MAA CHINNA CEMENT & ISPAT (P) LTD, HAZARIBAGH V. ITO WARD-2(1) , RANCHI

ITA 268/RAN/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0625 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 03-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: INDERJI T SINGH
• Keywords: Unexplained cash credit; Share purchase agreement
• Section: 133(6); 131; 68

Judgement Text

P A G E 1 | 15 IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 268 / RAN /201 7 ASSESSMENT YEAR : 2013 - 14 MAA CHINNA CEMENT & ISPAT PVT LTD., HEHAL, BARKAKANA, RAMGARH. VS. ITO, WARD - 2(1), RANCHI PAN/GIR NO. AADCM 9547 Q (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI DEVESH PODDAR, ADV REVENUE BY : SHRI INDERJIT SINGH, CIT (DR) DATE OF HEARING : 28 / 11 / 2018 DATE OF PRONOUNCEMENT : 30 / 11 / 2018 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), RANCHI, D ATED 11.89.2017 FOR THE ASSESSMENT YEAR 2013 - 14. 2. GROUND NOS.1 AND 4 ARE GENERAL IN NATURE AND HENCE, REQUIRES NO SEPARATE ADJUDICATION. 3. IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSE IS THAT THE CIT(A) ERRED IN TREATING THE LOAN MONEY RECEIVED AS UNEXPLAINED CREDIT U/S.68 OF THE ACT. ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 2 | 15 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS ING OFFICER OBSERVED THAT THE FOLLOWING COMPANIES HAVE INVESTED THE FOLLOWING AMOUNTS IN THE ASSESSE COMPANY: 1. NAGINA EXPORTS & FINVEST PVT LTD,. : RS.4,83,00,000 2. TOLASARIYA VINIYOG PVT LTD. : RS.4,36,00,000 3. LUPIN COMMODEAL PVT LTD. : RS.4,14,00, 000 4. JIT FINANCE LTD., : RS.1,00,00,000 5. MOHANKA EXPORTS PVT LTD. : RS. 12,00,000 6. AMBIKA COMMERCE PVT LTD. : RS. 10,00,000 7. M.R.INFRADEV PVTD. : RS. 3,50,000 8. M.R.INTERNATIONAL PVT LTD. : RS. 3,00,000 TOTAL: RS.14,61,50,000 5. THE ASSESSING OFFICER REQUIRED THE ASSESSE TO FURNISH THE COPY OF BANK ACCOUNT OF COMPANIES MAKING INVESTMENT IN ASSESSEES COMPANY, COPY OF SHARE CERTIFICATE ISSUED, MINUTES OF MEETING & COMPANY OF FORM NO.2 FOR RELEVANT PERIOD, COPY OF AGM, COPY OF ELECTRICITY BILLS, QUANTITATIVE DETAILS OF CONSUMPTION OF RAW MATERIALS. THE ASSESSE PRODUCED DETAILS BEFORE THE ASSESSING OFFICER. IN THE MEANTIME, INFORMATION UNDER SECTION 133(6) OF THE ACT WAS CALLED FOR FROM THE PARTIES, WHO INV ESTED IN THE ASSESSEES COMPANY. THE ASSESSING OFFICER OBSERVED FROM THE INFORMATION CALLED FROM THE INVESTMENT COMPANIES WAS NOT FURNISHED BY THEM AND, THEREFORE, HE SHOW CAUSED THE ASSSESSEE WHY TRANSACTIONS MADE WITH THESE COMPANIES SHOULD NOT BE DISBE LIEVED AND DISALLOWED. THE ASSESSING OFFICER REQUIRED THE ASSESSE TO PRODUCE ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 3 | 15 SHRI ALO K RUNGTA AND SHRI SHRI ASHISH RUNGTA IN JANUARY, 2016. IN COMPLIANCE TO THE SAME, SHRI ALOK RUNGTA APPEARED ON 7.1.2016, WHOSE STATEMENT WAS RECORDED PARTIALLY. THEREAF TER, A SUMMON WAS ISSUED TO SHRI ALOK RUNGTA ON 1.2.2016 FOR APPEARING ON 11.2.2016 BUT THE SAME WAS NOT COMPLIED WITH. SIMILARLY, THE ASSESSING OFFICER ISSUED SUMMONS TO SHRI SUDIP KUMAR SHAW AND MOHAMAD PYARE ON 12.1.2016 FOR COMPLIANCE ON 19.1.2016 BU T THEY ALSO DID NOT APPEAR BEFORE THE ASSESSING OFFICER. SUBSEQUENTLY, A COMMISSION WAS ISSUED TO THE DIRECTOR OF INCOME TAX ( INV) UNIT2(4), KOLKATA, ASKING TO VERIFY THE GENUINE NE SS OF TRANSACTION MADE WITH VARIOUS PARTIES BY THE ASSESSE. THE D IRECTOR OF INCOME TAX (I NV) KOLKATA SUBMITTED THAT A SUMMON WAS ISSUED TO JEET FINANCE LTD., AND INSPECTOR OF THIS CHARGE WAS DEPUTED TO SERVE THE SAME. HOWEVER , THE INSPECTOR HAS REPORTE D THAT IN THE SAID ADDRESS, NO C OMPANY WAS FOUND IN THE NAME OF JEET FINANCE LTD. THE INSPECTOR INFORMED THAT IN RESPECT OF ADI ISPAT PVT. LTD., GIRIDIH, THE DIT(INV) UNIT - 2(24), KOLKATA, INFORMED THAT THIS COMPANY IS REGISTERED AT GIRIDIH, JHARKHAND. THEREFORE, ENQUIRY OF THIS COMPANY COULD NOT BE DONE. WITH REGARD TO REST OF THE CASES, IT WAS INFORMED THAT THE SUMMON S WERE ISSUED & SERVED TO THE ASSESSEE. THE ASSESSE SUBMITTED A WRITTEN EXPLANATION ALONGWITH COPY OF IT ACKNOWLEDGEMENT, BALANCE SHEET, ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 4 | 15 PROFIT AND LOSS ACCOUNT AND LEDGER COPY OF THE TRA NSACTION MADE WITH M/S. MAA CHINNA M ASTIKA CEMENT & ISPAT P VT. LTD.. RANCHI AND SAME WERE FORWARDED TO THE ASSESSING OFFICER FOR PERUSAL & NECESSARY ACTION. THE ASSESSING OFFICER OBSERVED THAT PERSONAL APPEARANCE OF DIRECTOR WAS SOUGHT FOR RECORDING TH E STATEMENT BUT NO ONE APPEARED BEFORE THE UNDERSIGNED. HE ALSO OBSERVED THAT W HEN INSPECTOR OF THIS CHARGE WAS SENT TO THE ADDRESS TO SEE WHETHER THE OFFICE OF THE SAID COMPANY IS FUNCTIONAL AT THE GIVEN ADDRESS OR NOT, IT WAS FOUND THAT THE SAID ADDRE SS WAS JUST FOR RECEIVING THE LETTER & A PERSON WHO MIGHT BE A PEON WAS PRESENT TO RECEIVE THE LETTER, AND NO SUBSTANT IAL ACTIVITY WAS FOUND THERE . THEREFORE, THE ASSESSING OFFICER OPINED THAT SAID COMPANY IS A SHELL COMPANY & IS ONLY PROVIDING ACCOMMODAT ION ENTRY FOR ENROOTING ASSESSEE'S OWN INCOME THROUGH DIFFERENT CHANNELS. . IN SUPPORT OF THE SAME, HE OBSERVED THAT INCOME AND TURNO V ER DECLARED BY ALL THESE SHELL COMPANIES, NAMELY, NAGINA EXPORTS AND FINEST PVT LTD., IN ASSESSMENT YEAR 2 013 - 14 WAS ONLY RS.26,177/ - , AMBIK A COMMERCE PVT LTD RS.13,060/ - , ESCORTS TRADLINK PVT ITD RS 97 950/ - , LUPIN COMMODEAL P VT LTD RS.43,439, MR INTERNATIONAL PV T LTD RS.230/ - , MR INFRADEV PVT LTD RS.1290, AND TOLASARIYA VINIYOG PVT LT D., 44,230/ - . HE ALSO OBSERVED THAT ON PERUSAL OF BALANCE SHEET SHOWS THAT THESE INVESTING COMPANIES DO NOT HAVE ANY SUBSTANTIAL ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 5 | 15 BUSINESS TO INVEST SUBSTANTIALLY IN ANY COMPANY. FURTHER, THE DIRECTOR S WHO WERE SUMMONED BY DIT(INV) UNIT - 2(4), KOLKATA AS WELL AS BY HIM DID NOT APPEAR BEFORE THE RESPECTIVE AUTHORITY TO EVADE CROSS - EXAMINATION & TO BRING THE TRUTH ON SURFACE. ONCE THE NOTICE U/S. 131 IS ISSUED TO THE ASSESSE E/WITNESS AND HE DID NOT APPEAR, THE ASSE SSEE IS REQUIRED T O PROOF THEIR IDENTITY AND CAPACITY TO ADVANCE MONEY & GENUINE NESS OF TRANSACTION. IN THE CASE OF THE ASSESSE, T HE ONUS ON ASSESSEE WAS NOT DISCHARGED AS HE FAILED TO PRODUCE THE DIRECTORS TO WHOM SUMMONS WERE ISSUED. MERE FILING OF INCOME RETURN BY THE CREDITORS IS NOT ENOUGH TO PROVE THE GENUINE NE SS OF CASH CREDIT APPEARING IN ASSESSEE'S BOOK. FOR THIS, HE RELIED ON THE DECISION IN THE CASE OF CIT VS CORLAY TRADIN G COMPANY LTD., (1999) 7 DTC 442 (CAL). SIMILARLY, HE RELIED ON THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF V VENKAT REDDY & COMPANY VS DCIT (2002) 26 DCT 458 (HYD), WHEREIN, IT WAS HELD THAT MERE FILING OF CONFIRMATORY LETTER TO ESTABL ISH THE IDENTITY OF THE CREDITORS IS NOT ENOUGH & IT CANNOT BE SAID THE ONUS WAS DISCHARGED BY THE ASSESSE. THEREFORE, HE HELD THAT INVESTMENTS MADE BY THESE COMPANIES ARE NOT CONSIDERED GENUINE AS THE ASSESSEES EXPLANATION IS NOT SATISFACTORY IN THIS R EGARD. HENCE, HE PRESUMED THAT ASSESSEES OWN MONEY WAS ROUTED THROUGH CIRCUITOUS ROUTE BY THESE COMPANIES AND HENCE, ADDED ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 6 | 15 RS.14,61,50,000/ - TO THE INCOME OF THE ASSESSE AS INFORM FROM UNDISCLOSED SOURCES UNDER SECTION 68 OF THE ACT. 6. ON APPEAL, THE CI T(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDER: 5.10 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND HAVE PERU SED THE ASSESSMENT ORDER. ONE THING THAT CAME OUT CLEARLY FROM THE STATEMENT OF SHRI AL OK RUNGTA WAS THAT HE WA S UNAWARE OF THE ACTIVITIES OF THE COMPANIES WHICH HAD EXTENDED LOANS TO THE APPELLANT COMPANY EVEN THOUGH HE WAS A DIRECTOR IN SEVERAL OF THESE COMPANIES AS WELL. IT IS ALSO A FACT THAT THE AO WAS CONSIDERATE ENOUGH TO SUSPEND THE STATEMENT TO ALLOW SHRI RUNGTA TO ATTEND TO SOME URGENT BUSINESS REQUIREMENT. SHRI RUNGTA STATED TH A T HE WOULD PRESENT HIMSELF FOR THE COMPLETION OF THE STATEMENT IN THE SECOND WEEK OF FEBRUARY BUT HE DID NOT ABIDE BY THE STATEMENT MADE ON OATH. THE AO ISSUED ANOTHER SUMMON D ATED 1.2.2016 REQUIRING THE APPELLANT TO PRESENT HIMSELF ON 11.2.2016 BUT THIS SUMMON HAS NOT COMPLIED WITH. 5.11 THE APPELLANT HAS TRIED TO MAKE OUT A CASE THAT TILL 15.2.2016 HE WAS BUSY WITH OTHER COURT MATTERS AND THUS WAS NOT ABLE TO COMPLY WITH THE S UMMONS. THE CLAIM OF THE APPELLANT IS THAT THIS DETAIL WAS AVAILABLE WITH THE AO, HOWEVER, NO FURTHER COMMUNICATION WAS ISSUED BY THE AO BEFORE PASSING OF THE ASSESSMENT ORDER. THE ARGUMENT OF THE APPELLANT IS SPECIOUS. THE APPELLANT IS SHUNNING ALL RES PONSIBILITIES FROM HIS SIDE AND SHIFTING ALL THE BURDEN ON TO THE AO. IT WAS THE APPELLANT WHO GOT HIS STATEMENT TEMPORARILY SUSPENDED STATING SOME URGENT COURT MATTER IN DELHI. HE STATED THAT HE WOULD PRESENT HIMSELF IN THE SECOND WEEK OF FEBRUARY. THI S STATEMENT WAS MADE ON OATH BEFORE THE AO U/S.131 OF THE ACT. THE APPELLANT DID NOT RESPOND TO THE SECOND SUMMON. THE ASSESSMENT ORDER WAS PASSED ON 30.3.2016. THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE APPELLANT MADE ANY EFFORT TO PRESENT HIMSELF BEFORE THE AO FOR THE COMPLETION OF HIS INCOMPLETE STATEMENT AFTER 15.2.2016 AND BEFORE THE COMPLETION OF THE ASSESSMENT PROCEEDINGS WHICH HAPPENED AFTER A GAP OF ONE AND A HALF MONTHS. APPELLANTS CONTENTION IS THAT ALL RESPONSIBILITY LAY ON HE AO AND T HAT HE WAS ABSOLVED OF ALL LEGAL RESPONSIBILITIES. UNDER THE CIRCUMSTANCES, I AGREE WITH THE CONTENTION OF THE AO THAT THE APPELLANT DELIBERATELY SHIED AWAY FROM MAKING A STATEMENT BEFORE THE AO AND THAT THE AO WAS JUSTIFIED IN DRAWING ADVERSE CONCLUSIONS . ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 7 | 15 5.12 SIMILARLY, BOTH SUDIP K SHAW AND SRI MD PYARE DID NOT ATTEND IN RESPONSE TO THE SUMMON. WHILE RECORDING HIS STATEMENT SHRI ALOK RUNGTA HAD STATED THAT BOTH WERE EMPLOYEES OF THE GROUP COMPANIES BELONGING TO THE RUNGTA GROUP. HOWEVER, BOTH WERE SHOWN AS DIRECTORS. 5.13 IT IS ALSO A FACT THAT THE COMPANIES EXTENDING LOANS TO THE APPELLANT COMPANIES HAD VERY MEAGRE INCOME. THE APPELLANT HAS CHALLENGED THIS ASSERTION OF THE AO STATING THAT MEAGRE INCOME COULD BE NO PROOF OF A COMPANY BEING SHE LL COMPANY. THIS ARGUMENT OF THE APPELLANT IS WELL FOUNDED AS A STAND ALONE ARGUMENT. IN CIRCUMSTANCES SUCH AS THAT IN THE PRESENT CASE THERE COULD BE NO CLINCHING EVIDENCE. THE CASE HAS TO BE VIEWED BY PUTTING ALL THE EVIDENCE TOGETHER TO SEE THE GESTA LT EFFECT WHERE THE WHOLE IS MORE THAN THE SUM OF ITS PARTS. 5.14 THE HONBLE DELHI HIGH COURT IN A RECENT JUDGMENT IN THE CASE OF PR CIT VS BIKRAM SINGH ITS 55/2017 DATED 25.8.2017 HAS HELD: THE TRANSACTION IN THE PRESENT APPEAL ARE YET ANOTHER EXAMPLE OF THE CONSTANT USE OF THE DECEPTION OF LOAN ENTRIES TO BRING UNACCOUNTED MONEY INTO BANKING CHANNELS. THIS DEVICE OF LOAN ENTRIES CONTINUES TO PLAGUE THE LEGITIMATE ECONOMY OF OUR COUNTRY. AS SEEN FROM THE FACTS NARRATED ABOVE, THE TRANSACTIONS HEREIN CLEARLY DO NOT INSPIRE CONFIDENCE AS BEING GENUINE AND ARE SHROUDED IN MYSTERY, AS TO WHY THE SO CALLED CREDITORS WOULD LEND SUCH HUGE UNSECURED, INTEREST FRE E LOANS - THAT TOO WITHOUT ANY AG REEMENT. 5.15 IT IS ALSO A FACT THAT ALL THE SAID COMPANIES WERE LOCATED AT A SINGLE ADDRESS WHERE THERE WAS ONLY ONE PERSON TO RECEIVE LETTERS. NONE OF THE DIRECTORS OF THE COMPANIES WHICH HAD EXTENDED LOANS TO THE APPELLANT COMPANY APPEAR BEFORE THE DDIT (INV), KOLKATA. FROM THE INFORMATION AVAILABLE ON THE NET (EX TRACTED BELOW) ALL THESE COMPANIES IN WHICH SHRI ALOK RUNGTA IS A DIRECTOR FUNCTION FROM SINGLE ROOM DIAMOND PRESTIGE, ROOM NO.310 41A, AJC BOSE ROAD, KOLKATA, WB - 700017 IN LUPIN COMMODEAL P. LTD. LUPIN COMMODEAL PVT LTD., IS A PRIVATE INCORPORATED ON 1 2 TH JULY, 1994. IT IS CLASSIFIED AS NON - GOVT. COMPANY AND IS REGISTERED AT REGISTRAR OF COMPANIES, KOLKATA. DIRECTORS OF LUPIN COMMODEAL PVT LTD., ARE ALOK RUNGTA, ASHISH RUNGTA. LUPIN COMMODEAL PVT LTD., CORPORATE IDENTIFICATION NUMBER IS (CIN) U51109 WB 1994 PTC 063901 AND ITS REGISTRATION NUMBER IS 63901. ITS EMAIL ADDRESS IS RUNGTARAMGARH @GMAIL.COM AND ITS REGISTERED ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 8 | 15 ADDRESS IS DIAMOND PRESTIGE, ROOM NO.310 41 AJC BOSE ROAD, KOLKATA - 700017 IN PALAK PROJECT P LTD PALAK PROJECTS PVT LTD., IS A PRIVATE INCORPORATED ON 5 TH SEPT 2008. IT IS CLASSIFIED AS NON - GOVT. COMPANY AND IS REGISTERED AT REGISTRAR OF COMPANIES, KOLKATA DIRECTOR OF PALAK PROJECTS PRIVATE LIMITED ARE ALOK RUNGTA, ASHISH RUNGTA PALAK PROJECTS PRIVATE LIMITED'S CORPORATE IDENT IFICATION NUMBER IS (CIN) U45400WB2008PTC129137 AND ITS REGISTRATION NUMBER IS 129137. ITS EMAIL ADDRESS IS [e-mail] AND ITS REGISTERED ADDRESS IS DIAMOND PRESTIGE, ROOM NO.310, 41A, A .J.C., BOSE ROAD, KOLKATA, WB - 700017 IN NAGINA EXPORTS FINVEST P. LTD NAGINA EXPORTS & FINVEST PVT. LTD. IS A PRIVATE INCORPORATED ON 10 MAY 1991. IT IS CLASSIFIED AS NON - GOVT COMPANY AND IS REGISTERED AT REGISTRAR OF COMPANIES, KOLKATA. DIRECTORS OF NAGINA EXPORTS & FINVEST PVT. LTD. ARE ALOK RUNGTA, ASHISH RUNGTA,. NAGINA EXPORTS & FINVEST PVT. LTD.'S CORPORATE IDENTIFICATION NUMBER IS (CIN) U51909WB1991PTC051710 AND ITS REGISTRATION NUMBER IS 51710. ITS EMAIL ADDRESS [e-mail] AND ITS REGISTERED ADDRESS IS DIAMOND PRESTIGE, ROOM NO.310, 41 A, A.J.C., BOSE ROAD, KOLKATA WB 700017 IN ESCORTS TRADELINK P. LTD. ESCORTS TRADELINK PVT. LTD. IS A PRIVATE INCORPORATED ON 28 MARCH, 1996. IT IS CLASSIFIED AS NON - GOVT COMPANY AND IS REGISTERED AT REGISTRAR OF COMPANIES, KOLKATA. DIRECTORS OF ESCORTS TRADELINK PVT. LTD. ARE ALOK RUNGTA, ASHISH RUNGTA. ESCORTS TRADELINK PVT. LTD.'S CORPORATE IDENTIFICATION NUMBER IS (CIN) U51909WB1996PTC078723 AND I TS REGISTRATION NUMBER IS 78723. ITS EMAIL ADDRESS IS [e-mail] AND ITS REGISTERED ADDRESS IS DIAMOND PRESTIGE, ROOM NO.310, 41A, A.J.C., BOSE ROAD, KOLKATA, WB - 700017 IN AMBIKA COMMERCE P LTD AMBICA COMMERCE PRIVATE LIMITED IS A PRIVATE INCORPORATED ON 16 TH FEBRUARY, 2009. IT IS CLASSIFIED AS NON - G OVT COMPANY AND IS REGISTERED AT REGISTRAR OF COMPANIES, KOLKATA. ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 9 | 15 DIRECTORS OF AMBICA COMMERCE PRIVATE LIMITED ARE MOHMAD PYARE, SUDIP KUMAR SHAW, AMBICA COMMERCE PRIVATE LIMITED'S CORPORATE IDENTIFICATION NUMBER IS (CIN) U51109WB2009PTC132781 AND ITS REGISTRATION NUMBER IS 132781. ITS EMAIL ADDRESS IS [e-mail] AN D ITS REGISTERED ADDRESS IS DIAMOND PRESTIGE, ROOM NO.310,41 A, A.J.C., BOSE ROAD, KOLKATA, WB - 700017 IN M.R. INFRADEV P. LTD MR. INFRADEV PRIVATE LIMITED IS A PRIVATE INCORPORATED ON 26 TH JUNE, 2009. IT IS CLASSIFIED AS NON - GOVT COMPANY AND IS REGISTERED AT REGISTRAR OF COMPANIES, KOLKATA. DIRECTORS OF MR. INFRADEV PRIVATE LIMITED ARE ABHISHEK RUNGTA AND MAYA RUNGTA. MR INFRADEV PVT LIMITEDS CORPORATE IDENTIFICATION NUMBER IS (CIN) U7020 0WB2009PTC136320 AND ITS REGISTRATION NUMBER IS 136320. ITS EMAIL ADDRESS IS [e-mail] AND ITS REGISTERED ADDRESS IS DIAMOND PRESTIGE, ROOM NO.310, 41 A, A.J.C., BOSE ROAD, KOLKATA, WB - 700017 IN M.R. INTERNATIONAL P. LTD. MR. INTERNATIONAL PRIVATE LIMITED IS A PRIVATE INCORPORATED ON 16 TH JULY, 2009. IT IS CLASSIFIED AS NON - GOVT COMPANY AND IS REGISTERED AT REGISTRAR OF COMPANIES, KOLKATA. DIRECTORS OF MR. INTERNATIONAL PRIVATE LIMITED ARE ABHISHEK RUNGTA AND MAYA RUNGTA. MR. INTERNATIONAL PRIVATE LIMITED'S CORPORATE IDENTIFICATION NUMBER IS (DN) U74900WB2009PTC136892 AND ITS REGISTRATION NUMBER IS 136892. ITS EMAIL ADDRESS IS RUNGTARAMGARH@GMA IL.COM AND ITS REGISTERED ADDRESS IS DIAMOND PRESTIGE, ROOM NO.310, 41 A, A.J.C., BOSE ROAD, KOLKATA, WB - 700017 IN 7. THE CIT(A) AFTER RELYING ON VARIOUS DECISIONS QUOTED IN HIS ORDER, CONFIRMED THE ACTION OF THE ASSESSING OFFICER AND DISMISSED THE APPEAL OF THE ASSESSE. ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 10 | 15 8. BEFORE US, LD AUTHORISED REPRESENTATIVE EXPLAINED THE SOURCE OF THE LOAN TAKEN BY THE ASSESSE COMPANY FROM EIGHT COMPANIES. 9. ON THE OTHER HAND, LD DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF LOWER AUTHORITI ES AND RELIED ON THE FOLLOWING DECISIONS AND FILED COPIES OF THE SAME: I) SHREE BHAGWATI CONCAST PVT LTGD. VS ITO (ITA NO.33/JP/15 A.Y. 2005 - 06 ORDER DATED 16.2.2018.(JAIPUR TRIBUNAL) II) CIT VS. NOVA PROMOTERS & FINLEASE (P) LTD. (ITA NO.342 OF 2011) ORDER DATED 15.2.2012 (DELHI H.C.) III) CIT VS. NR PORTFOLIO PVT LTD (INCOME TAX APPEAL NO.1019/2011) ORDER DATED 22.11.2013 (DELHI H.C.) IV) RAJMANDIR ESTATE PVT LTD. VS PR. CIT (G.A.HNO.509 OF 2016 WITH ITAT NO.113 OF 2016) ORDER DATED 13.5.2016 (CAL H.C .). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSE COMPANY HAS CLAIMED TO HAVE RECEIVED LOAN FROM EIGHT COMPANIES AGGREGATING TO RS.14,61,50,000/ - DURING THE YEAR UNDER APPEAL. THE ASSESSE IN SUPPORT OF THE ABOVE LOAN TRANSACTION FILED BEFORE THE ASSESSING OFFICER THE FOLLOWING DOCUMENTS: I) CONFIRMATION OF LOAN. II) COPY OF PAN CARD OF LOAN CREDITORS. III) AUDITED BALANCE SHEET OF LOAN CREDITORS. ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 11 | 15 IV) BANK STATEMENT OF THE LOAN CREDITORS FROM WHERE THE LOAN WAS GRANTED TO THE ASSESSE. 11. HOWEVER, THE ASSESSING OFFICER NOT ACCEPTED THE ABOVE LOAN AND ADDED THE ENTIRE AMOUNT OF RS.14,61,50,000/ - TO THE INCOME OF THE ASSESSE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT OUT OF EIGHT COMPANIES, ADDRESS OF FOUR COMPANIES ARE SAME. HE ALSO OBSERVED THAT THE INCOME S DECLARED BY EIGHT COMPANIES WERE MEAGRE. THE DIRECTOR OF THE ASSESSE COMPANY, WHO WAS ALSO A DIRECTO R IN A NUMBER OF COMPANIES FROM WHOM LOAN WAS TAKEN BY THE ASSESSE COMPANY , THOUGH ONCE APPEARED BEFORE HIM IN PURSUANCE TO SUMMON ISSUED UNDER SECTION 131 OF THE ACT AND HIS STATEMENT WAS ALSO PARTIALLY RECORDED BUT DID NOT APPEAR LATER ON BEFORE THE ASSE SSING OFFICER FOR COMPLETING THE RECORDING OF STATEMENT. IN ONE OF THE LENDING COMPANY, NAMELY, AMBICA COMMERCIAL PVT LTD., FROM WHOM LOAN OF RS.10,00,000/ - WAS ACCEPTED BY THE ASSESSE COMPANY, SHRI MOHD. PYARE AND SHRI SUDIP K SHAW WERE THE DIRECTORS. THESE TWO PERSONS ARE EMPLOYEES OF THE COMPANIES BELONGING TO THE ASSESSE GROUP COMPANIES. THESE TWO PERSONS ALSO NOT APPEARED BEFORE THE INCOME TAX OFFICER, WARD 2(1), RANCHI. 12. IN VIEW OF ABOVE, THE ASSESSING OFFICER TREATED THE ENTIRE INVESTMENT MAD E BY ALL THE EIGHT COMPANIES WITH THE ASSESSE COMPANY AS NON - GENUINE AND HE HELD THAT THE ASSESSEES OWN ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 12 | 15 MONEY WAS ROUTED THROUGH CIRCUITOUS ROUTES THROUGH DIFFERENT COMPANIES AS UNDER: 1. NAGINA EXPORTS & FINVEST PVT LTD,. : RS.4,83,00,000 2. TOLASARIYA VINIYOG PVT LTD. : RS.4,36,00,000 3. LUPIN COMMODEAL PVT LTD. : RS.4,14,00,000 4. JIT FINANCE LTD., : RS.1,00,00,000 5. MOHANKA EXPORTS PVT LTD. : RS. 12,00,000 6. AMBIKA COMMERCE PVT LTD. : RS. 10,00,000 7. M.R.INFRADEV PVTD. : RS. 3,50,000 8. M.R.INTERNATIONAL PVT LTD. : RS. 3,00,000 TOTAL: RS.14,61,50,000 13. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 14. WE FIND THAT THE ASSESSE COMPANY HAS CLAIMED THAT ALL THE EIGHT COMPANIES FROM WHOM LOAN IN QUESTION WAS TAKEN BELONGED TO THE SAME GROUP TO WHICH THE ASSESSE COMPANY BELONGED TO. IN OTHER WORDS, THE LOANS IN QUESTION WERE TAKEN FROM GROUP COMPANIES AND NOT FROM ANY OUTSIDER. AS THE COMPANIES BELONGED TO THE SAME GRO UP, IT WAS NORMAL THAT THE FOUR OF THE COMPANIES HAD THE SAME ADDRESS. SO, NO ADVERSE INFERENCE COULD HAVE BEEN DRAWN FROM THE ABOVE FACT. 1 5. IN RESPECT OF MOH D. PYARE AND SRI SUDIP K SHAW, IT WAS SUBMITTED THAT THEY WERE EMPLOYEE OF THE GROUP COMPANIES. THEY WERE NOT THE PROMOTER DIRECTOR S BUT WERE APPOINTED AS DIRECTOR S FOR THE SAKE OF DAY TO DAY ADMINISTRATIVE CONVENIENCE. SIMPLY BECAUSE ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 13 | 15 A DIRECTOR IS NOT A PROMOTER DIRECTOR, IT CANNOT BE BRANDED AS A DUMMY DIRECTOR. 16. SIMPLY BECAUSE THE AMOUNT OF LOAN ADVANCED BY EACH OF THE EIGHT COMPANIES WAS MORE THAN THE INCOME OF THE RELEVANT YEAR, IT CANNOT BE CONCLUDED THAT THE LOANS WERE NOT GENUINE. BECAUSE THE LOAN CAN BE ADVANCED OUT OF REFUND RECEIVED OF THE LOAN ADVANCED IN EARLIER YEARS OR BY DISPOSAL OF OTHER INVESTMENTS ACQUIRED IN EARLIER ASSESSMENT YEARS OR EVEN FROM BORROWINGS MADE. 17. REGARDING THE SOURCE FROM WHICH THE EACH OF THE 8 COMPANIES IN QUESTION ADVANCED LOAN TO THE ASSESSE COMPANY, IT WAS EXPLAINED AS UNDER: NAME AMOUNT SOU RCE AMBICA COMMERCE PVT LTD. 10,00,000.00 LOAN JEET FINANCE PVT LTD. 1,00,00,000.00 REFUND OF LOAN M/S. INFRADEV PVT LTD. 3,50,000.00 LOAN M.R. INTERNATIONAL PVT LTD. 3,10,000.00 LOAN MOHANKA EXPORTS PVT LTD. 12,10,000.00 LOAN LUPIN COMMDEAN PVT LTD 4,14,00,000.00 REFUND OF LOAN/LOAN TAKEN NAGINA EXPORTS & FINVEST PVT LTD. 4,83,00,000.00 REFUND OF LOAN/LOAN TAKEN/SALE OF SHARES TOLASARIYA VINIYOG PVT LTD. 4,36,00,000.00 REFUND OF LOAN/LOAN TAKEN ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 14 | 15 18. WE FIND THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE ASSESSE S OWN MONEY WAS BROUGHT IN AS IN THE FORM OF LOAN BY CIRCUITOUS METHOD. THE ABOVE LOAN IS IN THE REALM OF SUSPICION OR SURMISES AND NOT THAT BY ANY MATERIAL. 19. ON APPRECIATIO N OF THE ENTIRE FACTS OF THE CASE AVAILABLE, WE FIND THAT THE IDENTITY OF EIGHT LOAN CREDITORS WHO ARE GROUP COMPANIES ARE NOT IN DISPUTE. THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE LOAN CREDITORS STANDS EXPLAINED FROM THE CONFIRMA TION ACCOUNT OF BANK STATEMENT OF THE CREDITORS AND THE AUDITED FINANCIAL STATEMENT OF THE CREDITOR COMPANIES. THUS, PRIMA FACIE, THE ONUS WHICH WAS ON THE ASSESSE COMPANY STANDS DISCHARGED. 20. THEREAFTER, THE REVENUE COULD NOT BRING ANY MATERIAL APART FROM SUSPICION OR SURMISES TO SHOW THAT THE ASSESSEES OWN MONEY WAS PLOUGHED BACK VIDE THE LOAN IN QUESTION. 21. FURTHER, IT IS OBSERVED FROM THE CONFIRMATION OF LOAN ACCOUNT OF EIGHT COMPANIES UNDER CONSIDERATION THAT THE ASSESSE COMPANY H AD PAID INTEREST ON LOAN IN QUESTION TO ALL THE EIGHT LOAN CREDITORS. THE SAID PAYMENT OF INTEREST WAS CONSIDERED BY THE LOWER AUTHORITIES AS GENUINE AND NO DISALLOWANCE OUT OF THE SAME WAS MADE. ITA NO.268/RAN/2017 ASSESSMENT YEAR :2013 - 14 : P A G E 15 | 15 22. HENCE, WE ARE OF THE CONSTRAINED TO HOLD THAT THE ADDIT ION OF RS.14,61,50,000/ - IN QUESTION CANNOT BE SUSTAINED. WE, THEREFORE, DELETE THE ADDITION OF RS.14,61,50,000/ - AND ALLOW THE APPEAL OF THE ASSESSE. 23. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED ORDER PRONOUNCED ON 30 / 11 /2018. SD/ - SD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER R ANCHI ; DATED 30 / 11 /2018 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR. PVT.SECRETARY, ITAT, RANCHI ON TOUR 1. THE APPELLANT : MAA CHINNA CEMENT & ISPAT PVT LTD., HEHAL, BARKAKANA, RAMGARH. 2. THE RESPONDENT. ITO, WARD - 2(1), RANCHI 3. THE CIT(A) - RANCHI 4. PR.CIT - RANCHI 5. DR, ITAT, RANCHI 6. GUARD FILE. //TRUE COPY//