VIJAY KUMAR RUNGTA,ERODE vs. ITO, ERODE

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 3, Coimbatore, dated 26.11.2015 and pertains to assessment year 2007-08.

Smt. S. Vidya, the Ld. representative for the assessee, submitted that the only issue arises for consideration is with regard to addition made under Section 69 of the Income-tax Act, 1961 (in short "the Act"). According to the Ld. representative, the assessee borrowed a loan from Shri Rose Sudhir Padbidiri, proprietor of M/s Natasha Enterprises. The Assessing Officer disbelieved the transaction of loan borrowed by the assessee and treated the loan amount as unexplained investment in the hands of the assessee.

On the contrary, Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that the assessee claimed that he received a sum of `6 lakhs on 09.06.2006 from Shri Rose Sudhir Padbidiri, the proprietor of M/s Natasha Enterprises. The Assessing Officer called for the details with regard to the transaction including the postal address of M/s Natasha Enterprises. The assessee could not produce any details as called for. According to the Ld. D.R., in fact, there was search operation under Section 132 of the Act in the case of Shri Praveen Kumar Jain. During the course of search operation, a sworn statement was recorded from one Shri Nilesh Parmer, who claimed himself as proprietor of M/s Mohit International. The Revenue authorities came to know that Shri Nilesh Parmer was in-charge of 33 dummy concerns. In fact, the said Shri Nilesh Parmer is looking after the 33 dummy concerns, including M/s Natasha Enterprises. M/s Natasha Enterprises existed only on paper despite having a registered address and dummy proprietor. Shri Nilesh Parmer used to make entries pertaining to sale, purchase, etc. without any physical movement of stock in any of the 33 concerns, which were found to be dummy entries and has not carried out any business activity otherwise providing accommodation entries. M/s Natasha Enterprises, which is subject matter of appeal in this case, was the 29th concern in the list. The Assessing Officer, after considering the material available on record, issued notice to M/s Natasha Enterprises to find out the genuineness of the transaction. In fact, the notice issued by the Assessing Officer was returned by the postal authorities. This fact was brought to the notice of the assessee and the assessee could not produce any further details with regard to M/s Natasha Enterprises or about Shri Rose Sudhir Padbidiri. In the absence of any material, the Assessing Officer treated the so-called loan of `6 lakhs as income of the assessee. Therefore, according to the Ld. D.R., M/s Natasha Enterprises is providing accommodation entries along with other 32 dummy concerns.

We have considered the rival submissions on either side and perused the relevant material available on record. During the course of search operation in the case of Shri Praveen Kumar Jain, several incriminating materials were found and the Revenue authorities have also found that 33 concerns were created of which M/s Natasha Enterprises is one among them. The major function of 33 concerns is to provide accommodation entries by creating entries pertaining to sale and purchase without any physical movement of the stocks. A copy of the bank statement produced by the assessee, which is available at page 4 of the paper-book, clearly indicates that the money deposited in the bank account was advanced to several companies. The bank statement does not indicate that M/s Natasha Enterprises is engaged itself in any of the business activity. Shri Praveen Kumar Jain accepted during the course of examination under Section 132(4) of the Act that all the 33 concerns are providing accommodation entries to various concerns.

In the result, the appeal of the assessee is dismissed.