GLOBAL STAINLESS,DELHI vs. ACIT,CIRCLE-34(1), DELHI

5. In view of the above, the assessee requests your honour to delete the additions made by the AO and drop the penalty proceedings initiated. The assessee relies on various orders passed by Hon'ble Delhi High Court. (i) DJ Surfactants vs National E-Assessment Centre Delhi, W.P. (C) 4814/2021 dt. 03.05.2021 (ii) Lemon Tree Hotels Limited vs NFAC Delhi, W.P. {C} 5427/2021 dt. 21.05.2021. (iii) Naresh Kumar Goyai vs NFAC Delhi WP(C) 6245/2021 dt. 12.07.2021. The assessee reserves the right to add after modify, amend, delete any ground before Hon'ble CIT (A)”

B. “WRITTEN SUBMISSIONS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE CASE OF M/s GLOBAL STAINLESS, 17 MEERA TOWER GROUND FLOOR, WAZIRPUR INDUSTRIAL AREA, NEW DELHI - 110052 FOR THE ASSESMENT YEAR 2018-19 PAN : AAJFG7209G ASSTT. YEAR : 2018-19 1. The assessment is bad in law and on facts. It is against the principles of natural justice as everything has been done without going into the facts and submissions of the case. The submissions made by the assessee have not been taken on record and the assessment order has been passed without taking submissions into consideration.

3. The AO in his assessment order at S. No. 4 says that i. With reference to these two unsecured loan creditors, M/s Steel Impex M/s Cloud Zone assessee could not give basic details of PAN / Bank Account Statement / comprehensive confirmation from these parties of at least ledger extracts of assessee as appearing in their books confirming the closing balances. Explanation: Comprehensive confirmation from these parties as appearing in their books of accounts confirming the closing balances were submitted on 27.03.2021 including their Name, Address, PAN, E-Mail ID, Signatures.Bank Statement of these parties was submitted on 30.03.2021 i.e. before passing the assessment order on dt. 31.03.2021. The above details are on record. But the same were not considered by AO and the assessment order was framed without considering these documents. ii. The AO alleged that with reference to one loan creditor assessee submitted PAN (ADIPC0422B) for further cross verification U/s 133(6). In 1TBA the same was found to be not retatable to this loan creditor M/s Steel Impex and the same refer to non-related individual Mr. Rahul 6 Chawla etc. Hence 133(6) enquiries could not be made as the assessee submitted wrong PAN. Explanation: M/s Steel Impex is a Proprietorship Firm and its proprietor is Mr. Rahul Chawla who has signed the confirmation of account as per his ledger extracts. The PAN: ADIPC0422B belongs to Mr. Rahul Chawla as confirmed and accepted by AO in his assessment order. The Proprietorship firm M/s Steel Impex is owned by Mr. Rahul Chawla and his PAN is ADIPC0422B which has been confirmed by AO himself. iii. The AO further alleged that with reference to other loan creditors M/s Cloud Zone, the assessee merely submitted PAN without giving verifiable details of email - id etc. to examine the claim u/s 133(6) with this loan creditor. Accordingly, this loan creditor also apparently neither reconcilable nor explainable as claimed by the assessee and also as assessee failed to submit basic details of this loan creditors involving PAN, Email-id etc. to examine the assessee claim u/s 133(6). Explanation : - Comprehensive confirmation from M/s CIoud Zone as appearing in their books of accounts confirming the closing balance was submitted on 27.03.2021 including their Name, Address, PAN, E-Mail ID, Signatures. Bank Statement of these parties was submitted on 30.03.2021 i.e. before passing the assessment order on dt. 31.03.2021. The above details are on record. But the same were not considered and the assessment order was framed without considering the documents and submission of the assessee.

7. It is assessee's contention that he had via the material placed before the AO, alongwith its reply on 27.03.2021 and 30.03.2021 explained and established the genuineness of unsecured loans received. It is quite evident that the AO has not taken into account the explanation and material placed before him by the assessee alongwith its reply on dt. 27.03.2021 and 30.03.2021. This aspect is brought to fore, if one were to pursue paragraph 6 of the impugned assessment order. For the sake of convenience, the same is extracted hereinafter. "In view of the above discussion, it is seen that mere reflection of a liability in the books of accounts does not support the existence and correctness of unsecured loans and same is again to infusion of unexplained capital into assessee business in the guise of bogus unsecured loans. In the absence of the information / confirmation in respect of these two loan creditors to the tune of Rs. 59121000/- appearing as a liability in the books of the assessee stands unexplained is added back to the income of the assessee U/s 68 of the IT Act as the assessee was unable to offer any explanation about the nature and source of such credit / genuineness of the same could not be established by the assessee inspite of availing sufficient time and opportunities as per IT Act"

8. In view of the above, the assessee requests your honour to delete the additions made by the AO and drop the penalty proceedings initiated. The assessee relies on various orders passed by Hon'ble Delhi High Court. (i) DJ Surfactants vs National E-Assessment Centre Delhi, W.P.(C) 814/2021 dt. 03.05.2021 (ii) Lemon Tree Hotels Limited vs NFAC Delhi, W.P.(C) 5427/2021 it 21.05.2021. iii) Naresh Kumar Goyal vs NFAC Delhi WP(C) 6245/2021 12.07.2021. The assessee reserves the right to add, alter, modify, amend, any ground before Hon'ble CIT(A)” 4. It appears that the Ld. AO while making addition observed that the confirmations stated to have been submitted were never submitted, neither the ledger account of the two creditors in the books of account of the assessee were furnished before him. The confirmations/bank accounts, e-mail ids of sundry creditors for the impugned transactions being unsecured loans amounting to Rs.3,33,00,000/- and Rs.2,58,21,000/- from M/s Steel Impex and M/s Cloud Zone, respectively, were not furnished and, therefore, show cause were issued to the assessee whereupon only bald confirmation as appearing in the books of the assessee without obtaining proper and comprehensive confirmation from these parties were furnished. Therefore, according to the Ld. AO the loans are not proved to be confirmed by these parties and inquiries conducted under Section 133(6) of the Act did not yield any result which proves unexplainable nature of these two parties’ loan as against other parties in whose case the assessee was able to reconcile the claim. Thus, finally, as the assessee was unable to offer any explanation in regard to these impugned transactions, the same were added in the hands of the assessee under Section 68 of the Act. The Ld. CIT(A) reiterated the same that no cogent document/evidence in support of the claim of the assessee in fact was submitted before it. The copy of the bank statement of M/s Steel Impex and Bank Account Statement of ICICI Bank of M/s Cloud Zone clearly indicate that huge sum of money in lakhs/crores were credited by some entities and the same were transferred to various other entities including the appellant immediately invariably on the same day leaving a bank balance which was almost negligible, i.e., only upto a few thousand rupees. This particular aspect of the matter cannot be brushed aside having regard to the case made out by the Revenue.

5. The Ld. CIT(A) while confirming the addition observed as follows:- “6.6. The assessee also stated that the said unsecured loan was squared off in subsequent years through Banking Channel as and when the appellant had liquidity the loan was duly paid off and claimed that no addition is to be made in current year on account of cash credit. The claim of the appellant is not acceptable as the unsecured loans received by the appellant has been held to be bogus in the preceding paragraphs. As the loans have been held as bogus, the repayment of loans in the subsequent years does not make the transaction genuine. 6.7 Reliance is placed on the decision of the Hon’ble ITAT, Mumbai in the case of J K Global 167 taxmann.com 15 (Mumbai - Trib.), where the facts are exactly same as the present case. The Hon’ble ITAT upheld the addition made u/s 68 of the Act on account of unsecured loans taken from three companies for 2010-11 to 2012-13 as information received from DGIT (Investigation) revealed that assessee had taken accommodation entries in form of bogus unsecured loans from said companies which were operated by one Praveen Kumar .lain who had admitted that companies under their control were paper companies with no real business transactions. The Hon’ble ITAT also rejected the assessee's contention that the loans have been repaid during the year under consideration therefore 11 the set off of the same should also be given to the assessee. The relevant portion of the order is reproduced as under: “4. For the sake of conciseness and brevity, in AY 2010-11 unsecured loans have been taken from Ryan International of Rs. 25 lakhs, in AY 2011-12 from Casper Enterprises Pvt. Ltd of Rs 5 lakhs and in AY 201213 Rs. 20 lakhs taken from Duke Business Pvt Ltd. The common cause for treating the unsecured loan as unexplained and added u/s 68 of the Act is the information received from DGIT (Investigation). Mumbai that Shri Pravin Kumar Jain through a web of concerns run and operated by him is engaged in providing accommodation entries in the nature of bogus unsecured loans, bogus share application etc through various paper entities and the assessee is one of the beneficiaries who has taken accommodation entry. Statement of Shri Pravin Kumar Jain was recorded u/s 132(4) of the Act wherein, he has categorically admitted that the entire business of accommodation entries is through him and Pankaj Jain and companies under their control, which are either owned by him or directly or indirectly controlled are paper companies with no real business transactions.

5. The coordinate bench in the appeal of Praveen Kumar Jain v. Dy. CIT [IT Appeal No. 7191 (Mum.) of 2018, dated 19-1-2023] for AY 2008-09 to 2014-15 had the occasion to consider the statement of Shri Praveen Kumar Jain which reads as under: ………… ………… 6. On perusal of the aforementioned statement showed that in the list of companies given the accommodation entries names of Duke Business Pvt. Ltd, Casper Enterprises Pvt. Ltd and Ryan International are mentioned which means that as per the order of the coordinate bench it has been established that these companies were providing accommodation entries through unsecured loans claimed to have been borrowed from these companies by the assessee during the year under consideration as unexplained and rightly added u/s 68 "17. It is also brought to the notice of the Bench by the Ld. DR for the Revenue that in hundreds of cases, Shri Pravin Kumar Jain has provided accommodation entry for unsecured loans, bogus share application money, etc. without carrying out any real business, but operating through dummy / paper companies. So in these circumstances, we are of the considered view that the Assessing Officer as well as Ld.CIT(A) have rightly quantified the unaccounted commission earned by the assessees during the year under consideration from 54 companies which is nothing but a huge network of unlawful business to evade the tax for companies operating through them and by the assessee themselves also. Rather, they are in to money laundering.

7. Considering the facts of the case in toto and in the light of the decisions of the coordinate bench (supra), we have no hesitation in confirming the addition made u/s 68 of the Act for the captioned Assessment years. The contention of the Id. counsel that the, loans have been re-paid during the year under consideration therefore the set off of the same should also be given to the assessee does not hold any water as it has been established that the impugned loans were nothing but accommodation entries and the repayment is also nothing but return of accommodation entries therefore, the money which has been brought in the garb of unsecured loan is nothing but the unaccounted money of the assessee and the repayment of the same does not make any sense.

6. It appears from the above that the Ld. CIT(A) has also taking into consideration the case sought to be made out by the assessee to this effect that the unsecured loan was squared up in the subsequent years through banking channel as and when the appellant had liquidity the loan was duly paid off and claimed that no addition was to be made in the current year on account of cash credit, which was further reiterated by the ld. Counsel for the assessee appearing before us, concluded that as the unsecured loan received by the assessee has already been held to be bogus in the preceding paragraphs and rejected such case of the assessee. Having regard to the entire aspect of the matter, the conduct of the assessee particularly in not cooperating with the authorities below in not discharging onus under Section 68 as regards the genuineness of the transaction to the satisfaction of the Ld. Assessing Officer or that the submissions that the transactions having been made through banking channel or the companies were the income tax assessees registered with the Registrar of Companies is also found to be not sufficient enough to prove the transaction genuine it is held that the unsecured loans received by the appellant as bogus. In that view of the matter, as the loan has already been held as bogus the repayment of loans in the subsequent years does not make the transaction genuine, in our considered opinion, is the correct observation of the authorities below. We have further considered the order passed by the ITAT Mumbai Bench in the case of J.K. Global, reported in 167 taxmann.com 15 which were relied upon the Ld. CIT(A). The addition made under Section 68 of the Act on account of unsecured loans taken from companies from 20.10.11 to 20.12.2013 as information received from the DGIT, Investigation that the assessee had taken 14 accommodation entries in the form of bogus unsecured loans from the said companies operated by Shri Praveen Kumar Jain found to be rightly applicable on the identical facts and circumstances of the case in hand. The loans since having been repaid during the year under consideration, therefore, the set off of the same by the assessee as rejected by the ITAT Mumbai Bench is found to be squarely applicable in the instant case. As the impugned loans in the case in hand, is nothing but accommodation entries the return of accommodation entries by paying it off through banking channel cannot give a seal of sanctity to the impugned transactions already held “bogus”. Thus, we do not find any reason to interfere with the order passed by the Ld. CIT(A). Hence, this appeal preferred by the assessee is found to be devoid of any merit, and, thus, dismissed.