J K GLOBAL,MUMBAI vs. INCOME TAX OFFICER 31(2)(2), MUMBAI

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ITA 3259/MUM/2023Status: DisposedITAT Mumbai05 September 2024AY 2011-128 pages
AI SummaryN/A

What did the Tribunal hold?

The Tribunal confirmed the additions made under Section 68 of the Income Tax Act, treating the unsecured loans as unexplained cash credits, as they were established to be accommodation entries. It also confirmed the addition of interest paid on these loans. The argument that the repayment of loans should be set off was rejected, as the repayment was also considered a return of accommodation entries.

What were the facts?

The assessee took unsecured loans from three companies (Ryan International, Casper Enterprises Pvt. Ltd, and Duke Business Pvt Ltd) across three assessment years. Information from DGIT (Investigation) revealed that Shri Pravin Kumar Jain was providing bogus accommodation entries, including unsecured loans, through various paper entities, and the assessee was a beneficiary. Shri Pravin Kumar Jain admitted to running this business of accommodation entries through paper companies with no real business transactions.

What were the issues?

Whether unsecured loans received by the assessee constituted unexplained cash credits under Section 68 of the Income Tax Act given their nature as accommodation entries, and if repayment of these loans can negate such additions.

Which sections of the Income-tax Act were involved?

Section 68,Section 132(4),Section 131

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & SHRI SUNIL KUMAR SINGH, HONBLE

For Appellant: Shri Haridas Bhat
For Respondent: Shri R. R. Makwana, Sr. DR
Hearing: 03.09.2024Pronounced: 05.09.2024

PER NARENDRA KUMAR BILLAIYA, AM I.T.A. No. 3260/Mum/2023, 3259/Mum/2023 and 3258/Mum/2023 are 3 separate appeals by the assessee preferred against the 3 separate orders dated 25.07.2023 of Id. NFAC, Delhi pertaining to Assessment Years 2010-11, 2011-12 and 2012-13. 2. Since, the underline facts in the issues raised in the captioned appeals are identical, all these appeals were heard together and are disposed of by this common order for the sake of convenience and brevity.

3.

The common addition in the captioned appeals relates to the unsecured loans taken during the year considered as unexplained u/s 68 of the Act and further addition of interest paid on such unsecured loans.

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 2012- 13 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 in ITA Nos. 7191/Mum/2018 to 7197/Mum/2018 for AY 2008-09 to 2014-15 had the occasion to consider the statement of Shri Praveen Kumar Jain which reads as under:-

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