9911796707
TMI Blog2023 (10) TMI 1406X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of assessments was to the tune of more than Rs. 10 Cr. The assessee stated that the income for all the years had fallen into the highest tax bracket which shows that the assessee has been earning substantial Income clearly establishing the status. It has time and again been held that due credit of the same has to be allowed by the assessing officer looking and appreciating the status, customs, and traditions relating to the family. Hon ble Delhi High Court in the case of Ashok Chaddha [ 2011 (7) TMI 142 - DELHI HIGH COURT] held that collecting jewellery of 906.900 gms by a woman in a married life of 25 years in form of stree dhan or on other occasions is not abnormal. Assessee appeal allowed. Unsecured Loans - statement recorded u/s 131 of loan grantor - HELD THAT:-As gone through the statement of Sh. Vibhor Tyagi and Sh. Vaibhav Tyagi produced by the ld. DR wherein they have categorically denied in the statement recorded u/s 131 of giving any loan to Dr. Ankit Sharma. They stated that they were trying to open a petrol pump a partnership of wife of Dr. Ankit Sharma and due to non-allotment of petrol pump the business could not start. Revenue has not brought anything on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rranted based on surmises, conjectures, and the same is bad in law. 3. That on the facts of the case, in law and under the circumstances, the Commissioner of Income Tax (Appeal)4, Kanpur erred to confirm the action of the assessing officer to make an addition of Rs 92,00,000/- to the incomer of the appellant for the alleged loan figures jotted on the rough paper bearing number Z-1, of Annexure LP-3, page number 27 by invoking the provisions of section 69A of the Act, while no such loan was ever received but these were only figures jotted to show higher cost. The addition confirmed by the Hon'ble Commissioner of Income Tax (Appeal) 4, Kanpur is based on surmises, conjectures and on mere hypothetical reasonings and the same is unjustified unwarranted and bad in law 4. That on the facts and in law and under the circumstances, the assessing officer erred to issue the penalty notice under section 271AAB and also the interest charged under section 234A, 2348, 234C and 234D is thus illegal and bad in law. 3. In ITA No. 2124/Del/2022, following grounds have been raised by the Revenue: 1. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warded to the assessee in its balance sheet. Since the assessee failed to prove the genuineness of her receipt of loan from M/s Moral Sales Pvt. Ltd., addition of Rs. 25,00,000/- made by the AO as unexplained loan u/s 68 of the Act, is justified. 4. In ITA No. 2125/Del/2022, following grounds have been raised by the Revenue: 1. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by Assessing Officer of Rs. 1,50,00,000/- on account of unexplained loan u/s 68 of the IT Act, 1961 without considering that lender company i.e. M/s Sarvottam Securities Pvt. Ltd. does not have the creditworthiness to pay huge amount of loan i.e. Rs. 1,50,00,000/- to the assessee as the lender company had declared income of Rs 9,99,730/- only during the year. Further, enquiries were made by the Investigation Wing and it was found that the lender company is a bogus entity and merely working for providing accommodation entries to various persons/entities. Thus, the creditworthiness of lender and genuineness of the loan received by the assessee from M/s Sarvottam Securities could not be proved. 2. On facts and circumstances of the case and in law, the Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. Further, enquiries were made by the Investigation Wing and it was found that the company is a bogus entity and merely working for providing accommodation entries to various entities. In such facts and circumstances, the creditworthiness of lender and genuineness of the loan received by the assessee from M/s Sarvottam Securities could not be proved. 3. On facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made by Assessing Officer of Rs. 80,00,000/- on account of unexplained loan u/s 68 of the IT Act, 1961 without considering that the lender company namely M/s Upaj Leasing and Finance Company Pvt. Lid does not have the creditworthiness to pay huge amount of loan i.e. Rs. 80,00,000/- to the assessee as the lender company had declared income of Rs 13,63,530/- only during the year. Further, enquiries were made by the Investigation Wing and it was found that the company is a bogus entity and merely working for providing accommodation entries to various entities. Since the assessee failed to prove the genuineness of his receipt of loan from M/s Upaj Leasing and Finance Company Pvt. Ltd., addition of Rs. 80,00,000/- made by the JAO as unexp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 3,30,00,000/- on account of unexplained donation u/s 68 of the I.T Act, 1961 without considering that the doner doner companies namely M/s Moral Sales Pvt. Ltd. M/s Amsoft Global Pvt. Ltd. do not have the creditworthiness to pay huge amount of loan i.e. Rs. 2,80,00,000/- Rs. 50,00,000/- respectively to the assessee as the doner companies had declared very low incomes during the year. It had also not furnished its financial statement to prove its net worth and capital to forward loans. Further, enquiries were made by the Investigation Wing and it was found that the company is a bogus paper company and the transaction of giving loan to the assessee trust is bogus. It is also note worthy here that during search proceedings, the said amount of donation were accounted as corpus donations in the books of the assessee, however, after filing the return in consequence of notice u/s 153A, it converted the same from corpus donation to voluntary donation. Whereas the donor company had categorically stated that it had provided corpus donations to the assessee. In such facts and circumstances, the creditworthiness of donor companies and genuineness of the donations received by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mt Nidhi Bansal (Sister in law) 500 GMS 5. Sh. Ankit Sharma (Self) 100 GMS 6. Smt Neha Goel (Wife) 500 GMS 7. Kiaara Sharma (Daughter) 250 GMS 8. Advay Sharma (Nephew) 100 GMS 9. Adyant Sharma (Nephew) 100 GMS Total 2250 GMS The remaining gold jewellery of 1627.5 Grams amounting to Rs. 61,34,610/- remains unexplained. Therefore, considering the facts of the case and CBDT's instruction No. 1916 dated 11.05.1994 and press release dated 01.12.2016, the remaining jewellery of 1627.5 GMS for the total value of Rs. 61,34,610/- (as on date of search) is treated as unexplained jewellery. The amount of Rs. 20,44,870/- (1/3 share) is added to the total income of the assessee for the year under consideration u/s 69A r.w.s. 115BBE of the Income Tax Act, 1961. The remaining amount is added in the income of Sh. Ganga Saran Sharma, father of assessee and Sh. Ankur Sharma, Brother of assessee. 4. Proceedings before the ld. CIT(A): Before the ld. CIT(A), the appellant submitted that it had been explained that the major amount of gold ornaments were inherited by Shri Ganga Saran Sharma on the death of his mother, besides Shri Ganga Saran Sharma was married in equally rich and business class fami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the AO has already considered as explained the jewellery of 2250 grms in accordance to CBDT Instruction No. 1916 dt. 11.05.1994 pertaining to all male and female members of the family and has been reasonable enough to add only 1627.5 grms jewellery valuing Rs. 61,34,610/- and divided the same in the hands of main family members i.e. the appellant, his father and brother. The ld. CIT(A) held that with regard to the jewellery belonging to daughter of Smt. Shashi Sharma i.e. the sister of the appellant, the appellant could not furnish the requisite evidence, which may conclusively prove that the jewellery belonging to his sister was also kept in the residential premise of the appellant. Therefore, the ld. CIT(A) was of the opinion that this submission as an afterthought and since the same was held to be devoid of merit, the arguments of the assessee were summarily dismissed. In effect, the order of the AO has been confirmed. 9. The addition of Rs. 61,34,610/- has been made in the hands of Sh. Ganga Saran Sharma, the patriarch of the family and the siblings Sh. Ankit Sharma and Sh. Ankur Sharma at the rate of 33.33% each. 10. Aggrieved, the assessee filed appeal before the Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 270/RJT/2015 DCIT, CC-8(3), Mumbai Vs. Shri Manekchand Kothari ITA No. 194/Mum/2018 16. The Hon ble Delhi High Court in the case of Ashok Chaddha vs. Income-tax Officer 14 taxmann.com 57 (Delhi) held that collecting jewellery of 906.900 gms by a woman in a married life of 25 years in form of stree dhan or on other occasions is not abnormal. The operative part of the judgment is reproduced below: 3. Learned Counsel for the respondent on the other hand relied upon the reasoning given by the authorities below. After considering the aforesaid submissions we are of the view that addition made is totally arbitrary and is not founded on any cogent basis or evidence. We have to keep in mind that the assessee was married for more than 25-30 years. The jewellery in question is not very substantial. The learned counsel for the appellant/assessee is correct in her submission that it is a normal custom for woman to receive jewellery in the form of stree dhan or on other occasions such as birth of a child etc. Collecting jewellery of 906.900 grams by a woman in a married life of 25-30 years is not abnormal. Furthermore, there was no valid and/or proper yardstick adopted by the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in jewellery and addition of Rs. 1.87,082/- on account of unexplained investment in property. The total jewellery found during the course of search was 2531.5 gms, out of which the AO has given assessee the benefit of 950 gms, as per the CBDT Instruction No. 1916 dated 11.4.1994 on account of wife and two children of the assessee. The Ld. CIT(A) in appeal has further allowed the benefit of 600 gms. Of jewellery on account of mother and father of the assessee, holding that the same was allowable to the assessee as per the CBDT Instruction No. 1916, but however, sustained the balance addition made by the AO, vide order dated 22.12.2014 treating the balance jewellery weighting 1050 gms of gold as unexplained. 6.3 Keeping in view of the aforesaid facts and circumstances of the case as well as the status of the family and on the anvil of the judgement of the High Court of Delhi in the case of Ashok Chaddha (Supra) of Sushila Devi (supra) and the IT AT Delhi decision in the case of Suneela Soni (supra), the explanation given by the assessee's counsel is accepted. Accordingly the orders of the authorities below are cancelled and addition made by the AO and partly confirmed by the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment was required for around 130 crores inclusive of bank liabilities. However, the proposal could not get through, because still, the allocation of medical seats was yet to be approved. The real estate sector had been passing through heavy recession and looking to the quantum of investment required, the proposal could not get final nod of the investors and as such, it is only a dump document and has nothing to do with the assessee and the trust. Moreover, there is no name written on the document to connect the same with the assessee in any manner and as such, cannot be used to make addition without proper bringing corroborative evidence of records. Alternatively, it is stated that this document has been confronted to almost all the family members by scanning the same in the show cause notice issued to them. Though, as stated above it does not belong to any particular entity but is an overall proposal for the sale of college. By going through the entries as contained in the document, the following facts can be note. The above has been perused and examined. The AR of assessee has explained that the page also contains details of secured loans from different bank loans whose details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Ankit Sharma, secretary of the trust. In this regard the AR submits that this document is just a proposal prepared by the family to sell the hospital and the college on account of heavy losses suffered by the trust during this period and further a setback of not getting approval for the college. He claims that whatever is jotted on this paper, the same is not in reference to any particular person in the family but is a mere sale-proposal and as such, no addition is called for on the basis of the figures jotted on this paper being a mere dumb document. Thus the AR concludes that any addition made on the basis of a rough proposal based on the document/loose sheet prepared by the family as sale proposal for college taking its value as on 21.09.2018, cannot be sustained. Before the ld. CIT(A), the ld. AR further submitted that this document (page no 27 of Annexure LP-3) is an estimate which was finalized on 21.09.2018 and as such pertains to the assessment year 2019- 20. He claims that this was explained to the AO that the family trust i.e. Shri Jaipal Singh Sharma Trust had been in the process of establishing and running medical college at Pilkhuwa since 2013-14, however, in spite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000/- could not be successfully explained by the appellant. 23. Aggrieved, the assessee filed appeal before the Tribunal. 24. During the hearing before us, the ld. AR relied on the submissions and the arguments taken up before the revenue authorities and the ld. CIT DR relied upon the orders of the authorities below. 25. Heard the arguments of both the parties and perused the material available on record. We have gone through the facts of the case and the judgments of various Courts on this issue. 26. The entries as contained in the document reveals the following: P. C. Sharma - Amount written Rs. 3,70,00,000/- - Loan reflected in the books of the trust Rs. 2,03,60,000/- - Loan reflected in the books of Ankit Sharma Rs. 89,40,000/- - Loan reflected in the books of Sh. G. S. Sharma Rs. 63,09,700/- Anil Kumar Garg :- Rs. 1,87,00,000/- - Loan reflected in the books of the trust Rs. 77,00, 000/- only, - Loan reflected in the name of Vigour Finvest Pvt. Ltd. Rs. 25,00,000/- - Loan reflected in the name of Kisley Promoters Pvt. Ltd. Rs. 5,00,000/- - Loan reflected in the name of Karnak Exim Pvt. Ltd. Rs. 50,00,000/ - Loan in the name of Free Bird Industries Pvt. Ltd. Rs. 15,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. during the FY-2015- 16 201617. When he was asked about the various directors of these companies during different FYs, he stated that he did not know these persons. He accepted that he had audited books of accounts of above three companies without knowing the directors of these companies. Sh. Ankur Goel was asked to state whether all loan agreements of above three NBFCS were put before him during audit of the books of accounts of these companies. In response to this he stated that loan agreements made by these companies were not put before him during the audit of books of accounts of these companies. From the statement of Sh. Ankur Goel, it is also seen that the directors are not the shareholders of the company. It is also observed that the directors appear to be only for namesake as they have low income ITRS. Shri Ankur Goel has further stated that all directors are dummy for namesake and are there only to sign documents. From the ongoing, it is clearly seen that these companies are bogus. When Sh. Ankur Goel was asked about the nature of entries made by the above mentioned NBFCs to Shri Jaipal Singh Sharma Trust, he clearly stated that these entries were Bogus. 31. The salie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of the loan party is not proved. Proceedings Before the ld. CIT(A): 35. The submissions of the assessee before the ld. CIT(A) are as under: SARVOTTAM SECURITIES PVT LTD. A. The appellant has been required by your honour to explain as to why the summons issued by the Investigation wing could not be served upon the company to prove their identity, and creditworthiness with supporting evidence. The assessing officer has recorded that summons could not be served on Ankur Gupta and Premnath both Directors of the company at 246/68, Second Floor, East School Block, Mandwali, Delhi-92. A1. In reply it is stated that the copy of the balance sheet of the company Sarvottam Securities Private limited is has been filed before your honour for the year under consideration. The aforesaid Ankur Gupta and Premnath are not the directors of the company during the year. The directors are Shri Rishi Jindal and Shri Ashok Kumar. Accordingly, it has no relevance if the summons could not be served on these persons even at their residence. As far K.G. Finvest, it shall be dealt with in their case separately, it is however clarified that the office of the company is situated on the first floor of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmoned and examined Shri Ankur Goel, the Chartered Accountant who has claimed to have audited the books of account of the company for the year under consideration. The appellant on the last date of hearing had been also required by your Honour to explain the contention of the Auditor Ankur Goel that the directors are not known to him and the company is a bogus entity engaged in providing accommodation entries only and that the directors being dummy, the beneficial directors are Himanshu Verma and Hari Shankar Yadav. B1. In reply, at the very outset, it is explained that for the year under consideration relevant to the assessment year 2016-11, the books of account of the company were audited by Shri Shenu Aggarwal, Chartered Accountant, Proprietor of M/S Shenu Aggarwal Company. The books of account of the company were never audited by Shri Ankur Goel, Chartered Accountant and there is no evidence on record to prove that Ankur Goel may be partner of Shenu Aggawal. Accordingly, all his assertions that the lender company is bogus and entry provider is totally false statement seems to be given out of professional jealously only. Since, books are not audited by Ankur Goel, Chartered Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. REGARDING ASPIRE SALES PRIVATE LIMITED D. On the last date of hearing, appellant was required to explain the objections recorded by the assessing officer at page number 7 of the assessment order, where it is observed that to enquire about the genuineness of the loan summons were issued to the lender company on 08.09.202. However, in response, neither the director of the company nor any authorized representative of the company appeared. D1. It is explained that the summons issued by the assessing officer were properly served upon the company but non compliance can be for obvious reasons. It was the period, when on account of COVID- 19, people prone to the infection preferred to remain indoors. The copies of balance sheet and ITR had been sent along with copies of the loan agreements and other supporting documents and the copies have been also enclosed for the perusal by your Honour. D2. It is further explained to your Honours query that the net income declared in the ITR is not the sole criteria to judge the creditworthiness of any lender company. The trading account of the lender company shows Revenue from operations at Rs. 9,54,76,041/- and the balance sheet reflects total ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad audited the books of M/s. KG Finvest Pvt. Ltd., M/s. Sarvottam Securities Pvt. Ltd. and M/s. Upaj Leasing and Finance Pvt. Ltd. for FY 2015-16 and FY 2016-17. Sh. Ankur Goel stated that he audited books of these three concerns without knowing their directors and that loan agreements made by these companies were not put before him during the audit of books of these companies. He claimed that the directors of these companies appear to be only for name-sake and that these companies are bogus. The AO observes that Sh. Ankur Goel stated that the directors of these three companies are dummy and actual beneficial owners are Sh. Himanshu Verma and Sh. Hari Shankar Yadav. Thus the AO concludes that these three entities i.e. M/s. KG Finvest Pvt. Ltd., M/s. Sarvottam Securities Pvt. Ltd. and M/s. Upaj Leasing and Finance Pvt. Ltd. provide accommodation entries. The AO further observes that the directors of M/s. Sarvottam Securities Pvt. Ltd. did not appear personally during the assessment proceedings. The creditworthiness of M/s Sarvottam Securities Pvt. Ltd. was also concluded to be insufficient due to its meager income of Rs. 9,99,730/- in AY 2016-17 against the loan of Rs. 75,00,000/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is bogus and entry provider are totally false and seem to be given out of professional jealousy. He submits that the investigation wing failed to confirm the statement of Shri Ankur Goel from Sh. Himanshu Verma and Sh. Hari Shankar Yadav, who have been claimed to be main persons controlling the loan creditor. The AR claims that the AO has personally conducted discreet enquiries on the issue and at page number 2 of assessment order admitted that total information in respect of unsecured loan raised from these entities has been submitted in compliance to notice issued under section 133(6) of the Act that goes to prove the identity, genuineness and creditworthiness of the loans received. The loan confirmation, copy of bank account, ITR, balance sheet and audit report has been already filed. It is thus explained that once, the assessing officer has made independent enquiries, he cannot brush aside the material information collected by her simply to follow the agenda set by investigation wing. The AR claims that balance sheet of the lender company M/s. Sarvottam Securities Pvt. Ltd. for AY 2016-17 reflects total assets of Rs. 107,60,35,346/- and an amount of Rs. 105,85,84,049/- is show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et, CSC, Mayur Vihar, Phase-3, Kondli, Gharoli, Delhi-110096. The copy of rent agreement of this premise is also furnished. Therefore the AO cannot claim that the identity of this loan creditor could not be proved. From the balance sheet of this NBFC company it has been found that this has share capital of Rs. 3,01,87,000/- and reserve and surplus of Rs. 65.09 crores. From the Schedule of Short term Loans and advances, it is found that loans are given to various persons. Loans have been received by the appellant through banking channel and relevant bank statements have been filed. This company has earned interest income of Rs. 1.39 crores and achieved the sales turn-over of Rs. 39.50 Lacs. It is found that the net income of Rs. 9,99,732/- has been offered for tax but the income of current year cannot be made a criteria of creditworthiness of the loan creditor. The statement of Sh. Ankur Goel suffers from factual incorrectness and the same has also not been taken to logical conclusion by verifying the same from the affected parties. This statement has also not been provided to the appellant. Further all the three limbs of genuine cash credit i.e. identity, creditworthiness and genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement given by Sh. Ankur Goyai, CA after more than 5 months of the search, has been found incorrect in the light of the fact that the books of the accounts of M/s. Sarvottam Securities Pvt. Ltd. have not been actually audited by him and the same have been audited by Sh. Shenu Aggarwal, prop. of Shenu Aggarwal and Company, (membership No. 527267 and prop, concern registration No. 026501N). Further the AR has brought into fore the fact that no cash trail could be established by the investigation wing or by the AO. The statement was not confronted to the AR and the same was also not taken to its logical conclusion by examining Sh. Himanshu Verma and Sh. Hari Shankar Yadav, who have been claimed as controllers of these three NBFCs. These NBHCs are regulated by RBI laws. The objectivity of statement of Sh. Ankur Goyai could also not be examined when the questions were raised by the appellant that the same is recorded after the 5 months of the search action and he has not been auditor of the NBFC lender in the year under consideration, in-fact he was partner of NJ Associates and M/s. NJ Associates has been auditor of this lender company in FY 2016-17 only and as per his clarification i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flect any cash deposit at all and the assessing officer has not made out the case of entry in lieu of cash with sufficient documents and corroborative evidence on record. The AR explains that loans and advances given to Sh. Ankit Sharma and Smt. Nidhi Sharma have been shown under trade receivables in schedule 10 which sums up to Rs. 1,63,85,283/- and the bifurcation of the same is as under: Name of Parties Amount Bright View Telecom Pvt. Ltd. 24,39,177.00 ID Pearl India 39,46,106.00 Ankit Sharma Loan A/c 50,00,000,00 Nidhi Sharma Loan A/c 50,00,000.00 1,63,85,283.00 Thus the AR submits that the AO has wrongly concluded that the loans and advances given to the appellant group amounting to Rs. 1,00,00,000/- are way more than the Short term loans and advances shown by the lender at Rs. 1,83,359/-, which s shown in schedule 12 of the balance sheet. The AR submits that the opportunity of explaining the balance sheet before reaching to any conclusion has not been given and wrong conclusions have been drawn. 6.11 The AR further submits that financial health of the entity is very sound and bank account does not reflect any cash deposit at all and the assessing officer has failed to prove t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reports of the investigation. The ld. CIT(A) cogently brought on record that the loans received by the assessee could not be treated u/s 68 as the identity, genuineness and creditworthiness of the parties has been duly proved. In view of the above facts and the ratio given by the ld. CIT(A), no interference is called in the well reasoned order of the ld. CIT(A). Nidhi Sharma ITA No. 2124/Del/2022 39. The assessee has received loans from M/s Moral Sales Pvt. Ltd. in addition to Sarvottam Securities Pvt. Ltd. and Aspire Sales Pvt. Ltd. The adjudication in the case of Ankit Sharma in ITA No. 2125/Del/2022 applies mutatis mutandis with reference to the unsecured loans received from M/s Sarvottam Securities Pvt. Ltd. and M/s Aspire Sales Pvt. Ltd. 40. M/s Moral Sales Pvt. Ltd. During the year, the assessee has received loan of Rs 25,00,000/- from the lender entity. The entity has declared income of Rs. 1,05,690/- during the year. Further, the entity has forwarded total loan of Rs. 80,00,000/- to the assessee and his family members, during the year, namely Sh. Ankur Sharma and Smt. Shashi Sharma. 41. Notice u/s 133(6) was issued to the company, in response to which it furnished reply. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply the authorized signatory of M/s Moral Sales Pvt. Ltd. submitted that the matter is old and they need 15 days more to collect the requisite documents/information. However, after that none attended nor any written reply from M/s Moral Sales Pvt. Ltd. was received. 44. The details of Gross Total income of the company declared in the ITRs during different FYs are obtained and are summarized as under:- Sl. No. F.Y. Gross Total Income (Rs.) 1. 2014-15 1,10,673/- 2. 2015-16 1,05,685/- 3. 2016-17 1,64,632/- 4. 2017-18 2,04,312/- 45. M/s Moral Sales Pvt. Ltd. has given substantial loan to the assessee and h family members and donations to M/s Shri Jaipal Singh Sharma Trust. The loans given by the company are not getting reflected the Balance sheet of the company. From the perusal of above table, it is seen that the maximum gross total income of the company during the period from FY 201 15 to 2017-18 is Rs. 2,04,312/- only in FY-2017-18. Further, juxtaposition income profile to the outcome of enquiries made regarding genuineness of the company make it amply clear that such loans and donations received by the assessee and her family members from M/s Moral Sales Pvt. Ltd. are bogus. 46. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived by the company and in response, the lender company furnished reply. This fact stands admitted by the assessing officer in last paragraph at page number 2 of the assessment order. It is further explained that the trading account of the lender company Moral Sales Private Limited shows Revenue from operations at Rs. 5,21,45,340/- and balance sheet reflects total investments at Rs. 5,03,45,177/- that includes accumulated profits/reserve and surplus at Rs. 4,94,41,908/- and trade receivables at Rs. 1,44,23,653/- besides short term-long term loan, and advances at Rs. 52,97,148/- and every auditor has its own system of indicating advances and/or receivable in the balance sheet. The breakup of the figure of loan and advances declared at the net amount of Rs. 52,97,148/- is enclosed. E4. Further, summons under section 131 was issued to the company on 08.09.2021, in response, the authorized representative of the company Shri Santosh Gupta, CA and internal auditor of the company appeared along with copy of the power of attorney issued by the Director and he had filed the copies of the loan agreement and further explained to the assessing officer that the source of loan was out of accum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Nirmal Rani Vs. Deputy Commissioner of Income Tax, Ambala, reported in 163 ITD 491; where assesse had adequately discharged her onus of proving identity of donor, capacity of donor as also genuineness of transaction, addition could not be made under section 68 of the Act and by asking assessee to file their income tax return and bank statement, revenue was verifying source of source which could not be done. Reference is invited to the judgment delivered by the High Court of Bombay, in the case of Commissioner of Income Tax vs Harsh D Mehta, reported in 251 Taxman 346: where assessee proved loan transactions from various parties by providing details like copy of PAN card, copy of return of income, balance sheet and copy of the bank statement of the creditors, tribunal was justified in deleting additions made by Assessing Officer under section 68 in respect of said transaction. Reference is invited to the judgment delivered by Delhi High Court, in the case of Pr. Commissioner of Income Tax vs Manoj Hora, reported in 402 ITR 175; search and seizer- assessment in search cases, statement of third party recorded under section 132(4) of the Act, no incriminating material attributa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished the copies of loan agreements and explained that the loans have been given out of accumulated profits and loans of the company. The AO further mentions that summons were issued by Investigation Wing in the names of Sh. Vivek Datta and Sh. Hardayal, directors of M/s. Moral Sales Pvt. Ltd. however the summons could not be served at the registered office of the company and it was reported by the inspectors that the given premise belongs to M/s. Rajesh Vipin and Associates. The AO states that Sh. Bijendra Chauhan present in that office claimed that neither there is any person with the name of Sh. Hardayal nor M/s. Moral Sales Pvt. Ltd. exists at that address. However it is stated by the AO in the assessment order itself that in response to the Summons the authorized signatory of the company submitted the written submission through the speed post. Further the AO has given details of returned income of four years of the lender company which is very less and the maximum income of these four years is only Rs. 2,04,312/- in FY 2017-18. Therefore the AO concludes that the lender suffers from creditworthiness. On the other hand the AR submits that in the matter of M/s. Moral Sales P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les Rs. 2,32,68,050/- Less: Unsecured Loan Payables Rs. 1,80,00,000/- Net Amount Rs. 52,68,050/- Add: TDS (as shown in BS) Rs. 29,098/- Amount Rs. 52,97,148/- 50. The ld. CIT(A) held that in compliance to the summons issued under section 131 on 08.09.2021, the authorized representative of the company Shri Santosh Gupta CA and internal auditor of the company appeared along with copy of the power of attorney issued by the Director and he had filed the copies of the loan agreement and further explained to the assessing officer that the source of loan was out of accumulated profits and loan of the company. Accordingly, it was held that financial health of the entity is very sound and bank account does not reflect any cash deposit at all and the assessing officer has failed to prove the allegation of entry in lieu of cash with sufficient documents and corroborative evidence on record excepting that the AO has tried to toe the line drawn by investigation wing. The ld. CIT(A) relied on the balance sheet and profit and loss account that lender company i.e. M/s. Moral Sales Pvt. Ltd. had share capital and reserves of more than Rs. 5 crores on 31.03.2016 and the company has revenue from oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lender company on 18.12.2020. In response to which the lender company furnished reply alongwith confirmation, ITR and Bank statement. Further, summon u/s 131 was issued to the company on 08.09.2021. In response the authorized representative of the company Sh. Pankaj Walia, Advocate appeared alongwith copy of power of attorney issued on e-stamp paper by the Director of the company Sh. Shree Ram Yadav, copy of loan agreement with the trust. He stated that he provides consultancy tax and civil matters to M/s Upaj Leasing and Finance Private Limited. He stated that the source of loan was out of accumulated profits and loans received back by the company. He further stated that the loans have been repaid by the trust. Further, during the post search investigation, enquiries were made by the Investigation wing and it was found that the company is a bogus paper entity. To enquire about the genuineness of such loans, on 10.05.2019, summon was issued in the name of Sh. Ravinder Kumar Yadav Sh. Prem Nath both directors in this company. These summons neither could be served at the registered office of the company nor at the residential address of the directors. Sh. Ankur Goel, CA of M/s N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s KG Finvest Private Limited are bogus. He also stated that the directors of the companies are dummy directors and actual beneficial owners of the company are two other persons, namely, Sh. Himanshu Verma and Sh. Hari Shankar Yadav. Through the above, statement recorded, the auditor of the company Sh. Ankur Gupta has himself admitted, in reply to Q.40, that the entities M/s Sarvottam Securities Private Ltd, M/s Upaj Leasing and Finance Company Ltd. and M/s KG Finvest Pvt. Ltd. provide accommodation entries to various entities. In view of the above, the assessee's reply has not been found to be satisfactory. Without prejudice to the above, the creditworthiness of the above company was also analyzed by examining the ITR. The company has only declared income of Rs. 13,63,530/- for the AY 2016-17 against the loan of Rs. 80,00,000/-. Further, during the assessment proceedings also, the Directors did not appear personally while summons were issued for confronting the above facts unearthed during the search investigation. From the above discussions, it is very much clear that M/s Upaj Leasing and Finance Company Ltd., has provided accommodation entries in the form of loan of Rs.80,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued to the lender company on 18.12.2020 by the assessing officer to verify the genuineness of the loan received by the company. In response to which, the lender company furnished reply along with confirmation, ITR, and bank statement Further summons under section 131 was issued to the company on 08.09.2021, in response, the authorized representative of the company Shri Pankaj Walia, Advocate appeared along with copy of the power of attorney issued on e-stamp paper by the Director of the company Shri Shree Ram Yadav and the copy of the loan agreement with the trust. He stated that the source of loan was out of accumulated profits and loan has been partly repaid by the trust to the company. C2. It is further recorded by the assessing officer that on 10.05.2019 summons was issued by the Investigation Wing, in the name of Sh. Ravinder Kumar Yadav and Shri Prem Nath both directors in the company. These summonses could not be served. IT IS EXPLAINED THAT PREM NATH IS NOT THE DIRECTOR OF THE COMPANY. FURTHER IT IS NOT MENTIONED AS TO WHICH ADDRESS, THE SUMMONS WERE SENT WHILE THE AS PER ITR OF THE RELEVANT YEAR, THE ADDRESS OF THE COMPANY IS NOTED AS 224, SECOND FLOOR, VARDHMAN CITY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... INVESTIGATION WING HAS FAILED TO SUMMON ANO RECORD THE STATEMENT OF HIMANSHU VERMA AND HARI SHANKAR YADAV AND AS SUCH THE CONTENTION OF CA Sh. ANKUR GOEL LACKED CORROBORATIVE EVIDENCE AND IS NOTHING MORE THAN A DUMP DOCUMENT AND CAN NOT BE RELIED UPON.THE ANSWAR TO QUESTION NUMBER 40 GIVEN BY ANKUR GOEL THAT THESE ARE ENTITIES PROVIDING ACCOMODATION ENTRIES IS WITHOUT ANY AUTHORTY AND BEING NEITHER AN AUDITOR NOR DIRTECTOR AND IS MARRED BY PROFESSIONAL JELOUSLY ONLY. D2. How any CA like Ankur Goel who is not auditor of any of the aforesaid companies for the relevant year can give statement that it is a mere paper company, it is for this reason that neither of the two, investigation wing and the assessing officer took steps to provide the copy of the statement of Shri Ankur Goel to the appellant before using the same to complete the assessment after making uncalled for additions. D3. It may be pointed out that the trust had been facing grave financial crises to run the hospital for charitable objects while the medical college did not get sanction of the medical seats and thus day by day, the financial situation was getting bad to worst while the trust had been extending its medical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- taken from M/s. Upaj Leasing and Finance Company Pvt. Ltd., the AO observes that as per ITR this loan creditor has shown the income of only Rs. 13,63,530/-. The AO observes that notice u/s 133(6) of IT Act was issued to this lender company and reply was furnished along with confirmation, ITR and Bank Statement. The AO further records that in response to the summons issued u/s 131 of IT Act, the AR of the company Sh. Pankaj Walia Advocate attended and copy of loan agreement with the trust was filed. The AR also submitted that the source of the loan was out of accumulated profits and loans received by the company. It is also brought to the fore that the loan has been paid back by the trust However in the assessment order the AO has recorded findings of the investigator wing and observed that the post search investigation inquiries concluded that the lender company was bogus paper entity. In the assessment order, the AO records that during post search proceedings, summons were issued in the name of Sh. Ravinder Kumar Yadav and Sh. Premnath, both directors in M/s. Upaj Leasing and Finance Company, however the inspectors could not serve the summons either on the registered office o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter of fact is that Premnath is not the director of the company and as per ITR of the relevant year, the address of the company is noted as 224, second floor, Vardhman City Centre, Gulabi Bagh, Shakti Nagar, near railway under bridge, Delhi-110052 but it appears that the summons were not issued to the correct address by Investigation Wing. The AR further explains that the trading account of the lender company shows Revenue from operations at Rs. 6,97,44,205/- and balance sheet reflects total assets/investments at Rs. 137,51,20,593/- that includes accumulated profits/reserve and surplus at Rs. 64,23,32,8172/- and also short term loan and advances at Rs. 135,56,29,534/-. Based on the same, he claims that the financial health of the entity is very sound and the bank account does not reflect any cash deposit at all and the assessing officer has failed to prove the allegation of entry in lieu of cash with sufficient documents and corroborative evidence on record excepting that AO has tried to toe the line drawn by investigation wing. 8.3 The AR submits that for AY 2016-17, the books of account of the company were audited by Shri Shenu Aggarwal, Chartered Accountant, Proprietor of M/S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liabilities of Rs. 137.51 crores. From the Schedule of Short term Loans and advances, it is found that loans of Rs. 135.58 crores are given to various persons. Loans have been received by the appellant through banking channel and relevant bank statements have been filed. The income of current year cannot be made a criteria of creditworthiness of the loan creditor. The statement of Sh. Ankur Goel suffers from factual incorrectness and the same has also not been taken to logical conclusion by verifying the same from the affected parties. This statement has also not been provided to the appellant. Further all the three limbs of genuine cash credit i.e. identity, creditworthiness and genuineness of transaction, have been proved by furnishing all the relevant details and the loans have been paid back by the trust. The reliance placed by the appellant on various judicial pronouncements has been found correct in the sense that the appellant has discharged his onus by proving identity and creditworthiness of the loan creditor along with genuineness of transaction, which is proved since all the loans of advanced through banking channels. 9.1 From the details furnished by the appellant in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany (membership No. 527267 and prop, concern registration No. 026501N). Further the AR has brought into fore the fact that no cash trail could be established by the investigation wing or by the AO. The statement was not confronted to the AR and the same was also not taken to its logical conclusion by examining Sh. Himanshu Verma and Sh. Hari Shankar Yadav, who have been claimed as controllers of these three NBFCs. These NBFCs are regulated by RBI laws. And the loans, taken by trust have been returned back completely. The objectivity of statement of Sh. Ankur Goyai could also not be examined when the questions were raised by the appellant that the same is recorded after the 5 months of the search action and he has not been auditor of the NBFC lenders in the year under consideration, in-fact he was partner of NJ Associates and M/s. NJ Associates has been auditor of these lender companies in FY 2016-17 only and as per his clarification in the statement on oath, Sh. Ankur Gupta has just signed the audited records and has not been involved in the actual audit process. 9.2 The appellant has explained the source of the creditor in its books by filing the confirmation and financial statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 as the identity, genuineness and creditworthiness of the parties has been duly proved. In view of the above facts and the ratio given by the ld. CIT(A), no interference is called in the well reasoned order of the ld. CIT(A). Amsoft Global Pvt. Ltd. 59. The relevant portion of the Assessment Order on this issue is as under: M/s Amsoft Global Pvt Ltd. The assessee has received donation of Rs. 50,00,000/- from M/s Amsoft Global Pvt. Ltd. However, after filing the return in consequence of notice u/s 153A, the assessee converted the same from corpus donations to voluntary donations and filed amended Form 10B. The same was confronted to the assessee. In this regard, vide reply dated 26.03.2021, the assessee has stated that the donation was voluntary donation and not corpus donation. To verify the above contention of the assessee, Notice u/s 133(6) was issued to the donor company. As per the reply filed, the donor company has categorically stated that it has provided 'corpus donations' to the assessee. Henceforth, the contention of the assessee is not acceptable as corpus donations are given for a specific purpose and with a specific clause of going towards corpus fund of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Gross Total income of the company declared in the ITRS during different FYs are obtained from ITBA and are summarized as under: Sl. No. F.Y. Gross Total Income (Rs.) 1. 2014-15 1,38,135/- 2. 2015-16 1,40,884/- 3. 2016-17 82,122/- M/s Amsoft Global Pvt. Ltd. has made corpus donation to the tune of Rs. 50 lacs to M/s Shri Jaipal Singh Sharma Trust while gross total income of the company is as low as Rs. 82,120/- in AY 2017-18. This is beyond common comprehension that a company having very low income of it will make any genuine donations of such huge amounts. The financial statements of the company have also not been produced to establish the net worth and creditworthiness of the company. Substantial donations of Rs. 50 lakhs in each year were made to Shri Jaipal Singh Sharma Trust in FY 2015-16 and FY 2016-17. From the perusal of above table, it is seen that the gross total income of the company during FY 2014-15 to 2016-17 is below Rs. 1.5 lakhs in each FY. Further, juxtaposition of income profile to the outcome of enquiries made regarding genuineness of the company make it amply clear that such donations received by Shri Jaipal Singh Sharma Trust from M/s Amsoft Global Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, on re-examination of the state of affairs, the donation being voluntary donations have been incorporated in the income and expenditure account and the copy of the re-casted income and expenditure account and balance sheet had been also filed during assessment proceedings with the assessing officer and the copies of the balance sheet and receipt and expenses account had been enclosed with the Income Tax Return submitted in response to the notice issued under section 153A of the Act and this return had been made basis for completing cases after search. Necessary details about the donations transferred from the corpus fund to the voluntary donation in the Receipt and Expenditure account had been also submitted with the assessing officer. The assessing officer has made these documents such as Balance Sheet, Receipt and expenses account as the base for the completing case. Accordingly, the voluntary donations form part of the income. The AR submits that during the year under reference, the appellant had received total donations to the tune of Rs 5,95,36,000/- and these donations at the time of submitting return originally inadvertently and under bonafide belief were adjusted un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame amounts. In the matter of donation of Rs. 2,80,00,000/- given by M/s. Moral Sales Pvt. Ltd. and donation of Rs. 50,00,000/- given by M/s. Amsoft Global Pvt. Ltd., since the appellant i.e. Sh. Jaipal Singh Sharma Trust has itself considered these donations of Rs. 3,30,00,000/- as revenue receipts, by considering the donations as 'voluntary donations, there is no need to further add the same in the income as 'deemed income as per the provisions of section 68 of IT Act. Infact making this addition u/s 68 of IT Act again, is nothing but the double addition. In the light of these observations, the addition of Rs. 3,30,00,000/- made u/s 68 of IT Act is hereby deleted. 61. Having gone through evidences collected by the Assessing Officer, the reply submitted by the assessee before the AO and the ld. CIT(A), examination of each issue and contention raised by the revenue with reference to the facts relied upon by the ld. CIT(A) and reports of the investigation, the ld. CIT(A) cogently brought on record that the loans received by the assessee could not be treated u/s 68 as the identity, genuineness and creditworthiness of the parties has been duly proved. In view of the above fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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