M/s Suraj Impex (India) Pvt. Ltd., Indore V. The ACIT, Circle 4(1), Indore

ITA 313/IND/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1531 (ITAT-INDORE)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRIDULA BAJPAI
• Assessee Lawyers: S S DESHPANDE; ASHOK KHASGIWALA CAS
• Keywords: Accommodation entries
• Section: 133(6); 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. :AACCS3080R I.T.A.NO. 312 & 313/IND/2012 A.Y. : 2007-08 & 2008-09 SURAJ IMPEX (INDIA)PRIVATE LIMITED, ACIT, CIRCLE 4(1), SAKET TOWER, A.B.ROAD, VS INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S. S. DESHPANDE AND SHRI ASHOK KHASGIWALA, CAS RESPONDENT BY : SMT. MRIDULA BAJPAI, CIT DR DATE OF HEARING : 21 . 01 .201 3 DATE OF PRONOUNCEMENT : 24 . 01 .201 3 O R D E R PER R. C. SHARMA, A.M. THESE ARE THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDERS PASSED BY THE CIT(A) DATED 30.3.2012, FOR TH E ASSESSMENT YEARS 2007-08 & 2008-09. 2. IN BOTH THE APPEALS, THE ASSESSEE IS AGGRIEVED FOR THE ADDITION MADE U/S 68 AND DISALLOWANCE OF CLAIM OF I NTEREST -: 2: - 2 THEREON. IN THE ASSESSMENT YEAR 2007-08, THE ASSESS EE IS ALSO AGGRIEVED FOR ENHANCEMENT OF ASSESSMENT BY CIT (A) IN RESPECT OF LOAN OF RS. 55 LAKHS AND INTEREST THEREO N. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. IN THE COURSE OF SCRUTINY ASSESSMENT FOR ASSESSMENT YEAR 2007-08, THE ASSESSING OFFICER ASKE D THE ASSESSEE TO FILE DETAILS OF UNSECURED LOANS WITH TH EIR DEPOSITORS ALONGWITH COMPLETE ADDRESSES, PAN NUMBE RS ETC. THE ASSESSING OFFICER ALSO ISSUED NOTICE U/S 1 33(6) TO THE FOLLOWING PARTIES FROM WHOM ASSESSEE HAS TAKEN UNSECURED LOANS. 4. NOTICES ISSUED TO FOLLOWING PARTIES WERE RETURNED UNSERVED WITH POSTAL REMARK NOT FOUND AT ADDRESS MENTIONED 1) M/S. PERSUIT SECURITIES. 2) M/S. SUNDROP SECURITIES. 3) M/S. NEEMA INVESTMENT 4) M/S. K. K. PATEL FINANCE. 5) M/S. PRAMILA INVESTMENT & FIN. 6) M/S. MONEY PENNY FINVEST. -: 3: - 3 5. THE LD. COUNSEL WAS ASKED TO SHOW CAUSE WHY THESE UNSECURED LOAN TAKEN BY THE ASSESSEE SHOULD N OT BE ADDED TO TOTAL INCOME OF THE ASSESSEE COMPANY AS ID ENTITY OF THE LOAN GIVING PARTY (CLAIMED LENDER) COULD NOT BE PROVED. A.O. FURTHER OBSERVED THAT IN SOME OF THE OTHER CAS ES ASSESSED TO TAX IN INDORE SHARE APPLICATION MONEY W AS SHOWN TO HAVE BEEN RECEIVED FROM THESE VERY COMPANI ES, NAMELY, MONEY PENNY FINVEST, M/S. PURSUIT SECURI TIES, M/S. NEEMA INVESTMENT , M/S. PRAMILA INVESTMENT , AND THESE COMPANIES WERE FOUND TO BE PAPER COMPANIES. 6. IN THIS CASE, FOLLOWING ARE THE DETAILS OF UNSECURE D LOANS FROM THESE FOUR COMPANIES :- NAME OF COMPANY UNSECURED LOAN (ASK IN RS.) INTEREST (IN RS.) SHOWN PAID BY ASSESSEE M/S. MONEY PEENY FINCOM LIMITED 55,00,000/ - 59,369/ - M/S.NEEMA INVESTMENT 67,00,000/ - 42,658/ - M/S.PURSUIT SECURITIES 75,00,000/ - 86,972/ - M/S.PRAMILA INVESTMENT PVT.LTD. 20,00,000/ - 12,822/ - TOTAL 2,17,00,000/ - 2,01,821/ - 7. THE ASSESSING OFFICER HAD ALSO ASKED THE ASSESSEE T O PRODUCE THE PARTIES FROM WHOM UNSECURED LOAN WAS TA KEN AND IT WAS ALSO STATED THAT ONUS IS UPON THE ASSESS EE TO -: 4: - 4 PROVE THE IDENTITY, CREDITWORTHINESS OF THE TRANSAC TION IS NOT DISCHARGED ADEQUATELY THEN THE TRANSACTIONS WILL HA VE TO BE TREATED AS HIT BY SECTION 68 AND THE RELEVANT ADDIT ION WILL HAVE TO BE MADE IN THIS SCRUTINY ASSESSMENT PROCEED INGS. 8. AFTER DISCUSSING VARIOUS CASE LAWS CITED BY LD. AUTHORIZED REPRESENTATIVE , THE ASSESSING OFFICER C ONCLUDED AS UNDER :- IN COMPLIANCE TO SUMMONS ONLY ONE SHRI MANOJ PANDYA DIRECTOR M/S. PUSUTI SECURITIES LIMITED APPEARED ON 22.12.2009. STATEMENT OF SHRI MANOJ PANDYA RECORDED ON OATH, WHICH WAS PARTLY CONCLUDED AND DATE WAS FIXED FOR 23.12.2009. BUT SHRI MANOJ PANDYA DID NOT APPEAR ON THE NEXT DAY IS (23.12.2009) NOR TILL THE CONCLUSION OF THE PROCEEDINGS. NO ONE APPEARED ON BEHALF OF REMAINING TWO PARTIES I.E. 1. NEEMA INVESTMENT PVT.LTD. 2. M/S. MONEY PENNY FINCOM (P) LTD. RELEVANT QUESTION AND ANSWERS FROM STATEMENT & SHRI MANOJ PANDYA, DIRECTOR, PURSUIT SECURITIES ARE REPRODUCED FOR READY REFERENCE. -: 5: - 5 IZ'U 9%& D`I;K CRK;SA FD VKIDH DAIUH DK REGD. ADDRESS 40, MOTI MAHAL SIR HUKUMCHAND MARG, INDORE DC LS GS\ D`I;K BLDK MRRJ VKI VIUH GLRFYFI ESA LO;A FY[KSA\ MRRJ 9 %& BL DAIUH DK REG. OFFICE DK IRK EQ>S RKS DSOY AMITA APPT. CKSJHOYH EQACBZ DK GH IRK GSA ;G MIJKSDR IRK ESJK FUOKL LFKKU GSA IZ'U 11%& VKIUS IZ'U LA- 9 DS MRRJ ESA DAIUH DK IRK EAQCBZ DK CRK;K GS A TCFD DK;KZY;HU FJDKMZ DS VUQLKJ VKIDH DAIUH DK JFT- DK;KZY; 40, MOTI MAHAL SIR HUKUMCHAND MARG, INDORE GS BLH IRS IJ VKIDKS LEEU HKSTK X;K FKK TKS FD RKEHY GQVK GS A VR% D;KS U ;G EKUK TK;S FD ;GH VKIDH DAIUH DK REG. OFFICE GS \ BL IZ'U DK MRRJ VKI LO;A VIUH GLRFYFI ESA NSAA\ MRRJ 11%& VKT FNUKAD RD ESJH TKUDKJH DS VUQLKJ DAIU H DK REG. OFFICE AMITA APPT. CKSJHOYH EQACBZ DK GH GS A BUNKSJ DK EDKU FDJK;S D K GSA EDKU EKFYD DK UKE JH LQJS'K DQEKJ TSU GS TKS FD 254 LE`FR UXJ ESA FUOKL DJRS GSA IZ'U 12%& D`I;K CRK;SA FD D;K VKI TKURS GAS FD DAIU H ,DV 1956 DS FOFHKUU IZKO/KKUKSA DS RGR REG. OFFICE LS LACAF/KR OSF/KD VKSIPKFJDRK;SA IWJH DJUH GKSRH GSAA ESA VKIDK /;KU FO'KSK :I LS /KKJK 163 D H VKSJ FNYKUK PKGWWXK FTLDS RGR DAIUH DS DKEDKT LS LACAF/KR DKXTKR RETURNS, INDEX,CERTIFICATE VKSJ NLRKOSTKSA DH IZFRFYFI;KSA REG. OFFICE ESA J[KUH GKSRH GSA D`I;K BL IZ'U DK MRRJ VIUH GLRFYFI ESA NSA\ -: 6: - 6 MRRJ 13%& DAIUH ,DV DS RGR TKS HKH VKO;DRKUQLKJ LK JS NLRKOST TKS HKH T:JH GKS OG LKJS EQACBZ FLFKR DK;KZY; IJ MIYC/K GSA VKT RD FNUKAD 22&12&2009 DKS ESJH TKUDKJH DS VUQLKJ OGKA IJ MIYC/ K GKSOSXS A DAIUH CKSMZ ,OA DAIUH ,DV DS RGR TKS HKH VKO;DRK GS MLDH EQ>S TKUDKJH UGHA GSA IZ'U 13 %& D;K VKI TKURS GSA FD DAIUH DS DIRECTOR DS :I ESA VKIDS D;K NKF;RO GSA\ VKSJ ;G FD /KKJK 163 VFKOK /KKJK 161 ,O A /KKJK 147 DS RGR DAIUH DK UKE LKQ VKSJ CM+S V{KJKSA ESA CKSMZ CUKDJ FN[KKU K GKSRK GS VKSJ FTLDS VUQIKYU DS VHKKO ESA DAIUH DS IZR;SD DIRECTOR IJ ,SLK U DJUS IJ IZFRFNU 500 : DH PENALTY YXRH GS\ BLDK MRRJ VKI LO;A VIUH GLRFYFI ESA NSA\ MRRJ 14%& WRONGLY WRITTEN AS MRRJ 14* IN PLACE OF MRRJ 13* MIJKSDR IZ'U DS MRRJ ESA ESJK DFKU ;G GS FD EQ>S MI JKSDR /KKJK 147 ,OA 163 DS CKJS ESA FOLR`R TKUDKJH UGHA GSA IZU 15%& D`I;K CRK;SA FD VKIDKS VIUH DAIUH DS DKE& DKT DS CKJS ESA D;K TKUDKJH GS ,OA D;K VKIDS MK;JSDVJ CUUS LS IGYS LS ; G DAIUH VFLRRO ESA GS\ LKFK GH ;G HKH CRK;SA FD VKIUS BL DAIUH ESA VC RD F DRUK ISLK YXK;K GS\ BL IZU DK MRRJ VKI LO;A VIUH GLRFYFI ESA FY[KS \ MRRJ 15 %& DAIUH DK EQ[; DKE&DKT QKABUSL ,OA BUOSLV ESAV DK DKE GS VKSJ ESJS MK;JSDVJ CUUS DS IGYS LS GH DAIUH VFLRRO ESA G S VKSJ BL DAIUH ESA ESJK VC RD DKSBZ ISLK UGHA YXK;K GSA IZU 19%& D`I;K CRK;S FD VKI ,D ES- LWJT BEISDL BF. M;K IZK-FY- DKS TKURS GSA ;FN GKW RKS DSLS\ -: 7: - 7 MRRJ 19%& GKW ESA ES- LWJT BEISDL BF.M;K IZK-FY- DK S TKURK GWW VKSJ MULS ESJH EQYKDKR ,D LKS'KY XSNFJAX DS NKSJKU GQBZ FKHA LWJT BEISDL BF.M;K IZK-FY- DS MK;JSDVJ JH OHJSUNZ DQEKJ TSU DKS TKURK GWWA IZ'U 20 %& D`I;K CRK;S FD FDL LKSKY XSNFJAX ESA VK IDH EQYKDKR GQBZ FKH\ MRRJ 20%& TSU LEKT DS EGKOHJ T;ARH DS MIY{; DS NKSJ KU LUSG LEESYU ESA GQBZ FKHA LU 2005 VIZSY ESA GQBZ FKHA IZU 21%& D`I;K CRK;S FD ES- LWJT BEISDL BF.M;K IZK -FY- DKS DC VKSJ FDRUH JDE ,OA FDRUS C;KT NJ IJ YKSU FN;K \ MRRJ 21%& EQ>S ,DTSDV JDE ;KN UGHA GS VKSJ YKSU ESA US 2006&07 DS OKZ ESA FN;K FKKA C;KT NJ 18 % IZFR'KR IZFROKZ DS VUQLKJ YKSU OKFIL DC GQVK FKK EQ>S IRK UGHA GSA YKSU ,EKMUV MUGKSAUS EQ>S CKN DS OKKSZ ESA FJVUZ DJ FN;KA 9. AFTER DISCUSSING VARIOUS CASE LAWS CITED BY THE LD. AUTHORIZED REPRESENTATIVE, THE ASSESSING OFFICER CO NCLUDED AS UNDER :- 2.32 NOW REVERTING BACK TO THE FACTS OF THIS CAS E, IT IS SEEN THAT APART FROM BRINGING ON RECORD THE DEJURE IDENTITY OR IDENTITY OF THE LEGAL ENTITY AS A COMPANY, I.E. OF THE NAME LENDERS, THE ASSESSEE COMPANY IN SUBSTANCE HAS NOT BEEN ABLE TO ESTABLISH EVEN THE FACTUAL IDENTITY OF THE PERSONS -: 8: - 8 FROM WHOM LOAN HAS BEEN SHOWN. FURTHER STILL, SUFFICIENT OPPORTUNITY HAS BEEN GIVEN BY THE UNDERSIGNED AS AN AO TO PROVE THE IDENTITY CREDITWORTHINESS OF THE CLAIMED LENDERS AND GENUINENESS OF THE TRANSACTIONS. 2.33 THERE IS ENOUGH MATERIAL ON RECORD TO DOUBT THE CREDITWORTHINESS AND CAPACITY OF SUCH NAME LENDERS WHO HAVE BEEN CLAIMED BY THE ASSESSEE COMPANY AS LENDERS. THOUGH THE ASSESSEE COMPANY TRIED TO EXPLAIN THE GENUINENESS OF THE CREDIT ON THE BASIS OF LETTERS OF CONFIRMATI ON, IT COULD NOT BE EXPLAINED AS TO HOW THE TRANSACTION WAS MATERIALIZED WHEN EVEN THE ADDRESSES OF THE CLAIMED LENDER COMPANIES WAS NOT CORRECTLY KNOWN TO THE ASSESSEE COMPANY AND THE AMOUNT WAS PAID BY CHEQUE ONLY ON THE DATE ON WHICH THE AMOUNT WAS CREDITED TO THE ACCOUNT OF THE CLAIMED LENDER COMPANIES. 2.34 THE ASSESSEE COMPANY HAS TOTALLY FAILED TO DISCHARGE CREDITWORTHINESS OF ALL THE PARTIES FROM WHOM SUCH LOANS HAVE BEEN SHOWN. LASTLY, -: 9: - 9 DESPITE EVEN SUFFICIENT OPPORTUNITY GIVEN AT ASSESSMENT STAGE, THE APPELLANT HAS TOTALLY FAILED TO ESTABLISH THE GENUINENESS OF SUCH HUGE LOANS. THUS, TO CONCLUDE, THE ASSESSEE COMPANY HAS TOTALLY FAILED TO DISCHARGE THE ONUS CAST U/S 68 TO CUMULATIVELY ESTABLISH IDENTITY, CREDITWORTHINESS O F THE LENDERS AND THE GENUINENESS OF TRANSACTIONS. THUS, AN ADDITION OF RS. 2,17,00,000/- IS MADE TO THE TOTAL INCOME OF THE ASSESSEE. 3. SINCE THE CLAIMED LOAN OF RS. 2,17,00,000/- IS FOUND HIT BY SECTION 68 OF THE ACT AND ADDED AS INCOME IN HANDS OF THE ASSESSEE COMPANY, THE RELATED INTEREST OF RS. 2,01,821/- IS ALSO DISALLOWED AND ADDED IN HANDS OF THE ASSESSEE COMPANY. 10. AGAINST THE ABOVE ORDER, THE ASSESSEE APPROACHED TO THE CIT(A), WHO NOT ONLY CONFIRMED THE ADDITIONS MA DE BY THE ASSESSING OFFICER BUT ALSO ENHANCED THE ASSESSM ENT IN RESPECT OF LOAN TAKEN BY THE SUN DROP SECURITIES PR IVATE LIMITED. THE PRECISE OBSERVATION OF THE CIT(A) WAS AS UNDER :- -: 10: - 10 4.4 IN VIEW OF ABOVE DISCUSSION AND CONSIDERING THE FINDINGS OF HON'BLE I.T.A.T. IN THE CASE OF AGRAWAL COAL (SUPRA) IT HAS TO BE NECESSARILY HELD THAT MONNEY PENNY FINCOM LTD WERE DUBIVOUS AND NEEMA INVST. COMPANY ENGAGED IN MONEY LAUNDERING AND PROVIDING ACCOMMODATION ENTRIES TO WILLING ENTITIES. IN VIEW OF ADMISSION OF THE DIRECTOR OF THE COMPANY , SHRI RAMESH CHAND KHATOD IN THE STATEMENT RECORDED. FURTHER, HON'BLE ITAT INDORE BENCH INDORE IN ITA NO. 535/IND/2010 IN THE CASE OF M/S. SAAJ PLASTIC INDUSTRIES PVT. LTD. DECIDED ON 23.03.12 IN PARA 5 OF THE O RDER, AFTER TAKING NOTE OF THE FINDINGS RECORDED BY CIT(A), IN RESPECT OF 'MONEY PENNY', AS MADE IN PARA 4.2 TO 4.2.5 ABOVE, HAS HELD IN PARA 8 & 9 OF THE ORDER, FOLLOWING ITS DECISION IN THE CASE OF -: 11: - 11 AGRAWAL COAL (SUPRA) THAT IDENTITY OF 'MONEY PENNY' WAS NOT ESTABLISHED AND ADDITION MADE BY AO AS CONFIRMED BY CIT(A) WAS UPHELD. 4.5 HON'BLE SUPREME COURT IN THE CELEBRATED DECISION IN THE CASE OF CIT VS DURGA PRASAD MORE 82 ITR 540(SC), ON PAGE 545 HAS CATEGORICALLY HELD THAT GENUINENESS OF TRANSACTIONS CANNOT BE DECIDED MERELY ON THE BASIS OF RECITALS IN DOCUMENTS AND SAME HAS TO BE EXAMINED IN THE LIGHT OF 'SURROUNDING CIRCUMSTANCES. THE SAME ANALOGY WAS APPLIED LATER BY HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT 214 ITR 801 (SC) AS ELABORATED ON PAGE 808-809 OF THE REPORT THAT TEST OF ' HUMAN PROBABILITIES' HAVE TO BE APPLIED TO JUDGE THE TRUE NATURE OF ANY -: 12: - 12 TRANSACTION. THE SAME VIEW WAS AGAIN REITERATED BY HON'BLE SUPREME COURT, TAKING NOTICE OF THE AFORESAID TWO DECISION, IN THE CASE OF P. MOHAN KALA 291 ITR . 278(SC) ON PAGES 288-289 OF THE REPORT. 4.5.1 THESE ARE TWO WELL KNOWN SAYINGS OR PROVERBS WHICH HAVE EVOLVED FROM THE EXAMINATION OF HUMAN NATURE AND CONDUCT OVER A PERIOD OF CENTURIES AND ARE THUS RECOGNIZED AS 'CONVENTIONAL WISDOM' OF UNIVERSAL APPLICATION. SIMILAR PROVERBS EXIST IN MANY INDIAN LANGUAGES AND EVEN FOREIGN LANGUAGES. THE PROVERB ARE ' A MAN IS KNOWN BY THE COMPANY HE KEEPS' AND ' BIRDS OF SAME FEATHER FLOCK TOGETHER'. IN HINDI, THE NEAR EQUIVALENT IS 'ADDAMI KI PEHCHAN SANGAT SE HOTI HAI'. IF THE -: 13: - 13 TEST OF 'HUMAN PROBABILITIES' IS APPLIED IN THE LIGHT OF THE TWO PROVERB AND FURTHER TEST OF 'SURROUNDING CIRCUMSTANCES' IS APPLIED, IN THE LIGHT OF THE TWO PROVERB AND FURTHER TEST OF SURROUNDING CIRCUMSTANCES IS APPLIED, THE ONLY LOGICAL CONCLUSION WHICH EMERGES IS THAT UNSECURED LOAN, RECEIVED FROM PRAMILA INVESTMENT LIMITED, SUNDROP SECURITIES PVT.LTD. AND PURSUIT SECURITIES PVT.LTD. ARE ALSO NOT GENUINE LOAN TRANSACTIONS, IN VIEW OF FACTUAL POSITION DISCUSSED ABOVE. 4.6 IN VIEW OF ABOVE DISCUSSION, THE APPELLANT CANNOT GET ANY SUPPORT FROM VARIOUS DECISIONS CITED AND RELIED IN SUPPORT OF CONTENTION ADVANCED AS THE FACTS OF THE PRESENT CASE ARE CLEARLY DIFFERENT AND DISTINGUISHABLE. THE AO'S ACTION IN TREATING UNSECURED LOANS FROM ALL THE FOUR COMPANIES -: 14: - 14 NAMELY (1) M/S MONEY PENNY FINCOM LTD. (RS. 55.0 LAKH) (2) M/S. NEEMA INVESTMENT (RS. 67.0 LAKH) (3) M/S PURSUIT SECURITIES ( RS. 75.0 LAKH) AND (4) M/S PRAMILA INVESTMENT PVT. LTD.(RS. 20.0 LAKH) AS UNEXPLAINED U/S 68 RESULTING IN ADDITION OF RS. 2.17 CRORE AND DISALLOWANCE OF INTEREST OF RS. 2,01,821/- ARE ACCORDINGLY FOUND TO BE FULLY JUSTIFIED AND HENCE APPROVED. ACCORDINGLY, SECOND AND THIRD GROUNDS OF APPEALS ARE HEREBY DISMISSED. 4.7 FURTHER, THE ASSESSING OFFICER IS DIRECTED TO ENHANCE INCOME OF THE APPELLANT FOR UNEXPLAINED AND INGENUINE LOAN OF RS. 55 LAKHS FROM M/S. SUNDROP SECURITIES PRIVATE LIMITED AS DISCUSSED AND HELD ABOVE AND FURTHER INCREASE THE INCOME BY INTEREST PAID/PAYABLE ON SAID LOAN AT -: 15: - 15 RS. 30,520/- 11. AGAINST THE ABOVE ORDER OF THE CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 12. SHRI S. S. DESHPANDE, C. A. APPEARED ON BEHALF OF T HE ASSESSEE, AND SUBMITTED AS UNDER : THE ASSESSEE IS A LIMITED COMPANY DOING THE BUSINESS OF TRADING AND EXPORT OF AGRO COMMODITIES. THE RETURN IS FILED DECLARING THE INCOME AT RS. 3,02,79,339/-. THE BOOKS ARE AUDITED AND TAR IS FILED. WHILE FRAMING THE ASSESSMENT THE LD. AO ASKED THE ASSESSEE TO PROVE THE GENUINENESS OF SIX CREDITORS AS MENTIONED AT PG. 2 OF THE ASSESSMENT ORDER. THE LD. AO ON THE BASIS OF ORDER PASSED IN THE CASE OF M/S. KETI CONSTRUCTIONS IN WHICH IT WAS HELD THAT THE SHARE APPLICATION OF FOUR COMPANIES WERE FOUND TO B E BOGUS, OBSERVED THAT THE INVESTMENTS MADE BY THESE FOUR COMPANIES ARE NOT GENUINE. THE ASSESSEE WAS ASKED TO PRODUCE THE LOAN CREDITORS. THE ASSESSEE SUBMITTED THAT IN PURSUANCE TO THE NOTICE U/S. 133(6) ALL THESE COMPANIES HAVE -: 16: - 16 FILED THE CONFIRMATION LETTERS, THE COPIES OF THE B ANK STATEMENTS AND THE COPIES OF THE INCOME TAX RETURNS AND AS SUCH THE GENUINENESS OF THE TRANSACTION AND EXISTENCE OF THE PARTIES ARE PROVED BEYOND DOUBT. I N THE CASE OF M/S.. PERSUIT SECURITIES LTD. THE DIRECTOR SHRI MANOJ PANDYA WAS PRODUCED ON 22.12.2009 AND HE CONFIRMED THE TRANSACTION ABOUT GIVING THE LOAN TO THE ASSESSEE. HE WAS ASKED TO AGAIN APPEAR ON 23.12.2009. ON THIS DAY HE DID NOT APPEAR BEFOR E THE LD. AO. THE LD. AO AT PG 21 FROM PARA 2.32 OBSERVED AS UNDER:- 'NOW REVERTING BACK TO THE FACTS OF THIS CASE, IT IS SEEN THAT APART FROM BRINGING ON RECORD THE DEJURE IDENTITY OR IDENTITY OF THE LEGAL ENTITY AS A COMPANY, I.E. OF THE NAME LENDERS, THE ASSESSEE COMPANY IN SUBSTANCE HAS NOT BEEN ABLE' TO ESTABLISH EVEN THE FACTUAL IDENTITY OF THE PERSONS FROM WHOM LOAN HAS BEEN SHOWN. FURTHER STILL, SUFFICIENT OPPORTUNITY HAS BEEN GIVEN BY THE UNDERSIGNED AS AN AO TO PROVE THE IDENTITY CREDITWORTHINESS OF THE CLAIMED -: 17: - 17 LENDERS AND THE GENUINENESS OF THE TRANSACTIONS.' THE LD. AO THUS MADE THE ADDITION OF RS. 2,17,00,000/- U/S 68. THE LD. CIT (A) ON THE BASIS OF THE STATEMENT OF SHRI RAMESH CHAND KHATOD RECORDED ON 16.04.2009 HELD THAT M/S. NEEMA INVESTMENTS AND M/S. MONEY PENNY FINCOM PVT. LTD. ARE PAPER COMPANIES. HE FURTHER OBSERVED THAT IN THE CASE OF PRAMILA INVESTMENT PVT. LTD. AND PERSUIT SECURITIES PVT. LTD., THEY ARE DUMMY COMPANIES IN VIEW OF THE PROFITS EARNED AND THE SHAREHOLDER FUND SHOWN IN THE BALANCE SHEET. HE STRONGLY RELIED ON THE JUDGMENT OF THE HON'BLE TRIBUNAL IN THE CASE OF AGRAWAL COAL CORPORATION REPORTED IN 18 ITR PG. 717 IN WHICH THE HON'BLE TRIBUNAL SUSTAINED THE ADDITION U/S 68 IN RESPECT O F SHARE CAPITAL CONTRIBUTED BY HCL LTD. AND OPTIMATES TEXTILES INDUSTRIES PVT. LTD. THE LD. CIT ALSO CONSIDERED THE JUDGEMENT OF HON'BLE TRIBUNAL IN THE CASE OF SAAJ PLASTIC INDUSTRIES PVT. LTD. IT A -: 18: - 18 NO. 535/IND/2010 REPORTED IN 20, ITR PG. 103 WHEREIN THE SHARE APPLICATION MONEY FROM MONEY PENNY PVT. LTD. HAS BEEN DISALLOWED. THE LD. CIT (A) FURTHER ENHANCED THE LOAN FROM M /S. SUNDROPS SECURITIES PVT. LTD. OF RS. 55,00,000/-. THIS WAS DONE ON THE BASIS OF OBSERVATIONS MADE BY THE LD. AO IN THE ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE FOR THE A.Y. 2008 - 09 WHICH IS REPRODUCED AS UNDER:- 'BESIDE THESES PARTIES ASSESSEE HAD ALSO TAKEN UNSECURED LOAN FROM M/S SUNDROP SECURITIES PVT. LTD. DURING THE ASSESSMENT YEAR 2007-08, ON WHICH IT HAS PAID INTEREST DURING THE YEAR UNDER CONSIDERATION. THIS COMPANY IS ALSO A PAPER COMPANY AND PROVIDING ACCOMMODATION ENTRIES. ASSESSMENT OF THIS COMPANY FOR A.Y. 2005- 06 WAS COMPLETED BY ITO 5(1), INDORE EX- PARTE U/S 144 BECAUSE ASSESSING OFFICER AFTER MAKING EFFORTS COULD NOT TRACE OUT THE COMPANY ON GIVEN ADDRESS. LD. -: 19: - 19 COMMISSIONER OF INCOME TAX (APPEAL ) - II, INDORE CONFIRM ALL THE ADDITION MADE BY THE AO AND DISMISSED APPEAL OF THE ASSESSEE. HON'BLE ITAT , INDORE BENCH HAS ALSO DISMISSED THE APPEALS FOR NON PROSECUTION OF THE CASE BY AFORESAID COMPANY. EVEN NOTICE U/S 133(6) REMAINED UNSERVED DURING THE ASSESSMENT PROCEEDINGS OF ASSESSMENT YEAR 2007-08 ON THE ADDRESS OF PUNE WHICH WAS GIVEN BY THE ASSESSEE.' THE LD. CIT (A) DISCUSSED ABOUT THE ENHANCEMENT IN PARA 3.3 AND 3.4 :- 3.3 ON CONSIDERATION OF CONTENTIONS OF THE APPELLANT AND COPIES OF DOCUMENTS FILED THERE BEING NO SPECIFIC AND DEFINITE MATERIAL AVAILABLE ON RECORD OF THIS OFFICE, THE PROPOSAL OF ENHANCEMENT IS HEREBY DROPPED IN RESPECT OF ALL OTHER COMPANIES EXCEPT ' SUNDROP SECURITIES PVT. LTD.', WHICH ACCORDING TO INFORMATION AND DETAILS AVAILABLE IN THIS OFFICE IS A DUMMY -: 20: - 20 AND BOGUS ENTITY ENGAGED IN THE BUSINESS OF PROVING ACCOMMODATION ENTRIES AND EVEN PRESENT STATUS OF THE COMPANY AS PER WEBSITE OF MINISTRY OF CORPORATE AFFAIRS IS 'DORMANT'. 3.4 IT MAY BE FURTHER OBSERVED THAT 'SUNDROP SECURITIES PVT. LTD.' IS AN ASSOCIATE COMPANY OF M/S PERSUIT SECURITIES PVT. LTD. AND THE LOAN FROM WHOM HAS NOT BEEN ACCEPTED AS GENUINE LOAN BY THE AO AND FURTHER INTEREST PAID TO SUCH COMPANY IS DISALLOWED FOR A.Y. 2008-09. IT MAY ALSO BE OBSERVED THAT LOANS FROM SOME OF THE COMPANY MENTIONED IN SHOW CAUSE NOTICE BEING M/S PURVI FINVEST LTD., TRIMURTHY FINVEST LTD. AND EAST AND WEST FINVEST INDIA LTD. WERE ACCEPTED AS GENUINE LOANS IN APPEAL ORDER PASSED BY THIS OFFICE IN OTHER CASES AND HENCE THERE IS NO REASON TO TAKE A DIFFERENT AND ADVERSE VIEW, IN -: 21: - 21 THE CASE OF THE PRESENT APPELLANT. IN RESPECT OF OTHER COMPANIES EXCEPT SUNDROP SECURITIES PVT. LTD.' THE APPELLANT HAS BROUGHT NECESSARY MATERIAL AND EVIDENCES TO ESTABLISH THE IDENTITY, GENUINENESS OF LOAN TRANSACTIONS AND CREDITWORTHINESS. THUS IN VIEW OF ABOVE DISCUSSION THE LOAN FROM ' SUN DROP INVESTMENT PVT. LTD.' SHALL ONLY BE CONSIDERED FOR ENHANCEMENT PURPOSES AS PER DISCUSSION MADE HEREINAFTER. THE LD. CIT(A) THUS ENHANCED THE ASSESSMENT BY THIS AMOUNT AND ALSO DISALLOWED THE PAYMENT OF INTEREST OF RS. 30,520/-. IT IS HUMBLY SUBMITTED THAT IN CASE OF AGRAWAL COALS PVT.LTD. AND ALSO IN THE CASE OF SAAJ PLASTIC INDUSTRIES PVT.LTD, IT HAS BEEN HELD THAT IN THE CASE OF SHARE CAPITAL THE IDENTITY IS REQUIRED TO BE ESTABLISHED BY -: 22: - 22 PRODUCING THE DIRECTORS. IT WAS OBSERVED IN THOSE CASES THAT THE COMPANIES WHO ARE THE SHAREHOLDERS ARE REQUIRED TO CONFIRM THE TRANSACTION PERSONALLY FOR PROVING THE IDENTITY. IN THE CASE OF LOAN CREDITORS. THE ASSESSEE IS REQUIRED TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS. IN THE INSTANT CASE ALL THE THREE INGREDIENTS ARE PROVED. THE CREDITORS ARE FILING THEIR INCOME TAX RETURNS. THEY HAVE FILED THE BALANCE SHEET, SHOWING THE ADVANCES GIVEN TO THE ASSESSEE AND SHOWING THE INTEREST RECEIVED ON THE LOANS. THEY HAVE FILED THE BANK STATEMENT SHOWING THE CHEQUES GIVEN TO THE ASSESSEE. THUS ALL THE THREE INGREDIENTS ARE PROVED. IT IS FURTHER SUBMITTED THAT THE LOANS HAVE BEEN REPAID BY CHEQUES. THE COPIES OF THEIR ACCOUNTS FOR SUBSEQUENT YEARS ARE ENCLOSED. THE BANK STATEMENTS HAVE ALREADY BEEN FILED IN THE PAPER BOOK. THE CHEQUES ISSUED FOR THEIR REPAYMENT ALONG WITH INTEREST -: 23: - 23 IN THE SUBSEQUENT YEARS ARE SHOWN AS UNDER:- 1. MONEY PENNY - PG. 31, 32 & 13 2. NEEMA INVESTMENTS - PG. 59 & 60 3. PERSUIT SECURITIES - PG. 85 4. RAMILA INVESTMENTS - PG. 113 5. SUNDROP SECURITIES - PG. 117, 118 & 125 IT IS FURTHER SUBMITTED THAT THE STATEMENT OF SHRI RAMESH CHAND KHATOD DIRECTOR OF MONEY PENNY WAS RECORDED ON 16.04.2009 BY THE INCOME TAX DEPARTMENT. HE HAS CONFIRMED THE TRANSACTION WITH THE ASSESSEE AND SUBMITTED THE DETAILS VIDE LETTER DATED 22.12.2009 PG. 36 FOR MONEY PENNY AND AT PG. 64 FOR NEEMA INVESTMENT ALONGWITH THE MEDICAL REPORT. IN THIS CONNECTION, WE WOULD LIKE TO DRAW YOUR HONOURS KIND ATTENTION TO THE FOLLOWING JUDGEMENT:- 1. CIT V/S METACHEM INDUSTRIES 245 ITR PG. 160 2. CIT V/S PITHAMPUR CONZIMA 244 ITR PG. 442 3. CIT V/S TANIA INVESTMENTS 322 ITR PG. 394 -: 24: - 24 IN VIEW OF THE ABOVE IT IS SUBMITTED THAT THE ASSESSEE HAS PROVED THE CAPACITY OF CREDITOR BY ITS BANK ACCOUNT AND THE BALANCE SHEETS, THE IDENTITY OF THE CREDITOR BY THE CONFIRMATION AND THE LT. RETURN AND THE GENUINENESS BY THE FACT THAT THE PAYMENT IS RECEIVED AND REPAID THROUGH THE BANKING CHANNEL. IN ONE CASE THE DIRECTOR OF THE CREDITOR COMPANY HIMSELF APPEARED AND CONFIRMED THE TRANSACTION. REGARDING THE SUNDROP, THE LD. CIT(A) HAS MERELY RELIED ON THE FACT THAT IN THE CASE OF THE CREDITOR THE ASSESSMENT WAS FRAMED BY EX PARTE AND THE APPEAL WAS DISMISSED ON THE GROUND THAT THE SOURCE OF CREDIT IS NOT PROVED AND THE HON'BLE TRIBUNAL ALSO DISMISSED THE APPEAL FOR NON- PROSECUTION. THE ENHANCEMENT THUS MADE IS BAD IN LAW. 13. ON THE OTHER HAND, SMT. MRIDULA BAJPAI, THE LD. CIT DR APPEARED ON BEHALF OF THE REVENUE AND SUBMITTED THAT THE ASSESSEE COULD NOT DISCHARGE THE ONUS CASTED ON THE -: 25: - 25 ASSESSEE U/S 68 AS WELL AS CREDITWORTHINESS OF LOAN CREDITORS. SHE INVITED OUR ATTENTION TO THE VARIOUS FINDINGS RECORDED BY THE ASSESSING OFFICER AS WELL AS CIT(A) WITH RESPECT TO THE CASH CREDITORS TO WHOM VARIOUS OPPOR TUNITIES WERE GIVEN BY THE ASSESSING OFFICER, BUT THE SAME C ANNOT BE COMPLIED WITH. SHE FURTHER SUPPORTED THE ORDERS PAS SED BY THE LOWER AUTHORITIES AND CONTENDED THAT THE ORDER OF THE CIT(A) SHOULD BE UPHELD. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D ALSO DELIBERATED ON THE CASE LAWS CITED AT BAR BY THE LD . AUTHORIZED REPRESENTATIVE AS WELL AS REFERRED BY T HE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS WITH REFEREN CE TO THE FACTUAL MATRIX OF THE CASE. 15. FROM THE RECORD, WE FOUND THAT THE ASSESSEE HAS TAKEN UNSECURED LOAN FROM FOUR COMPANIES AS MENTION ED IN PARA 6 HEREINABOVE. THE LOAN WAS TAKEN BY ACCOUNT P AYEE CHEQUE AND INTEREST WAS ALSO PAID THEREON. DURING C OURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER FOUND TH AT ALL THESE FOUR COMPANIES ARE PAPER COMPANIES. NOTICES S ENT TO THEM WERE RETURNED UNSERVED WITH THE REMARK THAT NO SUCH -: 26: - 26 COMPANY EXISTS. NOTICES WERE ALSO ISSUED U/S 133(6) , BUT NOBODY APPEARED EXCEPT IN THE CASE PURSUIT SECURITI ES, WHEREIN ONE MR. MANOJ PANDEY APPEARED BEFORE THE ASSESSING OFFICER ON 22 ND DECEMBER, 2009, HIS STATEMENT WAS RECORDED AND VARIOUS QUESTIONS WERE ASKED TO AS CERTAIN IDENTITY OF THE COMPANY, GENUINENESS OF THE LOAN TR ANSACTION AND ITS CREDITWORTHINESS. MR. PANDEY WAS AGAIN CALL ED ON 23 RD DECEMBER, BUT HE DID NOT APPEAR. AFTER MAKING DETA ILED INQUIRY AND RECORDING SEVERAL FINDINGS, THE ASSESSI NG OFFICER REACHED TO THE CONCLUSION THAT NEITHER IDENTITY NOR GENUINENESS OF LOAN TRANSACTION NOR CREDITWORTHINES S OF THE LOAN CREDITORS, WAS ESTABLISHED. THE FINDINGS SO RE CORDED BY THE ASSESSING OFFICER WAS FURTHER FORTIFIED BY CIT( A) AFTER GIVING DETAILED REASONING AND ALSO APPLYING THE PRO POSITION OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT AND V ARIOUS COURTS TO THE INSTANT CASE. HE FURTHER ENHANCED THE ASSESSMENT IN RESPECT OF LOAN TAKEN FROM SUN DROP SECURITIES PRIVATE LIMITED AFTER GIVING DUE OPPORTU NITY TO THE ASSESSEE. THE CIT(A) ALSO FOUND THAT TRIBUNAL IN IT S ORDER IN THE CASE OF AGRAWAL COAL CORPORATION HAS HELD THAT MONEY PENNY FINCOM LIMITED DOES NOT EXIST. EVEN STATEMENT -: 27: - 27 RECORDED IN THE CASE OF NEEMA INVESTMENT BY ITS DIR ECTOR SHRI RAMESH CHAND KHATOD FORTIFIED THE FACT THAT CO MPANY IS ENGAGED IN MONEY LAUNDERING AND PROVIDING ACCOMMODATION TO WILLING ENTITIES. AFTER FOLLOWING THE DECISION OF TRIBUNAL IN THE CASE OF SAAJ PLASTIC IN DUSTRIES, I.T.A.NO. 535/IND/2010, ORDER DATED 23.3.2012, THE LD. CIT(A) HELD THAT EVEN THE LOAN TAKEN FROM SUN DROP INVESTMENT PRIVATE LIMITED WAS ALSO BOGUS, ACCORDIN GLY, THE ASSESSMENT WAS ENHANCED BY RS. 55 LAKHS. CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE TO THE EFFECT TH AT DIRECTOR OF M/S. PURSUIT SECURITIES LIMITED, NAMELY, MANOJ P ANDEY APPEARED BEFORE THE ASSESSING OFFICER AND HE CONFIR MED THE LOAN TRANSACTION, THEREFORE, NO ADDITION CAN BE MAD E, IS NOT SUSTAINABLE ON THE FACTS AND LAW. THERE IS NO DISPU TE TO THE WELL SETTLED LEGAL POSITION THAT IN CASE OF LOAN CR EDITOR, THE ASSESSEE IS NOT ONLY REQUIRED TO PROVE THE IDENTITY OF THE LOAN CREDITOR BUT ALSO GENUINENESS OF ITS LOAN TRAN SACTION AND CREDITWORTHINESS OF THE LOAN CREDITORS. AS PER THE FINDINGS RECORDED BY THE LOWER AUTHORITIES, WHICH I S AS PER MATERIAL ON RECORD, WE FOUND THAT NONE OF THESE ING REDIENTS WERE SATISFIED BY THE ASSESSEE. MERE FILING OF LOAN -: 28: - 28 CONFIRMATION LETTER IN REPLY TO NOTICE U/S 133(6) I S NOT GOING TO SATISFY THESE INGREDIENTS OF LOAN CREDITORS. NOT HING WAS PLACED ON RECORD BY THE ASSESSEE EVEN BEFORE US, TO PERSUADE US TO DEVIATE FROM THE DETAILED FINDINGS R ECORDED BY THE LOWER AUTHORITIES. ACCORDINGLY, WE DO NOT FI ND ANY REASON TO INTERFERE IN THE FINDINGS RECORDED BY THE LOWER AUTHORITIES CONFIRMING ADDITION MADE U/S 68 IN BOTH THE YEARS AS WELL AS ENHANCING THE ASSESSMENT IN ASSESS MENT YEAR 2007-08. 16. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24 TH JANUARY, 2013. CPU* 21231