M/s Associated Alcohols & Breweries Ltd , Indore V. The ACIT,Central-1 , Indore, Indore

CO 10/Ind/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 5328 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 10-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Source of fund; Corroborative evidences; Validity of assessment; Accommodation entries; Retraction; TDS; Set aside
• Section: 68; 132; 69C; 143(3); 153A; 292BB; 251; 143(2); 139(1); 43; 48; 73; 13

Judgement Text

आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING IT(SS)A No.184/Ind/2020 Assessment Year: 2014-15 ACIT, Central-1, Indore : Appellant V/s M/s. Associated Alcohols & Breweries ltd. Indore PAN:AAECA2674B : Respondent CO No.10/Ind/2021 (Arising out of IT(SS)A No.184/Ind/2020) Assessment Year: 2014-15 M/s. Associated Alcohols & Breweries ltd. Indore PAN:AAECA2674B : Appellant V/s ACIT, Central-1, Indore PAN:AAECA2674B : Respondent Appellant by Shri P.K. Mitra, CIT-DR Respondent by Shri V.N.Dube, AR Date of Hearing 14.12.2021 Date of Pronouncement 20.01.2022 M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 2 O R D E R PER BENCH: The above captioned appeals filed at the instance of the Revenue & Cross Objection by the assessee for Assessment Year 2014-15 are directed against the order of Ld. Commissioner of Income Tax(Appeals)-3 (in short ‘Ld. CIT] Bhopal dated 16.10.2020 which is arising out of the order u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 04.06.2018 framed by ACIT-Central-1, Indore. The revenue has raised following grounds of appeal in :ITSSA.No.184/Ind/2021 for Assessment Year 2014-15 1. On the facts and in the circumstances of the case, the Ld. CIT (A) erred in deleting the addition of Rs. 7,48,20,461/- made by Assessing Officer on account of unexplained cash credits u/s 68 of the Income Tax Act, 1961.” The Assesse has raised following grounds in Cross Objection No. 10/Ind/2021 for AY 2014-15:- I. “Notice issued u/s 153A is bad in Law: 1. That the Ld. CIT (A) has erred in not appreciating the ground no.1 and 2 of assessee Company challenging the notice issued by Ld. AO as well as Assessment proceedings u/s section 153A of the Act on the basis that no incriminating documents has been found during the search and seizure operations conducted at various premises/factory of assessee company. 2. That the Ld. CIT (A) erred in dismissing the ground of assessee Company that the statement recorded of the Promotor u/s. 132(4) which has been subsequently retracted before the Investigation wing M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 3 itself immediate after the search, cannot be treated as incriminating material for the purpose of assessment u/s 153A of the Act. Therefore, notice is bad in law. 3. That, Ld. CIT (Appeals) failed to appreciate that assessee company after issuance of notice u/s 153A has no option left but to file return and therefore Assessee has filed Income Tax Return and participated in the assessment proceedings under protest and without prejudice to the provisions of section 292BB and others applicable provisions of the Income Tax Act. 4. That the Ld. CIT (Appeals) erred in not appreciating the facts of the case and settled law that notice as well as assessment order passed u/s 153A by Ld. AO in absence of any incriminating documents found during the search and seizure operation is bad in law, 5. That the Ld. CIT (Appeals) erred in dismissing the contention/ground of assessee merely on the basis that assessee has participated in the assessment proceeding therefore the assessee cannot claim the that notice of 153A is bad in law despite of the concrete law that there is no estoppel against the law and statute. 6. That the Ld. CIT (A) further failed to appreciate that very fact that during the course of the search and seizure operation in the premises of the assessee, the department was not able to pinpoint a single incriminating material/document in respect of any unaccounted funds/assets/sales/stock, which can draw any adverse inference against the Assessee. Further assessee was able to provide each and every detail as required by the department with respect to the financial transactions entered by the Assessee Company during the period under consideration with respect to turn over / sales revenue, expenses/purchases, inventories, Bank & Cash and no defects of whatsoever in the nature were found by the department. 7. That the Ld. CIT (A) erred in holding that once the search has been taken place and notice u/s 153A has been issued by the AO. the jurisdiction is conferred on the Assessing officer to assess or reassess the total income of the six assessment years, evading the settled position of law that A.O has jurisdiction to pass the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search and seizure operation. II. Allowance and deletion of addition of Rs. 7,48,20,461/- as Undisclosed Cash Credit u/s. 68 r.w.s. 115 BBE of the Act: 1. That the Ld. CIT (A) rightly allowed and deleted the addition of Rs. 7,48,20,461/- as unexplained cash credit under section 68 r.w.s. 115BBE of the Act being unsecured loans received from certain group / associate companies after considering all the documents produced during the course of appeal and appreciated that the assessee have proved the identity of the parties, their credit worthiness and M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 4 genuineness of the transaction by submitting complete documentary proof relating to section 68 of the Act. 2. That the Ld. CIT(A) appreciated that the funds received from the group / associate Companies and the same was even repaid by the company during the financial year 2016-17. The said transactions were reflected in the regular books of the assessee company as well the group companies who have advanced the said loans. 3. The Ld. CIT (A) appreciated that the transaction entered by the assessee with the group companies are genuine and in support assessee filed copy of PAN, Bank statement along with audited Balance Sheet, Profit & Loss Account, certificate of incorporation, MOA collected from Ministry Of Corporate Affairs, ITR acknowledgement and confirmation of lenders group companies, reflecting these loans in the assessee name and the same are reflected in the regular books of the assessee company also, therefore Ld. CIT (A) has rightly deleted the addition Rs. 7,48,20,461/-. 4. That the Ld. CIT (A) is correct by deleting the addition made by the learned Assessing Officer merely on the basis of surmises and conjectures and without any substance as no incriminating material was found during course of search and seizure operations conducted on various offices/factories/other premises of the assessee company in respect of any unaccounted cash/business/turnover/stock/assets. 5. That the Ld. CIT (A) is right by deleting the addition made by the learned Assessing Officer merely based on surmises and conjectures and without any substance as the assessee company have fully explained source to source of investment made by the lender group companies, even such loan has been repaid by the assessee company during the financial 2016-17 which is prior to the date of search. 6. That the Assessee craves leave to add, amend, alter, delete, modify, and substitute any or all the above grounds of cross objection.” 2. Brief facts of the case as culled out from the records are that the assessee is a limited company engaged in the business of manufacturing Spirit. It is listed with Bombay Stock Exchange and has adopted and implemented world class SAP M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 5 ERP systems. It operates under the strict supervision of State Excise department . Original return of income for AY 2014-15 filed on 28/11/2014 along with Audit reports showing income of Rs.5,80,41,350/-. Search & seizure operations u/s 132(1) of the Income Tax Act, 1961 was carried out on 14.11.2017 at various premises of concerns/entities/associates of Associated Alcohols Group by the investigation Wing, Indore. Consequently, notice u/s 153A were issued on assessee on 05.02.2019 for AY 2012- 13 to 2017-18.In response to such notice the appellant filed the return on 25.04.2019 under protest and without prejudice to the provisions of section 292BB of the Income Tax Act, 1961 and thereafter the representatives of the assessee appeared and explained the case from time to time. Based on the statements given by the key person of the assessee company various unsecured loans/cash credits taken were examined by Ld.AO. Detailed submissions were filed by the assessee to prove the identity and creditworthiness of the cash creditors and genuineness of the transaction but Ld.AO was not satisfied as the registered office of the company was situated at Kolkata and at the very same address various alleged paper companies having meager income were sharing the same common address. Ld.AO passed the assessment order u/s 143(3) r.w.s. 153A of the Act on 26.12.2019 assessing income of Rs. 13,28,61,810/- after making an addition of Rs. 7,48,20,461/- towards unexplained cash credit under section 68 r.w.s 115BBE to the returned M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 6 income of Rs.5,80,41,350/- declared in the return of income . Income assessee at Rs.13,28,61,810/-. 3. Aggrieved Assessee challenged the aforesaid additions made by Learned Assessing Officer raising grounds both on legal issues and quantum addition. Ld. CIT (A) after considering facts of the case and settled judicial precedence deleted the addition of Rs. 7,48,20,461/- taken from group Companies on being satisfied that the Identity & Creditworthiness of cash creditors and Genuineness of the transactions are sufficiently proved by the assessee and provisions of sections 68 r.w. 115BBE of the Act are not applicable on the alleged cash credits. However Ld.CIT(A) rejected the legal grounds raised in respect of validity of the proceedings. 4. Aggrieved revenue is in appeal against the deletion of addition made u/s 68 of the Act of Rs.7,48,2461/-by Ld. CIT(A) and the assessee has filed Cross Objection firstly challenging the validity of assessment proceeding carried out u/s 153A r.w.s. 143(3) of the Act and secondly has raised grounds supporting the finding of Ld. CIT(A). 5. We will first take up the legal grounds raised by the assessee challenging the validity of assessment proceedings in the cross objections filed against the Revenue’s appeal. 6.Learned counsel for the Assessee while challenging the validity of the proceedings initiated under section 153A of the Act drew our attention to the fact that the return for A.Y. 2014- M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 7 15 under section 139(1) of the Act was filed on 28/11/2014 and in pursuant to notice under section 143(2) of the Act, the assessee was subjected to scrutiny assessment for the year and assessment order under section 143(3) of the Act was passed by A.O prior to issuance of notice dated 26.04.2019 under section 153A of the Act and further submitted that Ld. CIT (A) erred in not appreciating the fact that no incriminating material has been found during the search and seizure operations conducted at the premises of assessee company and relating to the addition made and failed to appreciate that assessee company after issuance of notice u/s 153A has no option left but to file return to save the penalty for non-filing of return and therefore Assessee has participated in the proceedings however the same was under protest and without prejudice to the provisions of section 292BB and others applicable provisions of the Income Tax Act 1961. 7.Learned Counsel for the assessee also submitted that Ld. CIT (A) erred in dismissing the contention/ground of assessee merely on the basis that assessee has participated in the assessment proceeding therefore the assessee cannot claim that the notice of 153A is bad in law. That Ld. CIT (A) has further failed to appreciate the very fact that during the course of the search and seizure operation in the premises of the assessee, the department was not been able to pinpoint a single incriminating material / document in respect of any unaccounted funds/assets/sales/stock, which can draw any adverse inference against the Assessee as the assessee was M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 8 able to provide each and every detail as required/desired by the department with respect to the financial transactions entered by the Assessee Company during the period under consideration with respect to turn over / sales revenue, expenses/purchases, inventories, Bank & Cash and no defects of whatsoever in the nature were found by the department. The addition of alleged unexplained cash credit has been made on the basis of entries in the regular books of accounts duly reflected in the assessee's financial accounts and there is no reference to any material found in search with reference to the addition made. Therefore, in absence of an incriminating material no addition can be made in assessment u/s 153A. Reliance placed on following decisions:- 1. Hon’ble Delhi High Court in Commissioner of Income Tax (CENTRAL) –III v Kabul Chawla (2015) 281 CTR (Del) 45 2. Hon’ble Madhya Pradesh High Court bench at Gwalior in Pr. Commissioner of Income Tax v. Gahoi & Oil Mills and Ors. [2020] 272 TAXMAN 522 (MP) 3.Hon’ble ITAT Delhi in the case of ACIT, Central Circle-15 and Ors. Vs. Moon Beverages Ltd. and Ors. MANU/ID/0958/2020 4. Hon’ble Delhi High court in the matter of Kurele Paper Mills private Limited reported in (2016) 380 ITR 571, 8. Per Contra Ld.CIT(DR) referred to the written submissions placed on record citing various decisions. Reliance was placed on the following finding of Ld.CIT(A) dismissed the legal grounds raised by the assessee observing as follows:- M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 9 “4.1 Ground No 1 & 2 for AYs 2012-13 to 2018-19: -Through these grounds of appeal, the appellant has challenged legality of assessment order passed by the AO. I have perused the submissions of the learned AR, the various decision cited, and the assessment order. Once the search has taken place and notices u/s 153A has been issued the jurisdiction is conferred on the assessing officer to pass assessment order 'to assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made'. .......” 4.1.1 Once the assessee has participated in assessment proceedings before the A.O the appellant assessee cannot claim that issue of notice u/s 153A r.w.s 143(3) for A.Y 2012-13 to 2017- 18 is not in order. Once the assessee has been put to notice and has filed returns in response to the notices and has attended the assessment proceedings, it cannot be said that issue of notice u/s 153A is not in order. .......... 4.1.2 In view of the above, the ground taken by the appellant that no incriminating material is found and the issue of notices u/s 153A for A.Y 2012-13 to 2018-2019 is not justified, has no merit and is therefore, rejected. Therefore, appeal on these ground is Dismissed.” 9. We have heard rival contentions and perused the records placed before us. Through the Cross objection assesse has raised legal ground challenging validity of the assessment proceeding stating that the assessment order under appeal i.e. A.Y.2014-15 is a non-abated assessment year and already stood assessed u/s 143(3) of the act before initiation of search and no incriminating material was found during the course of search specifically relating to the additions made by the ld. AO and therefore, initiation of assessment proceedings were itself bad in law and the additions made by the ld. AO deserves to be deleted. 10. We, observe that before us Ld. counsel for the assessee has stated that after issuance of notice u/s 153A assessee has no M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 10 option left but to file return to save the penalty for non-filing of return and therefore had no other option except to file the return/to participate in the proceedings, which was filed/participated simultaneously raising protest and the same is without prejudice to the provisions of section 292BB and others applicable provisions of the Income Tax Act. 11. As regards the contention of the Revenue in respect of the validity of the Notice issued u/s 153A that during the search and seizure operation books of account, document, loose paper etc were seized, the seized documents and papers are the incriminating material on the basis of which the additions have been made. Ld. counsel for the assessee sated that Ld. AO is not able to pin point a piece of document which can be treated as incriminating and documents under question, found during course of search (viz Audited financial Balance sheet, Profit & Loss Account, Books of accounts, bills/vouchers, bank statement etc) cannot be treated as incriminating material per se without pointing out any discrepancy/defect therein and the observation of the department that the seized documents are the incriminating material on the basis of which the additions have been made is totally illegal and unjustified and no incriminating documents/material has been found during the search and seizure operations. 12. Further Ld. counsel for the assessee stated the revenue is not able to pin point a single incriminating material / document in respect of any unaccounted funds/assets/sales/stock/cash, M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 11 which can draw any adverse inference against the Assessee and to point out any defect/deficiency in respect of the contention of the assessee that assessee was able to provide each and every detail as required/desired by the department with respect to the financial transactions entered by the Assessee Company during the period under consideration with respect to turn over / sales revenue, expenses/purchases, inventories, Bank & Cash and no defects of whatsoever in the nature were found by the department and the addition of unsecured loans received from the group companies has been made on the basis of entries in the regular books of accounts duly reflected in the assessee's financial accounts and is no reference to material found in search with reference to the addition made, hence therefore, in absence of an incriminating material no addition can be made in assessment u/s 153A. 13. We also observe that the basis of the addition was mainly statement given by the key person of the group namely Anand Kedia recorded on 16.11.2017. In the assessment order Ld. AO has specifically observed that the retraction made by the assessee was after a very long period and therefore the same cannot be accepted. We, however, on perusal of record find that the assessee retracted the statement within 5 days of the date of search while filing in affidavit. 14. Apart from the statement the search team was only able to find the financial statements of the alleged cash creditors and the confirmation of account but no other material was unearthed which could indicate that assessee has converted its M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 12 unaccounted income in the form of unsecured loan from the alleged companies and which mostly are owned/control by the assesse group only. Addition made by the ld. AO are based on the theory that the alleged companies have meager income and have no basis of any fixed asset and are therefore paper companies. Apart from this theory there is no evidence against the assessee. It is also not in dispute that the assessee filed its return of income originally u/s 139(1) of the Act on 28.11.2014 and case was selected for scrutiny and assessment u/s 143(3) of the Act also stood completed much before the issuance of notice u/s 153A of the Act on 26.04.2019. Thus, the assessment year 2014-15 comes under the category of complete and non-abated assessment and addition for this assessment year can only be made if any incriminating material is found during the course of search. Our view is supported by various judicial pronouncements. 15. Reliance is placed on the decision of Hon’ble Delhi High Court in Commissioner of Income Tax (CENTRAL) –III v Kabul Chawla (2015) 281 CTR (Del) 45 wherein the Hon’ble Court has specifically held that completed assessments can be interfered with by Assessing officer while making the assessment under Section 153A can only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 13 16. That further Hon’ble Madhya Pradesh High Court bench at Gwalior in Pr. Commissioner of Income Tax v. Gahoi & Oil Mills and Ors. [2020] 272 TAXMAN 522 (MP) has also affirmed the aforesaid view of Hon’ble Delhi High Court and held that in absence of any incriminating material, Ld. AO has no jurisdiction to make addition under section 153A of the Act. 17. That, Hon’ble ITAT Delhi in the case of ACIT, Central Circle- 15 and Ors. Vs. Moon Beverages Ltd. and Ors. MANU/ID/0958/2020 has also held that It was held once the entries are recorded in the books of account, the same cannot be construed as incriminating in nature and So far as statements u/s. 132(4) is concerned, the same are also not incriminating in nature as held in various decisions. Relevant portion of the order is reproduced hereunder that: “46.1 .....A perusal of the assessment order shows that the addition is not based on any incriminating material, but, based on post- search enquiries or statements recorded u/s. 132(4) of the Act. The share certificates and counterfoils thereof found during the search, in our opinion, cannot be construed as incriminating in nature. Even the document appearing at page 59 of Annexure A-10 found and seized from the corporate office of M/s. Hindustan Aqua Limited at 1010, Vijaya Building, Barakhamba Road, New Delhi, showing the details of advance for purchase of shares or refund of share application money in our opinion cannot be construed as incriminating since the entries are duly recorded in the books of account. The AO nowhere has disputed or challenged the above submission of the assessee before him as appears at page 43 of the assessment order. Therefore, once the entries are recorded in the books of account, the same in our opinion cannot be construed as incriminating in nature. So far as statements u/s. 132(4) is concerned, the same are also not incriminating in nature as held in various decisions. Under these circumstances, we are of the considered opinion that when the M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 14 addition is not based on any incriminating material found as a result of search, no addition can be made u/s. 153A/143(3) of the Act.” 18. Reliance is also placed on the judgement of the Hon’ble Delhi High court in the matter of Kurele Paper Mills private Limited reported in (2016) 380 ITR 571, wherein the issue was whether there was any incriminating material whatsoever found during the search to justify initiation of proceedings u/s 153A of the Act and the Hon’ble High Court has held that the order of CIT (A) reveals that there is a factual finding that "no incriminating evidence related to share capital issued was found during the course of search as is manifest from the order of the Assessing Officer". Consequently, it was held that the Assessing Officer was not justified in invoking section 68 of the Act for the purposes of making additions on account of share capital. 19. On the basis of examination of the facts of the case as placed before us and judicial pronouncement cited as above we are of the view that notice as well as assessment order passed u/s 153A by Ld. AO in absence of any incriminating documents found during the search and seizure operation is bad in law, and the contention of the revenue that assessee has participated in the assessment proceeding therefore the assessee cannot claim that the notice of 153A is not justified. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 15 20. We find that Ld. CIT (A) further erred in holding that once the search has taken place and notice u/s 153A has been issued the jurisdiction is conferred on the Assessing officer to assess or reassess the total income of the six year, evading the settled position of law that A.O has jurisdiction to pass the assessment under Section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 21. Under these circumstances, the additions made in the non- abated assessment i.e. A.Y. 2014-15 is bad in law and deserve to be deleted. Our view is supported by the ratio laid down by the Hon’ble Delhi High Court in case of CIT v. Kabul Chawla, (2016) 2 ITJ Online 869 (Delhi) : (2016) 380 ITR 573 : (2015) 281 CTR 45 : (2015) 234 Taxman 300 and also decision of Pr. CIT v. Meeta Gutgutia, (2020) 8 ITJ Online 273 (Delhi) : (2017) 395 ITR 526. Therefore, totality of facts in view of the relevant judicial pronouncements clearly suggests that that the proceedings initiated u/s 153A of the Act for the A.Y. 2014-15 being non-abated and completed assessments deserve to be quashed. We, therefore, set aside the findings of Ld. CIT(A) on this ground and hold that proceedings initiated in the case of the assessee M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 16 for A.Y. 2014-15 are without jurisdiction and consequently, assessments framed for these years are quashed and set aside. Accordingly, first legal ground challenging the legality of assessment proceedings is allowed. 22. Now we take merits of the case for which Revenue has raised ground challenging the finding of Ld.CIT(A) deleting the addition for unexplained cash credit of Rs.7,48,20,461/- . Addition was made by Ld.AO treating the following unsecured loans/cash credits as unexplained:- Name of Lender Companies F.Y 2013-14 Amount Received through Banking channel Interest on loan Total Amount of Credit during the year Rabisha Holdings (Pvt) Ltd 73,00,000 3,99,389 76,99,389 Veneers Mercantiles (Pvt) Ltd 2,18,00,000 4,56,220 2,22,56,220 Welplan Traders (Pvt) Ltd 89,50,000 5,11,750 94,61,750 Saffron Plantation (Pvt) Ltd 1,31,50,000 1,86,721 1,33,36,721 Venkateshwar Inv.& Fin. (Pvt) Ltd - 5,43,135 5,43,135 Accord Vanijya (Pvt) Ltd 68,74,000 - 68,74,000 Snehsil Hirise (Pvt) Ltd - 4,17,892 4,17,892 Associated Infra & Housing Ltd - 2,20,793 2,20,793 Oceanic Developers (Pvt) Ltd 92,50,000 4,49,033 96,99,033 Jemtec Traders Pvt Ltd - 1,69,096 1,69,096 Mayfair Mercantiles (Pvt) Ltd 10,96,000 5,29,762 16,25,762 Bhillai Properties Investments Pvt Ltd - 6,21,370 6,21,370 Dhanlaxmi Tech Pvt Ltd 1,96,700 - 1,96,700 Lingraj Housing Pvt Ltd 2,97,600 - 2,97,600 Nityanand Plantation & Properties Pvt Ltd 14,00,000 - 14,00,000 M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 17 TOTAL 7,03,14,300 45,05,161 7,48,19,461 23. The Ld. Departmental Representative Vehemently argued supporting the order of Ld. AO and submitted that the unsecured loan/share capital received by the assessee from the alleged companies are directly and indirectly controlled by the group and found to be paper entities having meager business activities and the assessee has failed to establish the identity, credibility and genuineness of the transactions with respect to unsecured loans/share capital in the question received from the group companies with doubtful credentials , therefore treated as unexplained cash credit u/s 68 of the Act and accordingly the interest paid by the assessee to such companies is also treated as unexplained expenses u/s 69C of the Act. 24. The Ld. Departmental representative strongly contended that the promoters of the assessee company in their statement recorded on 16.11.2017 under section 132 (4) of the Act admitted the receipt of the sum from the companies concerned as unexplained income and as per AO the retraction was made by the concerned after a period of 2 years, whereas as per findings of Ld. CIT (A) the same was retracted by letter dated 22.11.2017 and affidavit dated 30.11.2017. The relevant portion of the Assessment order dated 26.12.2019 on the basis of which the Ld. AO made the addition as relied by the Ld. Departmental representative is as follows: - M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 18 “9. In the above backdrop it was observed that the assessee has received huge amount of funds from these very companies in the form of unsecured loans/advances/capital etc. Likewise, during the course of search proceedings u/s 132 at the business premises situated at 4th floor, BPK Star Tower, A.B. Road, Indore, the promoter of the group Shri Anand Kumar Kedia had given a statement on oath u/s 132(4) on 16/11/2017. In this statement the promoter had admitted that unaccounted income of the assessee company Mount Everest Breweries Ltd. (MEBL) was being routed through various Kolkata based companies acquired by the group namely Eagle Agencies Pvt. Ltd., Novelty Realtors Pvt. Ltd. and Moriya Merchandise Pvt. Ltd. He had also given details of various such companies acquired/formed by the group and investments made in them. ...... It can be Inferred from the above statement of the promoter Shri Anand Kumar Kedia that the entire modus operandi of routing unaccounted funds have been lucidly described and admitted. ......... 10. Apart from this confession if one takes a holistic view at the entirety of the facts l.e. formation of companies operating from a single address with common promoters/key persons, Investment in them by the assessee, their investment in shell companies through shell companies and Inter connected transactions leading to receipt of funds from these companies by the assessee in various forms (Unsecured loans etc.), It becomes more than evident that the funds received by the assessee from these companies are likely to be its own unaccounted funds. 13. The contentions of the assessee regarding the proposed addition owing to funds received from its shell companies more or less vindicates the findings/observations discussed in the preceding paragraphs on the basis of which the show cause notice was issued. The arrangement has been made by the assessee for rotating Its funds by forming a maze of companies which in turn makes investments within such kind of group companies and ultimately liquidates the same to other shell companies and then provide these funds to the assessee in the guise of unsecured loans. 13.1 There is no denying the fact that the Investments transactions made by the said companies are duly reflected in the Bank statements, Balance sheets and P&L account. When the chief object behind the genesis of a company is to provide accommodation entries, the filling of statutory documents before various authorities does not establish the genuineness of Its business transactions since everything on paper will be well maintained by such entities M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 19 notwithstanding its actual activities. It is also not denied that income is generated by these so called Investment companies in the guise of share sale/investment to Infuse funds in the assessee company. The moot point is the arrangement adopted for routing of unaccounted funds. The reflection of Investments in the bank statements does not in any way legitimize the said arrangement. The transaction through banking channels is also not a benchmark of genuineness. The department is not bound to provide separate justification to the assessee for treating an entity as shell since the same will be incorporated in the assessment order which in any case will be provided to the assessee. ... .. 16.6 The above detailed analysis about the activities and happenings of the five conduit companies namely Eagle Agencies Pvt. Ltd., Moriya Merchandise Pvt. Ltd., Novelty Realtors Pvt. Ltd., Bhilai Property Investments Pvt. Ltd, and Accord Vanijya Pvt. Ltd demolishes the assessee's assertion that they are genuine investment companies of the group. The transactions entered into by these companies with dubious other companies and the purchase/sale of shares of similar shell companies at whimsical valuations reveal the ulterior motives of the assessee company which is routing of unaccounted funds. ... .. 17.1 The retraction by Shri Anand Kumar Kedla from the statement recorded u/s 132(4) during the course of search/post search proceedings after more than two years is not supported by any corroborative evidences. The deponent has not been able to produce any evidence, documentary or circumstantial, in support of the claim that it was under pressure (coercion, threat etc.). No such affidavit has been filed by any witnesses who would endorse the assessee's contention. It is therefore evident that the retraction is just an afterthought. Examination of the statement reveals that the recording of statement u/s 132(4) started on 16/11/2017 but at 11.35 PM the statement was halted in order to provide rest to Shri Anand Kedia. The statement was then restarted on 17.11.2017 at 9.30 PM. In the concluding para It Is specifically mentioned that the statement has been read and understood and recorded In a sound state of mind without any threat coercion. The same has then been duly endorsed by the assessee and two witnesses. Shri Prasanna Kumar Kedla (Co-promoter) has also endorsed the same statement and the disclosure of Rs.45,11,49,372/- as undisclosed Income. The relevant pages are reproduced below: ...... M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 20 19. The assessees contention about incriminating material found during the course of search has no basis since the entire analysis done in the unearthed during search operation u/s 132. ....... 24. In view of the entire discussion made In all the preceding paragraphs It Is Inferred that the assessee has failed to establish the Identity, credibility and genuineness of the maze of transaction with respect to unsecured loans from Kolkatta based group companies. The unaccounted funds of the assessee routed through shell companies in the guise of proceeds on sale of share Investments have subsequently landed in the hands of the assessee as unsecured loans. These unsecured loans from the maze of paper companies are actually the laundered funds of the assessee Itself and therefore required to be treated as Income of the assessee as unexplained cash credits u/s 68 r.w.s. 115BBE of the Act which reads as under: Cash credits. 68. 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. 25 Moreover incriminating material has very well been found during search proceedings which was related to various Issues discussed in the order. Even otherwise the issue of incriminating material is sub judice in the Supreme Court and there have been varied views taken by other courts. The copies of the entire seized material has been provided to the assessee and hence the assessee cannot felgn ignorance regarding its existence. In the case of EN Gopal kumar [2016] 75 faxmann.com 215 (Kerala), the High Court has held as follows: "Section 153A, read with section 132, of the Income-tax Act, 1961 Search & seizure - Assessment in case of (Scope of) Whether for issuance of a notice under section 153A(1)(a). It is not necessary that search on which It was founded should have necessarily yielded any Incriminating material against assessee or person to whom such notice is issued Held, yes Whether, therefore, assessment proceedings generated by Issuance of a notice under section 153A(1)(a) can be concluded against interest of assessee including making additions even without any incriminating material being available against assessee in search under section 132 on M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 21 basis of which notice was issued under section 153A(1) (a) - Held, yes [Paras7 and 8] [In favour of revenue]" 26. In view of the entire discussion made in all the preceding paragraphs it is inferred that the assessee has failed to establish the identity, credibility and genuineness of the maze of transaction with respect to Unsecured loans from several Kolkata based group companies with doubtful credentials. ...... 27. The unsecured loans accepted by the assessee (as per Audited accounts) from those group companies directly/indirectly controlled by the group and found to be paper entities having meager business activities are therefore treated as unexplained cash credits Us 68 r.w.s. 115BBE. ..........” 25. Per Contra Ld. Counsel for the Assessee while supporting the order of Ld. CIT (A) in respect of deletion of the addition made by Ld. AO in the matter draw our attention to the relevant portion of the order in which while allowing the appeal of the assessee on the basis of facts and evidences and also supported the judicial pronouncements referred by Ld. CIT(A) in the impugned order. Learned counsel for the assessee submitted that Ld. CIT Appeals has rightly concluded and observed that in the instant case the assessee Company has not received any such fund during the year rather the credit in respect of the transactions undertaken by the assessee company are for the purpose of structuring of the Balance Sheet vis-à-vis classification of debts on Long term and short term basis (during the month of March 2014) as appearing in the audited annual financial statements of the concerned year, and in order to facilitate the transactions, the assessee company itself has advanced the initial amount to M/S Millennium Urja Limited on 6th March,2014, amounting to Rs. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 22 20,00,000/- as the base amount, after which the M/S Millennium Urja Limited in turn advanced the same amounts to associate / group companies, namely (Rabisha Holdings Pvt Ltd , Oceanic Developers Pvt Ltd , Mayfair Mercantiles Pvt Ltd , Veneers Mercantiles Pvt Ltd. , Welplan Traders Pvt Ltd , Saffron Plantation Pvt Ltd,, Dhanlaxmi Tech Pvt Ltd , Lingraj Housing Pvt Ltd, Nityanand Plantation & Properties Pvt Ltd.) which again was matched by the Associated Alcohols & Breweries Limited by advancing the exactly same amount of Rs. 6,34,40,300/- during the period from 06.03.2014 to 20.03.2014. This cycle carried on during the month of March, 2014. The source of such base amount of Rs. 20,00,000/- which was advanced by the assessee Company on 06.03.2014 is the receipt of sale proceeds of liquor on 05.03.2014. 26. It was further submitted by Ld. Counsel for the assessee that all the 3 conditions as required u/s. 68 of the Act i.e. the identity, creditworthiness and genuineness of the transaction in the matter has been proved and substantiated by the Assessee, and Ld. CIT(A) on consideration of the materials on record, rightly applied the correct law which are required to be applied in the facts of the present case and deleted the addition of Rs. 7,48,20,461/- taken as a loan from concerned group companies. 27. Further Ld. counsel for the assessee placed reliance on the finding of Ld. CIT(A) and the decision referred in the impugned order favouring the assessee. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 23 28. We have heard rival contentions and perused the records placed before us and carefully gone through the written submission filed by the assessee as well as the decision relied from both sides. Revenue’s sole grievance is that the Ld. CIT(A) erred in deleting addition of Rs. 7,48,20,461/- made by the Ld. AO on account of unaccounted cash credit u/s 68 of the Act. We, observe that during the course of search conducted on 14.11.2017 statement of Mr. Anand Kedia was recorded who accepted that unaccounted money was routed in the company through other companies which are closely held by the assessee group of companies only. After five days on 22.11.2017 the statement was retracted but this fact went unnoted by the Ld. AO. During the course of search financial statements and other documents relating to alleged cash creditors were found. Confirmation of accounts of these companies were also found and the transactions with these companies are consistently taken place from A.Y.2012-13 onwards. Ld. counsel for the assessee stated that most of the alleged companies had opening balance also. Transaction have taken place through account payee cheque and subsequently alleged loan was repaid. However, we notice that ld. AO based on the statement recorded u/s 132(4) of the Act and also observing the financial of the alleged cash creditors came to a conclusion that all these companies are paper companies and assessee has routed its unaccounted income in the form of unsecured loans from these companies. It was also contended by the assessee before the ld. AO that so far as the alleged M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 24 additions is concerned the fact is that the assessee received Rs.20 lac from sale of goods. This sum was given as loan to one of the alleged company which was again routed as unsecured loan to the assessee company and this pattern was followed amongst other alleged cash creditors. This exercise was done in order to restructure the financials of the companies. However, Ld. AO failed to appreciate this fact and made the impugned addition. 29. We find that Ld. CIT(A) during the course of appellate proceeding thoroughly examined the fact in order to examine the identity and creditworthiness of the cash creditors and genuineness of the transactions and also distinguished the decision referred by the ld. AO being not applicable on the case of assessee and further referred to other judicial precedents applicable on the fact of the case and deleted the impugned addition observing as follows: Ground No 3 to 5 for AYs 2012-13, 2014-15 & 2018-19 and Ground No 3 to 6 for AY 2013-14, 2015-16, 2016-17 & 2017-18:- Through these grounds of appeal, the appellant has challenged addition of Rs.85,50,000/- in AY 2012-13, Rs. 90,13,800/- in AY 2013-14, Rs. 7,48,20,461/- in AY 2014-15, Rs. 66,56,408/- in AY 2015-16, Rs. 1,11,20,518/- in AY 2016-17, Rs. 1,05,356/- in AY 2017-18 and Rs. 1,05,00,000/- in AY 2018-19 on account of unexplained cash credit u/s 68 of the Act. During the course of search assessment proceedings, the AO observed that the assessee has taken sum of Rs.85,50,000/- in AY 2012-13, Rs. 90,13,800/- in AY 2013-14, Rs. 7,48,20,461/- in AY 2014-15, Rs. 66,56,408/- in AY 2015-16, Rs. 1,11,20,518/- in AY 2016-17, Rs. 1,05,356/- in AY 2017-18 and Rs. 1,05,00,000/- in AY 2018-19 as fresh unsecured loan from various Kolkata based shell companies. Therefore, the assessee was required to establish identity of creditors, capacity of the creditors and genuineness of the transaction. The AO considering the reply of the assessee stated that genuineness of the transaction between the assessee and creditors are not established and held that the loan taken from various companies are paper/shell/briefcase companies which does not have any operative business and are involved in providing accommodation entries. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 25 4.2.1 The appellant during appellate proceedings has contended that the loan was taken from various associated group concerns. Further, the appellant has filed various documentary evidences in support of genuineness of the transaction, creditworthiness of the lender and identity of the lender which were also filed before the AO. The appellant has also strongly contended that no incriminating material was found during search on the basis of which additions have been made by the AO. The appellant has also taken a plea that entire addition has been made on conjectures, surmises and suspicion basis. 4.2.2 I have considered the facts of the case, material evidences on record & written submissions filed by the ld AR of the appellant. I have also given my thoughtful consideration to the facts and findings of the AO inter alia material brought on record. As culled out from assessment order the appellant has taken unsecured loan from following companies:- Name of Lender Companies F.Y 2013-14 Amount Received through Banking channel Interest on loan Total Amount Received during the F.Y 2013-14 Rabisha Holdings (Pvt) Ltd 73,00,000 3,99,389 76,99,389 Veneers Mercantiles (Pvt) Ltd 2,18,00,000 4,56,220 2,22,56,220 Welplan Traders (Pvt) Ltd 89,50,000 5,11,750 94,61,750 Saffron Plantation (Pvt) Ltd 1,31,50,000 1,86,721 1,33,36,721 Venkateshwar Inv.& Fin. (Pvt) Ltd - 5,43,135 5,43,135 Accord Vanijya (Pvt) Ltd 68,74,000 - 68,74,000 Snehsil Hirise (Pvt) Ltd - 4,17,892 4,17,892 Associated Infra & Housing Ltd - 2,20,793 2,20,793 Oceanic Developers (Pvt) Ltd 92,50,000 4,49,033 96,99,033 Jemtec Traders Pvt Ltd - 1,69,096 1,69,096 Mayfair Mercantiles (Pvt) Ltd 10,96,000 5,29,762 16,25,762 Bhillai Properties Investments Pvt Ltd - 6,21,370 6,21,370 Dhanlaxmi Tech Pvt Ltd 1,96,700 - 1,96,700 Lingraj Housing Pvt Ltd 2,97,600 - 2,97,600 Nityanand Plantation & Properties Pvt Ltd 14,00,000 - 14,00,000 M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 26 TOTAL 7,03,14,300 45,05,161 7,48,19,461 **Unsecured loans were taken in AYs 2012-13, 2014-15 & 2018-19. However, the addition made by the AO in AYs 2013-14 to 2018-19 was on account of unsecured loan which includes interest on loan. The AR has vehemently challenged the arbitrary approach of the AO mainly on two major Counts: (a) The AO erred in considering the documentary evidences filed in support of creditworthiness of the lender and genuineness of the transaction. (b) The AO erred in making addition based on statement without any incriminating material on record. (a) The AO erred in considering the documentary evidences filed in support of creditworthiness of the lender and genuineness of the transaction:- 1. Appellant before the AO as well as before me has filed copies of PAN, bank account statement of lenders, audited balance sheet, profit and loss statement, certificate of incorporation, copy of MOA, details collected from website of Ministry of Corporate Affairs, and confirmations of lenders. The brief details of these lender companies are as under:- • M/s Rabisha Holding Pvt Ltd (PAN-AABCR4750N) [in short RHPL]:- Regarding the identity of RHPL the appellant submitted that the RHPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AABCR4750N. The registered address of the company is at 106A, Shyam Bazar street, Shyam Bazar, Kolkata, West Bengal-700005. Thus, from the above it is very clear that identity of the company RHPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of RHPL. Appellant has also filed copy of ledger account of appellant in the books of RHPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter of RHPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 27 the above it is very clear that all the transactions have been executed through banking channels and the AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of RHPL the appellant has filed copies of audited financial statements of RHPL along with Auditors’ Report, for FY 2011-12, 2013-14, 2014-15 & 2015-16 (AYs 2012-13, 2014-15, 2015-16 & 2016-17). On perusal of audited balance sheets it was observed that the company RHPL has owned funds of Rs. 2.69 crores as on 31.03.2011, Rs. 2.88 crores as on 31.03.2013, Rs. 2.90 crore as on 31.03.2014 and Rs. 6.45 crores as on 31.03.2015 by way of share capital and reserves & surplus. RHPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves and surplus. Therefore, creditworthiness of the lender company cannot be doubted. Further, the appellant has also explained source to source of investment and stated that during AY 2011-12 a sum of Rs. 8,00,000/- was received by lender company from the promoters family Bhagwati Prasad Prasann Kumar (HUF) on 29.09.2011. Further, Bhagwati Prasad Prasann Kumar HUF has sold securities held from over the years, on 28.09.2011. in support appellant has filed copies of bank account statement and cash book of Bhagwati Prasad Prasann Kumar HUF. Further, for AY 2013-14 appellant has stated that it has not received any such fund during the year rather out of said credit of Rs.7,48,20,461/- in the loan account of group companies under question, includes Rs 45,05,161/- being interest on loans payable to the concerned group companies in respect of loans taken/carried forward from earlier years. Further credit appearing in the loan account of the group companies includes Rs. 6,34,40,300/- ,in respect of the transactions undertaken by the appellant company for the purpose of structuring of the Balance Sheet vis-à-vis classification of debts on Long term and short term basis as appearing in the audited annual financial statements of the concerned year and in order for facilitating said transactions, the appellant company itself has advanced the initial amount to M/S Millennium Urja Limited on 6th March,2014, amounting to Rs. 20,00,000/- as the base amount, after which the M/S Millennium Urja Limited in turn advanced the same amounts to associate / group companies, namely M/s Rabisha Holdings Pvt Ltd Rs. 73,00,000/-, Oceanic Developers Pvt Ltd Rs. 92,50,000/-, Mayfair Mercantiles Pvt Ltd Rs. 10,96,000/- , Veneers Mercantiles Pvt Ltd. Rs. 2,18,00,000/- , Welplan Traders Pvt Ltd Rs. 89,50,000/-, Saffron Plantation Pvt Ltd, Rs. 1,31,50,000/- Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, Nityanand Plantation & Properties M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 28 Pvt Ltd. Rs. 14,00,000/- which again was matched by the Associated Alcohols & Breweries Limited by advancing the exactly same amount of Rs. 6,34,40,300/- during the period from 06.03.2014 to 20.03.2014. This cycle carried on during the month of March’2014. The source of Rs. 20,00,000/- which was advanced by the appellant Company on 06.03.2014 is the receipt of sale proceeds of country liquor on 05.03.2014. In support appellant has filed copies of bank statement. Hence no fund as such received by the appellant Company, rather its credit and resulting debit on account of rotation of fund on account of Balance sheet structuring exercise and even initial amount of the transaction infused by the appellant itself out of its internal accrual in the loan account of concerned group Companies (namely 1, Rabisha Holdings Pvt Ltd of Rs 73,00,000/-, 2. Oceanic Developers Pvt Ltd. Rs.92,50,000/-,3. Mayfair Mercantiles Pvt Ltd. Rs. 10,96,000/-,4. Veneers Mercantiles Pvt Ltd Rs. 2,18,00,000/-, 5., Welplan Traders Pvt Ltd Rs. 89,50,000/-, 6, Saffron Plantation Pvt Ltd Rs. 1,31,50,000/-, 7. Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, 8, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, 9.Nityanand Plantation & Properties Pvt Ltd. Rs.14,00,000/-) and resultant debit in respect of the same is appearing in the name Millennium Urja Ltd are part and parcel of very same transaction, is verifiable from the appellant company Balance sheet for the year ended on 31 st March 2014 under note no. 3 Long Term Borrowing and under note no. 17 Short Term loans and advances. Also for the amount of net interest expenses the appellant has filed copies of Loan confirmation, Income tax acknowledgement, Balance Sheet and Profit & Loss account confirming the receipt of interest and the same has been offered to tax by the lender company. Further, the appellant for AY2016-17 has stated that the AO has taken figure of Rs. 39,50,577/- as loan taken from Rabisha Holdings Pvt Ltd, however, no loan was taken from the group company and the amount under consideration is interest paid by appellant which amounts to Rs. 3,95,076/- only. Hence, the appellant has fully explained source to source of investment made by the lender company. Most importantly, entire loan has been repaid during AY 2017-18 which is prior to the date of search. • M/s Veneers Mercantiles Pvt Ltd (PAN-AABCV0929M) [in short VMPL]:- 2. Regarding the identity of VMPL the appellant submitted that the VMPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AABCV0929M. The registered address of the company is at 106A, Shyam Bazar street, Shyam Bazar, M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 29 Kolkata, West Bengal-700005. Thus, from the above it is very clear that identity of the company VMPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of VMPL. Appellant has also filed copy of ledger account of appellant in the books of VMPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by director of VMPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of VMPL the appellant has filed copies of audited financial statements of VMPL along with Auditors’ Report, for FY 2011-12, 2013-14, 2014-15 & 2015-16(AYs 2012-13, 2014-15, 2015-16 & 2016-17). On perusal of audited balance sheets it was observed that the company VMPL has owned funds of Rs. 4.19 crores as on 31.03.2011, Rs. 4.26 crores as on 31.03.2013, Rs. 4.53 crore as on 31.03.2014 and Rs. 5.13 crores as on 31.03.2015 by way of share capital and reserves & surplus. VMPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves and surplus. Therefore, creditworthiness of the lender company cannot be doubted. Further, the appellant has also explained source to source of investment and stated during AY 2011-12 a sum of Rs. 8,00,000/- was received from M/s Veneers Mercantiles Pvt Ltd which was having sufficient self fund lying with since beginning of the year, which was got deposited into bank on 29.02.2012 out of which the payment ultimately received by the appellant Company. In support appellant has filed copies of bank account statement and cash book of M/s Veneers Mercantiles Pvt Ltd confirming facts of the case. Further, for AY 2013-14 appellant has stated that it has not received any such fund during the year rather out of said credit of Rs.7,48,20,461/- in the loan account of group companies under question, includes Rs 45,05,161/- being interest on loans payable to the concerned group companies in respect of loans taken/carried forward from earlier years. Further credit appearing in the loan account of the group companies includes Rs. 6,34,40,300/-,in respect of the transactions undertaken by the appellant company for the M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 30 purpose of structuring of the Balance Sheet vis-à-vis classification of debts on Long term and short term basis as appearing in the audited annual financial statements of the concerned year and in order for facilitating said transactions, the appellant company itself has advanced the initial amount to M/S Millennium Urja Limited on 6th March,2014, amounting to Rs. 20,00,000/- as the base amount, after which the M/S Millennium Urja Limited in turn advanced the same amounts to associate / group companies, namely M/s Rabisha Holdings Pvt Ltd Rs. 73,00,000/-, Oceanic Developers Pvt Ltd Rs. 92,50,000/-, Mayfair Mercantiles Pvt Ltd Rs. 10,96,000/- , Veneers Mercantiles Pvt Ltd. Rs. 2,18,00,000/- , Welplan Traders Pvt Ltd Rs. 89,50,000/-, Saffron Plantation Pvt Ltd, Rs. 1,31,50,000/- Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, Nityanand Plantation & Properties Pvt Ltd. Rs. 14,00,000/- which again was matched by the Associated Alcohols & Breweries Limited by advancing the exactly same amount of Rs. 6,34,40,300/- during the period from 06.03.2014 to 20.03.2014. This cycle carried on during the month of March’2014. The source of Rs. 20,00,000/- which was advanced by the appellant Company on 06.03.2014 is the receipt of sale proceeds of country liquor on 05.03.2014. In support appellant has filed copies of bank statement. Hence no fund as such received by the appellant Company, rather its credit and resulting debit on account of rotation of fund on account of Balance sheet structuring exercise and even initial amount of the transaction infused by the appellant itself out of its internal accrual in the loan account of concerned group Companies (namely 1, Rabisha Holdings Pvt Ltd of Rs 73,00,000/-, 2. Oceanic Developers Pvt Ltd. Rs.92,50,000/-,3. Mayfair Mercantiles Pvt Ltd. Rs. 10,96,000/-,4. Veneers Mercantiles Pvt Ltd Rs. 2,18,00,000/-, 5., Welplan Traders Pvt Ltd Rs. 89,50,000/-, 6, Saffron Plantation Pvt Ltd Rs. 1,31,50,000/-, 7. Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, 8, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, 9.Nityanand Plantation & Properties Pvt Ltd. Rs.14,00,000/-) and resultant debit in respect of the same is appearing in the name Millennium Urja Ltd are part and parcel of very same transaction, is verifiable from the appellant company Balance sheet for the year ended on 31 st March 2014 under note no. 3 Long Term Borrowing and under note no. 17 Short Term loans and advances. Also for the amount of net interest expenses the appellant has filed copies of Loan confirmation, Income tax acknowledgement, Balance Sheet and Profit & Loss account confirming the receipt of interest and the same has been offered to tax by the lender company. Further, for AY2016-17 the apepllant has stated that no loan was taken from the group company and the amount under consideration is interest paid by appellant which was taken into consideration by the lender company while filing return of income for respective assessment year. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 31 Hence, the appellant has fully explained source to source of investment made by the lender company. Most importantly, entire loan has been repaid during AY 2017-18 which is prior to the date of search. • M/s Welplan Traders Pvt Ltd (PAN-AAACW3037E) [in short WTPL]:- 3. Regarding the identity of WTPL the appellant submitted that the WTPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AAACW3037E. The registered address of the company is at 106A, Shyam Bazar street, Shyam Bazar, Kolkata, West Bengal-700005. Thus, from the above it is very clear that identity of the company WTPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of WTPL. Appellant has also filed copy of ledger account of appellant in the books of WTPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by director of WTPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of WTPL the appellant has filed copies of audited financial statements of WTPL along with Auditors’ Report, for FY 2011-12, 2013-14, 2014-15, 2015-16 & 2017-18 (AYs 2012-13, 2014-15, 2015-16, 2016-17 & 2018-19). On perusal of audited balance sheets it was observed that the company WTPL has owned funds of Rs. 4.20 crores as on 31.03.2011, Rs. 4.15 crores as on 31.03.2013, Rs. 4.30 crore as on 31.03.2014, Rs. 4.37 crores as on 31.03.2015 and Rs. 4.33 crores as on 31.03.2017 by way of share capital and reserves & surplus. WTPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves and surplus. Therefore, creditworthiness of the lender company cannot be doubted. Further, the appellant has also explained source to source of investment and stated that during AY 2011-12 a sum of Rs. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 32 14,00,000/- was received by lender company from the promoters family Bhagwati Prasad Kedia (HUF) on 08.10.2011. Further, Bhagwati Prasad Kedia HUF has sold securities held from over the years, on 28.09.2011. in support appellant has filed copies of bank account statement and cash book of Bhagwati Prasad Prasann Kumar HUF. Further, for AY 2013-14 appellant has stated that it has not received any such fund during the year rather out of said credit of Rs.7,48,20,461/- in the loan account of group companies under question, includes Rs 45,05,161/- being interest on loans payable to the concerned group companies in respect of loans taken/carried forward from earlier years. Further credit appearing in the loan account of the group companies includes Rs. 6,34,40,300/-,in respect of the transactions undertaken by the appellant company for the purpose of structuring of the Balance Sheet vis-à-vis classification of debts on Long term and short term basis as appearing in the audited annual financial statements of the concerned year and in order for facilitating said transactions, the appellant company itself has advanced the initial amount to M/S Millennium Urja Limited on 6th March,2014, amounting to Rs. 20,00,000/- as the base amount, after which the M/S Millennium Urja Limited in turn advanced the same amounts to associate / group companies, namely M/s Rabisha Holdings Pvt Ltd Rs. 73,00,000/-, Oceanic Developers Pvt Ltd Rs. 92,50,000/-, Mayfair Mercantiles Pvt Ltd Rs. 10,96,000/- , Veneers Mercantiles Pvt Ltd. Rs. 2,18,00,000/- , Welplan Traders Pvt Ltd Rs. 89,50,000/-, Saffron Plantation Pvt Ltd, Rs. 1,31,50,000/- Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, Nityanand Plantation & Properties Pvt Ltd. Rs. 14,00,000/- which again was matched by the Associated Alcohols & Breweries Limited by advancing the exactly same amount of Rs. 6,34,40,300/- during the period from 06.03.2014 to 20.03.2014. This cycle carried on during the month of March’2014. The source of Rs. 20,00,000/- which was advanced by the appellant Company on 06.03.2014 is the receipt of sale proceeds of country liquor on 05.03.2014. In support appellant has filed copies of bank statement. Hence no fund as such received by the appellant Company, rather its credit and resulting debit on account of rotation of fund on account of Balance sheet structuring exercise and even initial amount of the transaction infused by the appellant itself out of its internal accrual in the loan account of concerned group Companies (namely 1, Rabisha Holdings Pvt Ltd of Rs 73,00,000/-, 2. Oceanic Developers Pvt Ltd. Rs.92,50,000/-,3. Mayfair Mercantiles Pvt Ltd. Rs. 10,96,000/-,4. Veneers Mercantiles Pvt Ltd Rs. 2,18,00,000/-, 5., Welplan Traders Pvt Ltd Rs. 89,50,000/-, 6, Saffron Plantation Pvt Ltd Rs. 1,31,50,000/-, 7. Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, 8, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, 9.Nityanand Plantation & Properties Pvt Ltd. Rs.14,00,000/-) and resultant debit in respect of the same is appearing in the name Millennium Urja Ltd are part and M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 33 parcel of very same transaction, is verifiable from the appellant company Balance sheet for the year ended on 31 st March 2014 under note no. 3 Long Term Borrowing and under note no. 17 Short Term loans and advances. Also for the amount of net interest expenses the appellant has filed copies of Loan confirmation, Income tax acknowledgement, Balance Sheet and Profit & Loss account confirming the receipt of interest and the same has been offered to tax by the lender company. Further, for AY 2016-17 the appellant has stated that no loan was taken from the group company and the amount under consideration is interest paid by appellant which was taken into consideration by the lender company while filing return of income for respective assessment year. Further, for AY 2018-19 the appellant has stated that it had received loan of Rs. 1,05,00,000/- from M/s Welplan Traders Private Limited. The amount has been advanced by lender company out of sale proceeds of the immovable property (being the land situated at Niranjanpur, A.B Road, Indore) received on 22/06/2017 of Rs. 25,00,000/-, 28/06/20217 of Rs.25,00,000/-, 10/07/2017 of Rs.25,00,000/-, 01/08/2017 of Rs.25,00,000/- and 23/10/2017 of Rs.25,00,000/- amounting to Rs.1.25 Cr and out of which the sum under question amounting to Rs.1.05 Cr was given to appellant Company on 04/08/2017 Rs. 80,00,000/-, 30/10/2017 Rs. 25,00,000/-. In support appellant has filed copy of sale deed and Bank statement of lender company. Hence, the appellant has fully explained source to source of investment made by the lender company. Most importantly, entire loan except taken in AY 2018-19, has been repaid during AY 2017-18 which is prior to the date of search. Also, the loan taken in AY 2018- 19 has been repaid n the same year. 4. • M/s Dhanlaxmi Tech Pvt Ltd (PAN-AAECD3615K) [in short DTPL]:- 5. Regarding the identity of DTPL, the appellant submitted that the DTPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AAECD3615K. The registered address of the company is at 106A, Shyam Bazar street, Shyam Bazar, Kolkata, West Bengal-700005. Thus, from the above it is very clear that identity of the company DTPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of DTPL. Appellant has also filed copy of ledger account of appellant in the books of DTPL showing each and every transaction M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 34 relating to unsecured loan. A copy of confirmation letter duly signed by director of DTPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of DTPL the appellant has filed copies of audited financial statements of DTPL along with Auditors’ Report, for FY 2013-14(AY2014-15). On perusal of audited balance sheets it was observed that the company DTPL has owned funds of Rs. 8.58 lakhs as on 31.03.2013 by way of share capital and reserves & surplus. DTPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves and surplus. Therefore, creditworthiness of the lender company cannot be doubted. Most importantly, entire loan has been repaid during AY 2015-16 which is prior to the date of search. • M/s Lingraj Housing Pvt Ltd (PAN-AABCL1843L) [in short DTPL]:- 6. Regarding the identity of LHPL, the appellant submitted that the LHPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AABCL1843L. The registered address of the company is at 106A, Shyam Bazar street, Shyam Bazar, Kolkata, West Bengal-700005. Thus, from the above it is very clear that identity of the company LHPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of LHPL. Appellant has also filed copy of ledger account of appellant in the books of LHPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by director of LHPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 35 AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of LHPL the appellant has filed copies of audited financial statements of LHPL along with Auditors’ Report, for FY 2013-14(AY2014-15). On perusal of audited balance sheets it was observed that the company LHPL has owned funds of Rs. 10.67 lakhs as on 31.03.2013 by way of share capital and reserves & surplus. DTPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves and surplus. Therefore, creditworthiness of the lender company cannot be doubted. Most importantly, entire loan has been repaid during AY 2015-16 which is prior to the date of search. • M/s Nityanand Plantation and Properties Pvt Ltd (PAN- AABCN8086F) [in short NPPPL]:- 7. Regarding the identity of NPPPL, the appellant submitted that the NPPPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AABCN8086F. The registered address of the company is at 107, Foreshore road, Shibpur, Howrah, West Bengal-711102. Thus, from the above it is very clear that identity of the company NPPPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of NPPPL. Appellant has also filed copy of ledger account of appellant in the books of NPPPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by director of NPPPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of NPPPL the appellant has filed copies of audited financial statements of DTPL along with Auditors’ Report, for FY 2013-14 (AY 2014-15). On perusal of audited balance M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 36 sheets it was observed that the company DTPL has owned funds of Rs. 1.25 crores as on 31.03.2013 by way of share capital and reserves & surplus. DTPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves and surplus. Therefore, creditworthiness of the lender company cannot be doubted. Most importantly, entire loan has been repaid during AY 2017-18 which is prior to the date of search. • M/s Saffron Plantation Pvt Ltd (PAN-AAECS2036B) [in short SPPL]:- 8. Regarding the identity of SPPL the appellant submitted that the SPPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AAECS2036B. The registered address of the company is at 106A, Shyam Bazar street, Shyam Bazar, Kolkata, West Bengal-700005. Thus, from the above it is very clear that identity of the company SPPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of SPPL. Appellant has also filed copy of ledger account of appellant in the books of SPPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by director of SPPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of SPPL the appellant has filed copies of audited financial statements of SPPL along with Auditors’ Report, for FY 2013-14(AY 2014-15). On perusal of audited balance sheets it was observed that the company VMPL has owned funds of Rs. 2.26 crores as on 31.03.2013 by way of share capital and reserves & surplus. SPPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves and M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 37 surplus. Therefore, creditworthiness of the lender company cannot be doubted. Further, the appellant has also explained source to source of investment and stated duirng AY 2013-14 it has not received any amount of Rs.7,48,20,461/- in the loan account of group companies under question which includes Rs 45,05,161/- being interest on loans payable to the concerned group companies in respect of loans taken/carried forward from earlier years. Further credit appearing in the loan account of the group companies includes Rs. 6,34,40,300/- ,in respect of the transactions undertaken by the appellant company for the purpose of structuring of the Balance Sheet vis-à-vis classification of debts on Long term and short term basis as appearing in the audited annual financial statements of the concerned year and in order for facilitating said transactions, the appellant company itself has advanced the initial amount to M/S Millennium Urja Limited on 6th March,2014, amounting to Rs. 20,00,000/- as the base amount, after which the M/S Millennium Urja Limited in turn advanced the same amounts to associate / group companies, namely M/s Rabisha Holdings Pvt Ltd Rs. 73,00,000/-, Oceanic Developers Pvt Ltd Rs. 92,50,000/-, Mayfair Mercantiles Pvt Ltd Rs. 10,96,000/- , Veneers Mercantiles Pvt Ltd. Rs. 2,18,00,000/- , Welplan Traders Pvt Ltd Rs. 89,50,000/-, Saffron Plantation Pvt Ltd, Rs. 1,31,50,000/- Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, Nityanand Plantation & Properties Pvt Ltd. Rs. 14,00,000/- which again was matched by the Associated Alcohols & Breweries Limited by advancing the exactly same amount of Rs. 6,34,40,300/- during the period from 06.03.2014 to 20.03.2014. This cycle carried on during the month of March’2014. The source of Rs. 20,00,000/- which was advanced by the appellant Company on 06.03.2014 is the receipt of sale proceeds of country liquor on 05.03.2014. In support appellant has filed copies of bank statement. Hence no fund as such received by the appellant Company, rather its credit and resulting debit on account of rotation of fund on account of Balance sheet structuring exercise and even initial amount of the transaction infused by the appellant itself out of its internal accrual in the loan account of concerned group Companies (namely 1, Rabisha Holdings Pvt Ltd of Rs 73,00,000/-, 2. Oceanic Developers Pvt Ltd. Rs.92,50,000/-,3. Mayfair Mercantiles Pvt Ltd. Rs. 10,96,000/-,4. Veneers Mercantiles Pvt Ltd Rs. 2,18,00,000/-, 5., Welplan Traders Pvt Ltd Rs. 89,50,000/-, 6, Saffron Plantation Pvt Ltd Rs. 1,31,50,000/-, 7. Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, 8, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, 9.Nityanand Plantation & Properties Pvt Ltd. Rs.14,00,000/-) and resultant debit in respect of the same is appearing in the name Millennium Urja Ltd are part and parcel of very same transaction, is verifiable from the appellant company Balance sheet for the year ended on 31 st March 2014 under M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 38 note no. 3 Long Term Borrowing and under note no. 17 Short Term loans and advances. Also for the amount of net interest expenses the appellant has filed copies of Loan confirmation, Income tax acknowledgement, Balance Sheet and Profit & Loss account confirming the receipt of interest and the same has been offered to tax by the lender company. Hence, the appellant has fully explained source to source of investment made by the lender company. Most importantly, entire loan has been repaid during AY 2017-18 which is prior to the date of search. • M/s Snehsil Hirise Pvt Ltd (PAN-AAJCS8642N [in short SPPL]:- 9. Regarding the identity of SHPL the appellant submitted that the SHPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AAJCS8642N. The registered address of the company is at 106A, Shyam Bazar street, Shyam Bazar, Kolkata, West Bengal-700005. Thus, from the above it is very clear that identity of the company SHPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of SHPL. Appellant has also filed copy of ledger account of appellant in the books of SHPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by director of SHPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of SHPL the appellant has filed copies of audited financial statements of SHPL along with Auditors’ Report, for FY 2013-14(AY 2014-15). On perusal of audited balance sheets it was observed that the company VMPL has owned funds of Rs. 78.41 lakhs as on 31.03.2013 by way of share capital and reserves & surplus. SPPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves and surplus. Therefore, creditworthiness of the lender company cannot be doubted. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 39 It is important to mention here that no fresh loan has been taken by appellant from the said lender company, however, the loan was taken before 01.04.2011, hence, the same was not taken during AYs 2012-13 to 2018-19. The AO of the assessee in the relevant year when the loan was taken has treated the same as form genuine source and did not make any disallowance for the same. The appellant has been paying interest on loan amount and the loan was completely repaid in AY 2017-18 which is prior to the date of search. • M/s Associated Infrastructure & Housing Pvt Ltd (PAN- AACCA0814B); Jemtech Traders Pvt Ltd (PAN:- AAACJ7202J) and M/s Bhillai Propoerties & Investments Pvt Ltd (PAN:- AACCB1745J):- On perusal of copies of confirmation from the lender companies it is seen that the loan was not taken during AYs 2012-13 to 2018-19 and the same was taken before 01.04.2011. The AO of the appellant in the relevant year when the loan was taken has treated the same as from genuine source and did not make any disallowance for the same. The appellant has been paying interest on loan amount and the loan was completely repaid in AY 2017-18 which is prior to the date of search. Thus, the AO was not justified in making addition on account of fresh unsecured loan taken by the appellant from the said lender companies. The appellant has also brought some different facts to light and stated that out of total disallowance of Rs. 5,38,072/- in the case of lender company M/s Jemtech Traders Pvt Ltd a sum of Rs. 1,14,572/- was towards interest on loan and balance amount of Rs. 4,23,500/- was towards purchase of shares of M/s Narmada Distilleries Pvt Ltd., however, the AO has treated the entire amount as unsecured loan from the said company. Since, the loan amount has been taken prior to AY 2012-13 and the same has been treated as genuine by the AO of the assessee. However, for the investment in shares of M/s Narmada Distilleries Pvt Ltd it was explained by the appellant that appellant has having shares of M/s Narmada Distilleries Pvt Ltd and the same were sold to M/s Jemtech Trades Pvt Ltd for Rs. 4,23,500/-. In support appellant has filed copies of balance sheet of M/s Jemtech Traders Pvt Ltd and bank account statement. On perusal of evidences on record it is seen that M/s Jemtech Traders Pvt Ltd has total amount towards capital and surplus of Rs. 1.76 crores out of which a meager amount was investment in shares of M/s Narmada Distilleries and not in the appellant’s company. Therefore, the AO was not justified in making addition on this account. • M/s Venkateshwar Investment & Finance Pvt Ltd (PAN- AACCA0815A) [in short VIFPL]:- 10. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 40 Regarding the identity of VIFPL the appellant submitted that the VIFPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AACCA0815A. The registered address of the company is at 106A, Shyam Bazar street, Shyam Bazar, Kolkata, West Bengal-700005. Thus, from the above it is very clear that identity of the company RHPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of VIFPL. Appellant has also filed copy of ledger account of appellant in the books of VIFPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by director of VIFPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of VIFPL the appellant has filed copies of audited financial statements of VIFPL along with Auditors’ Report, for FY 2011-12 (AY 2012-13). On perusal of audited balance sheets it was observed that the company VIFPL has owned funds of Rs. 8.93 crores as on 31.03.2011 by way of share capital and reserves & surplus. VIFPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves and surplus. Therefore, creditworthiness of the lender company cannot be doubted. It is also important to mention that the lender company has provided loan of Rs. 8,00,000/- only during AY 2012-13 to 2018-19 and there was an opening balance of Rs. 6,98,275/-. Further, the appellant has also explained source to source of investment and stated that during AY 2012-13 a sum of Rs. 8,00,000/- was received by lender company from M/s Millennium Urja Ltd on 19.08.2011 Rs.8,00,000/- , and the Millennium Urja Ltd received fund from the promoter Prasann Kumar Kedia on 16.08.2011 who has received proceeds of life insurance policy of TATA AIG Insurance on 02.08.2011. Hence, the appellant has fully explained source to source of investment made by the lender company. As a matter of fact, the appellant during AY 2013-14 has purchased shares of M/s Vedant Energy Pvt M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 41 Ltd from the said lender company. The appellant for passing general entry in books of accounts credited account of M/s VIFPL and the AO has treated the said amount as unsecured loan. Also, the investment made by the appellant has been shown in balance sheet for AY 2013-14 which has been accepted by the AO. Therefore, the AO was not justified in making addition on account of investment made in other companies by the appellant by treating the same as unsecured loan. Most importantly, entire amount i.e. loan amount and investment amount has been repaid during AY 2017-18 which is prior to the date of search. • M/s Oceanic Developers Pvt Ltd (PAN-AAACO3000D) [in short ODPL]:- 11. Regarding the identity of ODPL the appellant submitted that the ODPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AAACO3000D. The registered address of the company is at 106A, Shyam Bazar street, Shyam Bazar, Kolkata, West Bengal-700005. Thus, from the above it is very clear that identity of the company ODPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of ODPL. Appellant has also filed copy of ledger account of appellant in the books of ODPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by director of ODPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of ODPL the appellant has filed copies of audited financial statements of ODPL along with Auditors’ Report, for FY 2011-12 & 2013-14 (AY 2012-13 & 2014-15). On perusal of audited balance sheets it was observed that the company ODPL has owned funds of Rs. 4.82 crores as on 31.03.2011 and Rs. 4.77 crores as on 31.03.2013 by way of share capital and reserves & surplus. ODPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 42 and surplus. Therefore, creditworthiness of the lender company cannot be doubted. It is also important to mention that the lender company has provided loan of Rs. 8,00,000/- & Rs. 92,50,000/- only during AY 2012-13 to 2018-19 and there was an opening balance of Rs. 33,11,311/-. Further, the appellant has also explained source to source of investment and stated that during AY 2012-13 sum of Rs. 17,50,000/- was received from M/s Smilington Holdings Pvt Ltd on 01.03.2012 and the source of fund of Smilington Holdings Pvt Ltd is the receipt of fund from another group concern namely Millennium Urja Ltd on 01.03.2012 and millennium Urja Ltd having sufficient own fund lying since beginning of the year, which was deposited into bank on 03.02.2012,21.03.2012 out which the payment ultimately received by the appellant Company. In support appellant has filed copy of bank statement and Cash book of lender company. Further, the appellant has also explained source to source of investment and stated during AY 2013-14 it has not received any amount of Rs.7,48,20,461/- in the loan account of group companies under question which includes Rs 45,05,161/- being interest on loans payable to the concerned group companies in respect of loans taken/carried forward from earlier years. Further credit appearing in the loan account of the group companies includes Rs. 6,34,40,300/- ,in respect of the transactions undertaken by the appellant company for the purpose of structuring of the Balance Sheet vis-à-vis classification of debts on Long term and short term basis as appearing in the audited annual financial statements of the concerned year and in order for facilitating said transactions, the appellant company itself has advanced the initial amount to M/S Millennium Urja Limited on 6th March,2014, amounting to Rs. 20,00,000/- as the base amount, after which the M/S Millennium Urja Limited in turn advanced the same amounts to associate / group companies, namely M/s Rabisha Holdings Pvt Ltd Rs. 73,00,000/-, Oceanic Developers Pvt Ltd Rs. 92,50,000/-, Mayfair Mercantiles Pvt Ltd Rs. 10,96,000/- , Veneers Mercantiles Pvt Ltd. Rs. 2,18,00,000/- , Welplan Traders Pvt Ltd Rs. 89,50,000/-, Saffron Plantation Pvt Ltd, Rs. 1,31,50,000/- Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, Nityanand Plantation & Properties Pvt Ltd. Rs. 14,00,000/- which again was matched by the Associated Alcohols & Breweries Limited by advancing the exactly same amount of Rs. 6,34,40,300/- during the period from 06.03.2014 to 20.03.2014. This cycle carried on during the month of March’2014. The source of Rs. 20,00,000/- which was advanced by the appellant Company on 06.03.2014 is the receipt of sale proceeds of country liquor on 05.03.2014. In support appellant has filed copies of bank statement. Hence no fund as such received by the appellant Company, rather its credit and resulting debit on account of rotation of fund on account of Balance sheet structuring exercise and even M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 43 initial amount of the transaction infused by the appellant itself out of its internal accrual in the loan account of concerned group Companies (namely 1, Rabisha Holdings Pvt Ltd of Rs 73,00,000/-, 2. Oceanic Developers Pvt Ltd. Rs.92,50,000/-,3. Mayfair Mercantiles Pvt Ltd. Rs. 10,96,000/-,4. Veneers Mercantiles Pvt Ltd Rs. 2,18,00,000/-, 5., Welplan Traders Pvt Ltd Rs. 89,50,000/-, 6, Saffron Plantation Pvt Ltd Rs. 1,31,50,000/-, 7. Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, 8, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, 9.Nityanand Plantation & Properties Pvt Ltd. Rs.14,00,000/-) and resultant debit in respect of the same is appearing in the name Millennium Urja Ltd are part and parcel of very same transaction, is verifiable from the appellant company Balance sheet for the year ended on 31 st March 2014 under note no. 3 Long Term Borrowing and under note no. 17 Short Term loans and advances. Also for the amount of net interest expenses the appellant has filed copies of Loan confirmation, Income tax acknowledgement, Balance Sheet and Profit & Loss account confirming the receipt of interest and the same has been offered to tax by the lender company. Therefore, the appellant has fully explained source to source of investment by the lender company. Most importantly, entire amount i.e. loan amount and investment amount has been repaid during AY 2017-18 which is prior to the date of search. 12. • M/s Accord Vanijya Pvt Ltd (PAN-AAFCA3152P) [in short AVPL]:- 13. Regarding the identity of AVPL the appellant submitted that the AVPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AAFCA3152P. The registered address of the company is at 106A, Shyam Bazar street, Shyam Bazar, Kolkata, West Bengal-700005. Thus, from the above it is very clear that identity of the company AVPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of AVPL. Appellant has also filed copy of ledger account of appellant in the books of AVPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by director of AVPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 44 AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of AVPL the appellant has filed copies of audited financial statements of AVPL along with Auditors’ Report, for FY 2011-12 & 2013-14 (AY 2012-13 & 2014-15). On perusal of audited balance sheets it was observed that the company AVPL has owned funds of Rs. 9.88 crores as on 31.03.2011 and Rs. 9.87 crores as on 31.03.2013 by way of share capital and reserves & surplus. ODPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves and surplus. Therefore, creditworthiness of the lender company cannot be doubted. It is also important to mention that the lender company has provided loan of Rs. 30,00,000/- in AY 2012-13 & Rs. 68,74,000/- in AY 2014-15 and there was an opening balance of Rs. 4,63,00,000/-. Since, the loan taken prior to AY 2012-13 has been accepted as genuine, therefore, the AO has no locus to disallow interest paid on such loan in later years. Further, the appellant has also explained source to source of investment and stated that during AY 2011-12 and stated that sum of Rs. 15,50,000/- was received on 04.02.2012 and 11.02.2012 from Millennium Urja Ltd. M/s Millennium Urja Ltd was having sufficient own fund since beginning of the year and the same were deposited into bank account and payments were made to appellant company. Further, sum of Rs. 14,50,000/- was deposited in bank account on 02.02.2012 and 11.02.2012 and made the payment to the appellant company. In support appellant has filed copies of ledger account of bank statement, Ledger of bank book, Cash book of Accord Vanijya Pvt Ltd. Further, the appellant has also explained source to source of investment and stated during AY 2013- 14 sum of Rs. 68,74,000/- advanced by the Accord Vanijya Pvt Ltd to the appellant Company is the receipt of fund from Millennium Urja Ltd, on 04.07.2013, Millennium Urja Ltd received fund from Mount Everest Breweries Limited and the source of Mount Everest Breweries Ltd is the internal receipt by sale of beer on 02.07.2013. In support appellant has filed copies of bank statement of Mount Everest Breweries Ltd and Millennium Urja Ltd filed along with copy of loan confirmation, ledger account and bank statement. Further for AY 2016-17 the appellant submitted that no loan was taken by appellant company from the said lender company. In fact a loan was given to the lender company which was repaid by the said lender company. In support appellant has filed copies of bank account statement and ledger account of lender company. On perusal of the evidences on record it is seen that appellant during AY 2016-17 has made total repayment of Rs. 2,32,50,000/-, however, the opening loan balance amount was Rs. 1,82,74,000/-. Therefore, loan was M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 45 provided by appellant to the lender company of Rs. 49,76,000/-. The said loan was repaid by the lender company on 10.09.2015 through bank account. Thus, the AO was not justified in presuming loan paid as loan received by the appellant company. Therefore, the appellant has fully explained source to source of investment by the lender company. Most importantly, entire amount i.e. loan amount and investment amount has been repaid during AY 2016-17 which is prior to the date of search. • M/s Mayfair Mercantile Pvt Ltd (PAN-AABCM7789G) [in short MMPL]:- 14. Regarding the identity of MMPL the appellant submitted that the MMPL is a private limited company duly registered under the erstwhile Companies Act, 1956, under the Certificate of Incorporation granted by the Registrar of Companies, West Bengal and is a regular income tax assessee with PAN AABCM7789G. The registered address of the company is at 106A, Shyam Bazar street, Shyam Bazar, Kolkata, West Bengal-700005. Thus, from the above it is very clear that identity of the company MMPL has been duly proved by the appellant with supportive evidences. Regarding the genuineness of the transaction the appellant submitted that all the transactions have taken place through account payee cheques. Appellant in support has filed copies of bank account statement of MMPL. Appellant has also filed copy of ledger account of appellant in the books of MMPL showing each and every transaction relating to unsecured loan. A copy of confirmation letter duly signed by director of MMPL has also been filed by the appellant. The appellant company has paid interest and applicable TDS was also deducted. The loan taken by the appellant has been fully repaid through banking channels. From the above it is very clear that all the transactions have been executed through banking channels and the AO has simply doubted the genuineness of the transaction without having any incriminating material on record. Regarding the creditworthiness of MMPL the appellant has filed copies of audited financial statements of MMPL along with Auditors’ Report, for FY 2013-14 (AY 2014-15). On perusal of audited balance sheets it was observed that the company MMPL has owned funds of Rs. 2.98 crores as on 31.03.2013 by way of share capital and reserves & surplus. MMPL is a regular income tax payer which can also seen from copies of return of income filed by the appellant. Thus, the lender company has sufficient funds by way of capital and reserves and surplus. Therefore, creditworthiness of the lender company cannot be doubted. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 46 Further, the appellant has also explained source to source of investment and stated that during AY 2013-14 appellant has received sum of Rs. 10,96,000/- from the said lender company, however, there was an opening loan balance of Rs. 90,03,271/- which was taken prior to AY 2012-13. The AO of the appellant in respective assessment year when loan was taken has treated the loan as genuine and therefore, no disallowance can be made towards interest paid on such loan. However, for the fresh loan appellant has stated that it has not received any such fund during the year rather out of said credit of Rs.7,48,20,461/- in the loan account of group companies under question, includes Rs 45,05,161/- being interest on loans payable to the concerned group companies in respect of loans taken/carried forward from earlier years. Further credit appearing in the loan account of the group companies includes Rs. 6,34,40,300/- ,in respect of the transactions undertaken by the appellant company for the purpose of structuring of the Balance Sheet vis-à-vis classification of debts on Long term and short term basis as appearing in the audited annual financial statements of the concerned year and in order for facilitating said transactions, the appellant company itself has advanced the initial amount to M/S Millennium Urja Limited on 6th March,2014, amounting to Rs. 20,00,000/- as the base amount, after which the M/S Millennium Urja Limited in turn advanced the same amounts to associate / group companies, namely M/s Rabisha Holdings Pvt Ltd Rs. 73,00,000/-, Oceanic Developers Pvt Ltd Rs. 92,50,000/-, Mayfair Mercantiles Pvt Ltd Rs. 10,96,000/- , Veneers Mercantiles Pvt Ltd. Rs. 2,18,00,000/- , Welplan Traders Pvt Ltd Rs. 89,50,000/-, Saffron Plantation Pvt Ltd, Rs. 1,31,50,000/- Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, Nityanand Plantation & Properties Pvt Ltd. Rs. 14,00,000/- which again was matched by the Associated Alcohols & Breweries Limited by advancing the exactly same amount of Rs. 6,34,40,300/- during the period from 06.03.2014 to 20.03.2014. This cycle carried on during the month of March’2014. The source of Rs. 20,00,000/- which was advanced by the appellant Company on 06.03.2014 is the receipt of sale proceeds of country liquor on 05.03.2014. In support appellant has filed copies of bank statement. Hence no fund as such received by the appellant Company, rather its credit and resulting debit on account of rotation of fund on account of Balance sheet structuring exercise and even initial amount of the transaction infused by the appellant itself out of its internal accrual in the loan account of concerned group Companies (namely 1, Rabisha Holdings Pvt Ltd of Rs 73,00,000/-, 2. Oceanic Developers Pvt Ltd. Rs.92,50,000/-,3. Mayfair Mercantiles Pvt Ltd. Rs. 10,96,000/-,4. Veneers Mercantiles Pvt Ltd Rs. 2,18,00,000/-, 5., Welplan Traders Pvt Ltd Rs. 89,50,000/-, 6, Saffron Plantation Pvt Ltd Rs. 1,31,50,000/-, 7. Dhanlaxmi Tech Pvt Ltd Rs. 1,96,700/-, 8, Lingraj Housing Pvt Ltd, Rs. 2,97,600/-, 9.Nityanand Plantation & M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 47 Properties Pvt Ltd. Rs.14,00,000/-) and resultant debit in respect of the same is appearing in the name Millennium Urja Ltd are part and parcel of very same transaction, is verifiable from the appellant company Balance sheet for the year ended on 31 st March 2014 under note no. 3 Long Term Borrowing and under note no. 17 Short Term loans and advances. Also for the amount of net interest expenses the appellant has filed copies of Loan confirmation, Income tax acknowledgement, Balance Sheet and Profit & Loss account confirming the receipt of interest and the same has been offered to tax by the lender company. Hence, the appellant has fully explained source to source of investment made by the lender company. Most importantly has been repaid during AY 2017-18 which is prior to the date of search. (b) The AO erred in making addition based on statement without any incriminating material on record. Shri Anand Kumar Kedia in his statement recorded on oath on 16.11.2017 has admitted that a sum of Rs. 45,11,49,372/- was though three companies namely, M/s Moriya Merchandise Pvt Ltd , M/s Eagle Agencies Pvt ltd and M/s Novelty Realtors Pvt Ltd. However, the said statement was retracted vide letter dated 22.11.2017 and affidavit dated 30.11.2017. However, the AO vide para 17.1 has alleged that the said retraction was made after two years. In support appellant has filed copy of letter dated 22.11.2017 duly received in the office of The DDIT(Inv)-III, Indore. The search in the case of appellant initiated on 14.011.2017 and concluded on 18.11.2017 and the said retraction letter was filed on 22.11.2017 i.e. within 4 days, therefore, it cannot be said that the retraction is an afterthought. Shri Anand Kumar Kedia vide retraction letter dated 22.11.2017 has contended that the statement was given under pressure and at odd hours. This fact has also been confirmed by the AO vide para 17.1 of the assessment order. However, the AO has not placed reliance on any incriminating material having its bearing on the surrendered income. The A.O has also failed to bring on record any positive evidence having nexus with the impunged investment in share capital. Further, the declaration was made for Mount Everest Breweries Ltd. Thus, it can be safely concluded that the addition made by the A.O was not on the basis of the incriminating material found during the course of search but only on the basis of retracted statement of Shri Anand Kumar Kedia. 4.2.3 As discussed above, the appellant has furnished all details such as documents relating to identity, creditworthiness of the lender and genuineness of the transaction. Thus prima facie liability of the assessee to prove the genuineness of the transaction and to establish the identity and creditworthiness of the lender stands discharged. Thus, consideraing the fact that the lender is group companies and is M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 48 regular tax assessee’s and have given the loan through account payee cheque and have confirmed the transaction the liability of the assessee of explaining the genuineness of the transaction stands discharged and the addition cannot be made on mere suspicion hose so strong the reasons of suspicion may be. Also the appellant has repaid the loan. Hon'ble. Gujarat High Court in the case of Ayachi Chandrashekhar Nasangji (2014) 42 Taxmann.com 251 (Guj. HC) has held that “ It has also come on recordd that the said loan amount has been repaid by the assessee4 to Shri Ishwar Adwani in the immediate next FINANCIAL YEAR and the Department has accepted the repayment of loan without probing into it. In the aforesaid fact and circumstances of the case, when the Tribunal has held that the matter is not required to be remanded as no other view would be possible we see no reason to interfere with the impugned order passed by I.T.A.T. 4.2.4 The loan party furnished the loan confirmation, copy of bank account and proof of filing of the return. By filing the above documents the appellant is able to establish the – i. Identity of the creditors the creditors are income tax payer and filed the loan confirmation. ii. Genuineness of the transaction – the appellant has taken the loan through banking channel. The appellant is in the receipt of loan by cheque. Copies of bank statements of lender companies are placed on record and perusal. Appellant has made repayments of the loan taken per his convenience of fund availability as is evident from loan confirmation letter and leger statement of the lender companies duly accompanies by bank statements. Appellant has also paid interest to the lender companies on the loans borrowed and the same have been offered to tax by the respective lender companies in their regular income tax return. The appellant has also deducted TDS on interest the TDS credit has also been availed by respective lender companies. iii. Creditworthiness of the creditors the creditors are income tax payer and filing the income tax return. The companies have not only given the loan to the appellant but to other parties also. 4.2.5 From the above it is clear that the appellant has satisfied all the three conditions required for genuineness of the transaction. The same view has been upheld by Hon'ble I.T.A.T. in the following cases:- i. i. Umesh Electricals v/s Asst. CIT(2011) 18 ITJ 635 (Trib.-Agra):- (2011) 131 ITD 127: (2011) 141 TTJ Establishment of identity and credit-worthiness proved- Assessee produced the bank account of creditor in his bank account on the same day on which loan was given- Assessee furnished the cash flow statement of creditor-Based on inquiry, AO noted that creditor was engaged in providing accommodation entries HELD- In group cases, it has been held that there was no evidence against the creditor to prove that he was providing accommodation entries-Further, mere deposit of money by M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 49 the creditor on the same day, does not establish that the loan is not genuine-Assessee has proved the source of credit and also the source of source-Addition cannot be made. ii. Aseem Singh v/s Asst. CIT (2012) 19 ITJ 52 (Trib.-Indore) Identity and credit-worthiness proved-Assessee took loan of Rs.1,00,000/- confirmation of creditor was filed-Lower authorities made addition u/s 68 holding that amount was deposited in cash in the bank account of lender immediately prior to date of loan- HELD- Assessee has established the identity- The party has confirmed the transaction-If AO doubted the transaction, AO should have called creditor u/s 131-Addition cannot be made. Thus, appellant has furnished all the required details in order to prove identity of lenders, genuineness of the transaction and creditworthiness of the creditors. 4.2.11 As far as case laws relied upon by the A.O. are concerned, on perusal it is seen that none of the case laws relied upon by the A.O. are applicable to the facts of this case//The case laws referred by AO are as under: (a) Sumatidayal vs CIT 214 ITR 801 (SC) Section 68 of the Income-tax Act, 1961-Cash credits - Assessment years 1971-72 and 1972-73-Assessee had shown certain amounts in capital accounts in books claiming same to be winnings from horse races- She filed sworn statement to effect that she started going for races only towards end of year 1969 and had no experience in races but she purchased jackpot tickets on combination worked out by her on basis of advice given by her husband - She had allegedly won 16 jackpots besides trebles Assessing Officer disbelieved her version and taxed amount as income from undisclosed sources Settlement Commission by its majority order upheld assessment order holding that it was reasonable to infer, on facts, that assessee did not participate races but purchased winning tickets after events with unaccounted money Whether matter in question had to be considered in light of human probabilities - Held, yes - Whether having record to conduct of assessee as disclosed by her in nworn affidavit as well as other material on record, an inference could reasonably be drawn that winning tickets were purchased by her after race event - Held, yes - Whether, therefore, finding of majority of Settlement Commission that amount in question was not winnings from horse races but income from undisclosed sources was justified-Held, yes In the above mentioned case, the assessee has claimed certain amounts in capital account from winnings from horse races. But in reality assessee has purchased lottery tickets out of unaccounted money. However, facts of the case of appellant are entirely different from the above cited case. Moreover, when the primary and direct evidences provide all the explanation, the surrounding circumstances bear no significance. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 50 (a) Pavankumar M Sanghvi (2018) 97 taxmann.com 398 (b) Seema Jain (2018) 96 taxmann.com 307 (Delhi) (c) Aaradhna estate Pvt Ltd (2018) 91 taxmann.com 19 (Guj HC) (d) Pratik SyntexPvt Ltd (2018) 94 taxmann.com 12 (ITAT Mumbai) (e) Mid East Folio Management Ltd vs CIT(2003) 81 TTJ 37(Mum) (f) PCIT vs NRA Iron & Steel (P) Ltd (2019) 103 taxmann.com 48 (SC) (g) Navodaya Castle Pvt Ltd (2015) 56 taxmann.com 18 (SC) All the case laws cited by the AO are relating to failure on the part of assessee to prove genuineness of the credit which is not in the case of appellant. Appellant has proved genuineness of the transaction, and creditworthiness of the creditors with supportive evidences. Therefore, facts of the case relied by the AO are clearly distinguishable from the facts of the case of appellant. 4.2.12 In my considered view, the AO except relying upon the findings of the Investigation Wing could not bring on record any cogent material to establish that the lender company from whome appellant had claimed to have received loan was non-existent or bogus or paper company. In my view, the appellant could be able to fully discharge its onus of proving the genuineness of the loan transaction beyond all doubts. It is important to mention here that during the course of search a stock audit was also done in the case of appellant, where no discrepancy was found. The identity of the lender company is self-proven from the fact that the assessments in the case of the lender company have been framed either by the AO himself or by some other assessing officer. The genuineness of the transactions also gets fully established as the transactions have been taken place through banking channels and these have been confirmed by the lender companies. Also find that all the lender company was having sufficient net owned funds for making advances to the appellant or any one also. The appellant has been able to establish even the sources of the source in the hands of the lender company. The lender company is assessed to Income Tax. During the course of the search/survey no incriminating material or any other evidence was found from which it could have been inferred that the appellant had provided any fund to the lender company before obtaining loans. 4.2.13 Once it has been established and proven beyond doubt that the loan taken by appellant from various companies is genuine. Therefore, the interest payment on loan is also considered as genuine business expenditure. The appellant has also deducted applicable TDS on the interest paid and no delay in payment of TDS to government by the appellant has been brought on record by the AO. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 51 4.2.14 Therefore, in view of the above discussion, the AO was not justified in making addition on account of unsecured loan amount and interest on loan amount to various companies. The appellant has repaid the loan of Rs.3,45,00,000/- taken in the AY 2013-14 from M/s Bhilai Properties & Investments Pvt Ltd and M/s Accord Vanijya Pvt Ltd. The appellant has repaid the loan of Rs. 12/-in AY 2015-13 taken from M/s Eagle Agencies Pvt Ltd. The appellant has repaid the loan of Rs.4,92,00,000/- in AY 2016-17 taken from M/s Novelty Realtors Pvt Ltd through cheque. The appellant has also repaid loan of Rs. 1,18,50,000/-in AY 2017-18 taker from M/s Novelty Realtors Pvt Ltd and Rs. 1,20,00,000/- from M/s Welplan Traders Pvt Ltd. Thus, keeping in view facts of the case, the documentary evidences filed by the appellant and the case laws cited above, the additions made by the AO amounting to Rs.3,45,00,000/-in the AY 2013-14, Rs.12/- in AY 2015-16, Rs. 5,86,50,000/- in AY 2016-17 and Rs.1,20,00,000/- in AY 2017-18 are Deleted. Therefore, appeal on these grounds are allowed.” 30. We find merit in the contentions of the counsel for the assessee that the assessee Company has not received any such fund during the year rather the credit in respect of the transactions undertaken by the assessee company for the purpose of structuring of the Balance Sheet vis-à-vis classification of debts on Long term and short term basis (during the month of March 2014) as appearing in the audited annual financial statements of the concerned year, and in order to facilitate the transactions, the assessee company itself has advanced the initial amount to M/S Millennium Urja Limited on 6th March,2014, amounting to Rs. 20,00,000/- as the base amount, after which the M/S Millennium Urja Limited in turn advanced the same amounts to associate / group companies, namely (Rabisha Holdings Pvt Ltd , Oceanic Developers Pvt Ltd , Mayfair Mercantiles Pvt Ltd , Veneers M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 52 Mercantiles Pvt Ltd. , Welplan Traders Pvt Ltd , Saffron Plantation Pvt Ltd,, Dhanlaxmi Tech Pvt Ltd , Lingraj Housing Pvt Ltd, Nityanand Plantation & Properties Pvt Ltd.) which again was matched by the Associated Alcohols & Breweries Limited by advancing the exactly same amount of Rs. 6,34,40,300/- during the period from 06.03.2014 to 20.03.2014. This cycle carried on during the month of March, 2014. The source of such base amount of Rs. 20,00,000/- which was advanced by the assessee Company on 06.03.2014 is the receipt of sale proceeds of liquor on 05.03.2014. Copy of bank statement of IDBI bank of the appellant company reflecting the transfer the initial amount of Rs.20,00,000/- along with other relevant bank statements, Balance Sheet, Confirmation of the Accounts, of the concerned companies of the group in respect of the loan transactions submitted by the assessee substantiating the transaction under question. The source of total credit of Rs 6,34,40,300/- is Rs 20,00,000/- which was advanced by the appellant Company on 06.03.2014 to the group company Millennium Urja Limited and thereafter Millennium Urja Ltd to aforementioned associate / group companies and thereafter to the assessee Company and the transaction under question was done between 6/3/2014 to 20/3/2014. Copy of the Bank statement of Millennium Urja Limited reflecting complete chain of transactions are substantiated and explained by the assessee. M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 53 31. Further while substantiating the receipt of loan from Accord vanijya Pvt. Ltd. of Rs. 68,74,000/- and Bhillai Properties & Investment Pvt. Ltd. of Rs. 6,21,370/-, the companies of the group, it is submitted by the Ld. Counsel for Assessee that the allegation of routing unaccounted funds in form of loans received by the assessee company, from Accord Vanijya Pvt. Ltd. & Bhillai Properties Investment Pvt Ltd is also misplaced as during the year under consideration the assessee company was having opening balances of the outstanding loan of Rs. 4,93,00,000/- from Accord Vanijya Pvt. Ltd. and repaid a sum of Rs. 3,63,00,000/- and received the sum of Rs. 68,74,000/- and ended with the closing balance of Rs. 1,98,74,000/- at the year end and the amount advanced by the Accord Vanijya Pvt. Ltd. which has a source again in Millennium Urja Limited not the sources as alleged by the learned AO. Further the addition for the amount in respect of the Bhillai Properties Investment Pvt. Ltd. is on account of interest provisioning and not a single penny received during the PY 2013-14 by the assessee from the company instead repayment of balances carry forwarded from earlier years were made during the PY 2013-14. Hence the same is also rightly deleted by the Ld. CIT (A) on the basis of facts/evidences on record. 32. Further the Ld. Counsel of the assessee submitted that the Ld. AO has made the addition merely on the basis of surmises and conjectures evading the facts and evidences available on M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 54 the record and drawn on attention to the observation of Ld. CIT (A) while allowing the appeal as reproduced hereunder: “ (b) The AO erred in making addition based on statement without any incriminating material on record. Shri Anand Kumar Kedia in his statement recorded on oath on 16.11.2017 has admitted that a sum of Rs. 45,11,49,372/- was though three companies namely, M/s Moriya Merchandise Pvt Ltd , M/s Eagle Agencies Pvt ltd and M/s Novelty Realtors Pvt Ltd. However, the said statement was retracted vide letter dated 22.11.2017 and affidavit dated 30.11.2017. However, the AO vide para 17.1 has alleged that the said retraction was made after two years. In support appellant has filed copy of letter dated 22.11.2017 duly received in the office of The DDIT(Inv)-III, Indore. The search in the case of appellant initiated on 14.11.2017 and concluded on 18.11.2017 and the said retraction letter was filed on 22.11.2017 i.e. within 4 days, therefore, it cannot be said that the retraction is an afterthought. Shri Anand Kumar Kedia vide retraction letter dated 22.11.2017 has contended that the statement was given under pressure and at odd hours. This fact has also been confirmed by the AO vide para 17.1 of the assessment order. However, the AO has not placed reliance on any incriminating material having its bearing on the surrendered income. The A.O has also failed to bring on record any positive evidence having nexus with the impunged investment in share capital. Further, the declaration was made for Mount Everest Breweries Ltd. Thus, it can be safely concluded that the addition made by the A.O was not on the basis of the incriminating material found during the course of search but only on the basis of retracted statement of Shri Anand Kumar Kedia.” 33. It was submitted that it is the case of Balance Sheet structuring exercise of the assessee company during the M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 55 month of March, 2014 in which the initial amount of Rs. 20 Lacs by the assessee company, to aforesaid group company Millennium Urja Ltd, which was in turn transferred to the concerned loan creditor companies of the group, to enable them to transfer the same fund to the assessee company and the chain of transactions taken place between 6 th March, 2014 to 20 th March, 2014 and the same was resulted into resulting credit balances in the name of aforesaid loan creditor of group companies (which was classified as long term loans in the balance sheet of the assessee company) and resulting debit balances in that respect in the name Millenium Urja Ltd. was classified as short term loans and the same is appearing on the relevant pages of Audited balance sheet of the assessee company. 34. Further the Copy of Bank Statement of the concerned group company Millennium Urja Ltd.( to whom the assessee company initiatlly advanced the sum of Rs. 20 Lacs, which was in turn transferred by the aforesaid company to the concerned loan creditor companies of the group, to enable them to transfer the same fund to the assessee company) reflects the complete chain of the transactions (appearing on page no. 373 to 380 of the paper book). Further Copy of submission, bank statements, statements of account, tax audit report of the assessee company along with bank statements, statements of account of concerned loan creditor companies, reflecting the complete chain of transactions as appearing on page 356-434 M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 56 of paper book confirms the submissions made by Learned Counsel for the Assessee. 35. We note that the source of total credit of Rs 6,34,40,300/- is Rs 20,00,000/- which was advanced by the appellant Company on 06.03.2014 to the group company Millennium Urja Limited and thereafter Millennium Urja Ltd to aforementioned associate / group companies and thereafter to the assessee Company and the transaction under question was done between 6/3/2014 to 20/3/2014. Being the case of just balance sheet restructuring exercise during the month of march 2014 in which the source amount routed from the assessee company out of its own sale proceeds of business and advance to Millennium Urja Ltd. which in turn transferred to the concerned loan creditor companies of the group for onward transfer to the assessee company. For example, in case of Rabisha Holding Pvt. Ltd. from whom the credit of Rs. 73 Lacs received by the assessee during the year is in question, the Millenium Urja Ltd. received the sum of Rs. 20 Lacs on 8 th March, 2014 from the assessee company, which in turn transferred the same amount on very same day to Rabisha Holding Pvt. Ltd. and the concerned loan creditor Rabisha Holding Pvt. Ltd. transferred the amount to the assessee company on 8 th March, 2014 itslef, and thereafter another trench of Rs. 20 Lacs again received by Millenium Urja Ltd. on 11 th March, 2014 from the assessee company, which in turn transferred the same amount on very same day to Rabisha M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 57 Holding Pvt. Ltd. and the concerned loan creditor Rabisha Holding Pvt. Ltd. transferred the amount to the assessee company on 11 th March, 2014 and similarly the third trench of Rs. 20 Lacs was again received by Millennium Urja Ltd. on 12 th March, 2014 from the assessee company, which in turn transferred the same amount on very same day to Rabisha Holding Pvt. Ltd. and the concerned loan creditor Rabisha Holding Pvt. Ltd. transferred the amount to the assessee company on 12 th March, 2014. And Lastly the 4 th trench of Rs. 13 Lacs was rotated on 14 th March, 2014 through the companies concerned. The transactions are appearing on the bank Statement of Millennium Urja Ltd. (page 374-377 of the paper book ) Bank statements of Assessee appearing on page 394-397 of the paper book. The statement and the Bank statements of Rabisha Holding Pvt. Ltd. is appearing on page 388 and 401 of the paper book. We thus find that the transactions in respect of credit balances of the concerned companies of the group are totally explained and substantiated. 36. We, therefore, in view of the aforesaid discussions, finding of Ld. CIT(A) including the decisions relied therein and our examination of facts, are of the considered view that firstly the assessee has proved, substantiated and submitted the required documents/evidences to prove that provisions of section 68 of the Act are not applicable on the alleged cash creditors and also the assessee has proved the identity and creditworthiness of the alleged cash creditors and genuineness of the M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 58 transaction which are in dispute before us and sufficient documentary evidences have been placed to prove that the alleged credit balance are results of the balance sheet restructuring exercise carried out by the assesse through Millennium Urja Limited and other group companies by way of rotating fund received from sale of goods. We, therefore, find no reason to interfere in the finding of Ld. CIT(A) deleting aforesaid additions arrived at by rightly adjudicating the facts of the case. Grounds raised by the revenue for A.Y. 2014-15 are dismissed. 37. Lastly as regard the grounds raised in the Cross Objection by the assesse supporting the finding of ld. CIT(A) the same deserves to be dismissed as infructuous as we have already confirmed the finding of Ld. CIT(A) deleting addition for unexplained cash credit u/s 68 of the Act. 38. In the result revenue’s appeal in ITANo.184/Ind/2020 for A.Y. 2014-15 is dismissed and Cross Objection in CO No. 10/Ind/2021 is partly allowed. The order pronounced as per Rule 34 of ITAT Rules, 1963 on 20.01.2022. Sd/- Sd/- (MAHAVIR PRASAD) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER दनांक /Dated : 20.01.2022 Patel/PS M/s. Associated Alcohals & Breweries Ltd. IT(SS)A No.184/Ind/2020 59 Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Asstt.Registrar, I.T.A.T., Indore