SHARDASHREE ISPAT LTD.,NAGPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3, NAGPUR

आदेश / ORDER PER S.S. GODARA, JM: This assessee’s appeal for AY 2012-13 arises against the NFAC, Delhi’s order dated 05-08-2021 passed in case No. ITBA/ NFAC/S/250/2021-22/1034661345(1), involving proceedings under Section 250 of the Income Tax Act, 1961, in short ‘the Act’.

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Ltd., and Koel Tradecom Pvt. Ltd. for sums of Rs.5.00 lakhs in former

and Rs.20.00 lakhs in latter twin instances; respectively. The asessee’s

stand all along is that the impugned sums have been routed through

banking channels only and it had submitted all the relevant details of

the foregoing three parties before the lower authorities. All these

assessee’s pleadings stand rejected in the CIT(A)’s detailed discussion

as follows :

“Ground No.4 &5 : The ground raised is general in nature hence not pressed. Thus looking to the facts, circumstances and the above submission, it is humbly requested before your honor to take the appropriate view for the sake of justice. It is also requested before your honour to provide the opportunity before passing of any adverse order on the basis of the aforesaid submission. I have gone through the submission and grounds of appeal of the appellant. In this case the assessee is in appeal about the addition of Rs. 45,00,000/- as undisclosed income. The Assessing officer has made the addition on ground of information based on DDIT(lnv),Unit- 1 (3), Kolkata. As per the information, the assessee has obtained accommodation entries in the form of unsecured loans from the aforesaid three companies. Further, the three companies were managed and controlled by Shri Vinod Kumar Jajoo and during the proceedings he had admitted in his statement that he was providing accomodation entries to vairous beneficiaries companies in lieu of commission. The assessee company was found to be one of the beneficiaries and the the amount of Rs.45,00,000/- transferred from the account of the abvoe three companies to the account of the assessee company remained unexplained. The AO was given adequate opportunity to the assessee company by statutory notices on different dates through speed post or email etc. to furnish the details/explain the aforesaid transactions before the AO. The assessee company has not objected, the procdure followed for services of notices are valid and unlawful. The assessee company had not complied with the details on the served notices. The AO had issued final show cause notice on 22.10.2019 and it was requested to comply with all the details on or before 28.10.2019 with categorically mentioned that if it failed to comply with the detials requisitioned alongwith supporting

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documentry evidences, the assessment would be assessed on the basis of available of records. However, the assessee company failed to comply with the final show cause notice issued as none of the directors of the company nor any authorized representative attended the proceedings on the given date of hearing. In the assessment order the AO clearly mentioned that the assessee has not produce the written submission as well as documentry evidences during the assessment proceedings. The AO had issued a notices u/s 133(6) of the Income tax Act, 1961 on 23.09.2019 to all the three companies i.e. Muskan Distributors Pvt.Ltd., Subhlabh Prints Pvt. Ltd and Koel Tradecom Pvt. Ltd. through speed post or e mail etc but none of the companies replied to the notices. The AO mentioned in his order the assessee company was one of the beneficiaries in securing amount of Rs. 45,00,000/- from the aforesaid three companies which were not carrying any genuine business activity only indulged in providing accomodation entries to the beneficiary companies in lieu of commission. Sri Vinod Kumar Jajoo was one of the person who was arranging these transactions. He had given statement before the investigation wing and recorded by the ADIT(lnv) Raipur at the office of ITO(lnv./),Unit-1,Kolkata on 05.10.2017. Sri Vinod Kumar Jajoo admitted that he has managed and controlled the above three Kolkata based company for the purpose of providing accomodation entreies to vairous companies.

Sri Vinod Kumar Jajoo again reconfirmed his statement before the DDIT(lnv.), Unit- 1(3),Kolkata on 29.11.2017. The assessee company has failed to comply with the details in response to the notices and also failed to comply with the final show cause notice and to explain the transaction of arranging money of Rs. 45,00,000/- from three companies based in Kolkata. Therefore, the AO has no option amount of Rs. 45,00,000/- is added to the total income of the assessee company u/s 68 of the Income tax Act, 1961.

In view of the above discussion and ground no 2: In the appellant proceedings before me, the appellant stated in his submission reason record not provided by the AO but in the assessment order in para 1, the AO clearly mentioned that “the reasons and duly obtaining approval from the competent authorities issued a notice u/s 148 of the Act to the assessee company on 22.03.2019 which was duly served upon the assessee”. Hence, the appellant contention that the reasons for reopening of the case was not provided which is not correct. Further, the case laws relied upon by the assessee are clearly not applicable to the fact of the case. Hence, the A.O. had got specfic information from the investigation wing and on that the A.O has formed the opinion. Reliance is placed upon the judgement of Hon’ble

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Supreme Court in the case of Raymond Woollen Mills vs. I.T.O 236 CTR 34, where it has been held by Hon’ble Supreme Court that the A.O. is justified in forming his opinion on any material availble on record. On the second issue regarding ground no. 1 & 3 : The appellant has not substantiated that the loan amount of Rs. 45,00,000/- was taken from aforesaid three companies i.e. Muskan Distributors Pvt.Ltd., Subhlabh Prints Pvt. Ltd and Koel Tradecom Pvt. Ltd. is genuine and not accommodation entries. It is clearly seen that the loan transactions with this entity/persons are not genuine transactions and was entered to avoid the payment of legitimate taxes. In view of the facts, the entire loans of Rs. 45,00,000/- during the year are treated as unexplained income. It is the duty of the assessee to prove the identity, capacity and the genuineness of the transactions done. It is also his duty to file confirmation with the PAN when the lender is assessed to tax. Since, the assessee is not inclined to provide the current whereabouts of the person as well as to produce him for verification, it is evident that the affidavit provided by the appellant has failed to prove the genuineness and on the very fact that the statements given has more weightage legally, as the same has been given before independent witnesses. Even at the appellate stage before me, no details has been filed like laon confirmations and other related detils to proof the identity, capacity and the genuineness of the transactions. Hence, at both the stages, before A.O and before me, the assessee had failed to provide any details to prove the genuineness of the transactions. In this regard, the Judgment in favour of revenue Hon’ble Calcutta High Court in the decision of CIT vs M/s Precision Finance Pvt. Ltd. Reported at 208 ITR 465 stated that mere transacting through banking channels is not sacrosanct. Hence, in view of the above discussion the addition of the AO is confirmed and the appeal of the assessee is dismissed.

3A. We find merit in the Revenue’s vehement arguments supporting

the impugned addition. Hon’ble apex court’s landmark judgment n

Sumati Dayal Vs. CIT (1995) 214 ITR 801 (SC) and CIT Vs. Durga

Prasad More (1972) 82 ITR 540 (SC) as well as PCIT Vs. NRA Iron

and Steel Ltd. (2010) 412 ITR 161 (SC) have settled law that all the

corresponding evidence(s) submitted in income-tax proceedings ought

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to be examined in the light of human probabilities, after removing all blinkers. And that mere submission of documents do not discharge the concerned assessee from proving the genuineness and credit worthiness thereof. We keep in mind these settled legal principles and note from the perusal of the instant case file that the assessee could not prove the genuineness/creditworthiness of the impugned cash credits amounting to Rs.45.00 lakhs from Kolkata based accommodation entry operators. We thus confirm the impugned addition in very terms. The assessee fails in its sole substantive grievance. 4. Delay of 62 days in filing the instant appeal instituted on 06-12-2021 is condoned since falling in Covid-19 pandemic outbreak period. 5. This assessee’s appeal is dismissed in above terms. Order pronounced in the open Court on 09th December, 2022.

Sd/- Sd/- (DIPAK P. RIPOTE) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे Pune; �दनांक Dated : 09th December, 2022 Satish

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आदेश क� ��त�ल�प अ�े�षत/Copy of the Order is forwarded to:

आदेशानुसार/ BY ORDER,

// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

Date 1. Draft dictated on 29-11-2022 Sr.PS 2. Draft placed before author 06-12-2022 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.