9911796707
TMI Blog2019 (10) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... ved an amount of Rs. 2 crores as unsecured loan from M/s. Raffle Mercantile P. Ltd. and Rs. 20 lacs as share application money from M/s. Purushottam Vinimay P. Ltd. To substantiate the above two amounts, the assessee filed confirmation and bank statement of M/s. Raffle Mercantile P. Ltd. and M/s. Purushottam Vinimay P. Ltd. and copy of their balancesheet alongwith relevant schedules showing the investment. The Assessing Officer asked the assessee to substantiate the identity, genuineness and credit worthiness of the above two parties and asked the assessee to explain as to why said amount should not be taxed u/s. 68 of the IT Act, 1961 being unexplained credit. The relevant portion of the reply of the assessee which has been reproduced by the Assessing Officer in the body of the assessment order reads as under :- 5.1 For Rs. 2,00,00,000/- received from M/s. Raffle Mercantile Pvt. Ltd. "That the following amount has been received in A. Y.2011-12 Rs. 95 lacs on 28.08.2010 Rs. 85 lacs on 30.08.2010 Rs. 20 lacs on 30.08.2010 Rs. 2.00 crores Rs. 2.00 crore recd. In A. Y. 2011-12 have been returned back in A.Y.2014-15. Documents attached. Certified Ledger Account of Raffle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the beneficiary on the same or the next two or three following dates leaving normal balance in the account which is a typical characteristic of entry providing company by creating a web of companies which are used only to transfer funds. On verification of the financials of M/s. Raffle Mercantile P. Ltd. he noted that the income and turnover of the company are very meager. Therefore, it is not possible on the part of M/s. Raffle Mercantile P. Ltd. to invest such huge amount in the assessee company. Further the amount which was received out of repayment of its loan given to Kala Devi Education Society and Shankar Enterprises is beyond economic logic since the company has not earned a single paise as interest although such huge amounts were given as advance for a considerable time. Rejecting the various explanation given by the assessee the Assessing Officer held that the unsecured loan / share application money received by the assessee in its books of account is clearly the income of the assessee which has been introduced in the garb of share application money/ unsecured loan. He, therefore, invoking the provision of section 68 of the IT Act made addition of Rs. 2 crores to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been advanced by it is out of the funds received from Kala Devi Educational Society. The appellant has provided the confirmation of account from Kala Devi Educational Society, 17/5, Rolland Tower, The Mall, Kanpur for 2 years. The payments have been made to Raffle Mercantile P. Ltd. through cheques and source of the funds in the hands of Kala Devi Educational Society is also duly explained as shown in its bank account details. Further funds received by Raffle Mercantile P. Ltd. is through M/s Shankar Enterprises, (Rs. 80 lacs) for which the bank account has been provided alongwith the copy of return filed for the AY 2011- 12 and confirmation from the party. 11.5 In the case of M/s Purushottam Vinimay P. Ltd., it is observed that Rs. 7 lacs and Rs. 9 lacs has been received by it as loan on 24.12.2010 from M/s Nine News Ltd. and Rs. 4 lacs has also been received as loan on 28.12.10 from M/s Nine News Ltd. The confirmation and ITR acknowledgment of M/s Nine News Ltd. is also submitted. In fact during assessment proceedings the appellant has produced the confirmation letter from M/s Purushottam Vinimay P. Ltd., providing further confirmation from M/s Nine New Ltd. and its bank ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase may have caused suspicion in the mind of AO but despite having conducting the search on the premises of the appellant, no evidence or other material could be gathered to hold that the appellant had routed its own money. 11.9 This is also noted that the representative of the lending entities were presented before the AO. It is also observed that the loan amount was subsequently repaid. 11.10 It has been stated by the appellant that in paragraph 5.4 and 6.6 of the assessment order, AO has mentioned about the "unqualified admission of the assessee company" regarding the addition, which is incorrect. No such admission has been made by anybody on behalf of the company and they are vigorously contesting the addition. 11.11 The AO in his report has stated that this expression in the assessment order is with respect to the introduction of share capital of Rs. 2.20 crores, not found satisfactory by the AO and used in that context which is otherwise not connected with any type of admission by the appellant. Therefore, the said expression of AO in the assessment order is not considered as any such admission of undisclosed income by the appellant. 11.12 In view of the totality of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see within a few days of the receipt of the same from other companies/concerns which clearly prove that these are all entry providing companies. Therefore, it is nothing but assessee's own money which has been introduced by it in the garb of unsecured loan or share application money. 9. Further the address of Kaladevi Educational Society and M/s. Raffle Mercantile Private Limited are same. Therefore, this substantial evidences have to be considered and merely by relying on the excellent power work done by the assessee the addition cannot be deleted. Relying on various decision including the decision of Hon'ble Delhi High Court in the case of NDR Promoters vide ITA No.49/2018 order dated 17.01.2019 and the decision of Hon'ble Supreme court in the case of NRA Ispat vide ITA No.1731/Del/2016 order dated 30.04.2019, she submitted that the order of Ld. CIT(A) be set aside and the addition made by the AO be upheld. 10. The Ld. AR for the assessee on the other hand heavily relied on the order of the CIT(A). So far as the admission of additional evidences by the CIT(A) is concerned he submitted that the Assessing Officer has not objected to the admission of additional evidences and no su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the transaction alongwith source thereof. 3. Share certificate issued by assessee to Raffle 4. Audited Balance Sheet of A.Y.2011-12 5. Schedule -4 of Audited Balance Sheet of A.Y.2011-12 6. Bank Statement of Raffle of PNB Bank for the period 01.04.2010 to 05.05.2011. 7. Confirmed copy of account of Raffle Mercantile Pvt. Ltd. for A. Y.2011-12 in books of Assessee 8. Summons u/s. 131 dated 27.05.2013 issued by DDIT Kanpur 9. Summons u/. 131 dated 21.01.2013 issued by DDIT Delhi 10. Reply dated 29.01.2013 in response to summons u/. 131 dated 21.01.2013 to DDIT Delhi 11. Abstract of order sheet of AO. 12. Certified ledger a/c of Raffle in the books of assessee for A.Y.2014-15 13. Affidavit of Raghvinder Garg (directed to Raffle) 14. Confirmed ledger a/c. of Raffle in the books of Smt. Kala devi Educational Society of A.Y.2009-10 15. Confirmed ledger a/c. of Raffle in the books of Smt. Kala devi Educational Society of A.Y.2010-11 16. Bank statement of Smt. Kala Devi Educational Society showing receipt of Rs. 75 lacs. 17. Confirmed ledger a/c. of Raffle in the books of Smt. Kala devi Educational Society of A.Y.2011-12 18. Bank Statement of Kaladevi sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions. Further the assessee failed to substantiate the credit worthiness of the said company. So far as the share application money received from M/s. Purushotam Vinnimay P. Ltd. is concerned, the AO noted that the assessee failed to discharge the onus of establishing beyond doubt, the genuineness and the creditworthiness of M/s. Purushotam Vinnimay P. Ltd. We find the Ld. CIT(A) deleted both the additions, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Dr that the Ld. CIT(A) without considering the circumstantial evidences has deleted the addition which is not justified in the facts of the case. 17. It is the submission of the Ld. Counsel for the assessee that assessee has not only proved the source of the source but has also proved all the three ingredients as per the provision of section 68 of the IT Act i.e. the identity and creditworthiness of the lenders/ share applicants and the genuineness of the transactions. It is also his submission that merely because the companies have not earned enough income during the year the same cannot be a ground to disbelieve the creditworthiness of the above two companies espe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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