9911796707
TMI Blog2011 (12) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... h course is more beneficial to the Revenue. A person lawfully liable to be taxed can claim no immunity because the Assessing Officer has taxed the said income in the hands of another person contrary to law. In the instant case, there is no dispute to the identity in so far as Lunkad Group is also on Department s record and a survey has been carried out at premises of Lunkad Group. The genuineness of transaction of the loans become doubtful in view of the incriminating documents found during survey at Lunkad Group. Applying the proposition of law been laid down by the Hon ble Supreme Court in the case of Smt. Taradevi [ 1972 (11) TMI 2 - SUPREME COURT] to the facts of the instant case, we can safely conclude that the ld. CIT(A) was not justified in deleting the addition in the hands of the assessee company merely on the plea that the same amount has been added in the hands of the creditor company. We found that in case of Lunkad Group addition was made in respect of cash received by it from persons, whose name, address and other particulars could not be furnished before AO. This addition is mothering to do with the genuineness of loan received by assessee from Lunkad Group. Before r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng party-wise and assessment-wise details of peak credit in respect of loans from Lunkad Group of companies. As per Annexure I, we found that the peak amount of loan was in the AY 2005-06 amounting to 2.58 crores, however, the total addition in respect of total peak credit as made by the AO amounts to 7,59,50,000/- starting from AY 2002-03 to 2007-08. Thus, as per this Annexure the peak amount of the credit was 2.58 crores. The peak credit of 2.58 lacs as mentioned by AO in Annexure I appears to be wrong. In the paper book, we find one more date-wise statement of loan taken by the assessee (Narmada Extrusions Limited) from various Lunkad Group Companies starting from 10th July, 2001 to 31st March, 2007. As per this statement, the peak amount of loan is 6,44,37,338/- as on 29th June, 2006. We, therefore, direct the AO to reverify and recompute the peak amount of loan and to restrict the addition to the extent of peak amount of the loan. We direct accordingly. In the result, all the appeals of the Revenue are allowed, whereas cross objections are allowed in part for statistical purposes, in terms indicated hereinabove. X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) erred in confirming the act of AO in issuing notice u/s 153A of the I.T. Act for the years under consideration even when no incriminating documents were found and seized from the possession of the assessees during the course of search. Thus the notices as issued u/s 153A of the I.T. Act and assessments framed accordingly require to be quashed on this account. 2. That on the facts and in the circumstances of the case, the ld. CIT(A) erred in confirming the act of AO in making additions in the case of assessees in respect of cash credit even when the entire amounts of cash credit were duly recorded in the regular books of accounts of the assessees prior to the date of search and no incriminating documents were found and seized from the possession of the assessees. Thus, the additions made in the case of the assessees in respect of cash credits on the basis of inferences and presumptions and that too in the 153A proceedings are wrong. The same require to be deleted in full." 4. Common grounds raised by the Revenue in all the years relates to deletion of addition on account of unsecured loan u/s 68 of the Income-tax Act, 1961, which was alleged to be taken by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove/transactions are enclosed. (iii) That the assessee has received the entire amount of loan through account payee cheques. That when the amounts of loan were received by the assessee through account payee cheques and confirmation letters duly signed by the creditors have been filed and more so when they are assessed to tax, the assessee has discharged its onus lying on him. That if you have any doubt about the genuineness of the said transaction, you are requested to directly collect necessary information from both the parties. Without Prejudice to the above (iii) That Hon'ble Jurisdictional High Court has consistently held that once the assessee has furnished confirmation letters duly supported by Affidavits and identity of the creditors stands proved. in that case if the A.O. is not satisfied about the capacity of the said creditors, the amount should be added to the income of the creditors and not in the case of the assessee. " The assessee has failed to produce the above party which is very well known as Lunkad Group, even after specific opportunity Thus, the assessee failed to prove the identity, genuineness and creditworthiness of parties providing unsecure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Course, Indore 15. Celerity Capital Market & Finvest (P) Lgtd. Vijay Lunkad/G.Jagtap Lunkad House, 13, Race Course, Indore 16 Alpine Agrotech Limited Sanjeev/ Lunkad/Sneha Lunkad Lunkad House, 13, Race Course, Indore 17 Alpine Infosys Ltd Sanjeev/ Lunkad/Sneha Lunkad Lunkad House, 13, Race Course, Indore 18 Himalya Grah Nirman Sahakari Samiti Maryadit The impounded documents so found at Lunkad Group was reproduced by Assessing Officer as Under :- More examples from Lunkad Companies Impounded material . DATE NAME Cash Payments Cash Receipts 3/4/2006 Sandeep 50,000 3/4/2006 Tulsiyan 1,00,000 3/4/2006 Ritesh 1,00,000 3/4/2006 Bank 5,10,000 3/4/2006 Darak 5,00,000 3/4/2006 Bank 3,50,000 3/4/2006 Chopraji 5,00,000 4/4/2006 Ritesh 4,000 4/4/2006 Bank 19,000 4/4/2006 Ticket sunil 4,700 4/4/2006 Darak 1,000,000 4/4/2006 Darak 1,000,000 4/4/2006 Bank 150,000 4/4/2006 Chopraji 500,000 4/4/2006 Bhabhi 10,000 4/4/2006 Bank 1,000 4/4/2006 Bindal 19,000 4/4/2006 Bank 99,000 4/4/2006 Daddy 33,500 4/4/2006 Petrol getz 1,000 4/4/2006 Recharge (1850) 2,000 4/4/2006 dewas 10,000 5/4/2006 darak 300,000 5/4/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 Bank 500,000.00 21/4/2006 Bank hsbc 25,000 21/4/2006 Narmada 3,500,000 21/4/2006 Daddy 17,700 21/4/2006 Seeds 3,000 21/4/2006 Petrol 2,000 22/4/2006 Mehtaji 2,000,000 22/4/2006 Bank 995,000 22/4/2006 Banthiaji 500,000 22/4/2006 Ritesh personal 2,500 22/4/2006 Bracket 3,000 24/4/2006 Darak 1,050,000 24/4/2006 Bank 1,990,000 24/4/2006 Sunil 250,000 24/4/2006 Plants dhar 10,000 24/4/2006 Sanju dhar 8,000 24/4/2006 Getz pet 2,000 25/4/2006 Narmada 300,000 25/4/2006 Bank 1,795,000 25/4/2006 Bank 50,000 25/4/2006 Opel repair 2,000 25/4/2006 Sunshine society 10,000 25/4/2006 ICICI Bank 25,000 25/4/2006 Dhar 30,000 25/4/2006 p.g. 500,000 25/4/2006 p.g. 1,500,000 25/4/2006 Swati ticket 5,000 26/4/2006 Ajay 1,000,000 26/4/2006 Darak 4,000,000 26/4/2006 Bank 995,000 26/4/2006 Anjli challan 2,000 26/4/2006 Sanju 50,000 26/4/2006 Bank 750,000 27/4/2006 Bank 1,990,000 27/4/2006 Bank 10,000 27/4/2006 Sanjay Agrawal on a/c 41,000 27/4/2006 p.g. 354,350 28/4/2006 Darak 450,000 28/4/2006 Mehtaji 1000,000 28/4/2006 Bank 2,350,000 28/4/2006 Sunil 300,000 28/4/2006 Dewas 200,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the said companies (Calculated on the basis of Peak credit as discussed here under ) is treated as unexplained cash credit and shall be added to the income of the assessee u/s 68 of Income-tax Act. 9. By the impugned order, the ld. CIT(A) deleted the addition by observing as under :- 4.2.3 In the context of the facts and findings as given in the Lunkad Group of cases, It has been held that the Lunkad group had failed in discharging its onus to explain the source of huge share capital introduced year after year in their group companies. The documents impounded during the survey in the Lunkad group of cases, though, for the limited period only, do suggest the modus operandi adopted by them in providing entries to the beneficiaries. But this has not been accepted by the Lunkad group so far. Rather, they (Lunkad group) have issued confirmatory letters to the various beneficiaries in support of having given genuine loan and share application money. Had they accepted the modus operandi of providing only entries, then the required course would have been confirming the additions made in the hands of beneficiaries. But this has not been done so. Rather the Lunkad group had tried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up did not appear to substantiate the entry of loans given to the group companies of assessee. The documents so found during survey conducted at Lunkad Group shows that Lunkad Group has acted as accommodation entry provider. Even during course of assessment proceedings, the assessee had filed loan confirmation letters alongwith affidavit of Lunkad Group to substantiate the loan taken and repaid by it, but could not produce the alleged creditors in person to substantiate the same. It was contended by the ld. CIT DR that since Lunkad Group could not be produced before any of the authorities, the source of huge cash deposits in their Bank account could not be explained, so as to establish the genuineness and creditworthiness of loans advanced by them to assessee. From the record, we also found that the assessee Mittal Group is engaged in manufacturing of HDPP/PE Bags and one of the leading concerns in this line of business. The ld. CIT DR also drew our attention to the fact that loose papers found during search in this group dated 5.10.2006 showed huge cash loan of ₹ 1.20 crores advanced by it. It was also submitted that huge investment was found in land. The ld. CIT DR also con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beneficiaries. List of Bank account held by the Lunkad Group was also given in the assessment order where cash is deposited. 12. The ld. CIT(A) in his appellate order in the case of Narmada Extrusion Limited for assessment year 2002-03 relied on his order passed in the case of M/s. Lunkad Media and Entertainment Limited for the assessment year 2004-05, wherein entire addition was sustained by the ld. CIT(A) in the hands of Lunkad Group on the plea that they have failed to explain source of huge share capital received by them and they have issued confirmation letters to various parties to whom loan was given. Following this decision, the addition of unsecured loan to the assessee Mittal Group including that of Narmada Extrusion Limited were deleted by CIT(A). The CIT(A) observed that since addition made in the hands of Lunkad Group has been sustained on substantive basis in the case of Lunkad Group of Companies, confirming the addition on same issue in the hands of beneficiaries would amount to double addition though in different hands. Accordingly, he deleted the additions so made by the Assessing Officer in the hands of the assessee. 13. On the other hand, the contention of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee in the present case has properly explained the source of credit appearing in its books of account and the same was also substantiated with the Confirmation Letters and Balance sheet of the loan creditors. The assessee has filed affidavits simply to reconfirm its contention otherwise it has filed affidavit simply to reconfirm its contention otherwise it has properly discharged its onus by filing the confirmation letter and balance sheet of the loan creditors. Thus, there is no reason to tax the loan amount as received from different companies of the Lunkad Group in the case of the assessee. E.1) The AO while passing the order in the case of Lunkad Group of companies for survey year after detailed examination of papers impounded form its premises has added the entire amount of credit as reflected in the Balance sheet and entire credit as shown in the alleged cash book as found from its premises as income of the Lunkad Securities Limited on substantive basis. E.2) As we understand the assessment order of the survey year was passed with the prior approval of the JCIT/Addl. CIT. That once the Department has taxed the entire credit as reflected in the alleged cash book, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like to draw your honour's kind to the last para in respect of decision of Agrawal Coal Corpn. P.Ltd.(I.T.A.No. 151/Ind/2009) as relied upon by the ld. CIT DR in his submission dated 21.11.2011 filed before the Hon'ble Bench. We respectfully like to submit the said decision is in fact in favour of the assessee since the identity of the Lunkad Group is beyond doubt and Department has rather conducted a survey at its premises on 02.05.2006 which confirms the identity of Lunkad Group." 15. First, we take up the preliminary objection raised by the ld. Authorized Representative to the effect that since question of fact has been decided by the CIT(A), the Revenue should not have filed the appeal before the Tribunal. For this purpose, he relied on various circular of C.B.D.T. From the order of the CIT(A), it is clear that he has deleted the addition in the hands of the assessee company on the plea that addition in the hands of creditor company (Lunkad Group) has been confirmed on substantive basis. As per CIT(A), if he confirmed the same addition in the hands of the assessee company, it will amount to double addition in respect of the same amount of income. We found that additions h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By "right person" is meant the person, who is liable to be taxed according to the law with respect to a particular income. The expression "Wrong Person" is obviously used as opposite of the expression "right person". Merely because a wrong person is taxed with respect to a particular income, the AO is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact, which course is more beneficial to the Revenue. A person lawfully liable to be taxed can claim no immunity because the Assessing Officer has taxed the said income in the hands of another person contrary to law. Similar provision has been laid down by the Hon'ble Supreme Court in the case of Smt. Taradevi, 88 ITR 323. The proposition so discussed above as laid down by the Hon'ble Supreme Court has been followed by the I.T.A.T. Special Bench in the case of Pradeep Agencies, 111 TTJ 346. 16. Applying the above proposition of law to the facts of the instant case, we can safely conclude that the ld. CIT(A) was not justified in deleting the addition in the hands of the assessee company merely on the plea that the same amount has been added in the hands of the creditor compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n confirmation letters. These loan transactions have been accepted by the Department either u/s 143(1) or 143(3) of the Income-tax Act, 1961. The whole problem arose due to the survey at business premises of Lunkad Group on 2.5.2006, wherein certain documents for the month of April, 2006, was found and impounded, which indicated that Lunkad Group had received cash from various persons including assessee. Even though full name of assessee was not mentioned on the papers so impounded but the Assessing Officer inferred that name of "Narmada" as relating to assessee company, namely, "Narmada Extrusion Limited". The Lunkad Group was asked to explain these incriminating documents indicating receipt of cash from various parties, but the Lunkad Group could not explain the same and dispute arose between the Lunkad Group and Department with regard to survey conducted at Lunkad Group. The Lunkad Group has also filed a writ petition in the M.P.High Court against the Department for the survey so conducted and the records so impounded. This writ petition is still pending in the Court. It was also brought to our notice that High Court has directed for issue of copy of documents so impounded along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's favour nor anything was brought on record by Assessing Officer suggesting return of cash to assessee whenever assessee had repaid the loan so taken from Lunkad Group. On the other hand, contention of the ld. CIT DR was that incriminating documents as mentioned by Assessing Officer in his assessment order even though pertained to one month, it indicated the modus operandi of Lunkad Group for advancing loans to the assessee , therefore, the Department has applied the same conclusion even with respect to the loans, which were taken and also repaid in earlier years for which no incriminating document was found either at the business premises of the assessee or at Lunkad Group. 20. After analyzing all the documents placed on record, we found that additions have been made by Assessing Officer in respect of all the loans which even though taken and repaid by assessee in earlier years starting from 1.4.2001. Conention of Assessing Officer was that since the assessee could not produce the creditor in person, therefore, the confirmation and the affidavits filed by the creditors cannot be relied upon. We found that all the necessary documentary evidence to substantiate the loan trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has paid cash in consideration of the cheques so issued. Without any evidence, much less a cogent evidence, it is not legally justified to doubt the genuineness of loan transaction or make addition in the hands of the assessee company for which no material much less a cogent material is in possession of Department. In the interest of justice and fair play, we restore the grounds raised by the assessee in the cross objection to the file of the Assessing Officer for deciding afresh in terms of our above discussion and as per law. 21. Notwithstanding the above, as per our considered opinion, the addition in the hands of assessee company should be restricted with respect to the peak amount of loan outstanding during the entire period ranging from 1.4.2001 to 31.3.2007, rather than taking total of the loans received and paid back. Since the transactions pertains to taking the loan and repaying the same, again taking the loan and repaying the same, total of all these transactions cannot be said to be unaccounted money of the assessee. For example, if the assessee had unaccounted money of ₹ 2 lakhs by paying which he gets the loan entry, after sometime if the assessee ge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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