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12-04-2019, Lalbaba Seamless Tubes, Section 68, 158BBE, 43B, Tribunal Kolkata

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2 months 1 week ago #9139 by amit
Section - 68, 158BBE, 43B, 131
Order Date - 12-04-2019
Favouring - Partly allowed for statistical purposes
Court - Tribunal Kolkata
Appellant - Lalbaba Seamless Tubes Pvt. Limited
Respondent - DCIT
Justice - P.M. Jagtap VP & S.S. Viswanethra Ravi JM
Citation - 419Taxpundit174
Appeal No. - I.T.A. No. 1033/KOL/2017
Asstt. Year - 2014-2015

Order

PER : P.M. Jagtap

These two appeals, one preferred by the assessee being ITA No.1033/KOL/2017 and the other preferred by the Revenue being ITA No. 1637/KOL/2017 are cross appeals, which are directed against the order of ld. Commissioner of Income Tax (Appeals)-1, Kolkata dated 07.04.2017.

2. First we take up the appeal of the assessee, which involves a solitary issue relating to the addition of Rs.6.22 crores made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of unexplained cash credit under section 68 and the same is raised by the assessee by way of the following ground:-

“1.(a) For that the Ld. CIT (A) erred in Law as well as on facts in confirming the addition made Rs.6,22,00 000/- as unexplained cash credit u/s 68 on the ground hat "identity and creditworthiness/source of income could not be established satisfactorily" when, the appellant duly furnished cogent evidences to substantiate the capacity of the loan creditors and genuineness of the transactions, the identity was duly established and the loan creditors duly confirmed the transactions with the appellant as recorded in their audited accounts, including repayment of loan thereof, the appellant's onus thus gets discharged, further the loan creditors had sufficient networth to advance loans to the appellant.

(b) For that the Ld. CIT CA) erred in confirming the cash credit u/s 68 when both the lower authorities failed to appreciate that nterest was duly accounted for by the loan creditors and declared as their Income in their audited accounts on which TDS duly deducted by the appellant.

(c) For that the Ld. CIT (A) erred in confirming the cash credit u/s 68, when, inspite of giving the Assessing Officer a 2 n d innings during remand proceedings, no nexus could be established that the source of creditors' deposits emanated from the Appellant”.

2. The assessee in the present case is a Company, which is engaged in the business of manufacturing of Cold Drawn Seamless Pipes. The return of income for the year under consideration was filed by it on 29.09.2014 declaring a loss of Rs.6,45,82,182/-. As noted by the Assessing Officer, during the course of assessment proceedings, unsecured loans taken by the assessee-company were increased by Rs.7,74,26,996/- in the year under consideration. He, therefore, required the assessee to furnish the details of unsecured loans taken during the year under consideration. In reply, the details of unsecured loans were furnished by the assessee along with the loan confirmations, balance-sheets, Bank statements and source of funds of the concerned loan creditors. On perusal of the said details and documents, the Assessing Officer arrived at a conclusion that the creditworthiness of the loan creditors was doubtful for the following reasons:-

“(1) Alliance Infra Properties Pvt. Ltd:- During the year the assessee received of Rs.15,00,000 as a unsecured Loan from the company. The A/R furnished loan confirmation, Balance sheet, Bank statement and copy of ITR acknowledgment After perusal of records furnished by the assessee, it was appa ent that M/s Alliance Infra Properties Pvt. Ltd had no real business activities and its disclosed income was only Rs.40,310, and the income of the earlier year was nil in evenue from operation. There was negative Reserve and Surplus balance. As per the bank statement there was peak balance only of Rs.l0,750. Equal amount of fund was received before its full transfer to assessee as loan. As per the document filled by the A/R of the aforesaid company it is apparent that this is a zero net worth company with no real business, and used only for providing bogus fund in lieu of commission. Therefore, I am of the opinion that the loan creditor company has no creditworthiness for advancing the loan. Therefore, the amount 15,00,000 is treated as cash credit under section 68 of the LT. Act in the hand of the assessee. Addi ion:- Rs. 15,00,000

02. M/s Bhima Agencies Pvt. ltd:- During the year the assessee received of Rs 40,00,000 as a unsecured loan from the company. The A/R furnished loan confirmation, Balance sheet, Bank statement and copy of ITR acknowledgment. After perusal of records furnished by the assessee, it was apparent that M/s Bhima Agencies Pvt. Ltd had no real business activities its disclosed income was only Rs.20,115 and the income of the earlier year was nil in revenue from operation. There was negative Reserve and Surplus balance. As per the bank statement there was peak balance only of Rs.40,766. Equal amount of fund was received before its full transfer to assessee as loan. As per the document filled by the A/R of the aforesaid company it is apparent that this is a zero net worth company with no real business, and used only for providing bogus fund in lieu of commission. Therefore, I am of the opinion that the loan creditor company has no creditworthiness for advancing the loan. Therefore, the amount Rs.40,00,000 is treated as cash credit under section 68 of the I.T. Act in the hand of the assessee Addition:- Rs.40,00,000/-

03. M/s Cranberry Enterprises Pvt. Ltd:- During the year the assessee received of Rs.30,00,000 as a unsecured loan from the company. The A/R furnished loan confirmation, Balance sheet, Bank statement and copy of ITR acknowledgment. After perusal of records furnished by the assessee, it was apparent that M/s Cranberry Enterprises Pvt. Ltd had no real business activities and its disclosed income was only Rs. 48,931. Equal amount of fund was received before its full transfer to assessee as loan. As per the document filled by the A/R of the aforesaid company it is apparent that this is a zero net worth company with no real
business, and used only for providing bogus fund in lieu of commission. Therefore, I am of the opinion that the loan creditor company has no creditworthiness for advancing the loan. Therefore, the amount Rs.30,00,000 credited in the books of the assessee is treated as cash credit under section 68 of the I.T. Act in the hand of the assessee. Addition:- Rs. 30,00,000

04. M/s Dalmia Industrial Development Limited:- During the year the assessee received of Rs.1,45,00,000 as unsecured loan from the company. The A/R furnished loan confirmation, Balance sheet, Bank statement and copy of ITR acknowledgment. After perusal of records furnished by the assessee it was apparent that M/s Dalmia Industrial Development limited had no real business activities its disclosed income was only Rs.9 70,005 and in the earlier year the revenue from operation was nil. There was negative Reserve and Surplus. As per th bank statement there was peak balance only Rs.1,76,664. During the year the company M/s Dalmia Industrial Development Limited issued 20,000,000 share at the face value Rs. 10/-per share. The total capital received during the years of Rs 20,00,00,000 out of which the company give loan entries to other companies Rs.11,58,13,568. The assessee was one such beneficiary. The company had no owned fund to give loan entry to other companies. The AIR was asked to produced the director of the said company to establish the creditworthiness of the transaction. There was no evidence for establishing the creditworthiness of the loan creditors except dry documents. The funds received by the creditor were given out immediately on the same day to others. It has been amply documented by the Income Tax Department Investigation wing and assessment orders of assessing officers of the Department that these companies are created and exists only for providing bogus funds in lieu of commission through layered rotation of funds in Banks. Therefore, I am of the opinion that the loan creditor company has no creditworthiness for advancing the
loan. Therefore, the amount Rs.1,45,00,000 credited in the books of the assessee is treated as cash credit under section 68 of the I.T. Act in the hand of the assessee. Addition:- Rs.1,45,00,000/-

05. M/s Derby Mercantile Pvt. ltd:- During the year the assessee received of Rs.37,09,712 as unsecured loan from the company. The A/R furnished loan confirmation, Balance sheet, Bank

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