9911796707
TMI Blog2025 (3) TMI 1434X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that there was no actual business carried on by these companies and it is only paper companies. It was found that M/s Cityzy Infraheights Pvt Ltd was also controlled and managed by Shri Verma. AO observed that the assessee also taken entry of Rs. 50 lakhs dated 9/7/2015 and since the same was provided by the Shri Verma, based on the above the AO formed the opinion that the income escaped assessment to the extent of Rs. 50 Lakhs in this assessment year within the meaning of section 147 of the Act. Accordingly, notice u/s 148 was issued and served on the assessee. In response, the assessee filed the return of income declaring the same income as original return of income. The notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee. 3. During the assessment proceedings, it was also noticed from the information received from DDIT (Inv), Ghaziabad that the assessee has also taken unsecured loan from CEA Consultants Pvt. Ltd of Rs. 50 lakhs. Notices were issued to submit the detail of these transactions. In response, the assessee submitted vide letter as under :- "8. In response to the above Show Cause Notice dated 02/02/2022 issued to the assessee com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secured loan Citzy Infraheights Pvt Ltd as Annexure-6. 8. Further, please find enclosed herewith copy of statement of accounts of CEA Consultants Pvt Ltd, where we have attached copy of account in our books, copy of our bank statement, where we have received money, copy of bank statement of M/s CEA Consultants Pvt Ltd from which account, CEA Consultants Pvt Ltd has paid money to assessee company as Annexure-4. 9. Further, please find enclosed herewith copy of statement of accounts of Citzy Infra heights Pvt Ltd, where we have attached copy of account in our books, copy of our bank statement, where we have received money as well as repaid the money in the form of unsecured loan Citzy Infraheights Pvt Ltd as Annexure-5. 10. Further you have intimated to interest credited to the account amounting to Rs. 2,62,356, I am pleased to draw your attention that, this amount is not being received from the unsecured loan suppliers. We have credited the amount to these parties account on account of interest and deducted TOS on that interest....." The reply so furnished by the assessee company is duly considered but is found not tenable. The detailed analysis and findings are* as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,64,35,463/-. It is crystal clear from these financials that both the creditor companies, do not have any tangible assets and not' having any actual business as capital in shape of Reserves and Surpluses are loaded in both these companies and again which these companies have extended bogus accommodation credit entries in shape of long/short term loans or purchase of unquoted shares. Hence, the objections furnished by the assessee are found to have no merit and assessment is finalized as per assessment order." 4. After considering the above submissions, AO rejected the same and based on the statements and findings of respective accommodation providers assessments, he came to conclusion that the assessee has taken accommodation entries from the dummy or paper companies controlled by the accommodation providers, Shri Verma and Shri Anil Agarwal. He analysed the financial statements submitted by the assessee of the above said two companies, both companies are having huge surplus in the form of reserves and observed that both the creditor companies do not have any tangible assets and not having any actual business as capital in shape of reserves and surpluses are loaded in b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,07,07,524/- as against the income of Nil declared by the appellant. 6. That the Ld. CIT(A) has erred, both on facts and in law, in sustaining the addition of Rs. 1,00,00,000/- u/s 68 of the Act, considering the same as unexplained credit without appreciating the fact. 7. That the Ld. CIT(A) has erred, both on facts and in law, in sustaining the addition of Rs. 3,07,524/- u/s 69C of the Act assuming that the interest expenses incurred is not genuine as it is on bogus accommodation credit entry without appreciating the fact. 8. That the Ld. CIT(A) has erred, both on facts and in law, in sustaining the addition of Rs. 4,00,000/- u/s. 69C of the Act assuming it as commission expenses @4% of Rs. 7,00,00,000/- without appreciating the fact. 9. On the facts and circumstances of the case, the learned Ld. (A) New Delhi has erred, both on facts and in law, in sustaining the assessment order which Was passed without giving opportunity of cross examination. 10. That the provisions of section 234A, 234B and 234C of the Act are not at all applicable. 11. that the impugned appeal order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in search proceedings. Accordingly, assessing officer treated loan amount received by assessee as unexplained credit under section 68 and made addition. Assessee by furnishing loan confirmations, financials, bank statements, copies of ITR of all the creditors discharged her onus to prove identity, and creditworthiness of loan creditors and genuineness of loan transactions. Assessing officer merely relying on statement of third party whose statement was not even provided to assessee treated creditors as non-genuine without making any sort of enquiries. In such situation, addition made under section 68 could not be upheld. The same has been held in the below mentioned decisions :- a) CIT v. Shri Lekh Raj Educational & Charitable Trust 2020 TaxPub(DT) 1942 (Chd-Trib) b) Ram Dev Rice (P) Ltd. v. Asstt. CIT 2020 TaxPub(DT) 57 (Del-Trib). * Shagun Jewellers (P) Ltd. v. Asstt. CIT 2020 TaxPub(DT) 2544 (Del-Trib) "While making additions, the Assessing Officer drew support from the statement of Shri Vinod Kumar Taneja and Shri Chanchal Taneja who are directors of M/ s Index Securities and Research Pvt Ltd. 13. According to the Assessing Officer, both the directors did not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's income - Whether, on facts, assessee had discharged initial onus placed on it and if revenue still had a doubt with regard to genuineness of transactions in issue or as regards creditworthiness of creditors, it would have had to discharge onus which had shifted on to it - Held, yes- Whether no such exercise having been undertaken by revenue authorities, addition under section 68 in hands of assessee was unjustified - Held, yes [In favour of assessee]. * In CIT vs Kamdhenusteel & alloys ltd 206 taxman 254 DELHI hon'ble Delhi High Court has held that Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 2004-05 - Whether once adequate evidence/material is given, which would prima facie discharge burden of assessee in proving identity of shareholders, genuineness of transaction and creditworthiness of shareholder, thereafter in case such evidence is to be discarded or it is proved that it is 'created' evidence, revenue is supposed to make thorough investigation before it could nail assessee and fasten assessee with a liability under sections 68 and 69 - Held, yes - Whether where assessee had given particulars of registration of investin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments, to probe matter further-Held yes- whether opinion of AO for not accepting the assessee's explanations not being satisfactory has to be based on proper appreciation of material and other attending circumstances available on record-Held Yes" * In CIT vs. Makhni and Tyagi (P) Ltd. 267 ITR 433 (Del) it was held by Hon'ble Jurisdictional High Court as under: "If the AO felt that their examination was absolutely necessary then he could have enforced their attendance as pointed out by Allahabad High Court in Nathu Ram Premchand v. CIT(1963) 49ITR 561 (All) and E.M.C. (Works) (P) Ltd. v. ITO(1963) 49ITR 650 (All). This Court is of the opinion that when documentary evidence was placed on record to prove the identity of all the shareholders including their PAN/ GIR numbers and filing of other documentary evidence in the form of ration card, etc. which had neither been controverter nor disapproved by the AO, then no interference is called for". * In Nathu Ram Prem Chand Vs. CIT, 49 ITR 561 (All), it was held as under: "No inference can be drawn against the assessee merely because the assessee had taken a dasti summons for production of a witness and had not produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs and PAN card copies had been produced". * In the case of M/S. Umbrella Projects Pvt. Ltd., vs Ito, New Delhi on 23 February, 2018, ITA No. 5955/DEL/2014, it is held that_ "De horse the non-receipt of the reply, even for the sake of argument we assume that the AO has not received the reply, still the fact remains that 133(6) notice were served on these four shareholders. On going through the assessment order we note that it is not the case of the AO that notices have come back unserved or these shareholders were not available at the address given by the assessee. If that be so, we are of the view that no adverse inference can be drawn against the assessee merely because reply has not been received by the AO in response to notice issued under Section 133(6). The AO having issue the notice and such notice having been served on the person concerned, the AO has to take the process to the logical end. He cannot draw adverse inference merely because reply has not been received. Submission of the reply in an independent enquiry being carried out by the AO by issue of notice under Section 133(6) from the person concerned directly is not in the hands of the assessee. The AO may be jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are merely provided confirmation letters. They had provided their particulars, PAN details, assessment particulars, mode of payment for share application money, i.e. through banks, bank statements, cheque numbers in question, copies of minutes of resolutions authorizing the applications, copies of balance sheets, profit and loss accounts for the year under consideration and even bank statements showing the source of payments made by the companies to the assessee as well as their master debt with ROC particulars. The AO strangely failed to conduct any scrutiny of documents and rested content by placing reliance merely on a report of the Investigation Wing. This reveals spectacular disregard to an AO's duties in the remand proceedings which the Revenue seeks to inflict upon the assessee in this case. " * The Bombay High Court in the case of CIT vs. Orchid Industries Pvt. Ltd. 397ITR 136expressed as under: "6 The Tribunal has considered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neness and creditworthiness was fulfilled and therefore, addition made under section 68 was not Justified." 27. It may kindly be appreciated that the assessee has furnished complete details about the transactions along with related documents. All the transactions have been carried out through regular banking channels. The identity and the capacity of the lender is clearly established through the documents already submitted. Therefore, the allegation that the assessee company received accommodation entries is false and is therefore submitted that provisions of section 68 are not applicable in the case of the assessee. 28. It is submitted that the principles laid down in the various rulings are that the assessee Company has to establish that the shareholders/creditor exist and they have invested in the share capital/borrowings of the assessee-company, The assessee had laid substantial evidence and established all these facts. 29. It is further submitted that from all the material placed on record by the assessee, there is no doubt that the assessee has fulfilled its onus of. * Establishing the source of amount received, * Genuineness of the transaction and * Credit worthi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
