT in the cases of group companies, as abstracted above, has rendered a finding of fact that the loans by the group companies were repaid in February 2010, the fact which is also corroborating with the . facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years which is enclosed at page no. 01 and page No. 67 of PB-B-I. This aspect has already been discussed earlier and it is seen that both these companies have earned considerable income in various years. Therefore, the conclusion that they are having meager income is factually incorrect and consequentially the conclusion that these are paper/shell companies has also not been found correct. 9.2 In para 4.2.3 it has been stated by my predecessor that the appellant failed to prove the genuineness of the transactions. I wish to differ from this observation also. As explained by the appellant, Mr. Deepak Kalani who manages and controls both Aereo and Chamak is a prominent financial consultant having establishment at Indore and Kolkatta and is a very close friend of Shri Vinod Agrawal, the promoter of Agrawal Group of concern and is associated even professionally with the Agrawal Group since long as a financial consultant. These facts have not been controverted either by the AO or by my predecessor. The fact that both these lender companies have not raised any fresh share capital during last 8 to 10 years and have no borrowings in the form of unsecured loans or otherwise in their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been untraveled by the AO by interrogating them, is misplaced since the loan provider companies i.e. Chamak and Aereo were duly produced before the DCIT 1(1) through their director Shri Deepak Kalani on several occasion in December 2016 and his detailed statements were recorded and he also substantiating the transactions by filing the bank also by explaining the source of source. The statements so then AO are enclosed at page no. 154-164 of PB-B-I, which filed before my predecessor as evident from the submission of the appellant in those cases as reproduced in the order of my predecessor. It seems that the vital facts that the loan creditors were produced by the appellant group before the then AO, statements were recorded and submissions were made have completely skipped attention of my predecessor. It is very rightly pointed out by him that once the onus shifted back to the assessee to offer an explanation to the satisfaction of the AO, it could have been discharged by producing the loan providers. Since this is what has exactly happened in the group cases that the loan creditors were produced before the AO in those cases and thus the onus which shifted back to the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the source of source of raising the loan by filing not only the bank statements of the loan creditors but also substantiating the source of source by filing the details of such source of source. It was categorically substantiated that the immediate source of credit entries in the hands of the appellant was the funds received by the loan creditors from other group concerns of the appellant itself. The other group concerns of the' appellant repaid the loans back to the loan creditor which was advanced to the appellant. Thus the appellant contended that there cannot be any better source of source as in the case of the appellant. 9.12 The appellant further submitted that the person in whose name the appellant i.e. Chamak and Aereo also offered an explanation about the nature and source of such sum credited in explanation, their bank statements and the details and accounts of the persons from whom the transactions with the appellant were sourced. The director was produced and his statements were recorded. Therefore, the condition of the newly inserted proviso were also satisfied. Therefore, the contentions of the appellant have been sound footings. 9.13 I further endorse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, I agree with the observation of my predecessor that creditworthiness is not proved by showing issue and receipt of cheque or by furnishing a copy of statement of bank account and when circumstances require that there should be some more evidence of positive nature to ensure that the subscribers have made genuine investment. I find that the appellant has well discharged this onus through the balance sheets and other financial details of both the companies reflecting substantial revenues and profits in almost all the years and also through the fact that both the companies have not borrowed any amount for making investments with the appellant group. 9.18 It is found that besides showing that the transactions were through normal banking channels, the appellant, in order to establish the creditworthiness of the loan creditor and the genuineness of the transactions, went far ahead and placed on record many more evidences to substantiate the same, which are already discussed and explained in this order such as investments purely out of own capital and reserves of the lender companies, their assessment orders, source of credits, source of source creditors, production of director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which Lunkad Group has issued cheques in favour of Narmada Extrusion Ltd. Further the assessee failed to produce the director and the Lunkad Group also failed in discharging its onus to explain the source of huge share application money as it did not had any sound business and it declared meager amount of income. The facts of this case are also clearly distinguishable and rather support the case of the appellant. No such documents reflecting any cash receipts by Mr. Deepak Kalani or the lender companies were found in the search and it is neither a case where the directors refrained from appearing before the AO nor it is case where there is receipts of huge share application money by the lenders before issuing cheques to the appellant. In fact the share capital received by the lender companies is duly assessed u/s 143(3) of the Income Tax Act, 1961 and no fresh share capital was raised in last 7-8 years. Thus the facts of the present case are very clearly distinguishable from the facts of the various decisions relied upon by my predecessor and therefore, the propositions laid down in those cases do not apply on the facts of the present case before me. On the contrary, the propositio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. The lenders have explained the source of funds which have been advanced to the appellant. It is well evident from audited financials that both the lender companies have not raised any share capital or borrow1ngs in past 10-12 years. 10.2 Regarding the issue of genuineness of the transactions, it is also established as the same are in the normal course of their finance business. These companies are non banking finance companies and have made lending to the appellant for its working capital requirements in purely a commercial manner. The appellant has paid interest on the loans raised and have deducted TDS as per law. The loans taken and repayments have been found through normal banking channel. All the transactions are properly reflecting in the audited balance sheet of the appellant and the lender parties. The transactions have been found properly confirmed by both the parties. The directors of both the lender companies are identified; they appeared before the authorities and explained their transactions as well as understanding with the appellant companies. They have also replied to all the queries raised by the authorities from time to time. There is no denial of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e identity of the lenders , genuineness of transactions and accepting the creditworthiness of the lender companies namely M/s ADPL M/s CTPL and holding that the Ld. A.O was not justified in making the addition u/s 68 of the Act. The relevant extract of the finding of Hon ble Tribunal in its order dated 27.6.2016 is mentioned below:- 4.3 Now the issue of loan taken from AEREO DEALCOMN PVT LTD. at Rs. 3.26 crores is taken up for consideration. The appellant had an opening balance appearing in the name of said company at Rs. 98,73,663/- and an amount of Rs. 42,93,663/- was repaid during the year under consideration the interest paid being Rs. 33,04,583/-. 4.3.1 The AR present pointing out the repayment chart in paper book D at page 837 submitted that the loan received from these company stand fully repaid in Feb 2010. The Inspectors in their report as noted on page 3 of assessment order has confirmed about existence of such company at the given address. The Inspectors have confirmed, as noted on page 7 of the assessment order that the accountant of this company, in the statement recorded by the Inspectors, has confirmed having advanced unsecured loans to the Appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Share Capital' was raised to the tune of Rs. 4,77,50,000/-. Assessee company was asked to provide list of new 'Share holders' from whom such fresh share capital was raised. The AR had submitted the list of Shareholders to whom shares were allotted during the relevant previous year. Notices u/s 133(6) of the I'T Act were issued to some of those new Share-holders on test-check basis for the purpose of verification of the claim made by the assessee Company in this connection. Replies were received from those Shareholders and those were considered in the light of their capabilities to invest such huge sum to pay Share prices including premium. Copies of Bank accounts of those Shareholders have also been verified to cross-check the transactions they had entered with the assessee Company. In this connection Inspector was entrusted with independent inquiries. From the report submitted by the Inspector, nothing objectionable was found; no interference is thus made on this ground. 4.3.3 It will be appropriate to refer to the decision of Hon'ble KolkataHigh Court as relied and referred by appellant in the written submissions decided in the case of CIT Vs. Data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning balance of repayment is at Rs. 3.84 crores. 4.4.1 The AO of this company for Asstt. Year 2004-05 in assessment order passed u/s 143(3) on 31.01.2006 has verified the source of owners fund being share capital, share premium received which were invested by way of loans and advances. In the intimation issued u/s 143(1) for AY 2009-10 at page 849 of paper book D, the returned income has been stated at Rs 11.66 lacs and a refund of Rs. 11.27 lacs has been issued to this company. Thus in view of detailed findings arrived in the case of Aereo Dealcomm Pvt. Ltd. above, the said loan of Rs. 25 lacs from this company is also held to be explained. 20. We have heard the rival contentions of both the parties. We have gone through the assessment order and also the order of the CIT(A). We have also perused the case laws cited by the Ld. Departmental Representative as well as the Ld. Authorized Representative for the assessee. 21. We find that during the year under consideration the assessee has received unsecured loan aggregating to Rs. 6,69,00,000/- from 12 Kolkata based companies, the details of which are as under :- S. No. Name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,17,247 12. Lambodar Barter Pvt Ltd. - 47,00,000 37,909 7,809 - 47,30,100 TOTAL 6,69,00,000 1,03,20,567 22. During the assessment proceedings, the AO has tried to verify the aforesaid unsecured loan. Notices were issued u/s 133(6) to the lenders calling for documentary evidences in support of the amounts advanced. Secondly, the Income-tax Inspectors were deputed personally to visit and make enquiries. The Commission was also issued to DDIT, Kolkata u/s 131 of the Act and Income tax inspectors were again deputed to personally visit and make enquiries at Kolkata and lastly the assessee was directed to furnish documentary evidences in support of the unsecured loan. The AO has issued notices directly u/s 133(6) to lenders calling for documentary evidence in support of the amounts advanced. The lender companies, in return, filed the various documents in the form of confirmations, income tax retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was made in that year and this year interest was paid of AO. 33,04,583/-. We find that the loan receipt from this company were repaid in February, 2010. The inspector has confirmed that the accountant of this company of whom statement was also recorded by the Inspector, has confirmed having advanced unsecured loan to the assessee. The DDIT has also issued summons u/s 131 and in response to that the Company has filed the copy of the audited annual account, photocopy of the bank statement and confirmation. Therefore, the Inspector and DDIT have confirmed the existence of such company. The assessee has also filed copy of the assessment order for assessment year 2002-03 of the said lender company, wherein the shareholder funds being shareholder capital and share premium account was examined and found to be verifiable. AO found that the said lender company had share capital of Rs. 47,75,000/- and it has received share premium of AO. 4,29,75,000/- on account of share allotment. The AO of the lender company has also verified the shareholder on test check basis and shareholders bank accounts were also verified. Therefore, we are of the view that the assessee has proved the identity, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has filed documentary evidence like confirmations, bank statements, income tax returns, audited reports, TDS certificates, Master data of the Company with Registrar of Companies, Memorandum of Association. In the case of Reward Consultants Private Limited, on inquiry made by the Inspector, it was informed that the present occupant has purchased the office from one Shri O.P. Agrawal who was the key person of M/s. Reward Consultants Pvt. Limited. This lender company had turnover of AO. 1.66 crores, gross interest of AO. 32.54 lacs and net profit of AO. 9.43 lacs in assessment year 2008-09. Opening balance from the said company stands accepted, since no addition was made in the AO 2007-08. The entire loan was repaid in September, 2010. The said creditor company also responded to the notices issued u/s 133(6) by the AO. Similarly, in Pushpak Trading Consultancy (P) Limited, it had shareholder s funds of AO. 13.47 crores as on 31.3.2008.The entire loan was repaid in March, 2009. The said company is a registered NBFC. The said creditor company also responded to the notices issued u/s 133(6) by the AO and also in response to the notice issued u/s 131 by the DDIT (AO) Kolkat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 68 of the Act, observed that the assessee having given the names and addresses of the creditor who were income-tax assessees, the mere fact that such creditors did not respond pursuant to notice under section 131 of the Act could not be used against the assessee. The Hon'ble Supreme Court observed as under: In this case, the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, there is the concurrent finding of both the Commissioner (Appeals) as well as of the Tribunal that the firm has satisfactorily explained the aforesaid entries. 30. We find that in the case of S. K. Bothra Sons, HUF v. ITO: 347 ITR 347, the assessee took loan from two persons. During the course of assessment proceedings, the assessing officer issued notice under section 131 of the Act to such parties which were duly responded. The assessing officer, however, added these loan amounts as unexplained credit simply based on the report of the Inspector and held the same as not genuine. The appeal preferred by the assessee was dismissed by the CIT(A) as well as by the Tribunal. On further appeal before the High Court, while setting aside the matter to the assessing officer, the Court observed as under: .. In such circumstances, we find substance in the contention of Mr. Khaitan that the order of assessment cannot be supported as the materials collected by the Assessing Officer through the Inspector which were relied upon were neither disclosed to the appellant nor was the appellant asked to explain the report submitted by the Inspector. It is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor by pointing out that the amount was received by way of cheques drawn on the bank account of M/s. Yadav and Company maintained with Union Bank of India, MotiBagh Branch, New Delhi, which, despite denial by the Yadavs, was, as per bank records, found to be opened and operated by Sh. O.P. Yadav/Mohinder Singh Yadav. The initial burden thus discharged, it was for the revenue to establish that the transaction in question was bogus. This would be so even if there is a denial by the creditors that the credits were not genuine as held by the Supreme Court in CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 78. Mere denial by Yadavs that account in question was not operated by them would not automatically lead to the inference that assessee deposited in the said account and, therefore, it became its unaccounted income. The CIT(A) as well as the ITAT have rightly pointed out that the necessary exercise which was to be undertaken by the Assessing Officer was not carried out. It was for the Assessing Officer to probe the matter further. He could not simply pass on the buck to the assessee asking him to produce Sh. O.P. Yadav or Sh. Mohinder Singh Yadav. It is the Department which had r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unworthy of credence. So long it is not established that the return submitted by the creditor has been rejected by its Assessing Officer, the Assessing officer of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness of transaction through account payee cheque has been established. We find that both the Commissioner of Income Tax(Appeal) and the Tribunal below followed the well-accepted principle which are required to be followed in considering the effect of Section 68 of the Act and we thus find no reason to interfere with the concurrent findings of fact recorded by both the authorities. The appeal is thus devoid of any substance and is summarily dismissed. 33. On going through the above case laws and applying them on the facts of the assessee s case, we find that the same are squarely applicable to the assessee s case. We find that in the instant case the assessee had, during the course of assessment proceedings, filed all the relevant details/ documents/ information, required by the assessing officer, as were necessary to substantiate the identity and credit-worthiness of the creditor companies and also the genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, without any basis and is legally unsustainable. 38. The view of the ld. CIT(A) that the loan taken by the assessee from twelve companies aggregating to Rs. 6,69,00,000/- was explained, is proper and does not require any interference and the addition was rightly deleted by the ld. CIT(A) and has also rightly deleted the disallowance of interest of Rs. 1,03,20,567/- on the above loans. Ground Nos. 2 to 4 of the Revenue are dismissed. 21. From perusal of the above finding of Co-ordinate Bench in the case of another Group concern of assessee(s) namely Agarwal Coal Corporation Pvt. Ltd wherein also unsecured loan taken from M/s ADPL and M/s CTPL were in dispute. We find that Hon ble Tribunal after considering all the relevant facts and material; on record decided in favour of the assessee thereby confirming the finding of Ld. CIT(A) holding that the assessee has duly proved the identity of the cash creditors, genuineness of the transaction and proved creditworthiness of the lender companies which thus do not call for any addition u/s 68 of the Act and the interest paid on such loans should be allowed. 22. We also find that assessment proceedings of the alleged lender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 144148 Cases concluded after searching of DDIT(Inv), Indore and no adverse opinion was formed 3 2010-11 16.11.17 147 8,86,387 149 23. It is also noteworthy that the loans taken by M/s Agrawal Coal Corporation Pvt. Ltd from two lender companies namely M/s ADCPL M/s CTPL which were held to be genuine by the Coordinate Bench were repaid back and on the very same day of receiving the loan which repaid by M/s Agrawal Coal Corporation Pvt. Ltd the lender companies have used the same fund for advancing loan to M/s Agrawal Transport Corporation Pvt. Ltd. We have verified this fact and found that on 23.02.2010 sum of Rs. 2,68,40,000/- was repaid by M/s Agrawal Coal Corporation Pvt. Ltd to M/s Aereo Deal Com Pvt. Ltd. This sum was received in UCO Bank account in case of M/s Aereo Deal Com Pvt. Ltd and on the very same day, through Cheque No. 111017 sum of Rs. 2,68,00,000/- was given as loan to M/s. Agrawal Transport Corporation Pvt. Ltd. Similarly in the case of M/s Chamak Traxim Pvt. Ltd loan of Rs. 3,42,55,000/-was repaid by M/s Agrawal Coal Corporation P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of M/s Admanum Finance Ltd and delete the addition of unexplained cash credit u/s 68 of the Act for the unsecured loan taken from the above referred two lender companies totalling to Rs. 1,44,75,000/- and we also direct the revenue authorities to allow the claim of interest expenditure of Rs. 61,58,897/-. We thus dismiss Ground No. 1 2 of Revenue s Appeal in the case of M/s Agrawal Transport Corporation Pvt. Ltd for Assessment Year 201011 allow Ground No. 2 3 of the assessee s appeal in case of M/s Admanum Finance Ltd for Assessment Year 2009-10 and dismiss Ground No. 2 of Revenue s appeal in the case of M/s Available Finance Ltd for Assessment Year 2014-15. 24. As regards the Cross Objection filed the assessee in the case of M/s Agrawal Transport Corporation Pvt. Ltd for Assessment Year 2010-11, at the outset Ld. Counsel for the assessee requested for not pressing the ground raised in the Cross Objection No35/Ind/2019. Thus all the grounds raised in the Cross Objection by the assessee in case of M/s Agrawal Transport Corporation Pvt. Ltd for Assessment Year 2010-11 are dismissed as not pressed. 25. As regards Ground No. 1 in the case of M/s. Admanum Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year by the assessee itself on account of certain dispute with the lender and thus the addition made during the year under appeal resulted into double addition. 30. Per contra Ld. Departmental Representative vehemently argued supporting the orders of both the lower authorities. 31. We have heard rival contentions and perused the records placed before us and also gone through the decision of Hon ble Coordinate Bench of Indore in the case of M/s Agrawal Corporation Pvt. Ltd (supra) relied by Ld. Counsel for the assessee. Through Ground No. 4 the assessee namely M/s Admanum Finance Ltd is aggrieved with the finding of Ld. CIT(A) confirming the disallowance of interest of Rs. 6,75,000/- and Rs. 6,00,000/- paid to M/s Jayant Securities Finance Ltd and M/s. Lunkward Media Entertainment Ltd respectively. The undisputed fact before us is that the interest has been paid on the opening balance of the loans which were taken in the preceding years. No fresh loan has been received from the above named loan providers during the year under consideration. It was also brought to our notice that no addition has been made u/s 68 of the Act in the case of the assessee for the loans taken in pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the method provided under Rule 8D of I.T. Rules r.w.s. Section 14A of the Act and computed disallowance at Rs. 38,90,444/-. Against this disallowance u/s 14A assessee preferred appeal before Ld. CIT(A). The assessee got substantial relief as Ld. CIT(A) sustained the disallowance u/s 14A of the Act only to the extent of Rs. 7481/- which the Auditor of the company has worked out. Now the revenue is in appeal before the Tribunal. 34. Ld. Departmental Representative supported the order of Ld. A.O. Ld. Counsel for the assessee supported the finding of Ld. CIT(A) and also submitted that Ld. CIT(A) has rightly held that disallowance of interest was not called for since at the end of the year it earned net interest income and secondly the assessee had sufficient own capital and from reserves to cover up the investments made. The assessee placed reliance on following decisions; (i) Hon ble High Court of Bombay in the case of CIT v/s M/s Reliance Utilities Power Ltd (2009) 313 ITR 0340 (Mum) (ii) Hon ble High Court of Bombay in the case of CIT v/s HDFC Bank Ltd 366 ITR 505 (2014) (Mum) (iii) Hon ble High Court of Bombay in the case of HDFC Bank V/s DCIT (2016) 383 ITR 0529 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that only Rs. 5 crores of fresh investment was made by the assessee in debenture of group companies on which interest has earned and out of the remaining investment only Rs. 14,96,222/- is only made in the shares of the listed companies and all the remaining investments are old investment in equity shares of unlisted companies. We however are of the view that the word average investment referred in Rule 8D of I.T rules certainly does not include the investments made for earning taxable interest income but for sure includes the investment fetching tax free interest and those made in equity shares, which can be listed or unlisted. The contention of the assessee and finding of Ld. CIT(A) that investment in unlisted companies should not consider for computing the disallowance under third limb of rule 8D is devoid of any merit. There is no bar under the law for the unlisted companies to declare dividend. In other words dividend income can be generated from both the listed as well as unlisted companies. So for calculating the disallowance under third limb of Rule 8D of I.T. Rules we first need to subtract the investment in debentures of Rs. 5 crores from the total average inves ..... X X X X Extracts X X X X X X X X Extracts X X X X
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