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TMI Blog2024 (7) TMI 1574X X X X Extracts X X X X X X X X Extracts X X X X ..... - made by the Assessing Officer u/s 68 of the Act treating the unsecured loans claimed by the assessee as unexplained income of the assessee. 3. The brief facts of the case are that the Assessing Officer received information from the Investigation Wing that the assessee's proprietorship concern, namely M/s Deep Steel, has received funds to the tune of Rs. 70,00,000/- during the year from three shell companies namely M/s Anmol Commerce Pvt. Ltd., Avenue Dealcom Pvt. Ltd. and Mangalam Trade Fin Pvt. Ltd. The Assessing Officer observed that as per the information received, the amount was routed through various shell companies and the pattern of transactions indicated that there was possibility of routing unlawful money after getting used in the same account and probably with the intention of converting black money into white. On the basis of the said information, the Assessing Officer reopened the assessment in the case of the assessee u/s 147 of the Act. During the assessment proceedings, the Assessing Officer noted that the assessee had received loans aggregating to Rs. 80,00,000/- from three companies i.e. Vanilla Tieup (P) Ltd. (Rs. 10,00,000/-), Popular Vintrade (P) Ltd. (Rs. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. The ld. counsel has further submitted that as per the information received from the Investigation Wing that the assessee was alleged to have received funds of Rs. 70,00,000/- only, whereas, in the assessment order, the Assessing Officer has noted that the assessee had received an amount of Rs. 80,00,000/-. He in this respect has submitted that after receipt of information from the Investigation Wing, the Assessing Officer did not correlate the said information with the accounts/assessment records of the assessee to form belief that the income of the assessee has escaped assessment. That the Assessing Officer has reopened the assessment merely on the basis of information received from the Investigation Wing and therefore, the satisfaction derived by the Assessing Officer of escapement of income was a borrowed satisfaction. The ld. counsel has submitted that even on merits, the assessee had furnished all the relevant documents to prove the identity and creditworthiness of the creditors and genuineness of the transaction. He referring to the assessment order has submitted that the Assessing Officer has not discussed about a single document furnished by the assessee to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s duly furnished before the Assessing Officer. That loan confirmations from the creditors were also furnished. The ld. counsel has further referred to pages 104 to 116, which is the details of repayment of unsecured loans and submitted that all the loans were repaid and squared off during the subsequent assessment years. The ld. counsel has further referred to assessment order dated 28.12.2019 passed u/s 147/143(3) of the Act in the case of M/s Anmol Commerce Pvt. Ltd. for assessment year 2012-13. He referred to the observation made in the said assessment order to submit that the identical information was received from Investigation Wing in the case of M/s Anmol Commerce Pvt. Ltd., M/s Enpiee Finall Services Pvt. Ltd., M/s Fast-N-Perfect Commercial Pvt. Ltd., M/s Mangalam Tradefin Pvt. Ltd. As per the information, M/s Anmol Commerce Pvt. Ltd. had raised a share amounting to Rs. 30.07 crores. The assessment was reopened and ultimately after examination of the documents and considering the submissions, no additions were made in the case of M/s Anmol Commerce Pvt. Ltd. by the Assessing Officer. The ld. counsel referring to the said assessment order has submitted that though the said a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons recorded that the pattern of the transaction indicated that there was a possibility of routing of unlawful money and probably with intention to convert black money into white money. Thus even in the investigation report, there was suspicion only. Hence, the information from the investigation wing, at the most can be said to be a reason to suspect only. The Assessing officer did not corelate the said information with the accounts of the assessee. There was no credible information available with the Assessing Officer to form the belief that the income of the assessee has escaped assessment. It has been held time and again that the reasons to believe regarding the escapement of the income should be based on certain tangible material and it should not be mere pretence of the Assessing Officer. The reasons to believe does not mean reason to suspect. Reopening of the assessment is not permitted for making fishing and roving enquiries. The Assessing Officer, after receipt of alleged information received from the Investigation Wing was supposed to corelate the same with the records and other facts of the case and thereafter should have satisfied himself of escapement of income. Reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tire loans were repaid during the subsequent assessment years. As noted, the loans duly carried interest, TDS was duly deducted on the interest expenditure, the interest income has been accounted by lender and the same forms part of the income of the lender. Interestingly, the Assessing Officer has not made any disallowance in respect of interest expenditure incurred by the assessee on the aforesaid loan amount. Moreover, the assessment was reopened in the case of major loan provider i.e. M/s Anmol Commerce (P) Ltd., though in the subsequent assessment year, but on the similar allegations and the returned of income of the said concern has been accepted. Moreover, in this case, the Assessing Officer has given the cash trail, wherein, the name of only two companies has been mentioned i.e. M/s Anmol Commerce (P) Ltd. and M/s Vanilla Tie Up Pvt. Ltd. There was no mention even of the third creditor namely M/s Popular Vintrade Pvt. Ltd. I the said list. Moreover, the assessee has duly furnished all the documents to prove the identity and creditworthiness of the creditors and genuineness of the transaction. Neither the Assessing Officer, in our view, nor the ld. CIT(A) has pointed out any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. After the Assessing Officer puts the assessee on notice and the assessee submits the explanation concerning the cash credit, the Assessing Officer should consider it objectively before he decides to accept or reject it. Where the assessee furnishes full details regarding the creditors, it is up to the Department to pursue the matter further to locate those creditors and examine their creditworthiness. While drawing the inference, it cannot be assumed in the absence of any material that there have been some illegalities in the assessee's transaction. Held, dismissing the appeal, that the allegations against the assessee were in respect of thirteen transactions. The Assessing Officer issued a show-cause notice only in respect of one of the lenders. The assessee responded to the show-cause notice and submitted the reply. The documents annexed to the reply were classified under three categories namely: to establish the identity of the lender, to prove the genuineness of the transactions and to establish the creditworthiness of the lender. The Assessing Officer had brushed aside these documents and in a very casual manner had stated that merely filing the permanent account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained at commercial rate of interest which was also repaid at a later date in subsequent year, interest was paid on the loans and tax at source has been deducted and duly reflected by the loan creditor in their income tax return. Therefore, we fail to find any justification in the action of ld. AO invoking the provisions of Section 68 of the Act. We, thus, set aside the finding of ld. CIT(A) and delete the addition of Rs. 25,00,000/- made u/s 68 of the Act." 8. The aforesaid decisions referred to by the Tribunal is squarely applicable to the facts and issues involved in this case. In view of our discussion made above, we do not find any justification on the part of the lower authorities in making/confirming the impugned addition and the same is accordingly ordered to be deleted. 9. ITA No. 1171/Kol/2023 - The sole issue raised by the assessee through grounds of appeal is relating to the confirmation of addition of Rs. 35,00,000/- made by the Assessing Officer u/s 68 of the Act treating the unsecured loans claimed by the assessee as unexplained income of the assessee. 10. The brief facts of the case are that the Assessing Officer received from the Investigation Wing that the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Assessing Officer has made the addition solely relying upon unsubstantiated report of the Investigation Wing. That the Assessing Officer has not discussed about a single document furnished by the assessee to prove the identity and creditworthiness of the creditors and genuineness of the transaction. He in this respect has submitted that after receipt of information from the Investigation Wing, the Assessing Officer did not correlate the said information with the accounts/assessment order of the assessee to form belief that the income of the assessee has escaped assessment. He has submitted that in the reasons recorded, the Assessing Officer has noted that as per the information received from Investigation Wing, the assessee has received the aforesaid amount of Rs. 35,00,000/- from three shell companies namely Anmol Commerce (P) Ltd., Avenue Dealcom Pvt. Ltd. & Mangalam Trade Fin Pvt. Ltd., however, as per the assessment order, the assessee during the year had received Rs. 35,00,000/- from one company only namely M/s Mangalam Tradefin Pvt. Ltd. He, therefore, has submitted that the Assessing Officer did not correlate the aforesaid information with the accounts/records of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the creditworthiness of the said share subscriber was proved beyond doubt. The ld. counsel has further referred to page 69 & 70 that even source of funds of the creditor was also furnished. He has further referred to page 73 of paper book to submit that the aforesaid transaction was duly confirmed by the creditor. The ld. counsel has finally referred to page 77, which is a copy of assessment order dated 30.12.2017 passed u/s 143(3) of the Act in the case of M/s Mangalam Tradefin Pvt. Ltd. for A.Y 2015-16 to submit that in the said assessment order only an addition u/s 14A of the Act of Rs. 352031/- has been made. The ld. counsel in this respect has submitted that the said M/s Mangalam Tradefin Pvt. Ltd. has been duly assessed to Income Tax and that from the said assessment order, it is not only proved that no addition on account of any unexplained source of funds has been made in the case of the said creditor but also the observation of the Assessing Officer that the said company was a shell company, was wrong and false. 13. We have heard the rival submissions and gone through the record. In this case, firstly, the reopening has been made merely on suspicion and solely on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1170/2023 and in the light of the decision o0f the co-ordinate bench of the tribunal in the case of 'Poddar Realtors vs. ITO' (Supra), the addition made/confirmed in this case by the lower authorities is not sustainable and hence the same is ordered to be deleted. 14. ITA No. 1172/Kol/2023 - The sole issue raised by the assessee through the grounds of appeal is relating to the confirmation of addition of Rs. 1,10,00,000/- made by the Assessing Officer u/s 68 of the Act treating the unsecured loans claimed by the assessee as unexplained income of the assessee. 15. The brief facts of the case are that the Assessing Officer received from the Investigation Wing that the money was routed to the accounts of various beneficiaries through shell companies. As per the information, the assessee received funds amounting to Rs. 1,10,00,000/- during the year from three shell companies namely M/s Anmol Commerce Pvt. Ltd., Avenue Dealcom Pvt. Ltd. and Mangalam Trade Fin Pvt. Ltd. having the same directors. The Assessing Officer observed that as per the information received, the amount was routed through various shell companies and the pattern of transactions indicated that there was possibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identity and creditworthiness of the creditor but also the genuineness of the transaction. The ld. counsel has further referred to the various documents placed in the paper-book. He in this respect has referred to page 9 of the paper-book to submit that in response to notice issued u/s 142(1) of the Act, the assessee had duly furnished the copy of ITR, Audited Balance Sheet and Profit & Loss account of the proprietorship concern i.e. M/s Deep Steels and further the details of unsecured loan in desired format including details of interest paid and TDS deducted thereon along with loan confirmations from the creditors were filed and also the details of bank accounts of the proprietorship concern were also furnished. The ld. counsel has further referred to page 10 of the paper-book to submit that vide letter dated 21.08.2017, the necessary documents/evidences pertaining to the loan creditor i.e. M/s Anmol Commerce Pvt. Ltd., which included loan confirmations from the said creditor, return filing acknowledgement for A.Y 2014-15, audited annual accounts, bank statement and declaration about source of loan payments. The ld. counsel has further referred to page 14 of the paperbook, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deleted. 19. ITA No. 1173/Kol/2023 - The sole issue raised by the assessee through grounds of appeal is relating to the confirmation of addition of Rs. 1,50,00,000/- made by the Assessing Officer u/s 68 of the Act treating the unsecured loans claimed by the assessee as unexplained income of the assessee. 20. The facts are identical to that have been discussed in appeals for earlier years. The only distinguishing fact is relating to the name of creditors and amount of money received as loan. In this case, the Assessing Officer received from the Investigation Wing that the assessee received funds amounting to Rs. 1,50,00,000/- during the year from three shell companies namely M/s Anmol Commerce Pvt. Ltd., Avenue Dealcom Pvt. Ltd. and Mangalam Trade Fin Pvt. Ltd.. On the basis of the said information, the Assessing Officer reopened the assessment in the case of the assessee u/s 147 of the Act. However, during the assessment proceedings, it was found that the amount of Rs. 1,50,00,000/- was received by the assessee from one company only namely M/s Anmol Commerce Pvt. Ltd. Rest of the facts, documents relied upon by the assessee and submissions made are identical. To be more partic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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