MOTOREX FINANCE PVT LTD ,KOLKATA V. ITO, WARD-4(1), KOLKATA

ITA 115/KOL/2022

AI Insights

Motorex Finance Pvt. Ltd., an NBFC, appealed against the order of the CIT(A) which confirmed the additions made by the Assessing Officer regarding the sale of shares and interest income for the assessment year 2016-17. The Assessing Officer had treated the sale of shares as bogus and the interest income as unexplained. The tribunal examined the evidence presented, including the balance sheet, profit & loss account, and responses on the e-portal, and found that the assessee had provided sufficient documentation to substantiate their claims. The tribunal noted that the assessee had purchased and sold shares legitimately and had received interest income from loans and advances, which was also subjected to TDS. Consequently, the tribunal allowed the appeal, deleting the additions made by the Assessing Officer and confirmed by the CIT(A).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633540 (ITAT-RANCHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS; Accommodation entries; Bogus Share capital; Bogus

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RATNESH NANDAN SAHAY, ACCOUNTANT MEMBER ITA No. 115/Kol/2022 (Assessment Year: 2016-17) Motorex Finance Pvt. Ltd., 1A, Grant Lane, Kolkata-700012 (West Bengal). PAN No. AACCM 1042 R Vs. I.T.O., Ward 4(1), Kolkata. Appellant/ Assessee Respondent/ Revenue Assessee represented by Sri Devesh Poddar, A.R. Department represented by Smt. Rinku Singh, CIT-DR Date of hearing 09/06/2025 Date of pronouncement 09/06/2025 O R D E R PER: BENCH 1. This is an appeal filed by the assessee against the order of the learned CIT(A), NFAC in appeal No. CIT(A), Ranchi/10173/2018-19 dated 22/11/2021 for the A.Y. 2016-17. 2. Shri Devesh Poddar, ld A.R. is represented on behalf of the assessee and Smt. Rinku Singh, ld. CIT-DR is represented on behalf of the revenue. A perusal of record shows that there was a delay of 35 days in filing this appeal before this Tribunal. The ld. AR of the assessee submitted that the ld. CIT(A) had passed impugned order on 22/11/2021 and this appeal was filed before this Tribunal on 25/02/2022. At the time of hearing, the ld. AR of the assessee fairly accepted that no condonation petition was filed by the assessee. It was a submission that the delay was caused due to situation beyond the control of assessee. There was no deliberate or intentional delay in filing this appeal. The ld. AR prayed ITA No. 115/Kol/2022 Motorex Finance Pvt. Ltd. Vs ITO 2 that the delay is not inordinate and the same may be condoned and appeal may be admitted and decided on merit. The ld. CIT-DR has raised no serious objection and made a submission that the Bench may take appropriate view in accordance with law. On perusal of record which shows that the delay was not inordinate and intentional, therefore, we condone the delay and admit the appeal. 3. On merit, it was submitted by the ld. AR that the assessee is an NBFC. It was a submission that during the impugned assessment year, the assessee had sold shares to an extent of Rs. 9,35,85,560/-. The assessee had also received interest income to an extent of Rs. 4,46,49,586/-. It was a submission that in course of assessment, the Assessing Officer treated the amount received by the assessee from the sale of shares as bogus transactions and the interest income was added as an unexplained income of the assessee. The ld. AR drew our attention to page No. 14 of the paper book which is a copy of the balance sheet and the P&L account of the assessee. The ld. AR also drew our attention to page No.16 which was the details of the purchase of shares made by the assessee for the year 31/03/2015 and 31/03/2016. It was a submission that the assessee had purchased shares of more than Rs. 31.35 crores for the year ended 31/03/2015 and for the impugned assessment year, the assessee had purchased shares of Rs. 12.89 crores. The ld. AR further submitted that the revenue from operations was to an extent of Rs. 13,82,25,416/- and this consisted of only the income being the interest income and the sale receipts of the shares. It was a submission that the total revenue of the assessee excluding the other income representing interest on income tax refund and dividend have ITA No. 115/Kol/2022 Motorex Finance Pvt. Ltd. Vs ITO 3 been treated as unexplained income of the assessee. It was a submission that before the Assessing Officer, the assessee had provided the complete break up of all the receipts and for this he drew our attention to page No. 151 of the paper book which was the response on the e-portal. It was a submission that four responses had been filed and all the details in regard to sale of the shares as also interest income was shown. In reply to specific query as to whether TDS had been deducted on the interest income, the ld. AR submitted in the positive. It was a submission that the Assessing Officer has also granted the benefit of the TDS in the refund claim of the assessee. It was a submission that before the ld. CIT(A) also, the details were produced and on the ground that the assessee had not provided the details of the Directors and identities and creditworthiness of the persons who had purchased the shares that formed the addition of Rs. 9,35,75,560/- and on account of an allegation that the assessee was unable to prove that the said amount of Rs. 4,46,49,856/- was the interest income, the ld. CIT(A) had confirmed the addition. It was a prayer that the addition as made by the Assessing Officer and as confirmed by the ld. CIT(A) is liable to be deleted. 4. In reply, the ld. CIT-DR vehemently supported the orders of the Assessing Officer and the ld. CIT(A). It was a submission that the assessee has been identified as one of the bogus share operators. It was a submission that the statement had been recorded from one Shri Santosh Kumar Shah who had categorically admitted that he had been doing transactions in bogus share application money. It was a submission that the said assessee company which had sold the shares were shares of such bogus companies. ITA No. 115/Kol/2022 Motorex Finance Pvt. Ltd. Vs ITO 4 5. In reply, the ld. AR of the assessee drew our attention to page No. 11 of the assessment order. It was a submission that page No. 11 of the paper book was the statement recorded from Shri Santosh Kumar Shah and in the statement, Shri Santosh Kumar Shah it has been categorically admitted that he was engaged in providing accommodation entry during the period from 2007-08 to 2010-11. It was a submission that the impugned assessment year 2016-17 and the said Shri Santosh Kumar Shah was no way connected with the assessee company. 6. We have considered the rival submissions. We find merit in the submission made by the ld. AR that the said Shri Santosh Kumar Shah has categorically admitted that he had been doing accommodation entries for the A.Y. 2007-08 to 2010-11. The impugned assessment year is A.Y. 2016-17. A perusal of the balance sheet of the assessee clearly shows that the assessee is having shares representing inventory of more than Rs. 28.00 crores during the year ended 31/03/2015 and in the P&L account, the assessee has categorically shown sale of shares under the head revenue from operations. The balance sheet of the assessee also clearly shows long term loans and advances of Rs. 59,55,29,250/- . This long term loans and advances are supported by the short note to the balance sheet. The said loans and advances are to various companies as also against the property. Admittedly the assessee is an NBFC. The assessee had shares and though specific shares had been sold by the assessee. If the said sale of shares is treated as bogus, then obviously, the balance sheet of the assessee would fail in so far as the shares which have been sold cannot be removed from the balance sheet. The assessee having sold its inventory from its ITA No. 115/Kol/2022 Motorex Finance Pvt. Ltd. Vs ITO 5 balance sheet and the assessee being an NBFC, it cannot be said that the sale of shares is bogus even otherwise the sale consideration has been received only by cheque and there is no cash transaction in the accounts of the assessee. Coming to the interest income, it is noticed that the assessee admittedly has given long term loans and advances of nearly Rs. 60.00 crores. It is against the such loan and advances that the assessee has received interest income of Rs. 4,46,49,856/-. The said interest income has also been subjected to TDS and the Assessing Officer has not disturbed the TDS either in fact the Assessing Officer has accepted the TDS and has issued appropriate refunds to the assessee. This being so, we are of the view that the addition as made by the Assessing Officer and as confirmed by the ld. CIT(A) is not permissible on the facts of the present case, consequently, we delete the same. 7. In the result, the appeal of the assessee stands allowed. Order announced in open court on 09th June, 2025. Sd/- Sd/- (RATNESH NANDAN SAHAY) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Ranchi, Dated: 09/06/2025 *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Ranchi "