9911796707
TMI Blog2021 (2) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... statement was recorded, which is not in accordance to Section 133A of the Act and the Hon ble Supreme Court in Khader Khan Sons [ 2013 (6) TMI 305 - SC ORDER] held that the statement recorded u/s 133A of the Act is not given evidentiary value for the reason that officer is not authorized to administer oath and to take any sworn statement in contra distinction to the power vested in authorities to record statement under oath during search u/s 132 - on the sole statement recorded u/s 133A of the Act of Shri Ashish Kumar Agarwal, no adverse view can be taken against the assessee since there is no evidentiary value to be given to it. After doing these exercises, still if the AO finds that from the statement which has undergone cross-examination, a wrong-doing on the part of assessee, then he could have drawn adverse inference against the assessee. However admittedly these actions were not taken by AO. So the statement of Shri Ashish Kumar cannot be relied upon against the assessee In the light of the fact that all the eleven (11) lender companies from which the assessee had taken loan of ₹ 4,50 crore had replied directly to AO pursuant to section 133(6) and the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee by issuing notice and thereafter he reproduced the reply given by the assessee dated 22.12.2017 which is found at page 4 and 5 of the assessment order. Thereafter, the AO explained the modus operandi followed by paper companies for routing the black money in the guise of unsecured loans. According to him, these transactions are nothing but accommodation entries and these are not real transactions. According to him, merely by filing PAN details, Balance Sheet and receiving money through the banking channel cannot establish the identity, creditworthiness and genuinity of the transactions. Thereafter, he explained some modus operandi and also list out the characteristic of the paper companies at para 5.4 and 5.5 of the assessment order. Thereafter, the AO notes that in this year the assessee has received unsecured loan from one M/s. Fast Glow Distributors Pvt. Ltd. (M/s. FGDPL) from loan entry operator Shri Ashish Kr. Agarwal. And according to him, Shri Ashish Kr. Agarwal s statement had been recorded by the Investigation Wing of the Department which is reproduced from page 8 to 12 of the assessment order which, according to him, proves beyond doubt that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance credit, since the money which was received, had been repaid in the same year. Thus, according to him, it is difficult to assume that the loans in question are in the form of accommodation entry, since they effectively accommodate zero value at the end of the year and relied on the decision of the Hon ble Gujarat High court in the case of CIT Vs. Chandra Shekhar . Thereafter, the Ld. CIT(A) notes that interest has been paid @ 12% per annum in most cases with proper TDS deduction. According to Ld. CIT(A), the business sense of extending such loan to a brand like Sreeleathers/assessee cannot be ignored. The Ld. CIT(A) notes that he has taken note of the replies given by the lender companies pursuant to the notice u/s 133(6) of the Act which were duly served upon them and from the replies it is established that these lender companies had enough net-worth which are in crores. The Ld. CIT(A) notes that some of the companies declared income to the tune of ₹ 45 Lakhs, 75 Lakhs etc. Thus, according to Ld. CIT(A), the assessee has satisfied the requirement of law insisted u/s 68 of the Act as laid down by the Hon ble Jurisdictional High Court in the case of Precision Finance Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee pointing out the adverse observations made by the Inspector and pursuant to which the reply was given which has been reproduced by the AO in the assessment order which shows that the assessee had replied only in respect of one (1) lender company M/s Fast Glow Distributors, when the fact remains that the assessee had taken loan from thirteen (13) lenders. According to Ld. D.R, the assessee has taken loan from the lender company called M/s Fast Glow Distributors which is a paper company operated by entry provider Shri Ashish Kumar Agarwal whose statement which the AO has reproduced from pages 8 to 12 would reveal that the assessee had taken accommodation entry from paper companies and therefore, the AO rightly taking note of these facts has given the modus-operandi of such entry provider and has rightly added the addition which has been erroneously deleted by the Ld. CIT(A) which he wants us to reverse. Per Contra, the Ld. A.R Shri Miraj D Shah supporting the order of the Ld. CIT(A) pointed out that all the eleven (11) lender companies from whom the assessee had taken loan of ₹ 4.50 crores in this assessment year has been given back (except ₹ 15 Lakhs). Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration, that you have received unsecured loans from various companies out of which one (1) company have been found to be paper company having no worth as mentioned in table below: Sl. No. Name and address of the Party Loan Received Interest 1 Fast Glow Distributors 50,00,000 12,79,268 4. You are requested to prove identity of lenders, genuineness of transaction, and creditworthiness of lenders, failing which adverse inference would be drawn. 5. Your case is re-fixed for hearing at 12.30 PM on 22nd December, 2017 at the office of the undersigned. If you do not wish to avail yourself of this opportunity of being heard in person or through an Authorized Representative, you may show cause in writing on or before the said date which will be considered before any such order is made under Section 143(3) of the Income Tax Act, 1961. 6. It may be noted that request for adjournment of the case will not be entertained under any circumstances as the matter is time barr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f M/s Fast Glow Distributors from which the assessee borrowed ₹ 50 Lakhs, the AO has made the addition of the entire loan transaction of this assessment year to the tune of ₹ 4.50 crores, which according to Ld. A.R is arbitrary and whimsical. Moreover, according to Ld. A.R he was surprised that the adverse view of AO has taken against the lending companies based on a statement recorded by the Investigation Wing i.e. DDIT(Inv) dated 27.01.2015 which is two years prior to framing of assessment. According to Ld. A.R, the statement cannot be relied upon for two reasons. According to him, the statement of Shri Ashish Kumar Agarwal has been recorded during survey u/s 133A of the Act and that on oath which is not in accordance to law and therefore does not have any evidentiary value as held by the Hon ble Supreme Court in S. Khader Khan Sons (supra). According to Ld. A.R., the copy of the survey statement which the AO has relied upon has not been given to the assessee before framing of assessment and the assessee was not allowed to cross-examine Shri Ashish Kumar Agarwal. Therefore, the statement cannot be taken as evidence against the assessee as held by Hon ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the SCN, the assessee had replied and given all the documents to the AO which he has reproduced at page 4 5 of assessment order (refer Page 126-148 of PB). Thereafter, the AO has framed the assessment by relying on the statement of Shri Ashish Kumar Agarwal which was recorded u/s 133A of the Act (on oath) dated 27.01.2015 in a third party case and thereafter made an addition of ₹ 4.50 crores and disallowed interest expenditure of ₹ 74,30,571/-. On appeal, the Ld. CIT(A) had deleted the addition, which action of Ld. CIT(A) is under challenge before us. We find that in this assessment year, the assessee which is a leading shoe manufacturing State of West Bengal had taken loan of ₹ 4.50 crores from eleven (11) lender companies and squared up the loan (except 15 Lakhs) with them, which finding of fact of Ld. CIT(A) has not been challenged by the Revenue by preferring any grounds of appeal, so this fact attains finality. We find that AO in order to examine the identity and genuineness of the ibid loan transaction had issued notice u/s 133(6) of the Act directly from them along with details and supporting documents called for as discussed (supra). Thereafter the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dentiary value to be given to it. Moreover, if the AO still felt that he needs to use Shri Ashish Kumar Agarwal s statement against the assessee, then in all fairness he should have given a copy of the statement well in advance and called for explanation from assessee and thereafter if the AO is not satisfied then he should have summoned and examined (Ashish Kumar) and thereafter given an opportunity to assessee to cross-examine Shri Ashish Kumar Agarwal. After doing these exercises, still if the AO finds that from the statement which has undergone cross-examination, a wrong-doing on the part of assessee, then he could have drawn adverse inference against the assessee. However admittedly these actions were not taken by AO. So the statement of Shri Ashish Kumar cannot be relied upon against the assessee as held by Hon ble Supreme Court in Andaman Timbers (supra). So when both foundation on which the AO drew adverse inference against the assessee goes, applying the legal maxim sublato Fundaments credit opus meaning in a case foundation is removed, the super-structure falls, the additions goes. Therefore, in the light of the fact that all the eleven (11) lender companies from ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
