M/S LITTLELEAF FARMICULTURE PVT. LTD., RAIGARH,RAIGARH V. INCOME TAX OFFICER, WARD-1, RAIGARH, RAIGARH

ITA 385/RPR/2023

AI Insights

M/s. Littleleaf Farmiculture Pvt. Ltd. appealed against the order of the Commissioner of Income-Tax (Appeals), which upheld the addition of Rs.30,00,000 as unexplained cash credit under Section 68 of the Income-tax Act, 1961. The amount was claimed to be an unsecured loan from M/s. Sarvojana Properties Pvt. Ltd. During the assessment, the Assessing Officer (A.O.) could not verify the authenticity of the lender company despite multiple attempts, including a field inquiry that revealed the lender's address was that of a 'dangerous building' and possibly a shell company. The Tribunal agreed with the lower authorities that the assessee failed to prove the genuineness of the loan transaction.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 28692 (ITAT-RAIPUR)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 26-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 19-12-2023
• Other Referred Cases: CIT Vs. Orissa Corporation P Ltd., Abhijavala Developers(P) Ltd. Vs. ITO, CIT Vs. Orchid Industries P. Ltd., ITO Vs. Shree Banke Bihari Infracon P. Ltd., CIT Vs. Navodaya Castles (P) Ltd., Pr. CIT (Central)-1 Vs. NRA Iron & Steel Pvt. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: R.B DOSHI
• Keywords: Unexplained cash credit; Search and seizure; Source of fund; Bogus
• Section: 143(3); 143(2); 68; 133(6)

Judgement Text

" आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश सूद, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 385/RPR/2023 Ǔनधा[रण वष[ / Assessment Year : 2017-18 M/s. Littleleaf Farmiculture Pvt. Ltd. Village: Giveri, Raigarh Chhattisgarh-496111 PAN: AAFCP1692R .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-1, Raigarh (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri R.B Doshi, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 26.09.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 23.10.2024 2 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee company is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 23.10.2023, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 20.12.2019 for the assessment year 2017-18. The assessee company has assailed the impugned order on the following grounds of appeal: “1. That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in upholding the addition of Rs.30,00,000.00 u/s. 68 of the Act, made by the Assessing Officer, Ward -1, Raigarh Chhattisgarh (C.G) on the ground that the appellant has failed to discharge the onus cast upon it to prove and offer explanation about the nature and source of such sum so credited in the applicant company to the satisfaction of the A.O. However, onus has already been discharged by the appellant by submitting the proof of identity, credit worthiness and genuineness of the transaction in respect to unsecured Loan taken, both before A.O. and Learned CIT(A) NFAC. 2. That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in upholding the order passed by the Assessing Officer, Ward -1, Raigarh (C.G), u/s.143(3) without giving any reason behind not considering the relevant documents/records/ confirmation statements placed on records. 3. That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi has erred in confirming the addition made by the A.O Merly on the basis of judgments given by various courts in case of other parties, facts and circumstances of which are not identical to the case of appellant, wherein amount of unsecured loan has been fully repaid through proper banking channels in subsequent years and 3 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 confirmation of which has been placed on record before the adjudicating authority. 4. That the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi is erred in law as well as on facts. 5. That the appellant craves to add/ alter any of the grounds of appeal before or at the time of hearing.” 2. Succinctly stated, the assessee company which is mainly engaged in agricultural activities, had e-filed its return of income for A.Y.2017-18 on 25.01.2018, declaring an income of Rs.26,755/- a/w. agricultural income of Rs.9,76,532/-. Subsequently, the case of the assessee company was selected for scrutiny assessment u/s. 143(2) of the Act. 3. During the course of the assessment proceedings, it was observed by the A.O that the assessee company during the subject year had claimed to have received an unsecured loan of Rs.30 lacs from M/s. Sarvojana Properties Pvt. Ltd. The assessee company to substantiate the authenticity of the loan transaction had placed on record confirmation of the account, financial reports a/w. copy of bank account statements of the lender company for the year under consideration. Also, the assessee company provided to the A.O. the complete address of the lender company, viz. M/s. Sarvojana Properties Pvt. Ltd. i.e. “196C, C.R. Avenue, Kolkata-700 007 (WB)”. 4 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 4. The A.O, in order to verify the authenticity of the aforesaid loan transaction issued notice u/s. 133(6) of the Act to M/s. Sarvojana Properties Pvt. Ltd. at the address that was provided by the assessee company and verified from zaubacorp.com. The A.O had called upon the lender company to furnish certain details for the year under consideration, viz. (i) copy of the return of income; (ii) balance sheet & capital account; (iii) computation of income; (iv) copies of bank statement for both the subject year and the preceding year; (v) explanation as regards the source of investment in the shares of M/s. Pawan Putra Ispat Pvt. Ltd. (erstwhile name of the assessee company); and (vi) details about its business activities and various streams of sources of income. However, the aforesaid notice u/s. 133(6) of the Act issued to the aforementioned lender company was returned unserved. The A.O, considering the aforesaid factual position deputed a Messenger/Inspector from his office who was sent to Kolkata to serve the notice u/s. 133(6) of the Act at the address provided by the assessee company. Once again, the notice could not be served for the reason that no office of the lender company was available at the address so provided. The Messenger/Inspector so deputed submitted a report with the A.O., wherein it was stated by him that the building at the given address was declared as a “dangerous building” by the Kolkata Municipal Corporation and a caution board was displayed at the entrance of the building premises. It was reported that on enquiring about the lender company from the shops 5 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 nearby, he was informed that the entire building was lying vacant. Accordingly, under the aforesaid circumstances, the notice u/s. 133(6) of the Act could not be served by the Messenger/Inspector who was deputed by the A.O. 5. The A.O., on further verification from “zaubacorp.com”, i.e a site from where the details about the financial performance of businesses can be gathered, observed that 14944 companies had their address at “196C, C.R. Avenue, Kolkata-700 007 (WB)”, i.e the aforesaid abandoned building. Considering the aforesaid facts, the A.O. held a firm conviction that the non- availability of the lender company established that it was a paper/shell company. Accordingly, the A.O. was of the view that the assessee company had failed to discharge the onus that was cast upon it to prove the authenticity of the loan transaction u/s. 68 of the Act. 6. I find that the A.O. in the absence of necessary verification and the requisite details that were sought by him from the lender company u/s. 133(6) of the Act did not abruptly culminate the proceedings and drew adverse inferences as regards the authenticity of the loan claimed by the assessee company to have been received from the aforementioned lender, viz. M/s. Sarvojana Properties Pvt. Ltd. Rather, the A.O carried out delayering of the funds received by the assessee company from the aforementioned company, and observed, that the same unfurled a mad and 6 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 purposeless rotation of funds from one account to the other without any business rationale. Referring to certain entities, viz. M/s. Mandhana Marketing Pvt. Ltd., Shri. Kishan Choudhary, M/s. Eastern Tradelink Pvt. Ltd. etc., which all concerns of negligible financial credibility as observed by the A.O were part of a chain driven by an entry operator to facilitate the beneficiary with funds in the garb of legal transactions, the A.O culled out the details of debit/credit entries in the bank account of the lender company and those from whom the latter had received the funds. The A.O., further observed, that neither the lender company nor those from whom it had received funds had substantial financial means. Accordingly, the A.O. concluded that not only the identity of the lender company, viz. M/s. Sarvojana Properties Pvt. Ltd. whose whereabouts despite best efforts could not be traced/located was not established but also, it was found to have no financial creditworthiness to advance the loan to the assessee company. 7. The A.O. in all fairness brought the aforesaid facts to the notice of the assessee company, viz. (i) non-service of notice u/s. 133(6) of the Act on the lender company; (ii) non-availability of the lender company at the address provided by the assessee company; (iii) availability of 14944 companies at the address of the lender company that was provided by the assessee company (as was gathered from zaubacorp.com); and (iv) lack of creditworthiness of the lender company to advance loan in question to the assessee company. Also, the assessee company was made abreast of the 7 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 result that had emanated from the exercise of delaying of fund flow carried out by him. Accordingly, the A.O backed by his observation that the identity and creditworthiness of the lender company, and genuineness of the loan transaction was not proved, thus, called upon the assessee company to put forth an explanation as to why the aforesaid amount may not be treated as an unexplained cash credit u/s. 68 of the Act. However, as observed by the A.O. in the body of the assessment order, the assessee company failed to submit any reply, and thus, failed to discharge the onus as regards proving the authenticity of the loan transaction within the meaning of Section 68 of the Act. Accordingly, the A.O. based on his aforesaid deliberations and after drawing support from a host of judicial pronouncements held the sum of Rs.30 lacs as an unexplained cash credit u/s. 68 of the Act. 8. Aggrieved, the assessee company carried the matter in appeal before the CIT(Appeals) but without success. For the sake of clarity the observations of the CIT(Appeals) wherein he had approved the view taken by the A.O for the reason that the assessee company had failed to discharge the onus that was cast upon it as regards proving the authenticity of the subject loan transaction, are culled out as under: “7.1.4 In conclusion, as can be seen from the above said judgements, it is clear that the initial onus is upon the assessee to prove the identity, genuineness and creditworthiness of the persons in whose name the credit entry is appearing by way of share capital/premium, loan or creditor etc. After that the Assessing Officer is duty bound to check the veracity of those 8 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 details filed and thereafter arrive at a conclusion in connection with the genuineness of share capital/premium. However, the recent judgements of different high courts in this regard are quite different particularly considering the facts of each case. Moreover, recent judgement in the case of Navodaya Castle (supra) has distinguished the position of law settled in the case of Lovely Exports (supra). In CIT Vs. Navodaya Castles (P) Ltd. 109 DTR (Delhi HC) 109 (184) Certificate of Incorporation, PAN etc. are relevant for the purpose of identification, but have their limitation when there is evidence and material to show that the subscriber was a paper company and not a genuine investor., Matter i remanded for reconsideration. In the case of Navodaya Castle (56 taxmann.com 18 (SC)], this it was held- Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes. 7.1.5 In the instant case, the appellant has failed to discharge the onus as clearly noted by the AO in assessment order discussed above. Therefore, I find no reason to interfere with the AO on this issue and the addition on account of unexplained loan for Rs. 30,00,000.00/- u/s. 68 of the I.T. Act 1961, on this ground is upheld. The grounds of appeal are dismissed. 8. In the result, the appeal is \"dismissed\".” 9. The assessee company being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the tribunal. 10. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 11. Shri R.B Doshi, Ld. Authorized Representative (for short ‘AR’) for the assessee company at the threshold submitted that the A.O. had drawn adverse inferences as regards the authenticity of the loan transaction in 9 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 question on the basis of his premature observations and half-baked facts. Elaborating on his contention, the Ld. AR submitted that the assessee company had duly discharged the primary onus that was cast upon it as regards proving the genuineness of the loan transaction by placing on record supporting documentary evidence, viz. (i) confirmation of the account; (ii) financial report; and (iii) copy of bank statement of the lender company. The Ld. AR further submitted that the primary reason that had weighed in the mind of the A.O for drawing adverse inferences as regards the authenticity of the loan transaction was that the notice u/s. 133(6) of the Act could not be served upon the lender company. The Ld. AR to support his contention that merely for the reason that the notice u/s. 133(6) of the Act is not served upon the lender company cannot form a basis for dubbing the transaction as ingenuine, had relied upon following judicial pronouncements: (i) CIT Vs. Orissa Corporation P Ltd. (1986) 159 ITR 78 (SC) (ii) Abhijavala Developers(P) Ltd. Vs. ITO (2021) 187 ITD 222 (Mum) (iii) CIT Vs. Orchid Industries P. Ltd. (2017) 397 ITR 136 ( Mum) (iv) ITO Vs. Shree Banke Bihari Infracon P. Ltd., ITA No.95/RPR/2020, dated 18.03.2024. 12. Carrying his contention further, the Ld. AR submitted that no adverse inference could have been drawn based on the report of the Messenger/Inspector who was deputed by the A.O to physically serve the notice u/s. 133(6) of the Act upon the lender company. The Ld. AR 10 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 submitted that the Messenger/Inspector had merely stated in his report that the address of the lender company was a building that was declared by the Kolkata Municipal Corporation as a “dangerous building” by putting a caution board at the entrance of the same. The Ld. AR submitted that the Inspector/Messenger had shirked from his duty and without carrying out any verification had submitted his report, based on which, the A.O had drawn adverse inferences and concluded that the lender company was not available at the address provided by the assessee company. The Ld. AR vehemently submitted that as the report filed by the Messenger/Inspector was devoid and bereft of any credence, therefore, there was no justification for the A.O to have taken cognizance of the same and drawn adverse inferences as regards the authenticity of the loan transaction which was duly confirmed by the said lender company. 13. The Ld. AR adverting to the process of delayering of fund flow in the books of the lender company, viz. M/s. Sarvojana Properties Pvt. Ltd., submitted that nothing could be gathered from the “chart” culled out by the A.O. in the body of the assessment order. The Ld. AR submitted that the A.O. had merely remained guided by assumptions, presumptions, surmises and conjectures for drawing adverse inferences as regards the authenticity of the loan transaction under consideration. The Ld. AR, submitted that as nothing was placed on record by the A.O which would prove that it was the unaccounted money of the assessee company which was in the garb of loan 11 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 transaction from the aforementioned lender company received back in the coffers of the assessee company, therefore, the whimsical dubbing of the said loan as an accommodation entry was not justified. 14. Dr. Priyanka Patel, Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. The Ld. DR vehemently submitted that it was a classic case where the lender company was not found available at the address provided by the assessee company. The Ld. DR submitted that despite the fact that the A.O had brought the entire set of facts about the non-availability of the lender company at the address provided by the assessee to its notice, but the latter instead of dispelling all doubts as regards the authenticity of the said loan transaction had chosen lie-low and had failed to produce the said lender for necessary verification. The Ld. DR submitted that as the assessee company had failed to discharge the onus that was cast upon it as regards proving the authenticity of the loan transaction, therefore, both the lower authorities had rightly held the same as a sham transaction. 15. As the A.O. while framing the assessment had in the body of his order referred to certain entities, viz. (i) M/s. Mandhana Marketing Pvt. Ltd.; (ii) Kishan Choudhary; (iii) M/s. Eastern Tradelink Pvt. Ltd., and (iv) G.K Ispat Pvt. Ltd. but it was not clear as to in what context the said reference was made by him, therefore, the Ld. DR in the course of the hearing of the appeal 12 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 on 09.07.2024 was directed to obtain a report from the concerned A.O for clarifying as to how the said concerns were related to the assessee company. In compliance, the A.O had filed a report dated 24.07.2024 (through the Ld. DR), which for the sake of clarity is culled out as under: 13 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 14 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 15 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 16 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 On a careful perusal of the report filed by the A.O, it transpires that he had vide Para 2 to 8 of his report merely reproduced the assessment order and had failed to answer the specific query which was raised by the Bench, i.e. as to how the aforementioned parties were related to the assessee company. The aforesaid report of the A.O., which is a mere reproduction of the assessment order, being nothing better than an eye wash needs to be deprecated. I am of the view that the department should answer the specific queries which are raised in the course of hearing of the appeal so that the proceedings in the backdrop of the correct factual position may be brought to a logical end. 17 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 16. Be that as it may, I find that my indulgence in the present appeal has been sought by the assessee-appellant, for adjudicating, as to whether or not both the lower authorities are right in law and facts of the case in treating the sum of Rs.30 lacs received by the assessee company from M/s. Sarvojana Properties Pvt. Ltd. as an unexplained cash credit u/s. 68 of the Act. 17. Before proceeding any further, I deem it fit to cull out the provisions of Section 68 of the Act, which reads as under: “68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income- tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless— (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.” 18. Admittedly, it is a matter of fact borne from the record, that the assessee company in the course of the assessment proceedings, in its attempt to discharge the primary onus that was cast upon it as regards 18 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 proving the authenticity of the subject loan transaction, had placed on record certain documents, viz. (i) confirmation of the lender; and (ii) financial reports a/w. copies of the bank account statements of the lender company for the year under consideration. After the assessee company had discharged the primary onus that was cast upon it as regards proving the authenticity of the loan transaction by placing on record confirmation of the lender a/w. copies of its bank account statements and financial reports for the year under consideration, then as per the mandate of law, the onus was shifted upon the revenue to prove to the contrary. I find that the notice u/s. 133(6) of the Act issued by the A.O to M/s. Sarvojana Properties Pvt. Ltd. was initially returned unserved. Accordingly, the specific queries/documents that the A.O. had raised/called for vide notice u/s. 133(6) of the Act had remained unanswered. Also, I find that the A.O. under the aforesaid circumstances had deputed a Messenger/Inspector from his office to effect service of the notice u/s. 133(6) of the Act at the address of the lender company that was provided by the assessee company. As observed by me hereinabove, the address of the lender company turned out to be that of a building that was declared as a “dangerous building” by the Kolkata Municipal Corporation, and as per the verifications carried out by the Messenger/Inspector the entire building was found to be vacant. I find that the A.O had thereafter carried out further verifications by logging into “zaubacorp.com” i.e a site available in the public domain from where details 19 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 about the financial performance of businesses can be gathered, which revealed that 14944 companies had their address at “196C, C.R. Avenue, Kolkata-700 007 (W.B)”, i.e. the address of the lender company that was provided by the assessee company. 19. At this stage, I may herein observe, that the aforesaid facts were brought to the notice of the assessee company vide “Show Cause Notice” (SCN), dated 13.12.2019 by the A.O, viz. (i). the non-service of notice u/s. 133(6) of the Act upon the lender company, viz. M/s. Sarvojana Properties Pvt. Ltd.; (ii). the non-availability of the lender company at the address that was provided by the assessee company, which as reported by the Messenger/Inspector was declared as a “dangerous building” by the Kolkata Municipal Corporation and as per the verifications carried out by him was found to be a vacant building; and (iii). that as per verifications carried out by him from “zaubacorp.com” (supra), it was gathered that 14944 companies had their address at “196C, C.R. Avenue, Kolkata-700 007 (W.B)”, i.e. the address of the lender company that was provided by the assessee company. As the identity of the lender company was in itself not proved, therefore, in my view, a very heavy onus was cast upon the assessee company, which ought to have produced the concerned person of the lender company before the A.O for not only dispelling all doubts as regards its identity but also for verifying the authenticity of the loan transaction. I find, that as observed by the A.O, and rightly so, the assessee company despite being made abreast 20 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 of the aforesaid developments had chosen to lie low and failed to produce the lender for necessary examination before the A.O. 20. As observed by me hereinabove, after the assessee company had discharged the primary onus that was cast upon it as regards proving the authenticity of the loan transaction by placing on record confirmation of the lender a/w. copies of its bank account statements and financial reports for the year under consideration, then, as per the mandate of law, the onus was shifted upon the revenue to prove to the contrary. However, I am unable to fathom that now when the said lender company was in itself not available, then how the needful could have been done by the A.O. Neither the documents that the A.O. had vide notice u/s. 133(6) of the Act called for from the lender company, viz. M/s. Sarvojana Properties Pvt. Ltd. were made available to him nor the queries so raised by him had seen the light of the day. 21. Considering the aforesaid facts, I would mince no words in observing that the failure on the part of the assessee company to produce the lender company, and/or place on record the aforesaid documents, which as per the A.O were crucial for verifying the authenticity of the loan transaction in question, had resulted to a complete failure on the part of the assessee company to discharge the onus that was cast upon it u/s. 68 of the Act. 21 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 22. Apropos the Ld. AR’s contention that the report of the Messenger/Inspector deputed by the A.O. as regards the unavailability of the lender company at the address provided by the assessee company cannot be relied upon, I am afraid that the same cannot accepted. It is not merely that the Messenger/Inspector had reported that the address of the lender company on which notice u/s. 133(6) of the Act was to be served was an address of a building that was declared as “dangerous building” by the Kolkata Municipal Corporation by placing a caution board at the entrance of the same, but he had after making inquiries from nearby shops had reported that as per information gathered the entire building was vacant. Apart from that, the fact that the A.O’s observation that 14944 companies claimed to be operating from the same address, viz. “196C, C.R. Avenue, Kolkata-700 007 (WB)”, i.e. an abandoned building, further supplements the adverse inferences drawn by the A.O. that the lender company was a paper/shell company. 23. Based on the aforesaid facts, I am of a firm conviction that as the assessee company in the course of the assessment proceedings had failed to establish the identity of the lender company, which despite best efforts on the part of the A.O could not be traced, therefore, the onus that was cast upon the assessee company to prove the authenticity of the loan transaction is not found to have been established on the said count itself. As per the mandate of Section 68 of the Act, in case the assessee offers no explanation 22 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 about the “nature” and “source” thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. As in the present case before me, not only the identity of the lender company had not been established despite the best efforts put in by the A.O but also, all queries/documents which the A.O had called for vide notice u/s. 133(6) of the Act to verify the authenticity of the loan transaction could not see the light of the day due to non-availability of the lender company, therefore, I am of a firm conviction that the explanation of the assessee company of having received a genuine loan from the aforementioned lender company had remained unproved. 24. At this stage, I may herein observe that it is not the case of the assessee company that it had provided the correct whereabouts of the lender company; or that the latter was not cooperating with him, due to which, it could not produce the same before the A.O for carrying out necessary verifications or obtain the requisite details as were called for by him vide notice u/s. 133(6) of the Act. I say so, for the reason that it was the assessee company that had obtained and placed on the record of the A.O., the confirmation of account and copy of financial reports a/w. bank statements of the aforementioned lender company, which proves beyond doubt that it was in touch with the said lender company. The evasive approach adopted by the assessee company by neither producing the said lender company for 23 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 verification before the A.O.; nor placing on record the requisite details as were called for by him vide notice u/s. 133(6) of the Act further fortifies the adverse inferences drawn by the A.O. as regards the authenticity of the loan transaction in question. At this stage, I am reminded of the judgment of the Hon’ble Supreme Court in the case of Pr. CIT (Central)-1 Vs. NRA Iron & Steel Pvt. Ltd., Civil Appeal No……. of 2019 (arising out of SLP (Civil) No.29588 of 2018). The Hon’ble Apex Court, in its aforesaid order, had laid down certain guidelines for verifying the authenticity of the sums credited in the books of accounts of the assessee, which reads as under: “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. (emphasis supplied by me) It was, thus, observed by the Hon’ble Apex Court that where the investor companies were found to be non-existent, then it was to be held that the onus that was cast upon the assessee was not discharged. For the sake of 24 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 clarity, the observations of the Hon’ble Apex Court are culled out as under: (relevant extract) “a. The companies Hema Trading Co. Pvt. Ltd. and Eternity Multi Trade Pvt. Ltd. at Mumbai, were found to be non- existent at the address given, and the premises was owned by some other person. b. The companies at Kolkatta did not appear before the A.O., nor did they produce their bank statements to substantiate the source of the funds from which the alleged investments were made. c. The two companies at Guwahati viz. Ispat Sheet Ltd. and Novelty Traders Ltd., were found to be non- existent at the address provided. The genuineness of the transaction was found to be completely doubtful.” (emphasis supplied by me) Also, the Hon’ble Apex Court while considering the creditworthiness of the investor company had taken cognizance of the negligible taxable income disclosed by them in the return of income. At this stage, it would be relevant to point out that the Hon’ble Apex Court had observed that the lower appellate authorities appeared to have ignored the detailed findings of the A.O., which in turn were based on the field inquiry and investigation carried out by his office. It was further observed that the lower authorities had erroneously confined themselves to the primary evidence that was placed by the assessee company and losing sight of the field inquiry/investigation carried out by the A.O., had held that the onus cast upon the assessee company stood discharged. The Hon’ble Apex Court had further observed that the Court/Authorities below did not even advert to the field enquiry 25 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 conducted by the AO which revealed that in several cases the investor companies were found to be non-existent, and thus, the onus to establish the identity of the investor companies was not discharged by the assessee. For the sake of clarity, the observations of the Hon’ble Apex Court are culled out as under: “The Court/Authorities below did not even advert to the field enquiry conducted by the AO which revealed that in several cases the investor companies were found to be non- existent, and the onus to establish the identity of the investor companies, was not discharged by the assessee.” (emphasis supplied by me) 25. In the present case before me, I find that the field enquiry that the A.O had got conducted through the Messenger/Inspector, who in their attempt to serve the notice u/s 133(6) of the Act upon the lender company at its Kolkata address that was provided by the assessee company, had reported, viz. (i). that the address was of a building that was declared as “dangerous building” by the Kolkata Municipal Corporation by placing a caution board at the entrance of the same; and (ii). that on enquiring from the nearby shops it was gathered that the entire building was lying vacant. Although the A.O. had brought the aforesaid facts to the notice of the assessee company, but the latter had neither produced the concerned person of the lender company for necessary examination before the A.O.; nor come forth with any explanation on the said aspect. I am of a firm conviction that as the lender company, viz. M/s. Sarvojana Properties Pvt. Ltd. was found to be non- 26 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 existent, therefore, as per the aforesaid judgment of the Hon’ble Apex Court in NRA Iron & Steel Pvt. Ltd. (supra), it could safely be concluded that the assessee company had failed to discharge the onus that was cast upon it as regards proving the authenticity of the loan transaction as per Section 68 of the Act. 26. Apropos the Ld. AR’s claim that the lender company had also advanced a loan to the assessee company in the preceding year and as on 01.04.2016 had an opening balance of Rs.56,63,529/- (Cr), therefore, the same fortified the authenticity of the loan transaction in question, I am unable to concur with the same. As nothing had been placed on record, which would reveal that the impugned loan received by the assessee company in the preceding year/years from the aforementioned lender company was scrutinized and accepted by the department, therefore, the aforesaid claim of the assessee would not carry its case any further. 27. Resultantly, finding no infirmity in the well-reasoned order passed by the A.O. which, thereafter, had been upheld by the CIT(Appeals), I uphold the same. 27 M/s. Littleleaf Farmiculture Pvt. Ltd. Vs. ITO, Ward-1, Raigarh ITA No. 385/RPR/2023 28. In the result, the appeal of the assessee company being devoid and bereft of any merit is dismissed in terms of the aforesaid observations. Order pronounced in open court on 23rd day of October, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 23rd October, 2024 **##SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "