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TMI Blog2019 (6) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... f Glorious Holding Pvt Ltd, is the bank statement of Kalol Kutir Pvt Ltd and page 156 is the bank statement of New KMS Finance Pvt. Ltd. These bank statement clearly show that the transactions have been done through banking channel and no cash was found to be deposited prior to issue of cheques. Therefore, it cannot be said that the appellant company has purchased cheques by paying cash. The factual matrix with respect to documentary evidences clearly establish that not only the assessee has discharged the onus cast upon it, but has also demonstrated the source of source. Moreover, as mentioned elsewhere, the entire loan amount has been repaid by the appellant company alongwith interest. It would not be out of place to mention here that interest paid on loan for the year under consideration has been allowed as expenditure by the AO. Further, in so far as the addition in respect of loan from Kalol Kutir Pvt Ltd and New KMS Finance Ltd are concerned, the Assessing Officer has made additions simply on the basis of report of the DDIT, INV read with the statement of Shri Binod Agarwal. The appellant company has successfully discharged the onus cast upon it by virtue of provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 Revenue from operations Glorious Holding Pvt Ltd AACCG4244K 3, Saklat Place, Kolkata - 700072 2,10,687/65,103 1. ,28,79,000 2. 72,94,21,000 3. 2,27,573 46,43,721 Kallol Kutir Pvt Ltd AABCK3979L 40, Weston Street, Bowbazar, Kolkata - 700012 8378/2589 1. 6,30,000 2. 2,30,30,000 3. 197 2,23,562 New KMS Finance Ltd AABCN8389D Ram Garh Road, Vijaypur, Jammu - 180012. Jammu Kashmir 29110/9000 1. 1,47,26,800 2. 72,00,02,000 3. (2,27,114) 3,90,137 8. The Assessing Officer was of the opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is uncertain as to what Is relation of these companies with the parties from whom money is being circulated before the present entries. All these companies have given unsecured loan from the funds taken other companies. 11. The Assessing Officer proceeded by making further enquiry and the notices u/s 133(6) of the Act were issued to all the three companies on 29.02.2016. The Assessing Officer observed that all such notices have been received back as unserved. 12. Since the notices returned back unserved, enquiry was conducted through the commission u/s 131(1)((d) of the Act dated 04.03.2016 issued to the DDIT (Inv), Unit 2(4), Kolkata to examine the identity, genuineness and creditworthiness of the transactions entered into by the assessee company with M/s Glorious Holding Pvt Ltd. 13. The DDIT (Inv), submitted a detailed report in which it was stated that M/s Glorious Holding Pvt Ltd is managed and controlled by a known entry operator of Kolkata Shri Binod Agarwala. It was also stated that this company runs only on paper and does not have any substantial business operations. Alongwith his report, the DDIT (Inv), annexed a copy of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition before the CIT(A) and reiterated that it has successfully discharged the onus cast upon it by virtue of section 68 of the Act. Strong reliance was placed on the documents furnished during the course of scrutiny assessment proceedings to substantiate that initial onus has been discharged. 18. After considering the facts and detailed submissions, the ld. CIT(A) observed that the Assessing Officer during the proceedings had duly verified and analysed the documents submitted by the assessee. The first appellate authority concurred with the findings of the Assessing Officer that the lenders have miniscule amount of revenue and negligible income in their Income tax returns. The first appellate authority further observed that even the report of the DDIT, INV alongwith the statement of Shri Binod Agarwala clearly establishes that the lenders have provided accommodation entries, and, therefore, the assessee has failed to discharge the initial onus. 19. The CIT(A) further observed that he himself had examined the documents produced before the Assessing Officer and came to the conclusion that instead of supporting the case of the appellant, these docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lender company, the Assessing Officer should have exercised the power vested upon him for forceful attendance. But the Assessing Officer did not exercise any such power and simply based his assessment on the basis of notices served u/s 133(6) of the Act, which were returned unserved. ii) Income of the lenders is miniscule and does not commensurate with the amount lended by them to the appellant 24. In our considered opinion, the income may be a criteria for deciding the issue. But the income is not to be all and end all of everything. For example, a person having a salary of ₹ 12 lakhs per annum purchases a flat for ₹ 50 lakhs. Merely on the basis of his level of income, the addition of ₹ 50 lakhs cannot be made as unexplained investment without understanding the facts. It may be possible that the person might have taken a housing loan of ₹ 45 lakhs and that source would justify his investment. Similarly, income of the lender company cannot be the sole basis for making addition without going into the facts and without understanding the financial statements of the lender companies. Glorious Holding Pvt Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t: Name of the lender company Date Amounts raised as loan Date of refund Mode of refund Amount of interest paid Mode of interest paid Cheque no Cheque no M/s Glorious Holdings Private Limited 21.03.2013 26.03.2013 30.03.3013 ₹ 50,00,000/- ₹ 50,00,000/- ₹ 50,00,000/- 20.12.2014 04.02.2015 15.02.2016 20.02.2016 294724 061021 853707(RTGS) 853722(RTGS) 29,589 5,32,603 5.44.438 5.44.438 5,32,602 5,38,520 5.44.438 5,42,957 4,63,068 4,48,767 121289 112774 001401 061056 060968 018337 294773 ( RTGS) 061021 294857 M/s Kallol Kutir Private Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 131(1)((d) of the Act dated 04.03.2016 issued to the DDIT (Inv), Unit 2(4), Kolkata to examine the identity, genuineness and creditworthiness of the transactions entered into by the assessee company with M/s Glorious Holding Pvt Ltd. with the registered address at Kolkata. It is pertinent to mention here that the Assessing Officer did not ask to enquire anything about the other two companies, namely, Kalol Kutir Pvt Ltd and New KMS Finance Limited. 32. The report of the DDIT, INV is at pages 90 to 91 of the paper book. A bare perusal of the same shows tht the DDIT simply reported what he has seen from the data base of Kolkata based entry operators prepared by the Directorate that M/s Glorious Holdings Pvt Ltd is managed and controlled by a non entry operator Shri Binod Agarwala and, thereafter, he has simply annexed the statement of Shri Binod Agarwala recorded u/s 133A proceedings during the course of operations on 2.2.2015 in the case of Geeta Bali Merchant and M/s Glorious Holding Pvt Ltd. It can be seen that the DDIT, instead of making any investigation himself, he simply relied upon the statement recorded somewhere else, which is placed at pages 92 to 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions have been done through banking channel and no cash was found to be deposited prior to issue of cheques. Therefore, it cannot be said that the appellant company has purchased cheques by paying cash. 37. The factual matrix, as explained hereinabove, with respect to documentary evidences clearly establish that not only the assessee has discharged the onus cast upon it, but has also demonstrated the source of source. Moreover, as mentioned elsewhere, the entire loan amount has been repaid by the appellant company alongwith interest. It would not be out of place to mention here that interest paid on loan for the year under consideration has been allowed as expenditure by the Assessing Officer. Further, in so far as the addition in respect of loan from Kalol Kutir Pvt Ltd and New KMS Finance Ltd are concerned, the Assessing Officer has made additions simply on the basis of report of the DDIT, INV read with the statement of Shri Binod Agarwal. 38. Considering the facts of the case in totality, we are of the considered opinion that the appellant company has successfully discharged the onus cast upon it by virtue of provisions of section 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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