DCIT-7(1)(1), MUMBAI vs. NMC INDUSTRIES PVT.LTD, MUMBAI

The grounds of appeal

During appellate proceedings, the assessee claimed that it provided all details, documents and explanations with regards to the amount received from LAN .It was submitted that the AO re-opened assessment proceedings on basis of information received from Investigation Directorate, Kolkata stating that on the basis of some reliable information and bank statement of M/s Kalyani Vincom Pvt. Ltd. (KVPL) and interlinked companies, it was found that significant transactions of accommodation entries were established from the fund trail analysis of bank statements of KVPL group. It was also found that the said company was under the process of striking off and not doing any actual business justifying these transactions recorded in its bank account. As per investigation carried out, it was found KVPL was one of the many shell companies which controlled and managed by the entry operator Shri Praveen Agarwal and someother dummy directors. These companies had no business activity and showed meagre income and also had no fixed assets in the balance sheet. They were existing only on paper. After verification of money trail, it was found that the assessee company had taken accommodation entries amounting to Rs. 4,53,00,000/- from LAN during the year. The assessee categorically denied to know the person named as Praveen Agrawal or any of his shell companies. Further, reason recorded had not brought out any kind of P a g e | 4 A.Y. 2012-13 NMC Industries Pvt. Ltd. relationship between KVPL or its interlinked companies and LAN. Further amount received by assessee company from LAN during the year under consideration had no link with KVPL or its interlinked companies. It had duly provided AO with detailed of source of money which had been advanced by LAN. Further, the assessee had specifically requested the AO to provide them with the statement of Kolkata Investigation Wing refereed by him and also to provide with opportunity to cross examine Pravin Agarwal. In response to questionnaire by the AO, the assessee had provided with copy of Income Tax return acknowledgment, confirmation of accounts & bank statements of LAN and the same had been duly verified and accepted by the erstwhile AO as genuine and the same was allowed by him. During assessment proceedings, assessee company had submitted several details and documents to discharge its onus as laid down under section 68 of the Act in support of unsecured loans taken from LAN: a) Confirmation of accounts from LAN showing address and PAN b) Copy of Bank Statements of LAN highlighting payment made to the assessee company c) Copy of Income Tax Acknowledgment as proof that the LAN was assessed to Tax for A.Y. 2012-13 d) Copy of Audited Balance Sheet & Profit & Loss A/c along with Audit Report of ,Copy of Bank statement of the assessee in which the amount had been credited f) Copy of P a g e | 5 A.Y. 2012-13 NMC Industries Pvt. Ltd. "Certificate of Incorporation" issued by