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TMI Blog2021 (6) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. 2. That the order passed by the AO u/s 147/143(3) of the Act is incorrect, bad in law and have been passed without assuming jurisdiction to issue notice u/s 148 of the Act and Ld. CIT(A) erred in upholding the same. 3. That the order passed by the AO u/s 147/143(3) of the Act is incorrect, bad in law and have been passed without properly and judicially considering the submission of the appellant. The additions/disallowances made are illegal, unjust and unlawful since reason for reopening statement merely states that a sum has been credited in the account of the assessee and there is no information against the creditor company as paper/shell company involved in providing accommodation entry and CIT(A) erred in upholding the same. 4. That the order passed by AO making an addition of Rs. 67,00,00,000/- is incorrect, bad in law and have been passed without considering the submissions of the assessee while discharging the onus made upon him u/s 68 of the Act and CIT(A) erred in upholding the same. 5. That the additions made by AO of Rs. 67,00,00,000/- u/s 68 of the Act is bad in law and in the facts and circumstances of the case even when the source of the source was explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sked the assessee to furnish the details of unsecured loans and to prove the identity and creditworthiness of the transaction but the assessee has failed to discharge its onus and proof of the genuineness of the unsecured loan. Therefore, reasons were recorded u/s 148 and notice was issued to the assessee. In response to the above notice issued, assessee filed its return of income on 25/5/2018 declaring loss of Rs. 15,565/- which was as per original return filed u/s 139 (1) of the act. The assessee was questioned about the unsecured loan of Rs. 63 crores by the assessee. Assessee submitted that it has received the loan from Infotel Technologies Private Limited. Assessee submitted ledger account, balance sheet, confirmation, and income tax return of the above party. The learned AO further noted that assessee has given a loan to two companies amounting to Rs. 62.90 crores. With respect to all these, threecompany assessee submitted the similar details; however, assessee could not produce any memorandum of understanding or agreement between the parties. The learned AO noted that it is not possible that the assessee could disburse such a huge amount without any legal agreement. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted that the statement of Mr., Kumar Sharma who has stated that the Infotel technologies Ltd received the loan from sun vision engineering Co Ltd, on perusal of assessment order of sun vision Engineering limited, it was seen that it has declared loss of Rs. 6.49 crores and further it had merged with Himachal futuristic Communications Ltd with effect from 1/1/2010 approved by the honourable High Court of Himachal Pradesh. He noted that Himachal Futuritics Limited is assessed for assessment year 2010 - 11 at the loss of Rs. 6.96 crores and again for assessment year 2011 - 12 the return loss was 523 crores. Thus the accumulated losses of the ultimate source company i.e. sun vision engineering Ltd was very huge. Therefore ld AO was of the view that how a company which is incurring such huge loss and having a huge accumulated losses can give a loan to another company with no business activity and having a meager capital only of Rs. 1 lakh, to the tune of Rs. 67 crores and that too without charging any interest. Therefore, he held that that the receipt of Rs. 67 crores by the assessee from Infotel technologies private limited in the form of 0% optionally convertible debenture is an un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rs. 2 crores, on 9/11/2010 for Rs. 1.35 crores. Thus, she noted that the transactions entered through bank are deliberate steps taken with the sole motive of imparting a colour of genuineness to it. Thus, according to her, bank statement does not demonstrate the genuineness of the transaction. According to her, it was imperative on the part of the assessee to establish the creditworthiness of the party and genuineness of the transaction. On the issue of the statement of Mr., Kamal Kumar Sharma of Infotel technologies private limited recorded u/s 131 of the act; she held that merely the reliance was placed on the financial statements. Further the source of the fund was explained being another company, sun vision engineering Co private limited, she held that it cannot be explained that why that company give the funds to Infotel technologies private limited then give the amount to the appellant company for investing in the form of optionally convertible debentures despite huge losses incurred. Therefore, she held that creditworthiness of Infotel technologies private limited as well as the genuineness of the transaction is not proved. 7. With respect to advance to two companies, sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relied on the decision of Pr CIT V SNG Developers Limited 404 ITR 312[Delhi]. 10. On the merits of the case, he submitted that the assessee has furnished the complete details of the lender and all layers of the investments which have resulted into the loan in the books of the assessee company has been disclosed with evidences such as the confirmation, the balance sheets, income tax returns, Assessment orders, therefore, Assessee has discharged its initial onus. He further submitted that even the representative of the assessee was also examined u/s 131 of the act. All these evidences were rejected by the learned assessing officer as well as the learned CIT - A without carrying out any enquiry and merely on conjectures and surmises. He submitted that merely because the company, which has invested into the lender company, has incurred losses, the whole transaction of receipt of money by the assessee company cannot be held to be chargeable to tax in the hands of the assessee u/s 68 of the Act. He further referred to the order of the learned CIT - A and stated that the learned CIT - A has gone into all the evidences furnished before her, however has not given any reason to confirm t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case the orders of the lower authorities deserve to be upheld. 13. We have carefully considered the rival contention and perused the orders of the lower authorities as well as the documents submitted by the assessee in a paper book containing 530 pages. Originally the assessee has filed its return of income for assessment year 2011 - 12 on 30/9/2011 declaring loss of Rs. 15,565/-. Admittedly, this return of income was not picked up for the scrutiny. Subsequently the case of the assessee was reopened by recording following reasons which are placed at page number 78 - 80 of the paper book as Under: "Reasons for issue of notice u/s 148 for the assessment year 2011 - 12 in case of M/s Naveen infradevelopers private limited 1. Facts of the case The company was incorporated on 4/7/2008 and was previously known as Naveen Fabtrade private limited. The return of income for the year 2011 - 12 has been filed by the assessee company on 30/9/2011 declaring loss of Rs. 15,565/-. 2. Details of information received regarding escapement of income:- As information regarding the assessee company was received from DDIT, Inv , unit - 7 (2), New Delhi vide his letter F . No. DDIT (INV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of investigation proceedings, has asked the assessee company to furnish details of unsecured loans of Rs. 67 crores and establish the identity and creditworthiness of the lenders as well as genuineness of transactions. As it has been mentioned in the letter of DDIT (investigation), unit - 7 (2), New Delhi that the assessee has failed to discharge its onus and to prove genuineness of unsecured loan of Rs. 67 crores/-. In view of the provisions of Section 68 of The Income Tax Act 1961, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. From the above facts, it is clear that the income amounting to Rs. 67 crore/- has escaped assessment in view of failure of the assessee to establish genuineness of unsecured loans during the course of investigation conducted by DDIT (investigation), unit - 7 (2), New Delhi. 4. Reasons for formation to believe The assessee has fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me in response to the notice u/s 148 of the income tax act wherein in the return of income in part A - BS in the "sources of fund‟ Under "unsecured loans from others‟ the assessee disclosed a sum of Rs. 67 crores. In the annual accounts i.e. balance sheet and profit and loss account in schedule - 3 assessee disclosed unsecured loan being 0% optionally convertible debentures of Rs. 67 crores. As per letter submitted on 22 November 2018 by the assessee in annexure - 6 also gave details of loan obtained stating that name of the parties i.e. Infotel technologies Ltd having a permanent account number AACCD 8086E. The assessee also submitted that during the year the assessee company has received 6,70,000 debentures of Rs. 1000 each to M/s Infotel Technologies Ltd. In support of the same assessee submitted the debentures certificate, copy of the balance sheet for financial year 2010 - 11 of the lender, copy of income tax returns for assessment year 2011 - 12 of the lender, Ledger account copies along with the bank statements. In the balance sheet of the lender for the year ended on 31st of March 2011, assessee also demonstrated that in schedule 4, "investments‟ are discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest rate at the rate of 6% instead of 0%. Similarly the assessee was also assessed for assessment year 2013 - 14 on 23/3/2016 u/s 143 (3) of the income tax act wherein the business of the assessee was stated to be engaged in real estate business and total income was assessed at Rs. 136,19,030/-. Before the assessing officer, the assessee also disclosed the source of fund available with Infotel technologies private limited from sun vision engineering Co private limited. The sun vision engineering Co private limited was amalgamated with Himachal futuristic company Communications Ltd with effect from 1/1/2010. The assessee has also submitted the assessment orders in the case of sun vision engineering Co private limited for assessment year 2010 - 11 passed u/s 143 (3) of the act by the DCIT Circle 9 (1) New Delhi on 4/3/2013. Similarly the assessment for assessment year 2010 - 11 and 2011 - 12 in case of M/s Himachal futuristic communication Ltd was also passed u/s 143 (3) of the act was placed on record by the assessee. Therefore assessee has shown the transaction of the loan from Infotel technologies private limited showing the "source of the source‟ of the above fund fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he lender‟ to assessee. Any inference against the assessee for that reason cannot be sustained. Now it is to be seen that assessee has filed a substantial evidences before the learned assessing officer, even the representative of the investor company also remained present in response to the summons issued u/s 131 of the income tax act confirming the above investment, but to rebut all those evidences the learned assessing officer has not made any enquiry to show that the documentary evidences submitted by the assessee does not exhibit a genuine transaction. Merely saying that assessee has a small capital of Rs. 1 lakh and nobody would invest in such a company of the sum to the magnitude of Rs. 67 crores remains merely conjectures and surmises in view of the overwhelming evidences submitted by the assessee and absence of any inquiry by the revenue. for several years , assessee, Investor, Investor in the investor are assessed u/s 143 (3) of the act , such assessment orders are produced by the assessee before the assessing officer, it cannot be said that the investment made by Infotel technologies Ltd in the assessee company of Rs. 67 crores is failing the test of genuineness u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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