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TMI Blog2011 (10) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment for the assessment year 2007-08, the AO observed that the assessee has shown share capital of ₹ 3,80,000/- and reserve and surplus of ₹ 25,40,998/-. In addition to above assessee has also shown unsecured loans of ₹ 3,33,09,596/- Unsecured loans were stated to be taken from the following parties :- S. No. Name of the Party Amount of Unsecured Loan 1 M/s. Shradha Agencies ₹ 3,02,40,000/- 2 M/s Sourabh Cotton ₹ 28,15,000/- 3 Smt. Kiran Choudhary ₹ 2,50,000/- Total ₹ 3,33,05,000/- 13.2. The information u/s 133(6) of the Income Tax Act was called for and person wise position emerged as under:- 1. M/s Shardha Agencies, Prop. Shri Rajendra Chhajed, 125, Ramchandra Nagar, Indore Dispatch through Speed Post/AD First notice was received un served with postal comment Diye pat per nahi hone se vapas and 111 the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22.02.2007 Vardhmaan Traders ₹ 2,95,000/- 08.03.2007 M/s Vaibhav Cotton ₹ 5,00,000/- 08.03.2007 M/s Vardhmaan Traders ₹ 5,00,000/- 17.03.2007 Rai enterprises ₹ 8,50,000/- 17.03.2007 M/s Vardhmaan Traders ₹ 8,50,000/- 17.03.2007 Rai enterprises ₹ 8,50,000/- 17.03.2007 Arihant Traders ₹ 8,50,000/- 17.03.2007 Rai enterprises ₹ 16,65,000/- 17.03.2007 M/s Vaibhav Cotton ₹ 16,50,000/- 17.03.2007 Rai enterprises ₹ 15,00,000/- 17.03.2007 Rai enterprises ₹ 1,50,000/- 17.03.2007 M/s Vaibhav Cotton ₹ 16, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdhaman Traders prop. Shri Suresh Kumar Mehta (Director of assessee company). 2. Shri Suresh Kumar Mehta savings account. (Director of assessee company). 3. Shri Vaibhav Agencies Prop. Smt. Kanaklata Mehta ( mother of Shri Suresh Kumar Mehta) 4. M/s. Rai Enterprises Prop. Shri Rakeh Kumar Rai, Nijar pura Ujjain (cotton purchased by assessee company from Rai Enterprises. ). 5. M/s. Kartik Trading Co. Prop. Shri Ramesh Agrawal Mahawar Nagar, Annapura Road, Indore ( cotton purchased by assessee company from Kartik Trading Company) Loans given to :- 1. Shri Suresh Kumar Mehta savings account. (Director of assessee company). 2. M/s. Shri Vardhaman Traders prop. Shri Suresh Kumar Mehta (Director of assessee company). 3. M/s. Vaibhav Cotton Pvt. Ltd. the assessee company in which Shri Suresh Kumar Mehta and Smt. Anita Mehta are Directors. 5.1 In question No.6 he was asked to explain the loans taken and given during the period of F.Y.2006-07. How many loans have taken from different persons and also shown rate of interest and how many amount was advanced to other persons showing the rate of interest. Shri Rajendra Chhajed explained that during the F.Y.2006- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en given and from whom credit has been taken. It is clear from the above that assessee is engaged in routing the funds of a particular group, in this case Shri Suresh Kumar Mehta Group, from one concern to another concern. The funds have flown from one concern of Mehta Group to the assessee company in which in which Shri Suresh Kumar Mehta is director. It is also pertinent to note that Shri Hastimal Jain is not charging interest on these huge transactions which is not possible during the recent times present market conditions. A person gives, normally, a loan to get some profit out of it. It means, Shri Suresh Kumar Mehta managed to route his own funds required for his company through Shri Hastimal Jain has been used as unsecured loan provider. 14.4 It is not out of place to mention an example that Vaibhav Cotton Pvt. Ltd, the assessee, has purchased cotton bales from M/s. Rai Enterprises and made payment to them by taking loan from Shri Hastimal Jain Prop. of M/s Saurabh cotton. The money paid to Rai Enterprises by the company again came back as loan to Shri Hastimal Jain and then Shri Hastimal Jain routed this money as loan to the assessee company M/s Vaibhav Cotton Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted and the funds have again flown back to such creditors from the assessee's own records, it is difficult to appreciate how the final amount standing in their name which includes funds advanced by the appellant himself can be treated as unexplained and so added in the hands of the appellant. 5.01 The appellant has amply established the source of such transactions by filing the copy of bank account of M/s. Saurabh Cotton on page 127 of the compilation where source of each and every amount advanced to the appellant is clearly established. So is the position about the statement prepared from the bank transactions of M/s. Sarda Agencies in compilation in page 135 explaining the transaction as per bank statement included in compilation at pages 136 and 137, whereby source of each and every amount credited to the appellant's account are clearly established. The aforesaid pages on Paper book being 127,135,136 and 137 are enclosed with the appeal order and collectively market as Annexure Al to A4. The appellant has also filed further written submission dated 12.3.10 as extracted above repelling AO's observation that business transaction with two concerns Rai Enterprises, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ld. Authorized Representative and ld. CIT DR during the course of hearing before us in the context of factual matrix of the case. From the record, we found that assessee company is carrying on business in cotton and brokerage of cotton. The loan was received from the close relatives/friends of the Director of the assessee company. To prove the genuineness of credit balance in the account of Saurabh Cotton and Sharda Agencies, the assessee had filed copy of accounts and Bank account of creditors. The assessee and creditor have explained each and every entry of inflow of money in the bank account and their respective utilization. The assessee has also filed detailed copy of account of M/s. Karthik Trading Company and M/s. Rai Enterprises from whom these creditors received money in their Bank account. The assessee company has filed detailed copies of accounts of all the four parties with the assessee company alongwith the copy of account of the assessee company in their books and so also copies of their bank accounts with narration against each entry. 12. After going through all these accounts, we found that entries in the account of all these four parties and those in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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