GENUS ELECTROTECH LTD,AHMEDABAD V. DCIT CENTRAL CIRCLE, MORADABAD

ITA 47/DEL/2021

AI Insights

The case involves M/s Genus Electrotech Limited, which appealed against the order of the CIT(A)-III, Lucknow, arising from the assessment order passed by the ACIT, Central Circle, Moradabad. The assessment was based on a search and seizure operation under Section 132 of the Income Tax Act, 1961, which revealed that the assessee had taken unsecured loans from various parties, including M/s Darkin Vincom Pvt. Ltd., M/s New View Consultants Pvt. Ltd., M/s Puroshottam Distributors Pvt. Ltd., M/s Shivalik Vintrade Pvt. Ltd., M/s Madhuvan Agro Service Pvt. Ltd., and M/s Super Sound Pvt. Ltd. The Income Tax Department conducted detailed investigations and found that these companies were either non-existent or operated from small offices with multiple other companies, suggesting they were paper companies. The tribunal upheld the additions made by the AO, citing the failure of the assessee to prove the genuineness of the loans and the creditworthiness of the creditors.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712603 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2016-2017
• Other Referred Cases: Pr. Commissioner of Income Tax-14 v/s M/s Aditya Birla Telecom Ltd., NRA Iron & Steel Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MONIKA SINGH
• Assessee Lawyers: MAYANK PATAWARI; AKASH OJHA
• Keywords: Additional evidence; Unexplained cash credit; Search and seizure; Source of fund; Charitable institution; Bogus
• Section: 143(3); 132; 68; 131; 133(6)

Judgement Text

"P a g e | 1 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) THE INCOME TAX APPELLATE TRIBUNAL “F” BENCH, DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER & SHRI KHETTRA MOHAN ROY, ACCOUNTANT MEMBER ITA No.47/Del/2021 (Assessment Year: 2016-17) M/s Genus Electrotech Limited, 308, 3rd Floor, Dev ARC Mall, SG Highway, Ahmedabad Gujarat – 380015 Vs. DCIT, Central Circle Income Tax Office, Pilikothi, Moradabad Uttar Pradesh - 244001 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AABCG9645H Appellant .. Respondent Appellant by : Sh. Mayank Patawari, Adv. & Sh. Akash Ojha, Adv. Respondent by : Ms. Monika Singh, CIT. DR Date of Hearing 20.05.2025 Date of Pronouncement 29.07.2025 O R D E R PER MADHUMITA ROY, JM: The instant appeal filed by the assessee is directed against the order passed by the Ld. CIT(A)-III, Lucknow, dated 25.11.2019 arising out of the Assessment Order passed by the ACIT, Central Circle, Moradabad, dated 31.12.2017 under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2016- 17. Printed from counselvise.com P a g e | 2 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) 2. Brief facts leading to the case is this that a search and seizure operation under Section 132 of the Act, dated 30.07.2015 was carried out in the premises at Ahmedabad. Notices, thereafter, under Section 143(2) of the Act was served upon the assessee along with questionnaire after centralization of the case with the office at Moradabad. The assessee, in fact, had taken unsecured loan from certain parties, details whereof is as follows: The assessee was directed to provide the complete address of the persons given loan and to explain nature and source of such loan transaction made by them. As no compliance was made to this effect, the Ld. AO proceeded with the facts available with him. The first party namely Darkin Vincom Pvt. Ltd. from whom the assessee took loan of Rs.50,00,000/-, the DDIT Investigation Wing visited the Kolkata office and conducted inquiries and found that the said party was not in existence. The records reveals that the assessee has taken the said loan of Rs.50,00,000/- from M/s Darkin Vincom Pvt. Ltd. on 15.05.2015 were only having 3 rooms as their office space that too along with other company namely M/s New View Consultants Pvt. Ltd. & M/s Geminy Vinimay Pvt. Ltd. . The loan amount was given to the assessee through Printed from counselvise.com P a g e | 3 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) banking channel; account payee cheque through Axis Bank Kolkata. In fact, the same was received by M/s Darkin Wincom Pvt. Ltd. from one M/s Indus Valley World School Kolkata on 06.05.2016 through account payee cheque drawn at Allahabad Bank Kolkata. Such school premises was also visited by the Investigation Wing. The details of the account were obtained wherefrom it appears that the said school received an amount of Rs.24,00,000/- from one Tribhuwan Properties Limited. The observation made by the Ld. AO from the factual aspect of the matter while making addition of Rs.50,00,000/- is as follows: “From the records available it is seen that Genus Electrotech Ltd., Gandhidham has taken an unsecured loan of Rs. 50,00,000/- on 15.05.2015 from M/s Darkin Vincom Pvt. Ltd. The DDIT(Inv.) visited the premises of M/s Darkin Vincom Pvt. Ltd. on 26.10.2015. it was a 3 room premises which has been given address of some other companies including MTs New View Consultants Pvt. Ltd. and M/s Gemini Vinimay Pvt. Ltd. etc. At the premises one staff Sh. Povel Pandya was there. He informed that the office of M/s Darkin Vincom Pvt. Ltd., M/s New View Consultants Pvt. Ltd. and M/s Gemini Vinimay Pvt. Ltd. is running from here but he was not able to give the information about the loan given by these companies as he was not working with these companies. He is working with M/s Opel Extra. Notice u/s 131 (IA) was issued directing the director of the M/s Darkin Vincom Pvt. Ltd., M/s New View Consultants Pvt. Ltd. and M/s Gemini Vinimay Pvt. Ltd. to be present in the office on 27.10.2015 for furnishing information regarding the above loan. On 27.10.2015 it was informed tnat directors Mr. J.M. Saraogi and Mr. P.K. Mishra are out of town and will return in the first week of November. However copy of ledger account of M/s Genus Electrotech Ltd. along with confirmation of account for financial year 2015-16 was submitted along with bank statement showing the loan granted to M/s Genus Electrotech Ltd. From the documents submitted it was found that M/s Darking Vincom Pvt. Ltd. had given loan of Rs. 50,00,000/- to M/s Genus Electrotech Pvt. Ltd. through it a/c no. 913020028971057 at Axis Bank, Kolkata. But from the bank a/c statement itself it was seen that Darkin Vincom had received an amount of Rs. 50,00,000/- from M/s Indus Valley World School, Kolkata on 06.05.2015 through their a/c no. 50018409716 at Allahabad Bank, Kolkata. To find out the source of money paid by M/s Indus Valley World School, Kolkata he visited the school premises at 488, Ajoy Nagar, E.M. Byepass, behind Satyajit Roy Film Institution, Kolkata-700094. There it was informed by Sh. Uttam Sharda, Accountant that books of accounts etc. are not maintained at school but at its another office at 46-C, R.A. Kidwai Road, Kolkata - 700016. He reached this place where Sh. S.P. Gupta, trustee of Gopal Chakraborty Charitable Trust Printed from counselvise.com P a g e | 4 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) under which M/s Indus Valley World School, Kolkata is being run was present who informed that the trust owns the school and he furnished written submission about the source of the money given by the school to Darkin Vincom. He furnished the bank account statement of M/s Tribhuvan Properties Ltd. account no. (2718020000400 at HDFC Bank, Kalkaji, New Delhi. From this it was seen that M/s Tribhuvan Properties Ltd. has given Rs. 2,40,00,000/- to M/s Indus Valley World School on 05.05.2015. it was also gathered that the company M/s Tribhuvan Properties Ltd. is controlled by Mr. Shailesh Khaitan who is also controlling the Indus Valley World school. Notice u/s 131 (IA) was issued and served in the office of Darkin Vincom asking the Directors to appear in the investigation wing, Kolakata on 28.10.2015 for personal examination. He did not appear on the given date. After that he visited the house of Sh. Jhumar Mall Saragi at 418/3, G.T. Road, 2nd Floor, Pilkahana, Howrah to examine him. The place was found to be a flat in multistory building. There his daughter opened the door. She was non- cooperative. However, in whatever little talk he had with her she said that she did not know much about the financial activity of her father Sh. Jhumar Mall Saraogi other than the fact that he was an LIC agent. From the above it is seen that the company M/s Darkin Vincom Pvt. Ltd. is a paper company being managed from a small office in which there are offices of many other companies. The Director Mr. Jhumar Mall Saraogi was avoiding personal examination and his daughter informed that he was a LIC agent. Moreover M/s Darkin Vincom Pvt. Ltd. had not extended the loan from its own fund but it had taken loan from other entity namely Indus Valley World School. In view of the above, I am satisfied that unsecured loan of Rs. 50,00,000/- remains unexplained and the same is being added as unexplained credit to the total income of the assessee u/s 68 of the I.T. Act. 3. In fact, enquiries in regard to the other parties were also done by the Investigation Wing and the Ld. AO added the loan amount in the hands of the assessee almost with the same observation. 4. Before the First Appellate Authority it is the case of the assessee that the Ld. AO has not made any inquiry while making addition in the hands of the assessee in respect of loan amount received. However, from the above observation of the Ld. AO that the assessee has not been able to explain the transaction, the genuineness of such transaction made by Printed from counselvise.com P a g e | 5 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) and between the assessee and the 7 parties as mentioned hereinabove, the primary condition of Section 68 having been not satisfied, we then proceeded with the order passed by the Ld. CIT(A). Taking into consideration this particular aspect of the matter the Ld. CIT(A) upheld the addition with the following observations. “13. The appellant in the written submission has contended as under: With reference to the above appeal in continuation of our earlier reply, it is submitted that the Bombay High Court has decided an appeal in the case of \"Pr. Commissioner of Income Tax-14 v/s M/s Aditya Birla Telecom Ltd.\" In favor of the assessee on the same issue which is involved in our appeal. Where in it was held that as is well known in the context of Section 68 at the Act, the basic duty would be on the assessee to establish the genuineness of the transaction, credit worthiness of the investor and the source of funds. Equally well settled principle through series of judgments is that the Department cannot insist on the assessee establishing source of the source. With this background, we may peruse the impugned judgment of the Tribunal more minutely. Further held that in the opinion of the Tribunal merely because there were multiple entities involved in such investment process, would not enable the assessing officer to draw an adverse inference on the financial capacity of PS AHIML. Also in the report, the assessing officer had made remark suggesting that the transactions were genuine as well as it has been held that merely because multiple corporate bodies may have been involved in the entire process of collecting funds in PS AHIML and then investing the same in the assessee company, by itself would not be sufficient to establish a sham transaction or colorable device. 14. I have examined the facts and circumstances of the case, I have considered the finding of the AO in the assessment order and submission made by the appellant during appellate proceedings. The AO has noted that the appellant has received unsecured loan of Rs. 50,00,000/- from M/s Darkin Vincom Pvt. Ltd, which was not satisfactorily explained by the assessee hence Rs, 50,00,000/- was treated as unexplained income u/s. 68 of the Act. 15. The appellant has contended that with reference to the above appeal in continuation of our earlier reply, it is submitted that the Bombay High Court has decided an appeal in the case of \"Pr. Commissioner of Income Tax-14 v/s M/s Aditya Birla Telecom Ltd.\" In favor of the assessee on the same issue which is involved in our appeal. Where in it was held that as is well known in the context of Section 68 at the Act, the basic duty would be on the assessee to establish the genuineness of the transaction, credit worthiness of the investor and the source of funds. Equally well settled principle through series of Printed from counselvise.com P a g e | 6 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) judgments is that the Department cannot insist on the assessee establishing source of the source. With this background, we may peruse the impugned judgment of the Tribunal more minutely. 16. On examination, it is noted that the DDIT(Inv), Moradabad conducted enquiry and visited the premises of Darkin Vincom Pvt. Ltd. and submitted a detailed report, reproduced at page 3 of the assessment order. From the report, it is seen that the company M/s Darkin Vincom Pvt. Ltd. is a paper company being managed from a small office in which there are offices of many other companies. The Director Mr. Jhumar Mall Saraogi was avoiding personal examination and his daughter informed that he was a LIC Agent. Moreover M/s Darkin Vincom Pvt. Ltd. had not extended the loan from its own fund but it had taken loan from other entity namely Indus valley World School. 17. Considering the above mentioned facts, I find a detailed enquiry has been conducted by the AO which shows that M/s Darkin Vincom Pvt. Ltd. is a paper. company. Hence the additional evidence submitted in the form of confirmation of loan from M/s Darkin Vincom and copy of the bank statement alongwith copy of the audit report cannot be accepted, also it does not establish the genuineness of transaction. 18. In this connection, the Apex Court has delivered a landmark judgment in the case of NRA Iron & Steel Pvt. Ltd. Vide order dated 05.03.2019. The issue in this case was with respect to the onus of proof in respect of Share capital/premium credited in the books of account of the assessee company, which was added u/s 68 of the Income Tax Act, 1961. The Hon'ble Apex Court enumerated the following principles: 11. The principles which emerge where sums of money are credited as Share Capital/Premium are: i. The assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and credit-worthiness of the investors who should have the financial capacity to make the investment in question, to the satisfaction of the AO, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the credit- worthiness of the creditor/subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders. iii. If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case the assessee would not have discharged the primary onus contemplated by section 68 of the Act. Printed from counselvise.com P a g e | 7 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) 3.9 The Hon'ble Apex court also held as under: 14. The practice of conversion of un-accounted money through the cloak of Share Capital/Premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares, where a higher onus is required to be placed on the Assessee since the information is within the personal knowledge of the Assessee. The Assessee is under a legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee. 16. The aforesaid decision relates to sum credited as share capital/premium and the legal obligation of the appellant to prove the genuineness of the transaction, the identity of the creditors, creditworthiness of the creditor who should have the financial capacity of advancing the sum to the satisfaction of the assessing officer so as to discharge the primary onus. The above decision is also relevant in the instant case wherein unsecured loan of Rs.50,00,000/- received from M/s Darkin Vincom Pvt. Ltd.., by the appellant is required to be proved as per the provisions of section 68 of the Act, i.e. the genuineness of transaction, identity of the creditor & creditworthiness of the creditor who should have the financial capacity to advance loan of Rs. 50,00,000/ - in question, to the satisfaction of the assessing officer. 17. In view of the aforesaid facts and the decision of Hon'ble Apex Court in the case of NRA Iron & Steel Pvt. Ltd. (supra), I find that the appellant has not discharged the onus cast upon him u/s 68 of the Act to establish the identity of the creditors, creditworthiness of the creditors and genuineness of the transaction. In view thereof addition of Rs. 50,00,000/ - made by the AO is held to be justified and is hereby upheld. Ground No. 3. This ground of appeal has not been pressed by the appellant during the appellate proceeding and in this regard nothing has been mentioned in the written submission. Hence Ground no. 3 is dismissed. Ground No.4 is related to the addition of Rs. 50,00,000/- made by the AO. 18. The AO in the assessment order has noted as under: M/s New View Consultant Put. Ltd.: To verify the transactions of loan with M/s New View Consultant Pvt. Ltd., the DDIT(Inv), Moradabad personally visited Kolkata and conducted enquiries and found that party is not in existence on the given address. His enquiry report reveled as under: From the records available it in seen that Gemus Electrotech Lad Gandhidham has taken unsecured loan of Rs. 50,00.000/-an Consultants Pvt. Ltd. He visited the premises of M/s New View Consultants Pvt. Ltd. on 26. 10.2015. It was a 3 room premises which has been given address of some ether companies including M/s Darkin Printed from counselvise.com P a g e | 8 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) Vincom Pvt. Ltd. and M/s Gemini Vinimay Pvt. Ltd One staff Sh. Povel Pandya was there. He informed that the office of M/s Darkin Vincom Pvt. Ltd., M/s New View Consultants Pvt. Ltd. and M/s Gemini Vinimay Pt Ltd. Is running from here but he was not able to give the information about the loan given by these companies as he was not working with these companies. Notice u/s 131 (1A) was issued directing the director of the M/s Darkin Vincom Pvt. Ltd. M/S New View Consultants Pvt. Ltd. and M/s Gemini Vinimay Pvt. Ltd, to be present this office on 27.10.2015 for furnishing information regarding the above loan on 27.10.2015 it was informed that directors Mr. J.M. Saraogi and Mr. P.K. Mishra were out of town and will return in the first week of November. However copy ledger on 15.0s.2015 from M/s New View of M/s Genus Electrotech Ltd. along with confirmation of account for financial year 2015-16 was submitted along with bank statement showing the loan account granted to M/s Genus Electrotech Ltd. From the documents submitted it was found that M/s New View Consultants Pvt. Ltd had given loan of Rs. 50,00,000/- to M/s Genus Electrotech Pvt. Ltd. through it account no. 913020029999337 at Axis Bank, Kolkata. But from the bank account statement itself it was seen that M/s New View Consultants Pvt. Ltd had received an amount of Rs. 40,00,000/-from M/s Patni Resources Pvt Ltd. Kolkata on 15/05/2015 through their account non. 913020028959251 at Axis Bank, Kolkata. One director of m/s M/s Patni Resources Pvt Ltd. Mr. M.K. Patni, who is an FCA also camt to the premises. His statement was taken u/s 131(1A), he informed that the money was given out of refund of loan from Mr. Shailesh Khaitan who is also controlling the Indus Valley World School. he visited the school premises at 488, Ajoy Nagar, E.M. Byepass, behind Satyajit Roy Film Institution, Kolkata- 700094, There it was informed by Sh. Uttam Sharda, Accountant that books of account s etc. are not. maintained at school but at its another office at 46-C, R.A. Kidwai Road, Kolkata - 700016. He reached this place where Sh. S.P.Gupta, who said that he was power of attorney holder of Shri Shailesh Khaitan and he furnished written submission about the source of the money given by Shri Shailesh Khaitan to M/s Patni Resources Pvt. Ltd. Kolkata. He furnished the bank account statement of account No. 04692020000192 at HDFC Bank, Kolkata. From this it was seen that Shri Shailesh Khaitan had given Rs. 50,36,986/- to M/s Patni Resources Pvt. Ltd. Kolkata on 27/04/2015. From the same account it was found that Shri Shailash Khaitan had received amount on 21/04/2015 from different companies as per details given below: Starrose Supplier P. Ltd. Rs 40,00,000/- Positive View Commercial Rs 60,00,000/ Goodfield Commercial P. Ltd. Rs 55,00,000/- Silver commosale Pvt. Ltd. Rs.15,00,000/- Lifewood Vinimay Pvt. Ltd. Rs. 30,00,000/- Printed from counselvise.com P a g e | 9 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) Commission has been issued in above cases. Reply is awaited. Notice u/s 131 (1A) was issued and served in the office of New View Consultants Pvt. Ltd. asking the Directors to appear in the investigation wing, Kolkata on 28.10.2015 for personal examination. They did not appear on the given date. After that he visited the house of Jhumar Mall Saraogi at 418/3, G.T. Road, 2nd Floor, Pilkahana, Howrah to examine him. The place was found to be a flat in multistory building. There his daughter opened the door. She was non-cooperative. However, in whatever little talk he had with her she said that she did not know much about the financial activity of her father Sh. Jhumar Mall Saraogi other than the fact that he was an LIC agent. From the above it is seen that the company M/s New View Consultants Pvt. Ltd. is a paper company being managed from a small office in which there are office of so many other companies. The Director Mr. Jhumar Mall Saraogi was avoiding personal examination and his daughter informed that he was a LIC agent.Moreover M/s New View Consultants Pvt. Ltd. had not extended the loan from its own fund but it had taken loan from other person namely Sh. Shailesh Khaitan who in turn has taken loan from different other companies. In view of the above, I am satisfied that unsecured loan of Rs. 50,00,000/-remains unexplained and the same is being added as unexplained credit to the total income of the assessee u/s 68 of the Act. 19. I have examined the facts and circumstances of the case, I have considered the finding of the AO in the assessment order and submission made by the appellant during appellate proceedings. The AO has noted that the appellant has received unsecured loan of Rs. 50,00,000/- from M/s New View Consultant Pvt. Ltd, which was not satisfactorily explained by the assessee hence Rs. 50,00,000/- was treated as unexplained income u/s 68 of the Act. 20. On examination, it is noted that the DDIT(Inv), Moradabad conducted enquiry and found that the party did not exist at the given address. The report of the DDIT(Inv.), Moradabad showed that the company M/s New View Consultant Pvt. Ltd. is a paper company being managed from a small office in which there are offices of many other companies. The Director Mr. Jhumar Mall Saraogi was avoiding personal examination and his daughter informed that he was a LIC Agent. Moreover M/s New View Consultant Pvt. Ltd had not extended the loan from its own fund but it had taken loan from other entity. 21. I find that a detailed enquiry has been conducted by the DDIT(Inv.), Moradabad, which shows it a paper company. It also establishes that the aforesaid party had borrowed funds from other entities to advance Rs.50,00,000/- to the appellant. 22. Considering the totality of the facts and the circumstances of the case and the material on record & the decision of Hon'ble Apex Court in the case of NRA Printed from counselvise.com P a g e | 10 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) Iron & Steel Pvt. Ltd. (supra), I find that M/s New View Consultant Pvt. Ltd., does not have the financial capacity to advance unsecured loan of Rs.50,00,000/- to the appellant. Hence mere furnishing confirmation of the unsecured loan of Rs. 50,00,000/-by the party, which is stated to be received through banking channel does not establish the creditworthiness of the creditor and genuineness of the transaction. 23. In view of the aforesaid facts, I find that the appellant has not discharged the onus cast upon him u/s 68 of the Act to establish the identity of the creditors, creditworthiness of the creditors and genuineness of the transaction. In view thereof addition of Rs.50,00,000/-made by the AO is held to be justified and is hereby upheld. Ground No.5 is related to the addition of Rs. 50,00,000/- made by the AO. 24. The AO in the assessment order has noted as under: M/s Puroshottam Distributors During the post search enquiries commission u/s.131(1)(d) issued to the DDIT (Inv.) Unit 4(2), Kolkara where Summons was issued to the company but it is noticed that neither any one appeared personally for giving their own statement nor filed complete documents /papers to the DDIT(inv.) Unit 4(2), Kolkata. Show accordingly but it was not possible to ascertain the creditworthiness and genuineness of the transaction of the party. Hence the transaction of loan remained unexplained. To verify the transactions of loan with M/s Puroshottam Distributors., the DDIT(Inv) Moradabad personally visited Kolkata and conducted enquiries and found that party is not in existence on the given address. His enquiry report reviled as under:- From the record s available it was seen that Genus Electrotech Ltd., Gandhidham has taken an unsecured loan of Rs.50,00,000/- from M/s Purushottam Distributors Pot. Ltd. he visited at Building No. 63, Radha Bazar Street on 28/10/2015. He asked in several shops and offices about M/s Purushottam Distributors Pot. Ltd. but nobody had heard about this company. There is a person gave the n umber of Sh. Sanjay Agarwal, caretaker of the building. On telephonic talk he informed that he knew all the residents of this building but he too had not heard about this company M/s Purushottam Distributors Pot. Ltd. Thus it is clear that it is a paper company and the loan shown by Genus Electrotech from this company is also sham transaction. In view of the above, I am satisfied that unsecured loan of Rs.50,00,000/-remains unexplained and the same is being added as unexplained credit to the total income of the assessee u/s 68 of the Act. Printed from counselvise.com P a g e | 11 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) 25. The appellant in the written submission filed by the appellant has been considered and placed on record. 26. I have examined the facts and circumstances of the case, I have considered the finding of the AO in the assessment order and submission made by the appellant during appellate proceedings. The AO has noted that the appellant has received unsecured loan of Rs. 50,00,000/- from M/s Puroshottam Distributors Pvt. Ltd, which was not satisfactorily explained by the assessee hence Rs. 50,00,000/- was treated as unexplained income us 68 of the Act. 27. On examination, it is noted that the DDIT(Inv), Moradabad reported that Genus Electrotech Ltd., Gandhidham has taken an unsecured loan of Rs.50,00,000/- from M/s Purushottam Distributors Pvt. Ltd. He visited at Building No. 63, Radha Bazar Street on 28/10/2015. He asked in several shops and offices about M/s Purushottam Distributors Pvt. Ltd. but nobody had heard about this company. There is a person gave the n umber of Sh. Sanjay Agarwal, caretaker of the building. On telephonic talk he informed that he knew all the residents of this building but he too had not heard about this company M/s Purushottam Distributors Pvt. Ltd. Thus it is clear that it is a paper company and the loan shown by Genus Electrotech from this company is also sham transaction. 28. I find that a detailed enquiry has been conducted by the DDIT(Inv.), Moradabad, which showed that party did not exist at above address and hence the additional evidence submitted in the form of confirmation of loan from the party, copy of bank statement and copy of audited accounts cannot be accepted, also it does not prove the genuineness of transaction. 29. Considering the totality of the facts and the circumstances of the case and the material on record & the decision of Hon'ble Apex Court in the case of NRA Iron & Steel Pvt. Ltd. (supra), I find that M/s Purushottam Distributors Pvt. Ltd., does not have the financial capacity to advance unsecured loan of Rs.50,00,000/- to the appellant. Hence mere furnishing confirmation of the unsecured loan of Rs. 50,00,000/-by the party, which is stated to be received through banking channel does not establish the creditworthiness of the creditor and genuineness of the transaction. Ground No.6 is related to the addition of Rs.25,00,000/ - made by the AO. 30. The AO in the assessment order has noted as under: Shivalik Vintrade Pvt. Ltd. During the post search proceedings to verify the loans, commission was issued to DDIT(Inv.) Uinit 4(2), Kolkata by the DDIT(Inv.), Moradabad. The report reveals that Summons was issued to the company but it was noticed that neither any one appeared personally for giving their own statement nor filed complete documents/Papers to the DDIT(Inv.) Unit Printed from counselvise.com P a g e | 12 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) 4(2), Kolkata. Show cause was issued accordingly but it was seen that once again none appeared for the same, in view of the above, it was not possible to ascertain the creditworthiness and genuineness of the transaction of the party. Hence the transaction of loan remained unexplained. In view of the above, I am satisfied that unsecured loan of Rs. 25,00,000/-remains unexplained and the same is being added as unexplained credit to the total income of the assessee u/s 68 of the Act. 31. The appellant in the written submission which has been considered and placed on record. 32. I have examined the facts and circumstances of the case, I have considered the finding of the AO in the assessment order and submission made by the appellant during appellate proceedings. The AO has noted that the appellant has received unsecured loan of Rs. 25,00,000/- from Shivalik Vintrade Pvt. Ltd., which was not satisfactorily explained by the assessee hence Rs.25,00,000/ - was treated as unexplained income u/s 68 of the Act. 33. I find that a detailed enquiry has been conducted by the AO which shows that M/s Shivalik Vintrade Put. Ltd., did not comply with the summons and the show cause notice issued by the DDIT(Inv.) Unit 4(2), Kolkata. Hence, the additional evidence submitted in the form of confirmation of loan from the party and copy of statement cannot be accepted, also it does not establish the genuineness of transaction. 34. Considering the totality of the facts and the circumstances of the case and the material on record & the decision of Hon'ble Apex Court in the case of NRA Iron & Steel Pvt. Ltd. (supra), I find that M/s Shivalik Vintrade Pvt. Ltd., does not have the financial capacity to advance unsecured loan of Rs.25,00,000/- to the appellant. Hence there furnishing confirmation of the unsecured loan of Rs. 25,00,000/-by the party, which is stated to be received through banking channel does not establish the creditworthiness of the creditor and genuineness of the transaction. Ground No.7 is related to the addition of Rs. 50,00,000/ - made by the AO. 35. The AO in the assessment order has noted as under: Madhuvan Agro Service Put. Ltd. During the post search proceedings to verify the transactions of loan with M/Madhuvan Agro Service Pot. Ltd., the DDIT(Inv.) Moradabad personally visited Kolkata and conducted enquiries and found that party is not in existence on the given address. His enquiry report reviled as under: Printed from counselvise.com P a g e | 13 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) From records available it was seen that M/s Genus Electrotech Lid., Gandhidham has taken an unsecured loan of Rs. 25,00,000/ on 14/07/2015 and Rs.25.00,000/- On 23/07/2015 from M/s Madhuan Agro Service Pot. Ltd. He visited the premises of M/s Madhuvan Agro Services Pot. Ltd. on 28.10.2015. In this room it was informed that M/s Madhuvan Agro has shift to Room No. 308 at the 3rd floor of the same building. The person available there said that this company had shifted elsewhere. But on calling the number given by him, Sh. Kunadan Mal Baid Director of the company was contacted. He came to this place and informed that his office still runs from here. His statement was taken u/s 131 (1A). He submitted that M/S Madhuvan Agro was not doing business now. He was planning to start agriculture related business but it did not materialize. So currently he was giving short term loan through this company. The turnover of the company during F.Y.14-15 was Rs.29,09,612/-and net profit was Rs.8,01,658/- He further stated that the loan was given from the own fund of the company. But from the bank account furnished it was found that M/s MadhuVan had received Rs.25,00,000/- on 13/07/2015 from Iris Clothing Pot. Ltd. and Rs.25,00,000/- from CA-513 on 23/07/2015. Thus the source of loan given to Genus Electrotech was receipt by M/s Madhuvan from other concerns. From the bank statement showing the loan granted to M/s Genus Electrotech Ltd. it was found that M/s Madhuvan Agro Agency Pvt. Ltd. had given loan of Rs. 25,00,000/-4o M/s Genus Electrotech Pvt. Ltd. on 14/07/2015 and Rs.25,00,000/ On 23/07/2015 through its account no. 005200201003859 at Corporation Bank, Kolkata, But from the bank a/c statement itself it was seen that Madhuvan Agro had received an amount of Rs. 25,00,000/- from M/s Iris Clothing Pot. Ltd. on 13.07.2015 through their a/c no.50167677683 at Allahabad Bank, Howarak and had it received Rs.25,00,000/-from M/s Welfit Garment Manufacturing Co., a concern controlled by Sh. Kundan Mall Baid, on 23/07/2015. On further inquiry it was found that M/s Welfit had received Rs.25,00,000/- on transfer from CA 4696 on 23/07/2015 and M/S Genus Iris Clothing Out. Ltd, had received Rs.25,00,000/- from Ratnanandam Comm on 13/07/2015. Further commission was issued to the DDIT(Inv.). Unit 4 (2), Kolkata. The report dated 27.05.2016 revealed that Summons was issued though speed post but it was returned back unserved with remark not found/ left by postal department. Inspector was deputed for filed enquiries and he found that the party is no existent on the given address. In view of the above, it is not possible to ascertain the creditworthiness and genuineness of the transaction made by the parties as well as source of payment so far. Hence the transaction of loan remained unexplained. From the above it is seen that the company M/s Madhuan Agro Agency Pot.Ltd is a paper company being managed from a small office in which Printed from counselvise.com P a g e | 14 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) there are office of so many other companies. It is not giving loans from its own fund but it is being given from fund received by other parties. In view of the above, I am satisfied that unsecured loan of Rs. 50,00,000/- remains unexplained and the same is being added as unexplained credit to the total Income of the assessee /s 68 of the I.T. Act. 36. The appellant written submission filed by the appellant has been considered and placed on record. 37. I have examined the facts and circumstances of the case, I have considered the finding of the AO in the assessment order and submission made by the appellant during appellate proceedings. The AO has noted that the appellant has received unsecured loan of Rs. 50,00,000/- from Madhuvan Agro Agency Pvt. Ltd., which was not satisfactorily explained by the assessee hence Rs. 50,00,000/- was treated as unexplained income u/s 68 of the Act. 38. On examination, it is noted that the DDIT(Inv), Moradabad conducted enquiry and found that the party did not exist at the given address and has shift to Room No. 308 at the 3rd floor of the same building. The report of the DDIT(Inv.), Moradabad showed that the company M/s Madhuvan Agro Agency Pvt. Ltd. is a paper company being managed from a small office in which there are offices of many other companies. The Director Sh. Kunadan Mal Baid was contacted and he informed that his office still runs from here and stated that M/s Madhuvan Agro was not doing business now and planning to start agriculture related business but it did not materialize. So currently he was giving short term loan through this company. 39. Considering the above mentioned facts, I find a detailed enquiry has been conducted by the DDIT(Inv.), Moradabad. which establishes that the aforesaid party had borrowed funds from other entities to advance Rs. 50,00,000/- to the appellant. 40. Considering the totality of the facts and the circumstances of the case and the material on record & the decision of Hon'ble Apex Court in the case of NRA Iron & Steel Pvt. Ltd. (supra), I find that M/s Madhuvan Agro Agency Pvt. Ltd., does not have the financial capacity to advance unsecured loan of Rs.50,00,000/- to the appellant. Hence mere furnishing confirmation of the unsecured loan of Rs. 50,00,000/-by the party, which is stated to be received through banking channel does not establish the creditworthiness of the creditor and genuineness of the transaction. 41. In view of the aforesaid facts, I find that the appellant has not discharged the onus cast upon him u/s 68 of the Act to establish the identity of the creditors, creditworthiness of the creditors and genuineness of the transaction. In view thereof addition of Rs.50,00,000/- made by the AO is held to be justified and is hereby upheld. Ground No.8 is related to the addition of Rs. 1,60,00,000/ - made by the AO. Printed from counselvise.com P a g e | 15 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) 42. The AO in the assessment order has noted as under: Super Sound Pvt. Ltd., During the post search proceedings to verify the transactions of loan with M|s Super Sound Pot. Ltd., the DDIT (Inv) Moradabad personally visited Kolkata and conducted enquiries and found that party is not in existence on the given address. His enquiry report revealed as under:- From the records available it is seen that Genus Electrotech Ltd., Gandhidham has taken an unsecured loan of Rs.1,60,00,000/- from M/s Super Sound Pvt. Ltd. The address of this company was given as Main Road, Rourkela, Orrissa but from AST it was found that the address was given as Room No. 1015, 10th Floor, 4, Synagogue Street, Kolkata-1. I visited this premises on 28.70.2015. In this room it was found that the office of Sh. Lalit Bagaria, CA was running from this office. He informed that M|s Super Sound had given this address earlier on and it was still being used on ITR. He further offered to contact the owners of M/s Super Sound and furnish the required information. He submitted the copies of ledger account of M/s Genus Electrotech and the bank account through which loan was given by Super Sound. From this it is found that M/s Super Sound has given loan to M/s Genus Electrotech through it's a/c n0.062009300141477 at PNB, Mumbai as per details given below:- Rs.30,00,000/- 11/07/15 Rs.18,00,000/- 13/07/15 Rs.18,00,000/- 14/07/15 Rs.28,00,000/ 23/07/15 Rs.12,00,000/- 25/-7/15 Rs.12,00,000/- From this bank account and other documents it is found that M/s Super Sound has received fund just before giving loan to Genus Electrotech as under.- 11/07/15 Rs.25 lacs loan from Solty financial Consultants Pvt. Ltd. 11/07/15 Rs.5 lacs loan from Eiffel Merchants Pot. Ltd 11/07/15 Rs.10 lacs loan from Gemus Agents Pot. Ltd. 13/07/15 Rs.3.50 lacs transfer from Vivek Auto Further during the assessment proceedings notice w/s.133(6)dated 08.12.2017was issued and served. In reply it is seen that the loan taken of Rs.1,60,00,000/- is not matched with the assessee's audit report and Balance sheet. In view of the above, I am satisfied that unsecured loan of Rs.1,60,00,000/-remains unexplained and the same is being added as unexplained credit to the total income of the assessee u/s 68 of the I.T. Act. Printed from counselvise.com P a g e | 16 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) 43. The appellant written submission filed by the appellant has been considered and placed on record. 44. I have examined the facts and circumstances of the case, I have considered the finding of the AO in the assessment order and submission made by the appellant during appellate proceedings. The AO has noted that the appellant has received unsecured loan of Rs. 1,60,00,000/- from M/s Super Sound Pvt. Ltd., which was not satisfactorily explained by the assessee hence Rs. 1,60,00,000/- was treated as unexplained income u/s 68 of the Act. 45. On examination, it is noted that the DDIT(Inv), Moradabad conducted enquiry and found that M/s Super Sound has received fund just before giving loan to Genus Electrotech as under:- 11/07/15 Rs.25 lacs loan from Solty financial Consultants Pvt. Ltd. 11/07/15 Rs.5 lacs loan from Eiffel Merchants Pvt. Ltd 11/07/15 Rs.10 lacs loan from Gemus Agents Pvt. Ltd. 13/07/15 Rs.3.50 lacs transfer from Vivek Auto Further during the assessment proceedings notice u/s. 133(6)dated 08.12.2017was issued and served. In reply it is seen that the loan taken of Rs.1,60,00,000/- is not matched with the assessee's audit report and Balance sheet. 46. I find a detailed enquiry has been conducted by the DDIT(Inv.), Moradabad. Which establishes that the aforesaid party had borrowed funds from other entities to advance Rs. 1,60,00,000/ - to the appellant. 47. Considering the totality of the facts and the circumstances of the case and the material on record & the decision of Hon'ble Apex Court in the case of NRA Iron & Steel Pvt. Ltd. (supra), I find that M/s Super Sound Pvt. Ltd., does not have the financial capacity to advance unsecured loan of Rs.1,60,00,000/- to the appellant. Hence the additional evidence submitted in the form of confirmation of loan from M/s Super Sound Pvt. Ltd and copy of statement cannot be accepted, also it does not establish the genuineness of transaction. 48. In view of the aforesaid facts, I find that the appellant has not discharged the onus cast upon him u/s 68 of the Act to establish the identity of the creditors, creditworthiness of the creditors and genuineness of the transaction. In view thereof addition of Rs(1,60,00,000/-made by the AO is held to be justified and is hereby upheld. Ground No.9 is related to the addition of Rs. 50,00,000/ - made by the AO. 49. The AO in the assessment order has noted as under: Abhay Construction Put. Ltd. Printed from counselvise.com P a g e | 17 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) During the assessment proceedings notice us. 133(6) dated 08.12.2017 was issued to the party for furnishing the details of transactions along with copy of ledger account and bank account statements showing the entries of one month prior and one month after the loan entry reflected in the bank statement. It was also asked to establish the relation with the assessee being in Moradabad whereas the loan party is Mumbai based and also nature of business is different from the assessee. In response to notice u/s. 133(6) dated 08.12.2017 the party has replied dated 13.12.2017 that the loan was advanced on advice of a broker. From the perusal of the details filed it is seen that the party has not furnished its acknowledged copy of for the A.Y. 2016-17, instead copy of acknowledged copy for the A.Y. 2015-16 showing return income nil is furnished. Also in spite of being asked the company has not furnished audited accounts for the relevant Assessment Year. It is seen from the bank statement of ICICI, Jaipur, Account No. 676005063772 that the payment of loan received by the assessee on 14.05.2015 and the assessee has furnished bank statement for the period from 01.05.2015 to 30.06.2015, 1st August to 31st August, 01 January 2016 to 13rd June 2016. From the available bank statements it is seen that except the loan entry of Rs. 50,00,000/, there is no other entry of major amount. All the deposit and withdrawal entries are in the range of Rs. 1345-and Rs. 1,26,350/-1.e, small entries are there and the party das made payment Rs.50,00,000/-from the amount of Rs, 50,00,000/- just received same day in its account from someone else. The party has not made the loan from its own source. Hence the creditworthiness of the assessee and genuineness of loan transaction has not been proved. In view of the above, I am satisfied that unsecured loan of Rs.50,00,000/- remains unexplained and the same is being added as unexplained credit to the total income of the assessee u/s 68 of the LT. Act. 50. The appellant written submission filed by the appellant has been considered and placed on record. 51. I have examined the facts and circumstances of the case, I have considered the finding of the AO in the assessment order and submission made by the appellant during appellate proceedings. The AO has noted that the appellant has received unsecured loan of Rs. 50,00,000/- from M/s Abhay Construction Pvt. Ltd., which was not satisfactorily explained by the assessee hence Rs. 50,00,000/- was treated as unexplained income u/s 68 of the Act. 52. On examination, it is noted that the DDIT(Inv), Moradabad enquiry showed that in response to notice u/s. 133(6) dated 08.12.2017 the party has replied dated 13.12.2017 that the loan was advanced on advice of a broker. From the perusal of the details filed it is seen that the party has not furnished its acknowledged copy of for the A.Y. 2016-17, instead copy of acknowledged copy for the A.Y. 2015-16 showing return income nil is furnished. Also in spite of being asked the company has not furnished audited accounts for the relevant Printed from counselvise.com P a g e | 18 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) Assessment Year. From the available bank statements it is seen that except the loan entry of Rs. 50,00,000/-, there is no other entry of major amount. All the deposit and withdrawal entries are in the range of Rs. 1345-and Rs. 1,26,350/ - 1.e, small entries are there and the party has made payment Rs. 50,00,000/- from the amount of Rs.50,00,000/-just received same day in its account from someone else. The party has not made the loan from its own source. Hence the creditworthiness of the assessee and genuineness of loan transaction has not been proved. 53. I find a detailed enquiry has been conducted by the DDIT(Inv.), Moradabad. Which establishes that the aforesaid party had received Rs. 50,00,000/- on the same day from some party. Also it is noted that the M/s Abhay Construction Pvt. Ltd. has not explained the source of Rs. 50,00,000/- from which advance has been made to the appellant. 54. Considering the totality of the facts and the circumstances of the case and the material on record & the decision of Hon'ble Apex Court in the case of NRA Iron & Steel Pvt. Ltd. (supra), I find that M/s Super Sound Pvt. Ltd., does not have the financial capacity to advance unsecured loan of Rs.50,00,000/- to the appellant. Hence the additional evidence submitted in the form of confirmation of loan from M/s Abhay Construction Pvt. Ltd. and copy of bank statement and the audited accounts cannot be accepted, also it does not establish the genuineness of transaction. 55. In view of the aforesaid facts, I find that the appellant has not discharged the onus cast upon him u/s 68 of the Act to establish the identity of the creditors, creditworthiness of the creditors and genuineness of the transaction. In view thereof addition of Rs.50,00,000/-made by the AO is held to be justified and is hereby upheld. Ground No. 10- is routine and general in nature hence not adjudicated 56. In the result, the appeal is dismissed.” 5. As we have already discussed hereinabove that the documents provided by the assessee had failed to establish the genuineness of transaction made by and between the assessee and the above said 7 parties, in addition to the identity of the creditors as found to be not genuine as sufficiently narrated by the Ld. AO and the creditworthiness of the above said 7 creditors since failed to have been satisfied by the assessee in spite of sufficient opportunity being given, the addition made by the Ld. AO confirmed by the First Appellate Authority, in our Printed from counselvise.com P a g e | 19 ITA No.47/Del/2021 M/s Genus Electrotech Limited (AY: 2016-17) considered opinion is found to be just and proper so as not to warrant inference. We, therefore, upheld the order of addition made by the authorities below. 6. The appeal of the assessee is dismissed. Order pronounced in the open court on 29.07.2025 Sd/- (Khettra Mohan Roy) Sd/- (Madhumita Roy) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 29.07.2025 Rohit, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "