M/s. Agrawal Transport Corporation (P) Ltd., INDORE V. Dy. CIT -1(1), Indore

CO 35/Ind/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4006 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-10-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-05-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 16-10-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: KAPIL SHAHCAS
• Keywords: Unexplained cash credit; Business expenditure; Search and seizure; Share purchase agreement; Earning of tax free income; Source of fund; Tangible material; Accommodation entries; Competent authority; Documents seized; Reassessment proceedings; Borrowed satisfaction; TDS; Rule 8D; Set aside
• Section: 143(3); 142(1); 14A; 133(6); 143(1); 201; 143(2); 191; 139(1); 64; 113; 43; 48; 73; 72; 13; 119; 22; 153C; 32; 131; 68; 148; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE KUL BHARAT, JUDICIAL MEMBER AND HONBLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.651/IND/2019 ASSESSMENT YEAR 2010-11 DEPUTY COMMISSIONER OF INCOME TAX 1(1), INDORE : REVENUE V/S M/S. AGRAWAL TRANSPORT CORPORATION PVT. LTD, YASHWANT NIWAS ROAD, INDORE PAN : AAECA1502C : APPELLANT C.O.NO.35/IND/2019 ASSESSMENT YEAR 2010-11 M/S. AGRAWAL TRANSPORT CORPORATION PVT. LTD , YASHWANT NIWAS ROAD, INDORE PAN : AAECA1502C : APPELLANT V/S DEPUTY COMMISSIONER OF INCOME TAX 1(1), INDORE : REVENUE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 2 ITA NO.331/IND/2018 ASSESSMENT YEAR 2009-10 M/S. ADMANUM FINANCE LTD, 5, AGRAWAL HOUSE, Y.N ROAD, INDORE PAN : AABCA4980F : APPELLANT V/S DEPUTY COMMISSIONER OF INCOME TAX 1(1), INDORE : REVENUE ITA NO.895/IND/2019 ASSESSMENT YEAR 2014-15 DEPUTY COMMISSIONER OF INCOME TAX 1(1), INDORE : REVENUE V/S M/S. AVAILABLE FINANCE LTD, 2 ND FLOOR, AGRAWAL HOUSE, 5 YASHWANT NIWAS COLONY, INDORE PAN : AAACF1246Q : APPELLANT REVENUE BY SHRI K.G. GOYAL , SR.DR ASSESSEE BY S/ SHRI AJAY TULSIYAN & KA P IL SHAH, CAS DATE OF HEARING 09.09 .2020 DATE OF PRONOUNCEMENT 14 . 1 0 . 2020 AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 3 O R D E R PER BENCH THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCES OF THE REVENUE & ASSESSEE(S) AND CROSS OBJECTION FILED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2010-11, 2009-10 AND 2014-15 ARE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-I (IN SHORT LD.CIT(A)], INDORE DATED 18 .3.2019, 20.2.18 & 16.7.2019 WHICH ARE ARISING OUT OF THE ORDER U/S 14 3(3) R.W.S. 147 OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATE D 29.12.2017, 21.09.2016 AND 14.12.2016 FRAMED BY ACIT-1(1)/DCIT- 1(1), INDORE. M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD, ITA NO.651/IND/2019 ASSESSMENT YEAR 2010-11 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL; 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE M ADE BY THE AO OF RS.2,71,66,288/- BEING UNSECURED LOAN FROM M/S AERE O DEALCOM PVT LTD AND INTEREST PAID THEREON. 2.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALL OWANCE MADE BY THE AO OF RS.3,46,76,137/- BEING UNSECURED LOAN FROM M/S CHAM AK TREXIM PVT. LTD AND INTEREST PAID THEREON. THE APPELLANT CRAVES LEAVE TO ADD OR DEDUCT FROM O R OTHERWISE AMEND THE ABOVE GROUNDS OF APPEAL. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 4 CROSS OBJECTION NO.35/IND/2019 IN APPEAL NO.651/IND/2019 ASSESSMENT YEAR 2010-11 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL 1. THE LEARNED CITCA) ERRED IN HOLDING THAT THE REOPEN ING PROCEEDINGS WERE PROPERLY AND VALIDLY INITIATED IN THIS CASE. THAT O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE REASSESSM ENT PROCEEDINGS INITIATED IN THIS CASE ARE WRONG, VOID AB-INITO, WI THOUT JURISDICTION AND BAD IN LAW AND IT IS PRAYED THAT THE SAME VERY KINDLY B E NOW QUASHED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CITCA) ERRED IN NOT APPRECIATING AND NOT ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE IMPUGNED REOPENING PROCEEDINGS IN ITIATED IN THIS CASE WERE BAD IN LAW IN VIEW OF THE FIRST PROVISO TO SEC TION 147 AS THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE MATERIAL FACTS. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CITCA) ERRED IN NOT APPRECIATING AND NOT ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE IMPUGNED REOPENING PROCEEDINGS IN ITIATED MERELY ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATIO N WING IN THIS CASE WAS ON BORROWED SATISFACTION, WHICH IS WRONG AND BAD IN LAW. 4. THE LEARNED CITCA) ERRED IN NOT ACCEPTING THE CONTE NTION OF THE ASSESSEE THAT THE IMPUGNED REASSESSMENT PROCEEDINGS WERE WRO NG ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW IN THE ABSENCE OF ANY TANGIBLE MATERIAL AND LIVE LINK OF ESCAPEMENT OF INCOME, MER ELY ON SURMISES AND CONJECTURES AND ALSO TANTAMOUNTED TO CHANGE OF OPIN ION. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CITCA) ERRED IN NOT APPRECIATING AND NOT ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE IMPUGNED REOPENING PROCEEDINGS IN ITIATED ON THE BASIS OF INFORMATION RECEIVED BY THE AO CONSEQUENT TO A S EARCH CONDUCTED ON A THIRD PERSON WERE BAD IN LAW IN VIEW OF THE NON-OBS TANTE CLAUSE IN SECTION 153C. 6. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER, MODIFY, SU BSTITUTE AND/OR WITHDRAW ALL OR ANY OF THE GROUNDS OF APPEAL AT ANY STAGE OF THE APPELLATE PROCEEDINGS. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 5 M/S ADMANUM FINANCE LTD ITA NO.331/IND/2018 ASSESSMENT YEAR 2009-10 4. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL 1. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTI ON OF THE AO OF INITIATING THE REOPENING PROCEEDINGS U/S 147 AND U/ S 148. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW THE PROCEEDINGS ARE WRONG BAD IN LAW AND THE CONSEQUENTIAL ASSESSMENT O RDER IS PRAYED TO' BE QUASHED. 2. THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADD ITION OF RS. 36,00,000/MADE BY THE AO U/S 68 ON ACCOUNT OF LOAN TAKEN FROM M/S AEREO DEALCOMM PVT. LTD. THAT ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE THE ADDITION IS WRONG AND UNCALLED FOR AND IS PRAYED TO' BE DELETED NOW. 2.1 THAT THE LEARNED CIT(A) IN ERRED CONFIRMING THE DISALLOWANCE OF INTEREST PAID TO' M/S AEREO DEALCOMM PVT. LTD. OF RS. 32,93,424/- MADE BY THE AO. THAT ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE, THE DISALLOWANCE OF INTEREST IS WRO.NG AND UNCALLED FOR AND IS PRAYED TO' BE DELETED NOW. 3. THAT THE LEARNED CIT(A) ERRED IN MAINTAINING THE AD DITION OF RS. 1,08,75,000/- MADE BY THE AO U/S 68 ON ACCOUNT OF L OAN TAKEN FROM M/S CHAMAK TREXIM PVT. LTD. THAT ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE, THE SAID ADDITION IS WRONG AND UNCALLED FOR A ND IS PRAYED TO' BE DELETED NOW. 3.1 THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO OF DISALLOWING THE INTEREST OF RS. 28,65,473/- PAID TO ' M/S CHAMAK TREXIM PVT. LTD. THAT ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE DISALLOWANCE OF INTEREST IS WRONG AND UNCALLED FOR AND IS PRAYED TO' BE DELETED NOW. 4. THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTI ON OF THE AO OF MAKING DISALLOWANCE OF RS. 6,75,000/- AND RS. 6,00, 000/- ON ACCO.UNT OF INTEREST PAID TO' TWO. 100AN CREDITORS. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE 100AN TRANSACTIONS O F THESE CREDITORS HAVING BEEN ACCEPTED AS PROPER. THE DISALLOWANCE OF INTEREST WAS UNCALLED FOR AND NOT IN ACCORDANCE WITH LAW. THE SAME IS PRA YED TO' BE NOW ALLOWED. 5. THAT THE APPELLANT CRAVES LEAVE TO' ADD, TO' ALTER, AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 6 BEFORE FINAL HEARING, IF NECESSITY SO ARISES. M/S AVAILABLE FINANCE LTD, ITA NO.895/IND/2019 ASSESSMENT YEAR 2014-15 5. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS JUSTIFIED IN RESTRICTING THE ADDITION MAD E U/S 14A OF THE ACT FROM 38,90,444/- TO RS.7,481/-. 2.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITI ON ON ACCOUNT OF UNSECURED LOAN AMOUNTING TO RS.69,00,000/- AND INTE REST THEREON OF RS.51,93,162/-. THE APPELLANT CRAVES LEAVE TO ADD OR DEDUCT FROM O R OTHERWISE AMEND THE ABOVE GROUNDS OF APPEAL. 6. AS MOST OF THE ISSUES RAISED IN THESE APPEALS A RE COMMON THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 7. FROM PERUSAL OF GROUND NO.1 & 2 OF REVENUES APP EAL IN THE CASE OF M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD ( IN SHORT ATCPL ) ITA NO.651/IND/2019 FOR ASSESSMENT YEAR 2010-11 AND GROUND NO.2 & 3 OF ASSESSEES APPEAL IN THE CASE OF M/S ADMANUM FINANCE LTD ( IN SHORT ADFL ) LTD ITA NO.331/IND/2018 FOR ASSESSMENT YEAR 2009-10 AND GROUND NO.2 OF REVENUE S APPEAL M/S AVAILABLE FINANCE LTD ( IN SHORT AFL ), ITA NO.895/IND/2019 FOR ASSESSMENT YEAR 2014-15 COMMON ISSUES RELATING TO ALLEGED AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 7 UNEXPLAINED UNSECURED LOANS U/S 68 OF THE ACT TAKEN FROM M/S AEREO DEALCOM PVT. LTD ( IN SHORT ADPL ) AND M/S CHAMAK TREXIM PVT. LTD ( IN SHORT CTPL ) AS WELL AS DISALLOWANCE OF INTEREST PAID THEREON. FOLLOWING CHART SHOWS THE DISPUTED AMOUNT OF UNSECURED LOAN AND INTEREST THEREON WHICH ARE CHALLENGED BEFO RE US BY THE REVENUE IN CASE OF M/S ATCPL & M/S AFL AND THE ASS ESSEE M/S ADFL. S.NO. NAME A.Y APPEAL NO. ISSUE AMOUNT CITA) 1 AGRAWAL TRANSPORT CORP. PVT. LTD 2010- 11 NO.651/IND/ 2019 (DEP.) AEREO DEAL COM PVT. LTD LOAN AEREO DEAL COM PVT. LTD INTEREST CHAMAK TRAXIM PVT. LTD- LOAN CHAMAK TRAXIM PVT.LTD-INTEREST 2,68,00,000 3,66,288 3,42,00,000 4,76,137 ALLOWED ALLOWED ALLOWED ALLOWED 2 ADMANUM FINANCE LTD 2009- 10 NO.331/IND/ 2018 (ASSESSEE) AEREO DEAL COM PVT. LTD LOAN AEREO DEAL COM PVT. LTD INTEREST CHAMAK TRAXIM PVT. LTD- LOAN CHAMAK TRAXIM PVT. LTD- INTEREST 36,00,000 32,93,424 1,08,75,000 28,65,473 CONFIRMED CONFIRMED CONFIRMED CONFIRMED 3 AVAILABLE FINANCE LTD 2014- 15 NO.895/IND/2019 (DEPARTMENT) AEREO DEAL COM PVT. LTD LOAN AEREO DEAL COM PVT. LTD INTEREST CHAMAK TRAXIM PVT. LTD- LOAN CHAMAK TRAXIM PVT. LTD- INTEREST 13,00,000 16,62,641 56,00,000 35,30,521 ALLOWED ALLOWED ALLOWED ALLOWED AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 8 8. SINCE THE ISSUE IS COMMON RELATING TO LOAN TAK EN AND INTEREST PAID TO M/S. ADCPL AND CTPL, AS AGREED BY BOTH THE PARTIES WE WILL BE ADJUDICATING THE ISSUE ON THE BASIS OF FACTS OF M/S. AGRAWAL TRANSPORT CORPORATION PVT. LTD AND OUR DECISION SHA LL APPLY MUTANDIS MUTANDIS ON THE GROUNDS RAISED IN THE SIMILAR CASES IN THE CASE OF M/S ADMANUM FINANCE LTD AND M/S AVAILAB LE FINANCE LTD. THE ISSUE IN BRIEF IS THAT FIRSTLY WHETHER THE LD. A.O IS JUSTIFIED IN MAKING THE ADDITION U/S 68 OF THE ACT FOR UNEXPL AINED CASH CREDIT FOR THE LOANS TAKEN FROM M/S ADPL AND M/S CT PL AND ALSO DISALLOWING THE INTEREST PAID THEREON. SECONDLY WH ETHER THE ASSESSEE SUCCEEDED IN PROVING THE IDENTITY, GENUINE NESS AND CREDITWORTHINESS OF THE CASH CREDITORS M/S ADPL AND M/S CTPL WITH NECESSARY DOCUMENTARY EVIDENCE. 9. BRIEF FACTS OF THE CASE AS NARRATED BY THE LD. C OUNSEL FOR THE ASSESSEE IN THE CASE OF M/S. ATCPL ARE THAT THE ASS ESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRANSPORTATION AND STEVEDORING. RETURN OF INCOME FOR ASSESSMENT Y EAR 2010-11 WAS FILED ON 27.10.2010 U/S 139(1) OF THE ACT FOLLO WED BY CARRYING OUT OF ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT WHICH WERE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 9 COMPLETED ON 20.3.2013 ASSESSING THE INCOME AT RS. 4,15,63,641/-. THEREAFTER THE CASE OF THE ASSESSEE WAS REOPENED U/ S 147 OF THE ACT BY WAY OF ISSUING NOTICE U/S 148 OF THE ACT. ASSES SEE AGAIN FILED ITS RETURN OF INCOME ON 1.3.2017. DURING THE COURSE OF REASSESSMENT PROCEEDINGS ASSESSEE WAS ASKED TO PROVE THE IDENTIT Y, GENUINENESS AND CREDITWORTHINESS OF THE CASH CREDITORS NAMELY M /S ADPL AND M/S CTPL WITH REGARD TO THE UNSECURED LOAN OF RS.2, 68,00,000/- AND RS.3,42,00,000/- TAKEN RESPECTIVELY. THE SUBMIS SIONS MADE BY THE ASSESSEE WERE NOT FOUND ACCEPTABLE AND THE LD. A.O WAS OF THE VIEW THAT SINCE THE ASSESSEE COULD NOT ESTABLISH TH E GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE LENDER THE ALLEGED AMOUNT OF UNSECURED LOAN OF RS.2,68,00,000/- FROM M/S. ADP L AND UNSECURED LOAN OF RS.3,42,00,000/- FROM M/S. CTPL A RE LIABLE TO THE ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF T HE ACT. LD. A.O ALSO DISALLOWED THE INTEREST ON THESE LOAN AT RS.3, 66,288/- AND RS.4,76,137/- PAID TO M/S. ADPL AND M/S CTPL RESPEC TIVELY. 10. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) CHALLENGING THE VALIDITY OF THE REASSESSMENT PROCEE DINGS AND ALSO CHALLENGING THE ADDITIONS AND DISALLOWANCE MADE BY THE LD. A.O. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 10 LD. CIT(A) HAS GIVEN A DETAILED FINDING OF FACT AFT ER EXAMINING DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE RELATIN G TO THE CASH CREDITORS AND THE SOURCE OF THE AMOUNT GIVEN AS LOA N TO THE ASSESSEE AND ALSO AFTER EXAMINING THE FACT THAT BOT H THE CASH CREDITORS WERE REGULARLY ASSESSED TO TAX AND WERE S UBJECTED TO ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT ON SEV ERAL OCCASIONS AND NOWHERE THE CASH CREDITORS NAMELY M/S ADPL AND M/S. CTPL WERE HELD TO BE BOGUS/SHELL/ACCOMMODATION ENTRY PRO VIDER. LD. CIT(A) ALSO APPRECIATED THE FACT THAT BOTH THE CASH CREDITORS ARE REGISTERED AS NON BANKING FINANCE COMPANIES ( IN SHORT NBFC ) AND HAVE SUFFICIENT BASE OF SHARE CAPITAL AND FREE RESE RVE AND SURPLUS AND ARE ALMOST REGULARLY OFFERING POSITIVE INCOME I N THE INCOME TAX RETURNS. LD. CIT(A) ACCORDINGLY DECIDED THE LEGAL GROUND CHALLENGING THE REASSESSMENT PROCEEDINGS AGAINST TH E ASSESSEE AND THE REMAINING GROUNDS ON MERITS WERE ALLOWED IN FAV OUR OF THE ASSESSEE AND THE ADDITIONS U/S 68 OF THE ACT AS WEL L AS THE DISALLOWANCE OF INTEREST WAS DELETED. NOW THE REVE NUE IS IN APPEAL BEFORE THE TRIBUNAL. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 11 11. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGU ED SUPPORTING ORDER OF LD. A.O IN THE CASE OF THREE AS SESSEES NAMELY, M/S. AEREO DEAL COM PVT. LTD, M/S ADMANUM FINANCE L TD AND M/S AVAILABLE FINANCE LTD AND ALSO SUPPORTED THE FINDI NG OF LD. CIT(A) IN THE CASE OF M/S ADMANUM FINANCE LTD. IT WAS ALSO SUBMITTED THAT THE NEXUS OF THESE ADDITIONS ARE ARISING OUT O F THE SEARCH AND SEIZURE OPERATIONS CARRIED OUT U/S 132 OF THE ACT I N THE CASE OF MITTAL GROUP OF INDORE ON 4.9.2015 DURING WHICH OFF ICE PREMISES OF MR. DEEPAK KALANI WAS ALSO COVERED. DURING THE SEA RCH SHARE CERTIFICATES OF M/S. AEREO DEAL COM PVT. LTD ( IN SHORT ADCPL ) WERE FOUND BOTH THE COMPANIES ARE NOT HAVING REGULA R SOURCE OF INCOME AND THEY ARE INDULGED IN PROVIDING ACCOMMODA TION ENTRIES. BOTH THE CASH CREDITORS NAMELY M/S. ADCPL AND M/S CTPL WERE CLAIMED TO BE SHELL COMPANIES AS THE TURNOVER WAS V ERY LITTLE IN COMPARISON TO THE CAPITAL EMPLOYED. LD. DEPARTMENT AL REPRESENTATIVE ALSO SUBMITTED THAT THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE LOAN PROVI DERS IS NOT PROVED AND HENCE THE ADDITIONS FOR UNEXPLAINED CASH CREDIT AND DISALLOWANCE OF INTEREST MAY BE MAINTAINED. RELIAN CE WAS PLACED ON VARIOUS JUDGMENTS REFERRED BY LD. CIT(A) IN HIS DETAILED ORDER IN AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 12 THE CASE OF M/S ADMANUM FINANCE LTD. 12. PER CONTRA LD. COUNSEL FOR THE ASSESSEE RELIED HEAVILY ON THE FINDING OF LD. CIT(A) IN THE CASE OF M/S ATCL WHICH WERE ARRIVED AT AFTER CONSIDERING THE FINDING OF LD. CIT(A) AGAINST THE ASSESSEE IN THE CASE OF M/S ADMANUM FINANCE LTD. LD. COUNSEL F OR THE ASSESSEE FURTHER SUBMITTED THAT IDENTITY OF THE LEN DER COMPANY IS NOT DISPUTED AS THEY APPEARED BEFORE LD. DCIT AND S TATEMENTS RECORDED ON 1.12.2016 AND 8.12.2016. BOTH THE LEND ER COMPANIES HAS SOUND FINANCIAL AS THEY ARE EARNING SUFFICIENT INCOME AND PAYING GOOD TAXES AND NOT BORROWING FROM OTHER COMP ANIES FOR GIVING UNSECURED LOANS. IT WAS ALSO SUBMITTED THAT THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT HAVE BEEN CARRIED OUT FOR VARIOUS YEARS IN THE CASE OF BOTH THE LENDER COMPANIES ON A CCOUNT OF REOPENING OF THE CASES FOR THE SAME REASONS AS THA T OF THE ASSESSEE BUT ON THE COMPLETION OF THE ASSESSMENT PROCEEDINGS NO ADVERSE VIEW WAS TAKEN IN THE CASE OF LENDER COMPANIES AND EVEN THE ISSUE OF FINDING OF ORIGINAL SHARE CERTIFICATES DURING SE ARCH PROCEEDINGS HAVE BEEN DISCUSSED IN THE ASSESSMENT ORDER. THE SH ARE CAPITAL OF BOTH THE LENDER COMPANIES STANDS ASSESSED BY THE LD . A.O U/S AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 13 143(3) OF THE ACT. LD. COUNSEL FOR THE ASSESSEE ALS O SUBMITTED THAT THE DIRECTOR OF THE LENDER COMPANIES APPEARED BEFOR E THE DEPARTMENT, STATEMENTS RECORDED, BOOKS OF ACCOUNTS PRODUCED, DETAILED EXPLANATION FILED FOR THE ALLEGED TRANSACT IONS AND MOVEMENT OF FUNDS AND SOURCE OF SOURCE DULY EXPLAIN ED. ON THE BASIS OF THESE EVIDENCES CREDITWORTHINESS OF THE LE NDER COMPANIES WERE ACCEPTED. 13. AS FAR AS THE GENUINENESS OF THE TRANSACTIONS A RE CONCERNED, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT MR. DEE PAK KALANI HAS GOOD FRIENDSHIP WITH THE DIRECTORS OF AGRAWAL T RANSPORT CORPORATION LTD FOR LAST MANY YEARS. IN THE PAST A LSO UNSECURED LOANS WERE GIVEN BY MR. DEEPAK KALANI THROUGH ITS C OMPANIES TO THE ASSESSEES OTHER GROUP COMPANIES AND HAS CHARGED IN TEREST. ALL THE TRANSACTIONS HAVE BEEN CARRIED OUT THROUGH BANKING CHANNEL AND LOANS HAVE BEEN REPAID ALONG WITH THE INTEREST ACCR UED THERE ON. LD. COUNSEL FOR THE ASSESSEE FURTHER REVEALED AN IMPORT ANT FACT THAT IN THE ASSESSEES ANOTHER GROUP CONCERN M/S AGRAWAL CO AL CORPORATION PVT. LTD ALSO LOANS WERE TAKEN FROM THE SAME LENDERS NAMELY M/S ADPL AND M/S. CTPL. GENUINENESS AND CREDITWORTHINESS OF THE LOANS TAKEN BY M/S. AGRAWAL COAL CORPORATION LTD TRAVELLED UP TO THE HONBLE TRIBUNA L AND WERE DECIDED IN FAVOUR OF THE ASSESSEE AND THE ADDITION U/S 68 OF THE ACT FOR UNEXPLAINED CASH CREDIT FOR UNSECURED LOANS TAK EN FROM M/S AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 14 ADPL AND M/S CTPL STOOD DELETED BY THE HONBLE TRIB UNAL VIDE ORDER DATED 27.6.2016. IT WAS ALSO MENTIONED THAT WHEN THE LOAN TAKEN FROM M/S CTPL AND M/S ADPL WAS REPAID BY M/S AGRAWAL COAL CORPORATION LTD ON THE VERY SAME DAY THOSE AMO UNTS WERE TRANSFERRED TO THE ASSESSEE I.E. M/S. AGRAWAL TRANS PORT CORPORATION LTD. THUS THE SOURCE OF SOURCE IS PROVED ON RECORD . LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSMENTS IN THE CASE OF M/S. CHAMAK TRAXIM PVT. LTD FOR ASSESSMENT YEARS 20 09-10 TO 2012-13 HAVE BEEN COMPLETED AFTER THE SEARCH ON MR. DEEPAK KALANI AND AFTER CONSIDERING THE SAME REPORT OF DDI T (INVESTIGATION), INDORE WHICH IS THE SOLE BASIS OF MAKING ADDITION IN THE CASES OF RESPONDENT ASSESSEE TAKING BASIS OF ID ENTICAL ALLEGATIONS REGARDING DUBIOUS NATURE OF TRANSACTION S DUE TO FINDING OF ORIGINAL SHARE CERTIFICATES. AFTER VERIFICATION NO ADVERSE VIEW WAS TAKEN BY A.O OF M/S. CHAMAK TRAXIM PVT. LTD. SIMILA RLY IN CASE OF M/S. AEREO DEAL COM PVT. LTD ASSESSMENT FOR ASSESS MENT YEARS 2009-10 AND 2010-11 WERE ALSO COMPLETED SUBSEQUENT TO THE SEARCH ON MR. DEEPAK KALANI, HOWEVER NO ADVERSE VIE W WAS TAKEN IN RESPECT OF ISSUE UNDER CONSIDERATION. 14. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITIONS IN THE HANDS OF THE ASSESSEE WERE MADE ON THE BASIS OF OBSERVATIONS OF THE DEPARTMENT IN THE CASE OF SEARCH CARRIED OUT ON MR. DEEPAK KALANI AND FINDING OF SHARE CERTIFICATE OF M/S CTPL AND M/S ADPL AND SINCE THE ABOVE REFERRED ASSESSMENT ORDERS PASS ED BY THE LD. A.O OF M/S. CTPL AND M/S ADPL POST SEARCH ON MR. DE EPAK KALANI NOT ONLY PROVES THE CREDITWORTHINESS OF THE LENDERS AND GENUINENESS AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 15 OF THE TRANSACTION BUT ALSO SUBSTANTIATE THAT THE A DVERSE INFERENCE DRAWN BY THE REVENUE AUTHORITIES FROM THE SAID SEAR CH PROCEEDINGS WERE BASELESS AND WRONG AND FOR THIS SIMPLE REASON THE ADDITIONS MADE IN THE CASE OF THE RESPONDENT ARE RIGHTLY DELE TED BY LD. CIT(A). AS REGARDS THE DECISIONS REFERRED TO BY LD. CIT(A) IN HIS FINDING AGAINST THE ASSESSEE IN THE CASE OF M/S ADF L, LD. COUNSEL FOR THE ASSESSEE CLAIMED THAT THEY ARE NOT APPLICAB LE IN THEIR CASES AND ALSO REFERRED TO THE WRITTEN SUBMISSION PLACED ON RECORD WHEREIN THE FACTS OF THE ASSESSEES CASE HAVE BEEN DISTINGUISHED FROM THE FACTS IN THE CASE OF FOLLOWING DECISIONS R EFERRED TO BY LD. CIT(A) IN CASE OF M/S ADFL NAMELY; 5. (I) CIT VS. NIVEDAN VANIJYA NIYOJAN LTD.(2003)263 ITR 0623(KOL HC) (II) ACIT VS. NARMADA EXTRUSION LTD. (2012) 19 ITJ 202 T RIB INDORE (III) M/S. PRAMILA INVESTMENT AND FINANCE LIMITED VS. ITO (2013)22 ITJ 149 (IV) CIT VS. NAVODAYA CASTLES PVT. LTD.(2014) 367 ITR 03 06 (V) CIT VS. N TARIKA PROPERTIES INVESTMENT PVT. LTD. (2 013)86 CCH 0368 (VI) ITO VS. VAIBHAV COTTON PVT. LTD. (2012) 20 ITJ 422 TRIB. INDORE (VII) ITO VS. M/S. SAAJ PLASTIC INDUSTRIES PVT. LTD. (201 2) 20 ITJ 103 (TRIB.) INDORE 15. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT FAC TS IN THE CASE OF ASSESSEE(S) ARE DISTINGUISHABLE BECAUSE BOTH THE LENDER COMPANIES ARE REGISTERED AS NON BANKING FINANCE COM PANIES BY RESERVE BANK OF INDIA HAVING SUFFICIENT SHARE CAPIT AL AND RESERVE IN AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 16 SURPLUS AND BOTH THE LENDER COMPANIES WERE REGULARL Y ASSESSED TO TAX AND ARE SHOWING SUBSTANTIAL INCOME. GENUINENES S OF TRANSACTION IS PROVED SINCE THE LOAN TRANSACTIONS H AVE TAKEN PLACE WITH OTHER GROUP COMPANIES WITH SAME LENDERS AND HA VE BEEN HELD TO BE GENUINE BY HONBLE TRIBUNAL IN THE CASE OF AGARWAL COAL CORPORATION PVT. LTD (SUPRA) ITA NO.202 & 294/IND/2012 & OTHERS DATED 27.6.2016 AND ALSO THE SOURCE OF SOURCE HAVE BEEN PROVED AS THE LOAN WHICH WAS REPAID BACK TO THE LENDER COMPAN IES BY THE ASSESSEES SISTER GROUP CONCERN M/S AGARWAL COAL CO RPORATION PVT. LTD HAS BEEN UTILISED IN PROVIDING LOANS TO THE ASS ESSEE AND OTHER COMPANIES. AT THE END LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF CO- ORDINATE BENCH OF INDORE IN OTHER SISTER CONCERN GR OUP M/S AGRAWAL COAL CORPORATION PVT. LTD (SUPRA) FOR ASSESSMENT YEAR 2003-04 AND 2008-09 AND IN CASE OF M/S ADMANUM FINANCE LIMITED RELATING TO ASSESSMENT YEARS 2008-09, 2010-11 AND 2011-12 PASSE D ON 27.6.2016 VIDE ITA NO. ITA NO.202 & 294/IND/2012 & OTHERS . 6. 16. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE SUB MISSIONS MADE BY BOTH THE PARTIES. THE COMMON ISSUE RAISED IN GRO UND NO. 1 &2 IN ITA NO.651/IND/19, GROUND NO. 2 & 3 OF ITA NO.33 1/IND/18 AND GROUND NO.2 OF ITA NO.895/IND/19 ARE RELATING TO UN EXPLAINED CASH CREDIT ADDITION U/S 68 OF THE ACT AND DISALLOW ANCE OF INTEREST ON THE LOANS TAKEN FROM UNEXPLAINED CASH CREDITORS NAMELY M/S. AEREO DEALCOM PVT. LTD AND M/S CHAMAK TREXIM PVT. L TD ARE IN AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 17 DISPUTE BEFORE US. 17. AT THE COST OF REPETITION WE ARE REPRODUCING TH E CHART OF THE ADDITIONS MADE IN VARIOUS ASSESSEES AND THE ACTION OF LD. CIT(A) WHICH IN THE CASE OF M/S AGRAWAL TRANSPORT CORPORAT ION PVT. LTD AND M/S. AVAILABLE FINANCE LTD HELD IN FAVOUR OF T HE ASSESSEE RELATING TO THE ASSESSMENT YEAR 2010-11 AND ASSESSM ENT YEAR 2014-15 RESPECTIVELY AND AGAINST THE ASSESSEE IN TH E CASE OF M/S ADMANUM FINANCE LIMITED FOR ASSESSMENT YEAR 2009-10 :- S.NO. NAME A.Y APPEAL NO. ISSUE AMOUNT CITA) 1 AGRAWAL TRANSPORT CORP. PVT. LTD 2010- 11 NO.651/IND/ 2019 (DEP.) AEREO DEAL COM PVT. LTD LOAN AEREO DEAL COM PVT. LTD INTEREST CHAMAK TRAXIM PVT. LTD- LOAN CHAMAK TRAXIM PVT. LTD- INTEREST 2,68,00,000 3,66,288 3,42,00,000 4,76,137 ALLOWED ALLOWED ALLOWED ALLOWED 2 ADMANUM FINANCE LTD 2009- 10 NO.331/IND/ 2018 (ASSESSEE) AEREO DEAL COM PVT. LTD LOAN AEREO DEAL COM PVT. LTD INTEREST CHAMAK TRAXIM PVT. LTD- LOAN CHAMAK TRAXIM PVT. LTD- INTEREST 36,00,000 32,93,424 1,08,75,000 28,65,473 CONFIRMED CONFIRMED CONFIRMED CONFIRMED 3 AVAILABLE FINANCE LTD 2014- 15 NO.895/IND/2019 (DEPARTMENT) AEREO DEAL COM PVT. LTD LOAN AEREO DEAL COM PVT. LTD INTEREST CHAMAK TRAXIM PVT. LTD- LOAN CHAMAK TRAXIM PVT. LTD- INTEREST 13,00,000 16,62,641 56,00,000 35,30,521 ALLOWED ALLOWED ALLOWED ALLOWED AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 18 18. FROM PERUSAL OF THE FINDING OF LD. CIT(A) IN TH E CASE OF M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD FOR ASSESSME NT YEAR 2010- 11 WE FIND THAT THE ISSUE OF GENUINENESS AND CREDIT WORTHINESS OF LOANS TAKEN FROM M/S AEREO DEAL COM PVT. LTD AND M/ S CHAMAK TRAXIM PVT. LTD HAS BEEN DEALT IN DETAIL CONSIDERIN G ALL NECESSARY MATERIAL FACTS AND AFTER DISCUSSING THE FINDING OF PREDECESSOR OF LD. CIT(A) DECIDING AGAINST THE ASSESSEE NAMELY M/S. AD MANUM FINANCE LTD FOR SIMILAR TYPE OF TRANSACTIONS FOR T HE LOAN TAKEN FROM M/S ADCPL AND M/S CTPL DURING ASSESSMENT YEAR 2009 -10. AFTER DETAILED DISCUSSION ABOUT THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CASH CREDITORS, SOURCE OF T HE LOAN GIVEN TO THE ASSESSEE, LINKAGE OF THE TRANSACTION WITH THE S EARCH CONDUCTED U/S 132 OF THE ACT IN THE CASE OF MR. DEEPAK KALANI ON 4.9.2015 ALONG WITH MITTAL GROUP OF INDORE AND CONSIDERING T HE FATE OF ASSESSMENT PROCEEDINGS CARRIED OUT IN THE CASE OF L ENDER COMPANIES (POST SEARCH ON 4.9.2015 AND POST REPORT BY DDIT (I NVESTIGATION) WHICH PAVED THE WAY OF MAKING THE ADDITION BY THE L D. A.O) HAS HELD THE LOAN TRANSACTION AS GENUINE AND ALSO ACCEP TED THE CREDITWORTHINESS OF THE LENDER COMPANIES OBSERVING AS FOLLOWS:- 4. GROUND NO.1: THIS GROUND OF APPEAL HAS BEEN RAISED AGAINST THE INITIATION OF THE REASSESSMENT PROCEEDINGS U/ S 147 OF THE INCOME TAX ACT, 1961. THE APPELLANT HAS CHALLENGED THE INITIATION OF THE REASSESSMENT PROCEEDINGS PRIMARIL Y RAISING THE CONTENTION THAT, SINCE THE SAME WERE INITIATED ON T HE BASIS OF THE INFORMATION/ REPORT RECEIVED FROM THE INVESTIGATION WING, INDORE AFTER THE SEARCH WAS CARRIED OUT ON ONE SHRI DEEPAK KALANI ON AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 19 04.09.2015 AND THEREFORE THE REOPENING IS ON BORROWED SATISFACTION AND NOT ON AN INDEPENDENT SATISFACTION OF THE AO. THE APPELLANT HAS ALSO STATED THAT THE CORRECTNESS OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING WA S NOT VERIFIED AND WAS ACCEPTED IN MECHANICAL MANNER AND THE REASONS RECORDED BY THE AO ARE NOT IN ACCORDANCE WITH THE LAW IN AS MUCH AS THE SAME ARE NOT REASONS TO BELIEVE BUT ARE ONLY REASON TO SUSPECT. THE APPELLANT HAS ALSO STATED THAT THE REPORT / INF ORMATION RECEIVED FROM INVESTIGATION WING BY THE AO ON THE BASIS OF WHICH THE PRESENT PROCEEDINGS WERE INITIATED WAS NE VER PROVIDED TO THE APPELLANT. THE APPELLANT HAS ALSO S TATED THAT THE STATEMENT OF SHRI DEEPAK KALANI WAS RECORDED BY THE THEN AO I.E. DCIT 1(1), DURING THE ASSESSMENT .PROC EEDING S OF OTHER GROUP CONCERNS OF THE APPELLANT IN DECEMBER 2 016 AND THE REASONS RECORDED IN THE PRESENT CASE BY THE THE N AO IN JANUARY, 2017 HAS NOT TAKEN IN TO CONSIDERATION THI S FACTUAL ASPECT THAT SHRI DEEPAK KALANI HAD PRESENTED HIMSEL F AND HIS STATEMENT WAS RECORDED. THE APPELLANT HAS ALSO CONTENDED THAT SINCE IN THIS CASE REGULAR ASSESSMEN T UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 WAS ALRE ADY FRAMED AND THERE WAS NO FAILURE ON THE PART OF THE APPELLANT TO DISCLOSE TRULY AND FULLY ALL THE MATERIAL FACTS NECESSARY FOR THE PURPOSE OF ASSESSMENT, THE FIRST PROVISO TO SEC TION 147 OF THE INCOME TAX ACT, 1961 WILL COME TO THE RESCUE AN D REOPENING PROCEEDINGS WERE WRONG FOR THIS REASON AL SO. THE APPELLANT HAS ALSO CHALLENGED THE PRESENT PROCEEDIN GS INITIATED UNDER SECTION 148 STATING THAT SINCE THE SAME WERE INITIATED AS A CONSEQUENCE OF SEARCH PROCEEDINGS IN THE CASE OF SHRI DEEPAK KALANI. THEREFORE, THE SAME SHOULD H AVE BEEN AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 20 INITIATED IN THE CASE OF THE APPELLANT U/S 153C INSTEAD OF SECTION 147 OF THE INCOME TAX ACT, 1961. 4.1 1 HAVE GONE THROUGH THE SUBMISSIONS OF THE APPELLANT ON THIS LEGAL GROUND AND AFTER TAKING IN TO ACCOUNT FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF CONSIDERED VIEW THAT THE SAME ARE DEVOID OF MERITS. A SEARCH WAS CONDUCTED IN THE MITTAL GROUP OF CASES IN INDORE ON 04.09.2015 BY THE INVESTIGATION WING, INDOR E IN WHICH MR. DEEPAK KALANI WAS ALSO COVERED. ON THE BA SIS OF CERTAIN DOCUMENTS SEIZED FROM THE POSSESSION OF MR. DEEPAK KALANI, THE INVESTIGATION WING PASSED ON CERTAIN INFORMATION TO THE THEN AO, ON THE BASIS OF WHICH THE AO INITIATED THE PROCEEDINGS AFTER RECORD ING PROPER REASONS A ND AFTER ISSUING A VALID AND PROPER NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961. 1N RESPONSE TO THE SAME THE APPELLANT A LSO FILED THE RETURN OF INCOME. THE REASONS SO RECORDED, WERE DULY SUPPLIED BY THE AO TO THE APPELLANT, AGAINST WHICH THE APPELLANT HAD ALSO RAISED THE OBJECTIONS. THE AO, THEN DISPOSED OFF THE OBJECTIONS SO RAISED BY THE APPELLANT, BY PASSING A SPEAKING ORDER SUBSEQUENTLY, THE APPELLANT PARTICIPATED IN THE REASSESSMENT PROCEEDI NGS AND THE SAME WERE COMPLETED AFTER TAKING IN TO ACCOUNT THE SUBMISSIONS FILED BY THE APPELLANT- THEREFORE, NO INFIRMITY IS FOUND. SO FAR AS THE INITIATION AND THE PROCEDURAL REQUIREMENTS ARE CONCERNED IN THIS MATTER. 4.2 IT IS ALSO OBSERVED THAT THERE IS NO CONCEPT OF BORROWED SATISFACTION IN THE LAW AND THE AO WAS JUSTIFIED IN ' REOPENING THE CASE ON THE BASIS OF INFORMATION RECEIVED BY HI M FROM THE INVESTIGATION WING. IT IS A SETTLED LAW THAT THE IN FORMATION RECEIVED FROM THE INVESTIGATION WING CAN BE MADE BA SIS OF AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 21 REOPENING OF THE CASE UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 AS THE ESCAPEMENT CAN ONLY BE ASCERTAINED AFTER THE VERIFICATION, FOR WHICH THE REOPENING IS A STARTING POINTS- AT THE STAGE OF INITIATION OF THE PROCEEDINGS, THE AO IS NOT SUPPOSED TO HAVE FORMED A FIRM BELIEF REGARDING THE NATURE AND EXTENT OF THE INCOME WHICH COULD HAVE ESCAPED ASSESSMENT. THE AO WAS WELL WITHIN LAW TO HAVE INITIATED THE REASSESSM ENT PROCEEDINGS AFTER AN EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEARS ON THE BASIS OF CERTAIN I NFORMATION COMING TO HIS POSSESSION LATER ON AFTER OBTAINING A PPROVAL FROM COMPETENT AUTHORITY. FURTHER, THERE IS NO RESTRICTI ON IN THE INCOME TAX ACT THAT THE CASE CANNOT BE REOPENED U/S 14B ON THE BASIS OF INFORMATION COLLECTED DURING THE SEARC H IN THE CASE OF THIRD PERSON. THE APPELLANT'S CONTENTION THAT TH E AO OUGHT TO HAVE RESORTED TO PROCEEDINGS U/S 153C IS MISPLACED AND CANNOT BE ACCEPTED. 4.3 IN V IEW OF THE ABOVE IT IS HELD THAT THE REOPENING PROCEEDINGS WERE PROPERLY AND VALIDLY INITIATED AND THE OBJECTIONS RAISED BY THE APPELLANT HAVE NOT BEEN FO UND ACCEPTABLE AS SUCH REJECTED. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 5. GROUND NOS. 2 & 3: THE SECOND GROUND OF APPEAL HAS BEEN RAISED AGAINST THE ADDITION OF RS.6,10,OO,OOO /- MADE U/S 6B OF THE INCOME TAX AC T, 1961 ON ACCOUNT OF LOAN RECEIVED FROM TWO PARTIES NAMELY M/S CHAMAK TREXIM PVT. LTD FRONT WHOM LOAN OF RS.3,42,00,OOO/- WAS RECEIVED AND M/S AEREO DEALCOMM PVT. LTD. FROM WHOM LOAN OF RS.2,68,OO,OOO/- WAS RECEIVED BY THE APPELLANT DURING THE YEAR UNDER CONSIDERATION. THE THIRD GROUND OF APPEAL IS AGAINS T THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 22 CONSEQUENTIAL DISALLOWANCE OF INTEREST OF RS.8,42,4 25/ INCURRED IN RESPECT OF THE ABOVE LOANS. 5.1 THE AO HAS DISCUSSED THESE ISSUES AT PARA NOS. 4 TO 7.4 OF HIS ORDER. AS NOTED FROM THE ASSESSMENT ORDER, T HE APPELLANT THROUGH QUESTIONNAIRE ISSUED U/S 142(1) WAS REQUIRED TO FILE COPY OF BANK STATEMENT, ITR ACKNOW LEDGEMENT AND TAX AUDIT REPORT OF THE FRESH LOAN DEPOSITORS A LONGWITH COPY OF ACCOUNT AND WAS REQUIRED TO PROVE THE IDENT ITY, CREDITWORTHINESS AND TO FURNISH THE DETAILS OF MODE OF TRANSACTIONS. THE APPELLANT WAS ALSO REQUIRED TO EX PLAIN AS WHY THE LOAN TAKEN FROM M/S CHAMAK TREXIM PVT. LTD. AND MI S AEREO DEALCOMM PVT. LTD. BE NOT ADDED BACK U/ S 68 OF THE INCOME TAX ACT, 1961. 5.2 THE DETAILED WRITTEN SUBMISSIONS HAVE BEEN FOUND FI LED BY THE APPELLANT IN SUPPORT OF IT'S CONTENTIONS. TH E AO ALSO CALLED FOR INFORMATION U/ S 133(6) OF THE INCOME TAX ACT, 1961 AND HAS OBSERVED IN PARA 5 OF THE ASSESSMENT ORDER THAT THE LENDERS HAVE FURNISHED THE REQUIRED INFORMATION WHI CH WERE PLACED ON RECORD. THE AO HAS ALSO DISCUSSED IN DETA IL AT PARA NOS. 6 TO 6.4 ABOUT THE COMPANY M/S AEREO DEALCOMM LTD. AND AT PARA NOS. 7 TO 7.4 ABOUT THE COMPANY M/S CHAMAK TREXIM PVT. LTD. AND BROADLY THE OBSERVATIONS OF THE AO IN RESPECT OF BOTH THE COMPANIES IN PARA 6 TO PARA 6.4 AND IN PARA 7 TO 7.4 ARE IDENTICAL. 5.3 IT IS FOUND THAT THE AO HAS RECORDED THAT THE A SSESSEE HAS FURNISHED THE COPY OF ITR OF BOTH THE COMPANIES FRO M WHERE IT WAS FOUND THAT M/S AEREO DEALCOMM HAD SHOWN INCOME OF RS 8,86,387/- AND M/S CHAMAK HAD SHOWN INCOME OF RS 17,40,714/-. IT IS ALSO NOTED IN THE ASSESSMENT ORDER THAT THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 23 APPELLANT SUBMITTED THE CONFIRMATION, RELEVANT BANK STATEMENTS, AUDITED FINANCIAL STATEMENTS AND ASSESS MENT ORDERS PASSED U/S 147 OF THE INCOME TAX ACT, 1961 D ATED 16/11/2017 IN THE CASE OF M/S AEREO DEALCOMM PVT. LTD. AND ORDER DATED 19/12/2016 IN THE CASE OF M/S CHAMAK TREXIM PVT. LTD. 5.4 IT IS FURTHER STATED IN THE ASSESSMENT ORDER THAT B OTH THE COMPANIES HAVE PROVIDED LOAN ENTRIES NOT ONLY TO T HE APPELLANT BUT ALSO TO OTHER GROUP COMPANIES OF AGRAWAL GROUP. REFERRING TO THE INVESTIGATION CARRIED OUT BY THE INVESTIGATI ON WING AND DRAWING SUPPORT FROM HIS DETAILED DISCUSSION MADE B Y THE AO WHILE REJECTING THE OBJECTION RAISED BY THE APPELLA NT TO THE REOPENING OF THE ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 AND OBSERVING THAT AGRAWAL GROUP OF COMPANIES ARE ASSESSED AT INDORE HOWEVER THE LENDER COMPANIES HAV E THEIR REGISTERED OFFICE AT KOLKATTA AND THE FACT THAT THE COMPANIES HAVE PROVIDED LOANS TO APPELLANT'S GROUP COMPANIES. THE AO HAS ALSO OBSERVED THAT BOTH THESE COMPANIES ARE CON TROLLED AND MANAGED BY THE APPELLANT GROUP TO BRING ITS UNA CCOUNTED FUNDS TO THE BOOKS OF ACCOUNTS. THE AO, ON THE BASI S OF THESE OBSERVATIONS, CONCLUDED THAT THE APPELLANT COULD NO T ESTABLISH GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE LENDERS AND ADDED THE IMPUGNED LOAN AMOUNTS U/S 68 OF THE INCOME TAX ACT, 1961 AND ALSO DISALLOWED THE INTERE ST THEREON. 5.5 I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WEL L AS THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT CAREFULL Y AND AFTER TAKING INTO ACCOUNT THE ARGUMENTS OF THE APPELLANT AND REASONS BROUGHT OUT BY THE AO IN THE ASSESSMENT ORDER, THE RELEVANT GROUNDS OF APPEAL ARE ADJUDICATED AS UNDER:- AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 24 5.6 IT IS SEEN THAT A SEARCH WAS CONDUCTED IN THE C ASE OF MITTAL GROUP OF INDORE IN WHICH MR. DEEPAK KALA NI WAS ALSO COVERED FROM WHOM CERTAIN DOCUMENTS PARTICULARLY ORIGINAL S HARE CERTIFICATES OF HIS TWO COMPANIES NAMELY M/S AEREO DEA1COMM PVT. LTD.AND M/S CHAMAK TREXIM PVT LTD WERE SEIZED. THE INVESTIGATION WING, INDORE PASSED ON THIS INFORMATI ON TO THE THEN AO I.E DCIT 1(1) I NDORE ON THE BASIS OF WHICH THIS CASE WAS REOPENED. IT WAS OBSERVED BY THE INVESTIGATION WING THAT THE APPELLANT AND ITS GROUP CONCERNS HAVE TAKEN LOA NS FROM THESE TWO COMPANIES I.E M/S AEREO DEALCOMM PVT. LTD. AND M/S CHAMAK TREXIM PVT LTD., BUT CREDITWORTHY AND THE GENUINENESS OF TRANSACTIONS OF THESE COMPANIES WERE NOT ESTABLISHED. 5.7 BEFORE DISCUSSING THE OBSERVATIONS OF THE AO MADE I N THE ASSESSMENT ORDER WHILE MAKING THE IMPUGNED ADDITION S, IT WOULD BE IMPERATIVE TO DISCUSS THE VARIOUS FACTUAL ASPECTS OF BOTH THE COMPANIES FROM WHOM THE APPELLANT HAS TAKE N LOANS DURING THE RELEVANT YEAR AND WHICH HAVE BEEN ADDED BY THE AO UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 AND INTEREST PAID THERE ON HAS ALSO BEEN DISALLOWED. 5.8 IT IS SEEN FROM THE ASSESSMENT ORDER PASSED IN THE PRESENT CASE THAT THE AO HAS ONLY DOUBTED THE CREDITWORTHIN ESS OF THE LENDER AND THE GENUINENESS OF THE TRANSACTIONS AND HAS NOT DISPUTED THE IDENTITY OF THE LOAN CREDITORS. THE AO CARRIED OUT INDEPENDENT ENQUIRIES FROM BOTH THE LENDER COMPANIE S, WHICH WERE ALSO DULY COMPLIED WITH BY THEM BY FILING ALL THE DETAILS REQUIRED FROM THEM BY THE AO, AS PER THE FACTS NOTE D IN THE ASSESSMENT ORDER. THERE ARE NO ADVERSE REMARKS IN R ESPECT OF THE COMPLIANCES MADE BY BOTH THESE COMPANIES. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 25 5.9 IT IS ALSO EVIDENT THAT THE IDENTITY OF BOTH THESE COMPANIES IS ESTABLISHED ON RECORDS AND IS UNDISPUTED SINCE THE DIRECTOR OF BOTH THE COMPANIES MR. DEEPAK KALANI APPEARED BEFORE THE THEN A 0 I. E. DCIT 1(1) ON VARIOUS OCCASIONS AND HIS STATEMENTS HAVE ALSO BEEN FOUND RECORDED ON 01/12/2 016 AND 08/12/2016. THE COPIES OF THE SAME HAVE BEEN FI LED BY THE APPELLANT AT PAGE NOS. 154 TO 164 OF THE PAPER BOOK PB-BI. BOTH THE COMPANIES ARE ALSO ASSESSED BY THEIR RESPE CTIVE JURISDICTIONAL AOS, WHEREIN ASSESSMENTS HAVE ALSO B EEN CARRIED OUT, THE ASSESSMENT PROCEEDINGS WERE ATTEND ED AND ASSESSMENT ORDERS WERE PASSED. THE COPIES OF VARIOU S HAVE ALSO BEEN PLACED ON RECORD. ALL THESE UNDISPUTED FACTS CUMULATIVELY ESTABLISH THE IDENTITY OF BOTH THESE C OMPANIES WHICH HAS ALSO NOT BEEN DISPUTED BY THE A.O. 5.10 THEREFORE, THE ISSUE UNDER CONSIDERATION HAS TO BE DECIDED IN RESPECT OF THE OTHER TWO CONDITIONS STIPULATED U NDER SECTION 68 OF THE INCOME TAX ACT, 1961 VIZ CREDITWORTHINESS, OF THE LOAN CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS, WHICH HAVE BEEN DOUBTED, BY THE AO IN THE ASSESSMENT ORDER. BOTH THESE ISSUES ARE DISCUSSED HERE UNDER: 6. A. CREDIT WORTHINESS OF THE LENDER COMPANIES: THE FACTS PERTAINING TO EACH COMPANY ARE DISCUSSED SEPA RATELY AS UNDER.- 6.1 I. M/S CHAMAK TREXIM PRIVATE LIMITED : THE APPELLANT HAS FILED THE FINANCIALS OF THIS COM PANY FROM FY 2008- 09 TILL FY 2016-17 AT PAGE NUMBERS 1 TO 48 OF PB-B- I AND ALSO ENCLOSED A CHART OF COMPARATIVE FINANCIAL FIGU RES OF THIS COMPANY AT PAGE NO.1 IT IS SEEN THAT THE SHARE CAPITAL OF THIS AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 26 COMPANY IS CONSTANT FROM F.Y.2008-09 TILL 2016-17 A ND IT'S OWN NET WORTH WAS RS.694.55 LACS IN FY 2008-09 WHICH INCREASED TO RS.869.581ACS IN F.Y. 2016-17 (PAGE 1 OF PB-B-1). 6.2 FURTHER THE COMPANY HAS EARNED CONSIDERABLE REVENUE S IN ALL THE YEARS AND ITS PROFIT BEFORE TAX IS ALSO SUBSTAN TIAL WHICH IS ABOVE RS. 10 LACS IN EACH OF THESE YEARS. IT HAS EA RNED PROFIT OF RS. 11.66 LACS AND 17.41 LACS IN AY 2009-10 AND AY 2010-11 AND PROFITS OF RS. 46.10 LACS , RS. 62.71 LACS, RS. 47.65 LACS RS.32.81 LACS, RS. 22.30 LACS AND RS. 21.49 LACS IN AY 2012-13 TILL AY 2017-18 ON WHICH IT HAS PAID CONSIDERABLE TAXES. THERE HAS BEEN A LOSS OF RS.7.45 LACS ONLY IN THE A.Y. 2011-1 2. 6.3 IT IS ALSO EVIDENT THAT THERE ARE NO BORROWINGS OR LOANS TAKEN BY THE CREDIT OR IN ANY OF THESE YEARS. ALL THE ABOVE FACTS CUMULATIVELY ESTABLISH THE CREDITWORTHINESS OF THIS COMPANY. 6.4 IT IS ALSO SEEN FROM THE BALANCE SHEET OF CH AMAK FOR F.Y. 2009-10 (AT PAGE NO. 10 OF PB-BL) THAT THE IMPUGNED LOANS ADVANCED TO THE APPELLANT ARE REFLECTING UNDER SCHEDULE-E OF LOANS AND ADVANCES. 6.5 FURTHER, THE ASSESSMENTS OF THIS COMPANY FOR VA RIOUS YEARS HAVE BEEN COMPLETED BY ITS AO. IN THE CASE OF CHAMAK TREXIM PRIVATE LIMITED IN THE ORDER PASSED FOR A.Y. 2010-11 ON 29/12/2016 U/S 148 OF THE INCOME TAX ACT, 1961HAS B EEN ENCLOSED BY THE APPELLANT AT PAGE NOS. 51 TO 55 OF ITS PAPER' BOOK. THE AO OF THIS COMPANY I.E. THE ITO WARD 6(1) , KOLKATA HAS MADE THE FOLLOWING OBSERVATIONS CITING THE REAS ONS FOR THE REOPENING OF THE CASE OF CHAMAK FOR THE AY 2010-11: 'INFORMATION HAS BEEN RECEIVED FROM DDIT {INV - I, INDORE VIDE LETTER NO: DDIT {INV-I)-I/LND/MITTAL GROUP/2015-16/ 2926 AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 27 DATED 17.03.2016 ALONG WITH ENCLOSURE FROM WHEREIN IT WAS WRITTEN THAT A SEARCH & SEIZURE OPERATION U/S 132 WAS CONDUCTED ON MITTAL GROUP INDORE ON 04.09.2015. ORI GINAL SHARE CERTIFICATES OF M/ S CHAMAK TREXIM. PRIVATE LIMITED WERE IN THE COURSE OF SEARCH ALSO SEIZED WHICH SURPRISINGL Y FOUND INTACT IN THE BOUND BOOK EVEN THOUGH AT DIFFERENT POINT OF TIMES THERE HAVE BEEN DIFFERENT SHAREHOLDERS. SRI DEEPAK KALANI PRESENT DIRECTOR OF MITTAL GROUP AND ALSO DI RECTOR OF M/ S CHAMAK TREXIM PRIVATE LIMITED FAILED TO PROVIDE ANY DETAIL AND FURTHER THE FINANCIAL TRANSACTION OF THE COMPANY ARE FOUND TO BE DUBIOUS IN NATURE. ANALYSIS OF FINANCIA L DATA, PRIMA-FACIE OF M/ S CHAMAK TREXIM PRIVATE LIMITED ESTABLISHES THAT THE CONCERN IS BEING UTILIZED FOR PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PARTIES OF INDORE. ON THE F. Y. 2009-10 CORRESPONDING TO A. Y. 2 010-11 M/ S CHAMAK TREXIM PRIVATE LIMITED HAS MADE HUGE ADVANCES TO SOME BENEFICIARIES, WHOSE SOURCE IS DOUBTFUL TO THE TUNE OF RS 6,50,37,499/- ON THE INFORMATION BEING RECEIVED FROM DDIT (INV) - I,INDORE THE CASE WAS PUT UP FOR GRANT OF ADMINISTRATIVE AP PROVAL' 6.6 IT SEEMS THAT THE SAME INFORMATION WHICH WAS PA SSED ON BY THE DDIT [INV]-I, INDORE TO THE AO OF THE APPELLANT IN THE PRESENT APPEAL, WAS ALSO SUPPLIED TO THE AO OF CHAM AK AS EVIDENT FROM THE ABOVE ABSTRACT FROM THE ASSESSMENT ORDER OF CHAMAK. THE CASE OF CHAMAK FOR THIS YEAR WAS REOPEN ED BY IT'S AO EXACTLY ON THE IDENTICAL INFORMATION RECEIV ED BY HIM FROM DDIT (INV)-I , INDORE AND ON THE SAME REASON O N WHICH THE PRESENT CASE OF THE APPELLANT WAS REOPENED. THE AO OF CHAMAK COMPLETED THE ASSESSMENT PROCEEDINGS AND IN THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 28 LATER PART OF THE ASSESSMENT ORDER AFTER NOTING TILE COMPLIANCES MADE BY CHAMAK DURING THE ASSESSMENT PROCEEDINGS, IT IS FURTHER OBSERVED BY ITS AO AS UNDER: IN THE COURSE OF HEARING QUERY REGARDING SEIZURE A ND RETENTION OF ORIGINAL COPIES OF SHARE CERTIFICATES BY DDIT (INV)-I, INDORE RELATED TO ASSESSEE COMPANY MADE. SHRI VISHNU KR. SINGHANIA SAID THAT COMPANY WAS INCORPOR ATED ON 17.03.1994. DURING AY 2004-05 COMPANY RECEIVED CAPITAL AND ALLOTMENT ACCORDINGLY MADE. HOWEVER, SO ME OF THE SHARE CERTIFICATES LOST BY S HAREHOLDERS AND APPROACHED COMPANY FOR ISSUE OF DUPLICATE COPIES OF SHARE. NUM BER OF DUPLICATE SHARE WAS TO BE ISSUED. FOR SAME PURPOSE SRI DEEPAK KALANI ONE OF THE DIRECTORS OF M/ S CHAMAK TRAXIM PRIVATE LIMITED WHO WAS ALSO ASSOCIATED AS DIRECTORS IN COMPANY LOCATED IN INDORE TOOK THE BUNDLE OF SHARE CERTIFICATE FROM KOLKATA TO INDORE AND KEPT IN HIS OFFICE A/ R FILED LETTER ON SUPPORTING DOCUMENT EXPLANATION. IN THE MATTER REGARDING DEPOSITS IN BANK ACCOUNT A/ R SAID THAT OPENING AND CLOSING BALANCE OF CAPITAL WERE RS. 69455633/ - AND RS70658347/- RESPECTIVELY. CAPITAL WAS APPLIED IN INVESTMENT AND PROVIDING LOAN AND ADVANCES. OPENING AND CLOSING BALANCES OF ASSET REPORTED UNDER THE HEAD LOAN AND ADVANCES WERE RS 6,33,83,839/- & RS 6,64,98,528/- RESPECTIVELY. AMOUNT OF LOANS AND ADVANCES IS GIVEN TO PARTIES CHANGED FROM TIME TO TIME. IN SOME CASES LOANS WHERE RECOVERED FROM ONE PARTY AN D GIVEN TO OTHERS. SINCE MONETARY TRANSACTIONS WERE CARRIED T HROUGH BANKING CHANNELS, REFLECTION IN STATEMENT OF DEPOSITS AND W ITHDRAWAL IN BANK ACCOUNT WAS OBVIOUS, FURTHER, TOTAL SUM CREDIT ED IN BANK ACCOUNT ALSO APPEARS GREATER THAN GROSS REVENUE. TH ESE STATEMENTS RELATED TO REALIZATION OF PART OF LOAN AND OFFERING SAME TO OTHERS AS LOAN AGAINST INTEREST. IN SUPPORT OF CLAIM STATEMEN T OF LOANS AND R:ONFINNATION ACCOUNTS WITH PAN FURNISHED. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 29 ON VERIFICATION OF ACCOUNTS AND DOCUMENT IT WAS SEE N THAT SRI DEEPAK KALANI BEING THE DIRECTOR OF COMPANY LOCATED IN IND ORE AND KOLKATA HAD TO LOOK AFTER OFFICIAL WORKS OF BOTH CO MPANIES. SRI DEEPAK KALANI SOMETIME CARRY THE DOCUMENTS OR OTHER PAPER WORKS FROM ONE OFFICE TO OTHER AND COMPLETED PENDING WORK. INFORMATION RELATED WAS WHETHER SHARES CERTIFICATES WHERE MEANT FOR ISSUE OR WAS IT RELATED OF M/ S CHAMAK TREXIM PRIVATE LIMITED. INFORMATION AS PROVIDED NOT RELATED TO INVOLVEMENT OF AMOUNT ESCAPED FROM ASSESSMENT. ISSUE OF DUPLICATE COPY OF SHARE CERTIFICATE RELATED TO OFFICE PROCEEDING, UPDATION OF OFFICIAL RECORDS AND EFFORT TO ENABLE THE SHAREHOLDER TO HAVE SUFFIC IENT DOCUMENTARY EVIDENCE FOR INVESTMENT HAD MADE. ON VERIFICATION OF ITD/ AST VALUE OF PAID UP CAPITAL REPORTED FOR AY 2010-11 WA S BROUGHT FORWARD FROM AY 2-007-08 AND NO CHANGE IN QUANTUM OF CAPITAL FOUND TILL 31.03.2016. ASSESSEE COMPANY ACCEPTED THE FACT THAT SHARE CERTI FICATE IS SEIZED WAS RELATED ITS COMPANY AND FURNISHED LIST OJ INVES TORS TO WHOM SHARE WERE ALLOTTED. HENCE, ON THE CIRCUMSTANCES AS STATED ABOVE NO ADVERSE VIEW TAKEN. J 6.7 FROM THE ABOVE FINDINGS IN THE ASSESSMENT ORDER OF CHAMAK, IT IS SEEN THAT THE CASE WAS REOPENED IN IDENTICAL REASONS, TH E ISSUE OF SEIZURE OF ORIGINAL SHARE CERTIFICATES AND ALSO THE ISSUE OF A DVANCING THE FUNDS BY IT, WHICH WERE SUSPECTED TO BE DUBIOUS IN NATURE, WAS E XAMINED BY ITS AO AND WAS FOUND PROPER AND NO ADVERSE VIEW WAS TAKEN. IT IS ALSO EVIDENT THAT THE ALLEGATION ON CHAMAK THAT THE COMPANY IS BEING USED FOR PROVIDING THE ACCOMMODATION ENTRIES TO VARIOUS PARTIES OF INDORE WAS MADE IN THE REPORT SENT BY THE DDLT-LNV(1), INDORE , WHICH WAS NOT FOU ND TO BE CORRECT BY THE AO OF CHAMAK. THE ISSUE OF FINDING OF ORIGINAL SHAR E CERTIFICATES HAS BEEN DISCUSSED AT LENGTH IN THE ASSESSMENT ORDER OF CHAMAK IT HAS ALSO AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 30 BEEN MENTIONED BY THE AO OF CHAMAK THAT HE HAS VERIFIED THE SHARE CAPITAL WHICH WAS BROUGHT FORWARDED FROM AY 2 007-08 AND NO CHANGE IN THE QUANTUM OF CAPITAL WAS NOTICED TILL 31.03.2016. THE BANK ACCOUNT OF CHAMAK WAS ALSO ANA LYZED WITH RESPECT TO THE LOANS AND ADVANCES MADE BY IT. THE AO OF CHAMAK HAS GIVEN A CATEGORICAL FINDING THAT CERTAIN LOANS WERE RECEIVED BACK FROM ONE PARTY AND WERE ADVANCED TO OTHERS. THE COPIES OF THE ASSESSMENT ORDER WERE ALS O FILED BY THE APPELLANT BEFORE THE AO WHICH FACT HAS ALSO BEE N ACKNOWLEDGED BY THE AO AT PARA NO.7 OF HIS ASSESSME NT ORDER. HOWEVER, NO ADVERSE COMMENTS HAVE BEEN MADE BY THE AO IN HIS ASSESSMENT ORDER REGARDING THE ASSESS MENT OF CHAMAK IN THE RELEVANT ASSESSMENT YEAR. 6.8 IT IS SEEN THAT THE CASE OF CHAMAK FOR AY 2011- 12 WAS ALSO REOPENED BY ITS JURISDICTIONAL AO AT KOLKATTA ON IDENTICAL GROUNDS REFERRING TO THE SAME INFORMATION RECEIVED FROM DDIT INV. WING, INDORE AS ABOVE, MAKING SIMILAR OBSERVAT IONS. THE RELEVANT ABSTRACT OF THE ORDER DATED 29.12.2016 PAS SED BY SAME ITO WARD 6(1) KOLKATTA, COPY ENCLOSED BY THE A PPELLANT AT PAGE NO. 56 TO 60 OF ITS PAPER BOOK IS ABSTRACTE D AS UNDER: 'INFORMATION HAS BEEN RECEIVED FROM DDIT (INV) - I, INDORE VIDE LETTER NO: DDIT (INV-I)-I/LND/MITTAL GROUP/2015-16/2926 DA TED 17.03.2016 ALONG WITH ENCLOSURE FROM WHEREIN IT WAS WRITTEN THAT A SEARCH & SEIZURE OPERATION U/ S 1 32 WAS CONDUCTED ON MITTAL GROUP INDORE ON 04.09.2015. ORIGINAL SHARE CERTIFIC ATES OF MI S CHAMAK TREXIM PRIVATE LIMITED WERE ALSO SEIZED WHIC H SURPRISINGLY FOUND INTACT IN THE BOUND BOOK EVEN THOUGH AT DIFFE RENT POINT OF TIMES THERE HAVE BEEN DIFFERENT SHAREHOLDERS. SRI D EEPAK KALANI PRESENT DIRECTOR OF MITRAL GROUP AND ALSO DIRECTOR OF M/S CHAMAK AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 31 TREXIM PRIVATE LIMITED FAILED TO PROVIDE ANY DETAIL S AND FURTHER THE FINANCIAL TRANSACTION OF THE COMPANY ARE FOUND TO BE DUBIOUS IN NATURE. ANALYSIS OF FINANCIAL DATA, PRIMA-FACIE OF M/ S CHAMAK TREXIM PRIVATE LIMITED ESTABLISHES THAT THE CONCERN IS BEING UTILIZED FOR PROVIDING ACCOMMODATION ENTRIES TO VARIOUS PART IES OF INDORE. ON F.Y 2010-11 CORRESPONDING TO A Y. 2011-12 M/S CHAMAK TREXIM PRIVATE LIMITED HAS MODE HUGE ADVANCES TO SOME BENEFICIARIES, WHOSE SOURCE IS DOUBTFUL TO THE TUNE OF RS. 6,15,82,961/-. ' ACCORDINGLY AFTER RECEIVED INFORMATION DDIT(INV)-I, INDORE THE CASE WAS PUT UP FOR ADMINISTRATIVE APPROVAL. ADMINISTRA TIVE APPROVAL RECEIVED. NOTICE U/S 148 ACCORDINGLY, GENERATED IN SYSTEM ON 22.03.2016 AND ISSUED TO ASSESSEE COMPANY BY POST A S WELL AS THROUGH EMAIL. 6.9 THUS THE CASE OF CHAMAK FOR AY 2011-12 WAS ALSO REOPENED BY THE AO EXACTLY ON THE IDENTICAL INFORMATION RECEIVED BY HIM FROM DDIT. (INV)- I, INDORE AND ON THE SAME REASON ON WHICH THE PRESENT CASE OF THE APPELLANT WAS REOPENED. THE AO OF CHAMAK COMPLETED THE ASSESSMENT PROCEEDINGS AND IN THE LAT ER PART OF THE ORDER AFTER NOTING THE COMPLIANCES MADE BY CHAM AK DURING THE ASSESSMENT PROCEEDINGS IT IS FURTHER OBSERVED A S UNDER: 'IN THE COURSE OF HEARING QUERY REGARDING SEIZURE AND RETENTION OF ORIGINAL COPIES OF SHARE CERTIFICATES BY DDIT {INV}- I , INDORE RELATED TO ASSESSEE COMPANY MADE. SRI VISHNU KR. SINGHANIA SAID THAT COMPANY WAS INCORPORATED ON 17.03.1994. D URING AY 2004-05 COMPANY RECEIVED CAPITAL AND ALLOTMENT ACCO RDINGLY MODE. HOWEVER, SOME OF THE SHARES CERTIFICATES LOST BY AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 32 SHAREHOLDERS AND APPROACHED ASSESSEE COMPANY FOR ISSUE OF DUPLICATE COPIES OF SHARE. NUMBER OF DUPLICATE SHAR E WAS TO BE ISSUED. FOR SAME PURPOSE SRI DEEPAK KALANI ONE OF THE DIRECTORS OF M/ S CHAMAK TREXIM PRIVATE LIMITED WHO WAS ALSO ASSOCIATED AS DIRECTORS IN OTHER COMPANY LOCATED IN INDORE TOOK THE BUNDLE OF SHARE CERTIFICATES FROM KOLKATA TO INDORE AND KEPT IN HIS OFFICE AI R FILED LETTER ON SUPPORTING DOCUMENT EXPLANATION. REGARDING VOLUME OF TRANSACTIONS SEEN IN STATEMENT OF BANK ACCOUNT AIR SAID THAT MAJOR SOURCES OF INCOME OF AS SESSEE COMPANY WAS INTEREST AGAINST LOAN. DURING THE YEAR COMPANY RECOVERED LOANS AND ADVANCES FROM ONE PARTY AND GIV EN TO OTHER AGAINST INTEREST ASSET REPORTED UNDER THE HEA D LOANS AND ADVANCES CHANGED FROM ONE HAND TO OTHER HAND. SINCE TRANSACTION WERE CARRIED OUT THROUGH BANKING CHANNE L, REFLECTION IN STATEMENT OF BANK ACCOUNT IS OBVIOUS AND CREDIT ALSO APPEARS MORE THAN GROSS INCOME. ON VERIFICATION OF ACCOUNTS AND DOCUMENT IT WAS SEE N THAT SRI DEEPAK KALANI WAS ASSOCIATED WITH TWO COMPANIES LOC ATED IN LNDORE AND KOLKATA AS DIRECTOR AND SOMETIME CARRY THE DOCUMENTS OR OTHER WORKS FROM OTHER OFFICE. INFORMATION RELATED WAS WHETHER SHARES CERTIFICATES WHERE MEANT FOR ISSUE OR WAS IT RELATED TO M/ S CHAMAK TREXIM PRIVATE LIMITED. INFORMATION AS PROVIDED NOT RELATED TO INVOLVEMENT OF AMOUNT ESCAPED FROM ASSESSMENT. ISSU E OF DUPLICATE COPY OF SHARE CERTIFICATE RELATED TO OFFI CE PROCEEDING AND UPDATION OF OFFICIAL RECORDS. ON VERIFICATION O F ITD/AST VALUE OF PAID UP CAPITAL REPORTED FOR AY 2011-12 WAS BROUGHT FORWARD FROM AY 2007-08 AND NO CHANGE IN QUANTUM OF CAPITAL AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 33 FOUND TILL 31.03.2016. ASSESSEE COMPANY ACCEPTED THE FACT THAT SHARE CERTI FICATE AS SEIZED WAS RELATED ITS COMPANY AND FURNISHED LIST O F SHAREHOLDERS TO WHOM IT WAS TO BE ISSUED. HENCE, ON THE CIRCUMSTANCES AS SLATED ABOVE NO ADVERSE VIEW TAKEN' 6.10 THEREFORE THE CASES OF CHAM AK FOR A.Y.2010-11 AND A.Y. 2011-12 WERE ALSO REOPENED ON THE BASIS OF SAME INF ORMATION OF THE INVESTIGATION WING OF INDORE AND SAME ALLEGATIONS W ERE MADE RAISING DOUBTS ON THE LOAN TRANSACTIONS WITH THE APPELLANT AND OTHER GROUP COMPANIES AND WERE COMPLETED AFTER VERIFYING THE VARIOUS FACTS AS NARRATED BY ITS AO IN THE ASSESSMENT ORDE R. 6.11 IT IS FURTHER OBSERVED THAT THE ASSESSMENTS OF CHAMAK FOR AY 2011- 12 AND AY 2012-13 WERE ALSO REOPENED UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 ON THE BASIS OF THE INFORMATION RECEIVED FROM ACIT(CENTRAL-1)INDORE, WHEREIN IT WAS ALLEGED THAT CHAMAK TREXIM PVT. LTD. HAS MADE ADVANCES TO C ERTAIN CONCERNS OF AGARWAL GROUP, SOURCES OF WHICH WERE NO T EXPLAINED. THESE ASSESSMENTS OF CHAMAK FOR BOTH THE YEARS HAVE ALSO BEEN COMPLETED ON 05.12.2018 BY THE ACIT( OSD), WARD 6(2), KOLKAUA, AND THE OBSERVATIONS MADE IN TH E ASSESSMENT ORDER OF CHAMAK OF AY 2012-2013 (COPY EN CLOSED AT PAGE NO. 71 TO 74 OF PAPER BOOK PB-B1), ARE ABST RACTED AS UNDER: 'THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 29.09.2012 DECLARING TOTAL INCOME OF RS 38,65,530/-. THE RETURN WAS DULY PROCESSED AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 34 U/S 143(1) OF THE 1.T ACT, 1961 ON RETURNED INCOME. SUBSEQUENTLY, THE CASE WAS RE-OPENED ON THE BASIS OF INFORMATION RECEIVED FROM ACIT (CENTRAL)- I, INDORE WHEREIN IT WAS ALLEGED THAT DURING THE FINANCIAL YEAR 2010-11, THE ASSESSEE COMPANY MADE ADVANCES TO MAA CHARITABLE TR UST AND AVAILABLE FINANCE LTD. SOURCES OF WHICH WAS NOT EXPLAINED. BASED ON ABOVE ALLEGATIONS, STATUTORY NOTICES U/S 148, 143(2) AND 142(1) OF THE IT ACT, 1961 WERE ISSUED TO THE ASSESSEE COMPANY. IN RESPONSE TO THE NOTICES AS ISSUED ABOVE, THE ASSESSEE COMPANY MADE COMPLIANCES FROM T IME TO TIME. CONSIDERING THE REPLIES OF THE ASSESSEE AND ON THE BASIS OF DOCUMENTS AND PAPERS FURNISHED DURING THE ASSESSMEN T PMCE E D IN 9 S , TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER: RETURNED INCOME OF THE ASSESSEE : RS 38,65,530/- ADDITION MADE : RS. NIL TOTAL ASSESSED INCOME :RS 38,65,530/- 6.12 THUS THE ABOVE ASSESSMENT OF CHAMAK WAS ALSO R EOPENED ON THE BASIS OF INFORMATION OF THE CENTRAL CIRCLE I NDORE REGARDING TRANSACTIONS OF CHAMAK WITH CERTAIN CONCE RNS OF AGRAWAL GROUP, WHICH AFTER VERIFICATION, WAS ASSESS ED AT THE RETURNED INCOME, WITHOUT ANY ADVERSE REMARKS IT IS ALSO WORTH NOTING THAT HE INCOME OF CHAMAK FOR THIS YEAR WAS A SSESSED AT RS. 38,65,530/- WHICH REAFFIRMS ITS CREDITWORTHINESS. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 35 6.13 IT IS ALSO SEEN THAT THE ASSESSMENT OF CHAMAK FOR A Y 2004-05 WAS ALSO COMPLETED UNDER SECTION 143(3) (CO PY OF ORDER AT PAGE NO. 49-50 OF THE PAPER BOOK PB-BI). FURTHER IN THE SAID ORDER, THE ISSUANCE OF THE FRESH CAPITAL ISSUED DUR ING AY 2004- 05 WAS EXAMINED BY THE AO OF CHAMAK AND WAS FOUND I N ORDER. AS PER THE ASSESSMENT ORDER OF CHAMAK FOR THE AY 20 04-05 DATED 31.05.2006 PASSED UNDER SECTION 143(3) BY ITO WARD '9(3), KOLKATTA, IT IS OBSERVED THAT THE AO OF CHAMAK HAS SPECIFICALLY DEALT THE ISSUE OF FRESH SHARE CAPITAL IN THAT YEAR AND ACCEPTED THE RETURNED INCOME OF CHAMAK IT WAS OBSER VED IN THE ASSESSMENT ORDER AS ABSTRACTED UNDER: 'DURING THE YEAR, ASSESSEE CO. INCREASED SHARE CAPI TAL LO THE TUNE OF RS. 64,60,000/- AND BY WAY OF SHARE PREMIUM RECEIPT TO THE TUNE OF RS. 5,81,40,000/- NOTICE U/S 133 (6) WERE ISSUED TO 18 PARTIES/CONCERNS AND REPLIES OF THE ABOVE WERE EXAMINE IN SOME SEVEN CASE SUMMONS U/S 131 WERE ALS O ISSUED TO VERIFY THEIR BOOKS OF AI CS., BANK STATEMENTS WHICH WERE ALSO TEST CHECKED, CONFIRMATIONS FROM LOAN DEBTORS WERE ALSO OBTAINED THE A SSESSEE CO. INVESTED TO THE TUNE OF RS. 5,99,00,000/- TO DIFFERENT CONCERNS. A/ R SRI SARDA PRODUCES COMPUTERISED BOOKS OF A/CS., BILLS, VOUCHERS, BANK STATEMENTS ETC. FOR NECESSARY EVIDENCE OF INVESTMENT MODE. ON GOING THR OUGH THE ADMINISTRATIVE AND OTHER EXPENSES, IT WAS SEEN THAT DURING THE YEAR, SALARY WAS DEBITED AMOUNTING RS. 1,57,236/- AS AGAINST RS 1,19,700/- OF THE LAST YEAR. AIR SRI SARDA WAS ASKED FOR SUCH SUDDEN HIKE OF SALARY. SRI SARDA, A/ R COULD NOT EXPLAIN THE SAME SATISFACTORILY. HIS REPLY IN THIS GROUND WAS ONLY THAT DURING YEAR, VOLUME OF ACCOUNTS JOB W AS HEAVIER AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 36 THAN THAT OF THE LAST YEAR. BUT THIS EXPLANATION DID NOT FIT WITH THE CIRCUMSTANCES OF THE ADMINISTRATIVE EXPENSES BEC AUSE DURING THE YEAR ASSESSEE CO. DEBITED AND ADDITIONAL AM OUNT OF RS 18,000/- AGAINST ACCOUNTING CHARGES WERE THERE WAS NO SUCH CLAIM AGAINST ACCOUNTING CHARGES AT THE LAST Y EAR. FURTHER, THE SALARY AMOUNT PAID TO EMPLOYEES WERE NOT. PROPERLY VOUCHED. IN THE VIEW OF THE ABOVE, I DISALLOW RS 37,536/- (CLAIM THIS YEAR RS. 1,57,236/- CLAIMED LAST YEAR RS 1,19,700/-) AND ADDED TO THE ASSESSEE'S TOTAL INCOME. 6.14 THUS IN THIS ASSESSMENT ORDER, THE ISSUE OF SHARE C APITAL RAISED BY CHAMAK IN AY 2001-05 WAS SPECIFICALLY EXA MINED BY ISSUING SUMMONS AND NOT ICE S UNDER SECTION 133(6) OF THE INCOME TAX ACT, 1961 AND THE CAPITAL RAISED ALO NG WITH SHARE PREMIUM STANDS ACCEPTED AND ASSESSED. FROM TH E RECORDS AND SUBMISSION OF THE APPELLANT, IT IS FURTHER OBSERVED THAT THE CHAMAK HAS NOT RAISED ANY FRESH C APITAL AFTER 2007-08, AS ALSO STATED BY THE A.O OF CHAMAK IN THE ASSESSMENT ORDER OF A.Y.2010-11 AND A.Y.2011-12. 7. II. M/S AEREO DEALCOMM PVT. LTD.: 7.1 THE APPELLANT HAS FILED THE FINANCIALS OF THIS COMPANY FROM F.Y.2008- 09 TILL FY 2015-16 AT PAGE NUMBERS 76 TO 141 OF PB- B-I AND ALSO ENCLOSED A CHART OF COMPARATIVE FINANCIAL FIGURES OF THIS COMPANY AT PAGE NO. 76. IT IS SEEN THAT THE SH ARE CAPITAL OF THIS COMPANY IS CONSTANT FROM F.Y.2008-09 TILL 2016 -17. ITS OWN NET WORTH IS ALSO IN THE RANGE OF RS.638.34 LACS TO RS.731.061ACS IN THESE YEARS. 7.2 FURTHER THIS COMPANY HAS ALSO EARNED CONSIDERABLE REVENUES IN ALL THE YEARS AND ITS PROFIT BEFORE TAX IS ALSO AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 37 SUBSTANTIAL WHICH IS ABOVE RS. 5 LACS IN EACH YEAR. IT HAS EARNED PROFIT OF RS. 8.86 LACS IN AY 2010-11 AND PROFITS OF RS. 07.85 LACS, RS. 23.79 LACS, RS. 27.13 LACS RS.09.67 LACS, RS. 35.98 LACS AND RS. 25.53 LACS IN AY 2012-13 TO AY 2 017-18 ON WHICH IT HAS PAID CONSIDERABLE TAXES. IT HAS INC URRED LOSS OF RS.11.17 LACS ONLY IN THE A.Y. 2011-12. 7.3 IT IS ALSO EVIDENT THAT THERE ARE NO BORROWINGS OR LOANS WERE TAKEN BY THE LOAN CREDITOR IN ANY OF THESE YEA RS. ALL THE ABOVE FACTS ESTABLISH THE CREDITWORTHINESS OF THIS COMPANY. 7.4 IT IS SEEN THAT IN THE CASE OF M/ S AEREO DEALCOM PRIVATE LIMITED ALSO, THE APPELLANT HAS FILED COPIES OF ITS ASSESSMENT ORDERS FOR AY 2002-03, 2009-10 AND AY 2010-11 AT PA GE NO. 142 TO 149 OF THE PB-B1. 7.5 IN THE A.Y.2003-04 THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 147/143(3 DATED 28.06.2007 BY ITO WAR D 1(1) KOLKATTA. THE FINANCIALS OF THIS COMPANY WERE PROPERLY ANALYZED AND PARTICULARLY THE ISSUE OF SHARE CAPITA L RAISED BY IT DURING THIS YEAR WAS ALSO CATEGORICALLY EXAMINED BY THE AO. IT WILL BE WORTHWHILE TO REFER TO THE PARTICULAR OBSER VATIONS MADE IN THE ASSESSMENT ORDER IN THIS REGARD WHICH IS ABSTRA CTED AS UNDER: 'FROM THE ENCLOSED BALANCE SHEET! PROFIT & LOSS ACCOUNT AND OTHER ENCLOSURES, IF APPEARED THAT THIS IS THE FIRST RETURN SUBMITTED BY THE ASSESSEE COMPANY AND THE SOURCE OF INCOME OF THE ASSESSEE WAS FROM MISCELLANEOUS SOURCES . IT ALSO APPEARED FROM THE, SAID DOCUMENTS THAT ASSESSEE COMPANY HAD INFUSED FRESH SHARE CAPITAL FOR RS 47,750,000/-. AGAIN, ASSESSEE COMPANY HAD RECEIVED TOTAL SHARE PREMIUM OF 4,29,75,000/ - ON ACCOUNT OF SHARE ALLOTMENT. THUS TOTAL 'SHARE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 38 CAPITAL' WAS RAISED TO THE TUNE OF RS 4,77,50,000/-. ASSESSEE COMPANY WAS ASKED TO PROVIDE LIST OF NEW SHARE-HOLDERS FROM WHOM SUCH FRESH 'SHARE CAPITAL' WAS RAISED. THE A/ R HAD SUBMITTED THE LIST OF SHARE-HOLDERS TO WHOM SHARES WERE ALLOTTED DURING THE RELEVANT PREVIOUS YEAR. NOTICES U/S 133(6) OF THE IT ACT WERE ISSUED TO SOME OF THOSE NEW SHARE-HOLDERS ON TEST- CHECK BASIS BUT THE PURPOSE OF VERIFICATION OF THE CLAIM MADE BY THE ASSESSEE COMPANY IN THIS CONNECTION. REPLIES WERE RECEIVED FROM THOSE SHARE-HOLDERS AND THOSE WERE CONSIDERED IN THE LIGHT OF THEIR-CAPABILITIES TO INVEST SUCH HUGE SUM TO PAY SHARE PRICES INCLUDING PREMIUM. COPIES OF BANK ACCOUN TS OF THOSE SHARE-HOLDERS HAVE ALSO BEEN VERIFIED TO CROSS-CHECK THE TRANSACTIONS THEY HAD ENTERED WITH THE ASSESSEE COMPANY. IN THIS CONNECTION INSPECTOR WAS ENTRUSTED WITH INDEPE NDENT INQUIRIES. FROM THE REPORT SUBMITTED BY THE INSPECTOR, NOTHING OBJECTIONABLE WAS FOUND; NO INTERFERENCE IS THUS MADE ON THIS GROUND.' 7.6 THUS IN THIS CASE ALSO THE ISSUE OF SHARE CAPIT AL RAISED BY AEREO DEALCOMM PVT. LTD. IN A.Y.2003-04 WAS SPECIFICALLY EXAMINED BY ISSUING SUMMONS AND NOTICES UNDER SECTION 133(6) OF THE INCOME TAX ACT, 1961 AND CARRYING OUT ENQUIRIES THROUGH TH E INSPECTORS AND THE CAPITAL RAISED ALONG WITH SHARE PREMIUM STA ND ACCEPTED AND ASSESSED. 7.7 THE ASSESSMENTS OF AEREO FOR A.Y.2009-10 AND A. Y.2010-11 WERE ALSO COMPLETED AFTER SCRUTINY U/S 147 R. W.S 143(3) OF THE INCOME TAX ACT, 1961 BY ITS JURISDICTIONAL AO ASSES SING THE INCOME AT RS. 18,42,160/- AND RS. 8,86,387/- RESPECTIVELY, WHICH FACT ALSO REAFFIRMS THE CREDITWORTHINESS OF THIS COMPANY , 7.8 IT IS FURTHER SEEN THAT MR. DEEPAK KALANI, DIRECTOR OF BOTH THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 39 COMPANIES APPEARED BEFORE THE THAN AO, DURING THE ASSESSMENT PROCEEDINGS OF OTHER GROUP CONCERNS OF T HE APPELLANT AND HAVE FILED THE BALANCE SHEETS AND OTHER F INANCIALS OF THESE COMPANIES. HIS STATEMENT WAS RECORDED BY THE THEN AO I.E. DCIT 1(1) ON 01.12.2016, WHEREIN HE PRODUCED ALL THE RECORDS FRO M FY 2008-09 ONWARDS BEFORE THE AO INCLUDING THE BOOKS OF ACCOUNTS I.E. BANK BOOK, CASH BOOK AND LEDGERS FROM AY 2009-10 TO AY 2014-15 (ANSWER TO QUESTION NO.6 OF THE SAID STATEMENT PA GE 157 OF PB- B1). HE ALSO FURNISHED EXPLANATION OF EACH DEBIT AND CREDIT ENTRY IN CASH BOOK / BANK BOOK OF THESE TWO COMPANI ES (QUESTION ANSWER NO. 8 OF THE SAID STATEMENT _ PAGE 157 OF PB-B1) AND ALSO THE TRAIL OF TRANSACTIONS WITH RES PECT TO MOVEMENT OF FUNDS WITHIN THE AGARWAL GROUP OF COMPA NIES SINCE FY 2008-09 (ANSWER TO QUESTION NO. 11 OF THE S AID STATEMENT PAGE. 158 OF PB-BL). ANOTHER STATEMENT OF SHRI DEEPAK KALANI WAS RECORDED ON 08/12/2016 BY THE AO WHEREIN HE SUBMITTED THE AUDITOR'S REPORT OF BOTH T HE COMPANIES FROM FY 2008-09 (AY 2009-10) TO FY 2013-1 4 (AY 2014-15)(ANSWER TO QUESTION O. 02 OF THE SAID STATE MENT PAGE. 159 OF PB- B1). THUS THE COMPLETE FINANCIAL DETAILS OF BOTH THESE COMPANIES WERE MADE AVAILABLE ON RECORD. 7.9 IN VIEW OF ABOVE FACTUAL ASPECTS OF BOTH THE LO AN CREDITORS, CONSIDERING THEIR FINANCIALS FROM FY 2007-08 TILL FY 2016-17, THEIR REVENUE GENERATIONS AS WELL AS PROFITABILITY, THE FACT THAT THERE ARE NO BORROWINGS/ LOANS TAKEN BY BOTH THESE COMPANIES, FUNDS HAVE BEEN ADVANCED TO THE APPELLAN T OUT OF THEIR OWN CAPITAL AND RESERVES AND ALSO IN VIEW OF THE FACT THAT THE ASSESSMENTS OF BOTH THE COMPANIES HAVE BEEN COM PLETED BY THEIR RESPECTIVE AOS, THERE REMAINS NO OTHER CRI TERIA TO JUDGE THE CREDITWORTHINESS. IT HAS TO BE HELD REASO NABLY THAT AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 40 THE SAME STAND PROPERLY ESTABLISHED AND THERE REMAI NS NO. REASON TO DOUBT THE VERACITIES OF THE CREDIT WORTHI NESS OF THESE COMPANIES. 7.10 A PERUSAL OF THE ASSESSMENT ORDER OF THE APPEL LANT SHOWS THAT THOUGH IT IS MENTIONED BY THE AO THAT THE CRED ITWORTHINESS OF THE LENDER IS NOT ESTABLISHED, HOWEVER NO COGENT BASIS OF FORMING SUCH AN ADVERSE OPINION HAS BEEN RECORDED I N THE ASSESSMENT ORDER AS TO WHY THE CREDITWORTHINESS IS NOT ESTABLISHED. NEITHER ANY DEFECT IS FOUND IN THE FIN ANCIALS OF THESE LOAN CREDITORS NOR IT IS POINTED OUT THAT WHA T ELSE WAS REQUIRED TO ESTABLISH THE CREDITWORTHINESS. THEREFORE, CONSIDERING THE FINANCIALS OF BOTH THE COMPANIES RE FLECTING THEIR SUBSTANTIAL OWN NET WORTH AND ALSO CONSIDERING THE PROFITS DECLARED BY BOTH THE COMPANIES AND ALSO THE FACT TH AT BOTH THESE COMPANIES HAVE NO BORROWINGS AS WELL AS IN TH E LIGHT OF THE FACTS THAT ASSESSMENTS- HAVE BEEN CARRIED OUT O F THESE TWO COMPANIES, PARTICULARLY FOR THE . ASSESSMENT YEARS, WHEN THEY LAST. RAISED THEIR SHARE CAPITAL, IN MY OPINION THE CREDITWORTHINESS OF BOTH THE COMPANIES STANDS SUBST ANTIATED PROPERLY AND THERE APPEARS NO COGENT REASON TO DOUB T THE SAME. IT IS HELD THAT BOTH THE COMPANIES WERE CREDI T WORTHY OF MAKING THE ADVANCES TO THE APPELLANT COMPANY. 8. B. GENUINENESS OF THE TRANSACTIONS~ NOW COMING TO THE NEXT ISSUE OF GENUINENESS OF THE TRANSACTIONS, IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE SAME HAS BEEN DOUBTED PRIMARILY FOR THE REASON THAT THE REGISTERED OFFICE OF BOTH THE COMPANIES IS AT KOLKA TTA WHEREAS THE APPELLANT GROUP OF COMPANIES ARE BASED AT INDOR E AND FURTHER THE OBSERVATION THAT PROVIDING LOANS ONLY T O THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 41 APPELLANT GROUP COMPANIES RAISES A DOUBT THAT BOTH THE LENDER COMPANIES ARE CONTROLLED AND MANAGED BY THE APPELLA NT GROUP. FURTHER THE AD HAS ALSO DRAWN SUPPORT FROM HIS ORDER REJECTING THE OBJECTIONS OF THE APPELLANT FILED AGA INST THE REOPENING OF THE CASE. THESE ISSUES ARE DISCUSSED H EREUNDER: 8.1 SO FAR AS THE ISSUE THAT THE LENDER COMPANIES A RE REGISTERED AT KOLKATTA AND HAVE PROVIDED LOANS TO I NDORE BASED APPELLANT GROUP, THE APPELLANT HAS EXPLAINED THIS ISSUE THROUGH POINT NO. 9.1 (II) AT PAGE NO. 23- 24 OF ITS WRITTEN SUBMISSION THAT BOTH THE LENDER COMPANIES I.E. CHAR NAK AND AEREO ARC OWNED AND MANAGED BY MR. DEEPAK KALANI WH O IS PROMINENT FINANCIAL CONSULTANT HAVING ESTABLISHMENT AT INDORE AND KOLKATTA. MR. DEEPAK KALANI IS A CLOSE FRIEND O F MR. VINOD AGARWAL (THE PROMOTER OF THE AGARWAL GROUP OF COMPA NIES) AND IS ASSOCIATED PROFESSIONALLY WITH THE AGRAWAL G ROUP SINCE LONG AS A FINANCIAL CONSULTANT. IT IS ALSO SU BMITTED BY THE APPELLANT THAT MR. DEEPAK KALANI IS ALSO A MAN OF MEANS AS HE HAS PROMOTED SEVE RAL COMPANIES AND IS ALSO A PARTNER IN P KALANI & , ASSOCIATES WHICH IS A LEADING FINANCIAL CONSULTANCY FIRM. 8.2 IT IS FURTHER EXPLAINED BY THE APPELLANT THAT MR. K ALANI AND MR. AGARWAL BOTH BASICALLY HAIL FROM KOLKATA. MY. K ALANI IS BORN AND BROUGHT UP IN KOLKATA AND MR. AGARWAL ALON G WITH HIS FATHER WAS ALSO SETTLED IN KOLKATA EARLIER, BEF ORE THEY CAME TO INDORE. 8.3 IT IS FURTHER STATED THAT THE APPELLANT ALSO BROUGHT THES E FACTS BEFORE THE AO THAT THE LENDER COMPANIES I.E. CHAMAK AND AEREO HAVE SHIFTED THEIR OFFICES FROM KOLKATTA TO I NDORE, AND' NOW STAND REGISTERED AT 116-117 MILINDA MANOR, 2 RNT MARG , AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 42 INDORE. THIS IS THE OFFICE PREMISES OF SHRI DEEPAK KALANI FROM WHERE HIS ALL BUSINESS OPERATIONS ARE BEING CARRIED OUT. THE NOTICES SENT TO CHAMAK AND AEREO UNDER SECTION 133( 6) OF THE INCOME TAX ACT, 1961 BY THE AO IN THE PRESENT PROCE EDINGS WERE ALSO SERVED ON THIS ADDRESS WHICH WERE ALSO DU LY COMPLIED BY BOTH THESE LENDER COMPANIES. 8.4 IT IS SEEN THAT THIS ISSUE WAS ALSO RAISED BY THE T HEN AO I.E. DCIT1(1) WHILE RECORDING THE STATEMENT OF MR. DEEPAK KALANI ON 01.12.2016 IN CONNECTION WITH THE ASSESSM ENT PROCEEDINGS OF M/S AVAILABLE FINANCE LIMITED, ADMANUM FINANCE LIMITED AND AGARWAL FUEL CORPORATION LIMITE D IN REPLY TO QUESTION NO.10 (PAGE 157 AND 158 OF PB-B1) EXPLA INING THE REASONS AS TO WHY THE MAJOR INVESTMENTS OF THESE TW O COMPANIES ARE IN AGARWAL GROUP OF COMPANIES, MR. KA LANI REPLIED THAT HE IS PROFESSIONALLY ASSOCIATED WITH A GARWAL GROUP SINCE 1990 AND THE CREDITWORTHINESS OF AGRAWA L GROUP IS PROVEN AND THEREFORE IN THE INTEREST OF SAFETY O F HIS INVESTMENTS, HIS COMPANIES ADVANCED LOANS AND MADE INVESTMENTS IN THE AGARWAL GROUP OF COMPANIES. 8.5 THE APPELLANT HAS ALSO EXPLAINED THAT INTEREST IS BEING REGULARLY AND PROPERLY PAID IN RESPECT OF THE FUNDS BORROWED FROM THE LENDER COMPANIES AT THE PREVALENT MARKET RATES AND THE LOANS ARE ALSO REPAID FROM TIME TO TIME AND IN THESE CIRCUMSTANCES ANY LENDER WOULD LOOK FORWARD TO LEND TO THE AGRAWAL GROUP, AS SAFE INVESTMENT. THE FACT THAT A GRAWAL GROUP BEING AMONGST THE LEADING BUSINESS HOUSE WITH SUBST ANTIAL REVENUES AND ALSO A PROMINENT TAX PAYER GROUP OF INDORE ALSO PROVIDES FURTHER COMFORT AND SECURITY TO ITS LENDERS AND THE LENDERS ARE MORE THAN WILLING TO INVEST IN THE GROUP. FURTHER CONSID ERING THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 43 BUSINESS VOLUMES AND POTENTIAL, THE AGRAWAL GROUP A LSO REQUIRES FUNDS WITHIN THE GROUP. CONSIDERING . THES E FACTS, THE APPELLANT CONTENDED THAT, THE FACT THAT THE MAJOR E XPOSURE OF BOTH THE LENDER COMPANIES IS ONLY WITH AGRAWAL GROU P OF CONCERNS STAND JUSTIFIED AND SHOULD NOT HAVE BEEN V IEWED ADVERSELY. 8.6 CONSIDERING ALL THE ABOVE, I.E. THE EXPLANATION OF MR. DEEPAK KALANI AND ALSO OF THE APPELLANT, IN MY OPIN ION MERELY ON THE FACT THAT THE LENDER COMPANIES HAVE ADVANCED AMOUNTS ONLY TO THE APPELLANT GROUP WHEN CONSIDERED IN THE LIGHT OF THE EXPLANATION GIVEN BY MR. DEEPAK KALANI IN THIS BEHA LF, DOES NOT RAISES ANY DOUBT ON THE GENUINENESS OF THE TRANSACT IONS. MR. DEEPAK KALANI AND MR. VINOD AGRAWAL ARE BOTH VERY W ELL KNOWN TO EACH OTHER, WHICH FACT IS UNCONTROVERTED, FURTHER CONSIDERING THE FINANCIAL STANDING OF THE APPELLANT GROUP AND FOR SECURING THEIR INVESTMENTS, THE LENDER COMPANIE S HAVE MAINLY INVESTED IN THE VARIOUS COMPANIES OF AGRAWAL GROUP, WHICH CONTENTION HAS ALSO NOT BEEN DISAPPROVED IT IS THE SOLE PREROGATIVE OF ANY BUSINESS MAN TO SEE HOW HE CONDU CTS HIS BUSINESS AND THE AO CANNOT STEP INTO THE SHOES OF T HE BUSINESS MAN. THEREFORE, THIS CONTENTION OF THE AO IS DEVOID OF MERITS. 8.7 WITH REGARD TO THE NEXT CONTENTION RAISED IN TH E ASSESSMENT ORDER THAT PROVIDING LOANS ONLY TO THE APPELLANT GR OUP COMPANIES RAISES A DOUBT THAT BOTH THE LENDER COMPA NIES ARE CONTROLLED AND MANAGED BY THE AGRAWAL GROUP, THE AP PELLANT HAS SUBMITTED THAT THIS ALLEGATION IS ILL FOUNDED A ND WITHOUT ANY BASIS, WHICH CONTENTION OF THE APPELLANT ALSO F IND SUPPORT FROM THE FACT THAT THE AO HIMSELF HAS MERELY RAISED DOUBTS AND DID NOT HAS ANY COGENT MATERIAL WHICH COULD SUPPORT HIS THIS AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 44 CONTENTION. THE APPELLANT EMPHASIZED THE FACT THAT THE APPE11ANT COMPANY OR ITS ASSOCIATES HAVE NEITHER AN Y OWNERSHIP INTEREST NOR ANY SAY IN THE MANAGEMENT OF THESE LENDER COMPANIES AND FURTHER STATED THAT THESE COMP ANIES ARE INDEPENDENTLY RUNNING THEIR BUSINESS, MAKING ADVANCES AND INVESTMENTS EARNING SUBSTANTIAL TAXABLE INCOME AND PAYING THE GOOD AMOUNT OF TAXES. 8.8 IT IS CATEGORICALLY STATED BY THE APPELLANT THAT TH E APPELLANT GROUP HAS NO CONTROL OVER THESE ENTITIES AND ALL THE OPERATIONS OF THESE COMPANIES ARE BEING MANAGED BY SHRI DEEPAK KALANI, WHO IS A CHARTERED ACCOUNTANT BY PROFESSION AND IS ENGAGED IN THE BUSINESS OF LENDIN G MONEY, LOAN SYNDICATION, FINANCIAL RESTRUCTURING AND ALLIE D ACTIVITIES SINCE LAST MANY YEARS AND THAT THESE ENTITIES ARE D ISTINCT AND HAVE MADE INVESTMENTS WITH THE APPELLANT GROUP ON THE BASIS OF THE GOOD WILL AND CREDITWORTHINESS OF MR. VINOD AGARWAL. 8.9 THE ABOVE CONTENTIONS OF THE APPELLANT DESERVE TO B E ACCEPTED. IN MY OPINION, AS ALREADY DISCUSSED ABOVE , MR. DEEPAK KALANI HAS PROPERLY EXPLAINED THE REASONS FO R PROVIDING LOAN TO THE APPELLANT GROUP ONLY. FURTHER THERE IS NOTHING ON RECORD TO SUPPORT THE CONTENTION OF THE AO THAT BOTH THE LENDER COMPANIES ARE CONTROLLED AND MANAGE D BY THE AGRAWAL GROUP. THE AO HAS ALSO RAISED DOUBTS ON LY IN THIS REGARD WITHOUT ANY BASIS- THE MANAGEMENT AND C ONTROL OF BOTH THE COMPANIES REST WITH MR. DEEPAK KALANI, WHICH FACT IS UNCONTROVERTED AND IS ALSO SUPPORTED BY THE FACT THAT CERTAIN DOCUMENTS RELATING TO BOTH THESE COMPANIES WERE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 45 FOUND FROM THE OFFICE OF SHRI DEEPAK KALANI DURING THE SEARCH. FURTHER HE IS A DIRECTOR OF BOTH THE COMPAN IES AND IS OTHERWISE AN INDEPENDENT PERSON HAVING HIS OWN STAN DING. HE ALSO APPEARED BEFORE THE DEPARTMENT TIME TO TIME , FILED VARIOUS SUBMISSIONS AND EXPLANATIONS AND PLACED ON RECORD VARIOUS DOCUMENTS AND INFORMATION OF BOTH THESE COM PANIES AS REQUIRED BY THE OFFICERS. IT IS SEEN THAT APART FROM MERE ALLEGATIONS, THERE IS NOTHING ON RECORDS TO HOLD TH AT MANAGEMENT/ CONTROL OF THESE TWO COMPANIES ARE WITH THE AGARWAL GROUP. 8.10 FINALLY COMING TO THE ISSUE OF REJECTION OF THE OBJ ECTIONS FILED BY THE A PPEL1ANT, BY THE AO IT IS SEEN THAT THE AO HAS REJECTED THE OBJECTIONS PRIMARILY ON THE BASIS OF REASONS RECORDED BY THE THEN AO FOR RE OPENING OF THE CASE AND T HE CONTENTIONS RAISED IN THE 'REASONS ARE ONLY REITERATED IN T HE ORDER OF REJECTION. ON PERUSAL OF THE REASONS IT IS SEEN THAT THE SAM E ARE RECORDED ON THE BASIS OF INFORMATION RECEIVED FROM THE INVESTIGATIO N WING P URSUANT TO THE SEARCH CONDUCTED IN THE CASE OF SHRI DEEPAK KAL ANI ON 04/09/2015, WHEREIN THE MAJOR CONCERN OF THE INVESTIGATION WING SEEMS TO BE THE FINDING OF ORIGINAL SHARE CERT IFICATES OF BOTH THESE COMPANIES IN THE POSSESSION OF SHRI DEEP AK KALANI AND OTHER REASON BEING THE FINANCIAL STRUCTURE -OF BOTH THE LENDER COMPANIES. THE CONCLUSION DRAWN IN THE 'REAS ONS' ARE THAT THE PRESENCE OF THE INTACT ORIGINAL SHARE CERT IFICATES AND WITH THE APPOINTMENT OF SHRI DEEPAK KALANI AS A DIR ECTOR AND DUE TO CHANGE IN THE BUSINESS PROFILE OF THE LENDER COMPANIES IT IS CONCLUDED THAT BOTH THESE COMPANIES ARE USED FOR PROVIDING ACCOMMODATION ENTRIES. BOTH THESE ISSUES ARE DISCUS SED IN DETAIL HERE UNDER.- AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 46 8.11 IN RESPECT OF ORIGINAL SHARE CERTIFICATES FOUN D AT THE TIME OF SEARCH, THE APPELLANT SUBMITTED THAT THE ORIGINAL S HARE CERTIFICATES OF M/ S AEREO DEALCOMM PVT. LTD. AND MLS CHAMAK TREXIM PVT. LTD. WERE FOUND INTACT IN THE BOUND BOO K DURING SEARCH PROCEEDINGS AT 116-117, MILINDA MANOR, 2, RN T MARG, INDORE WHICH WERE SEIZED AS BS 2, BS 3 AND BS 4 AND FURTHER, IT WAS OBSERVED THAT THE SHARES CERTIFICATES WERE N OT ISSUED TO ANY SHARE HOLDERS. THE APPELLANT FURTHER SUBMITTED THAT THE ISSUE WAS EXPLAINED BY SHRI DEEPAK KALANI THROUGH A WRITTEN SUBMISSION DATED 07/12/2016 FILED BY HIM ON 08.12.2016 BEFORE THE THEN AO AT THE TIME OF RECORDING HIS STA TEMENT, (COPY ENCLOSED IN CASE OF CHAMAK AT PAGE NO. 182-292 OF P B-B-I AND IN CASE OF AEREO AT PAGE NO, 293-389 OF PB-B-I) AND ALSO THROUGH HIS STATEMENT RECORDED ON 01.12.2016 IN REP LY TO QUESTION NO. 3. 8.12 I HAVE PERUSED THE STATEMENT OF DEEPAK KALANI AND IT WILL BE WORTH REFERRING TO THE RELEVANT PORTION OF THE S TATEMENT OF MR. DEEPAK KALANI RECORDED ON 0L/12/2016, WHEREIN WHILE REPLYING TO THE QUESTION NO. 3, HE STATED AS UNDER : 'AS REGARDS QUESTION NUMBER 22, IT IS SUBMITTED THAT THE SHARE SHAREHOLDERS OF THE TWO COMPANIES NA MELY CHAMAK TREXIM PVT.. LTD. AND AEREO DEALCOM PVT.LTD HAD LODGED REQUEST FOR REISSUE OF SHARE CERTIFICATES A S THEIR SHORES WERE EITHER MUTILATED OR LOST. IN RESPONSE TO THE SAME WHILE PREPARING DU PLICATE SHARE CERTIFICATES ENTIRE DETAILS WERE MENTIONED RIGHT FR OM THE BEGINNING WHICH IS NOT CORRECT PRACTICE AS SUCH THESE CERTIFICATE S WE RE NOT DETACHED FROM THE SHORE CERTIFICATE BOOK AND WERE HELD BACK AND WERE NOT ISSUED. MOREOVER FOR REISSUING DUPLICATE SHARE CERT IFICATE ONLY NAME OF THE PRESENT SHAREHOLDER IS MENTIONED O N THE FACE OF THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 47 SHARE CERTIFICATE AND DETAILS OF THE EARLIER SHAREH OLDER NEED NOT BE ENDORSED ON THE BACK OF SHARE CERTIFICATE. ACCORDI NGLY DUPLICATE SHARE CERTIFICATES WERE PREPARED AFTER INCORPORATIN G NAME OF THE PRESENT SHARE HOLDER ON THE FACE OF SHARE CERTIFICA TES AND WERE FINALLY ISSUED TO THE RESPECTIVE SHAREHOLDERS. THE SE ISSUANCE OF SHARE CERTIFICATES TO ANY SHAREHOLDER DOES NOT INVO LVE ANY FINANCIAL TRANSACTION WITH THE COMPANY. IT PERTAINS THE FINA NCIAL TRANSACTION BETWEEN THE SHAREHOLDERS ONLY WHICH IN NO CASE AFFE CTS THE INCOME OF THE COMPANIES WHOSE SHARES ARE BEING ISSUED/REIS SUED. THE COMMUNICATION TO THIS EFFECT WILL BE SUBMITTED SHOR TLY. 8.13 THU S MR. KALANI EXPLAINED ID DETAIL THE REASONS FOR ORIGINAL SHARE CERTIFICATES OF CHAMAK AND AEREO TO BE LYING AT THE CORPORATE OFFICE OF THE COMPANIES AT INDORE. HE HAS STATED THAT THE SHARE HOLDERS OF CHAMAK AND AEREO REQUESTED FOR REISSUANCE OF THE SHARE CERTIFICATES WHICH WERE MUT ILATED OR LOST AND WHILE PREPARING DUPLICATE SHARE CERTIFICATES CE RTAIN INADVERTENT TECHNICAL MISTAKES WERE COMMITTED BY TH E STAFF. THE NATURE OF SUCH TECHNICAL ERRORS HAS ALSO BEEN EXPLA INED BY MR. KALANI IN THE ABOVE ANSWER. THEREFORE, THESE CERTIF ICATES WERE HELD BACK AND WERE NOT ISSUED. LATER ON PROPER DUPL ICATE SHARE CERTIFICATES WERE PREPARED AND WERE FINALLY ISSUED TO THE RESPECTIVE SHARE HOLDERS. HE HAD ALSO FILED THE DOC UMENTS TO SUBSTANTIATE HIS CONTENTION INCLUDING REQUEST LETTE R FILED BY EXISTING SHAREHOLDERS, COPY OF RESOLUTION PASSED BY THE BOARD OF DIRECTORS FOR ISSUE OF DUPLICATE CERTIFICATE ALONG WITH COPY OF PAN CARD AND COPY OF INDEMNITY BOND OF SHAREHOLDER COMP ANIES ETC AT THE TIME OF RECORDING OF HIS STATEMENT ON 08.12.2016 WHICH HAVE BEEN ENCLOSED ALONG WITH SUBMISSION DATED 07.12.2016 AT PAGE NO. 187 TO 225 OF PB-B1 IN CASE OF CHAMAK AND AT PAGE NO. 298 AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 48 TO 334 OF PB-B-1 IN CASE OF AEREO. 8.14 A PERUSAL OF THESE DOCUMENTS/CORRESPONDENCE CORROBORA TE THE CONTENTION OF MR. DEEPAK KALANI AND ALSO SHOW THAT DUPLICATE SHARE CERTIFICATES WERE ALREADY ISSUED TO THE SHARE HOLDERS PRIOR TO THE SEARCH ON MR. DEEPAK KALANI. THE ABOVE SUBMISSIONS AND THE CORROBORATIVE DOCUMENTS FILED BY MR. DEEPAK KALANI HAV E NOT BEEN CONTROVERTED BY THE THEN AO WHILE RECORDING THE REAS ONS FOR REOPENING OF THE CASE. THEREFORE, THE CONTENTION OF MR. DEEP AK KALANI THAT THE ORIGINAL SHARE CERTIFICATES SEIZED WERE THE ONES WHICH WERE HELD BACK DUE TO TECHNICAL ERRORS, WHICH WERE FOUND AND SEIZED DURING THE SEARCH COMPRISING OF THE INCORRECT SHARE CERTIFICATES DESERVES TO BE ACCEPTED. THE APPELLANT HAS ALSO REITERATED THESE FACTS IN ITS WRITTEN SUBMISSIONS A ND FURTHER SUBMITTED THAT THIS FACT IN ITSELF DOES NOT CAST AN Y DOUBT ON THE CREDITWORTHINESS OF THESE COMPANIES AND ALSO ON THE GENUINENESS OF THE TRANSACTIONS WITH THE APPELLANT COMPANY. 8.15 IN MY OPINION, THE APPELLANT AS WELL AS MR. DEEPAK KALANI HAVE PROPERLY EXPLAINED THE REASONS FOR KEEP ING ORIGINAL SHARE CERTIFICATES BEFORE THE AO AND HAVE ALSO FILED THE COPIES OF CORRESPONDENCE WITH THE SHAREHOLDERS AND OTHER RELATED DOCUMENTS TO SUBSTANTIATE THE SAME. IT IS A LSO SEEN THAT MR. DEEPAK KALANI THROUGH HIS STATEMENTS RECOR DED ON 01/12/2016 AND ALSO THROUGH WRITTEN SUBMISSIONS DAT ED 07/12/2016 FILED BY HIM BEFORE THE THEN AO I.E. DCI T 1(1) INDORE HAS PROPERLY EXPLAINED THIS ISSUE . IT IS ALSO SEEN THAT THE SAME AO I.E. DCIT 1 (L) INDORE WHO RECORDED 'REASONS' FOR REOPENING THIS CASE ON 10/01/2017 DID NOT CONSIDER THE EXPLANATION AND SUBMISSIONS GIVEN BY MR. DEEPAK KAL ANI IN DECEMBER, '2016, I.E. JUST FEW DAYS BEFORE THE DATE OF AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 49 RECORDING TILE 'REASONS' ON THIS ISSUE AND WENT ON TO RECORD THE REASONS IN A MECHANICAL MANNER. IF AT ALL THE AO RECORDING THE 'REASONS' WAS NOT SATISFIED WITH THE EXPLANATION GI VEN BY MR. DEEPAK KALANI IN RESPECT OF THE SEIZURE OF ORIGINAL SHARE CERTIFICATES, FOR ANY REASON, IT WAS INCUMBENT UPON HIM TO HAVE STATED HIS POINTS OF DISSATISFACTION AND THE R EASONS THEREOF, IN THE 'REASONS' RECORDED BY HIM IMMEDIATE LY AFTER RECEIVING THE EXPLANATION OF MR. DEEPAK KALANI. IN THESE CIRCUMSTANCES THE EXPLANATION GIVEN BY SHRI DEEPAK KALANI ON THIS ISSUE STANDS UNCONTROVERTED AND THEREFORE D ESERVES TO BE ACCEPTED. EVEN OTHERWISE SHRI DEEPAK KALANI HAS PROPERLY EXPLAINED AND SUBSTANTIATED THE REASONS OF FINDING ORIGINAL SHARE CERTIFICATES AND THERE IS NOTHING ON RECORD T O DISBELIEVE THE SAME. THEREFORE THERE IS NO SOUND BASIS OR REAS ONS FOR DOUBT MG THE TRANSACTIONS OF BOTH THESE COMPANIES W ITH THE APPELLANT GROUP MERELY DUE TO FINDING OF ORIGINAL S HARE CERTIFICATES IN SEARCH OPERATION. 8.16 HAVING DISCUSSED THE ISSUE OF FINDING OF THE ORIGIN AL CERTIFICATES OF THE LENDER COMPANIES. WITH THE DIRE CTOR OF THE LENDER COMPANIES, WHICH HAS BEEN PROPERLY ANSWERED AND EXPLAINED BY THE DIRECTOR SHRI DEEPAK KALANI AND HA VING NEGATED THE CONTENTIONS AND DOUBTS OF THE INVESTIGA TION WING AS WELL AS THE AOS, EVEN IF IT IS AGAIN VIEWED IN L IGHT OF THE EXPLANATIONS GIVEN BY THE DIRECTORS OF THE LENDERS THERE SEEMS NO REASON, APPARENT OR OTHERWISE, TO RAISE ANY DOUB T, AS THE ORIGINAL SHARE CERTIFICATES FOUND WERE NOT OF ANY U SE FOR THEM AND WERE FOUND FROM OWN PREMISES OF THE LENDERS. TH US THE DOUBTS RAISED BY THE INVESTIGATION WING IN THIS RES PECT HAVE BEEN FOUND MISCONCEIVED AND CANNOT BE USED FOR DOUB TING THE GENUINENESS OF THE TRANSACTIONS OF THE APPELLANT WI TH THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 50 LENDER COMPANIES. 8.17 IN VIEW OF ABOVE DISCUSSION AND DOCUMENTARY EVIDENCES, THE DOUBTS RAISED BY THE INVESTIGATION WING AND REL IED UPON BY THE AOS FOR REOPENING OF THE CASE AND ALSO FOR MAKI NG THE ADDITIONS BY DOUBTING THE GENUINENESS OF THE TRANSA CTIONS, DO NOT HOLD GROUND AND ARE NOT BASED UPON ANY COGENT M ATERIAL. ON THE CONTRARY THE APPELLANT HAS SUCCESSFULLY DEMO NSTRATED THAT ITS TRANSACTIONS WITH BOTH THE LENDER COMPANIE S WERE GENUINE AND DESERVE TO BE ACCEPTED. THE APPELLANT'S CASE IS WELL SUPPORTED BY THE FOLLOWING REASONS: - MR. DEEPAK KALANI AND MR. VINOD AGARWAL ARE VERY WELL KNOWN TO EACH OTHER AND ARE ALSO PROFESSIONALLY REL ATED SINCE 1990; BOTH HAVE THEIR ROOTS AND BELONGINGS IN KOLKA TTA. - MR. DEEPAK KALANI HAS PROPERLY EXPLAINED THE REA SONS OF MAKING INVESTMENTS WITH AGARWAL GROUP OF CONCERNS CONSIDERING THE REPUTATION, CREDITABILITY AND CAPAB ILITIES OF THE GROUP AND CONSIDERING SECURITY ASPECTS OF HIS INVES TMENTS. - THE TRANSACTIONS BY CHAMAK AND AEREO BOTH BEING THE REGISTERED NBFCS HAVE BEEN MADE IN THE NORMAL COURS E OF THEIR FINANCE BUSINESS AND ALSO BY THE AGARWAL GROUP OF COMPANIES IN THE NORMAL COURSE OF THEIR BUSINESS WH ICH REQUIRED THE FUNDS FOR ITS WORKING CAPITAL NEEDS. - THE TRANSACTIONS ARE THROUGH NORMAL BANKING CHAN NELS, ON WHICH PROPER INTEREST HAS ALSO BEEN PAID AND TDS WAS ALSO MADE. ALL THE TRANSACTIONS ARE CATEGORICALLY CONFIR MED BY BOTH THE PARTIES. - MR. DEEPAK KA1ANI DIRECTOR OF BOTH THE LENDER COMP ANIES AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 51 APPEARED BEFORE THE AUTHORITIES FROM TIME TO TIME, RECORDED HIS STATEMENT FURNISHED DETAILED WRITTEN SUBMISSIONS AN D PROPERLY ADDRESSED ALL THE CONCERNS AND DOUBTS WITH RESPECT TO THE GENUINENESS OF THE TRANSACTIONS. ~ DIRECT ENQUIRIES HAVE ALSO BEEN FOUND CONDUCTED BY THE AO IN THIS CASE BY CALLING INFORMATION U/S 133(6) FROM BOTH THE LOAN CREDITORS (COPIES ARE AT PAGE 102 TO 105 OF PB -A), WHICH WERE ALSO COMPLIED WITH, AS MENTIONED IN THE ASSESS MENT ORDER, IT IS SEEN THAT THERE IS NO ADVERSE INFERENC E RECORDED IN THE ASSESSMENT ORDER WITH REGARD TO SUCH COMPLIANCE S MADE BY THE LOAN CREDITORS. ~ MOST IMPORTANTLY, IN THIS CASE NOT ONLY THE SOUR CE BUT ALSO SOURCE OF SOURCE IS VERY WELL AND PROPERLY EXPLAINE D AND SUBSTANTIATED ON RECORDS BOTH BY THE APPELLANT AS W ELL AS BY- THE LENDER COMPANIES. AS DISCUSSED ABOVE AND ALSO A S EVIDENT FROM THE FINANCIALS OF BOTH THE COMPANIES FILED ON RECORDS, RIGHT FROM THE FINANCIALS OF 2007-08, THE SHARE CAPITAL O F BOTH THE LENDER COMPANIES HAS REMAINED UNALTERED DURING ATLE AST LAST TEN YEARS WHICH ESTABLISHES THE FACT THAT NO FRESH FUNDS HAVE BEEN INTRODUCED IN BOTH THESE COMPANIES. IT IS ALSO ON RECORD THAT THE SHARE CAPITAL OF BOTH THESE COMPANIES STAN D ASSESSED THROUGH ORDERS PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 OF THE RESPECTIVE YEARS IN WHICH THE SHARE CAPITAL WAS LAST INCREASED. IN THESE CIRCUMSTANCES, IN MY C ONSIDERED OPINION, THE ULTIMATE SOURCES OF MAKING INVESTMENTS IN THE APPELLANT COMPANY BY WAY OF ADVANCING LOANS STANDS PROPERLY SUBSTANTIATED AND EXPLAINED. - SIMILARLY THE IMMEDIATE SOURCE I.E. SOURCE OF SO URCE OF MAKING ADVANCES BY BOTH THE CORN PARRIES TO THE APP ELLANT IS AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 52 ALSO PROPERLY EXPLAINED AND SUBSTANTIATED ON RECORD S BY FILING THE BANK STATEMENT AND FLOW OF FUNDS OF VARIOUS YEA RS OF BOTH THESE COMPANIES. NO ADVERSE COMMENTS HAVE BEEN FOUN D MADE BY THE AO RAISING ANY DOUBT ON THESE VERY CRUCIAL FACT S WHICH GO TO THE ROOT OF GENUINENESS OF THE TRANSACTION AT ANY STAGE IT IS SEEN THAT BOTH THESE LENDER COMPANIES HAVE ADVAN CED LOANS TO OTHER GROUP CONCERNS OF THE APPELLANT IN EARLIER YEARS, WHICH FUNDS WERE REPAID BACK TO THE LENDERS DURING THE YE AR UNDER CONSIDERATION, OUT OF WHICH THE LENDER COMPANIES HA VE AGAIN ADVANCED LOANS TO THE APPELLANT, THIS FACT IS CATEG ORICALLY ESTABLISHED THROUGH THE BANK STATEMENTS AS WELL AS THE LEDGER ACCOUNTS AND FUND FLOW TRAIL OF THE FUNDS WITH THE LENDER COMPANIES. - THE APPELLANT HAS ALSO SUBMITTED THAT THE FUNDS ADV ANCED IN EARLIER YEARS TO THE GROUP COMPANIES WERE ADDED UND ER SECTION 68 OF THE INCOME TAX ACT, 1961 IN THE RESPECTIVE GR OUP COMPANY IN THEIR REGULAR ASSESSMENT PROCEEDINGS MAD E UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, WHICH A DDITIONS WERE DELETED NOT ONLY BY THE FIR ST, APPELLATE AUTHORITY BUT ALSO BY THE HON'BLE ITAT. A CATEGORICAL FINDING WAS REND ERED IN RESPECT OF BOTH THE LENDER COMPANIES WITH REGARD TO THEIR CREDITWORTHINESS AND ALSO GENUINENESS OF THEIR TRAN SACTIONS WITH THE APPELLANT GROUP BY THE CIT[A)-LL AND ALSO BY THE HON'BLE ITAT, INDORE BENCH. THIS ISSUE IS DISCUSSED AT LENGTH IN THE LATER PART OF THIS ORDER. IN THESE PECULIAR FAC TS, WHEN THESE VERY FUNDS WERE RECEIVED BACK BY THE LENDER COMPANIES AN D WERE ADVANCED TO THE APPELLANT, THE SAME CANNOT BY ANY STRETCH OF IMAGINATION BE ROPED INTO THE CLUTCHES O F GENUINENESS AND CREDITWORTHINESS UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 53 8.18 IT IS' IMPORTANT TO NOTE HERE THAT THE LENDER COMPA NIES THROUGH THE DIRECTOR MR. DEEPAK KALANI HAVE PROVIDE D ALL THE NECESSARY DETAILS AND ALSO RECORDED THEIR PRESENCE BEFORE THE OFFICERS TIME AND AGAIN. THERE IS NO DEFECT FOUND A ND POINTED OUT IN THE TRAIL OF ANY TRANSACTIONS ON RECORDS. TH E TRANSACTIONS HAVE BEEN CONFIRMED BY THE PARTIES AND HAVE BEEN FO UND ENTERED IN THE COMMERCIAL MANNER, INTEREST HAS BEEN PAID ON LOANS AND TDS HAS ALSO BEEN DEDUCTED. SHRI DEEPAK KALANI AND THE LENDER COMPANIES HAVE PLACED ON RECORDS THEIR BALANCE SHEETS AND ASSESSMENT DETAILS WHICH SUBSTANTIATE THE CONTENTIONS OF THE APPELLANTS AS DISCUSSED ABOVE. ON THE CONTRARY, THERE IS NO EVIDENCE IN THE HANDS OF THE INVESTIGATION WING OR THE ASSESSING OFFICER WHICH SUGGESTS OTHERW ISE. ONLY ON FINDING OF THE ORIGINAL SHARE CERTIFICATES FROM THE LENDERS OWN OFFICE, ON WHICH THIS ENTIRE CASE HAS BEEN MADE-UP CANNOT BE DOUBTED AND CONCLUDED THAT THE TRANSACTIONS OF CONCERNS OF THE LENDERS WITH THE APPELLANT ARE NOT GENUINE. THUS IN MY CONSIDERED VIEW, THE TEST OF GENUINENESS OF THE TRA NSACTIONS HAS ALSO BEEN SUCCESSFULLY MET IN THIS CASE. 8.19 IN VIEW OF DETAILED DISCUSSION ABOVE, THE CREDITWORTHINESS OF THE LENDER PARTIES AS WELL AS T HE GENUINENESS OF THEIR TRANSACTIONS WITH THE APPELLAN T ARE PROPERLY EXPLAINED AND SUBSTANTIATED AND THERE IS N OTHING ON RECORD TO DOUBT THE SAME. ACCORDINGLY IT IS HELD TH AT THE ADDITIONS MADE BY THE AO DOUBTING THE CREDITWORTHIN ESS OF PARTIES AS WELL AS THE GENUINENESS OF TRANSACTIONS ARE WRONG ON THE FACTS OF THE CASE AND DESERVE TO BE DELETED. 8.20 IT IS ALSO SEEN THAT ADDITIONS U/S 68 OF THE INCOME TAX ACT, 1961 WERE MADE IN RESPECT OF CERTAIN OTHER GRO UP CASES OF AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 54 THE APPELLANT FOR AY 2008-09 I.E. M/S ADMANUM FINANCE LTD., M/S AGRAWAL COAL CORPORATION LTD. ETC. THESE ADDITIONS WERE MADE ON ACCOUNT OF LOANS RECEIVED BY THESE ASSESSEE S FROM CHAMAK AND AEREO U/S 68 IN THE REGULAR ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961. THE APPELLANT H AS FILED A COPY OF THE ASSESSMENT ORDER DATED 30.12.2010 AT PA GE NOS. 784 TO 819 OF PB - B - II IN THE CASE OF ADMANUM FI NANCE LTD. AND HAS ALSO FILED A COPY OF THE ORDER OF CIT(A) - II INDORE DATED 07.03.2012 PASSED AGAINST THE SAID ASSESSMENT ORDER AT PAGE 700 TO 783 OF PB - B - II AND ALSO A COPY O F HON'BLE ITAT LNDORE BENCH DATED 27.06.2016 AT PAGE 496 TO 6 99 OF PB - B - II. IT IS SEEN THAT THE AO IN AY 2008-09 COND UCTED ENQUIRIES THROUGH HIS INSPECTOR AND ALSO BY ISSUING NOTICE U/ S 133(6) AND ALSO THROUGH DDIT INVESTIGATION KOLKATTA BY ISSUING COMMISSION TO HIM. THE RESULT OF ALL THE EN QUIRIES WAS THAT BOTH THE COMPANIES WERE FOUND EXISTING AT THEI R RESPECTIVE ADDRESSES WHERE THE DIRECTOR OR THE STAFF PRESENT A CCEPTED THE LOAN TRANSACTIONS WITH ADMANUM FINANCE LTD AND ALSO FILED THE CONFIRMATIONS, BALANCE SHEET, BANK STATEMENT ET C. STILL ADDITIONS U/S 68 WERE MADE BY THE THEN A 0 DOUBTING THE CREDITWORTHINESS OF CHAMAK AND AEREO AND ALSO GENUI NENESS OF THE TRANSACTIONS. HOWEVER, IN THE SUBSEQUENT PR OCEEDINGS BOTH, THE FIRST APPELLATE AUTHORITIES AS WELL AS TH E SECOND APPELLATE AUTHORITY RENDERED A CATEGORICAL FINDING THAT THE CREDITWORTHINESS OF BOTH THE COMPANIES AS WELL AS GENUINENESS OF THE TRANSACTIONS WERE ESTABLISHED AN D. DELETE ADDITION MADE BY THE AO U/S 68 OF THE INCOME TAX ACT, 1961. FOR ME S25 OF READY REFERENCE, THE RELEVANT FINDINGS OF THE CIT(A) -II INDORE WHERE THIS ISSUE HAS BEEN DEALT ( PAGE 765 TO 775 OF PB - B IL) ARE REPRODUCED HEREUNDER: - AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 55 '4.FACTS ON RECORD, VERY DETAILED AND ELABORATE FINDINGS RECORDED BY AO IN THE ASSESSMENT ORDER ON BOTH FACTUAL AND LEGAL ASPECTS AND IN PARTICULAR THE RESULT OJ ENQUIRIES EMERGED FROM ITIS DEPUTED BY AO FOR LOCAL ENQUIRY AT KOLKATA AND EQUALLY DETAILED AND ELABORATE SUBMISSIONS FILED BY THE APPELLANT AND VOLUMINOUS DOCUMENTS INCLUDED IN COMPILATION IN SUPPORT OF GROUNDS OF APPEAL RAISED ARE VERY CAREFULLY TAKEN INTO CONSIDERATION. 4.1THE FIRST AND FOREMOST GROUND OF APPEAL IS DIRECTED- AGAINST ADDITION OF RS. 6,08,94,415/- CRO RES FOR LOANS TAKEN FROM 9 KOLKATA BASED COMPANIES AS PER CHART INCLUDED IN PAR A 2.3 OF ASSESSMENT ORDER TREATED AS UNEXPLAINED THE A.O. (ADDL.CIT, RANGE-5) APART FROM ISSUING NOTICES U/S 133(6) ON 29.11.2010 DIRECTLY HAD DEPUTED TWO INSPECTORS ATTACHED TO HIS RANGE IN MAKING LOCAL ENQUIRIES AT CALCUTTA IN THE MONTH OF DECEMBER, 2010; FIRST TIME FOR THE PERIOD 6.12.2010 TO 10.12.2010 AND THEN AGAIN FOR THE PERIOD 20.12.2010 TO 25.12.2010. THE AO ALSO TOOK ASSISTANCE OF THE INVESTIGATION WING OF THE DEPARTMENT BASED AT CALCUTTA BY ISSUING COMMISSION U/S 131(1)(D) ON 03.12.2010 TO MAKE VERIFICATION ABOUT THE EXISTENCE OF THESE 9 CALCUTTA BASED COMPANIES FROM WHOM THE APPELLANT BORROWED SUBSTANTIAL FUNDS DURING THE YEAR UNDER CONSIDERATION. THE AO HAS TAKEN NOTE OF THE ENQUIRY REPORT SUBMITTED BY DDIT (INV. WING) AND ON PAGE 7- 8 OF THE ASSESSMENT ORDER IT WILL BE WORTHWHILE TO REPRODUCE THE REPORT SUBMITTED BY DDIT (INV. WING)- AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 56 13, KOLKATTA TO APPRECIATE THE FACT SURROUNDING THE TRANSACTIONS I.E. IDENTITY OF SUCH CREDITORS AND FURTHER GENUINENESS AND CREDITWORTHINESS OF SUCH TRANSACTIONS . 4.1.1 THE INSPECTORS IN THEIR ENQUIRY REPORT HAVE NOTED THAT TWO COMPANIES M/S AEREO DEAL COMM. PVT. LTD. AND CHAMAK TREXIM PVT. LTD. WERE IN EXISTENCE ON THE GIVEN ADDRESSES AND SOME OTHER COMPANIES WERE ALSO OPERATING ON THE SAME ADDRESSES BUT THEY HAVE EXPRESSED DOUBT ABOUT THEIR CREDITWORTHINESS...... M/ S AEREO DEAL COMM. PUT LTD & M S CHAMAK TREXIM PUT: LTD ARE FUNCTIONING AT THE GIVEN ADDRESS. THE COPIES OF THE RETURNS ARE ALSO ENCLOSED. SHRI RAVIN UMARETHIYA IS THE ACCOUNTANT TO BOTH THESE COMPANIES AND IN HIS STATEMENT HE HAS ADMITTED THAT THESE COMPANIES HAVE NOT APPLIED FOR ANY SHARES IN M/ S ADMANUM FINANCE. LTD., IN.DOR E BUT: HAVE PROVIDED UNSECURED LOANS/ ADVANCES TO IT ............. 4.1.7 IN THE AFORESAID FACTUAL BACK GROUND IT HAS TO BE NOW DECIDED WHETHER THE APPELLANT HAS BEEN ABLE TO DISCHARGE THE ONUS CAST U/S 68 AND WHETHER THE ADDITION MADE U/S 68 WAS JUSTIFIED ON THE FACTS OF THIS CASE. IT SHOULD BE APPRECIATED THAT DEGREE OF ONUS TO EXPLAIN THE CASH CREDIT TRANSACTION CANNOT BE UNIFORM AND RIGID IN ALL THE SITUATIONS. DEGREE OF ONUS REGARDING GENUINENESS OF TRANSACTION IN RESPECT OF RECEIPT OF SHARE CAPITAL AT HUGE PREMIUM IN UNLISTED COMPANIES OTHERWISE THROUGH PUBLIC ISSUE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 57 CANNOT BE VIEWED BUT WITH SUSPICION AND THE APPELLANT MAY BE REQUIRED TO JUSTIFY SUCH RECEIPT OF MONEY ON HUGE PREMIUM AS SUCH TRANSACTION WOULD DEFY NORMAL FINANCIAL PRUDENCE AND LOGIC. BUT THE SAME DEGREE OF ONUS CANNOT BE CAST ON THE APPELLANT TO EXPLAIN THE LOAN TRANSACTION WHICH HAVE BEEN REPAID IN A SPAN OF 1 YEARS OR SO WHEN THE APPELLANT IS ABLE TO DISCHARGE HIS: ONUS TO ESTABLISH THE IDENTITY OF THE CREDITORS, RECEIPT OF MONEY THR OUGH BANKING CHANNEL AND EXISTENCE AND APPARENT FINANCIAL WORTH OF CREDITORS AS REFLECTED FROM THE AUDITED ACCOUNTS AND I T. RETURNS. IT MAY BE ALSO OBSERVED THAT ONUS TO ESTABLISH ALL THE THREE INGREDIENTS WOULD VARY FROM CASE TO CASE IDENTITY IS FIRST INGREDIENTS, WHICH CAN BE ESTABLISHED BY GIVING COMPLETE ADDRESS, PHYSICAL EXISTENCE OF THE PERSON AND I. T. PARTICULARS I.E. PAN AND DETAILS OF FILING OF RETURN ETC. IN A GIVEN CASE, WHERE THE TRANSACTION OF SAY A SMALLER AMOUNT OF RS. 50000/- OR 1 LAKH IS INVOLVED THE CREDIT WORTHINESS OF PERSON INVOLVING NOMINAL INCOME IN THE SAME RANGE MAY BE ACCEPTABLE, BUT CAN BECOME SUSPICIOUS AND DOUBTFUL IF THE AMOUNT ADVANCED RUNS IN MILLIONS AND CRORES WITHOUT THERE BEING OTHER VERIFIABLE DETAILS AND EVIDENCES OF SOURCES OF SUCH FUNDS ADVANCED. ......... 4.3 NOW THE ISSUE OF LOAN TAKEN FROM AEREO DEALCOM PVT. LTD. AT RS. 1.88 CRORES TAKEN UP FOR CONSIDERATION. THE APPELLANT HAD TAKEN A LOAN OFRS. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 58 1.88 CRORES FROM. THE SAID COMPANY AT RS.8,38,156/- AND AN AMOUNT OF RS. 1,60,590/- WAS REPAID DURING THE YEAR. THE AR PRESENT POINTING OUT THE LEDGER ACCOUNT OF THE SAID PARTY IN PAPER BOOK D AT PAGE 392-393 SUBMITTED THAT THE LOAN RECEIVED FROM THESE COMPANY STAND FULLY REPAID IN NOV 2010. THE INSPECTORS IN THEIR REPORT AS NOTED ON PAGE 3 OF ASSESSMENT ORDER HAS CONFIRMED ABOUT: EXISTENCE OF SUCH COMPANY AT THE GIVEN ADDRESS. THE INSPECTORS HAVE CONFIRMED, AS NOTED ON PAGE 7 OF THE ASSESSMENT ORDER THAT THE ACCOUNTANT OF THIS COMPANY, IN THE STATEMENT RECORDED BY THE INSPECTORS, HAS CONFIRMED HAVING ADVANCED UNSECURED LOANS TO THE APPELLANT. BEFORE DDIT (INV) KOLKATTA ALSO AGAINST ISSUE OF SUMMONS U/S 131 COMPLIANCE WERE MADE BY FILING OF COPIES OF AUDITED ANNUAL ACCOUNTS, PHOTO COPY OF BANK STATEMENT AND CONFIRMATION LETTERS. THUS IT CANNOT BE SAID THAT INSPECTORS AND DDIT(INV) HAVE EXPRESSED ANY DOUBT ABOUT THE EXISTENCE OF SUCH COMPANY. THE DOUBT EXPRESSED BY INSPECTORS AND DDIT (INV.) BOTH OF THE M ARE APPARENTLY SUBJECTIVE AND IN CASE OF DDITS REPORT IS MERELY BASED UPON NON APPEARANCE BY THE DIRECTORS OF THE SAID COMPANY. IN RESPONSE TO THE AO'S NOTICES U/S 133(6) THE SAID LENDER COMPANY REPLIED VIDE LETTER DATED 07.12.2010 AT PAGE 581 STATING THAT IT HAS ADVANCED LOANS TO THE APPELLANT AND ALSO FILED COPY OF ITS LEDGER FOR THE IMPUGNED YEAR, COPIES OF ITR ACKNOWLEDGEMENT ALONG WITH COMPUTATION FOR AYS 2006-07 TO 2008 09 AS WAS AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 59 REQUIRED BY THE AO. THE COMPANY IS HOLDING PAN AACCA5934G AND IS ACTIVE REGISTERED PRIVATE LIMITED COMPANIES VIDE REGISTRATION NO. UG1109WB1994PTC066871 WITH THE MINISTRY OF CORPORATE AFFAIRS GOVERNMENT OF INDIA. THE COPY OF AUDITED ACCOUNTS OF THE SAID COMPANY, ALONG WITH COPY OF BANK STATEMENT, CONFIRMATION, ITR ACKNOWLEDGEMENT ETC ARE INCLUDED IN COMPILATION BY THE APPELLANT FROM PAGE 303 TO 328. THE MAIN SOURCE OF THE SAID COMPANY IS FROM GROSS INTEREST INCOME OF RS. 47,83 LACS. THE NET PROFIT OF THE COMPANY IS REFLECTED IN THE HEAD AS 'SCHEDULE 7 TO BALANCE SHEET UNDER 'LOANS AND ADVANCES' DETAILS OF WHICH ARE AT PAGE 323. THUS IT COULD NOT BE SAID THAT THE FINANCIAL POSITION OF THE COMPANY WAS DUBIOUS AND NOMINAL RETURNED INCOME WAS DISCLOSED. THE APPELLANT HAS INCLUDED A COPY OF NBFC REGISTRATION ISSUED BY THE RBI AND AN INTIMATION U/S 143(1) FOR THE AY 2009-10 WHERE IN A REFUND OF RS. 14.67 LACS HAS BEEN ISSUED TO THIS COMPANY AND ALSO ASSESSMENT ORDER PASSED U/S 143(3} FOR ASSTT. YEAR 2003-04 OF THIS COMPANY AT PAGE 383 & 384 WHEREIN THE SOURCE OF SHARE HOLDERS FUND BEING SHARE CAPITAL AND SHARE PREMIUM ACCOUNT WAS EXAMINED AND FOUND TO BE VERIFIABLE AND DETAILED FINDINGS IN THIS BEHALF HAVE BEEN RECORDED IN THE SAID ASSESSMENT ORDER. IT. WILL BE APPROPRIATE TO REPRODUCE THE SAME HERE UNDER FOR READY REFERENCE. 'IT ALSO APPEARED FRONT THE SAID DOCUMENTS THAT AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 60 ASSESSEE COMPANY HAD INFUSED FRESH SHARE CAPITAL FOR RS.47,75,000/ -. AGAIN ASSESSEE COMPANY HAD RECEIVED TOTAL SHARE PREMIUM OF RSA,29,75,000/- ON ACCOUNT OF SHARE ALLOTMENT. THUS TOTAL 'SHARE CAPIT AL' WAS RAISED TO THE TUNE OF RS 4,77,50,000/- ASSESSEE COMPANY WAS ASKED TO PROVIDE LIST OF NEW 'SHARE HOLDERS' FROM WHOM SUCH FRESH SHARE CAPITAL WAS RAISED. THE AR HAD SUBMITTED THE LIST OF SHARE HOLDERS TO WHOM SHARES WERE ALLOTTED DURING THE RELEVANT PREVIOUS YEAR. NOTICES U/S 133(6) OF THE IT ACT WERE ISSUED TO SOME OF THOSE NEW SHARE-HOLDERS ON TEST-CHECK BASIS FOR THE PURPOSE OF VERIFICATION OF THE CLAIM MADE BY THE ASSESSEE COMPANY IN THIS CONNECTION. REPLIES WERE RECEIVED FROM THOSE SHARE HOLDERS AND THOSE WERE CONSIDERED IN THE LIGHT OF THEIR CAPABILITIES TO INVEST SUCH HUGE SUM TO PAY SHARE PRICES INCLUDING PREMIUM. COPIES OF BANK ACCOUNTS OF THOSE SHARE HOLDERS HAVE ALSO BEEN VERIFIED TO CROSS-CHECK THE TRANSACTIONS THEY HAD ENTERED WITH THE ASSESSEE COMPANY. IN THIS CONNECTION INSPECTOR WAS ENTRUSTED WITH INDEPENDENT INQUIRIES. FROM THE REPORT SUBMITTED BY THE INSPECTOR, NOTHING OBJECTIONABLE WAS FOUND; NO INTERFERENCE IS THUS MADE ON THIS GROUND.' 4.3.4 IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION WHEREIN EVEN THE SOURCES OF THE FUNDS OF THE CREDIT OR COMPANY HAVE BEEN FOUND AND VERIFIED BY THE CONCERNED AO AND THE TRANSACTIONS DULY GETTING REFLECTED IN THE AUDITED FINAL ACCOUNTS OF THE CRED ITOR COMPANY, THE AO'S ACTION IN DOUBTING SUCH LOAN AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 61 TRANSACTION IS ABSOLUTELY WITHOUT ANY MERIT AND SUBSTANCE AND ACCORDINGLY THE AO'S ACTION IN TREATING SUCH LOAN OF RS. 1.88 CRORES AND INTEREST OF RS. 8,38,156/- THEREON AS UNEXPLAINED IS HELD TO BE UNJUSTIFIED. 4.4 PROCEEDINGS NEXT TO THE LOAN OF RS.90 LACS FROM CHAMAK TEX IM PUT. LTD. WHICH IS ALSO A REGISTERED NBFC AS PER THE CERTIFICATE ISSUED BY THE RESERVE BANK OF INDIA, IT IS NOTED THAT. THE APPELLANT HAS NO OPENING BALANCE WITH THIS PARTY AND IT RECEIVED DURING THE YEAR UNDER CONSIDERATION RS. 90.00 LACS AS LOAN. INTEREST OF RS.9,25,680/- WAS PAID / PROVIDED AND AN AMOUNT OF RS. 3,29,640/- WAS PAID TO THE SAID PARTY. AS PER THE REPAYMENT CHART IN THE PAPER AT 394-395 OF PAPER B OOK THE LOAN STAND DULY REPAID IN DEC 2010. THE POSITION IN RESPECT OF ENQUIRY REPORT SUBMITTED BY INSPECTORS AND COMPLIANCES MADE BEFORE DDIT' IS EXACTLY. THE SAME AS NOTED IN THE CASE OF AEREO DEALCOMM PVT. LTD. ABOVE. THE COMPANY IS HOLDING PAN AABCC1003H, AND IS ACTIVE REGISTERED PRIVATE LIMITED COMPANIES VIDE REGISTRATION NO. U51109WB1994PTC06Z349 WITH THE MINISTRY OF CORPORATE AFFAIRS GOVERNMENT OF INDIA. AS PER RELEV ANT .FINAL ACCOUNTS AND OTHER DOCUMENTS OF THIS COMPANY ARE CONCERNED, THE SAME ARE FILED IN THE COMPILATION FROM PAGE 329 TO 358. IN THIS COMPANY ALSO THE MAIN SOURCE OF INCOME IS INTEREST AND GROSS AMOUNT IS REFLECTED AT RS.85.30 LACS AND NET PROFITS IN EXCESS OF RS.14 LACS AND LOAN IN THE NAME OF APPELLANT COMPANY IS DULY REFLECTED IN SCHEDULE E OF LOAN AND ADVANCES AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 62 AT PAGE 350 IN THE BALANCE SHEET OF THE SAID COMPANY. THE CONCERNED AO IN THE CASE OF THIS COMPANY IF ASSESSMENT ORDER PASSED U/S 143(3) FOR ASSTT. YEAR 2004-05 ON 31~01.2OO6 (INCLUDED AT PAGE 385 & 386) HAS VERIFIED THE SOURCE OF OWNERS FUND BEING SHARE CAPITAL, SHARE PREMIUM RECEIVED WHICH WERE INVESTED BY WAY OF LOANS AND ADVANCES. IN THE INTIMATION ISSUED U/S 143(3) FOR AY 2009-10, THE RETURNED INCOME HAS BEEN STATED AT RS: 11.66 LACS AND A REFUND OF RS. 11.27 LACS HAS BEEN ISSUED TO THIS COMPANY. THE SAID COMPANY HAS ALSO COMPLIED IN RESPONSE TO THE NOTICE ISSUED U/S 133(6) BY THE AO VIDE REPLY DATED 07.12.2010 AT PAGE 588. THUS IN VIEW OF DETAILED FINDINGS ARRIVED ABOVE IN 'THE CASE OF AEREO DEALCOMM PUT: LTD., ABOVE, THE SAID LOAN OF RS. 90 LACS FROM THIS COMPANY IS ALSO HELD TO BE EXPLAINED.' 8.21 THUS IT IS SEEN THAT THE CREDITWORTHINESS OF B OTH CHAMAK AND AEREO AND ALSO THE GENUINENESS OF THE TRANSACTI ONS STAND ALREADY EXAMINED AND SUBSTANTIATED EARLIER IN OTHER GROUP CASES OF THE APPELLANT, WHEREIN DIRECT ENQUIRIES WE RE GOT CONDUCTED NOT ONLY BY DEPUTING THE INSPECTORS OF TH E DEPARTMENT BUT ALSO THROUGH THE LOCAL INVESTIGATION WING. THE CIT(A) - II INDORE AFTER EXAMINING THE ISSUE AT LENGTH FOUND THE CREDITWORTHINESS OF BOTH THE PARTIES AND ALSO THE G ENUINENESS OF THE TRANSACTIONS PROVED AND DELETED THE ADDITION U/ S 68 OF THE INCOME TAX ACT, 1961 MADE IN RESPECT OF LOANS RECEIVED FROM THESE TWO COMPANIES BY THE GROUP COMPANIES OF THE APPELLANT, WHICH ORDER WAS ALSO AFFIRMED BY THE HON'BLE JURISD ICTIONAL ITAT IN THE CASE OF AGRAWA 1 COAL CORPORATION PVT. L T D IN ITA 294 /IND/2012. IT WOULD BE RELEVANT TO ABSTRACT THE OBSERVATIONS AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 63 OF THE HON'BLE 1TAT MADE IN THIS REGARD. 'WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND ALSO THE ORDER OF THE CIT(A). WE HAVE ALSO PERU SED THE CASE LAWS CITED BY THE LD. DEPARTMENTAL REPRESENTATIVE AS WELL AS THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. 21. WE FIND THAT DURING THE YEAR UNDER CONSIDERATIO N THE ASSESSEE RECEIVED UNSECURED LOAN AGGREGATING TO RS. 6,69,00,000/- FROM 12 KOLKATA BASED COMPANIES, THE DETAILS OF WHICH ARE AS UNDER ;- 22. DURING THE ASSESSMENT PROCEEDINGS, THE AO HAS TRIED TO VERIFY THE AFORESAID UNSECURED LOAN. NOTICES WERE ISSUED U/S 133(6) TO THE LENDERS CALLING FOR DOCUMENTARY EVIDENCES IN SUPPORT OF THE AMOUNTS ADVANCED. SECONDLY, THE INCOME-TAX INSPECTORS WERE DEPUTED PERSONALLY TO VISIT AND MAKE ENQUIRIES. THE COMMISSION WAS ALSO ISSUED TO DDIT, KOLKATA U/S 131 OF THE ACT AND INCOME TAX INSPECTORS WERE AGAIN DEPUTED TO PERSONALLY VISIT AND MAKE ENQUIRIES AT KOLKATA AND LASTLY THE ASSESSEE WAS DIRECTED TO FURNISH DOCUMENTARY EVIDENCES IN SUPPORT OF THE UNSECURED LOAN. THE AO HAS ISSUED NOTICES DIRECTLY U/S 133(6) TO LENDERS CALLING FOR DOCUMENTARY EVIDENCE IN SUPPORT OF THE AMOUNTS ADVANCED. THE LENDER COMPANIES, IN RETURN, FILED THE VARIOUS DOCUMENTS IN THE FORM OF CONFIRMATIONS, INCOME TAX RETURNS, BANK STATEMENTS ETC. INCOME TAX INSPECTORS WERE DEPUTED BY THE AO TO MAKE ENQUIRIES AT AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 64 KOLKATA, WHO VIDE REPORT DATED 10.12.2010 CONFIRMED' EXISTENCE OF MOST OF THE LENDERS. THEREAFTER, COMMISSION WAS ISSUED TO DDIT, INV., KOLKATA UNDER SECTION 131 OF THE ACT, WHO INDEPENDENTLY CONDUCTED INVESTIGATION AND SENT HIS REPORT DATED 20.12.2010 AND MOST OF THE PARTIES APPEARED AND FILED DOCUMENTARY EVIDENCES AS REQUIRED BY DDIT(INV}, KOLKATA, THEREBY CONFIRMING THE TRANSACTION WITH THE ASSESSEE. THE INCOME-TAX INSPECTORS WERE AGAIN DEPUTED TO PERSONALLY VISIT AND MAKE ENQUIRIES AT KOLKATA AND COLLECTED CERTAIN INFORMATION DIRECTLY FROM THE BANKS AND FILED ANOTH ER REPORT DATED 23.12.2010. THE ASSESSEE HAS ALSO SUBMITTED THE CONFIRMATION LETTERS ALONGWITH PAN, COMPANY'S MASTER DETAILS WITH THE REGISTRAR OF COMPANIES, COPY OF INCOME TAX RETURNS, AUDITORS REPORT OF THE CREDITOR COMPANIES, BANK STATEMENTS REFLECTING RECEIPT AND PAYMENT OF THE SAID LOAN AMOUNT AND FORM NO_16A ISSUED ON TAX WITHHELD ON INTEREST PAID. THE ASSESSEE HAS PLACED ON RECORD REQUISITE DOCUMENTS, WHICH PROVED THE IDENTITY, SOURCE OF CREDIT INCLUDING EXISTENCE AND CREDITWORTHINESS AND GENUINENESS OF THE LOAN. THE AO HAS MADE THE EXTENSIVE ENQUIRY. 23, THE ASSESSEE HAS TAKEN LOAN FROM AEREO DEALCOMM PRIVATE LIMITED. THE ASSESSEE HAS SUBMITTED DOCUMENTARY EVIDENCE LIKE CONFIRMATION, BANK STATEMENT, INCOME TAX RETURN, AUDITED ACCOUNTS , TDS CERTIFICATE, MASTER DATA OF THE COMPANY WITH REGISTRAR OF COMPANIES, MEMORANDUM OF ASSOCIATION. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 65 THE EXISTENCE OF THE COMPANY WAS INSPECTED BY THE INSPECTOR ON 10.12.2010 AND THE AO HAS NOT DISPUTED ABOUT THE EXISTENCE. DURING THE COURSE OF INVESTIGATION, STATEMENT OF ACCOUNTANT WAS RECORDED BY THE INSPECTOR, WHEREIN HE HAS CONFIRMED THE LOAN TRANSACTION IN ASSESSMENT YEAR 2002-03. THE SOURCE OF FUND OF CREDITOR COMPANY WAS EXAMINED. THE AO HAS ALSO EXAMINED THE OPENING BALANCE, WHICH STANDS ACCEPTED, SINCE NO ADDITION WAS MADE IN THE ASSESSMENT YEAR 2007-08. THE COMPANY HAS ALSO SHOWN THE INTEREST INCOME O] RS.47.83 LACS AND PROF IT OF RS. 11.20 LAC S IN ASSESSMENT YEAR 2008-09 REFLECTING A HEALTHY FINANCIAL POSITION. 24. DURING THE COURSE OF HEARING, THE L D: AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IN THE YEAR 2007-08 THE OPENING BALANCE OF THE COMPANY WAS RS. 98,73,663/- W HICH HAS BEEN ACCEPTED BY THE DEPARTMENT AS NO ADDITION WAS MADE IN THAT YEAR AND THIS YEAR INTEREST WAS PAID OF RS. 33,04,583/- WE FIND THAT THE LOAN RECEIPT FROM THIS COMPANY WERE REPAID IN FEBRUARY, 2010 . THE INSPECTOR HAS CONFIRMED THAT THE ACCOUNTANT OF THIS COMPANY OF WHOM STATEMENT WAS ALSO RECORDED BY THE INSPECTOR; HAS CONFIRMED HAVING ADVANCED UNSECURED LOAN TO THE ASSESSEE. THE DDIT HAS ALSO ISSUED SUMMONS U/S 131 AND IN RESPONSE TO THAT THE COMPANY HAS FILED THE COPY OF THE AUDITED ANNUAL ACCOUNT, PHOTOCOPY OF THE BANK STATEMENT AND CONFIRMATION. THEREFORE THE INSPECTOR AND DDIT HAVE CONFIRMED THE EXISTENCE OF SUCH COMPANY. THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 66 ASSESSEE HAS ALSO FILED COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2002-03 OF THE SAID LENDER COMPANY, WHEREIN THE SHAREHOLDER FUNDS BEING SHAREHOLDER CAPITAL AND SHARE PREMIUM ACCOUNT WAS EXAMINED AND FOUND TO BE VERIFIABLE. AO FOUND THAT THE SAID LENDER COMPANY HAD SHARE CAPITAL OF RS. 47, 75,000/- AND IT HAS RECEIVED SHARE PREMIUM OF RS. 4,29,75,000/ ON ACCOUNT OF SHARE ALLOTMENT. THE AO OF THE LENDER COMPANY HAS ALSO VERIFIED THE SHAREHOLDER ON TEST CHECK BASIS AND SHAREHOLDERS' BANK ACCOUNTS WERE ALSO VERIFIED. THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS PROVED THE IDENTITY, CREDITWORTHINESS OF THIS LENDER COMPANY AND ALSO THE GENUINENESS OF THE TRANSACTION WITH TH E SAID COMPANY WITH SUFFICIENT EVIDENCE. 25. IN THE CASE OF CHAMAK TREXIM PRIVATE LIMITED, THE ASSESSEE HAS FILED DOCUMENTARY EVIDENCE LIKE CONFIRMATION' BANK STATEMENT, INCOME TAX RETURN, AUDITED REPORT, TDS CERTIFICATE, MASTER DATA OF THE COMPANY WITH REGISTRAR OF COMPANIES, MEMORANDUM OF ASSOCIATION. THE EXISTENCE OF THE COMPANY WAS INSPECTED BY THE INSPECTOR ON 10.12.2010. THE STATEMENT OF THE ACCOUNTANT OF THIS COMPANY WAS RECORDED WHEREIN HE CONFIRMED THE LOAN TRANSACTION OF THE ASSESSEE. IN ASSESSMENT YEAR 2004-05, SOURCE OF FUNDS OF THIS CREDITOR COMPANY WAS EXAMINED AND VERIFIED BY THE AO IN ITS ASSESSMENT PROCEEDINGS U/S 143(3). THE OPENING BALANCE FROM THE SAID COMPANY WAS ACCEPTED. THE COMPANY HAS SHOWN THE INTEREST INCOME OF RS. 85.30 AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 67 LACS AND PROFIT OF RS: 14 LA CS IN ASSESSMENT YEAR 2008-09 AND THE ENTIRE LOAN WAS REPAID IN FEBRUARY' 2010 . ................................................... ... ON GOING THROUGH THE ABOVE CASE LAWS AND APPLYING THEM ON THE FACTS OF THE ASSESSEE'S CASE, WE FIND THAT THE SAME ARE SQUARELY APPLICABLE TO THE ASSESSEE'S CASE. WE FIND THAT IN THE INSTANT CASE THE ASSESSEE HAD, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FILED ALL THE RELEVANT DETAILS/ DOCUMENTS/ INFORMATION, REQUIRED BY THE ASSESSING OFFICER, AS WERE NECESSARY TO SUBSTANTIATE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR COMPANIES AND ALSO THE GENUINENESS OF TRANSACTION. 34. THE AO HAS NOT BEEN ABLE TO REBUT, IN ANY MANNER, VOLUMINOUS DOCUMENTARY EVIDENCES PLACED ON RECORD. IN FACT, DISREGARDING THE DOCUMENTS PLACED ON RECORD, THE ASSESSING OFFICER, PROCEEDED TO MAKE ADDITION UNDER SECTION 68 OF THE ACT, SIMPLY BY CHERRY PICKING 'CERTAIN PARTS OF THE REPORTS OF THE INSPECTORS OF INCOME TAXI INVESTIGATION WING WITHOU T APPRECIATING THAT THE REPORTS CONSIDERED ALONG WITH EX-PARTE MATERIAL/DOCUMENTS COLLECTED/RECEIVED FROM CREDITORS ESTABLISHED, BEYOND ANY DOUBT, THE INGREDIENTS OF SECTION 68 OF THE ACT. 35. MOST PERTINENTLY, THE AO HAS NOT SPECIFICALLY DEALT WITH ANY OF THE VOLUMINOUS MATERIAL/DOCUMENTS AVAILABLE ON RECORD. IN THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 68 ASSESSMENT ORDER, THE ASSESSING OFFICER HAS SIMPLY REPRODUCED THE REPORTS FURNISHED, SUBMISSIONS OF TH E ASSESSEE AND DISCUSSION ON CASE LAWS, WITHOUT DEALING WITH THE SAME AND SPECIFYING THEIR APPLICABILITY VIS-A-VIS THE FACTS OF VARIOUS CREDIT ORS. 36. WE FIND THAT IN ASSESSMENT YEAR 2005-06 IN THE CASE OF AGRAWAL COAL CORPORATION 19 TAXMAN.COM 209 (ITAT INDORE), OF THE SAME ASSESSEE, RELIED UPON BY THE LD, DEPARTMENTAL REPRESENTATIVE, THE CR EDITORS WERE NOT TRACEABLE, WHICH IS NOT THE FACT IN THE PRESENT CASES. ON THE CONTRARY, IN THE PRESENT CASE ALL THE CREDITORS NOT ONLY RESPONDED TO THE NOTICES ISSUED U/S 133(6), BUT MOST OF THEM WERE ALSO FOUND EXISTING BY THE INSPECTORS AND MOST OF THEM ALSO PRESENTED BEFORE THE DDIT (INVESTIGATION) KOLKATA. THEREFORE, THE FAC TS: ARE CLEARLY DISTINGUISHABLE. MOREOVER, IN THE CASE OF CIT VS. NAVODAYA CASTLES PVT. LTD., ALSO THE PARTY WAS NOT PRESENT AND THE SUMMONS ISSUED U/S 131 RETURNED UNSERVED. IN THAT CASE, THE ASSESSEE WAS ASKED TO PRODUCE THE SHAREHOLDERS TO SUBSTANTIATE THE CLAIM OF GENUINENESS BUT THE ASSESSEE WAS UNABLE TO PRODUCE THEM. BUT, IN THE INSTANT CASE, WE HAVE GONE THROUGH THE CASE RECORDS AND WE FOUND THAT THE AO HAS MADE THE VARIOUS ENQUIRIES HIMSELF. MOREOVER, H E HAS ALSO DEPUTED THE INSPECTOR AND IN MOST OF THE CASES, THE INSPECTORS CONFIRMED THE EXISTENCE OF THE CREDITORS. THEREAFTER, IF THE AO HAD ANY DOUBT, HE SHOULD HAVE ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO PRODUCE THE CREDITORS BEFORE HIM. THE AO DID NOT REQUIRE THE ASSESSEE TO PRODUCE THE CREDITORS. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 69 THEREFORE, WE HAVE TO DECIDE THE MATTER AS PER THE FACTS AVAILABLE ON RECORD. 37. THE ENTIRE ADDITION UNDER SECTION 68 OF THE ACT IS, THUS, WITHOUT ANY BASIS AND IS LEGALLY UNSUSTAINABLE. 38. THE VIEW OF THE ID. CIT(A) THAT THE LOAN TAKEN BY THE ASSESSEE FROM TWELVE COMPANIES AGGREGATING TO RS: 6,69,00,000/- WAS EXPLAINED, IS PROPER AND DOES NOT REQUIRE ANY INTERFERENCE AND THE ADDITION WAS RIGHTLY DELETED BY THE ID. CIT{A) AND HAS ALSO RIGH TLY DELETED THE DISALLOWANCE OF INTEREST OF RS: 1,03,20,567/- ON THE ABOVE LOANS. GROUND NOS. 2 TO 4 OF THE REVENUE ARE DISMISSED.' 8.22 IT IS ALSO FOUND THAT THE ABOVE FINDINGS RENDERED IN THE CASE OF AGRAWAL COAL CORPORATION PVT. LTD. BY THE HON'BJC ITAT HAS BEEN APPLIED IN THE CASE OF M/S ADMANUM FINANCE LTD AY 2008-09 IN APPEAL NO. ITA 389/IND/2012 WHICH HAS ALSO BEEN DECIDED BY THE SAME ORDER OF THE HONBLE ITAT WHEREIN IN PARA NO. 105 IT IS HELD AS UNDER :- 105. IN RESPECT OF GROUND NO. 2 REGAR D ING DELETION BY CIT(A) OF ADDITION OF RS.6,08,94,415/- MADE BY THE AO U/S 68, W E FIND THAT THE ADDITION WAS MADE IN THIS CASE IN RESPECT OF 9 KOLKATA BASED COMPANIES ON THE IDENTICAL FACTS, AS IT WAS MADE IN THE CASE OF M/S AGRAWAL COAL CORPORATION PVT. LTD. FOR THE SAME ASSESSMENT YEAR I. E. 2008-09. THE LOAN CREDITORS IN' THE INSTANT APPEAL ARE ALSO THE SAME. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 70 106. THIS ISSUE HAS ALREADY BEEN CONSIDERED BY US HI1E DECIDING GROUND NOS. 2 TO 4 IN ITA NO. 294/1ND/2012 FOR THE ASSESSMENT YEAR 2008-09 IN THE CASE OF M/S AGRAWAL COAL CORPORATION PVT. LTD. WHEREIN WE HAVE DEALT WITH THIS ISSUE IN DETAIL THE ADDITION MA.DE BY THE AO U/S 68 IN RESPECT OF CREDITS RECEIVED BY THE ASSESSEE FROM THE TWELVE KOLKATA BASED COMPANIES WAS DELETED BY THE LD. CIT(A) HO1DING THAT THEIR IDENTITY AND CREDITWORTHINESS AND: THE GENUINENESS OF THE TRANSACTIONS WAS ESTABLISHED. WE HAVE UPHELD THE DECISION OF THE LD CIT(A] 'AND DISMISSED THE SAID GROUND OF REVENUE IN THAT APPEAL FOLLOWING THE SAME REASONING WE HOLD THAT THE ITAT HAS RIGHT1Y DELETED THE ADDITION OF RS. 6,08,94,415/- MADE BY THE AO IN THIS EASE ALSO. ACCORDINGLY., THIS GROUND OF APPEAL OF THE DEPARTME NTAL APPEAL IS DISMISSED. ' 8.23 THUS THE ADDITIONS MADE UNDER SECTION 68 OF THE INCOME TAX AC 1961 IN RESPECT OF THE TRANSACTIONS OF THE GROUP CONCERNS OF THE APPELLANT WITH CHAMAK AND AEREO IN THE REGULAR ASSESSMENT PROCEEDINGS OF AY 2008- 09 AND AY 2009-10 WERE DELETED BY CIT(A) - II INDORE WHICH ORDER WAS AFFIR MED BY HONBLE ITAT. AT THIS JUNCTURE IT WILL BE WORTHWHILE TO REVISIT THE FOLLOWING OBSERVATIONS OF THE HONBLE !TAT WHILE AFF IRMING THE ORDER OF THE CIT(A) AND ALSO WHILE HOLDING THAT THE IDENTITY AND CREDITWORTHINESS OF THE LENDER COMPANIES AND ALSO T HE GENUINENESS OF THE TRANSACTIONS HAS BEEN PROVED BY THE ASSESSEE WITH SUFFICIENT EVIDENCE. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 71 (I) IN PARA 22 OF ITS ORDER THE HONBLE ITAT HAS DISCUSSED THE NATURE AND EXTEN T OF ENQUIRIES CONDUCTED BY THE THEN AO IN THE GROUP CASES OF THE APPELLANT AND CONCLUDED THAT, TH E AO HAD MADE EXTENSIVE ENQUIRY, (II) IN PARA 23 OF THE ORDER, THE HON'BLE ITAT HAS DISCUSSED THE ISSUE OF LOANS TAKEN FROM AERCO DCALCORNM PVT . LTD. AND FOUND THAT THE EXISTENCE OF THE COMPANY WAS INSPECTED BY THE INSPECTOR ON 10.12.2010 WHICH IS NOT DISPUTED BY TH E AO, A CATEGORICAL FINDING HAS BEEN RENDERED THAT THE COMP ANY HAS SHOWN INTEREST INCOME OF RS. 47.83 LACS AND PROFIT OF RS.11.2 LACS IN AY 2008-09 REFLECTING A HEALTHY FINANCIAL P OSITION. ( IIII) IN PARA 24 OF THE ORDER IT IS FURTHER OBSERVED THAT THE OPENING BALANCE OF RS.98,73,663/- IN. 2007-08 HAS BEEN ACCEPTED BY THE DEPARTMENT AND NO ADDITION WAS MADE IN THAT YEAR. [IV] IN SAME PARA 24 IT IS STATED BY THE HONOURABLE ITAT THAT THE LOAN RECEIVED FROM AEREO WAS REPAID IN FEBRUARY 2010. IT IS ALSO OBSERVED THAT THE INSPECT AND THE DDIT HAVE CONFIRMED THE EXISTENCE OF SUCH COMPANY. (V) IT IS FURTHER OBSERVED THAT THE AO OF AEREO HAS EXAMINED THE SOURCE OF ITS FUN D IN AY 2002-03 AND THE AO ALSO EXAMINED THE SHARE HOLDERS ON TEST CHECK BASIS AND SHARE HOLDER' S BANK ACCOUNTS WERE ALSO VERIFIED. VI ) IN PARA 24 OF ITS ORDER THE HON'BLE ITAT CONCLU DED 'THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS PROVED THE IDENTITY, CREDITWORTHINESS OF THIS LENDER COMPANY A ND ALSO THE GENUINENESS OF THE TRANSACTIONS WITH THE SAID COMPANY WITH AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 72 SUFFICIENT EVIDENCE.' (VII) SIMILARLY IN RESPECT OF CHAMAK TREXIM PVT. LT D. IN PARA 25 OF THE ORDER, THE HON'BLE I TAT HAS OBSERVED THAT THE EXISTENCE OF THIS COMPANY WAS INSPECTED BY THE INSPECTOR ON 10.1 2.2010, THE STATEMENT OF THE ACCOUNTANT WAS RECORDED WHERE HE CONFIRM THE LOAN TRANSACTIONS OF THE ASSESSEE. [VIII] IN THE SAME PARA 25 IT IS STATED THAT IN AY 2004-05 SOURCE OF FUNDS OF THIS CREDITOR COMPANY WAS EXAMINED AND VERIFIED BY THE AO IN ITS ASSESSMENT PROCEEDINGS U/S 143(3). THE OPENING BALANCE OF LOAN FROM THE SAID COMPANY WAS A CCEPTED. FURTHER IT IS STATED THAT THE COMPANY HAS SHOWN THE INTEREST INCOME OF RS. 85.30 LACS AND PROFIT OF RS. 14 LACS IN AY 2008- 09 AND THE ENTIRE LOAN WAS REPAID IN FEBRUARY 2010. 8.24 THUS THE HON'BLE IT AT FINALLY CONCLUDED AT PARA NO.37 THAT THE ENTIRE ADDITIONS MADE U/S 68 IS WITHOUT ANY BASIS AND 1S LEGALLY UNSUSTAINABLE AND IN PARA 38 FURTHER HELD T HAT THE LOAN TAKEN BY THE ASSESSEE WAS EXPLAINED, IS PROPER AND DOES NOT REQUIRE ANY INTERFERENCE AND THE ADDITION WAS RIGHT LY DELETED BY THE CIT(A) WHO HAS ALSO RIGHTLY DELETED THE DISALLO WANCE OF INTEREST ON THE ADHOC LOANS. 8.25 THE APPELLANT HAS ALSO POINTED OUT THAT ITS GROUP COMPANIES REPAID THE SAME LOAN WHICH W AS A DDED U/S 68 IN THE CASE OF IT S GROUP COMPANIES, TO THE LENDER COMPANIES DURING THE YEAR UNDER CONSIDERATION OUT OF WHICH FRESH LOANS WERE A DVANCED TO THE APPELLANT, WHICH HAS AGAIN BEEN ADDED IN ITS HANDS AND WHICH IS THE SUBJECT MATTER OF THE PRESENT APPE AL. IT IS ALSO NOTICED THAT THE HON'BLE ITAT IN THE CASES OF GROUP COMPANIES, AS ABSTRACTED ABOVE, HAS RENDERED A FIND ING OF AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 73 FACT THAT THE LOANS BY THE GROUP COMPANIES WERE REP AID IN FEBRUARY 2010, THE FACT WHICH IS ALSO CORROBORATING WITH THE . FACTS OF THE PRESENT CASE BEFORE ME, WHEREIN THE PR ESENT APPELLANT HAS TAKEN LOANS FROM CHAMAK AND AEREO IN FEBRUARY 2010 AS ALSO EVIDENT FROM THE CONFIRMATION OF ACCOUNT FILED RESPECTIVELY AT PAGE NO. 108 AND 138 OF PB- A. THUS THE IMPUGNED LOAN TRANSACTIONS WHICH ARE THE S UBJECT MATTER OF ADDITION U/S 68 IN THE PRESENT APPEAL ARE EMANATING FROM THE EARLIER LOAN TRANSACTIONS IN GROUP CASES O F THE APPELLANT WHICH WERE ADDED U/S 68 IN THE RESPECTIVE CASES AND STAND DELETED BY THE CIT(A) II INDORE AS WELL AS BY THE HON'BLE ITAT IN THOSE CASES. 9. IT WILL BE WORTHWHILE ALSO TO CONSIDER AND DISCU SS ANOTHER FACT, WHICH THE APPELLANT HAS ALSO BROUGHT ON RECOR D THAT IN TWO OTHER GROUP CONCERNS MY PREDECESSOR IN OFFICE H AS TAKEN AN ADVERSE VIEW AND CONFIRMED THE ADDITIONS MADE BY THE THEN AO U/S 68 OF THE INCOME TAX ACT, 1961 IN RESPECT OF LOAN TRANSACTIONS WITH CHAMAK AND AEREO IN THOSE CASES. THE COPIES OF THE FIRST APPEAL ORDERS PASSED IN THESE T WO CASES HAVE ALSO BEEN FILED BY THE APPELLANT ON RECORD AND THE SECOND APPEAL FILED BY IT BEFORE THE HON'BLE ITAT H AS NOT YET BEEN DECIDED. THE APPELLANT HAS ALSO MADE A DETAILE D SUBMISSION THROUGH WHICH IT HAS CONTROVERTED THE OBSERVATIONS MADE BY MY PREDECESSOR WHILE CONFIRMING THE ADDITIO NS. THESE SUBMISSIONS OF THE APPELLANT ARE CONTAINED AT PARA NO- 21 ON PAGE NOS. 40 TO 62 OF ITS WRITTEN SUBMISSIONS WHICH HAVE ALREADY BEEN REPRODUCED ABOVE. 1 HAVE GONE THROUGH THE SUBMISSIONS AND REASONS OF MY PREDECESSOR CAREFULLY . I FIND SUFFICIENT FORCE IN THE CONTENTION OF THE APPELLANT THAT ON THE FACTS AND CIRCUMSTANCE OF THE CASE THE FINDINGS REN DERED BY AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 74 MY PREDECESSOR ARE NOT EVEN FACTUALLY CORRECT TO SO ME EXTENT AND I DO NOT AGREE WITH THE SAME FOR THE FOLLOWING REASONS. 9.1 IT HAS BEEN HELD AT PARA 2.2 BY MY PREDECESSOR THAT THE LOAN PROVIDERS WERE NOT HAVING ANY BUSINESS ACTIVIT Y AND WERE HAVING MEAGER THAT THEY ARE PAPER / SHELL COMPANIES ENGAGED IN GIVING ACCOMMODATION ENTRIES TO THE BENE FICIARIES IN THE GARB OF LOAN. I WISH TO DIFFER FROM SUCH OBSERVATIONS AS BOTH THE COMPANIES I.E. CHAMAK AND AEREO ARE HAV ING SUBSTANTIAL BUSINESS ACTIVITIES IN ALL THESE YEARS WHICH IS EVIDENT FROM THEIR FINANCIALS FILED AT PAGE NO. 02 TO 48 PB- B-1 IN THE CASE AND AT PAGE NO. 77 TO 141 PB-B-I IN THE CASE OF AEREO. THE APPELLANT HAS ALSO FILED A TABLE DEPICTI NG THE GROSS REVENUES EARNED BY THESE COMPANIES IN SOME RE CENT YEARS WHICH IS ENCLOSED AT PAGE NO. 01 AND PAGE NO . 67 OF PB-B-I. THIS ASPECT HAS ALREADY BEEN DISCUSSED EARLIER AND IT IS SEEN THAT BOTH THESE COMPANIES HAVE EARNED CONS IDERABLE INCOME IN VARIOUS YEARS. THEREFORE, THE CONCLUSION THAT THEY ARE HAVING MEAGER INCOME IS FACTUALLY INCORRECT AND CONSEQUENTIALLY THE CONCLUSION THAT THESE ARE PAPER /SHELL COMPANIES HAS ALSO NOT BEEN FOUND CORRECT. 9.2 IN PARA 4.2.3 IT HAS BEEN STATED BY MY PREDECESSOR THAT THE APPELLANT FAILED TO PROVE THE GENUINENESS OF TH E TRANSACTIONS. I WISH TO DIFFER FROM THIS OBSERVATION ALSO. AS EXPLAINED BY THE APPELLANT, MR. DEEPAK KALANI WHO MANAGES AND CONTROLS BOTH AEREO AND CHAMAK IS A PROMINENT FINANCIAL CONSULTANT HAVING ESTABLISHMENT AT INDORE AND KOLKATTA AND IS A VERY CLOSE FRIEND OF S HRI VINOD AGRAWAL, THE PROMOTER OF AGRAWAL GROUP OF CONCERN A ND IS ASSOCIATED EVEN PROFESSIONALLY WITH THE AGRAWAL GRO UP AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 75 SINCE LONG AS A FINANCIAL CONSULTANT. THESE FACTS H AVE NOT BEEN CONTROVERTED EITHER BY THE AO OR BY MY PREDECE SSOR. THE FACT THAT BOTH THESE LENDER COMPANIES HAVE NOT RAISED ANY FRESH SHARE CAPITAL DURING LAST 8 TO 10 YEARS AND HAVE NO BORROWINGS IN THE FORM OF UNSECURED LOANS OR OTH ERWISE IN THEIR BALANCE SHEETS HAS NOT BEEN APPRECIATED AND CONSIDERED BY THEM. 9.3 THE FACT THAT MR. DEEPAK KALANI EXPLAINED THE REASONS OF ADVANCING LOAN/MAKING INVESTMENTS WITH CONCERNS OF AGRAWAL GROUP CONSIDERING HIS LONG PROFESSIONAL RELATIONSHIP WIT H THE GROUP AND ALSO CONSIDERING THE REPUTATION AND CREDIBILITY OF THE GROUP, HE' FOUND THE SAME TO BE MOS T SAFE AND LUCRATIVE COMMERCIAL PROPOSITION, IN THE STATEMENT RECORDED BY THE DCIT 1 (1) INDORE, IT SEEMS HAS NOT BEEN NOTICED BY MY PREDECESSOR. 9.4 IT IS CONCLUDED THAT THE SOURCE OF TRANSACTIONS WAS PROPE RLY SUBSTANTIATED BY FILING THE BANK STATEMENTS OF BOTH THE COMPANIES AND' ALSO BY EXPLAINING AND SUBSTANTIATIN G THE SOURCE, AND SOURCE THEREOF. THE CONTENTION OF THE A PPELLANT THAT THE SOURCE OF LOANS WAS RECEIPT OF MONEY FROM OTHER AGRAWAL GROUP CONCERNS AS REPAYMENT OF LOANS AND PAYMENT OF INTEREST IS DULY SUPPORTED BY THE BANK STATEMENTS AS WELL AS OTHER DOCUMENTS SUCH AS LEDGER ACCOUNTS ETC IN THE BOOKS OF OTHER GROUP CONCERNS CONFIRMING SUCH REPAYMENT OF LOANS. THESE IMPORTANT FACTS HAVE BEEN NOT BEEN CONSIDERED BY MY PREDECESSOR. 9.5 ANOTHER VERY CRUCIAL FACT THAT ADDITIONS MADE U/S 68 IN RESPECT OF TRANSACTIONS OF AGRAWAL GROUP CONCERNS W ITH CHAMAK AND AEREO IN REGULAR ASSESSMENT PROCEEDINGS FOR AY 2008-09 WERE DELETED NOT ONLY BY THE FIRST APPELLAT E AUTHORITY AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 76 BUT ALSO BY THE HON'BLE JURISDICTIONAL ITAT RENDERI NG CATEGORICAL FINDING OF ADMITTING THE IDENTITY AND CREDITWORTHIN ESS OF THESE TWO COMPANIES AND ALSO ACCEPTING THE GENUINENESS OF THE TRANSACTIONS HAS ALSO NOT BEEN CONSIDERED IN THE OR DER PASSED BY MY PREDECESSOR. 9.6 IT IS SEEN THAT THE ABOVE FACTS WERE DULY STATE D BEFORE MY PREDECESSOR AS EVIDENT FROM THE WRITTEN SUBMISSIONS OF THE RESPECTIVE ASSESSEES INCORPORATED IN HIS ORDER, BUT HAVE NOT BEEN CONSIDERED BY HIM. THEREFORE, IT WOULD NOT BE PROPER TO HOLD THAT THE APPELLANT FAILED TO PROVE THE GENUINE NESS OF THE TRANSACTIONS. 9.7 IT IS ALSO NOTICED THAT THE OBSERVATION OF MY P REDECESSOR THAT ONCE THE AO DOUBTED THE CREDITWORTHINESS OF TH E CREDITORS AND GENUINENESS OF THE TRANSACTIONS, THE ONUS SHIFT S BACK TO THE APPELLANT COMPANY TO OFFER AN EXPLANATION TO THE SA TISFACTION OF THE AO AS CONTEMPLATED U/S 68 OF THE INCOME TAX ACT , 1961, WHICH COULD HAVE BEEN DISCHARGED BY PRODUCING THE L OAN PROVIDERS BEFORE THE AO SO THAT TRUTH BEHIND THE SM OKESCREEN COULD HAVE BEEN UNTRAVELED BY THE AO BY INTERROGATING THE M, IS MISPLACED SINCE THE LOAN PROVIDER COMPANIES I.E. CHAMAK AND AEREO WERE DULY PRODUCED BEFORE THE DCIT 1(1) THROUGH THEIR DIRECTOR SHRI DEEPAK KALANI ON SEVERAL OCCASI ON IN DECEMBER 2016 AND HIS DETAILED STATEMENTS WERE RECO RDED AND HE ALSO SUBSTANTIATING THE TRANSACTIONS BY FILI NG THE BANK ALSO BY EXPLAINING THE SOURCE OF SOURCE. THE STATEMENTS SO THEN AO ARE ENCLOSED AT PAGE NO. 154-164 OF PB-B-I, WHICH FILED BEFORE MY PREDECESSOR AS EVIDENT FROM THE SUBMISSIO N OF THE APPELLANT IN THOSE CASES AS REPRODUCED IN THE O RDER OF MY PREDECESSOR. IT SEEMS THAT THE VITAL FACTS THAT THE LOAN AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 77 CREDITORS WERE PRODUCED BY THE APPELLANT GROUP BEFO RE THE THEN AO, STATEMENTS WERE RECORDED AND SUBMISSIONS WERE MADE HAVE COMPLETELY SKIPPED ATTENTION OF MY PREDEC ESSOR. IT IS VERY RIGHTLY POINTED OUT BY HIM THAT ONCE THE ON US SHIFTED BACK TO THE ASSESSEE TO OFFER AN EXPLANATION TO THE SATISFACTION OF THE AO, IT COULD HAVE BEEN DISCHARGED BY PRODUCI NG THE LOAN PROVIDERS. SINCE THIS IS WHAT HAS EXACTLY HAPP ENED IN THE GROUP CASES THAT THE LOAN CREDITORS WERE PRODUCED B EFORE THE AO IN THOSE CASES AND THUS THE ONUS WHICH SHIFTED BACK TO THE ASSESSEE WAS PROPERLY DISCHARGED IN THOSE CASES. 9.8 FURTHER, I ALSO AGREE WITH MY PREDECESSOR THAT IN SUCH CASES THE ONUS U/S 68 OF THE INCOME TAX ACT, 1961 I S VERY HEAVY AND THAT MERE SUBMISSION OF THE NAME AND ADDR ESSES, INCOME TAX RETURNS, BALANCE SHEETS AND BANK STATEME NTS ARE NOT SUFFICIENT AS THE AO IS TO BE SATISFIED CUMULAT IVELY AS TO THEIR IDENTITY, CREDITWORTHINESS AND THE GENUINENES S OF THE TRANSACTIONS ENTERED INTO. HOWEVER, IT IS FOUND THA T THE APPELLANT HAD PROPERLY AND EFFECTIVELY DISCHARGED T HE ONUS AND HAS CUMULATIVELY SATISFIED BY ESTABLISHING THE IDENTITY, CREDITWORTHINESS OF THE PARTIES AND ALSO THE GENUIN ENESS OF THE TRANSACTIONS. THE LOAN CREDITOR'S WERE PRODUCED AND DETAILED STATEMENTS WERE RECORDED BY THE THEN AO IN THE GROUP CASES, BOOKS OF ACCOUNTS AND BANK STATEMENTS OF THE LOAN CREDITORS WERE PRODUCED ARID VERIFIED BY THE AO, A SSESSMENT ORDER S OF THE LOAN PARTIES WERE ALSO PLACER: ON RECORDS, THE LOA N PARTIES HAVE SUBSTANTIAL BUSINESS TRANSACTIONS AND HAVE OFFERED CONSIDERABLE INCOME IN THEIR RETURNS. ALL THESE FACT S HAVE BEEN COMPLETELY IGNORED BY THE THEN AO IN THOSE CASES AND HAVE ALSO NOT BEEN CONSIDERED BY MY PREDECESSOR APPROPRI ATELY. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 78 9.9 THE APPELLANT HAS RIGHTLY SUBMITTED THAT NEITHER TH E AO NOR THE CIT(A) HAS POINTED OUT ANY SHORT COMING OR DEFICIENCY IN THE DOCUMENTS FILED AND FACTS PRESENTED TO CUMULATI VELY SATISFY THE THREE PREREQUISITE OF SECTION 68 NOR TH EY HAVE STATED AS TO WHAT MORE WAS REQUIRED TO BE DONE OR A S TO WHAT WAS NOT DONE FOR DISCHARGING THE ONUS CASTED UPON T HE ASSESSEE. 9.10 IT IS FURTHER NOTICED THAT THE OBSERVATION BY MY PREDECESSOR, THAT 'THE ALLEGED LOAN PARTIES WERE NO T FOUND TO BE IN EXISTENCE AND THUS THE ONUS SHIFTS BACK TO TH E APPELLANT TO PRODUCE THE LOAN PARTIES BEFORE THE AO AND IF TH E APPELLANT FALTERS, THE ADDITION CAN BE MADE U/S 68 OF THE ACT IS FACTUALLY INCORRECT AS THIS IS NOT AT ALL THE CASE WHERE THE LOAN PARTIES WERE NOT FOUND TO BE IN EXISTENCE. 9.11 THE APPELLANT HAS ALSO SUBMITTED THAT THE CIT(A) HA S REFERRED TO THE AMENDMENT MADE TO SECTION 68 BY THE FINANCE ACT, 2012 W.E.F. 01.04.2013 AND STATED THAT THE APP ELLANT IS NOT ONLY REQUIRED TO JUSTIFY THE SOURCE OF LOAN BUT IS ALSO REQUIRED TO EXPLAIN THE SOURCE OF THE SOURCE OF RAI SING THE LOAN WHICH HAS HELD TO BE C1ARIFICATORY IN NATURE. IN TH IS RESPECT THE APPELLANT FURTHER SUBMITTED THAT IT HAS DULY EX PLAINED THE SOURCE OF SOURCE OF RAISING THE LOAN BY FILING NOT ONLY THE BANK STATEMENTS OF THE LOAN CREDITORS BUT ALSO SUBSTANTI ATING THE SOURCE OF SOURCE BY FILING THE DETAILS OF SUCH SOUR CE OF SOURCE. IT WAS CATEGORICALLY SUBSTANTIATED THAT THE IMMEDIA TE SOURCE OF CREDIT ENTRIES IN THE HANDS OF THE APPELLANT WAS THE FUNDS RECEIVED BY THE LOAN CREDITORS FROM OTHER GROUP CONCERNS OF THE APPELLANT ITSELF. THE OT HER GROUP CONCERNS OF THE' APPELLANT REPAID THE LOANS BACK TO THE LOAN CREDITOR WHICH WAS ADVANCED AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 79 TO THE APPELLANT. THUS THE APPELLANT CONTENDED THAT THERE CANNOT BE ANY BETTER SOURCE OF SOURCE AS IN THE CAS E OF THE APPELLANT. 9.12 THE APPELLANT FURTHER SUBMITTED THAT THE PERSON IN WHOSE NAME THE APPELLANT I.E. CHAMAK AND AEREO ALSO OFFERED AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM CREDITED IN EXPLANATION, THEIR BANK STATEMENTS AND THE DETAILS AND ACCOUNTS OF THE PERSONS FROM WHOM THE TRANSACTIONS WITH THE APPELLANT WERE SOURCED. THE DIRECTOR WAS PRODUCED AND HIS STATEMENTS WERE RECORDED. THER EFORE, THE CONDITION OF THE NEWLY INSERTED PROVISO WERE AL SO SATISFIED. THEREFORE, THE CONTENTIONS OF THE APPELL ANT HAVE BEEN SOUND FOOTINGS. 9.13 I FURTHER ENDORSE THE VIEW AND OBSERVATION OF MY PREDECESSOR THAT AS HELD BY VARIOUS COURTS EVERY TRANSACTIONS INVOLVING APPLICATION OF SECTION 68 OF THE INCOME TAX ACT, 1961 AND WHETHER THE ONUS OF THE ASSESSEE HAS BEEN DISCHARGED OR NOT HAS TO BE APPRECIATED ON TOT ALITY OF EVIDENCE AVAILABLE ON RECORD AND SURROUNDING FACTS AND CIRCUMSTANCES OF THE CASE AND I FIND THAT THE ONUS IN THIS CASE HAS BEEN PROPERLY DISCHARGED ON OVERALL FACTS AS DISCUSSED ABOVE. 9.14 FURTHER, I ALSO SUBSCRIBE TO THE OBSERVATION OF MY PREDECESSOR THAT THE CREDITWORTHINESS OR GENUINENES S OF TRANSACTIONS DEPENDS UPON WHETHER THE PARTIES ARE R ELATED OR KNOWN TO EACH OTHER, MANNER OR MODE BY WHICH HE APPROACHED EACH OTHER, CREDITWORTHINESS OF RECIPIEN TS, OBJECT AND PURPOSE ETC. I FIND THAT THE APPELLANT HAS BROU GHT ON RECORD THAT MR. DEEPAK KALANI DIRECTOR OF THE LENDE R COMPANY AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 80 IS VERY WELL KNOWN TO SHRI VINOD AGRAWAL OF APPELLA NT GROUP. MR. KALANI IS ASSOCIATED PROFESSIONALLY WITH THE GR OUP SINCE LONG AS A FINANCE CONSULTANT AND CONSIDERABLE AMOUN T OF PROFESSIONAL FEES IS PAID BY VARIOUS AGRAWAI GROUP COMPANIES FOR HIS SERVICES. SIMILARLY THE CREDITWOR THINESS OF THE RECIPIENTS I.E. THE AGRAWAL GROUP CANNOT BE DOU BTED. THE TRANSACTIONS ARE PURELY OUT OF BUSINESS EXIGENCIES WHEREIN PROPER INTEREST HAS BEEN PAID REGULARLY. THESE SUBM ISSIONS OF THE APPELLANT HAVE NOT BEEN CONTROVERTED. 9.15 REGARDING OBSERVATION OF MY PREDECESSOR THAT THE APPLICANTS ARE NOT HAVING CREDITWORTHINESS TO INVES T THE AMOUNTS, THE FACTS ON RECORD DO NOT SUPPORT THIS OBSERVATION. IT SEEMS THAT THE FACT THAT THE INDIVIDUAL NET WORT H OF BOTH THE COMPANIES IS IN THE RANGE OF 7 TO 8 CRORES EACH AS EVIDENT FROM THEIR FINANCIALS ALREADY PLACED ON RECORD AS P APER BOOK B AND ALSO FROM THE SUMMARY TABLE ENCLOSED AT PAGE NO . 1&76 - PB-B-L HAVE SKIPPED THE ATTENTION OF MY PREDECESSOR. 9.16 IT IS FOUND THAT THE MAJOR FACTOR WHICH WEIGHED THE DECISION OF MY PREDECESSOR TREATING THE TRANSACTION S AS NOT GENUINE IS THE OBSERVATION THAT THESE COMPANIES ARE HARDLY EARNING ANY INCOME. HOWEVER I FIND THAT THIS OBSERV ATION IS NOT CORRECT ON FACTS AS EVIDENT FROM THE FINANCIALS OF THESE COMPANIES AND ALSO FROM THE INCOME TAX RETURNS AND ASSESSMENT ORDERS PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961. THESE COMPANIES ARE HAVING SUBSTANTIAL INCOME IN T HE FORM OF INTEREST RECEIPTS AND HAVE EARNED CONSIDERA BLE NET PROFITS. 9.17 FURTHER, I AGREE WITH THE OBSERVATION OF MY PREDECESSOR THAT CREDITWORTHINESS IS NOT PROVED BY SHOWING ISSU E AND AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 81 RECEIPT OF CHEQUE OR BY FURNISHING A COPY OF STATEM ENT OF BANK ACCOUNT AND WHEN CIRCUMSTANCES REQUIRE THAT THERE S HOULD BE SOME MORE EVIDENCE OF POSITIVE NATURE TO ENSURE THA T THE SUBSCRIBERS HAVE MADE GENUINE INVESTMENT. I FIND THAT THE APPELLANT HAS WELL DISCHARGED THIS ONUS THROUGH THE BALANCE SHEETS AND OTHER FINANCIAL DETAILS OF BOTH THE COMP ANIES REFLECTING SUBSTANTIAL REVENUES AND PROFITS IN ALMO ST ALL THE YEARS AND ALSO THROUGH THE FACT THAT BOTH THE COMPA NIES HAVE NOT BORROWED ANY AMOUNT FOR MAKING INVESTMENTS WITH THE APPELLANT GROUP. 9.18 IT IS FOUND THAT BESIDES SHOWING THAT THE TRANSACTIONS WERE THROUGH NORMAL BANKING CHANNELS, THE APPELLANT, IN ORDER TO ESTABLISH THE CREDITWORTHINESS OF THE LOAN CREDITOR AND THE GENUINENESS OF THE TRANSACTIONS, WENT FAR AHEAD AND PLACED ON RECORD MANY MORE EVIDENCES TO SUBSTANTIATE THE S AME, WHICH ARE ALREADY DISCUSSED AND EXPLAINED IN THIS O RDER SUCH AS INVESTMENTS PURELY OUT OF OWN CAPITAL AND RESERV ES OF THE LENDER COMPANIES, THEIR ASSESSMENT ORDERS, SOURCE O F CREDITS, SOURCE OF SOURCE CREDITORS, PRODUCTION OF DIRECTOR OF THE LOAN CREDITOR ALONG WITH BOOKS OF ACCOUNTS AND OTHER DOC UMENTS ETC. 9.19 THE APPELLANT HAS ALSO FILED IN A TABULAR FORM THE DISTINGUISHING FACTS OF ITS CASE WITH THOSE OF THE CASE LAWS RELIED UPON BY MY PREDECESSOR. IT IS E CASE LAWS RE LIED UPON BY THE CIT(A), THE ADVERSE VIEW HAS THE APPELLATE A UTHORITIES FOR THE REASON THAT EITHER THE LOAN THE SHARE APPLI CANTS WERE NOT FOUND OR THE SUMMONS AND NOTICES S 133(6) WERE RETURNED BACK UNSERVED AND THE ASSESSEES IN THOSE CASES COUL D NOT PRODUCE THE LOAN CREDITORS DURING THE ASSESSMENT AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 82 PROCEEDINGS. IN SOME OF THE CASES THERE IS A FINDIN G THAT CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF THE LENDERS IMMEDIATELY BEFORE ISSUING CHEQUES TO THE ASSESSES IN THOSE APPEALS. I, HOWEVER, WISH TO DIFFER FROM THE VIEW ADOPTED BY MY PREDECESSOR AS THE FACTS IN ALL THOSE CASE LAWS WHICH HAVE BEEN RELIED BY MY PREDECESSOR ARE SUBSTANTIALLY DIF FERENT. 9.20 IN THE PRESENT APPEAL, IT IS NOT A CASE WHERE THE L OAN CREDITORS WERE NOT FOUND NOR IT IS A CASE WHERE NOT ICES / SUMMONS WERE RETURNED UNSERVED. ON THE CONTRARY, IN THE GROUP CASES OF THE APPELLANT, THE DIRECTOR OF THE L OAN CREDITORS COMPANIES I.E. SHRI DEEPAK KALANI PRESENTED HIMSELF ON VARIOUS OCCASION AND HIS STATEMENTS WERE RECORDED. IN THE PRESENT APPEAL THE AO HAS ISSUED NOTICE U/S 133 (6) OF THE I NCOME TAX ACT, 1961 TO BOTH THE LENDER COMPANIES IN RESPONSE TO WHICH PROPER COMPLIANCE WAS MADE BY BOTH THE COM PANIES, THE FINDING ABOUT THE SAME HAS ALSO BEEN FOUND RECORDED M THE ASSESSMENT ORDER. IN FACT, THE IDENTITY OF THE LOAN CREDITORS IS NOT AT ALL DISPUTED BY THE AO IN THE PRESENT CAS E. IT IS ALSO SEEN FROM THE BANK STATEMENTS OF THE LENDER COMPANI ES THAT THERE ARE NO CASH DEPOSITS IN THEIR BANK ACCOUNTS. RATHER, TH E SOURCE OF DEPOSITS IN THESE BANK ACCOUNTS HAVE BEEN PROPERLY EXPLAINED BY THESE LENDER COMPANIES WHICH HAS COME FROM THE OTHER GROUP CONCERNS OF THE APPELLANT, WHO REPAID THE LOANS TAKEN BY THEM IN EARLIER YEARS. 9.21 IN THE CASE OF ACIT V/S NARMADA EXTRUSION LTD. (2012) 19 ITJ 202- ITAT INDORE, RELIED UPON .BY MY PREDECESSOR, THE JURISDICTIONAL ITAT CONFIRMED THE ADDITION MADE ON ACCOUNT OF UNSECURED LOANS RECEIVED FROM LUNKAD GROUP OF COMPA NIES U/S 68 BY CATEGORICALLY STATING THAT BASED ON' THE DOCU MENTS AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 83 IMPOUNDED DURING SURVEY FROM LUNKAD GROUP VARIOUS C ASH ENTRIES WERE APPEARING IN THE NAME OF NARMADA EXTRU SION LTD. AGAINST WHICH LUNKAD GROUP HAS ISSUED CHEQUES IN FA VOUR OF NARMADA EXTRUSION LTD. FURTHER THE ASSESSEE FAILED TO PRODUCE THE DIRECTOR AND THE LUNKAD GROUP ALSO FAILED IN DI SCHARGING ITS ONUS TO EXPLAIN THE SOURCE OF HUGE SHARE APPLIC ATION MONEY AS IT DID NOT HAD ANY SOUND BUSINESS AND IT DECLARE D MEAGER AMOUNT OF INCOME. THE FACTS OF THIS CASE ARE ALSO C LEARLY DISTINGUISHABLE AND RATHER SUPPORT THE CASE OF THE APPELLANT. NO SUCH DOCUMENTS REFLECTING ANY CASH RECEIPTS BY M R. DEEPAK KALANI OR THE LENDER COMPANIES WERE FOUND IN THE SE ARCH AND IT IS NEITHER A CASE WHERE THE DIRECTORS REFRAINED FRO M APPEARING BEFORE THE AO NOR IT IS CASE WHERE THERE IS RECEIPT S OF HUGE SHARE APPLICATION MONEY BY THE LENDERS BEFORE ISSUI NG CHEQUES TO THE APPELLANT. IN FACT THE SHARE CAPITAL RECEIVE D BY THE LENDER COMPANIES IS DULY ASSESSED U/S 143(3) OF THE INCOME TAX ACT, 1961 AND NO FRESH SHARE CAPITAL WAS RAISED IN LAST 7-8 YEARS. THUS THE FACTS OF THE PRESENT CASE ARE VERY CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE VARIOUS DECIS IONS RELIED UPON BY MY PREDECESSOR AND THEREFORE, THE PROPOSITI ONS LAID DOWN IN THOSE CASES DO NOT APPLY ON THE FACTS OF TH E PRESENT CASE BEFORE ME. ON THE CONTRARY, THE PROPOSITIONS L AID DOWN IN THE VARIOUS JUDICIAL PRONOUNCEMENTS SUPPORT THE CAS E OF THE APPELLANT. 9.22 IN VIEW OF DETAILED DISCUSSION HELD AS ABOVE, I WISH T O DIFFER FROM THE VIEW TAKEN BY MY PREDECESSOR IN RES PECT OF TWO APPEALS OF THE GROUP CONCERNS OF THE APPELLANT ON IDENTICAL ISSUE. 10. THE APPELLANT, IN MY CONSIDERED OPINION HAS DISCHARGED AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 84 THE ONUS OF ESTABLISHING THE IDENTITY, CREDITWORTHI NESS OF THE LOAN CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THE IDENTITY IS UNDISPUTED. THE LENDERS ARE VALIDLY REG ISTERED CORPORATE ENTITIES. THE COPIES OF CERTIFICATE OF R EGISTRATION, MEMORANDUM ETC ARE ON RECORDS. THESE LEN DERS HOLD VALID AND ACTIVE PAN, BOTH THE LENDERS ARE REGISTERED NON BANKING FINANCE COMPANIES (NBFC) REGISTERED WITH THE RESERV E BANK OF REGULATORY NORMS, AS NOTIFIED BY THE RBI. THE D IRECTORS OF BOTH THE LENDER COMPANIES ARE KNOWN AND RENOWNED CI TIZEN. BOTH THE LENDER COMPANIES WERE FOUND FUNCTIONING AT THE OFFICES AND THE DEPARTMENTAL REPRESENTATIVES HAVE C ONFIRMED THEIR EXISTENCE TIME AND AGAIN. THE DIRECTORS OF TH ESE COMPANIES REGULARLY PARTICIPATED IN THE ENQUIRIES C ONDUCTED FROM TIME TO TIME AND APPEARED BEFORE THE INVESTIGA TION WING AS WELL AS BEFORE THE ASSESSING OFFICERS IN THE CAS E OF THE APPELLANT COMPANY AS HEN REQUIRED. IN BOTH THE LEND ER COMPANIES, THE ASSESSMENTS PROCEEDINGS ARE COMPLETE D BY THEIR RESPECTIVE JURISDICTIONAL ASSESSING OFFICERS FOR VARIOUS YEARS, INCLUDING THE YEAR UNDER CONSIDERATION, WITH OUT ANY ADVERSE OBSERVATION WHICH REAFFIRMS THEIR IDENTITY, CREDITWORTHINESS AND ALSO GENUINENESS OF THE TRANSA CTIONS. 10.1 REGARDING CREDITWORTHINESS, IT IS SEEN THAT BOTH TH E LENDER COMPANIES POSSESSED SUBSTANTIAL OWN FUNDS, O UT OF WHICH THE ADVANCES HAVE BEEN EXTENDED TO THE APPELL ANT. FROM THE BALANCE SHEETS OF THE LENDERS, IT IS VERIF IABLE THAT BOTH THE COMPANIES ARE DEBT FREE COMPANIES I.E. THE SE COMPANIES HAVE NO BORROWINGS. FROM THE AUDITED FINA NCIAL STATEMENTS AND RETURN OF INCOME FILED, IT IS VERIFI ABLE THAT BOTH THE LENDERS COMPANIES ARE DOING WELL, EARNING SUBSTANTIAL REVENUES AND TAXABLE INCOME AND PAYING GOOD AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 85 TAXES ON THEIR INCOMES. THE DIRECTOR OF BOTH THE CO MPANIES IS WELL KNOWN AND IS WORTHY AND FINANCIALLY RESOURCEFU L PERSON. BOTH THESE LENDER COMPANIES FURNISHED THEIR BANK AC COUNT STATEMENTS, WHEREIN THE TRANSACTIONS WITH THE APPEL LANT WERE PROPERLY REFLECTING ALONG WITH THEIR REGULAR B USINESS TRANSACTIONS. THE LENDERS HAVE EXPLAINED THE SOURCE OF FUNDS WHICH HAVE BEEN ADVANCED TO THE APPELLANT. IT IS WELL EVIDENT FROM AUDITED FINANCIALS THAT BOTH THE LENDER COMPAN IES HAVE NOT RAISED ANY SHARE CAPITAL OR BORROW1NGS IN PAST 10-12 YEARS. 10.2 REGARDING THE ISSUE OF GENUINENESS OF THE TRANSACTI ONS, IT IS ALSO ESTABLISHED AS THE SAME ARE IN THE NORMAL COUR SE OF THEIR FINANCE BUSINESS. THESE COMPANIES ARE NON BAN KING FINANCE COMPANIES AND HAVE MADE LENDING TO THE APPE LLANT FOR ITS WORKING CAPITAL REQUIREMENTS IN PURELY A COMMER CIAL MANNER. THE APPELLANT HAS PAID INTEREST ON THE LOAN S RAISED AND HAVE DEDUCTED TDS AS PER LAW. THE LOANS TAKEN A ND REPAYMENTS HAVE BEEN FOUND THROUGH NORMAL BANKING CHANNEL. ALL THE TRANSACTIONS ARE PROPERLY REFLECTI NG IN THE AUDITED BALANCE SHEET OF THE APPELLANT AND THE LEND ER PARTIES. THE TRANSACTIONS HAVE BEEN FOUND PROPERLY CONFIRMED BY BOTH THE PARTIES. THE DIRECTORS OF BOTH THE LENDER COMPA NIES ARE IDENTIFIED; THEY APPEARED BEFORE THE AUTHORITIES AN D EXPLAINED THEIR TRANSACTIONS AS WELL AS UNDERSTANDING WITH T HE APPELLANT COMPANIES. THEY HAVE ALSO REPLIED TO ALL THE QUERIES RAISED BY THE AUTHORITIES FROM TIME TO TIME. THERE IS NO DENIAL OF THIS FACT BY ASSESSING AUTHORITY. THE SOURCE OF THE FUNDS WITH THE LENDERS ARE PROPERLY ESTABLISHED AND EXPLA INED BEFORE THE AUTHORITIES AND ARE ON RECORDS. THERE IS NO DOUBT OR AMBIGUITY REGARDING THE SOURCE OF FUNDS ADVANCED TO THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 86 APPELLANT. 10.3 IN VIEW OF ABOVE DISCUSSION AND KEEPING IN VIEW ENTIRETY OF FACTS AND CIRCUMSTANCES, THE IDENTITY A ND CREDITWORTHINESS OF THE LOAN CREDITORS HAVING PROPE RLY BEEN ESTABLISHED AND SUBSTANTIATED AND SO ALSO THE GENUI NENESS OF THE TRANSACTIONS, IT IS HELD THAT THE AO WAS NOT JU STIFIED IN MAKING OF IMPUGNED ADDITIONS U/S 68 OF THE INCOME TAX ACT, 1961. THEREFORE, THE ADDITIONS ARE DIRECTED TO BE DELETED . ACCORDINGLY, THE GROUND NOS. 2 & 3 ARE ALLOWED. 19. ON GOING THROUGH THE ABOVE FINDING OF LD. CIT(A ) WE FIND THAT HE HAS THOROUGHLY ANALYSED AND EXAMINED VARIOUS DOC UMENTS, FINANCIAL STATEMENTS, INCOME TAX RETURNS, ASSESSMEN T ORDER OF LENDER COMPANIES AND ALSO DISTINGUISHED THE FACT OF THE CASE IN HAND WITH THOSE OF THE FACTS OF THE JUDGMENTS REFER RED AND RELIED BY HIS PREDECESSORS OF LD. CIT(A) IN THE CASE OF M/S . ADMANUM FINANCE LTD HAS GIVEN HIS FINDING THAT BOTH THE LEN DER COMPANIES I.E. AEREO DEAL COM PVT. LTD AND M/S CHAMAK TRAXIM PVT. LTD ARE GENUINE COMPANIES CARRYING OUT REGULAR BUSINESS OF FINANCE IN THEIR CAPACITY AS NON BANKING FINANCE COMPANIES REGISTERE D WITH RESERVE BANK OF INDIA AND HAVING SUFFICIENT LIQUIDI TY TO GIVE LOAN TO VARIOUS BORROWERS. LD. CIT(A) HAS ALSO MENTIONED T HE FACT THAT MR. DEEPAK KALANI WHO CONTROLS THE FINANCIALS OF M/S AD PL AND M/S CTPL IS HAVING LONG TIME FRIENDSHIP WITH THE DIRECT ORS OF AGRAWAL GROUP OF COMPANIES AND IN THE PAST ALSO HE HAS GIVE N LOAN TO OTHER AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 87 GROUP CONCERNS OF AGRAWAL GROUP ON INTEREST. 20. WE FURTHER FIND THAT THE ISSUE OF UNEXPLAINED C ASH CREDIT U/S 68 OF THE ACT FROM THE VERY SAME LENDER COMPANIES N AMELY M/S AEREO DEAL COM PVT. LTD AND M/S CHAMAK TRAXIM PVT. LTD WHICH WERE RECEIVED BY ANOTHER GROUP CONCERN OF THE ASSES SEE NAMELY M/S AGRAWAL COAL CORPORATION PVT. LTD AND ADMANUM FINAN CE LTD CAME FOR ADJUDICATION BEFORE THE TRIBUNAL WHEREIN THE AP PEAL WAS FILED BY THE REVENUE CHALLENGING THE FINDING OF LD. CIT(A) D ECIDING IN FAVOUR OF THE ASSESSEE. THE CO-ORDINATE BENCH HAS DEALT T HIS ISSUE IN APPEAL NO. 202&294/IND/2012 & OTHERS IN THE CASE OF AGRAWAL COAL CORPORATION PVT. LTD (SUPRA) AND HAS CONFIRMED THE FINDING OF LD. CIT(A) THEREBY CONFIRMING THE IDENTITY OF THE L ENDERS , GENUINENESS OF TRANSACTIONS AND ACCEPTING THE CRED ITWORTHINESS OF THE LENDER COMPANIES NAMELY M/S ADPL & M/S CTPL AND HOLDING THAT THE LD. A.O WAS NOT JUSTIFIED IN MAKING THE A DDITION U/S 68 OF THE ACT. THE RELEVANT EXTRACT OF THE FINDING OF HO NBLE TRIBUNAL IN ITS ORDER DATED 27.6.2016 IS MENTIONED BELOW:- 4.3 NOW THE ISSUE OF LOAN TAKEN FROM AEREO DEALCOMN PVT LTD. AT RS. 3.26 CRORES IS TAKEN UP FOR CONSIDERATION. THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 88 A PPELLANT HAD AN OPENING BALANCE APPEARING IN THE NA ME OF SAID COMPANY AT RS.98,73,663/- AND AN AMOUNT OF RS.42,93,663/- WAS REPAID DURING THE YEAR UNDER CONSIDERATION THE INTEREST PAID BEING RS.33,04,583/-. 4.3.1 THE AR PRESENT POINTING OUT THE REPAYMENT CHA RT IN PAPER BOOK D AT PAGE 837 SUBMITTED THAT THE LOAN RECEIVED FROM THESE COMPANY STAND FULLY REPAID IN FEB 2010. THE INSPECT ORS IN THEIR REPORT AS NOTED ON PAGE 3 OF ASSESSMENT ORDER HAS C ONFIRMED ABOUT EXISTENCE OF SUCH COMPANY AT THE GIVEN ADDRES S. THE INSPECTORS HAVE CONFIRMED, AS NOTED ON PAGE 7 OF T HE ASSESSMENT ORDER THAT THE ACCOUNTANT OF THIS COMPAN Y, IN THE STATEMENT RECORDED BY THE INSPECTORS, HAS CONFIRMED HAVING ADVANCED UNSECURED LOANS TO THE APPELLANT AND ALSO IN RESPONSE TO THE AO'S NOTICES U/ S 133(6) THE SAID LENDER COMPANY REPLIED VIDE LETTER DATED 09.12.2010 AT PAGE 839 STATING THAT IT HAS ADVANCED LOANS TO THE APPELLANT AND ALSO FILED COPY OF ITS LEDGER FOR THE IMPUGNED YEAR, COP IES OF ITR ACKNOWLEDGEMENT ALONG WITH COMPUTATION FOR AYS 2006 -07 TO 2008-09 AS WAS REQUIRED BY THE AO. BEFORE DDIT (INV.), KOLKATA ALSO AGAINST ISSUE OF SUMMONS U/ S 131 COMPLIANCES WERE MADE BY FILING OF COPIES OF AUDITED ANNUAL ACCOUNTS , PHOTO COPY OF BANK STATEMENT AND CONFIRMATION LETTERS. THUS, I T CANNOT BE SAID THAT INSPECTORS AND DDIT(INV.) HAVE EXPRESSED ANY DOUBT ABOUT THE EXISTENCE OF SUCH COMPANY. THE DOUBT EXPR ESSED BY INSPECTORS AND DDIT (INV.) BOTH OF THEM ARE APPARENTLY SUBJECTIVE AND IN CASE OF DDIT'S REPORT IS MERELY B ASED UPON NON APPEARANCE BY THE DIRECTORS OF THE SAID COMPANY. THE COPY OF AUDITED ACCOUNTS OF THE SAID COMPANY, ALONG WITH COPY OF BANK STA T EMENT, CONFIRMATION, ITR ACKNOWLEDGEMENT ETC. ARE INCLUDED IN COMPILATION BY THE APPELLANT FROM PAGE 160 TO 200. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 89 THE MAIN SOURCE OF T HE SAID COMPANY IS FROM GROSS INTEREST INCOME OF RS.47.83 LACS. THE NET PROFIT OF THE COMP ANY IS REFLECTED AT A HEALTHY FIGURE OF RS.11.29 LACS. THE LOAN IN THE NAME OF THE APPELLANT COMPANY INCLUDING OUTSTANDING LOAN FROM EARLIER YEAR IS REFLECTED IN THE HEAD AS SCHEDULE-7 TO BALANCE SHEET UNDER 'LOANS AND ADVANCES. THUS, IT COULD NO T BE SAID THAT THE FINANCIAL POSITION OF THE COMPANY WAS DUBI OUS AND NOMINAL RETURNED INCOME WAS DISCLOSED. 4.3.2 THE APPELLANT IN ANOTHER COMPILATION (PAPER B OOK 'D') HAS INCLUDED A COPY OF NBFC REGISTRATION ISSUED BY THE RBI AT PAGE 836 AND AN INTIMATION U/S 143(1) FOR THE AY 2009-10 AT PAGE 835 WHEREIN A REFUND OF RS 14.67 LACS HAS BEEN ISSUED TO THIS COMPANY AND ALSO ASSESSMENT ORDER FOR ASSTT. YEAR 2 002~ 03 OF THIS COMPANY AT PAGE 833 AND 834 WHEREIN THE SOU RCE OF SHAREHOLDERS FUND BEING SHARE CAPITAL AND SHARE PRE MIUM ACCOUNT WAS EXAMINED AND FOUND TO BE VERIFIABLE AND DETAILED FINDINGS IN THIS BEHALF HAVE BEEN RECORDED IN THE S AID ASSESSMENT ORDER. IT WILL BE APPROPRIATE TO REPRODU CE THE SAME HERE UNDER FOR READY REFERENCE: ' IT ALSO APPEARED FROM THE SAID DOCUMENTS THAT TH E ASSESSEE COMPANY HAD INFUSED FRESH SHARE CAPITAL FOR RS.47,7 5,OOO/-. AGAIN ASSESSEE COMPANY HAD RECEIVED TOTAL SHARE PRE MIUM OF RS.4,29,75,OOO/- ON ACCOUNT OF SHARE ALLOTMENT. THU S TOTAL 'SHARE CAPITAL' WAS RAISED TO THE TUNE OF RS. 4,77 ,5O,OOO/-. ASSESSEE COMPANY WAS ASKED TO PROVIDE LIST OF NEW 'SHARE HOLDERS' FROM WHOM SUCH FRESH SHARE CAPITAL WAS RAI SED. THE AR HAD SUBMITTED THE LIST OF SHAREHOLDERS TO WHOM SHAR ES WERE ALLOTTED DURING THE RELEVANT PREVIOUS YEAR. NOTICES U/S 133(6) OF THE I'T ACT WERE ISSUED TO SOME OF THOSE NEW SHARE-HOLDERS ON AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 90 TEST-CHECK BASIS FOR THE PURPOSE OF VERIFICATION OF THE CLAIM MADE BY THE ASSESSEE COMPANY IN THIS CONNECTION. REPLIES WERE RECEIVED FROM THOSE SHAREHOLDERS AND THOSE WERE CON SIDERED IN THE LIGHT OF THEIR CAPABILITIES TO INVEST SUCH HUGE SUM TO PAY SHARE PRICES INCLUDING PREMIUM. COPIES OF BANK ACCOUNTS O F THOSE SHAREHOLDERS HAVE ALSO BEEN VERIFIED TO CROSS-CHECK THE TRANSACTIONS THEY HAD ENTERED WITH THE ASSESSEE COM PANY. IN THIS CONNECTION INSPECTOR WAS ENTRUSTED WITH INDEPE NDENT INQUIRIES. FROM THE REPORT SUBMITTED BY THE INSPECT OR, NOTHING OBJECTIONABLE WAS FOUND; NO INTERFERENCE IS THUS MA DE ON THIS GROUND.' 4.3.3 IT WILL BE APPROPRIATE TO REFER TO THE DECISI ON OF HON'BLE KOLKATA HIGH COURT AS RELIED AND REFERRED BY APPELLANT IN THE WRITTEN SUBMISSIONS DECIDED IN THE CASE OF CIT VS. DATA WARE PVT. LTD. ON 21 ST SEPTEMBER, 2009, WHEREIN HON'BLE CALCUTTA HIGH COURT CATEGORICALLY HELD - 'AFTER GETTING THE PAN NUMBER AND GETTING THE INFOR MATION THAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE ASSESSI NG OFFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CR EDITOR AS TO THE GENUINENESS OF THE TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE ASSESSING OFFI CER OF THE CREDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE A SSESSING OFFICER HIMSELF COULD NOT ENTER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RETURN SUBMITTED BY THE CREDIT OR HAS BEEN REJECTED BY ITS ASSESSING OFFICER, THE ASSESSING OF FICER OF THE ASSESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHE N THE IDENTITY OF THE CREDITOR AND THE GENUINENESS OF TRA NSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED.' AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 91 4.3.4 IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION W HEREIN EVEN THE SOURCES OF THE FUNDS OF THE CREDITOR COMPANY HA VE BEEN FOUND AND VERIFIED BY THE CONCERNED AO AND THE TRAN SACTIONS DULY GETTING REFLECTED IN THE AUDITED FINAL ACCOUNT S OF THE CREDITOR COMPANY, THE AO'S ACTION IN DOUBTING SUCH LOAN TRAN SACTION IS ABSOLUTELY WITHOUT ANY MER IT AND SUBSTANCE AND ACCORDINGLY THE AO'S ACTION IN TREATING SUCH LOAN OF RS. 3.26 C RORES AS UNEXPLAINED IS HELD TO BE UNJUSTIFIED. 4.4 PROCEEDINGS NEXT TO THE LOAN OF RS.25 LACS FROM CHAMAK TREXIM PVT. LTD. WHICH IS ALSO A REGISTERED NBFC WI TH RBI IT IS NOTED THAT THE APPELLANT HAS OPENING BALANCE OF MORE THAN RS.3.91 CRORES FROM THE SAME COMPANY DURING THE YEA R UNDER CONSIDERATION. A LARGER AMOUNT OF RS.78.86 LACS WAS REPAID AND SUBSTANTIAL INTEREST OF RS.59.19 LACS WAS PAID AFTER DEDUCTING THE TDS. AS PER THE REPAYMENT CHART ON PA GE 851 OF PAPER BOOK D THE LOAN STAND FULLY REPAID IN FEB 201 0. THE POSITION IN RESPECT OF ENQUIRY REPORT SUBMITTED BY INSPECTORS AND COMPLIANCES MADE BEFORE DDIT IS EXACTLY THE SAM E AS NOTED IN THE CASE OF AEREO DEALCOMM PVT. LTD., ABOV E. AS PER RELEVANT FINAL ACCOUNTS AND OTHER DOCUMENTS OF THIS COMPANY ARE CONCERNED, THE SAME ARE FILED IN THE COMPILATIO N FROM PAGE 201 TO 245. IN THIS COMPANY ALSO THE MAIN SOUR CE OF INCOME IS INTEREST AND GROSS AMOUNT IS REFLECTED AT RS.85.30 LACS AND NET PROFIT IS IN EXCESS OF RS.14 LACS AND LOAN IN THE NAME OF APPELLANT COMPANY IS DULY REFLECTED INCLUDI NG OPENING BALANCE OF REPAYMENT IS AT RS. 3.84 CRORES. 4.4.1 THE AO OF THIS COMPANY FOR ASSTT. YEAR 2004-0 5 IN ASSESSMENT ORDER PASSED U/S 143(3) ON 31.01.2006 HA S VERIFIED THE SOURCE OF OWNERS FUND BEING SHARE CAPI TAL, SHARE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 92 PREMIUM RECEIVED WHICH WERE INVESTED BY WAY OF LOAN S AND ADVANCES. IN THE INTIMATION ISSUED U/S 143(1) FOR A Y 2009-10 AT PAGE 849 OF PAPER BOOK D, THE RETURNED INCOME HA S BEEN STATED AT RS 11.66 LACS AND A REFUND OF RS. 11.27 L ACS HAS BEEN ISSUED TO THIS COMPANY. THUS IN VIEW OF DETAIL ED FINDINGS ARRIVED IN THE CASE OF AEREO DEALCOMM PVT. LTD. ABOVE, THE SAID LOAN OF RS.25 LACS FROM THIS COMPAN Y IS ALSO HELD TO BE EXPLAINED. 20. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND ALSO THE ORDE R OF THE CIT(A). WE HAVE ALSO PERUSED THE CASE LAWS CITED BY THE LD. D EPARTMENTAL REPRESENTATIVE AS WELL AS THE LD. AUTHORIZED REPRES ENTATIVE FOR THE ASSESSEE. 21. WE FIND THAT DURING THE YEAR UNDER CONSIDERATIO N THE ASSESSEE HAS RECEIVED UNSECURED LOAN AGGREGATING TO RS. 6,69,00, 000/- FROM 12 KOLKATA BASED COMPANIES, THE DETAILS OF WHICH ARE AS UNDER :- S.NO. NAME OPENING BALANCE LOAN TAKEN INTEREST PAID TDS ON INTEREST AMOUNT REPAID BALANCE 1. AEREO DEALCOMM. PVT LTD. 98,73,663 3,26,00,000 3 3,04,583 6,80,745 42,93,663 4,08,03,838 2. CHAMAK TREXIM PVT LTD. 3,91,86,415 25,00,000 59, 19,345 12,19,384 78,86,415 384,99,961 3. REWARD CONSULTANTS PVT. LTD. 16,39,608 12,00,000 3,76,804 77,622 1,39,608 29,99, 182 4. PUSHPAK TRADING & CONSULTANCY PVT. LTD - 50,00,000 2,41,803 49,881 - 51,91,922 5. SAVERA DISTRIBUTION PVT. LTD. - 50,00,000 3,10,6 56 63,995 - 52,46,661 6. PARADISE GARMENTS P. LTD. - 25,00,000 31,762 6,5 43 - 25,25,219 7. KHATU VANIJYA PVT LTD. - 50,00,000 34,631 7,134 - 50,27,497 8. PANCHNANVANIJYA PVT. LTD. - 35,00,000 25,615 5,2 77 - 35,20,338 9. KAMAL NAYAN COMMERCIAL PVT. LTD. - 15,00,000 7,992 1,646 - 15,06,345 10. RANCHHOD AGENCIES PVT. LTD. - 14,00,000 7,746 1,595 - 14,06,151 11. PRATHMESH VANIJAY PVT LTD. - 20,00,000 21,721 4 ,474 - 20,17,247 12. LAMBODAR BARTER PVT LTD. - 47,00,000 37,909 7,8 09 - 47,30,100 TOTAL 6,69,00,000 1,03,20,567 22. DURING THE ASSESSMENT PROCEEDINGS, THE AO HAS TRIED TO VERIFY THE AFORESAID UNSECURED LOAN. NOTICES WERE ISSUED U/S 1 33(6) TO THE LENDERS CALLING FOR DOCUMENTARY EVIDENCES IN SUPPORT OF THE AMOUNTS ADVANCED. SECONDLY, THE INCOME-TAX INSPECTORS WERE DEPUTED PE RSONALLY TO VISIT AND AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 93 MAKE ENQUIRIES. THE COMMISSION WAS ALSO ISSUED TO D DIT, KOLKATA U/S 131 OF THE ACT AND INCOME TAX INSPECTORS WERE AGAIN DEPUTED TO PERSONALLY VISIT AND MAKE ENQUIRIES AT KOLKATA AND LASTLY THE ASSESSEE WAS DIRECTED TO FURNISH DOCUMENTARY EVIDENCES IN SUPPORT OF THE UNSECURED LOAN. THE AO HAS ISSUED NOTICES DIRECTLY U/S 133(6) TO LENDER S CALLING FOR DOCUMENTARY EVIDENCE IN SUPPORT OF THE AMOUNTS ADVA NCED. THE LENDER COMPANIES, IN RETURN, FILED THE VARIOUS DOCUMENTS IN THE FORM OF CONFIRMATIONS, INCOME TAX RETURNS, BANK STATEMENTS ETC. INCOME TAX INSPECTORS WERE DEPUTED BY THE AO TO MAKE ENQUIRIES AT KOLKATA, WHO VIDE REPORT DATED 10.12.2010 CONFIRMED EXISTENCE OF MOST OF THE LENDERS. THEREAFTER, COMMISSION WAS ISSUED TO DDIT, AO., KOL KATA UNDER SECTION 131 OF THE ACT, WHO INDEPENDENTLY CONDUCTED INVESTI GATION AND SENT HIS REPORT DATED 20.12.2010 AND MOST OF THE PARTIES APP EARED AND FILED DOCUMENTARY EVIDENCES AS REQUIRED BY DDIT(AO), KOLK ATA, THEREBY CONFIRMING THE TRANSACTION WITH THE ASSESSEE. THE I NCOME-TAX INSPECTORS WERE AGAIN DEPUTED TO PERSONALLY VISIT AND MAKE ENQ UIRIES AT KOLKATA AND COLLECTED CERTAIN INFORMATION DIRECTLY FROM THE BAN KS AND FILED ANOTHER REPORT DATED 23.12.2010. THE ASSESSEE HAS ALSO SUBM ITTED THE CONFIRMATION LETTERS ALONGWITH PAN, COMPANYS MASTE R DETAILS WITH THE REGISTRAR OF COMPANIES, COPY OF INCOME TAX RETURNS, AUDITORS REPORT OF THE CREDITOR COMPANIES, BANK STATEMENTS REFLECTING RECE IPT AND PAYMENT OF THE SAID LOAN AMOUNT AND FORM NO.16A ISSUED ON TAX WITH HELD ON INTEREST PAID. THE ASSESSEE HAS PLACED ON RECORD REQUISITE D OCUMENTS, WHICH PROVED THE IDENTITY, SOURCE OF CREDIT INCLUDING EXI STENCE AND CREDITWORTHINESS AND GENUINENESS OF THE LOAN. THE A O HAS MADE THE EXTENSIVE ENQUIRY. 23. THE ASSESSEE HAS TAKEN LOAN FROM AEREO DEALCOMM . PRIVATE LIMITED. THE ASSESSEE HAS SUBMITTED DOCUMENTARY EVIDENCE LIK E CONFIRMATION, BANK STATEMENT, INCOME TAX RETURN, AUDITED ACCOUNTS, TDS CERTIFICATE, MASTER DATA OF THE COMPANY WITH REGISTRAR OF COMPANIES, ME MORANDUM OF ASSOCIATION. THE EXISTENCE OF THE COMPANY WAS INSPE CTED BY THE INSPECTOR AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 94 ON 10.12.2010 AND THE RS. HAS NOT DISPUTED ABOUT TH E EXISTENCE. DURING THE COURSE OF INVESTIGATION, STATEMENT OF ACCOUNTAN T WAS RECORDED BY THE INSPECTOR, WHEREIN HE HAS CONFIRMED THE LOAN TRANSA CTION IN ASSESSMENT YEAR 2002-03. THE SOURCE OF FUND OF CREDITOR COMPAN Y WAS EXAMINED. THE RS. HAS ALSO EXAMINED THE OPENING BALANCE, WHICH ST ANDS ACCEPTED, SINCE NO ADDITION WAS MADE IN THE ASSESSMENT YEAR 2007-08 . THE COMPANY HAS ALSO SHOWN THE INTEREST INCOME OF RS.47.83 LACS AND PROFIT OF RS. 11.20 LACS IN ASSESSMENT YEAR 2008-09 REFLECTING A HEALTH Y FINANCIAL POSITION. 24. DURING THE COURSE OF HEARING, THE LD. AUTHORIZE D REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IN ASSESSMENT YEAR 2007 -08, THE OPENING BALANCE OF THE COMPANY WAS AO. 98,73,663/- WHICH HA S BEEN ACCEPTED BY THE DEPARTMENT AS NO ADDITION WAS MADE IN THAT YEAR AND THIS YEAR INTEREST WAS PAID OF AO. 33,04,583/-. WE FIND THAT THE LOAN RECEIPT FROM THIS COMPANY WERE REPAID IN FEBRUARY, 2010. THE INS PECTOR HAS CONFIRMED THAT THE ACCOUNTANT OF THIS COMPANY OF WHOM STATEME NT WAS ALSO RECORDED BY THE INSPECTOR, HAS CONFIRMED HAVING ADVANCED UN SECURED LOAN TO THE ASSESSEE. THE DDIT HAS ALSO ISSUED SUMMONS U/S 131 AND IN RESPONSE TO THAT THE COMPANY HAS FILED THE COPY OF THE AUDITED ANNUAL ACCOUNT, PHOTOCOPY OF THE BANK STATEMENT AND CONFIRMATION. T HEREFORE, THE INSPECTOR AND DDIT HAVE CONFIRMED THE EXISTENCE OF SUCH COMPA NY. THE ASSESSEE HAS ALSO FILED COPY OF THE ASSESSMENT ORDER FOR ASS ESSMENT YEAR 2002-03 OF THE SAID LENDER COMPANY, WHEREIN THE SHAREHOLDER FUNDS BEING SHAREHOLDER CAPITAL AND SHARE PREMIUM ACCOUNT WAS E XAMINED AND FOUND TO BE VERIFIABLE. AO FOUND THAT THE SAID LENDER COM PANY HAD SHARE CAPITAL OF RS.47,75,000/- AND IT HAS RECEIVED SHARE PREMIUM OF AO. 4,29,75,000/- ON ACCOUNT OF SHARE ALLOTMENT. THE AO OF THE LENDER COMPANY HAS ALSO VERIFIED THE SHAREHOLDER ON TEST CHECK BASIS AND SH AREHOLDERS BANK ACCOUNTS WERE ALSO VERIFIED. THEREFORE, WE ARE OF T HE VIEW THAT THE ASSESSEE HAS PROVED THE IDENTITY, CREDITWORTHINESS OF THIS LENDER COMPANY AND ALSO THE GENUINENESS OF THE TRANSACTION WITH TH E SAID COMPANY WITH SUFFICIENT EVIDENCE. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 95 25. IN THE CASE OF CHAMAK TREXIM PRIVATE LIMITED, T HE ASSESSEE HAS FILED DOCUMENTARY EVIDENCE LIKE CONFIRMATION, BANK STATEMENT, INCOME TAX RETURN, AUDITED REPORT, TDS CERTIFICATE, MASTER DAT A OF THE COMPANY WITH REGISTRAR OF COMPANIES, MEMORANDUM OF ASSOCIATION. THE EXISTENCE OF THE COMPANY WAS INSPECTED BY THE INSPECTOR ON 10.12.20 10. THE STATEMENT OF THE ACCOUNTANT OF THIS COMPANY WAS RECORDED WHEREIN , HE CONFIRMED THE LOAN TRANSACTION OF THE ASSESSEE. IN ASSESSMENT YEA R 2004-05, SOURCE OF FUNDS OF THIS CREDITOR COMPANY WAS EXAMINED AND VER IFIED BY THE RS. IN ITS ASSESSMENT PROCEEDINGS U/S 143(3). THE OPENING BALA NCE FROM THE SAID COMPANY WAS ACCEPTED. THE COMPANY HAS SHOWN THE INT EREST INCOME OF RS. 85.30 LACS AND PROFIT OF RS. 14 LACS IN ASSESSM ENT YEAR 2008-09 AND THE ENTIRE LOAN WAS REPAID IN FEBRUARY, 2010. 26. OUT OF TWELVE COMPANIES, THE SIX LENDER COMPANI ES, VIZ., KHATU VANIJYA PRIVATE LIMITED, PANCHANAN VANIJYA PRIVATE LIMITED, KAMALNAYAN COMMERCIAL PRIVATE LIMITED, RANCHHOD AGENCIES PRIVA TE LIMITED, PRATHMESH VANIJYA PRIVATE LIMITED AND LAMBODHAR BAR TER PRIVATE LIMITED MERGED WITH M/S. MIDDLETON GOOD PRIVATE LIMITED IN APRIL, 2009. IN RESPECT OF THESE SIX COMPANIES, THE ASSESSEE HAS FILED DOCU MENTARY EVIDENCE LIKE CONFIRMATIONS, BANK STATEMENTS, INCOME TAX RETURNS, AUDITED REPORTS, TDS CERTIFICATES, MASTER DATA OF THE COMPANY WITH REGIS TRAR OF COMPANIES, MEMORANDUM OF ASSOCIATION, THE COPY OF MERGER ORDER PASSED BY THE HONBLE CALCUTTA HIGH COURT, WHICH HAVE BEEN ALSO P LACED ON RECORD. THE EXISTENCE OF THESE COMPANIES HAVE BEEN ACCEPTED BY THE INSPECTOR IN HIS REPORT DATED 10.12.2010. THE AO HAS ALSO NOT DISPUT ED THE EXISTENCE OF THIS COMPANY. THE INSPECTOR RECORDED STATEMENT OF B ROTHER OF THE DIRECTOR, WHEREIN HE CONFIRMED THE LOAN TRANSACTION WITH THE ASSESSEE. THE INSPECTOR ALSO REPORTED THAT LOAN TRANSACTIONS ARE GENUINE. THE FACT THAT THE COMPANIES WERE MERGED PURSUANT TO THE ORDER OF THE AOBLE HIGH COURT AFTER ALL REGULATORY COMPLIANCES, ESTABLISHES THE I DENTITY AND EXISTENCE OF THE ERSTWHILE CREDITORS. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 96 SIMILARLY, IN ALL THE OTHER CASES, NAMELY, REWARD C ONSULTANTS PRIVATE LIMITED, PUSHPAK TRADING & CONSULTANCY (P) LIMITED, SAVERA DISTRIBUTION PRIVATE LIMITED AND PARADISE GARMENTS PRIVATE LIMIT ED, THE ASSESSEE HAS FILED DOCUMENTARY EVIDENCE LIKE CONFIRMATIONS, BANK STATEMENTS, INCOME TAX RETURNS, AUDITED REPORTS, TDS CERTIFICATES, MAS TER DATA OF THE COMPANY WITH REGISTRAR OF COMPANIES, MEMORANDUM OF ASSOCIAT ION. IN THE CASE OF REWARD CONSULTANTS PRIVATE LIMITED, ON INQUIRY MADE BY THE INSPECTOR, IT WAS INFORMED THAT THE PRESENT OCCUPANT HAS PURCHASE D THE OFFICE FROM ONE SHRI O.P. AGRAWAL WHO WAS THE KEY PERSON OF M/S. RE WARD CONSULTANTS PVT. LIMITED. THIS LENDER COMPANY HAD TURNOVER OF A O. 1.66 CRORES, GROSS INTEREST OF AO. 32.54 LACS AND NET PROFIT OF AO. 9. 43 LACS IN ASSESSMENT YEAR 2008-09. OPENING BALANCE FROM THE SAID COMPANY STANDS ACCEPTED, SINCE NO ADDITION WAS MADE IN THE AO 2007-08. THE E NTIRE LOAN WAS REPAID IN SEPTEMBER, 2010. THE SAID CREDITOR COMPAN Y ALSO RESPONDED TO THE NOTICES ISSUED U/S 133(6) BY THE AO. SIMILARLY, IN PUSHPAK TRADING & CONSULTANCY (P) LIMITED, IT HAD SHAREHOLDERS FUNDS OF AO. 13.47 CRORES AS ON 31.3.2008.THE ENTIRE LOAN WAS REPAID IN MARCH, 2 009. THE SAID COMPANY IS A REGISTERED NBFC. THE SAID CREDITOR COM PANY ALSO RESPONDED TO THE NOTICES ISSUED U/S 133(6) BY THE AO AND ALSO IN RESPONSE TO THE NOTICE ISSUED U/S 131 BY THE DDIT (AO) KOLKATA. SIM ILARLY, IN THE CASE OF SAVERA DISTRIBUTION PRIVATE LIMITED, IT HAD SHAREHO LDERS FUNDS OF AO. 13.66 CRORES. FURTHER, THE COMPANY HAD SHOWN THE TU RNOVER OF AO. 2.34 CRORES AND INTEREST INCOME WAS AO. 18.72 LACS. THE SAID CREDITOR COMPANY ALSO RESPONDED TO THE NOTICES ISSUED U/S 133(6) BY THE AO. SIMILARLY, IN THE CASE OF PARADISE GARMENTS PRIVATE LIMITED, IT H AD SHOWN THE TURNOVER OF AO. 1.14 CRORES, INTEREST INCOME AT AO. 59.29 LA CS AND ITS TAXABLE INCOME WAS AO. 18.50 LACS IN ASSESSMENT YEAR 2008-0 9. THE COMPANY HAD SHAREHOLDERS FUND OF AO. 7.62 CRORES AS ON 31.0 3.2008. THE ENTIRE LOAN WAS REPAID IN FEBRUARY 2011. ON ENQUIRY, THE I NSPECTOR WAS INFORMED BY THE CURRENT OCCUPANT OF THE PREMISES TH AT THE COMPANY WAS IN EXISTENCE AT THE GIVEN ADDRESS A YEAR BACK AND WAS NOW SHIFTED TO SOME AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 97 OTHER PLACE. THUS THE EXISTENCE OF THE CREDITOR CAN NOT BE DISPUTED. THE SAID CREDITOR COMPANY ALSO RESPONDED TO THE NOTICES ISSU ED U/S 133(6) BY THE AO. THEREFORE, WE ARE OF THE VIEW THAT IN RESPECT O F ALL THE TWELVE COMPANIES, THE ASSESSEE WAS ABLE TO PROVE NOT ONLY THE IDENTITY AND CREDITWORTHINESS BUT ALSO THE SOURCE OF THE FUNDS. MOREOVER, THE ASSESSEE HAS ALSO SUBMITTED ALL THE EVIDENCES, WHICH WERE RE QUIRED BY THE AO. SECTION 68 OF THE INCOME-TAX ACT, 1961, WHICH IS RE PRODUCED AS UNDER :- 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 ASSESS ING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 27. IN TERMS OF THE AFORESAID PROVISIONS OF SECTION 68 OF THE ACT THE PRIMARY ONUS TO EXPLAIN THE NATURE AND SOURCE OF TH E AMOUNT SO FOUND TO BE CREDITED IS ON THE ASSESSEE. THE EXPRESSION NAT URE ENCOMPASSES BRINGING ON RECORD, EVIDENCE ABOUT NATURE OF THE RE CEIPT, BE IT LOAN, ADVANCE, SHARE APPLICATION MONEY, ETC. THE EXPRESSI ON `SOURCE ENVISAGES ESTABLISHING THE IDENTITY AND CREDITWORTHINESS OF T HE SOURCE/ PERSON FROM WHOM THE AMOUNT IS RECEIVED. HOWEVER, ONCE REASONAB LE EXPLANATION IS FURNISHED BY THE ASSESSEE, THE ONUS, SHIFTS TO THE REVENUE. 28. WE FIND THAT IN THE CASE OF ORISSA CORPORATION (P) LIMITED, 159 ITR 78, IN THE CONTEXT OF REQUIREMENT OF THE ASSESSEE T O DISCHARGE PRIMARY ONUS UNDER SECTION 68 OF THE ACT, OBSERVED THAT THE ASSE SSEE HAVING GIVEN THE NAMES AND ADDRESSES OF THE CREDITOR WHO WERE INCOME -TAX ASSESSEES, THE MERE FACT THAT SUCH CREDITORS DID NOT RESPOND PURSU ANT TO NOTICE UNDER SECTION 131 OF THE ACT COULD NOT BE USED AGAINST TH E ASSESSEE. THE HON'BLE SUPREME COURT OBSERVED AS UNDER: IN THIS CASE, THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF T HE REVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASSESSEES. THEIR INDEX NUMBERS AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 98 WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER SECTION 131 AT THE INSTANCE OF THE AS SESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAM INE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY OR WERE SUCH WHO COULD ADVANCE THE ALL EGED LOANS. THERE WAS NO EFFORT MADE TO PURSUE THE SO-CALLED AL LEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO A NYTHING FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLU SION THAT THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM, THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUEST ION OF LAW AS SUCH ARISES. 29. SIMILARLY, IN THE CASE OF HON'BLE VS. METACHEM INDUSTRIES, 245 HON'BLE 160 (MP), JURISDICTIONAL HIGH COURT HAS OBS ERVED AS UNDER :- 3. WE HAVE HEARD THE LEARNED COUNSELS FOR THE PARTIES . SECTION 68 OF THE ACT SAYS THAT WHERE ANY SUM IS FOUND CREDITE D IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND T HE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE T HEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE HON'BLE, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. T HEREFORE, ACCORDING TO SECTION 68, THE FIRST BURDEN IS ON THE ASSESSEE TO SATISFACTORILY EXPLAIN THE CREDIT ENTRY IN THE BOOK S OF ACCOUNT OF THE PREVIOUS YEAR. IF THE EXPLANATION GIVEN BY THE ASSE SSEE IS SATISFACTORY, THEN THAT ENTRY WILL NOT BE CHARGED W ITH THE INCOME OF THE PREVIOUS YEAR OF THE ASSESSEE. IN CASE THE EXPL ANATION OFFERED BY THE ASSESSEE IS NOT SATISFACTORY OR THE SOURCE OFFE RED BY THE ASSESSEE-FIRM IS NOT SATISFACTORY, THEN IN THAT CAS E THE AMOUNT SHOULD BE TAKEN TO BE THE INCOME OF THE ASSESSEE. I N THE PRESENT CASE, THE ASSESSING OFFICER DID NOT FEEL SATISFIED WITH THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 99 EXPLANATION GIVEN BY THE ASSESSEE AND, ACCORDINGLY, ASSESSED ALL THE THREE CREDIT ENTRIES TO THE ACCOUNT OF THE ASSE SSEE AS THE INCOME. THE HON'BLEBLE COURT FURTHER HELD THAT ONCE SATISF ACTORY EXPLANATION IS ADDUCED BY THE ASSESSEE, THEN, ADDITION CANNOT BE MADE AND THE AMOUNT MAY BE TAXED IN THE HANDS OF THE PERSON WHO HAS DEPOSITED THE AMOUNT. THE RELEVANT OBSERVATIONS OF THE COURT ARE AS UNDER: 5. SO FAR AS THE RESPONSIBILITY OF THE ASSESSEE IS CO NCERNED, IT IS SATISFACTORILY DISCHARGED. WHETHER THAT PERSON IS I NCOME-TAX PAYER OR NOT OR FROM WHERE HE HAS BROUGHT THIS MONEY IS N OT THE RESPONSIBILITY OF THE FIRM. THE MOMENT THE FIRM GIV ES SATISFACTORY EXPLANATION AND PRODUCES THE PERSON WHO HAS DEPOSIT ED THE AMOUNT, THEN THE BURDEN OF THE FIRM IS DISCHARGED A ND IN THAT CASE THAT CREDIT ENTRY CANNOT BE TREATED TO BE INCOME OF THE FIRM FOR THE PURPOSES OF INCOME-TAX. IT IS OPEN FOR THE ASSESSIN G OFFICER TO TAKE APPROPRIATE ACTION UNDER SECTION 69 OF THE ACT AGAI NST THE PERSON WHO HAS NOT BEEN ABLE TO EXPLAIN THE INVESTMENT. IN THE PRESENT CASE, THERE IS THE CONCURRENT FINDING OF BOTH THE C OMMISSIONER (APPEALS) AS WELL AS OF THE TRIBUNAL THAT THE FIRM HAS SATISFACTORILY EXPLAINED THE AFORESAID ENTRIES. 30. WE FIND THAT IN THE CASE OF S. K. BOTHRA & SONS , HUF V. ITO: 347 ITR 347, THE ASSESSEE TOOK LOAN FROM TWO PERSONS. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ISSUE D NOTICE UNDER SECTION 131 OF THE ACT TO SUCH PARTIES WHICH WERE DULY RESP ONDED. THE ASSESSING OFFICER, HOWEVER, ADDED THESE LOAN AMOUNTS AS UNEXP LAINED CREDIT SIMPLY BASED ON THE REPORT OF THE INSPECTOR AND HELD THE S AME AS NOT GENUINE. THE APPEAL PREFERRED BY THE ASSESSEE WAS DISMISSED BY THE CIT(A) AS WELL AS BY THE TRIBUNAL. ON FURTHER APPEAL BEFORE THE HIGH COURT, WHILE SETT ING ASIDE THE MATTER TO THE ASSESSING OFFICER, THE COURT OBSERVED AS UNDER: AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 100 .. IN SUCH CIRCUMSTANCES, WE FIND SUBSTANCE IN THE CON TENTION OF MR. KHAITAN THAT THE ORDER OF ASSESSMENT CANNOT BE SUPPORTED AS THE MATERIALS COLLECTED BY THE ASSESSING OFFICER THROUGH THE INSP ECTOR WHICH WERE RELIED UPON WERE NEITHER DISCLOSED TO THE APPELLANT NOR WA S THE APPELLANT ASKED TO EXPLAIN THE REPORT SUBMITTED BY THE INSPECTOR. IT IS NOW A SETTLED LAW THAT WHILE CONSIDERING THE QUESTION WHETHER THE ALLEGED LOAN TAKEN BY THE ASSESSEE WAS A GENUINE TR ANSACTION, THE INITIAL ONUS IS ALWAYS UPON THE ASSESSEE AND IF NO EXPLANAT ION IS GIVEN OR THE EXPLANATION GIVEN BY THE APPELLANT IS NOT SATISFACT ORY, THE ASSESSING OFFICER CAN DISBELIEVE THE ALLEGED TRANSACTION OF L OAN. BUT THE LAW IS EQUALLY SETTLED THAT IF THE INITIAL BURDEN IS DISCH ARGED BY THE ASSESSEE BY PRODUCING SUFFICIENT MATERIALS IN SUPPORT OF THE LO AN TRANSACTION, THE ONUS SHIFTS UPON THE ASSESSING OFFICER AND AFTER VERIFIC ATION, HE CAN CALL FOR FURTHER EXPLANATION FROM THE ASSESSEE AND IN THE PR OCESS, THE ONUS MAY AGAIN SHIFT FROM THE ASSESSING OFFICER TO ASSESSEE. IN THE CASE BEFORE US, THE ASSESSEE BY PRODUCING TH E LOAN- CONFIRMATION CERTIFICATES SIGNED BY THE CREDITORS, DISCLOSING TH EIR PERMANENT ACCOUNT NUMBERS AND ADDRESS AND FURTHER INDICATING THAT THE LOAN WAS TAKEN BY ACCOUNT PAYEE CHEQUES, NO DOUBT, PRIMA FACIE, DISCH ARGED THE INITIAL BURDEN AND THOSE MATERIALS DISCLOSED BY THE ASSESSE E PROMPTED THE ASSESSING OFFICER TO ENQUIRE THROUGH THE INSPECTOR TO VERIFY THE STATEMENTS. WE FIND SUBSTANCE IN THE CONTENTION OF MR. KHAITAN THAT ON THE BASIS OF THE REPORT SUBMITTED BY SUCH INSPECTOR, THE ASSESSING O FFICER COULD NOT STRAIGHTWAY ARRIVE AT THE CONCLUSION THAT THE TRANS ACTIONS WERE NOT GENUINE WITHOUT GIVING FURTHER OPPORTUNITY TO THE A PPELLANT TO EXPLAIN THE ALLEGED INFORMATION DISCLOSED BY THE INSPECTOR TO T HE ASSESSING OFFICER. . AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 101 31. WE ALSO FIND THAT IN THE CASE OF CIT V. KISHORI LAL CONSTRUCTION LTD.: 191 TAXMAN 194, HON'BLE DELHI HIGH COURT HAS OBSERV ED AS UNDER: AFTER CONSIDERING THE ARGUMENTS OF BOTH THE SIDES , WE FIND OURSELVES IN FAVOUR OF THE SUBMISSION MADE BY LEARNED COUNSEL FO R THE RESPONDENT. AS MENTIONED ABOVE, THE ASSESSEE HAD PRODUCED THE FOLL OWING WHICH WOULD CLEARLY DEMONSTRATE IT HAS DISCHARGED ITS INITIAL B URDEN:- (A) THE IDENTITY OF M/S. YADAV AND COMPANY, BY FILI NG THEIR CONFIRMATION AND THEIR ASSESSMENT PARTICULARS. (B) GENUINENESS OF THE TRANSACTION BY POINTING OUT THAT THE ASSESSEE HAD SOLD SHARES TO M/S. YADAV AND COMPANY IN THE IMMEDI ATELY PRECEDING YEAR (WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT) AN D THAT THE PAYMENT RECEIVED DURING THE RELEVANT PREVIOUS YEAR WAS AGAI NST THE DEBT DUE FROM M/S. YADAV AND COMPANY. (C) CREDITWORTHINESS OF THE CREDITOR BY POINTING OU T THAT THE AMOUNT WAS RECEIVED BY WAY OF CHEQUES DRAWN ON THE BANK ACCOUN T OF M/S. YADAV AND COMPANY MAINTAINED WITH UNION BANK OF INDIA, MO TIBAGH BRANCH, NEW DELHI, WHICH, DESPITE DENIAL BY THE YADAVS, WAS , AS PER BANK RECORDS, FOUND TO BE OPENED AND OPERATED BY SH. O.P . YADAV/MOHINDER SINGH YADAV. THE INITIAL BURDEN THUS DISCHARGED, IT WAS FOR THE REVENUE TO ESTABLISH THAT THE TRANSACTION IN QUESTION WAS BOGUS. THIS WOULD B E SO EVEN IF THERE IS A DENIAL BY THE CREDITORS THAT THE CREDITS WERE NOT G ENUINE AS HELD BY THE SUPREME COURT IN CIT V. ORISSA CORPN. (P.) LTD. [19 86] 159 ITR 78. MERE DENIAL BY YADAVS THAT ACCOUNT IN QUESTION WAS NOT O PERATED BY THEM WOULD NOT AUTOMATICALLY LEAD TO THE INFERENCE THAT ASSESSEE DEPOSITED IN THE SAID ACCOUNT AND, THEREFORE, IT BECAME ITS UNAC COUNTED INCOME. THE CIT(A) AS WELL AS THE ITAT HAVE RIGHTLY POINTED OUT THAT THE NECESSARY EXERCISE WHICH WAS TO BE UNDERTAKEN BY THE ASSESSIN G OFFICER WAS NOT CARRIED OUT. IT WAS FOR THE ASSESSING OFFICER TO PR OBE THE MATTER FURTHER. HE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 102 COULD NOT SIMPLY PASS ON THE BUCK TO THE ASSESSEE A SKING HIM TO PRODUCE SH. O.P. YADAV OR SH. MOHINDER SINGH YADAV. IT IS T HE DEPARTMENT WHICH HAD REOPENED THE ASSESSMENT ON THE BASIS OF THE STA TEMENTS OF THE YADAVS. THE DEPARTMENT WAS RELYING UPON THE SAID ST ATEMENTS. WHEN THE PREMISES OF M/S. YADAV AND COMPANY WERE SEARCHED BY THE DEPARTMENT IN 2002 AND THE STATEMENTS OF AFORESAID TWO PERSONS WERE RECORDED, IT IS CLEAR THAT YADAV AND COMPANY WAS VERY MUCH IN EXIST ENCE. MORE INTERESTINGLY, M/S. YADAV AND COMPANY EVEN ASSESSED TO INCOME-TAX. IN THE CASE OF ASSESSEE, THE ASSESSMENT WAS COMPLETED IN DECEMBER, 2003. IN SUCH A SCENARIO, IT WOULD NOT HAVE BEEN DIFFICUL T FOR THE ASSESSING OFFICER TO FIND THE WHEREABOUTS OF YADAVS PARTICULA RLY HAVING REGARD TO THE STATEMENT OF THE ASSESSEE THAT IT HAD NO DEALING WI TH M/S. YADAV AND COMPANY AFTER ASSESSMENT YEAR 2000-01 AND WAS THUS UNAWARE OF ITS PRESENT WHEREABOUTS. LIVE LINK BETWEEN THE BANK ACC OUNT OF M/S. YADAV AND COMPANY AND THE ASSESSEE HAS NOT BEEN ESTABLISH ED. 32. WE FIND THAT IN THE CASE OF CIT V. DATA WARE (P ) LIMITED: ITA NO. 263 OF 2011, THE HONBLE KOLKATA HIGH COURT HELD THAT ONCE THE ASSESSEE FURNISHED PAN OF THE CREDITOR, THE ASSESSING OFFICE R MUST ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR. THE COURT OBSERV ED AS UNDER: BOTH THE COMMISSIONER OF INCOME TAX (APPEAL) AND T HE TRIBUNAL BELOW HAVE IN DETAILS CONSIDERED THE FACT THAT THE SHARE APPLICATION MONEY WAS PAID BY ACCOUNT PAYEE CHEQUE, THE CREDITOR APPEARED BEFORE THE ASSESSING OFFICER, DISCLOSED ITS PAN NUMBER AND ALSO OTHER DE TAILS OF THE ACCOUNTS BUT IN SPITE OF THAT THE ASSESSING OFFICER DID NOT ENQUIRE FURTHER FROM THE ASSESSING OFFICER OF THE CREDITOR BUT INSTEAD, HIMS ELF PROCEEDED TO CONSIDER THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR AND OPI NED THAT HE HAD SOME DOUBT ABOUT THE GENUINENESS OF SUCH ACCOUNT. IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE ASSESSING OFFICER OF THE ASSESSE E CANNOT TAKE THE BURDEN OF ASSESSING THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR WHEN ADMITTEDLY THE CREDITOR HIMSELF IS AN INCOME TAX AS SESSEE. AFTER GETTING THE PAN NUMBER AND GETTING THE INFORMATION THAT THE CRE DITOR IS ASSESSED AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 103 UNDER THE ACT, THE ASSESSING OFFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR AS TO THE GENUINENESS OF TH E TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE ASSESSING OFFICER OF THE CREDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE ASSESSING OFFICER HIMSELF COULD NOT ENTER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RE TURN SUBMITTED BY THE CREDITOR HAS BEEN REJECTED BY ITS ASSESSING OFFICER , THE ASSESSING OFFICER OF THE ASSESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE GENUINENESS OF TRANSACTION THR OUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED. WE FIND THAT BOTH THE COMMISSIONER OF INCOME TAX(APPEAL) AND THE TRIBUNAL BELOW FOLLOWED THE WELL-ACCEPTED PRINCIPLE WHICH ARE REQUIRED TO BE FOLLOWED IN CONS IDERING THE EFFECT OF SECTION 68 OF THE ACT AND WE THUS FIND NO REASON TO INTERFERE WITH THE CONCURRENT FINDINGS OF FACT RECORDED BY BOTH THE AU THORITIES. THE APPEAL IS THUS DEVOID OF ANY SUBSTANCE AND IS SUMMARILY DISMI SSED. 33. ON GOING THROUGH THE ABOVE CASE LAWS AND APPLY ING THEM ON THE FACTS OF THE ASSESSEES CASE, WE FIND THAT THE SAME ARE SQUARELY APPLICABLE TO THE ASSESSEES CASE. WE FIND THAT IN THE INSTANT CASE THE ASSESSEE HAD, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FILED ALL THE RELEVANT DETAILS/ DOCUMENTS/ INFORMATION, REQUIRED BY THE ASSESSING O FFICER, AS WERE NECESSARY TO SUBSTANTIATE THE IDENTITY AND CREDIT-W ORTHINESS OF THE CREDITOR COMPANIES AND ALSO THE GENUINENESS OF TRANSACTION. 34. THE AO HAS NOT BEEN ABLE TO REBUT, IN ANY MANNE R, VOLUMINOUS DOCUMENTARY EVIDENCES PLACED ON RECORD. IN FACT, DI SREGARDING THE DOCUMENTS PLACED ON RECORD, THE ASSESSING OFFICER, PROCEEDED TO MAKE ADDITION UNDER SECTION 68 OF THE ACT, SIMPLY BY CHE RRY PICKING CERTAIN PARTS OF THE REPORTS OF THE INSPECTORS OF INCOME TAX/ INV ESTIGATION WING, WITHOUT APPRECIATING THAT THE REPORTS CONSIDERED ALONG WITH EX-PARTE MATERIAL/ DOCUMENTS COLLECTED/ RECEIVED FROM CREDITORS, ESTAB LISHED, BEYOND ANY DOUBT, THE INGREDIENTS OF SECTION 68 OF THE ACT. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 104 35. MOST PERTINENTLY, THE AO HAS NOT SPECIFICALLY D EALT WITH ANY OF THE VOLUMINOUS MATERIAL/ DOCUMENTS AVAILABLE ON RECORD. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS SIMPLY REPRODUCED THE REPORTS FURNISHED, SUBMISSIONS OF THE ASSESSEE AND DISCUSSION ON CASE LAWS, WITHOUT DEALING WITH THE SAME AND SPECIFYING THEIR APPLICABILITY VI S-A-VIS THE FACTS OF VARIOUS CREDITORS. 36. WE FIND THAT IN ASSESSMENT YEAR 2005-06 IN THE CASE OF AGRAWAL COAL CORPORATION 19 TAXMAN.COM 209 (ITAT INDORE), O F THE SAME ASSESSEE, RELIED UPON BY THE LD. DEPARTMENTAL REPRESENTATIVE, THE CREDITORS WERE NOT TRACEABLE, WHICH IS NOT THE FACT IN THE PRESENT CAS ES. ON THE CONTRARY, IN THE PRESENT CASE ALL THE CREDITORS NOT ONLY RESPONDED T O THE NOTICES ISSUED U/S 133(6), BUT MOST OF THEM WERE ALSO FOUND EXISTING B Y THE INSPECTORS AND MOST OF THEM ALSO PRESENTED BEFORE THE DDIT (INVEST IGATION) KOLKATA. THEREFORE, THE FACTS ARE CLEARLY DISTINGUISHABLE. M OREOVER, IN THE CASE OF CIT VS. NAVODAYA CASTLES PVT. LTD., ALSO THE PARTY WAS NOT PRESENT AND THE SUMMONS ISSUED U/S 131 RETURNED UNSERVED. IN THAT C ASE, THE ASSESSEE WAS ASKED TO PRODUCE THE SHAREHOLDERS TO SUBSTANTIA TE THE CLAIM OF GENUINENESS BUT THE ASSESSEE WAS UNABLE TO PRODUCE THEM. BUT, IN THE INSTANT CASE, WE HAVE GONE THROUGH THE CASE RECORDS AND WE FOUND THAT THE AO HAS MADE THE VARIOUS ENQUIRIES HIMSELF. MORE OVER, HE HAS ALSO DEPUTED THE INSPECTOR AND IN MOST OF THE CASES, THE INSPECTORS CONFIRMED THE EXISTENCE OF THE CREDITORS. THEREAFTER, IF THE AO HAD ANY DOUBT, HE SHOULD HAVE ISSUED SHOW CAUSE NOTICE TO THE ASSESSE E TO PRODUCE THE CREDITORS BEFORE HIM. THE AO DID NOT REQUIRE THE AS SESSEE TO PRODUCE THE CREDITORS. THEREFORE, WE HAVE TO DECIDE THE MATTER AS PER THE FACTS AVAILABLE ON RECORD. 37. THE ENTIRE ADDITION UNDER SECTION 68 OF THE AC T IS, THUS, WITHOUT ANY BASIS AND IS LEGALLY UNSUSTAINABLE. 38. THE VIEW OF THE LD. CIT(A) THAT THE LOAN TAKEN BY THE ASSESSEE FROM TWELVE COMPANIES AGGREGATING TO RS. 6,69,00,000/- W AS EXPLAINED, IS PROPER AND DOES NOT REQUIRE ANY INTERFERENCE AND TH E ADDITION WAS RIGHTLY AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 105 DELETED BY THE LD. CIT(A) AND HAS ALSO RIGHTLY DEL ETED THE DISALLOWANCE OF INTEREST OF RS. 1,03,20,567/- ON THE ABOVE LOANS. G ROUND NOS. 2 TO 4 OF THE REVENUE ARE DISMISSED. 21. FROM PERUSAL OF THE ABOVE FINDING OF CO-ORDINA TE BENCH IN THE CASE OF ANOTHER GROUP CONCERN OF ASSESSEE(S) NAMELY AGARWAL COAL CORPORATION PVT. LTD WHEREIN ALSO UNSECURED LOAN TA KEN FROM M/S ADPL AND M/S CTPL WERE IN DISPUTE. WE FIND THAT HO NBLE TRIBUNAL AFTER CONSIDERING ALL THE RELEVANT FACTS A ND MATERIAL; ON RECORD DECIDED IN FAVOUR OF THE ASSESSEE THEREBY C ONFIRMING THE FINDING OF LD. CIT(A) HOLDING THAT THE ASSESSEE HAS DULY PROVED THE IDENTITY OF THE CASH CREDITORS, GENUINENESS OF THE TRANSACTION AND PROVED CREDITWORTHINESS OF THE LENDER COMPANIES WHI CH THUS DO NOT CALL FOR ANY ADDITION U/S 68 OF THE ACT AND THE INT EREST PAID ON SUCH LOANS SHOULD BE ALLOWED. 22. WE ALSO FIND THAT ASSESSMENT PROCEEDINGS OF THE ALLEGED LENDER COMPANIES NAMELY M/S ADPL & M/S CTPL HAVE BEEN CARR IED OUT FOR MULTIPLE ASSESSMENT YEARS U/S 143(3)/147 OF THE ACT BUT NO ADVERSE INFERENCE OR ACTION HAS BEEN TAKEN BY THE R EVENUE AUTHORITIES AND THUS ACCEPTING THAT THE BUSINESS CA RRIED OUT BY THESE COMPANIES ARE GENUINE AND ARE NOT BOGUS COMPA NIES AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 106 INDULGED IN PROVIDING ACCOMMODATION ENTRIES. DETAIL OF SUCH ASSESSMENTS CARRIED OUT IN THE CASE OF TWO LENDER C OMPANIES ARE SUMMARISED IN THE FOLLOWING CHART:- ASSESSMENT DETAILS OF M/S CHAMAK TEXIM PVT. LTD S. NO AY DATE OF ORDER PASSED U/S INCOME ASSESSED PAGE NO. PB-B-I REMARKS 1 2004 - 05 31.05.06 143(3) 40,050 49 - 59 LAST SHARE CAPITAL AND PREMIUM RECEIVED IS ASSESSED AND ACCEPTED 2 2009 - 10 30.12.16 148/147 11,67,510 61 - 65 REGULAR REOPENING ON OTHER ISSUES 3 2010 - 11 29.12.16 148/147 17,40,714 51 - 55 CASES REOPENED ON INFORMATION OF DDIT(INV), INDORE ON THE BASIS OF SEARCH ON MR. DEEPAK KALANI 4 2011 - 12 29.12.16 148/147 NIL 56 - 60 5 2011 - 12 05.12.18 143(3)/147 - 7,44,953 66 - 70 6 2012 - 13 16.12.18 143(3)/147 38,65,530 71 - 75 ASSESSMENT DETAILS OF M/S AEREO DEALCOMM PVT. LTD S. NO AY DATE OF ORDER PASSED U/S INCOME ASSESSED PAGE NO. PB-B-I REMARKS 1 2003 - 04 28.06.07 147 /14 3(3) 32,240 142 - 143 LAST SHARE CAPITAL ASSESSED WAS ACCEPTED 2 2009 - 10 30.12.16 147/143(3) 18,42,160 144 - 148 CASES CONCLUDED AFTER SEARCHING OF DDIT(INV), INDORE AND NO 3 2010 - 11 16.11.17 147 8,86,387 149 AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 107 ADVERSE OPINION WAS FORMED 23. IT IS ALSO NOTEWORTHY THAT THE LOANS TAKEN BY M /S AGRAWAL COAL CORPORATION PVT. LTD FROM TWO LENDER COMPANIES NAME LY M/S ADCPL & M/S CTPL WHICH WERE HELD TO BE GENUINE BY T HE CO- ORDINATE BENCH WERE REPAID BACK AND ON THE VERY SAM E DAY OF RECEIVING THE LOAN WHICH REPAID BY M/S AGRAWAL COA L CORPORATION PVT. LTD THE LENDER COMPANIES HAVE USED THE SAME FU ND FOR ADVANCING LOAN TO M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD. WE HAVE VERIFIED THIS FACT AND FOUND THAT ON 23.02.201 0 SUM OF RS.2,68,40,000/- WAS REPAID BY M/S AGRAWAL COAL COR PORATION PVT. LTD TO M/S AEREO DEAL COM PVT. LTD. THIS SUM WAS R ECEIVED IN UCO BANK ACCOUNT IN CASE OF M/S AEREO DEAL COM PVT. LT D AND ON THE VERY SAME DAY, THROUGH CHEQUE NO. 111017 SUM OF RS.2,68,00,000/- WAS GIVEN AS LOAN TO M/S. AGRAWAL TRANSPORT CORPORATION PVT. LTD. SIMILARLY IN THE CASE OF M/S CHAMAK TRAXIM PVT. LTD LOAN OF RS.3,42,55,000/-WAS REPAID BY M/S AGRAWAL COAL CORPORATION PVT. LTD ON 23.02.2010 WHICH WAS ALSO C REDITED IN UCO BANK ACCOUNT HELD BY M/S CTPL AND ON THE VERY SAME DAY THROUGH CHEQUE NO.679523 LOAN OF RS.3,42,00,000/- W AS GIVEN TO AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 108 M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD. SO THE SOURCE OF SOURCE OF ALLEGED LOANS TAKEN FROM TWO LENDER COMPA NIES IS PROVED BEYOND DOUBT. IT FURTHER STRENGTHENS THE FINDING O F LD. CIT(A) THAT BOTH THE LENDER NON BANKING FINANCE ARE GENUINE HAV ING REGULAR BUSINESS OF FINANCE AND HAVE SUFFICIENT FUNDS FOR P ROVIDING LOANS TO VARIOUS BORROWERS FOR EARNING INTEREST AND ONCE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE COMPANY FOR THE TRANSACTION CARRIED OUT BY GROUP COMPANIES IS PROVE D BEYOND DOUBT AND DULY ACCEPTED BY THE TRIBUNAL THERE HARDLY REMA IN ANY SCOPE TO QUESTION IT AGAIN IN THE CASE OF OTHER CONCERNS WHE RE SUCH TYPE OF UNSECURED LOANS ARE RECEIVED FROM THE SAME LENDER C OMPANIES. THUS THE DECISION OF THE CO-ORDINATE BENCH IN THE C ASE OF M/S AGRAWAL COAL CORPORATION PVT. LTD (SUPRA) IS SQUARELY APPLICABLE ON THE FACTS OF THE INSTANT CASE AND THUS WE HOLD THAT THE LOAN RECEIVED FROM M/S AEREO DEALCOMM PVT. LTD AND M/S CHAMAK TRE XIM PVT. LTD BY M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD, ADMANUM FINANCE LTD AND AVAILABLE FINANCE LTD ARE GENUINE A ND DULY EXPLAINED BY THE ASSESSEE(S) AND THE INTEREST PAID THEREON AS PROVIDED IN THE CHART IN THE PRECEDING PARAS IS GEN UINE BUSINESS EXPENDITURE AND THE ASSESSEE(S) HAVE DULY EXPLAINED THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 109 TRANSACTION OF LOAN TAKEN AND ALSO PROVED THE IDENT ITY, GENUINENESS AND CREDITWORTHINESS OF THE LOAN CREDITORS. WE THU S ARE OF THE VIEW THAT RESPECTIVE ASSESSING OFFICERS OF THE THREE ASS ESSEE(S) IN APPEAL BEFORE US ERRED IN TREATING THE LOANS TAKEN FROM M/ S AEREO DEALCOMM PVT. LTD AND M/S. CHAMAK TREXIM PVT. LTD H AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND FURTH ER ERRED IN DISALLOWING THE INTEREST PAID ON SAID LOANS. WE THU S, CONFIRM THE FINDING OF LD. CIT(A) IN THE CASE OF M/S. AGRAWAL T RANSPORT CORPORATION PVT. LTD DELETING THE ADDITION U/S 68 O F THE ACT AT RS. 6,10,00,000/- AND ALSO DELETING THE DISALLOWANCE OF INTEREST AT RS. 8,39,425/-. WE ALSO CONFIRM THE FINDING OF LD. CIT( A) IN THE CASE OF M/S AVAILABLE FINANCE LTD DELETING THE ADDITION FOR UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AT RS. 69,00,000/- AN D DELETING THE DISALLOWANCE OF INTEREST PAID ON SUCH UNSECURED LOA NS AT RS.51,93,162/-. WE ALSO SET ASIDE THE FINDING OF L D. CIT(A) IN THE CASE OF M/S ADMANUM FINANCE LTD AND DELETE THE ADD ITION OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT FOR THE U NSECURED LOAN TAKEN FROM THE ABOVE REFERRED TWO LENDER COMPANIES TOTALLING TO RS. 1,44,75,000/- AND WE ALSO DIRECT THE REVENUE AUTHOR ITIES TO ALLOW THE CLAIM OF INTEREST EXPENDITURE OF RS.61,58,897/- . WE THUS AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 110 DISMISS GROUND NO. 1 & 2 OF REVENUES APPEAL IN THE CASE OF M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD FOR ASSESSME NT YEAR 2010- 11 ALLOW GROUND NO. 2 & 3 OF THE ASSESSEES APPEAL IN CASE OF M/S ADMANUM FINANCE LTD FOR ASSESSMENT YEAR 2009-10 AND DISMISS GROUND NO.2 OF REVENUES APPEAL IN THE CASE OF M/S AVAILABLE FINANCE LTD FOR ASSESSMENT YEAR 2014-15. 24. AS REGARDS THE CROSS OBJECTION FILED THE ASSESS EE IN THE CASE OF M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD FOR ASSE SSMENT YEAR 2010-11, AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE REQUESTED FOR NOT PRESSING THE GROUND RAISED IN THE CROSS OBJECTI ON NO35/IND/2019. THUS ALL THE GROUNDS RAISED IN THE C ROSS OBJECTION BY THE ASSESSEE IN CASE OF M/S AGRAWAL TRANSPORT C ORPORATION PVT. LTD FOR ASSESSMENT YEAR 2010-11 ARE DISMISSED AS NO T PRESSED. 25. AS REGARDS GROUND NO.1 IN THE CASE OF M/S. ADMA NUM FINANCE LTD FOR ASSESSMENT YEAR 2009-10 (ITA NO.331 /IND/2018) CHALLENGING THE INITIATION OF REOPENING OF ASSESSME NT PROCEEDINGS, LD. COUNSEL FOR THE ASSESSEE REQUESTED FOR NOT PRES SING GROUND NO.1 AND THUS GROUND NO.1 IS DISMISSED AS NOT PRESS ED. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 111 26. NOW WE WILL TAKE UP GROUND NO.4 OF THE ASSESSEE S APPEAL IN THE CASE OF M/S ADMANUM FINANCE LTD VIDE ITA NO.33 1/IND/2018 FOR ASSESSMENT YEAR 2009-10 WHEREIN THE ASSESSEE HA S CHALLENGED THE FINDING OF LD. CIT(A) CONFIRMING THE DISALLOWAN CE OF INTEREST AT RS.6,75,000/- AND RS.6,00,000/- PAID ON THE UNSECUR ED LOANS TAKEN FROM M/S JAYANT SECURITIES & FINANCE LTD AND LUNKWARD MEDIA ENTERTAINMENT LTD RESPECTIVELY. 27. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT DUR ING THE COURSE OF REASSESSMENT PROCEEDINGS CARRIED OUT U/S 147 R.W.S. 143(3) OF THE ACT LD. A.O OBSERVED THAT THE ASSESSEE HAD PAID INT EREST ON UNSECURED LOANS OF RS. 6,75,000/- AND RS.6,00,000/- TAKEN FROM M/S JAYANT SECURITIES & FINANCE LTD AND LUNKWARD ME DIA ENTERTAINMENT LTD RESPECTIVELY. THOUGH NO FRESH LO AN WAS TAKEN DURING THE YEAR AND THE INTEREST WAS PAID ON THE OP ENING BALANCE OF THE LOANS TAKEN IN THE PREVIOUS YEAR, LD. A.O GIVI NG THE FINDING THAT SINCE BOTH THE LOAN PROVIDER COMPANIES ARE ACCOMMODATION/PAPER/BOGUS COMPANY THE INTEREST PAID DURING THE YEAR NEEDS TO BE DISALLOWED. AGGRIEVED WITH THIS D ISALLOWANCE ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A) BUT FAILE D TO SUCCEED AS AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 112 THE ACTION OF LD. A.O. WAS CONFIRMED. 28. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. 29. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE TRIBUNAL IN ANOTHER GROUP CONCERN OF THE AS SESSEE M/S AGRAWAL COAL CORPORATION PVT. LTD FOR THE VERY SAME ASSESSMENT YEAR I.E. 2009-10 VIDE ITA NO.356/IND/2014 AND C.O. NO.41/1/2014 DATED 1.12.2015. LD. COUNSEL ALSO SUB MITTED THAT LOANS ON WHICH THE ALLEGED INTEREST WAS PAID WAS NO T TAKEN DURING THE YEAR AND IT IS A BROUGHT FORWARD BALANCE. DURIN G THE PRECEDING YEARS WHEN THE ACTUAL LOAN WAS TAKEN THE SAME WERE ACCEPTED AS EXPLAINED BY THE REVENUE AUTHORITIES IN THE REGULAR ASSESSMENT PROCEEDINGS. FURTHER THE LOAN FROM M/S JAYANT SECU RITIES & FINANCE LTD WAS REPAID IN THE IMMEDIATELY SUBSEQUEN T YEAR. THE LOAN BALANCE OF M/S LUNKWARD MEDIA ENTERTAINMENT L TD ALONG WITH THE IMPUGNED INTEREST WAS OFFERED TO TAX IN TH E SUBSEQUENT YEAR BY THE ASSESSEE ITSELF ON ACCOUNT OF CERTAIN D ISPUTE WITH THE LENDER AND THUS THE ADDITION MADE DURING THE YEAR U NDER APPEAL RESULTED INTO DOUBLE ADDITION. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 113 30. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHE MENTLY ARGUED SUPPORTING THE ORDERS OF BOTH THE LOWER AUTH ORITIES. 31. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND ALSO GONE THROUGH THE DECISION OF HONBLE CO- ORDINATE BENCH OF INDORE IN THE CASE OF M/S AGRAWAL CORPORATION PVT. LTD (SUPRA) RELIED BY LD. COUNSEL FOR THE ASSESSEE. THROUGH GROUND NO.4 THE ASSESSEE NAMELY M/S ADMANUM FINANCE LTD IS AGGRIEVED WITH THE FINDING OF LD. CIT(A) CONFIRMING THE DISALLOWANCE OF INTEREST OF RS. 6,75,000/- AND RS.6,00,000/- PAI D TO M/S JAYANT SECURITIES & FINANCE LTD AND M/S. LUNKWARD MEDIA EN TERTAINMENT LTD RESPECTIVELY. THE UNDISPUTED FACT BEFORE US IS THAT THE INTEREST HAS BEEN PAID ON THE OPENING BALANCE OF THE LOANS W HICH WERE TAKEN IN THE PRECEDING YEARS. NO FRESH LOAN HAS BEE N RECEIVED FROM THE ABOVE NAMED LOAN PROVIDERS DURING THE YEAR UNDE R CONSIDERATION. IT WAS ALSO BROUGHT TO OUR NOTICE T HAT NO ADDITION HAS BEEN MADE U/S 68 OF THE ACT IN THE CASE OF THE ASSESSEE FOR THE LOANS TAKEN IN PRECEDING YEARS FROM THESE COMPANIES . WE OBSERVE THAT THE CO-ORDINATE BENCH, INDORE IN THE CASE OF A NOTHER GROUP CONCERN OF ASSESSEE NAMELY AGRAWAL TRANSPORT CORPORATION PVT. LTD AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 114 (SUPRA) DEALT THE VERY SAME ISSUE FOR ASSESSMENT YEAR 200 9-10 RELATING TO DISALLOWANCE OF INTEREST PAID ON LOANS TAKEN IN EARLIER YEAR AND THE TRIBUNAL CONFIRMED THE FINDING OF LD. CIT(A) THUS DECIDING IN FAVOUR OF THE ASSESSEE AFTER RELYING ON THE DECISION OF THE HONBLE TRIBUNAL IN THE CASE OF SAME ASSESSEE AGRAWAL TRANSPORT CORPORATION PVT. LTD (SUPRA) FOR ASSESSMENTYEAR 2008-09 ACCEPTING THE PROPOSITION THAT SINCE NO ADDITION H AS BEEN MADE U/S 68 IN THE ASSESSEES OWN CASE, INTEREST CANNOT BE DISALLOWED. 32. NOW EXAMINING THE FACTS OF THE INSTANT APPEAL I N THE LIGHT OF DECISION OF HONBLE TRIBUNAL, WE ARE OF THE VIEW TH AT THE SAME IS SQUARELY APPLICABLE SINCE NO LOAN HAS BEEN TAKEN DU RING THE YEAR AND THE LOAN ON WHICH INTEREST HAS BEEN PAID DURING THE YEAR HAS NOT BEEN SUBJECTED TO ADDITION U/S 68 OF THE ACT AN D THEREFORE THE DISALLOWANCE OF INTEREST OF RS. 6,75,000/- AND RS. 6,00,000/- PAID TO M/S JAYANT SECURITIES & FINANCE LTD AND M/S. LUN KWARD MEDIA ENTERTAINMENT LTD RESPECTIVELY IS UNCALLED FOR. WE THUS SET ASIDE THE FINDING OF LD. CIT(A) AND ALLOW GROUND NO.4 OF THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 IN THE CASE OF M /S ADMANUM FINANCE LTD. AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 115 33. NOW WE WILL DEAL WITH GROUND NO.1 OF THE REVENU ES APPEAL IN THE CASE OF M/S AVAILABLE FINANCE LTD ITA NO.895/IN D/2019 FOR ASSESSMENT YEAR 2014-15. IN THIS GROUND NO.1 REVEN UE HAS CHALLENGED THE FINDING OF LD. CIT(A) RESTRICTING TH E ADDITION U/S 14A OF THE ACT AT RS. 7481 AS AGAINST RS.38,19,444/- MA DE BY LD. A.O. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT DURING THE YEAR ASSESSEE EARNED DIVIDEND INCOME OF RS. 2,70,120/- FROM THE I NVESTMENT IN EQUITY SHARES. THE TOTAL INVESTMENT STOOD AT RS.16 01.46 LAKHS AS ON 31.3.2014 AS AGAINST RS. 1101.46 LAKHS AS ON 31. 3.2013. THE AUDITOR OF THE COMPANY WORKED OUT THE DISALLOWANCE AT RS.7481/- U/S 14A OF THE ACT. THE ASSESSEE HAD PAID INTEREST OF RS. 88,41,366/-. HOWEVER DURING THE YEAR ASSESSEE HAD A POSITIVE INTEREST INCOME AND TOTAL INTEREST RECEIVED WAS HIG HER THAN THE INTEREST PAID. HOWEVER, LD. A.O ONLY CONSIDERED TH E INTEREST PAID AT RS.88,41,366/- AND THE AVERAGE VALUE OF INVESTMENT AT RS.11,01,46,222/- AND COMPUTED THE DISALLOWANCE U/S 14A OF THE ACT APPLYING THE METHOD PROVIDED UNDER RULE 8D OF I .T. RULES R.W.S. SECTION 14A OF THE ACT AND COMPUTED DISALLOWANCE AT RS.38,90,444/-. AGAINST THIS DISALLOWANCE U/S 14A ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). THE ASSESSEE G OT SUBSTANTIAL AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 116 RELIEF AS LD. CIT(A) SUSTAINED THE DISALLOWANCE U/S 14A OF THE ACT ONLY TO THE EXTENT OF RS.7481/- WHICH THE AUDITOR O F THE COMPANY HAS WORKED OUT. NOW THE REVENUE IS IN APPEAL BEFOR E THE TRIBUNAL. 34. LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDER OF LD. A.O. LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE FI NDING OF LD. CIT(A) AND ALSO SUBMITTED THAT LD. CIT(A) HAS RIG HTLY HELD THAT DISALLOWANCE OF INTEREST WAS NOT CALLED FOR SINCE A T THE END OF THE YEAR IT EARNED NET INTEREST INCOME AND SECONDLY THE ASSESSEE HAD SUFFICIENT OWN CAPITAL AND FROM RESERVES TO COVER U P THE INVESTMENTS MADE. THE ASSESSEE PLACED RELIANCE ON FOLLOWING DECISIONS; (I) HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT V/ S M/S RELIANCE UTILITIES & POWER LTD (2009) 313 ITR 0340 (MUM) (II) HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT V/S HDFC BANK LTD 366 ITR 505 (2014) (MUM) (III) HONBLE HIGH COURT OF BOMBAY IN THE CASE OF HDFC BANK V/S DCIT (2016) 383 ITR 0529 (IV) HONBLE SUPREME COURT IN THE CASE OF CIT V/ S M/S RELIANCE INDUSTRIES LIMITED (2019) 104 CCH 0005 (SC) AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 117 (V) HONBLE BENCH OF ITAT INDORE IN THE CASE OF AD MANUM FINANCE LIMITED FOR A.Y 2008-09 IN ITA NO.389/201 2 DATED 27.06.2016. (VI) ACIT CIRCLE 1 INDORE V/S ARIHANT CAPITAL MARK ET LIMITED IN ITA NO. 370/IND/2017 DATED 31.05.2018. 35. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND GONE THROUGH THE DECISION RELI ED BY THE LD. COUNSEL FOR THE ASSESSEE. REVENUE IS AGGRIEVED WITH THE FINDING OF LD. CIT(A) SUSTAINING THE DISALLOWANCE OF RS. 7481/ - AS AGAINST RS.38,90,444/- COMPUTED BY THE LD. A.O APPLYING THE METHOD UNDER RULE 8D OF I.T. RULES. WE OBSERVE THAT THE D ISALLOWANCE COMPUTED BY THE LD. A.O COMPRISES OF TWO FIGURES FI RSTLY THE DISALLOWANCE OF INTEREST EXPENSE AT RS.33,39,713/- AND THE REMAINING PART OF RS.5,50,731/- IS ARRIVED AT BY AP PLYING 0.5% ON THE AVERAGE VALUE OF INVESTMENT AT RS. 11,01,46,222 /-. 36. NOW AS FAR AS INTEREST DISALLOWANCE IS CONCERNE D WE OBSERVE THAT DURING THE YEAR ASSESSEE HAS EARNED INTEREST INCOME WHICH IS HIGHER THAN THE INTEREST PAID DURING THE YEAR. WE FIND THAT THE CO- ORDINATE BENCH IN THE CASE OF SAME ASSESSEE FOR ASS ESSMENT YEAR 2008-09 ITA NO/389/IND/2012 DATED 27.6.2016 HAS HEL D THAT THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 118 DISALLOWANCE OF INTEREST IS UNCALLED FOR IF THE INT EREST EXPENDITURE DURING THE YEAR IS LESS THAN THE INTEREST INCOME EA RNED DURING THE YEAR. EVEN OTHERWISE THE JUDGMENT OF HONBLE BOMBA Y HIGH COURT IN THE CASE OF CIT V/S RELIANCE UTILITIES & POWER LTD (SUPRA) IS ALSO SQUARELY APPLICABLE IN THE CASE OF ASSESSEE AS THE ASSESSEE HAS SUFFICIENT SHARE CAPITAL AND FREE RESERVES AT RS. 1 584.75 LAKHS AND RS. 1682 LAKHS AS ON 31.3.2013 AND 31.3.2014 RESPEC TIVELY TO COVER UP THE INVESTMENTS OF RS. 1101.46 LAKHS. THIS ITSEL F PROVES THAT BORROWED FUNDS HAVE NOT BEEN UTILISED FOR MAKING TH ESE INVESTMENTS AND NOTHING CONTRARY HAS BEEN BROUGHT T O OUR NOTICE BY THE REVENUE AUTHORITIES. THEREFORE WE CONFIRM T HE FINDING OF LD. CIT(A) TO THE EXTENT OF THAT NO INTEREST DISALLOWAN CE WAS CALLED FOR U/S 14A OF THE ACT IN THE CASE OF THE ASSESSEE AND THUS THE INTEREST DISALLOWANCE OF RS. 33,39,713/- HAS BEEN RIGHTLY DE LETED. 37. NOW WE COME TO THE REMAINING PORTION OF RS.5,57 ,531/- COMPUTED BY THE LD. A.O APPLYING 0.5% ON THE AVERAG E INVESTMENT OF RS.11,01,46,222/-. LD. CIT(A) WHILE ADJUDICATIN G THIS ISSUE HAS OBSERVED THAT ONLY RS.5 CRORES OF FRESH INVESTMENT WAS MADE BY THE ASSESSEE IN DEBENTURE OF GROUP COMPANIES ON WHICH INTEREST HAS AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 119 EARNED AND OUT OF THE REMAINING INVESTMENT ONLY RS. 14,96,222/- IS ONLY MADE IN THE SHARES OF THE LISTED COMPANIES AN D ALL THE REMAINING INVESTMENTS ARE OLD INVESTMENT IN EQUITY SHARES OF UNLISTED COMPANIES. WE HOWEVER ARE OF THE VIEW THA T THE WORD AVERAGE INVESTMENT REFERRED IN RULE 8D OF I.T RULES CERTAINLY DOES NOT INCLUDE THE INVESTMENTS MADE FOR EARNING TAXABL E INTEREST INCOME BUT FOR SURE INCLUDES THE INVESTMENT FETCHIN G TAX FREE INTEREST AND THOSE MADE IN EQUITY SHARES, WHICH CAN BE LISTED OR UNLISTED. THE CONTENTION OF THE ASSESSEE AND FINDI NG OF LD. CIT(A) THAT INVESTMENT IN UNLISTED COMPANIES SHOULD NOT CO NSIDER FOR COMPUTING THE DISALLOWANCE UNDER THIRD LIMB OF RULE 8D IS DEVOID OF ANY MERIT. THERE IS NO BAR UNDER THE LAW FOR THE U NLISTED COMPANIES TO DECLARE DIVIDEND. IN OTHER WORDS DIVI DEND INCOME CAN BE GENERATED FROM BOTH THE LISTED AS WELL AS UNLIST ED COMPANIES. SO FOR CALCULATING THE DISALLOWANCE UNDER THIRD LIMB O F RULE 8D OF I.T. RULES WE FIRST NEED TO SUBTRACT THE INVESTMENT IN D EBENTURES OF RS. 5 CRORES FROM THE TOTAL AVERAGE INVESTMENTS OF RS. 11.01 CRORES. THE RESULTANT AVERAGE INVESTMENT WILL BE RS. 6.01 CRORE S AND 0.5% OF THIS AVERAGE INVESTMENT WORKS OUT TO RS.3,00,731/-. HOWEVER THE DISALLOWANCE SO CALCULATED AT RS. 3,00,731/- SHOULD NOT EXCEED THE AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 120 DIVIDEND INCOME EARNED BY THE ASSESSEE DURING THE Y EAR AT RS. 2,70,120/-. OUR THIS VIEW OF NOT MAKING DISALLOWAN CE U/S 14A OF THE ACT EXCEEDING THE TOTAL EXEMPT INCOME EARNED DU RING THE YEAR IS ON THE BASIS OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD V/S CIT (2015) 378 ITR 33 (SUPRA) WHEREIN THE HONBLE HIGH COURT HAS CONFIRMED THE FINDING OF TRIBUNAL THAT IN THE ABSENCE OF ANY EXEMPT INCOME DISALLOWANCE U/ S 14A OF THE ACT IS NOT WARRANTED. FURTHER REVENUES SPECIAL LE AVE PETITION FILED AFTER THIS JUDGMENT OF HONBLE HIGH COURT OF DELHI BEFORE HONBLE SUPREME COURT ALSO STANDS DISMISSED VIDE SLP NO.275 5 OF 2019. IN VIEW OF THE ABOVE JUDGMENT WE SUSTAIN THE DISALLOWA NCE U/S 14A OF THE ACT AT RS. 2,71,120/-. THUS GROUND NO.1 OF ASS ESSEES APPEAL IN CASE OF ADMANUM FINANCE LTD IS PARTLY ALLOWED. 38. THE OTHER GROUNDS RAISED BY THE REVENUE AND ASS ESSEE(S) ARE GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 39. IN THE RESULT REVENUES APPEAL NO.651/IND/2019 IN THE CASE OF M/S AGRAWAL TRANSPORT CORPORATION PVT. LTD IS D ISMISSED, ASSESSEES C.O. NO.35/IND/2019 IN CASE OF M/S AGRAW AL TRANSPORT CORPORATION PVT. LTD IS DISMISSED AS NOT PRESSED, ASSESSEES APPEAL AGRAWAL TRANSPORT CORPORATION (P) LTD & ORS ITA NOS. 651, C.O.NO.35/IND/2019, 331/IND/2018 & 89 5/IND/2019 121 NO.331/IND/2018 INTHE CASE OF ADMANUM FINANCE LTD I S ALLOWED AND THE REVENUES APPEAL NO.895/IND/2019 IN THE CAS E OF M/S AVAILABLE FINANCE IS PARTLY ALLOWED AS PER THE TERM S INDICATED ABOVE. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.10.2 020. SD/- SD/- ( KUL BHARAT) (MANI SH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 14 TH OCTOBER, 2020 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE