KUBER KHADYAN PVT. LTD.,NEW DLEHI vs. ACIT, CENTRAL CIRCLE- 30, NEW DELHI

We have heard rival submission, in the light of the material available on record. It is a fact borne from records that the Ld. AO

Page 7 of 43 while making the impugned additions has relied upon the inquiries conducted by investigation wing of Kolkata, and did not conduct any independent inquiries of his own. A statement of Shri Mulchand Malu is difficult to be accepted and considering the decision of this Tribunal in the decisions in case of Kuber Khadyan Pvt. Ltd. and Kuber KhanpaanUdhyog Pvt. Ltd, ITA No. 580/Del/2019. Accordingly, we are of the considered view, that no case of any addition is made out in the case on account of unsecured loans u/s 68. Consequently, the order of lower authorities is set aside and the addition of Rs. 9,47,50,000/- made by the Ld. AO is deleted. Accordingly, all the grounds of appeal raised by the assessee on this issue, are allowed.

5. The next issue raised by the assesse is regarding the amount of Rs 18,94,000/- added to the income of the assesse by the Ld. CIT(A) invoking his powers of enhancement. Ld. Counsel submitted that the impugned enhancement is based upon twin presumption of assessee undertaking accommodation entries and such entry providers charging commission @ 1-4 %. Thus, on an estimate basis

We have heard rival submissions in the light of material available on records. The Ld. counsel for appellant has argued that they have not undertaken any entry from any dubious entry provider and that all its loans are genuine. Consequently, there cannot arise any case paying any commission to any entry provider. The Ld. DR relied upon order of Ld. CIT(A). We have considered the impugned loans in proceeding paras and concluded that they do not suffer from any lack of genuineness. Accordingly, there cannot be any case charging of any commission by such entry providers from the assessee. Further, we have also noted that Ld. CIT(A) has merely done a guess work to make his enhancements without placing any credible evidence on records. We are therefore not inclined to subscribe to his view point on the issue. The order of Ld. CIT(A) is therefore set aside and the enhancement made by him is deleted. The ground of appeal raised by the assessee on the subject is therefore allowed.

The assesee has through grounds of appeal number 10 has raised the issue of legal challenge to the order challenging legality of proceedings u/s 153D. As we have decided the appeal on its merits, the impugned legal ground is left open.

The first issue arising in the present appealis the action of AO in making an addition of Rs. 5,90,00,000/- under Section 68 of the Act, and its affirmation by the Ld. CIT(A). The assessee had reportedly taken share application money of Rs. 5,90,00,000/- from one M/s Powmex Sales Pvt. Ltd., a Calcutta based company. The Ld. Counsel for the assessee submitted that order U/s 147 of the Act, r.w.s. 143(3) was passed on 26.04.2017. The Ld. AO while making the addition relied upon the statement of Shri Mulchand Malu, the head of the Group and inquiry conducted by Investigation Wing of Kolkata. The Ld. AO had concluded that the said M/s Powmex Sales Pvt. Ltd. did not had sufficient creditworthiness qua the impugned share application money. He also held the view that the said company was a non-existent entity.

The Ld. Counsel for the assessee submitted that the Ld. First Appellate Authority has affirmed the order of the Ld. AO by relying upon averments made therein including the remand report submitted by the Ld. Assessing Officer. The Ld. Counsel submitted that the addition made by the Ld. AO is not based upon correct appreciation and understanding of the facts governing the case. The Ld. Counsel submitted that its case is fully covered by the decision of this Tribunal, in the case of M/s Kuber Khanpaan Udyog for A.Y. 2012-13 and A.Y. 2013-14 passed by ITA No.- 581 and 582/Del/2019. It was submitted that in the said case this Tribunal had concluded that M/s Powmex India was a genuine entity. As per the facts of impugned case M/s Powmex India had given share application money of Rs. 45,55,000/- to M/s Kuber Khanpaan Udyog. The Ld. DR would like to place reliance upon the decision of lower authorities.

We have heard rival submissions in the light of the material available on record. We have noted that in the case of M/s Kuber Khanpaan Udyog at para 9 and 10 of its order on pages 10 to 12, the Hon’ble Co-ordinate Bench has observed as under:

In the result, both these appeals are partly allowed.”

The assesee has through grounds of appeal number 1 has raised the issue of legal challenge to the order challenging legality of Page 15 of 43 proceedings u/s 148. As we have decided the appeal on its merits, the impugned legal ground is left open.

In the result appeal of assesee vide ITA number 1408/del/2022 is allowed.

The first issue arising in the present appealis the action of AO in making an addition of Rs. 18,13,00,000/- under Section 68 of the Act, and its affirmation by the Ld. CIT(A). The assessee had reportedly taken unsecured loans of Rs. 18,13,00,000/- from few parties. The Ld. Counsel for the assessee submitted that order 143(3) of the Act, was passed on 31.03.2017. The Ld. AO while making the addition relied upon the statement of Shri Mulchand Malu, the head of the Group and inquiry conducted by Investigation Wing of Kolkata including statement of one Sh. Devesh Upadhaya. The Ld. AO had concluded that the said parties were actually Kolkata based accommodation entry providers who did not had sufficient creditworthiness qua the impugned unsecured loans. He also held the view that the said company was a non-existent entity.

The Ld. Counsel for the assessee submitted that the Ld. First Appellate Authority has affirmed the order of the Ld. AO by relying upon averments made therein. The Ld. Counsel, submitted that the addition made by the Ld. AO is not based upon correct appreciation and understanding of the facts governing the case. The Ld. Counsel through documents filed in its paper book, submitted that the stand taken by the Ld. AO is contradictory in as much as whereas the AO has added the principal component of the unsecured loan it has failed to add back the interest component thereof which was part of the same loan transaction. The Ld. counsel argued that genuineness of either both principle and loan would be doubtful or both would be genuine. It cannot be case that revenue treats principal loan as ingenuine but allows corresponding claim of interest on it as genuine. The Ld counsel drew our attention to the decision of Mumbai Tribunal, in the case of M/s NH securities Ltd passed vide ITA number 1079/mum/2018 dated 24/3/2021 where it was held that once interest is accepted as genuine qua a loan there cannotbe case of treating principle as in genuine. The Ld DR argued that the said case is distinguished on facts.

We have heard rival submissions in the light of the material available on record. We have noted that in the case of M/s NH securities Ltd passed vide ITA number 1079/mum/2018 dated 24/3/2021 at para 3.3 of its order on pages 3-4, the Hon’ble Co- ordinate Bench has observed as under:

We have heard rival submissions in the light of material available on records. The Ld. counsel for appellant has argued that they have not undertaken any entry from any dubious entry

The first issue arising in the present appealis the action of AO in making an addition of Rs. 2 crores under Section 68 of the Act, and its affirmation by the Ld. CIT(A). The assessee had reportedly taken unsecured loans of Rs. 2 crores from Campbell Advertising

The Ld. Counsel for the assessee submitted that the Ld. First Appellate Authority has affirmed the order of the Ld. AO by relying upon averments made therein. The Ld. Counsel, submitted that the addition made by the Ld. AO is not based upon correct appreciation and understanding of the facts governing the case. The Ld. Counsel through documents filed in its paper book, submitted that the stand taken by the Ld AO is contradictory in as much as the impugned loan was returned by the assessee during the previous year on 17.09.2010 and hence, as the same was not appearing in its books on 31.03.2011, there cannot be any addition in respect of Page 22 of 43 the same. In support of his contentions, the Ld. AR has filed requisite documents showing repayment of the loan. The Ld. DR argued in favour of the order of lower authorities.

We have heard rival submissions in the light of the material available on record. We have noted that the appellant has produced credible evidences indicating return of the impugned loan during the financial year under consideration. Since, the said loan was not existing as a liability as on 31.03.2011, there cannot be any case of invoking of provision of section 68 of the Act.We havealso noted that the thrust of additions made by the Ld assessing officer is resting upon the statement of Sh Mul Chand Malu made during the search making disclosure of additional income . The assessing authority has also placed sufficient reliance upon enquiries conducted by the investigation wing of Kolkata , inter alia, including statement of third parties stated to be accommodation entry providers. In the case of Harjeev Agarwal, Hon’ble Delhi High Court has held that undisclosed income cannot be computed merely on the basis of statements of an accused unless, the same is supported by credible evidence on record. The ratio laid down by the Hon’ble

The assesee has through grounds of appeal number 1 has raised the issue of legal challenge to the order challenging legality of proceedings u/s 148. As we have decided the appeal on its merits, the impugned legal ground is left open.

In the result, appeal of the asseessee is allowed.

The only issue arising in the present appealis the action of AO in making an addition of Rs. 1,21,38,863/- under Section 68 of the Act, and its affirmation by the Ld. CIT(A). The assessee had reportedly taken unsecured loans of Rs. 1,21,38,863/- from M/s Powmex Sales Pvt. Ltd. of Calcutta. The Ld. Counsel for the assessee submitted that order 143(3) of the Act, was passed on 28.12.2016. The Ld. AO while making the addition relied upon the statement of Shri Mulchand Malu, the head of the Group and inquiry conducted by Investigation Wing of Kolkata. The Ld. AO had concluded that the said company did not had sufficient creditworthiness qua the impugned unsecured loans. He also held adverse view qua genuineness of the impugned loan transaction.

The Ld. Counsel for the assessee submitted that the Ld. First Appellate Authority has affirmed the order of the Ld. AO by relying upon averments made therein. The Ld. Counsel, submitted that the addition made by the Ld. AO is not based upon correct appreciation and understanding of the facts governing the case. The Ld. Counsel through documents filed in its paper book, submitted that the Page 25 of 43 stand taken by the Ld. AO qua the impugned loan is contradictory. In support of his contentions, the Ld. AR has filed requisite documents showing repayment of the loan. It is the case of the assessee that the Ld. AO has accepted the opening balance of Rs. 3.63 crores appearing in the confirmation of M/s Powmex Sales Pvt. Ltd. It has also been argued that the AO has also been selectively discriminating in his approach in as much as whereas he has accepted loan entry of Rs. 40 lakhs received on 17.07.2014, he has added all other entries aggregating to Rs. 1,21,38,863/-. The Ld. DR argued in favour of the order of lower authorities.

We have heard rival submissions in the light of the material available on record. We have noted that the appellant has produced credible evidences comprising a confirmation filed by M/s Powmex Sales Pvt. Ltd. Indicating loans given by them. We have noted that the AO has selectively added loan entries other than the loan of Rs. 40 lakhs received on 17.07.2014. There is nothing in the order towards justification of this selective approach adopted by the Ld. AO. The Ld. AO cannot take contradictory position. Unsecured loan from a party received in a year can either be held to be fully

Grounds of appeal no. 1 to 4 and 10 have been found to be general in nature and hence, bereft of any meritorious adjudication. The same are therefore, dismissed.

In the result, appeal of the assessee is partly allowed.

The only issue arising in the present appealis the action of AO in making an addition of Rs. 2,45,00,000/- under Section 68 of the Act, and its affirmation by the Ld. CIT(A). As per para 5.2 of the AO’s order, the assessee had reportedly taken share application money of Rs. 2,45,00,000/- from three companies namely, M/s Page 28 of 43 Kanasbati Trade Com Pvt. Ltd., M/s Binapani Merchandise Pvt. Ltd. And M/s Innova Comtrade Pvt. Ltd. of Rs. 50,00,000/-, 1,15,00,000/- and 80,00,000/- respectively.

The Ld. Counsel for the assessee submitted that order U/s 147 of the Act, r.w.s. 143(3) was passed on 27.12.2016. The Ld. AO while making the addition relied upon the statement of Shri Mulchand Malu, the head of the Group and inquiry conducted by Investigation Wing of Kolkata inter alia including statement of one Vikas Aggarwal an alleged entry provider. The Ld. AO had concluded that the said entities did not had sufficient creditworthiness qua the impugned share application money. He also held the view that the said company were a non-existent entity. Reliance was placed upon statement of one shri Vikas Aggarwal, and Divesh Upadhyay a Calcutta based entry provider.

The Ld. Counsel for the assessee submitted that the Ld. First Appellate Authority has affirmed the order of the Ld. AO by relying upon averments made therein. The Ld. Counsel submitted that the addition made by the Ld. AO is not based upon correct appreciation and understanding of the facts governing the case. The Ld. Counsel

We have heard rival submissions in the light of the material available on record. We have noted that in para 5.7 of his order, the Ld. AO has recorded that assessee had furnished share applications form, confirmations, bank statements, income tax returns, financial statements and MCA data of impugned companies. We have also noted that, the Ld. AO has held that the assessee failed to produce the promoters or the persons managing affairs of investor companies and hence, he held the share application money is ingenuine. We have noted that the thrust of additions made by the Ld assessing officer is resting upon the Page 30 of 43 statement of Sh Mul Chand Malu made during the search making disclosure of additional income. The assessing authority has also placed sufficient reliance upon enquiries conducted by the investigation wing of Kolkata, inter alia, including statement of third parties stated to be accommodation entry providers. In the case of Harjeev Agarwal, Hon’ble Delhi High Court has held that undisclosed income cannot be computed merely on the basis of statements of an accused unless, the same is supported by credible evidence on record. The ratio laid down by the Hon’ble Apex Court in the case of Abhisar Buildwell has also been found to applicable in the case . The statement of Shri Mulchand Malu, who was neither a Director nor an employee becomes questionable, for resting any addition. Further it is trite law that the assessing officer as a quasi-judicial authority must make his own independent enquiries before making any addition of income. Third party enquiries and/or statements can be a starting point but not the sole basis for drawing any conclusions. The assessment order suffers from deficiency of AO making any independent enquiries of his own. We have also noted that the Ld. AO has failed to discharge his primary responsibility of conducting his inquiries once details Page 31 of 43 are provided by assessee qua provisions of section 68 of the Act. To this extent, the order of Ld. AO and its affirmation by Ld. CIT(A) is found to be erroneous. Accordingly, we set aside the order of lower authorities and direct the Ld. AO to delete the impugned addition of Rs. 2, 25,00,000/-.

In the result, appeal of the assessee is partly allowed.

The first issue arising in the present appealis the action of AO in making an addition of Rs. 13,23,00,000/- under Section 68 of the Act, and its affirmation by the Ld. CIT(A). The assessee had reportedly taken unsecured loans of Rs. 13,23,00,000/- from few parties. The Ld. Counsel for the assessee submitted that order 143(3) of the Act, was passed on 29/12/2016. The Ld. AO while making the addition relied upon the statement of Shri Mulchand Malu, the head of the Group and inquiry conducted by Investigation Wing of Kolkata including statement of one Sh. Devesh Upadhaya. Page 32 of 43 The Ld. AO had concluded that the said parties were actually Kolkata based accommodation entry providers who did not had sufficient creditworthiness qua the impugned unsecured loans. He also held the view that the said company was a non-existent entity.

The Ld. Counsel for the assessee submitted that the Ld. First Appellate Authority has affirmed the order of the Ld. AO by relying upon averments made therein. The Ld. Counsel, submitted that the addition made by the Ld. AO is not based upon correct appreciation and understanding of the facts governing the case. The Ld. Counsel through documents filed in its paper book, submitted that the stand taken by the Ld. AO is contradictory in as much as whereas the AO has added the principal component of the unsecured loan it has failed to add back the interest component thereof which was part of the same loan transaction. The Ld. counsel argued that genuineness of either both principle and loan would be doubtful or both would be genuine. It cannot be case that revenue treats principal loan as ingenuine but allows corresponding claim of interest on it as genuine. The Ld. counsel drew our attention to the decision of Mumbai Tribunal, in the case of M/s NH securities Ltd

We have heard rival submissions in the light of the material available on record. We have noted that in the case of M/s NH securities Ltd passed vide ITA number 1079/mum/2018 dated 24/3/2021 at para 3.3 of its order on pages 3-4, the Hon’ble Co- ordinate Bench has observed as under:

We have considered the above decision of Hon’ble Co-ordinate Bench of Mumbai, and we concur with the findings that “ ….Once the interest is accepted to be genuine , then how the principal component thereon could be disbelieved by the lower authorities. We are unable to comprehend and unable to persuade ourselves to accept to this act of the lower authorities…”.We have noted that the thrust of additions made by the Ld assessing officer is resting upon the statement of Sh Mul Chand Malu made during the search making disclosure of additional income. The assessing authority has also placed sufficient reliance upon enquiries conducted by the investigation wing of Kolkata, inter alia, including statement of third parties stated to be accommodation entry providers. In the case of Harjeev Agarwal, Hon’ble Delhi High Court has held that undisclosed income cannot be computed merely on the basis of statements of an accused unless, the same is supported by credible evidence on record. The ratio laid down by the Hon’ble Apex Court in the case of Abhisar Buildwell has also been found to applicable in the case .The statement of Shri Mulchand Malu, who was neither a Director nor an employee becomes questionable, for resting any addition. Further it is trite law that the assessing officer as a quasi- Page 35 of 43 judicial authority must make his own independent enquiries before making any addition of income. Third party enquiries and/or statements can be a starting point but not the sole basis for drawing any conclusions. The assessment order suffers from deficiency of AO making any independent enquiries of his own.

We have heard rival submissions in the light of material available on records. The Ld. counsel for appellant has argued that they have not undertaken any entry from any dubious entry provider and that all its loans are genuine. Consequently, there cannot arise any case paying any commission to any entry provider. The Ld. DR relied upon order of Ld. CIT(A). We have considered the impugned loans in proceeding paras and concluded that they do not suffer from any lack of genuineness. Accordingly, there cannot be any case charging of any commission by such entry providers from the assessee. Further, we have also noted that Ld. CIT(A) has merely done a guess work to make his enhancements without placing any credible evidence on records. We are therefore not inclined to subscribe to his view point on the issue. The order of Ld. CIT(A) is therefore set aside and the enhancement made by him is deleted. The ground of appeal raised by the assessee on the subject is therefore allowed.

The assesee has through grounds of appeal number 10 has raised the issue of legal challenge to the order challenging legality of proceedings u/s 153D. As we have decided the appeal on its merits, the impugned legal ground is left open.

In the result, appeal of the assessee is allowed.

The two appeals of Revenue, for A.Y. 2012-13 and 2013-14 are revolving around identical facts and hence for the purposes of convenience adjudicated together. The decision taken in ITA- 1412/Del/2021for A.Y. 2012-13, shall apply mutatis mutandis in for 2013-14.

The Ld. Counsel for the assessee informed that the Ld. AO had made an addition of Rs. 2,78,00,000/- U/s 68 of the Act, on account of unsecured loans. The Ld. AO while making the impugned addition relied upon the statement of Shri Mulchand Malu, the Head of the Group and inquiry conducted by Investigation Wing of Kolkata. Before the Ld. First Appellate Authority, the assessee had contended that the addition of Rs. 2.78 crores did not have any nexus with any incriminating document found during the course of search, the statement of Sh. Mulchand Mallu, head of Family cannot be relied upon as he was neither an employee nor a Director in any company. It was argued that, there was no reference to the impugned loan in the satisfaction note.

We have heard rival submissions in the light of the material available on record. We have noted that the Ld. CIT(A), has comprehensively analysed the facts and circumstances of the case in the light of available judicial decisions of Hon’ble Delhi High Court. Through the decisions in case of Kabul Chawla 380 ITR 573, Meeta Gutgutiya 395 ITR 526, and Best Infrastructure Pvt. Ltd. 397 ITR 182 (supra), it is settled position that addition in search cases can only be made with reference to any incriminating seized documents. The addition therefore, cannot be made u/s 153

As facts of the case in for A.Y. 2013- 14, are identical the decision in herein above, shall apply mutatis mutandis. Accordingly, the appeal of the Revenue in ITA No. 4213/Del/2018, for A.Y. 2013-14, also stands dismissed.

In the result appeal of assessee vide ITR Nos.320/del/2019, 885/del/2019, 1406/del/2022, 1407/del/2022, 2711/del/2022, 1408/del/2022, 1409/del/2022 & 1924/del/2023 are allowed and of Revenue vide ITR no 4213/del/2018 and 1412/del/2021 is dismissed .