HAMILTON ELECTRONICS P.LTD,NEW DELHI vs. ACIT, WARD-11(1), NEW DELHI

This appeal filed by the assessee is directed against the order dated 25.05.2018 of the CIT(A)-4, New Delhi relating to A. Y. 2010-11. 2. The counsel for the assessee did not press the ground of appeal

No.1 challenging the validity of reassessment proceedings for which the Ld. DR has no objection. Accordingly the ground No.1 is dismissed as not pressed.

3. In ground of appeal No.2 the assessee has challenged the order of the CIT(A) in confirming to addition of Rs.10 lacs made by the Assessing Officer u/s. 68 of the IT Act and Rs.25,000/- being unexplained expenditure u/s. 69C of the Act.

4. Facts of the case, in brief, are that the assessee is a company and filed its return of income on 21.09.2010 declaring total income of Rs.10,81,340/- which was processed u/s. 143 (1) on 29.08.2011. Subsequently information was received from the ADIT (investigation) Unit-2 (1), New Delhi that a search and seizure action was carried out on 18.11.2005 on Sh. Pradeep Kumar Jindal who was involved in providing various types of accommodation entries in lieu of cash to a large number of beneficiaries through different companies floated by him. The assessee company is one of the beneficiary whose name figures in that list. The Assessing Officer after recording reasons reopened the assessment u/s. 147 and issued notice u/s. 148 of the IT Act. Subsequently the Assessing Officer issued notice u/s. 142 (1) and 143(2). The Assessing Officer issued notice u/s. 133 (6) to the companies from whom the assessee has received loan of Rs.10 lacs. Subsequently he also recorded the statement of Sh. Manoj Jain Director of M/s. Instant Travel and Tour Private Limited which is one of the main company operated by entry operator Sh. Pradeep Kumar Jindal.

5. Rejecting the various explanation given by the assessee the Assessing Officer made addition u/s. 68 of the IT Act of Rs. 10 lacs to the total income of the assessee and also made addition of Rs.25000 being expenditure incurred for arranging the accommodation entries. The conclusion given by the Assessing Officer for making such addition has been summarized by him at para 6 and 7 of the order which reads as under :- Page | 2 Conclusions sought to be drawn on basis of facts:- It is clearly evident from the above discussion that in case of private limited companies, generally persons known to directors or shareholders, directly or indirectly from whom money borrowed but assessee company has never met with the director of the lending company. II. the assessee company has failed to, produce the directors of the lender nor any cogent evidence about genuineness of transaction and creditworthiness of the lender was filed. The assessee received funds from the companies which did not have any independent existence but were paper companies being operated, controlled and used by Pradeep Kumar Jindal and his close business associates to provide accommodation entries. The said company was the part of group of paper companies used and operated by Shri Pradeep Kumar Jindal for providing accommodation entries in lieu of cash payments and the same was merged/amalgamated with M/s Focus Industrial Resources Pvt. Ltd. During the course of search/survey proceeding, incriminating documents were seized from the premises controlled by Pradeep Kumar Jindal, reveals that accommodation entries were taken by the assessee company. Cash payments received by Pradeep Kumar Jindal from beneficiary companies (assessee company is a one of them) were routed through complex web of companies to create multiple layer of transactions so that cash payments should not be linked easily with cheque payment made to the assessee company. Such layering of transactions had no business purpose except for evasion of taxes. It is evident from the statement of Shri Pradeep Kumar Jindal that Pradeep Kumar Jindal was charging commission @ 2.5 % for providing accommodation entries in lieu of cash payment. Notice under section 133(6) has also been issued to the lender but no compliance has been made so far.

In these circumstances I am constrained to add Rs. 10,00,000/- to the income of the assessee as unexplained credit U/s 68 of the I.T.Act,1961, because the provisions of section are clear wherein it is contained that where " an v sum is found credited in the books of the assessee and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, then sum so credited may be charged to income tax as income of the assessee. Here, in this case an amount of Rs. 10,00,000/- has been credited in the books of the assessee, the source of which was found not to be genuine. The assessee has categorically failed to discharge its onus of establishing the identity, genuineness and creditworthiness of the source of funds introduced in its books of accounts during the FY-2009-10. It is logically concluded from the above discussion that assessee has introduced its unaccounted money of Rs.10,00,000/- in books through above parties in the garb of unsecured loan received from M/s Instant Travel and Tour Pvt. Ltd. (now known as M/s Focus Industrial Resources Pvt. Ltd.). The same is treated as unexplained cash credits in the hand of the assessee as per the provisions of section 68 of the I.T. Act, 1961.

by the assessee should be dismissed.

10. I have considered the rival arguments made by both the sides and perused the orders of the AO and CIT(A). I have also considered the various decisions cited before me. It is an Page | 4 admitted fact that the Assessing Officer made addition of Rs.10 lacs u/s. 68 of the IT Act on the ground that the assessee failed to discharge the onus cast on it in terms of section 68 of the IT Act by proving the identity and credit worthiness of the loan creditor and the genuineness of the transaction. The Assessing Officer also made addition u/s.69C being the unexplained expenditure incurred by the assessee for arranging the accommodation entry of Rs. 10 lacs. It is the submission of the Ld. Counsel for the assessee that given an opportunity the assessee is in a position to substantiate with evidence to the satisfaction of the Assessing Officer regarding the identity and creditworthiness of the loan creditor and the genuineness of the transaction. It is the submission of the Ld. DR that in view of the recent decision of Hon’ble Delhi High Court in the case of NDR Promoters (supra) and the decision of Hon’ble Supreme Court in the case of NRA Ispat (supra), the addition sustained by the CIT(A) should be upheld. Considering the totality of the facts of the case and in the interest of justice I deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one final opportunity to the assessee to substantiate its case regarding the loan of Rs.10 lacs obtained from a company floated by the entry operator Sh. Pradeep Kumar Jindal and decide the issue as per fact and law. The Assessing Officer while deciding the issue shall also keep in mind the decisions relied on by the Ld. DR on this issue. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purpose. Page | 5