9911796707
TMI Blog2023 (7) TMI 1494X X X X Extracts X X X X X X X X Extracts X X X X ..... firmation of loans, acknowledgment of return of income filed by the parties who have duly shown the amount of loan in their returns of income and banks statement of loan parties and the Assessee showing the transactions held, but also shown to have deducted TDS on the interest payment made to the parties, which also strengthen the genuineness of the claim of the Assessee. Thus, on the basis of the general statement made by any 3rd party, without demolishing the case/claim of the Assessee, making of an addition is not logical. Also the loan was taken by the Assessee from the said entities in 2010-11 (AY:2011-12) and during the year consideration, no such amount was found credited in the books of an Assessee maintained, if any and even otherwise the Assessee has claimed the he is not maintaining any books of account. As a settled law that mere suspicion cannot takes place for the purpose of passing an order, in fact there must be something more than suspicion in support of an assessment. As neither the Assessee has received any cash nor paid any cash and there was no real cash credit during the year under consideration, therefore the amount in question as unexplained expenditure coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Eagar Corporation, (ix) M/s. Vikrant Marketing, (x) M/s. Acute Consultancy Limited and (xi) M/s. Dolex Commercial Private Limited on 05.02.2016. During the search action the statement of Mr. Vipul Vidur Bhatt was recorded u/s 132(4) of the Income-tax Act, 1961 in which he has accepted that he is an entry operator and all the above mentioned entities/ companies which are used by him for providing various bogus accommodation entries to the various beneficiaries for commission Mr. Vipul Vidur Bhatt also accepted that he is a director in these entities/companies and all other directors of these entities/companies are dummy directors appointed by him. Mr. Vipul Vidur Bhatt further accepted that he controls the entire activities/affairs of these entities/companies and these entities/companies were incorporated for providing bogus accommodation entries only. In the statement recorded u/s 132(4) of the IT Act, 1961, Shri. Vipul Vidur Bhatt also accepted that he controlled, managed and operated as many as 347 bogus entities, which are operated by lum for providing bogus accommodation entries to the various beneficiaries for commission. 02. During the search action u/s 132 of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, filed in response to the notice u/s. 148 of the Act. Subsequently, the statutory notices have also been issued to the Assessee. 5.1 The Assessee by filling it replies claimed to be an individual and proprietor of M/s. Mangal Industries, which is engaged in the business of manufacturing of S. S. utensils and during the year consideration, offered its business income at Rs. 5,20,897/- and income from other sources at Rs. 13,754/-. The Assessee during the financial year 201011, relevant to AY: 2011-12 borrowed loans/funds of Rs. 20,00,000/- Rs. 5,00,000/- from M/s. Santoshima and M/s. Vasudev respectively and during the year under consideration, has not taken any fresh loan from such concerns but paid interest of Rs. 2,40,000/- and Rs. 60,000/- respectively to the above two parties/entities. 5.2 In order to verify the said loan transactions, the Assessing Officer issued the notices u/s. 133(6) of the Act to M/s Santoshima and M/s. Vasudev. However, notice issued to M/s. Santoshima returned as un-served with the remarks not known and notice sent to the Vasudev P. Rawal (HUF) remained un-complied. 5.3 The AO therefore construed that said parties have no explanation to offer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y controlled by Mr Vipul Vidur Bhatt. 5.12 From the above discussion, it is clear that the case was validly reopened by invoking the provisions of section 147 of the Act by the AO after it was found that the appellant had received accommodation entries from a shell company. The AO had cogent material in the form of information/material gathered by the department at the time of search and seizure operation on Mr. Vipul Vidur Bhatt who admitted that the transactions with the assessee company were bogus. According to the appellant details/list of parties were not available with the AO to verify the information hence AO cannot form the belief. However, it is a fact that the AO had received information that M/s Santoshimaa Tradelinks Ltd and Vasudev Rawal HUF were bogus company/firm controlled by an entry operator i.e. Vipul Vidur Bhatt, which is enough for the AO to form a belief that income of the assessee has escaped the assessment. The argument of the appellant that the AO could not verify the information of loan received from the DDIT(Inv) as AO was not in possession of list of parties from where loans were taken is not acceptable The appellant on one hand stated that in the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g income returned by the appellant. Subsequently, the AO has issued notice u/s 148 on the basis of information received from the DDIT (Inv), Unit 7(4), Mumbai. The appellant during the FY 2010-11 relevant to AY 2011-12 has taken loan of Rs. 20,00,000/- from M/s Santoshima Tradelink Ltd and Rs. 5,00,000/- from M/s Vasudev P Rawal (HUF). During the AY 2012-13 the appellant has paid interest of Rs. 2,40,000/- to M/s Santoshima Tradelink Ltd and Rs. 60,000/- to M/s Vasudev P Rawal (HUF) on such loans. During the AY 2013-14 the appellant has paid interest of Rs. 2,40,000/- to M/s Santoshima Tradelink Ltd on such loan. The appellant contended that he has not claimed deduction of this amount of interest paid of Rs. 3,00,000/- out of his taxable income for AY 2012-13, i.e. neither in his profit and loss account nor in computation of total income. Since the appellant has not made claim of deduction of interest paid of Rs. 3,00,000/- out of his taxable income the question of disallowance of interest paid does not arise and same cannot be added to his total income. This contention of the appellant is found to be partly acceptable on the reason that the appellant has not received any fresh loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction in the matter. The Hon'ble Supreme Court in the case of CIT, West Bengal- Il vs., Durga Prasad More [1971] 82 ITR 540 [SC] and Smt. Sumati Dayal vs., CIT, Bangalore [1995] 214 ITR 801 [SC] have held that Courts and Tribunals have to Judge the evidence before them by applying the test of human probability. If the said test is applied in this matter, it is clearly established that assessee failed to prove identity of the accommodation entry providers, their creditworthiness and genuine of the transaction. 6.13 Considering all these facts, Judicial pronouncements and discussion made in previous paras addition made by the AO i.e. explained expenditure ( even though the same has not been debited to the P L Account) on account of interest payment of Rs. 3,00,000/- in AY 2012-13 and Rs. 2,40,000/- in AY 2013-14 is hereby confirmed The grounds of appeal no. 1 of both the appeals are dismissed. 8. The Assessee being aggrieved is in appeal before us. 9. Heard the parties and perused the material available on record. As per balance sheet, as on 31st March, 2012 the Assessee has shown the amount of Rs. 20,00,000/- and Rs. 50,000/- as liability towards M/s. Santoshima and M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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