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

The grounds of appeal are as under: 1. On the facts and circumstances of the case and in law, the Ld CIT(A) has erred in deleting the addition of Rs.3,55,00,000/-u/s 68 of the ITAct, irrespective of the fact that there are no circumstances of normal course of business done by NMC and LAN. 2. On the facts and circumstances of the case and in law, the Ld CIT(A) has erred in deleting the addition of Rs. 3,55,00,000/- u/s 68 of the I.T. Act, merely by verifying the transactions between LAN and NMC without going deeper into the fact that the Investigation wing Kolkata has established money trail which proves that M/s. Kalyani Vincom was involved in providing accommodation entries along with intermediate companies and the ultimate beneficiary of the transaction was NMC. 3. Further, the tax effect involved in this case is of Rs.1,06,50,000/- which is more than the prescribed monetary limits circular no. 9/2024 dated 17.09.2024. 3. Facts of the case are that the assessee a private limited company filed its return of income for the year under consideration declaring total income of Rs. 2,83,19,740/-and the assessment was completed under section 143(3) of the Act, determining total income of Rs 2,89,53,890/-.Subsequently, assessment was re-opened u/s 148 of the Act. During assessment proceedings, the AO issued notice u/s 142(1) of the Act seeking explanation as to why the amount received as loan from one LAN Finance Private Limited (‘LAN’) of Rs. 3,55,00,000/- should not be added to the total income? In response, the assessee provided various details, documents and explanations with regard to the above cash credit. However, the AO not being impressed added amount of Rs. 3,55,00,000/- as unexplained cash credits u/s. 68 of the Act.

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