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TMI Blog2025 (4) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... rom M/s. P. Saji Textiles Pvt. Ltd and Dolex Commercial Pvt. Ltd, run by Shri Vipul Vidur Bhatt, who were indulged in providing accommodation entry to parties without any actual transactions." 2. Whether on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) was justified in deleting the addition u/s. 69 on account of bogus Investment added by the Assessing Officer without appreciating the fact that the assessee is one of the beneficiaries of the bogus loan from M/s. P. Saji Textiles Pvt. Ltd and M/s. Jagvi Developers. run by Shri Vipul Vidur Bhatt, who were indulged in providing accommodation entry to parties without any actual transactions." 3. While the assessee has raised the following grounds in its cross objection: - "1. The Commissioner of Income-tax (Appeals) (hereinafter referred to as "the CIT(A)) erred in upholding the action of the Assessing Officer in reopening the case of the assessee vide notice dated 15.03.2018 under section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") although the same is bad in law. The reasons given are wrong, contrary to facts of the case and against the provision of law; 2. The Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appeal before us, while the assessee has filed the cross objection raising ground challenging the initiation of re-assessment proceedings under section 147 of the Act. 7. During the hearing, the learned Authorised Representative ("learned AR") submitted that the AO reopened the assessment of the assessee on the basis that the assessee has taken accommodation entries from the entity, which is controlled by Mr. Vipul Vidur Bhatt, who has admitted in the course of the search that he is an accommodation entry provider. The learned AR submitted that the loan was taken from P.Saji Textiles Ltd during the period September 2012 - October 2012 and was repaid in January 2013, however, Mr. Vipul Vidur Bhatt became the director of P.Saji Textiles Ltd w.e.f. 20/02/2013, i.e., after the transaction was closed, and accordingly the observation of the AO that the assessee has dealt with Mr. Vipul Vidur Bhatt controlled entity is erroneous. The learned AR further submitted that the statement by Mr. Vipul Vidur Bhatt was subsequently retracted, and therefore, the same cannot form the basis for making any addition in the hands of the assessee. 8. On the other hand, the learned Departmental Represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd 2012-13 25,00,000 0 3 Jagvi Developers 2012-13 0 34,00,000 TOTAL 85,00,000 1,19,00,000 In view of the above, I have reason to believe that the income chargeable to tax has escaped assessment in the hands of M/s. Blue Moon Housing & Development Pat Ltd for the A.Y. 2013-14 within the meaning of section 147 of the Income Tax Act, 1961 and hence, the case of the assessee needs to be reopened by issue of notice u/s 148 of the Income Tax Act, 1961." 10. From the perusal of the aforesaid reasons recorded by the AO while reopening the assessment, we find that the proceedings under section 147 of the Act were initiated on the basis of the information along with the details received from the Investigation Wing, Mumbai, regarding accommodation entries provided by Mr. Vipul Vidur Bhatt through various companies. On the perusal of the details, it was noticed that the assessee has taken accommodation entries from parties, which Mr. Vipul Vidur Bhatt admitted in his statement to be managed, controlled and operated by him. Therefore, it is evident that the statement of Mr. Vipul Vidur Bhatt only corroborated the evidence and details found during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 68 and section 69 of the Act, the brief facts of the case are that during the reassessment proceedings, in order to prove the identity and creditworthiness of the loan lender and genuineness of the transaction, the assessee furnished the copy of the confirmation of loans received/paid along with copies of the balance sheet, profit and loss account, and acknowledgement of the return of income and bank statement highlighting the transactions. The AO, vide order passed under section 143(3) section 147 of the Act, held that the financial status of the assessee as per the bank statement is not sound enough to lend money and the assessee during the year paid a sum of INR 34,00,000 to Jagvi Developers. The AO further noted that there was no sufficient balance in the assessee's bank account, and the funds were received through RTGS on the same date they were transferred to Jagvi Developers. Accordingly, the AO held that the assessee's statement that the money was advanced to further the business is not justifiable and bona fide. As regards the bank statement of P.Saji Textiles Ltd, the AO held that whenever there is a fund transfer to the assessee from this party there were credit en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be seen that P. Saji Textiles Pvt. Ltd has own funds of Rs. 3,37,12,209/- and accordingly, the creditworthiness of the party is proved. The appellant has also provided a copy of bank statements and ledger confirmation from P. Saji Textiles Pvt. Ltd. Therefore, the Vassessee has even established the genuineness of the transaction. The AO has issued notice under section 133(6) of the Act to the said party. The said party has confirmed the transaction before the AO. The AO has not reported any incriminating observation subsequent to such enquiry. From the above documents, it is seen that the assessee has explained the nature and source of the unsecured loan received by establishing the identity of the lender, creditworthiness of the lender and genuineness of the transaction. The appellant has discharged the primary onus casted upon it." 14. Further, the learned CIT(A) also deleted the addition made under section 69 of the Act in respect of the amount paid to P.Saji Textiles Ltd and Jagvi Developers on the basis that the assessee has submitted the necessary documents in order to show the nature and source of the transaction. Being aggrieved, the Revenue is in appeal before us. 15. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d revenue of INR 70,81,33,823 from the sale of fabrics, it neither has any shop or warehouse as its fixed asset nor has paid any rental in respect of the same. Therefore, we are of the considered view that the declarations made by P.Saji Textiles Ltd in its financial statements are not corroborated with other details provided therein, and thus, raise doubt on the veracity of the declaration made in the financial statement. Therefore, we are of the considered view that the net worth declared by P.Saji Textiles Ltd in its financial statement cannot form the basis for determining the creditworthiness for lending the loan to the assessee. Further, the company has shown an amount of INR 24,74,66,136 as unsecured loans and advances in the assets side of its balance sheet, which is quite peculiar to the entities which provide accommodation entry. Further, from the bank statement of P.Saji Textiles Ltd, forming part of the paper book from pages 28-24, we find that immediately on the date of transfer of funds to the assessee, i.e. on 13/09/2012, 10/10/2012, 20/10/2012, and 27/10/2012, there are credit entries. Further, from the bank statement of the assessee, forming part of the paper book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tating that the sum of INR 85 lakh was advanced to the assessee with the intention to start some business with respect to real estate development, the assessee has not brought on record any documentary evidence to support the aforesaid claim. As regards the various decisions relied upon by the learned AR in support of its claim that the amount received as a loan from entities controlled by Mr. Vipul Vidur Bhat have been found to be genuine, we find from the perusal of these decisions that same have been rendered in their own facts and each case needs to be examined qua the facts involved. Accordingly, we are of the considered view that all the decisions relied upon by the learned AR do not apply to the facts of the present case, as, in the present case, the assessee has failed to prove the creditworthiness of the loan lender and genuineness of the transaction. 19. Therefore, we are of the considered view that the assessee has failed to prove the creditworthiness of P.Saji Textiles Ltd and Dolex Commercial Private Ltd from whom the assessee received the loan amount during the year under consideration. Consequently, we are of the considered view that the payment made by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared by the assessee is only INR 1,99,709. As already noted elsewhere, from the perusal of the bank statement of the assessee, it is evident that as soon as the assessee received any amount from any entity the same was transferred to another entity, and there is no sufficient balance in the bank account of the assessee. Therefore, we agree with the findings of the AO that the assessee had no sufficient balance in its bank account to advance the fund to Jagvi Developers Ltd. Thus, we are of the considered view that merely because the AO has invoked the provisions of section 69 of the Act for making the addition amounting to INR 34,00,000 been paid by the assessee to Jagvi Developers Ltd, however, the same does not absolve the assessee from explaining the amount shown as loan to Jagvi Developers Ltd., since the amount transferred to Jagvi Developers Ltd is not supported by the financial capacity of the assessee, more so in the absence of duly signed loan confirmation from Jagvi Developers Ltd. In this regard, we placed reliance upon the decision of the special bench of the Tribunal in Manoj Aggarwal v/s DCIT: [2008] 113 ITD 377 (Delhi). We are of the considered view that mere rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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