RAJESH DOULATRAM BHATIA,MUMBAI V. ACIT-24(3), MUMBAI

ITA 651/MUM/2024

AI Insights

The case involves Rajesh Doulatram Bhatia, the appellant, who contested the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961, for the assessment year 2015-16. The additions pertained to loans received from M/s Rotomac Vinimay Pvt. Ltd., M/s Riddhi International, and M/s Orataman Realtors, which were treated as unexplained cash credits. The Tribunal examined the evidences, including the financial statements and the circumstances under which the loans were received and repaid. The Tribunal found that the loans from M/s Rotomac Vinimay Pvt. Ltd. were not substantiated as genuine transactions, leading to the setting aside of the addition of Rs. 5,80,00,000. However, for the loans from M/s Riddhi International and M/s Orataman Realtors, the Tribunal directed further verification by the Assessing Officer regarding their inclusion in the closing balance of unsecured loans as of 31.3.2014.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 32032 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-08-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 13-02-2024
• Other Referred Cases: Viswakarma Residency vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHITA NAIR
• Assessee Lawyers: SNEHAL SHAH
• Keywords: Set aside; Business income; Unexplained cash credit; TDS; Accommodation entries; Source of fund; Bogus
• Section: 68; 131; 205; 133(6); 13; 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SUNIL KUMAR SINGH (JUDICIAL MEMBER) ITA No. 651/MUM/2024 Assessment Year: 2015-16 Rajesh Doulatram Bhatia, 202, Morya Regency, Dr. Ambedkar Road, Khar West, Mumbai-400052. Vs. ACIT-24(3), (Current Jurisdiction, DCIT, Circle- 24(1), Mumbai), Aayakar Bhavan, Piramal Chamber, Lalbaug, Parel, Mumbai-400020. PAN NO. AAHPB 9438 N Appellant Respondent Assessee by : Mr. Snehal Shah Revenue by : Mrs. Mahita Nair, Sr. DR Date of Hearing : 01/08/2024 Date of pronouncement : 22/10/2024 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the assessee against order dated 16.12.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following grounds: 1. The learned CIT (A) has erred in confirming the action taken by the Learned Assessing officer by treating the short term loan of Rs. 5,80,00,000/- unexplained cash credit u/s. 68 of the Act without appreciating the facts of the case in right perspective. 2. With regards to the ad Act, being loan of Rs 20,00,000 each from M/s. and M/s. Orataman Realtors, the Learned CIT(A) has directed the Learned Assessing officer verify the balance sheet of the Appellant and ascertain whether the outstanding loan in the names of the aforesaid loan creditors was a part of the closing balance of unsecured loans as on 31.3.2014 and if the finding is officer may delete the addition of Rs. 40,00,000/ already vide letter dated 16.01.2024 submitted the details to the Ld. Assessing Officer to do the needful. Without prejudice, in the case Learned Assessing officer does not provide the relief, the Appellant out of abundance of caution take following ground: The learned Assessing officer has erred in making addition of Rs. 40,00,000/- being loan of Rs 20,00,000 each from M/s. Riddhi International and M/s. Orataman Realtors as unexplained cash credit u/s. 68 of the Act without appreciati facts of the case in right perspective 2. Briefly stated facts of the case are that the assessee filed its return of income on 21.08.2015 declaring total income at Rs.29,33,050/-. The return of income filed by the assessee was selected for scrutiny Income-tax Act, 1961 (in short ‘the Act’) were issued and complied. During scrutiny proceedings, the Assessing Officer observed one of the loan transactions carried out by the assessee with company namely M/s Rotomac Vinimay Pvt. Ltd. from which the assessee received Rs.5.80 crores during the year under consideration. The Assessing Officer also observed that during the year the assessee company has squared up loans received The learned CIT (A) has erred in confirming the action taken by the Learned Assessing officer by treating the short term loan of Rs. taken from M/s Rotomac Vinimay Pvt. Ltd. as unexplained cash credit u/s. 68 of the Act without appreciating the facts of the case in right perspective. With regards to the addition of Rs. 40,00,000/-made u/s 68 of the Act, being loan of Rs 20,00,000 each from M/s. Riddhi International and M/s. Orataman Realtors, the Learned CIT(A) has directed the Learned Assessing officer verify the balance sheet of the Appellant and n whether the outstanding loan in the names of the aforesaid loan creditors was a part of the closing balance of unsecured loans as on 31.3.2014 and if the finding is affirmative, the Learned Assessing officer may delete the addition of Rs. 40,00,000/-. The Appellant has vide letter dated 16.01.2024 submitted the details to the Ld. Assessing Officer to do the needful. Without prejudice, in the case Learned Assessing officer does not provide the relief, the Appellant out of abundance of caution take following ground: The learned Assessing officer has erred in making addition of Rs. being loan of Rs 20,00,000 each from M/s. Riddhi International and M/s. Orataman Realtors as unexplained cash credit u/s. 68 of the Act without appreciati facts of the case in right perspective Briefly stated facts of the case are that the assessee filed its return of income on 21.08.2015 declaring total income at . The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the tax Act, 1961 (in short ‘the Act’) were issued and complied. During scrutiny proceedings, the Assessing Officer observed one of the loan transactions carried out by the assessee with company mac Vinimay Pvt. Ltd. from which the assessee received Rs.5.80 crores during the year under consideration. The Assessing Officer also observed that during the year the assessee squared up loans received of Rs. 20.00 lakhs each Rajesh Doulatram Bhatia 2 ITA No. 651/MUM/2024 The learned CIT (A) has erred in confirming the action taken by the Learned Assessing officer by treating the short term loan of Rs. taken from M/s Rotomac Vinimay Pvt. Ltd. as unexplained cash credit u/s. 68 of the Act without appreciating the made u/s 68 of the Riddhi International and M/s. Orataman Realtors, the Learned CIT(A) has directed the Learned Assessing officer verify the balance sheet of the Appellant and n whether the outstanding loan in the names of the aforesaid loan creditors was a part of the closing balance of unsecured loans as affirmative, the Learned Assessing e Appellant has vide letter dated 16.01.2024 submitted the details to the Ld. Without prejudice, in the case Learned Assessing officer does not provide the relief, the Appellant out of abundance of caution takes the The learned Assessing officer has erred in making addition of Rs. each from M/s. Riddhi International and M/s. Orataman Realtors as unexplained cash credit u/s. 68 of the Act without appreciating the Briefly stated facts of the case are that the assessee filed its return of income on 21.08.2015 declaring total income at . The return of income filed by the assessee was assessment and statutory notices under the tax Act, 1961 (in short ‘the Act’) were issued and complied. During scrutiny proceedings, the Assessing Officer observed one of the loan transactions carried out by the assessee with company mac Vinimay Pvt. Ltd. from which the assessee received Rs.5.80 crores during the year under consideration. The Assessing Officer also observed that during the year the assessee of Rs. 20.00 lakhs each from two parties namely M/s Riddhi International and M/s Orataman Realtors. The Assessing Officer was not satisfied with the reply of the assessee in respect of tho same as unexplained cash credit in terms of section 68 of the Act and made addition for the amount of Rs.5.80 crores and Rs.40 lakhs respectively to the returned income in the order passed u/s 143(3) of the Act dated 27.12.2017. 3. On further appeal, the Ld. CIT(A) upheld the addition of Rs.5.80 crores. However, in respect of addit loan of Rs.20 lakhs each from M/s Riddhi International and M/s Orataman Realtors, verifying whether the said loan was and if so directed to delete the addit 3.1 Aggrieved with the above finding of the Ld. CIT(A), the assessee is in appeal before the Tribunal by way of raising grounds as reproduced above. 4. Before us, the assessee has filed a Paper Book containing pages 1 to 87. 5. The ground No. 1 of the appeal relates to addition of Rs.5.80 crores in respect of loans from M/s Assessing Officer relied on following observations (i) in the course of survey proceedings at the premises of Shri Krishna Mura stated that M/s Rotomac Vinimay Pvt. Ltd. was engaged in namely M/s Riddhi International and M/s Orataman Realtors. The Assessing Officer was not satisfied with the f the assessee in respect of those loans and therefore held the same as unexplained cash credit in terms of section 68 of the Act dition for the amount of Rs.5.80 crores and Rs.40 lakhs respectively to the returned income in the order passed u/s 143(3) of the Act dated 27.12.2017. On further appeal, the Ld. CIT(A) upheld the addition of Rs.5.80 crores. However, in respect of addition of Rs.40 lakhs being loan of Rs.20 lakhs each from M/s Riddhi International and M/s issued direction to the Assessing Officer for whether the said loan was appearing as opening balance and if so directed to delete the addition. Aggrieved with the above finding of the Ld. CIT(A), the assessee is in appeal before the Tribunal by way of raising grounds as Before us, the assessee has filed a Paper Book containing The ground No. 1 of the appeal relates to addition of Rs.5.80 crores in respect of loans from M/s Rotomac Vinimay Pvt. Ltd. The Assessing Officer relied on following observations (i) in the course of survey proceedings at the premises of Shri Krishna Mura stated that M/s Rotomac Vinimay Pvt. Ltd. was engaged in Rajesh Doulatram Bhatia 3 ITA No. 651/MUM/2024 namely M/s Riddhi International and M/s Orataman Realtors. The Assessing Officer was not satisfied with the se loans and therefore held the same as unexplained cash credit in terms of section 68 of the Act dition for the amount of Rs.5.80 crores and Rs.40 lakhs respectively to the returned income in the order passed u/s On further appeal, the Ld. CIT(A) upheld the addition of ion of Rs.40 lakhs being loan of Rs.20 lakhs each from M/s Riddhi International and M/s issued direction to the Assessing Officer for opening balance Aggrieved with the above finding of the Ld. CIT(A), the assessee is in appeal before the Tribunal by way of raising grounds as Before us, the assessee has filed a Paper Book containing The ground No. 1 of the appeal relates to addition of Rs.5.80 Rotomac Vinimay Pvt. Ltd. The Assessing Officer relied on following observations (i) in the course of survey proceedings at the premises of Shri Krishna Murari Naita, he stated that M/s Rotomac Vinimay Pvt. Ltd. was engaged in providing accommodation entries of share capital to Mercantile Pvt. Ltd. through five companies including M/s Rotomac Vinimay Pvt. Ltd. ; director of M/s Rotomac Vinimay Pvt. Ltd. Majumdar, admitted in his statement that he was one of the dummy director of the said company out by the Assessing 131(1)(d) of the Act to Asst. Commissioner of I Kolkata, it was found that was locked most of the time and from there. 5.1 When above facts the assessee, the assessee submitted that loan was received in the month of June, 2014 and same was returned back during the period from July, 2014 to October, 2014. It was further submitted that lender Company and total paid capital of the company wa the lender had creditworthiness to extend loan to the assessee. Regarding statements Biswanath Majumdar recorded on 23.04.2014 after 3rd June, 2014 and thus their statement relevance to the transaction of loan carried out by the assessee. The assessee sought cross providing accommodation entries of share capital to through five companies including M/s Rotomac ;(ii) during the course of survey act director of M/s Rotomac Vinimay Pvt. Ltd., Shri Biswanath admitted in his statement that he was one of the my director of the said company ;(iii) in the inqui out by the Assessing Officer through issue of commission u/s 1(1)(d) of the Act to Asst. Commissioner of Income was found that office of M/s Rotomac Vinimay Pvt. Ltd. was locked most of the time and no operation were carried out by above facts along with inquiry report were the assessee, the assessee submitted that loan was received in the month of June, 2014 and same was returned back during the period from July, 2014 to October, 2014. It was further submitted lender Company was doing business of lending of the loans and total paid capital of the company was Rs.258.86 lakhs. Thus creditworthiness to extend loan to the assessee. s given by Shri Krishna Murari Naita and Shri Biswanath Majumdar, it was submitted that their statement was recorded on 23.04.2014, whereas loan was received June, 2014 and thus their statements do to the transaction of loan carried out by the assessee. The assessee sought cross-examination of the director/manager w Rajesh Doulatram Bhatia 4 ITA No. 651/MUM/2024 providing accommodation entries of share capital to M/s Gajendra through five companies including M/s Rotomac during the course of survey action, the Shri Biswanath admitted in his statement that he was one of the (iii) in the inquiries carried Officer through issue of commission u/s ncome-tax Circle-6(2), office of M/s Rotomac Vinimay Pvt. Ltd. no operation were carried out by were confronted to the assessee, the assessee submitted that loan was received in the month of June, 2014 and same was returned back during the period from July, 2014 to October, 2014. It was further submitted lending of the loans 58.86 lakhs. Thus creditworthiness to extend loan to the assessee. given by Shri Krishna Murari Naita and Shri their statement was by the assessee do not have any to the transaction of loan carried out by the assessee. The examination of the director/manager who had given statements but to those directors/manager cross-examination could be provided to the assessee. 5.2 The Assessing Officer further Rotomac Vinimay Pvt. Ltd. due to following “i) Company has a meager share capital of Rs. 2.57 Crores. ii) Company has declared a profi of Rs.2.03 Cr. In F.Y. 2014 iii) There are no surplus funds generated by company from its business activity which further substantiates that company is not creditworthy. iv) There are no fixed assets in the compan v) The alleged sources of fund in balance sheet is share premium coming from shareholders namely * Cheerful Mercantile Pvt. Ltd * Glossy Suppliers Pvt. Ltd. * ClubsideDealcom Pvt. Ltd. * AccurateVintrade Pvt. Ltd. * Intellect Trade * Positive Vinimay Pvt. Ltd. An analysis of these shareholding companies are also having similar structure of cross structure i.e. for example, 'A' holds the shares of B'; B' holds shares of 'C' ; 'C' holds shares of 'A' etc. Further, there is no business activity in these shareholding companies as well. The only source of fund in their balance sheet is share premium received from companies. But there is no cash flow these shareholding companies listed above from where M/s. RotomacVinimay Pvt. Ltd. has allegedly received share premium are also being run by Sushil Kumar Naita and Krishna MurariNaita who have been proved to be entry opera vi) The Company has not declared any dividend in past so many years. had given statements but summon issued by the Assessing Officer /manager was not complied and therefore no amination could be provided to the assessee. The Assessing Officer further rejected creditworthiness of M/s Rotomac Vinimay Pvt. Ltd. due to following reasons: i) Company has a meager share capital of Rs. 2.57 Crores. ii) Company has declared a profit Rs. 41,726 in F.Y.2013-14 and a loss of Rs.2.03 Cr. In F.Y. 2014-15. iii) There are no surplus funds generated by company from its business activity which further substantiates that company is not creditworthy. iv) There are no fixed assets in the company. v) The alleged sources of fund in balance sheet is share premium coming from shareholders namely * Cheerful Mercantile Pvt. Ltd * Glossy Suppliers Pvt. Ltd. * ClubsideDealcom Pvt. Ltd. * AccurateVintrade Pvt. Ltd. * Intellect Trade-link Pvt. Ltd. Positive Vinimay Pvt. Ltd. An analysis of these shareholding companies reveals that these are also having similar structure of cross-shareholding i.e. for example, structure i.e. for example, 'A' holds the shares of B'; B' holds shares of 'C' ; 'C' holds shares of 'A' etc. Further, there is no business activity in these shareholding companies as well. The only source of fund in their balance sheet is share premium received from cross shareholding of similar companies. But there is no cash flow from business activities. these shareholding companies listed above from where M/s. RotomacVinimay Pvt. Ltd. has allegedly received share premium are also being run by Sushil Kumar Naita and Krishna MurariNaita who have been proved to be entry operators. vi) The Company has not declared any dividend in past so many years. Rajesh Doulatram Bhatia 5 ITA No. 651/MUM/2024 summon issued by the Assessing Officer not complied and therefore no amination could be provided to the assessee. creditworthiness of M/s 14 and a loss iii) There are no surplus funds generated by company from its business activity which further substantiates that company is not creditworthy. v) The alleged sources of fund in balance sheet is share premium coming reveals that these companies shareholding i.e. for example, structure i.e. for example, 'A' holds the shares of B'; B' holds shares of 'C' ; 'C' holds shares of 'A' etc. Further, there is no business activity in these shareholding companies as well. The only source of fund in their balance shareholding of similar om business activities. Further, these shareholding companies listed above from where M/s. RotomacVinimay Pvt. Ltd. has allegedly received share premium are also being run by Sushil Kumar Naita and Krishna MurariNaita who have been vi) The Company has not declared any dividend in past so many years. vii) Company has not received any interest from the Assessee for the alleged loan.” 5.3 The Assessing Officer did not consider the transaction as genuine for the reason that substantial amount According to him, companies who invested in M/s Rotomac Vinimay Pvt. Ltd were also alleged to be part of the companies controlled by M/s Krishna Murari Naita. 5.4 In view of observation Rs.5.80 crores as unexplained cash credit the Act. The relevant finding of the Assessing Officer is reproduced as under: “8.8 All these companies from which M/s. Rotom received funds just before transferring them to Mr. Rajesh Bhatia are managed by Sh. Krishna Murari Q.7 in his statement on oath quoted above. In most of these companies Sh. Sushil Kr. Naita is the director. 9. From the above, it is clear that M/s. Rotomac having any regular premium from own group companies which in turn do not have any source of income or creditworthiness and again have cross shareholding. 10. Creditworthiness means, whether the party had sufficient means to advance such loans. Creditworthiness is not proved by mere issue of a cheque or by furnishing a copy of statement of bank account. To creditworthiness of an entity, not only its bank statement should be examined but also the factual circumstances must also be examined. This is because the creditworthiness is not only the matter of financial strength of the assessee but also a mat company. It has already been shown that the above mentionedconcern was hardly earning anyincome which could go and finance the loans that it has purportedly advanced. Moreover, the concern did not have any financial or social background which would enable it to advance such a huge amount. The company is having a namesake office at dingy lanes in Kolkata. Even that office is not owned by the company. It does not even function, no one is found at that address whic vii) Company has not received any interest from the Assessee for the he Assessing Officer did not consider the transaction as for the reason that M/s Rotomac Vinimay Pvt. Ltd. received substantial amount as share premium from other companies. According to him, companies who invested in M/s Rotomac Vinimay were also alleged to be part of the companies controlled by M/s Krishna Murari Naita. n view of observations, the Assessing Officer held the loan of Rs.5.80 crores as unexplained cash credit in terms of section 68 of . The relevant finding of the Assessing Officer is reproduced All these companies from which M/s. RotomacVinimay Pvt. Ltd. has received funds just before transferring them to Mr. Rajesh Bhatia are managed by Sh. Krishna Murari Naita as was explained by him in reply to .7 in his statement on oath quoted above. In most of these companies Sh. a is the director. 9. From the above, it is clear that M/s. Rotomac Vinimay Pvt. Ltd., was not having any regular business income, source of alleged funds is share premium from own group companies which in turn do not have any source creditworthiness and again have cross shareholding. 10. Creditworthiness means, whether the party had sufficient means to advance such loans. Creditworthiness is not proved by mere issue of a cheque or by furnishing a copy of statement of bank account. To creditworthiness of an entity, not only its bank statement should be examined but also the factual circumstances must also be examined. This is because the creditworthiness is not only the matter of financial strength of the assessee but also a matter of financial and social background of the company. It has already been shown that the above mentionedconcern was hardly earning anyincome which could go and finance the loans that it has purportedly advanced. Moreover, the concern did not have any ncial or social background which would enable it to advance such a The company is having a namesake office at dingy lanes in Kolkata. Even that office is not owned by the company. It does not even function, no one is found at that address which is clear from the two Rajesh Doulatram Bhatia 6 ITA No. 651/MUM/2024 vii) Company has not received any interest from the Assessee for the he Assessing Officer did not consider the transaction as tomac Vinimay Pvt. Ltd. received from other companies. According to him, companies who invested in M/s Rotomac Vinimay were also alleged to be part of the companies controlled by the Assessing Officer held the loan of in terms of section 68 of . The relevant finding of the Assessing Officer is reproduced acVinimay Pvt. Ltd. has received funds just before transferring them to Mr. Rajesh Bhatia are by him in reply to .7 in his statement on oath quoted above. In most of these companies Sh. Vinimay Pvt. Ltd., was not business income, source of alleged funds is share premium from own group companies which in turn do not have any source creditworthiness and again have cross shareholding. 10. Creditworthiness means, whether the party had sufficient means to advance such loans. Creditworthiness is not proved by mere issue of a cheque or by furnishing a copy of statement of bank account. To see the creditworthiness of an entity, not only its bank statement should be examined but also the factual circumstances must also be examined. This is because the creditworthiness is not only the matter of financial strength ter of financial and social background of the company. It has already been shown that the above mentionedconcern was hardly earning anyincome which could go and finance the loans that it has purportedly advanced. Moreover, the concern did not have any ncial or social background which would enable it to advance such a The company is having a namesake office at dingy lanes in Kolkata. Even that office is not owned by the company. It does not even h is clear from the two independent enquiries conducted during the assessment proceedings as discussed above. Thus, the persons who are themselves on run and who do not have a fixed place to reside, stay and do business, how could they be said to be credit 11. Thus, it has been proved beyond doubt that neither the identity could be established, nor the creditworthiness could be proved and thus genuineness of transaction is not established. Taking into consideration the facts and circumstances of the case in entirety as discussed above, loan amounting to Rs. 5,80,00,000/ Pvt. Ltd. is considered and accordingly added to the income of t proceedings u/s.271(1)(c) are hereby initiated for concealment of particulars of income. 5.5 Further, the Ld. CIT(A) upheld the addition observing as under: “5.0 The contention of the assessee was that the sum of Rs 5,80,00,000 was taken as short was later squared off in the same year. The assessee submitted a attested copy of ledger account in the books of account of M/s. Rotomac Vinimay Pvt Ltd in support of the contention. I have p submission. As Investigation wing, Kolkata revealed that M/s. Rotomac Vinimay Pvt Ltd was a paper company managed and controlled by Shri. Krishna Murari Naita who deposed on oath only accommodation entries to various beneficiaries. Further a commission u/s. 131(1)(d) of the I.T. Act was issued to ACIT, Circle verify the credentials of the company who submitted a report with finding that no operations were carried out by the company and the office of the company was locked most of the time. The assessee highlighted that the outcome of investigation had no bearing on the company as the loan transaction with M/s. Rotomac Vinim Ltd was from 3.6.2014 which was much later than 23.04.2014 being the date of investigation and recording the statement of Shri. Krishna Murari Naita and his associates. Further, the assessee submitted that the findings of commission were not applica 5.80 Crores was done through banking channel. In this regard is to be noted that the AO clearly brought out the fact that the M/s. Rotomac Vinimay Pvt Ltd was a paper company which was used to facilitate clandestine tr Therefore, mere fact that the transactions were done through banking channels or that the transaction was squared off in the same year do not lend any credence to its genuineness. Further, the confirmation of the transaction produced by the assessee in form of attested ledger account in the books of M/s Rotomac Vinimay Pvt Ltd is without any proper date. In any case, the fact remained that M/s. Rotomac Vinimay Pvt Ltd was shell independent enquiries conducted during the assessment proceedings as discussed above. Thus, the persons who are themselves on run and who do not have a fixed place to reside, stay and do business, how could they be said to be creditworthy looking even at their background? 11. Thus, it has been proved beyond doubt that neither the identity could be established, nor the creditworthiness could be proved and thus genuineness of transaction is not established. Taking into consideration e facts and circumstances of the case in entirety as discussed above, amounting to Rs. 5,80,00,000/- received from M/s. Rotomac Vinimay Ltd. is considered as unexplained credit u/s 68 of the I.T. Act, 1961 accordingly added to the income of the assessee. u/s.271(1)(c) are hereby initiated for concealment of particulars of income.” Further, the Ld. CIT(A) upheld the addition observing as 5.0 The contention of the assessee was that the sum of Rs 5,80,00,000 taken as short-term loan from M/s. Rotomac Vinimay Pvt Ltd which was later squared off in the same year. The assessee submitted a attested copy of ledger account in the books of account of M/s. Rotomac Vinimay Pvt Ltd in support of the contention. I have perused the relevant submission. As discussed above, the outcome of the investigation by the Investigation wing, Kolkata revealed that M/s. Rotomac Vinimay Pvt Ltd was a paper company managed and controlled by Shri. Krishna Murari Naita who deposed on oath that M/s. Rotomac Vinimay Pvt Ltd provided only accommodation entries to various beneficiaries. Further a commission u/s. 131(1)(d) of the I.T. Act was issued to ACIT, Circle- verify the credentials of the company who submitted a report with finding that no operations were carried out by the company and the office of the company was locked most of the time. The assessee highlighted that the outcome of investigation had no bearing on the company as the loan transaction with M/s. Rotomac Vinim Ltd was from 3.6.2014 which was much later than 23.04.2014 being the date of investigation and recording the statement of Shri. Krishna Murari Naita and his associates. Further, the assessee submitted that the findings of commission were not applicable to him as all the transactions of 5.80 Crores was done through banking channel. In this regard is to be noted that the AO clearly brought out the fact that the M/s. Rotomac Vinimay Pvt Ltd was a paper company which was used to facilitate clandestine transactions like accommodation entries. Therefore, mere fact that the transactions were done through banking channels or that the transaction was squared off in the same year do not lend any credence to its genuineness. Further, the confirmation of the saction produced by the assessee in form of attested ledger account in the books of M/s Rotomac Vinimay Pvt Ltd is without any proper date. In any case, the fact remained that M/s. Rotomac Vinimay Pvt Ltd was shell Rajesh Doulatram Bhatia 7 ITA No. 651/MUM/2024 independent enquiries conducted during the assessment proceedings as discussed above. Thus, the persons who are themselves on run and who do not have a fixed place to reside, stay and do business, how could they worthy looking even at their background? 11. Thus, it has been proved beyond doubt that neither the identity could be established, nor the creditworthiness could be proved and thus genuineness of transaction is not established. Taking into consideration e facts and circumstances of the case in entirety as discussed above, received from M/s. Rotomac Vinimay as unexplained credit u/s 68 of the I.T. Act, 1961 he assessee. The penal u/s.271(1)(c) are hereby initiated for concealment of Further, the Ld. CIT(A) upheld the addition observing as 5.0 The contention of the assessee was that the sum of Rs 5,80,00,000 term loan from M/s. Rotomac Vinimay Pvt Ltd which was later squared off in the same year. The assessee submitted a attested copy of ledger account in the books of account of M/s. Rotomac Vinimay erused the relevant discussed above, the outcome of the investigation by the Investigation wing, Kolkata revealed that M/s. Rotomac Vinimay Pvt Ltd was a paper company managed and controlled by Shri. Krishna Murari that M/s. Rotomac Vinimay Pvt Ltd provided only accommodation entries to various beneficiaries. Further a commission -62, Kolkata to verify the credentials of the company who submitted a report with a finding that no operations were carried out by the company and the office The assessee highlighted that the outcome of investigation had no bearing on the company as the loan transaction with M/s. Rotomac Vinimay Pvt Ltd was from 3.6.2014 which was much later than 23.04.2014 being the date of investigation and recording the statement of Shri. Krishna Murari Naita and his associates. Further, the assessee submitted that the ble to him as all the transactions of In this regard is to be noted that the AO clearly brought out the fact that the M/s. Rotomac Vinimay Pvt Ltd was a paper company which was used ansactions like accommodation entries. Therefore, mere fact that the transactions were done through banking channels or that the transaction was squared off in the same year do not lend any credence to its genuineness. Further, the confirmation of the saction produced by the assessee in form of attested ledger account in the books of M/s Rotomac Vinimay Pvt Ltd is without any proper date. In any case, the fact remained that M/s. Rotomac Vinimay Pvt Ltd was shell company as borne out from the requisite credit worthiness to carry out the transactions. In the light of these facts, the addition of Rs 5,80,00,000/ 6. Before us, the Ld. counsel for the assessee submitted that firstly, the statement of Sh prior to the period in which the assessee obtained loan from said company and therefore whatever statement made was in respect of transactions prior to his statement and cannot be applied over the transactions subsequent to the statement of Shri Krishna Murari Naita. Secondly, Mr. Krishna Murari Naita did not say statement that assessee company was provided any accommodation entry of loan. Thirdly proceedings has no evidentiary value and cannot be made on the basis for the addition. examination of either Shri Krishna Murari Naita or Shri Biswanath Majumdar was provided to the a 6.1 The Ld. counsel further submitted that confirmation from said party along with their copy of balance sheet, profit and loss account and financials for the year under consideration the party as well as provided by the assess Officer. He further submitted that merely low income for the year under consideration cannot be basis for rejecting the creditworthiness of the said company when there are sufficient own funds available in the balance sheet of the said justifying the loan to the assessee. He rejected the contention of the company as borne out from the verification and therefore lacked the requisite credit worthiness to carry out the transactions. In the light of these facts, the addition of Rs 5,80,00,000/- by AO is upheld Before us, the Ld. counsel for the assessee submitted that the statement of Shri Krishna Murari Naita was for a period prior to the period in which the assessee obtained loan from said company and therefore whatever statement made was in respect of prior to his statement and cannot be applied over the quent to the statement of Shri Krishna Murari Mr. Krishna Murari Naita did not say that assessee company was provided any accommodation Thirdly, the statement recorded under survey proceedings has no evidentiary value and cannot be made on the basis for the addition. Fourthly, he submitted that no cross examination of either Shri Krishna Murari Naita or Shri Biswanath Majumdar was provided to the assessee. The Ld. counsel further submitted that confirmation from said party along with their copy of balance sheet, profit and loss account and financials for the year under consideration were party as well as provided by the assessee to the Assessing Officer. He further submitted that merely low income for the year under consideration cannot be basis for rejecting the creditworthiness of the said company when there are sufficient own funds available in the balance sheet of the said justifying the loan to the assessee. He rejected the contention of the Rajesh Doulatram Bhatia 8 ITA No. 651/MUM/2024 n and therefore lacked the requisite credit worthiness to carry out the transactions. In the light of by AO is upheld.” Before us, the Ld. counsel for the assessee submitted that ri Krishna Murari Naita was for a period prior to the period in which the assessee obtained loan from said company and therefore whatever statement made was in respect of prior to his statement and cannot be applied over the quent to the statement of Shri Krishna Murari Mr. Krishna Murari Naita did not say in his that assessee company was provided any accommodation the statement recorded under survey proceedings has no evidentiary value and cannot be made on the , he submitted that no cross- examination of either Shri Krishna Murari Naita or Shri Biswanath The Ld. counsel further submitted that confirmation from said party along with their copy of balance sheet, profit and loss account were duly filed by ee to the Assessing Officer. He further submitted that merely low income for the year under consideration cannot be basis for rejecting the creditworthiness of the said company when there are sufficient own funds available in the balance sheet of the said company for justifying the loan to the assessee. He rejected the contention of the Ld. CIT(A) that confirmation was without any proper date. The Ld. counsel submitted that the Ld. CIT(A) held M/s Rotomac Vinimay Pvt. Ltd. as shell company without any docu support. The Ld. counsel referred to copy of the ledger of M/s Rotomac Vinimay Pvt. Ltd. available on Paper Book page 19 also referred to the confirmation of M/s Rotomac Vinimay Pvt. Ltd. available on Paper Book page 62 to 63 havi said company. The Ld. counsel also referred to of the registered company filed on Paper Book page 57 to 58. He also referred to copy of the Income statutory audit report account of M/s Rotomac Vinimay Pvt. Ltd. relevant to the assessment year under consideration available on Paper Book page 67 to 84. The Ld. counsel further relied on the decision of the Co ordinate Bench of the Viswakarma Residency in ITA No. 255/Kol/2020 year 2016-17 wherein the addition u/s 68 of the Act was made respect of loans from various companies which were alleged to be controlled by Shri Krishna Murari Naita as p during the course of survey proceedings dated 23.04.2014. The Ld. counsel submitted that in the case of the assessee also addition has been made on the basis of statement of Shri Krishna Murari Naita and therefore, following the decis Residency (supra) the addition should be set aside. Ld. CIT(A) that confirmation was without any proper date. The Ld. counsel submitted that the Ld. CIT(A) held M/s Rotomac Vinimay Pvt. Ltd. as shell company without any documentary evidence in support. The Ld. counsel referred to copy of the ledger of M/s Rotomac Vinimay Pvt. Ltd. available on Paper Book page 19 also referred to the confirmation of M/s Rotomac Vinimay Pvt. Ltd. available on Paper Book page 62 to 63 having seal and signature of said company. The Ld. counsel also referred to copy of screen shot of the registered company filed on Paper Book page 57 to 58. He also referred to copy of the Income-tax Return acknowledgement statutory audit report, audited balance sheet and profit and loss account of M/s Rotomac Vinimay Pvt. Ltd. relevant to the assessment year under consideration available on Paper Book page 67 to 84. The Ld. counsel further relied on the decision of the Co ordinate Bench of the Kolkata Tribunal in the case of M/s Viswakarma Residency in ITA No. 255/Kol/2020 17 wherein the addition u/s 68 of the Act was made from various companies which were alleged to be controlled by Shri Krishna Murari Naita as per his statement made during the course of survey proceedings dated 23.04.2014. The Ld. counsel submitted that in the case of the assessee also addition has been made on the basis of statement of Shri Krishna Murari Naita and therefore, following the decision in the case of M/s Viswakarma Residency (supra) the addition should be set aside. Rajesh Doulatram Bhatia 9 ITA No. 651/MUM/2024 Ld. CIT(A) that confirmation was without any proper date. The Ld. counsel submitted that the Ld. CIT(A) held M/s Rotomac Vinimay mentary evidence in support. The Ld. counsel referred to copy of the ledger of M/s Rotomac Vinimay Pvt. Ltd. available on Paper Book page 19. He also referred to the confirmation of M/s Rotomac Vinimay Pvt. Ltd. ng seal and signature of copy of screen shot of the registered company filed on Paper Book page 57 to 58. He tax Return acknowledgement, nce sheet and profit and loss account of M/s Rotomac Vinimay Pvt. Ltd. relevant to the assessment year under consideration available on Paper Book pages 67 to 84. The Ld. counsel further relied on the decision of the Co- nal in the case of M/s Viswakarma Residency in ITA No. 255/Kol/2020 for assessment 17 wherein the addition u/s 68 of the Act was made in from various companies which were alleged to be er his statement made during the course of survey proceedings dated 23.04.2014. The Ld. counsel submitted that in the case of the assessee also addition has been made on the basis of statement of Shri Krishna Murari Naita ion in the case of M/s Viswakarma 7. On the contrary, the Ld. Departmental Representative (DR) submitted that M/s Rotomac Vinimay Pvt. Ltd. is a paper company , which was managed by Shri Krishna Murari accommodation to various beneficiaries. She further referred that no such company was in existence at the premises. that merely taking loan the genuineness of the transaction in su decision in the case of CTR 585 (SC). She further referred that the financial of M/s Rotomac Vinimay Pvt. Ltd. were not sufficient to justify loan to the assessee. The Ld. DR submitted that the l were nothing but accommodation entries facilitated by M/s Rotomac Vinimay Pvt. Ltd. and controlled by Shri Krishna Murari Naita. 8. We have heard rival submission of the parties and perused the relevant material on record. We f crores received from M/s Rotomac Vinimay Pvt. Ltd. by assessee company has been held to be unexplained cash credit mainly in view of statement of Shri Krishna Murari Naita and low income declared by the said company for the yea far as statement of Shri Krishna Murari Naita is concerned not specifically stated extending of any loan in the form the accommodation entry to the assessee through M/s Rotomac Vinimay Pvt. Ltd. It was not possible also to On the contrary, the Ld. Departmental Representative (DR) submitted that M/s Rotomac Vinimay Pvt. Ltd. is a paper company was managed by Shri Krishna Murari Naita for providing accommodation to various beneficiaries. She further referred that no such company was in existence at the premises. loan through bank is not sacrosanct to justify the genuineness of the transaction in support of relied on the decision in the case of M/s Kachwala Gems v. JCIT (2006) 205 She further referred that the financial of M/s Rotomac Vinimay Pvt. Ltd. were not sufficient to justify loan to the assessee. The Ld. DR submitted that the loan funds of the assessee were nothing but accommodation entries facilitated by M/s Rotomac Vinimay Pvt. Ltd. and controlled by Shri Krishna Murari We have heard rival submission of the parties and perused the relevant material on record. We find that the loan of Rs.5.80 crores received from M/s Rotomac Vinimay Pvt. Ltd. by assessee company has been held to be unexplained cash credit mainly in view of statement of Shri Krishna Murari Naita and low income declared by the said company for the year under consideration. As far as statement of Shri Krishna Murari Naita is concerned not specifically stated extending of any loan in the form the accommodation entry to the assessee through M/s Rotomac It was not possible also to state Rajesh Doulatram Bhatia 10 ITA No. 651/MUM/2024 On the contrary, the Ld. Departmental Representative (DR) submitted that M/s Rotomac Vinimay Pvt. Ltd. is a paper company Naita for providing accommodation to various beneficiaries. She further referred that no such company was in existence at the premises. She submitted bank is not sacrosanct to justify pport of relied on the M/s Kachwala Gems v. JCIT (2006) 205 She further referred that the financial of M/s Rotomac Vinimay Pvt. Ltd. were not sufficient to justify loan to the oan funds of the assessee were nothing but accommodation entries facilitated by M/s Rotomac Vinimay Pvt. Ltd. and controlled by Shri Krishna Murari We have heard rival submission of the parties and perused ind that the loan of Rs.5.80 crores received from M/s Rotomac Vinimay Pvt. Ltd. by assessee company has been held to be unexplained cash credit mainly in view of statement of Shri Krishna Murari Naita and low income r under consideration. As far as statement of Shri Krishna Murari Naita is concerned, he has not specifically stated extending of any loan in the form the accommodation entry to the assessee through M/s Rotomac state for him so because the loan has been received by the assessee after the statement of Shri Krishna Murari Naita recorded during the of survey proceedings dated 23.04.20214. In the circumstances, reliance placed by the Assessing Officer on the Krishna Murari Naita is not relevant for determination whether the loan received by the assessee is accommodation entry. As far as identity of the loan creditor is concerned said party has already filed copy of the acknowledgement of the registration certificate with the Ministry of Corporate Affairs. As regarding the creditworthiness is concerned the Ld. counsel for the assessee has referred to the balance sheet of the said company. According to the Paper Book page 74 share capital of Rs.2,57,86,550/ Rs.70,65,99,800/-. Thus it cannot be said that company was not having sufficient sources for extending loan to the assessee. Further the profit and loss account avail that said company has total revenue of Rs.11,51,35,129/ the year under consideration. Thus no business operation by the company during the year under consideration. The Ld. CIT(A) h as shell company without brining any documents on record. In the case of M/s Viswakarma Residency (supra) made similar observations alleged to be controlled reference same is reproduced as under: because the loan has been received by the assessee after the statement of Shri Krishna Murari Naita recorded during the survey proceedings dated 23.04.20214. In the circumstances, reliance placed by the Assessing Officer on the statement of Shri Krishna Murari Naita is not relevant for determination whether the loan received by the assessee is accommodation entry. As far as identity of the loan creditor is concerned said party has already filed acknowledgement of the return of income and registration certificate with the Ministry of Corporate Affairs. As regarding the creditworthiness is concerned the Ld. counsel for the assessee has referred to the balance sheet of the said company. According to the Paper Book page 74 the said company was having share capital of Rs.2,57,86,550/- and reserve and surplus of . Thus it cannot be said that company was not having sufficient sources for extending loan to the assessee. Further the profit and loss account available on Paper Book page 75 shows that said company has total revenue of Rs.11,51,35,129/ the year under consideration. Thus, it cannot be said that there was no business operation by the company during the year under consideration. The Ld. CIT(A) has merely treated the said company as shell company without brining any documents on record. In the case of M/s Viswakarma Residency (supra), the Assessing Officer observations in respect of loan creditor alleged to be controlled by Sh Krishan Murarai Naita reference same is reproduced as under: Rajesh Doulatram Bhatia 11 ITA No. 651/MUM/2024 because the loan has been received by the assessee after the statement of Shri Krishna Murari Naita recorded during the course survey proceedings dated 23.04.20214. In the circumstances, statement of Shri Krishna Murari Naita is not relevant for determination whether the loan received by the assessee is accommodation entry. As far as identity of the loan creditor is concerned said party has already filed return of income and registration certificate with the Ministry of Corporate Affairs. As regarding the creditworthiness is concerned the Ld. counsel for the assessee has referred to the balance sheet of the said company. the said company was having and reserve and surplus of . Thus it cannot be said that company was not having sufficient sources for extending loan to the assessee. Further able on Paper Book page 75 shows that said company has total revenue of Rs.11,51,35,129/- during it cannot be said that there was no business operation by the company during the year under treated the said company as shell company without brining any documents on record. In the Assessing Officer in respect of loan creditors , which were by Sh Krishan Murarai Naita. For ready “In respect of the 9 loan creditors being companies alleged as paper companies by the AO and other 3 companies who did not file replies to notices issued onus lying upon if filed copies of their company master data,PAN Card, Acknowledgement of returns of income, audited financial statements, confirmation of accounts, ba funds and nature of receipts. The assessee also filed copies of the assessment orders of the loan creditors showing that loan creditors had been subjected to regular assessment in different years wherein the returns filed by them has been accepted by their assessing officer. The assessee further required the AO to provide the material on the basis of which he alleged the 9 loan creditors and paper companies for rebuttal by the assessee and further requested to prov any parties on whose statement the AO wished to rely upon against the assessee and to produce the parties for cross examination of the assessee. However, the Assessing Officer without providing copy of any material whatsoever to during the year from the 12 loan creditor companies as unexplained cash credit on the following grounds. i. Accurate Vintrade Pvt. Ltd/New Town Mercantiles Pvt. Ltd/Purojit Vinimay Pvt. Ltd/Rotomac Vinimay Pvt. Ltd Ltd •. Statement of Shri Krishna Murari Natia who as per the AO in his statement dated 23 accommodation entries in lieu of commission in the form of bogus bills and loans. The A.Y 2016 Residency Page 5 relevant portion of his statement were stated to be attached with assessment order as KMN • Replies to notices s 133{6) was received from address other than the address at which notic • As per Inspector report there was no physical existence of the company at both the address. ii. Carmel Merchants Pvt. Ltd./Everest Commerce Pvt. Ltd. • Statement of Shri Ram Kishan Ajitsaria dated 21 provide accommodation entries through various paper companies. The relevant portion of\" his statement were stated to be a assessment order as RKA. The AO also stated that the said company was not physically found at its address. iii. Cosmos Real Estates Pvt. Ltd. • Statement of Shri Anand Singhania dated 15 the above company and who entries through various paper companies. The relevant portion of his statement were stated to be attached with the assessment order as AS. In respect of the 9 loan creditors being companies alleged as paper companies by the AO and other 3 companies who did not file replies to u/s. 133(6), the assessee in order to discharge the initial onus lying upon if filed copies of their company master data,PAN Card, Acknowledgement of returns of income, audited financial statements, confirmation of accounts, bank statements, statement showing source of funds and nature of receipts. The assessee also filed copies of the assessment orders of the loan creditors showing that loan creditors had been subjected to regular assessment in different years wherein the ns filed by them has been accepted by their assessing officer. The assessee further required the AO to provide the material on the basis of which he alleged the 9 loan creditors and paper companies for rebuttal by the assessee and further requested to provide copies of statement of any parties on whose statement the AO wished to rely upon against the assessee and to produce the parties for cross examination of the assessee. However, the Assessing Officer without providing copy of any material whatsoever to the assessee assessed the loans received during the year from the 12 loan creditor companies as unexplained cash credit on the following grounds. i. Accurate Vintrade Pvt. Ltd/New Town Mercantiles Pvt. Ltd/Purojit Vinimay Pvt. Ltd/Rotomac Vinimay Pvt. Ltd./ Singrodia Holdings Pvt. Ltd •. Statement of Shri Krishna Murari Natia who as per the AO in his statement dated 23-4-2014 admitted that he had provided accommodation entries in lieu of commission in the form of bogus bills and loans. The A.Y 2016-17 ACIT, C-49(1), Kol Vs. M/s. Viswakarma Residency Page 5 relevant portion of his statement were stated to be attached with assessment order as KMN-1, KMN-2 and KMN • Replies to notices s 133{6) was received from address other than the address at which notice was issued. • As per Inspector report there was no physical existence of the company at both the address. ii. Carmel Merchants Pvt. Ltd./Everest Commerce Pvt. Ltd. • Statement of Shri Ram Kishan Ajitsaria dated 21-05-2014 who proved that he provide accommodation entries through various paper companies. The relevant portion of\" his statement were stated to be attached with the assessment order as RKA. The AO also stated that the said company was not physically found at iii. Cosmos Real Estates Pvt. Ltd. • Statement of Shri Anand Singhania dated 15-07-2014 who controlled the above company and who proved that he provided accommodation entries through various paper companies. The relevant portion of his statement were stated to be attached with the assessment order as AS. Rajesh Doulatram Bhatia 12 ITA No. 651/MUM/2024 In respect of the 9 loan creditors being companies alleged as paper companies by the AO and other 3 companies who did not file replies to , the assessee in order to discharge the initial onus lying upon if filed copies of their company master data,PAN Card, Acknowledgement of returns of income, audited financial statements, nk statements, statement showing source of funds and nature of receipts. The assessee also filed copies of the assessment orders of the loan creditors showing that loan creditors had been subjected to regular assessment in different years wherein the ns filed by them has been accepted by their assessing officer. The assessee further required the AO to provide the material on the basis of which he alleged the 9 loan creditors and paper companies for rebuttal ide copies of statement of any parties on whose statement the AO wished to rely upon against the assessee and to produce the parties for cross examination of the assessee. However, the Assessing Officer without providing copy of any the assessee assessed the loans received during the year from the 12 loan creditor companies as unexplained i. Accurate Vintrade Pvt. Ltd/New Town Mercantiles Pvt. Ltd/Purojit ./ Singrodia Holdings Pvt. Ltd •. Statement of Shri Krishna Murari Natia who as per the AO in his 2014 admitted that he had provided accommodation entries in lieu of commission in the form of bogus bills 49(1), Kol Vs. M/s. Viswakarma Residency Page 5 relevant portion of his statement were stated to be 2 and KMN-3. • Replies to notices s 133{6) was received from address other than the • As per Inspector report there was no physical existence of the ii. Carmel Merchants Pvt. Ltd./Everest Commerce Pvt. Ltd. • Statement 2014 who proved that he provide accommodation entries through various paper companies. The ttached with the The AO also stated that the said company was not physically found at 2014 who controlled proved that he provided accommodation entries through various paper companies. The relevant portion of his statement were stated to be attached with the assessment order as AS. • Reply to notice address at which notice. • The AO also stated that the said company was not physically found at both the address. iv. Century Ply & Boards Pvt. Ltd. / Navana Trading Company Pvt. Ltd./ Sthavistha Mercantiles Pvt • Reply to notice were received after issuance of Show Cause Notice to the assessee • As per Inspector report there was no physical existence of t Regarding annexures being KMN have been annexed to the assessment order, the appellant stated that the assessment order was served through e of the appellate proceeding logged int that there were no such annexures at all. Against the reliance on the statements of Shri Krishan Murari Naita, Shri Ram Kishan Murari Naita, Shri Ram Kishan Ajitsaria and Shri Anand Singhania by the AO, the appellant arg of Shri Kishan Murai Naita. Shri Ram Kishan Ajitsaria and Shri Anand Singhania are stated to have been recorded on 23 2014 and 23-07 ii. Considering the dates of statements, it is apparent that the said statements were not recorded by the AO but he merely relied on the statements recorded by other AOs. iii. The transactions of the assessee with the said companies took place in FY 2015-16, therefore the statements recorded years before are irrelevant in so fa A.Y 2016-17 ACIT, C iv. The statements referred to does not and cannot relate to the transaction of the assessee. v. The parties had no capacity to depose on The statements recorded material has no evidentiary value. vii. Barring statements no other material has been brought on record by the AO Regarding receipt of replies from address other than the address at which notices were served, the appellant submitted that the assessee had provide the addresses as available in its records and subsequently the said companies changed their address. The issued by the AO at the old address were served but the creditor filed their replies mentioning the present address which is as per requirement of the law. Regarding physical existence at old address, the appellant submitted that since some of the • Reply to notice u/s 133(6) was received from address other than the address at which notice. • The AO also stated that the said company was not physically found at both the address. iv. Century Ply & Boards Pvt. Ltd. / Navana Trading Company Pvt. Ltd./ Sthavistha Mercantiles Pvt. Ltd. • Reply to notice u/s. 133(6) were manufactured replies as the same were received after issuance of Show Cause Notice to the assessee • As per Inspector report there was no physical existence of the company. Regarding annexures being KMN1, KMN2, KMN3, RK and AS stated to have been annexed to the assessment order, the appellant stated that the assessment order was served through e-filing portal and in course of the appellate proceeding logged into e-filing portal and demonstrated that there were no such annexures at all. Against the reliance on the statements of Shri Krishan Murari Naita, Shri Ram Kishan Murari Naita, Shri Ram Kishan Ajitsaria and Shri Anand Singhania by the AO, the appellant argued that i. The statement of Shri Kishan Murai Naita. Shri Ram Kishan Ajitsaria and Shri Anand Singhania are stated to have been recorded on 23-04- 2014, 21 07-2014. ii. Considering the dates of statements, it is apparent that the said ements were not recorded by the AO but he merely relied on the statements recorded by other AOs. iii. The transactions of the assessee with the said companies took place 16, therefore the statements recorded years before are irrelevant in so far as the case of the assessee is concerned. 17 ACIT, C-49(1), Kol Vs. M/s. Viswakarma Residency Page 6 iv. The statements referred to does not and cannot relate to the transaction of the assessee. v. The parties had no capacity to depose on behalf of the company. vi. The statements recorded u/s. 131 per se without any corroborative material has no evidentiary value. vii. Barring statements no other material has been brought on record by AO Regarding receipt of replies from address other than the address at which notices were served, the appellant submitted that the assessee had provide the addresses as available in its records and subsequently the said companies changed their address. The issued by the AO at the old address were served but the creditor filed their replies mentioning the present address which is as per requirement of the law. Regarding physical existence at old address, the appellant submitted that since some of the loan creditors had Rajesh Doulatram Bhatia 13 ITA No. 651/MUM/2024 was received from address other than the • The AO also stated that the said company was not physically found at iv. Century Ply & Boards Pvt. Ltd. / Navana Trading Company Pvt. were manufactured replies as the same were received after issuance of Show Cause Notice to the assessee • As he company. 3, RK and AS stated to have been annexed to the assessment order, the appellant stated that filing portal and in course filing portal and demonstrated Against the reliance on the statements of Shri Krishan Murari Naita, Shri Ram Kishan Murari Naita, Shri Ram Kishan Ajitsaria and Shri ued that i. The statement of Shri Kishan Murai Naita. Shri Ram Kishan Ajitsaria and Shri Anand 2014, 21-05- ii. Considering the dates of statements, it is apparent that the said ements were not recorded by the AO but he merely relied on the iii. The transactions of the assessee with the said companies took place 16, therefore the statements recorded years before are r as the case of the assessee is concerned. 49(1), Kol Vs. M/s. Viswakarma Residency Page 6 iv. The statements referred to does not and cannot relate to the behalf of the company. vi. per se without any corroborative vii. Barring statements no other material has been brought on record by AO Regarding receipt of replies from address other than the address at which notices were served, the appellant submitted that the assessee had provide the addresses as available in its records and subsequently the said companies changed their address. The notices issued by the AO at the old address were served but the creditor filed their replies mentioning the present address which is as per requirement of the law. Regarding physical existence at old address, loan creditors had shifted to new address as such the question of existence at old address does not arise. Regarding physical existence of loan creditors at new address, the appellant firstly stated that all the above Loan creditor's are companies registe regularly filing their statutory returns which is evident from the fact that their status on MCA is ACTIVE COMPLIANT. It is stated that the Active Complaint Statu building where the office of the company is situated, photo of the registered office of the company along with the photo of the director sitting in the office, geographical location of the company stati longitude and latitude all digitally signed by all by all the directors of the company and digitally certified by practising company secretary/chartered account. Besides, the companies are having PAN and have filed their returns of income. As such t said companies were not found at their address is factually incorrect. The assessee secondly submitted that all the notices issued by the AO were duly served further disapproves the allegation made by the AO. Thirdly and finally, it made in case of all the loan creditors in various years and therefore the allegation of physical non 8.1 The Ld. CIT(A) in that case rejected the Assessing Officer observing as under: “7. Regarding allegation of paper company, I find that the loan creditors ae companies and are regularly filing their statutory returns with the ROC and their status of MCA is ACTIVE COMPLAINT. All the loan creditors are having notices issued to the loan creditors have been duly served and in compliance thereto the A.Y 2016 Viswakarma Residency Page 13 loan creditors have confirmed the transactions wit income, audited financial statements, bank statements and have also explained their sources of fund and nature of receipts. The transactions have taken place through banking channels and have duly bee recorded in their regular books of account and reflected in their audited financial statements. The interest income has been credited in their Statement of Profit and Loss and the TDS have been claimed in the return of income. There is no finding that th the loan creditors have been rejected by their assessing officers. Rather there have been regular assessment of the loan creditors for different years whereby the returns filed by the loan creditors have been accepted. Reference jurisdictional Calcutta High Court in the case of CIT v. Dataware Pvt. Ltd (supra) wherein the Hon'ble Court held as under: \"In our opinion. in such circumstances, the Assessing officer of the assessee burden of assessing the profit and loss account of the creditor when admittedly the creditor himself is an income tax assessee. After shifted to new address as such the question of existence at old address does not arise. Regarding physical existence of loan creditors at new address, the appellant firstly stated that all the above Loan creditor's are companies registered under the Companies Act, 1956 regularly filing their statutory returns which is evident from the fact that their status on MCA is ACTIVE COMPLIANT. It is stated that the Active Complaint Status is given only to companies who uploads photo of the building where the office of the company is situated, photo of the registered office of the company along with the photo of the director sitting in the office, geographical location of the company stati longitude and latitude all digitally signed by all by all the directors of the company and digitally certified by practising company secretary/chartered account. Besides, the companies are having PAN and have filed their returns of income. As such the allegation that the said companies were not found at their address is factually incorrect. The assessee secondly submitted that all the notices issued by the AO were duly served further disapproves the allegation made by the AO. Thirdly and finally, it is submitted that regular assessments have been made in case of all the loan creditors in various years and therefore the allegation of physical non-existence are wholly baseless.” The Ld. CIT(A) in that case rejected the observation Officer observing as under: 7. Regarding allegation of paper company, I find that the loan creditors ae companies and are regularly filing their statutory returns with the ROC and their status of MCA is ACTIVE COMPLAINT. All the loan creditors are having PAN and have filed their returns of income. The notices issued to the loan creditors have been duly served and in compliance thereto the A.Y 2016-17 ACIT, C-49(1), Kol Vs. M/s. Viswakarma Residency Page 13 loan creditors have confirmed the transactions with the assessee and have filed copies of their return of income, audited financial statements, bank statements and have also explained their sources of fund and nature of receipts. The transactions have taken place through banking channels and have duly bee recorded in their regular books of account and reflected in their audited financial statements. The interest income has been credited in their Statement of Profit and Loss and the TDS have been claimed in the return of income. There is no finding that the return of income filed by the loan creditors have been rejected by their assessing officers. Rather there have been regular assessment of the loan creditors for different years whereby the returns filed by the loan creditors have been accepted. Reference in this regard is made to the decision of the Hon'ble jurisdictional Calcutta High Court in the case of CIT v. Dataware Pvt. Ltd (supra) wherein the Hon'ble Court held as under:- \"In our opinion. in such circumstances, the Assessing officer of the ee burden of assessing the profit and loss account of the creditor when admittedly the creditor himself is an income tax assessee. After Rajesh Doulatram Bhatia 14 ITA No. 651/MUM/2024 shifted to new address as such the question of existence at old address does not arise. Regarding physical existence of loan creditors at new address, the appellant firstly stated that all the above Loan creditor's Companies Act, 1956 and are regularly filing their statutory returns which is evident from the fact that their status on MCA is ACTIVE COMPLIANT. It is stated that the Active s is given only to companies who uploads photo of the building where the office of the company is situated, photo of the registered office of the company along with the photo of the director sitting in the office, geographical location of the company stating the longitude and latitude all digitally signed by all by all the directors of the company and digitally certified by practising company secretary/chartered account. Besides, the companies are having PAN he allegation that the said companies were not found at their address is factually incorrect. The assessee secondly submitted that all the notices issued by the AO were duly served further disapproves the allegation made by the AO. is submitted that regular assessments have been made in case of all the loan creditors in various years and therefore the observation of the 7. Regarding allegation of paper company, I find that the loan creditors ae companies and are regularly filing their statutory returns with the ROC and their status of MCA is ACTIVE COMPLAINT. All the loan PAN and have filed their returns of income. The notices issued to the loan creditors have been duly served and in 49(1), Kol Vs. M/s. Viswakarma Residency Page 13 loan creditors have confirmed the h the assessee and have filed copies of their return of income, audited financial statements, bank statements and have also explained their sources of fund and nature of receipts. The transactions have taken place through banking channels and have duly been recorded in their regular books of account and reflected in their audited financial statements. The interest income has been credited in their Statement of Profit and Loss and the TDS have been claimed in the e return of income filed by the loan creditors have been rejected by their assessing officers. Rather there have been regular assessment of the loan creditors for different years whereby the returns filed by the loan creditors have been in this regard is made to the decision of the Hon'ble jurisdictional Calcutta High Court in the case of CIT v. Dataware Pvt. \"In our opinion. in such circumstances, the Assessing officer of the ee burden of assessing the profit and loss account of the creditor when admittedly the creditor himself is an income tax assessee. After getting the PAN number and getting the information that the creditor is assessed under the Act, the Assessing officer s Assessing Officer of the creditor as to the genuineness\" of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor but instead of adopting such course, the Assessing officer himself co and brand the same as worthy of credence. So long it is not established that the return submitted by the creditor has been accepted by its Assessing Officer, the Assessing officer of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness\" of transaction through account payee cheque has been established. We find that both the Commissioner of Income Tax (Appeal) and the Tribunal below followed the well required to be followed in considering the effect of and we thus find no reason to interfere with the concurrent findings of fact recorded by both the authorities.\" 8.2 The Co-ordinate Bench of the Tribunal (supra) after consideration the submission of the parties upheld the order of the Ld. CIT(A). Respectfully following the above finding of the Co ordinate Bench of the Tribunal laon from M/s Rotomac Vinimayv P Ltd set aside and deleted assessee is accordingly allowed. 9. The ground No. 2 of the appeal relates to lakhs being loan of Rs. 20 lakhs International and M/s Orataman Realtors. We find that issue the Ld. CIT(A) has directed the Assessing Officer for verification as under: “As regards the addition of Rs. 40,00,000/ 20,00,000 each from M/s. Riddhi International and M/s. Orataman Realtors, the assessee submitted that the loan was availed in the earlier years and squared off in year under consideration. In view this, the AO is directed to verify the balance sheet of the assessee and ascertain whether the outstanding loan in the names of the aforesaid loan creditors was a part of the closing balance of unsecured loans as on 31.3.2014. In the event the finding getting the PAN number and getting the information that the creditor is assessed under the Act, the Assessing officer should enquire from the Assessing Officer of the creditor as to the genuineness\" of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor but instead of adopting such course, the Assessing officer himself could not enter into the return of the creditor and brand the same as worthy of credence. So long it is not established that the return submitted by the creditor has been accepted by its Assessing Officer, the Assessing officer of the assessee is bound to cept the same as genuine when the identity of the creditor and the genuineness\" of transaction through account payee cheque has been established. We find that both the Commissioner of Income Tax (Appeal) and the Tribunal below followed the well-accepted principle which are required to be followed in considering the effect of Section 68 and we thus find no reason to interfere with the concurrent findings of fact recorded by both the authorities.\" ordinate Bench of the Tribunal (supra) after consideration the submission of the parties upheld the order of the Ld. CIT(A). Respectfully following the above finding of the Co ordinate Bench of the Tribunal (supra), the addition laon from M/s Rotomac Vinimayv P Ltd in the instant case is also and deleted. The ground No. 1 of the appeal of the assessee is accordingly allowed. The ground No. 2 of the appeal relates to addition of Rs.40 lakhs being loan of Rs. 20 lakhs each from M/s Riddhi International and M/s Orataman Realtors. We find that the Ld. CIT(A) has directed the Assessing Officer for verification as under: As regards the addition of Rs. 40,00,000/- being loan of Rs 20,00,000 each from M/s. Riddhi International and M/s. Orataman Realtors, the assessee submitted that the loan was availed in the earlier years and squared off in year under consideration. In view this, the AO is directed to verify the balance sheet of the assessee and ascertain whether the outstanding loan in the names of the aforesaid loan creditors was a part of the closing balance of unsecured loans as on 31.3.2014. In the event the finding is affirmative, the AO may Rajesh Doulatram Bhatia 15 ITA No. 651/MUM/2024 getting the PAN number and getting the information that the creditor is hould enquire from the Assessing Officer of the creditor as to the genuineness\" of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor but instead of adopting such course, the uld not enter into the return of the creditor and brand the same as worthy of credence. So long it is not established that the return submitted by the creditor has been accepted by its Assessing Officer, the Assessing officer of the assessee is bound to cept the same as genuine when the identity of the creditor and the genuineness\" of transaction through account payee cheque has been established. We find that both the Commissioner of Income Tax (Appeal) inciple which are Section 68 of the Act and we thus find no reason to interfere with the concurrent findings of ordinate Bench of the Tribunal (supra) after consideration the submission of the parties upheld the order of the Ld. CIT(A). Respectfully following the above finding of the Co- the addition in respect of in the instant case is also . The ground No. 1 of the appeal of the addition of Rs.40 each from M/s Riddhi International and M/s Orataman Realtors. We find that on this the Ld. CIT(A) has directed the Assessing Officer for being loan of Rs 20,00,000 each from M/s. Riddhi International and M/s. Orataman Realtors, the assessee submitted that the loan was availed in the earlier years and squared off in year under consideration. In view of this, the AO is directed to verify the balance sheet of the assessee and ascertain whether the outstanding loan in the names of the aforesaid loan creditors was a part of the closing balance of unsecured loans as is affirmative, the AO may provide consequent relief to the assessee and delete the addition of Rs 40,00,000. Ground no 1 is partly allowed. 9.1 We have heard rival submission of the parties and perused the relevant material on record. On verification of these two parties, w was received in the month to assessment year 2014 International also loan of Rs.20 lakhs from 9th to 20th July, 2013 2014-15. The relevant part of their confirmation under: provide consequent relief to the assessee and delete the addition of Rs 40,00,000. Ground no 1 is partly allowed.” We have heard rival submission of the parties and perused the relevant material on record. On verification of the ledge these two parties, we find that loan from M/s Orataman Realtors in the month of June and July 2013 i.e. corresponding to assessment year 2014-15. Similarly, in the case of M/s Riddhi International also loan of Rs.20 lakhs was received July, 2013, which also falls in assessment year 15. The relevant part of their confirmation is Rajesh Doulatram Bhatia 16 ITA No. 651/MUM/2024 provide consequent relief to the assessee and delete the addition of Rs We have heard rival submission of the parties and perused the the ledger account of e find that loan from M/s Orataman Realtors July 2013 i.e. corresponding 15. Similarly, in the case of M/s Riddhi was received for the period which also falls in assessment year is reproduced as 9.2 We find that the Ld. CIT(A) had already directed the Assessing Officer for deleting the addition subject to verification whether that loan was as appearing as consideration. If the Assessing Officer has not decided the issue we direct the Assessing Officer to verify the ledger account of those parties in the books for the assessee in the year under consideration and delete the addition accordingly. The ground No. 2 of the appeal of the assessee is also allowed. 10. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court Sd/- (SUNIL KUMAR SINGH JUDICIAL MEMBER Mumbai; Dated: 22/10/2024 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// We find that the Ld. CIT(A) had already directed the Assessing the addition subject to verification whether that appearing as opening balance in the year under consideration. If the Assessing Officer has not decided the issue we direct the Assessing Officer to verify the ledger account of those n the books for the assessee in the year under consideration and delete the addition accordingly. The ground No. 2 of the appeal of the assessee is also allowed. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 22/10/2024. - Sd/ SUNIL KUMAR SINGH) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Rajesh Doulatram Bhatia 17 ITA No. 651/MUM/2024 We find that the Ld. CIT(A) had already directed the Assessing the addition subject to verification whether that opening balance in the year under consideration. If the Assessing Officer has not decided the issue we direct the Assessing Officer to verify the ledger account of those n the books for the assessee in the year under consideration and delete the addition accordingly. The ground No. 2 In the result, the appeal of the assessee is allowed. /10/2024. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "