Income Tax Appellate Tribunal - Delhi
Nimbus Multicommodity Brokers Pvt. ... vs Dcit, Cc-2, Noida on 12 January, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'E', NEW DELHI
Before Sh. Amit Shukla, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
(Through Video Conferencing)
ITA No. 925/Del/2021 : Asstt. Year : 2010-11
ITA No. 926/Del/2021 : Asstt. Year : 2011-12
ITA No. 927/Del/2021 : Asstt. Year : 2012-13
ITA No. 928/Del/2021 : Asstt. Year : 2013-14
ITA No. 929/Del/2021 : Asstt. Year : 2014-15
Nimbus Project Ltd., Vs DCIT,
1001-1006, Narain Manzil, 23, Central Circle-2,
Barakhamba Road, New Delhi-110001 Noida
(APPELLANT) (RESPONDENT)
PAN No. AAACN0116H
ITA No. 923/Del/2021 : Asstt. Year : 2012-13
Nimbus Multi commodity Brokers Pvt. Vs DCIT,
Ltd. (formerly Nimbus Multi commodity Central Circle-2,
Brokers Ltd.), 1001-1006, Narain Noida
Manzil, 23, Barakhamba Road,
New Delhi-110001
(APPELLANT) (RESPONDENT)
PAN No. AAACN2195G
ITA No. 924/Del/2021 : Asstt. Year : 2012-13
Bipin Agarwal, Vs DCIT,
1001-1006, Narain Manzil, 23, Central Circle-2,
Barakhamba Road, New Delhi-110001 Noida
(APPELLANT) (RESPONDENT)
PAN No. AEWPA2901C
Assessee by : Sh. Rajiv Khandelwal, CA
Revenue by : Ms. Deepshikha Sharma, CIT DR
Date of Hearing: 11.11.2021 Date of Pronouncement: 12.01.2022
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Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021
Bipin Agarwal
ITA Nos. 925 to 929/Del/2021
Nimbus Project Ltd.
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal s have been fil ed by the assessee and the assessee agai nst the orders of the l d. CIT(A), Kanpur-4 dated 19.07.2021.
2. Si nce, the i ssues i nvol ved in all these appeal s are i denti cal , they were heard togeth er and bei ng adjudi cated by a common order.
3. In ITA No. 925/Del /2021, foll owi ng grounds have been rai sed by the assess ee:
"1. The Commissioner of Income -tax (Appeals) - 4, Kanpur (hereinafter referred to as the CIT(A)) erred in upholding the action of the Deputy Commissioner of Income tax, Central Circle, Noida (hereinafter referred to as the Assessing Officer)in issuing notice under section 153 A of the Act.
The appellants contend that on the facts and in the circumstance of the case and in l aw, the notice issue d under section 153A is ab initiovoid inasmuch as the jurisdictional conditions for the issue of the said noti ce have not .been complied with and consequently, the assessment framed is bad in law and needs to be quashed.
The appellants further, contend th at on the facts and in the circumstances of the case and in law, the CIT(A) erred in confirming the action of the Assessing Officer in assuming jurisdiction and framing the assessment orde r under section 153 A of the Act.3 ITA No. 923/Del/2021
Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
2. The Assessing Officer and the appropriate authority under section 153D erred in not prope rly complying with the provisions of section 153D of the Act.
The appellants contend that on the facts and in the circumstances of the case and in law, the Assessing Officer and the appropriate aut hority under section 153D ought to have appropriately complied with the provisi ons of section 153D of the A ct and having not so complied, the entire assessment proceedings are bad in law and thus, the impugned assessment orde r needs t o be quashed.
3. The CIT(A) erred in upholdi ng the action of the Assessing Officer in making an addition of Rs 34,00,000 under section 68 of the Act, being unsecured loan obtained from Kaypee Mercantile Private Limited on the ground that that the appellants have failed to prove the identity, creditworthiness and gen uineness of the lender and therefore, the loan obtained is unexplai ned.
The appellants contend that on the facts and in the circumstances of the case and in law, the impugned addition is made on patently erroneous facts and law, and hence, not tenable; thus, requires to be deleted. Further, the said loan has been repaid during the year under reference and hence, the impugned addition ought not to have been made by the Assessing Officer.
The appellants further, contend that the appellants have paid interest Rs . 2,06,137 on the said loan which has been allowed by the Asses sing Officer and thus, the Assessing Officer has fallen in error in making addition of the impugned loan under reference received from Kaypee Mercantile Private Limited.
4. The CIT(A) erred in upholdi ng the action of the Assessing Officer in charging inte rest under section s 234A, 234B and 234C of the Act, respectively.4 ITA No. 923/Del/2021
Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
The appellants contend that the Assessing Officer ought not to have charged impugned interest under section s 234A, 234B and 234C inasmuch as -
(a) the Assessing Officer has not given an opportunity to the appellants before charging the said interest as required by ;the principles of nature justice.
(b) the charging of interest is n ot in accordance with law."
4. A search & sei zure ope rati on u/s 132 of the Income Tax Act, 1961 was conducte d on 26.0 8.2015 at the premi ses of the assessee compri sing IITL Ni mbus Group of cases. The assessee was engaged i n real estate busi ness i n and around NCR.
5. Consequent to the search operati on, noti ces u/s 153A have been i ssued to the assessee. In response, the asse ssee fil ed i ts return showi ng income of Rs.1,78,02,041/- for A.Y. 2010 -11, Rs. 3,40,02,769/ -for A.Y . 2011 -12, Rs. 2,89,00 ,780/ - for A.Y . 2012-13, Rs. 5,88,11,000/ - for A.Y. 2013 -14 & Rs. 1,13,46,070/ -for A.Y. 2014-15. The assessments have been compl eted u/s 153A making the foll owi ng adjustments to the i ncome of the assessee.
6. Addi ti on made by the AO:
A . Y. H e ad o f a d d it io n A d d it io n Re fe re n ce Da t e o f fi lin g o f to s e iz ed o rig in a l re t u rn m a t e ria l:
ye s /No Ni mb us P r o jects Ltd.
2 0 1 0 -1 1 U n s ec u red lo a n 34, 00, 000 No 20. 09. 2010 2 0 1 1 -1 2 U n s ec u red lo a n 1, 50, 00, 000 No 23. 09. 2011 2 0 1 2 -1 3 U n s ec u red lo a n 20, 90, 00, 000 No 28. 09. 2012 5 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
2 0 1 3 -1 4 S h a re p rem iu m 25, 50, 00, 000 No 25. 09. 2013 2 0 1 4 -1 5 S h ar e p r emi u m 2 1 , 0 0 , 00 , 0 0 0 No 3 0 . 0 9 . 20 1 4 Ni mb us M u l ti co mmod i ti es Br o k ers Pv t. Ltd . 2 0 1 2 -1 3 S h a re p rem iu m 2, 00, 00, 000 No 19. 09. 2012 B i p i n A g arwal 2 0 1 2 -1 3 U n s ec u red lo a n s 2, 50, 00, 000 No 08. 09. 2012
7. Accordi ng to the provi si ons of Secti on 143(2), no noti ce shall be served on the assessee after expi ry of 6 months from the end of the F.Y. i n whi ch the return i s furni shed the ti me li mit for i ssue of noti ce for the A.Y. 2014 -15 stands expi red.
8. At the outset, it wa s argued by the l d. AR that no i ncri mi nati ng materi al bel ongi ng to the assessee was found and sei zed during the course of search & sei zure operati ons u/s 132 of the IT Act on Nimbus Group. He reli ed on the arguments taken before the l d. CIT(A), the crux of the case l aws referred i n those arguments i s as under:
"Delhi High Court has expl ained the l egal positi on that emerges as under:
(i ) "Once a search takes pl ace under secti on 132, noti ce under secti on 153A(1) will have to be mandat ori l y i ssued to the person searched requi ri ng hi m to fil e returns for si x assessment years i mmedi atel y precedi ng the previ ous year rel evant to the assessment year i n whi ch the search takes pl ace.
(ii ) Assessments and reassessments pendi ng on the date of the search shal l abate . The total i ncome for such assessment 6 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
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years will have to be computed by the Assessi ng Offi cers as a fresh exerci se.
(iii) The Assessi ng Offi cer will exerci se normal assessment powers i n respect of the six years previ ous to the rel evant assessment year i n whi ch the search l akes pl ace. The Assessi ng Offi cer has the power to assess and reassess the 'total i ncome' of the aforementi oned si x years in separate assessment orders for each of the si x years. In other words there wi ll be onl y one assessment order i n respect of each of the si x assessment years 'i n whi ch both the di scl osed and the undi scl osed income woul d be brought to tax'.
(i v) Al though secti on 153A does not say that addi ti ons shoul d be stri ctly made on the basi s of evi dence found i n the course of the search, or other post -search materi al or i nformati on avail abl e wi th the Assessi ng Offi cer whi ch can be rel ated to the evi dence found, i t does not mean that the assessment 'can be arbi trary or made wi thout any rel evance or nexus with the sei zed materi al . Obvi ousl y an assessment has to be made under thi s secti on onl y on the basi s of sei zed materi al .
(v) In absence of any i ncri mi natin g materi al , the compl eted assessment can be rei terated and the abated assessment o r reassessment can be made . The word 'asse ss' i n secti on 153A i s rel atabl e to abated proceedi ngs (i .e., those pendi ng on the date of search) and the word 'reassess' to compl e te assessment proceedi ngs.
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(vi) In sofar as pendi ng assessments are concerned, the juri sdi cti on to make the origi nal assessment and the assessment under secti on 153A merges i nto one. Onl y one assessment shall be made separat el y for each asse ssment year on the basi s of the fi ndi ngs of t he search and any other materi al exi sting or brou ght on the record of the Assessi ng Offi cer.
(vii) Compl eted assessments can be i nterfered wi th by the Assessi ng Offi cer whil e maki ng the assessment under secti on 153A onl y on the basi s of some i ncrimi nati ng materi al unearthed duri ng the course of search or re qui si ti on of documents or undi scl osed i ncome or property di scovered i n the course of search whi ch were not produce d or not al ready di scl osed or made known in the course of ori gi nal assessment.
Hon'bl e Bombay High Court i n the case of CIT vs. Conti nental Wareh ousi ng Corporati on (Nhava Sheva) Ltd. (58 taxmann.com
78) wherein i t has been hel d as under:
"31. We, t herefor e, hold that the Special Bench's und erstanding of the legal provision is not perverse n or does it suff er from any error of law apparent on th e fac e o f the r ecord. The Special Bench in that regard held as under:
"48. The provision under s ection 15 3A is applicable where a search or requisition is initiated after 31.5.2003. In such a case the AO is obliged to issue notice u/s 153A in respect of 6 preceding years, preceding the y ear in which s earch etc. has been initiated . Thereaft er he has to ass ess or reassess the total income of these si x years. It is obligatory on th e part of th e AO to assess or r eassess 8 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
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total income of the six y ears as provided in section 153 A(1)( b) and reiterated in the 1 s t proviso to th is section. T he second proviso states that the assessm ent or r eassessment pending on t he date o f income which was vest ed in him earlier independent of th e searc h and which came to an end du e to init iation of the search.
50. The provision contained in section 1 32(1) e mpowers the of ficer to issue a warrant of search o f t he premises of a person wh ere any one or more of co nditions mention ed the rein is or are satisfied, i.e.
a) summons or notice has been issu ed to produce books of accoun t or other documents but such books of account or documents have not been produced, b) summons or notice has been or might b e issued, he will not produce th e book s of account or ot her documen ts mentioned th erein, or c) he is in pos session of any money or bullion etc. which repres ents wholly or partly the income or property whic h has not been and which would not be disclosed for th e purpose o f assessment, called as undisclosed income or property. We find that the provision in sec tion 1 32 (1) do es not use th e word "incriminating document". Cla uses (a) and (b) of s ection 1 32(1) employ the words "books of account or ot her documents". For harmonious interpretation of this provision with provision contained in section 153A, all the three co nditions on satisfaction of which a warrant of search can b e issued will have to be taken into accoun t.
51. Having held so, an assessment or reassessment u/s 15 3 A arises only when a search has been initiated and conduct ed.
Therefor e, such an assessm ent has a vital link with th e initiation and conduct of th e search. We have m entioned that a s earch can be authori zed on satisfaction of one o f the t hree conditions enum erated earlier. Therefore, while interpreti ng the provision contained in section 153 A, all these conditions will have to be taken into account.
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With this, we proceed to lit erally int erpret to provision in 153 A as it exists and read it alongside th e provision contained in sectio n 132(1).
52. The provision comes in to operation if a search or requisition is initiated after 3 1.5.20 03. O n satisfac tion of this condition, t he AO is under obligation to issue notice to the person requiring him to furnish th e return of income of six years immediately prec eding th e year of s earch. The word used is "sh all" and, thus, there is no optio n but to issue such a notice. Ther eaft er he has to assess or reassess total incom e of th ese six years. In th is respect also, the word used is "shall" and, therefor e, th e AO has no option but to assess o r reassess the total income of t hese six y ears. The pending proceedings shall abate. This mean s that out of si x y ears, if any assessment or reassessmen t is pending on the date of initiation of the search, it shall abate. In oth er words pending proceedings will not be proceeded with th ereafter. The assessmen t has now to be made u/s 153A ( 1)(b) and the first proviso. It also means that only one ass essment will be made under th e aforesaid provisions as the two proceedings i.e. assessmen t or reassessmen t proceedings and proceedings under this provision mer ge into one. If assessmen t made under sub -sec tion (1) is annulled in appeal or oth er l ega l proceedings, then t he abated ass essment or reassessmen t shall revive. This means that the assessm ent or r eassessmen t, which had abated, shall be made, for which ext ension of time has been provided under section 1 53B.
53. The question now is what is t he scope o f assessm ent or reassessment of to tal income u/s 153A (1) (b) and the firs t provision? We are of th e view tha t for answering this question, guidance will have to be sough t from section 132( 1). If any books o f 10 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
account or other documen ts relevan t to the assessmen t had not been produced in the cours e of original assessment and found in the course of s earch in our humble opinion such books of account or other documents have to be tak en into account while making assessment or reass essment o f tot al income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequ ence of search. In oth er words, harmonious interpretation will produce the following results: -
a) In so far as pending assessments are concern ed, the jurisdiction to make original assessment and assessment u/s 1 53A merge int o one and only one assessm ent for each assessment year shall be made separately on the basis of the findings of the search and an y other material existing or brought on the r ecord of th e AO.
(b) In respect of non -abated asses sments, th e assessment wilt b e made on the basis of books of account or other documents no t produced in the cours e of original assessment but found in th e course of search, and undisclosed income or undisclosed property discovered in the course o f search.
54. It may be men tioned here that Ld. C ounsel for All Cargo Global Logistics Ltd. was questioned about the scope of pending assessments as it was his contention th at all six assessments are to be made, if necessary, on the basis of undisclosed income discovered in the course o f search. He was specifically questioned about th e jurisdiction of the AO to make o riginal assessment along with assessment u/s 15 3A, merging into o ne. However h e took an evasiv e view submitting that this question n eed no t b e decided in his case although the qu estion of jurisdiction u/s 1 53A was veh emently 11 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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pressed on account of which ground No. 1 in th e appeal for assessment y ear 2004 - 05 was adm itted as additional around. He also wanted the additional ground to be retained in ca se of any future contingency."
9. The l d. AR submi tted that duri ng the year under consi derati on, the Assessi ng Offi cer had not accepted the i ncome offered by assessee and made the addi ti on whi ch was not based on any i ncri minati ng documents found duri ng the course of search acti on. Thi s fact can be verifi ed form the assessment order, wherei n the Assessi ng Offi cer had not menti oned anything about the i ncri mi nati ng docume nts sei zed duri ng the course of search acti on. The addi ti on has been made merel y on the basi s of so cal l ed i nvesti gati on report recei ved from Kol kata. In spi te of extensive search procee di ngs carri ed out at the premi ses of the appellant, no i ncri minati ng e vi dence whatsoever was found.
10. It was further argued that now a well deci ded judi ci al pri nci pal that the assessments made under secti on 153A wi thout any i ncri mi nati ng materi al bei ng found duri ng the search acti on are not i n accordance wi th l aw and the consequenti al resul t i s that the return/ori ginal assessments whi ch have acqui red finality are to be rei terated. Therefore, i t i s submi tted that the addi ti ons made by the AO otherwi se than on the basi s of i ncri mi nati ng evi dences found duri ng the course of s earch are bad i n l aw and deserve to be deleted.
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11. In the li ght of the above arguments, we have perused the orde r of the l d. CIT(A).
8. Di scussi on & deci si on on l egal Grounds of these cases by the Ld. CIT(A):
8.1 Ground nos. 1 & 2 for al l the assessment years pertai n to l egal challenge to t he noti ce u/s 153A of the Act. It i s al so submi tted by the l d. A.R. of the appel l ant that order u/s 153A of the Act i s i nvali d i n absence of i ncri mi nati ng materi al found as a resul t of search for these rel evant assessment years i n appeal s. Appel l ant al so pl aced reli ance on the foll owi ng case l aws:
i. CIT v. Kabul Chawl a (2016] 380 ITR 573/(2015) 234 Taxman 300/61 taxmann.com 412 (Del hi ), ii . All Cargo Gl obal Logi sti cs Li mited Vs. DCI T [2012] 18 ITR 106, iii . ACIT, Central Ci rcl e -16, New Delhi vs. Vi nita Chaurasi a , ITA No. 5957/DEL/2015 dated 05.10.2018, i v. ACIT, Central Ci rcl e -4, New Del hi vs. M/s. Mool chand Steel s Pvt. Ltd., ITA No. 2544/DEL/ 2015 dated 10.10.2018 etc. 8.2 Undersi gned has carefull y consi dered the submi ssi on and the case l aws ci ted by the appellant. However, consi deri ng the express provi si ons of secti on 153A of the Act, undersi gned woul d li ke to di ffer wi th the submi ssi on of the appell ant, because secti on 15 3A of the Act cl early provi des the power t o AO to assess/reassess the cases of person searched u/s 132(1) 13 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
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of the Act for i mmedi ately si x precedi ng years. Secti on 153A of the Act does not provi de exi stence of incri minati ng ma teri al as essenti al requi rement. In the opi ni on of the undersi gned, the acti on u/s 132/132A of the Act woul d automati call y tri gger the provi si ons of secti on 153A of the Act for computati on of total i ncome of the appell ant. Thi s provi si on does not rest ri ct the Assessi ng Offi cer to take ac tion in those cases where assessment has al ready been compl eted. Si nce, the AO has ri ghtl y exerci sed hi s powers to assess/reassess the case u/s 153A of the Act. The undersigned fi nds no force in the submi ssi on of the appell ant and therefore, thi s ground is di smi ssed.
8.3 The contenti on of the i d. A.R. i s al so not acceptabl e after pl aci ng reli ance on foll owi ng judi cial pronouncements:
In the case of E.N. Gopakumar Vs. CIT (2016) 75 taxmann.com 215 (Keral a)], Hon'bl e Kerala High Court hel d that assessment proceedi ngs generated by i ssuance of a noti ce under secti on 153A(1)(a) can be concl uded agai nst i nterest of assessee i ncl udi ng maki ng addi ti ons even wi thout any i ncrimi nati ng materi al bei ng avail abl e agai nst assessee in search under secti on 132 on basi s of whi ch noti ce was i ssued under secti on 153A(1)(a).
The above orde r has been pa ssed after consi deri ng cases of:
i. CIT vs. Kabul Chawl a [2016] 380 ITR 573/(2015) 234 Taxman 300/61 taxmann.com 412 (Del hi ), 14 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
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ii . CIT vs. Conti nental Warehousi ng Corpn. (Nhava Sheva) Ltd. [2015] 374 ITR 645/232 Ta xman 270/58 taxmann.com 78 (Bom.), iii . Pri nci pal CIT v s. Kurel e Paper Mill s (P.) Ltd. [201 6] 380 ITR 571 (Del hi), i v. CIT vs. Lancy Constructi ons [ 2016] 383 ITR 168/237 Taxman 728/66 taxmann.com 264 (Kar.) v. CIT vs. ST Franci es Cl ay Decor Til es [2016] 240 Taxman 168/70 taxmann.com 234 (Ker.) and vi . CIT vs. PromyKuri akose [2016] 386 ITR 597 (Ker.) Further, i n the case of CIT Vs . Raj Kumar Arora [2014] 52 taxmann.com 172 (All ahabad/2014) 367 ITR 517 (All ahabad) -
Hon'bl e Allahabad High Court h el d that Assessi ng Offi cer has power to reassess returns of asse ssee not onl y for undi scl osed i ncome found duri ng search operati on but al so wi th regard t o materi al avail abl e a t time of ori gi nal assessment.
Si mil arl y, i n the case of CIT Vs. Kesarwani Zarda Bhandar Sahson Al l d. i TA No. 270 of 2014 (All ahabad), Hon'bl e Allahabad High Court hel d that Assessi ng Offi cer has power to reassess returns of assessee not only for undi scl osed i ncome found duri ng search operati on but al so wi th regard to m ateri al avail abl e at time of ori gi nal assessment.
Al so, in the case of CIT Vs. St. Franci s Cl ay Decor Tiles (385 ITR 624)-Hon'bl e Kerala High Court hel d that noti ce i ssued under secti on 153A-return must be fil ed even if no i ncrimi nati ng documents di scovered duri ng search.
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In the case of CIT Vs. Anil Kumar Bhati a (24 taxmann.com 98 , 211 Taxman 453, 352 ITR 493)- Hon'bl e Delhi High Court hel d that juri sdi cti on of AO under 153A i s to assess total i ncome for the year and not restri cted to sei zed materi al Post search reassessment i n respect of all 6 years can be made even i f ori gi nal returns are al ready processed u/s 143(1 )(a) - Assessi ng Offi cer has power u/s 153A to make assessment for all si x years and compute total income of assessee, i ncl udi ng undi scl osed i ncome, notwi thstandi ng that returns for these years have al ready been processe d u/s 143(1 )(a). Even i f assessment order had al ready been passed i n respect of all or any of those si x assessment years, ei ther under secti on 143(1 )(a) or secti on 143(3) pri or to ini ti ati on of search/requi si ti on, still Assessi ng Offi cer i s empowered to reopen those procee di ngs under secti on 153A wi thout any f etters and reassess total income taking note of undi scl osed i ncome, i f any, unearthed duri ng search.
In the case of Fil atex Indi a Ltd Vs . CIT (49 taxmann.com 465) - Hon'bl e Delhi High Court hel d that duri ng assessment under secti on 153A, additi ons need not be restri cted or li mited to i ncri mi nati ng materi al , found duri ng course of search.
8.4 In vi ew of the detail ed di scussi on menti oned here -i n-above and consi deri ng the judi ci al pronouncements ci ted here -in- above, l egal grounds of appeal of the appell ant ar e hereby di smi ssed for all assessment years.
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12. At the end of the arguments, the ld. AR submitted that owing t o the different r atio laid down by the differen t Hon'ble High Courts , the legal issue would not be pressed if the matt er is decided on merits of the case. Since, th e Bench decided on m erit s of the case, th e jurisdictional/legal issue is not requir ed to be adjudicat ed.
Discussion & decision on merits of thes e cases:
13. A.Y. 2010-11, A.Y . 2011-12 and A.Y. 2012-13 pertai n to addi ti on of Rs.34,00,000/-, Rs.1,50,00,000 an d Rs.20,90,00,000 re specti vel y on account of unsecured l oans recei ved from M/s. Kaypee Mercantile Pvt . Ltd. and M/s. Ci ndy Goods & Suppl y Pvt. Ltd.
A.Y. Amount Nature Recei ved from
2010-11 34,00,000 Unsecured Loan Kaypee Mercantil e
Pvt. Ltd.
2011-12 1,50,00,000 Unsecured Loan Ci ndy Goods &
Suppl y Pvt. Ltd.
2012-13 20,90,00,000 Unsecured Loan Ci ndy Goods &
Suppl y Pvt. Ltd.
ITA No. 925 /Del/2021 for A.Y . 2010 -11
Kaypee Mer cantile Pvt. Ltd.:
14. Wi th regard to Kaypee Mercanti le Pvt. Ltd., the revenue all eged that before remitti ng the funds to the assessee, the l ender recei ved funds of si mil ar amounts. The l ender had no capaci ty to l end the money si nce no suffi ci ent bal ance i s bei ng 17 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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mai ntained by the l ender i n i ts bank statement. Further, the assessee and l ender has been asked to expl ai n the source of funds received by the l ender which i s thereafter given to the assessee, n o detai l s were furni shed. The revenue further hel d that these compani es are paper compani es of known accommodati on entry operati ons. The revenue al so reli ed on the l etter of the Deputy Di rector (Inv.), Uni t -II, Kol kata i n response to the commi ssi on i ssued u/s 131(1)(d) dated 14.10.2015. Hence, the i denti ty, credi tworthiness and the genui neness of the source of funds coul d not be expl ai ned.
15. Aggri eved the assessee filed appeal before the l d. CIT(A).
16. Wi th regard t o the Kaypee Me rcantil e Pvt. Ltd., the l d. CIT(A) dul y consi dered th e report of the Inspector of the Kol kata Investi gati on Uni t whi ch i s as under:
"As directed by the DDI T(Inv.), Unit - 2(2), we visited the place at the given address. No office of suc h entity has been found th ere. No signboard in the name of suc h company was noticed anywhere in th e building. We enquired with th e loca l inhabitants but nobody could give any information about the said c ompany. Thus, th e company has not been found to exist at th e given address."
17. The report al so i ndi cates that summons coul d not be served.
18. The ld. CIT(A) held that th e t otal income in th e ITR for the relev ant assessment y ear of the lender company was Rs.45,540/- and since the credits preceded the deb its 18 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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in the bank account on the s ame dat es, th e creditworthiness of t he lender cannot be considered as genuine. The ld. CIT(A ) has r elied on the judgm ents of various Courts which are as un der:
CIT Vs Mai than Internati onal 375 ITR 123 (Cal .) B.R. Petrochem (P.) Ltd. Vs. I T O 81 taxmann.com 42 4 (Madras) Ri ck Lunsford Trade & Investment Ltd Vs. CIT 2016-TIOL- 207-SC-IT Navodava Castl e Pvt . Ltd. Vs. CIT 230 Taxman 268 (SC) PCIT Vs. Vi kram Si ngh (2017) 85 taxmann.com 104 (Del .) CIT Vs. N.R . Portfoli o Pvt. Ltd. in ITA No. 1018, 1019/2100 (Del .) Pragati Fi nanci al Management Pvt. Lt d. Vs. C IT i n C.A. 887 & 998 of 2016 & others CIT vs. Nova Prom oters & Fi nl ese (P) Ltd. 342 ITR 16 9 (Del .) CIT vs. D.K. Garg 84 taxmann.com 257 (Del .) and many other judgments whi ch have been dul y perused. In nutshell , the l d. CIT(A) has confi rmed the addi ti on sol el y based on A. The returned i ncome of the l ender company was meager B. There were credi ts i n the bank account before i ssue of the l oan.19 ITA No. 923/Del/2021
Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
19. Before us, duri ng the arguments, the l d. AR submi tted that the revenue authori ti es fail ed to appreci ate the detail s provi ded duri ng the proceedi ngs to e stabl i sh the i denti ty, genuineness and credi tworthi ness of the transacti on undertaken by the assessee wi th the above menti oned party:
PAN and address of the party Copy of Ledger C onfi rmati on Copy of Bank Statement of appell ant Copy of ITRs, Bal ance Sheet and Profi t and l oss statement of the l ender Copy of Inter C orporate Deposi t Agreement between appel l ant and M/s KMPL Repl y to noti ce i ssued u/s 133(6) of the Act f il ed by M/s KMPL Copy of Bank statement of the l ender di scl osi ng source of l oan Confi rmati on of accounts of appell ant i n books of l ender etc.
20. Thus, i t was argued that i t i s cl early evi dent that the assessee has di scharged i ts onus of provi ng the requi rements of Secti on 68 of the I .T. Act i .e. i dentity of party, genui neness of the transacti on and credi tworthi ness of the party by provi di ng extensi ve evi dences. It was further argued that the observati on of the revenue that the l ender M/s KMPL was bei ng operated by a certai n person namel y, Mr. Deepak Pat awari who was an entry operat or i s wrong on facts. The AO has not brou ght anythi ng on record to expl ai n as how such a concl usi on was drawn. It was 20 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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argued that Mr. Deepak Pat awari was nei ther a Di rector nor a Sharehol der i n the company. The revenue authori ti es merely stated that i t became evi dent from the "database" and no reference has been made known t o the assessee nor confronted to the assessee whe reas the revenue itsel f accepted that the l ender i s an establi shed joi nt stock company li sted at Bombay Stock Exchange .
21. The l d. AR further reli ed on the foll owi ng case l aws:
CIT Vs. Ori ssa Corporati on P. Ltd . 159 ITR 78 (SC) PCIT-4 vs. Hi -Tech Resi dency Pvt. Ltd. (96 taxmann.com
403) (SC) CIT-1 vs. Apex Therm Packagi ng Pvt . Ltd. (42 taxmann.com 473) (Guj.) Anand Prakash Agarw al v d. ACIT 6 DTR 191 (All .) CIT vs. Jauhari mal Goel 147 Taxman 448 (All .) S. Hasti mal vs. CIT 49 1TR 273 (Mad.) Tol aram Daga vs. CIT 59 ITR 632 (Assam) CIT vs. Daul at Ram Rawatmull 87 ITR 349 (SC) Sarogi Credi t Corpn. v s. CIT 103 ITR 344 (Pat.) ACIT(Inv.) vs. Shree Ram Hard Coke & Alli ed Industri es 1 MTC 780 ITO vs. M.S. Advance (P.) Ltd. 188 Taxati on 181 (Tri b.) Vi nod Kumar Bhandari v s. ACIT 174 Taxati on 49 (Tri b.) Addl . CIT vs. Bahri Bros. (P.) Ltd. 154 ITR 244/22 CIT vs. Gangeshwari Metal Pvt . Ltd. (ITA No. 597/ 2012) (Del .) Nemi chand Kothari vs. CI T 264 ITR 254 (Gau.) 21 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
22. Heard the arguments of both the parti es and perused the materi al avail abl e on record.
23. From the record, we fi nd that the sol e reason for confi rmi ng the addi ti on was l ow income tax return i n the year of i ssue whereas it was contended that i t i s not the case for the subsequent years. Duri ng the assessment proceedi ngs, the l ender has furni shed that all the detail s i n response to th e noti ce i ssued by the Assessi ng Offi cer u/s 133(6). The repl y dated 21.12.2017 fil ed before the AO has been perused. Subsequent to the recei pt of the repl y from the l ender, the AO di d not conduct any further enqui ry. The report of the DDIT(Inv.), Kol kata reli ed upon by the l d. CIT(A) and the AO was much before 21.12 .2017 i .e. wi th response to the l etter i ssued by the DDIT(Inv.), Noi da on 14.10.2015. It i s apparent from the facts on record, whil e as per the report of 20 15, the noti ce u/s 131 coul d not be served whereas duri ng the assessment proceedi ngs i n 2017, the enti re detail s have been submi tted by the assessee. The response to the noti ce i ssued u/s 133(6) was full and comprehensi ve. The amounts have been recei ved by the assessee on 27 .0 7.2009 of Rs.16,00 ,000/ - and Rs.18,00,000/ - on 31.07.2009 as ICD beari ng i nterest of 9%. The same has been repai d on 07.01.2014 al ong wi th the i nterest agreed upon. The date of search i n the group was conducted on 26.08.2015. Havi ng ex ami ned the recei pt of l oan i ndependentl y di sregardi ng the date of search, we fi nd that the assessee di scharge the onus, prov ed the recei pt and repayment of the l oan recei ved al ong wi th the i nterest and the same i s al so 22 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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been brought before the Assessi ng Off i cer duri ng the assessment proceedi ngs. Hence, the reasons gi ven by the revenue authori ties for treating the l oan amount u/s 68 i s factuall y and l egally not vali d. Hence, we hereby di rect the addi ti on made be obli terated.
24. In the resul t, the appeal i n ITA 925/Del /2021 for A.Y. 2010-11 i s all owed.
ITA No. 926/Del/2021 for A.Y . 2011 -12 ITA No. 927/Del/2021 for A.Y . 2012 -13Cindy Goods & Supply Pvt. Ltd. :
25. Wi th regard to unsecured l oan recei ved from Ci ndy Goods & Suppl y Pvt. Ltd., the assessee was asked by the AO vi de l etter dated 22.09.2017 to furni sh the confi rmed copy of account, bank statement and copies of ITRs, bal ance sheet and profi t & l oss account. In response to the l etter, the assessee submi tted copy of ITR, Bank statement, confi rmati on f rom the l ender. The assessee al so submi tted a copy of l oan facili tati on agreement whi ch i s si gned by i ndependent wi tnesses. It was submi tted that the l ender company was establi shed i n 1995 and regi stered with ROC Kol kata, the Di rectors bei ng Sh. Mandan Gopal Sharma and Sh. Vi rendra Tri pathy. The substanti al sharehol der of thi s company i s held by two enti ti es namely, M/s Bonanza Vani jya Pvt. Ltd. and M/s Bri jdham Merchandi se Pvt. Ltd. The AO hel d that the enqui ry report from DDIT(Inv.), Uni t - 2(2), Kolkata re veal s that the said compani es have been used 23 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
by di fferent accommodati on entry operators to facili tate accommodati on entri es in di fferent forms to vari ous benefi ci ary groups. The AO hel d that these compani es are paper compani es of known accommodati on entry operators.
26. The AO further hel d that duri ng the post search proceedi ngs, the statement of Shri Anshul Mi ttal , one of the di rectors of Cindy Goods & Servi ces Pvt. Ltd., Pabl a Leasing & Fi nance company and Gi ri Fi nanci al Servi ces Pvt. Ltd. was recorded on 20.10.2015 and he admi tted that he i s dummy di rectors of several compani es from whi ch the l oans/ share appl i cati ons have been recei ved by the IITL Ni mbus Group of compani es. Further, other di rectors of the group com pany Shri Vi pul Kumar, brother of Shri Anshul Mi ttal duri ng statement u/s 131 of the Act on 20/10/2015 admi tted the fact that he i s dummy di rector i n the companies controll ed a nd managed by Shri Bi pi n Aggrwal . The AO hel d that,
1. On traci ng the trail backward to locate the ori gi nal source of fundi ng in Ni mbus group .from such l ender compani es, i t was observed that such funds have been routed through many other paper compani es/firms/conce rns/i ndi vi dual s whi ch were al so rai sed l oans to other group enti ti es as depi cted i n thei r bank statements. It has been observed that all such enti ti es i nvol ved in l ayering of funds are l ocated at vari ous addresses i n Del hi and Kol kata, whi ch are known for bei ng used for provi di ng vari ous accommodati on entri es, as reveal ed duri ng vari ous searches/surveys conducted by Investi gati on Wi ng.
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2. Ni mbus group i s actuall y routi ng i ts own unaccounted money under the umbrell a of Unsecured Loans and i t i s nothi ng but i ts own unaccounted cash whi ch was generated out of booki ng of fl ats wi th customers i n thei r projects and i nfused back i n the form of unsecured l oans.
3. Hence, i t i s cl ear that the assessee group had recei ved funds from these enti ti es i s nothi ng but just a pass through enti ty whose mai n work is to provi de accommodati on entri es to Nimbus group. Therefore , on traci ng out the source to source of funds, i t has been found that the funds have come from another enti ty. In the wri tten submi ssi on dated 17.11.2017, the assessee submi tted that ITR and confi rmati on and bank statement has been fil ed and the transacti ons are bonafi de.
27. Further, duri ng the assessment proceedi ngs the, assessee was gi ven an opportuni ty to furni sh i ts comments on the enqui ry report of the i nvesti gati on uni t , Kol kata whi ch was fil ed on 22.12.2017. Furthe r vi de l etter, dated 19 .12.2017, the assessee was asked to produce the di rectors/ pri nci pal offi cer of the company for exami nati on on o ath. Duri ng the statement, i t was agai n rei terated that the detail s have al ready been fil ed and the transacti ons withi n the ITTL - Ni mbus group for compani es are bona-fi de and genui ne.
28. Si nce, the company does not have any physi cal set up at the given address, the address gi ven i s onl y a postal address and the same address i s used as postal address for mul ti pl e compani es i ndul gi ng in to the same acti vi ty of provi di ng 25 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
accommodati on entri es. The di rectors of the companies are non - exi stent or even if they exi st, they are illiterate or semi illiterate i ndi vi dual s who do not h ave competence or credi bili ty to ope rate any i nvestment company. The company i s recei vi ng, huge amount as l oan and gi vi ng the same to other concerns wi thout any apparent moti ve of conducti ng any actual busi ness and the di rectors of the company are not even aware of such huge transacti ons made by the company for consi deri ng th e doctri ne of busi ness purpos es.
29. In the vi ew of above, i t wa s hel d that i n case of credi ts in the name of thi rd parti es, i t i s the duty of the assessee to prove i denti ty or credi ts, capaci ty of credi tor to advance money an d genui neness of transacti on. In the i nstant case capaci ty of credi tor coul d not be proved. Mere fili ng of confi rmati on or transacti on through banki ng channel i s not enough to prove the genui neness of cash credi t and it can be assessed. Credi tworthi ness must al so be proved and the transacti ons shoul d al so i nvi te confi dence of normal busi ness pri nci pl e of profi t.
30. The AO hel d that wi th regard to provi si ons of Secti on 68, the onus i s upon the assessee to prove the three i ngredi ents, i .e., i dentity, credi tworthiness of the person fro m whom the moni es were taken and the genuineness of the transacti on and hel d that assessee has routed i ts money from one paper based company i nto another with col ouri ng devi ce of unsecured l oan. Therefore, an addi ti on of Rs. 1,50,00,000/- i s made u/s 6 8 of the Act.
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31. Aggri eved the assessee filed appeal before the l d. CIT(A).
32. Wi th regard t o the Ci ndy Goods & Suppl y Pvt. Ltd. , the l d. CIT(A) whil e confi rmi ng the order of the Assessi ng Offi cer has dul y consi dered the report of t he Inspector of the Kol kata Investi gati on Unit whi ch i s as under:
"As directed by the DDI T(Inv.), Unit - 2(2), we visited the place at the given address of Cindy Goods & Sup ply Pvt. Ltd. at Room No. 4 18A, 4 t h Floor, Marshall House, N.S. Road, Kolkata -700001, it has been found that a notice is being hanged indicating the shifting of the said three companies to th e new address at 277, B.B. Ganguly Street, 3 r d Floor, Room No. 3 06, Kolkata -70001 2. On visiting the n ew address a signboard at the entrance of t he si ngle room office reflecting the names of all the 5 (fiv e) companies has been noticed. It was found that few computers wer e placed in that room indicating that some accounts were being maintained there. Howev er, no business activity was visible as to be carried out at that place. It was, however , reported by the employee of that offi ce Mr. Vivek Sharma that all the said 5 (five) companies are having their registered of fice at that address. Thereaft er, summonse s in th e cas e of all th e said companies were served at that address. "
33. The report al so i ndi cates that summons was served on 19.10.2015.
34. The l d. CIT(A) hel d that the total income i n the ITR for the rel evant assessment year of the l ender company was too l ow for the A.Y. 2011-12 and Rs. 140,89,252/ - for the A.Y. 2012 -13 and si nce the credi ts preceded the debi ts i n the bank account 27 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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on the same dates, the credi twort hiness of the l ender cannot be consi dered as genui ne. The l d. CIT(A) has reli ed on the judgments of vari ous Courts whi ch are as under:
B.R. Petrochem (P.) Ltd. Vs. I T O 81 taxmann.com 42 4 (Madras) Ri ck Lunsford Trade & Inve stment Ltd Vs. CIT 2016-TIOL- 207-SC-IT Navodava Castl e Pvt . Ltd. Vs. CIT 230 Taxman 268 (SC) PCIT Vs. Vi kram Si ngh (2017) 85 taxmann.com 104 (Del .) CIT Vs. N.R . Portfoli o Pvt. Ltd. in ITA No. 1018, 1019/2100 (Del .) Pragati Fi nanci al Management Pvt. Ltd. Vs . C IT i n C.A. 887 & 998 of 2016 & others CIT vs. Nova Prom oters & Fi nl ese (P) Ltd. 342 ITR 16 9 (Del .) CIT vs. D.K. Garg 84 taxmann.com 257 (Del .) and many other judgment s whi ch have been dul y perused.
35. Before us, duri ng the arguments, the l d. AR submi tted that the revenue authori ti es fail ed to appreci ate the detail s provi ded duri ng the proceedi ngs to e stabl i sh the i denti ty, genuineness and credi tworthi ness of the transacti on undertaken by the assessee wi th the above menti oned party:
PAN and address of the party Copy of Ledger C onfi rmati on Copy of Bank Statement of appell ant Copy of ITRs, Bal ance Sheet and Profi t and l oss statement of the l ender 28 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
Repl y to noti ce i ssued u/s 133(6) of the Act fil ed by M/s CG&SPL Copy of Bank statement of the l ender di scl osi ng source of l oan Confi rmati on of accounts of appell ant i n books of l ender etc.
36. Further, i t was argued that the l ender company i s i n exi stence from 1995 and the returned income for the A.Y . 2012-13 was Rs.1,40,89,252/- and it cannot be assumed that any paper com pany giv ing accommodation entry would pay t ax on the am ount of Rs.1,40,89,252/ -, the fact i tsel f indi cates that i t cannot be taken or presumed that the l ender company to be a non -exi sting, bogus company.
37. Thus, i t was argued that i t i s cl early evi dent that the assessee has di scharged i ts onus of provi ng the tenets of Secti on 68 of the IT act i .e. i dentity of party, genui neness of the transacti on and credi tworthi ness of the party by provi di ng extensi ve evi de nces. It was further argued that the observati on of the revenue that the l ender M/s CG&SPL was bei ng operated by fi cti ti ous person i s not on corre ct facts on record .
38. Further, the l d. AR brought to our noti ce that the i dentity, genui neness and credi two rthi ness of the l ender namel y, CG&SPL has been wi del y exami ned i n detail duri ng the proceedi ngs before the Tri bunal i n the case of Ni mbus Indi a Ltd. for the A.Y . 2013-14 and reli ed on the order of the Co -ordi nate Bench of ITAT.
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39. On the other hand, the l d. DR strongl y supported the orde rs of the revenue authori ti es.
40. We have gone through the order of the Co -ordi nate Bench of ITAT i n ITA No. 929 & 930/De l /2019 in the case of Ni mbus Indi a Ltd. Vs. DCIT for the A.Y. 2013 -14 and A.Y. 2014-15.
41. The rel evant poi nts wi th regard to exami nati on of genui neness of Ci ndy Goods & Suppl y Pvt. Ltd. by the Tri bunal i n the above sai d order i s as under:
Para 5 - The AO noted that the company was M/s Ci ndy Goods & Suppl y Pvt. Ltd. i s concer ned, he noted that the sai d company was i ncorporated on 21st March, 1995 wi th i ts regi stered offi ce at Kol kata. Thi s company i s controll ed and managed by the di rectors Mr. Madan Gopal Sharma and Mr. Vi rendra Tri pathy who hol ds substanti al shares i n M/s Bonanza Vani jya Pvt. Ltd. and M/s Bri jdham Merchandi se Pvt. Ltd., havi ng 49.96% shares each . These di rectors are al so the di rectors i n vari ous other compani es based in Kol kata. He noted that in the i mpugned assessment year, thi s company has decl ared i ncome of Rs.11,146/- from busi ness and professi on. Its authori zed share capi tal i s Rs.4.51 crores and rese rves and surpl us i s Rs.4,50,40,000/ -. It has recei ved an amount of Rs.34,37,25,000/ - as share premium. From the anal ysi s of the bank statements, he noted that an amount of Rs.5 crore was recei ved from M/s Worl d Resorts Li mi ted on 07th September, 2012 ITA Nos.929 & 9 30/Del /2019 and Rs.3.50 30 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
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crores on 21st August , 2012 from vari ous unknown enti ties and fi nall y transferred to assessee company on 03.09.2012.
Para 8 - To verify the source of the i nvestment of the above compani es, the AO obtai ned i nformati on u/s 133(6) of the Act from the respective banks and noted ITA Nos.929 & 930/Del /2019 that there are back to back transacti ons of same amount i .e., credi t an d debi t of the same amount on the same dat es/foll owing dates wi th several other deposi ts and wi thdrawal s. The AO, therefore , confronted the asse ssee and asked him to expl ai n the i denti ty and credi t worthi ness of the i nvestor compani es and genui neness of th e transacti ons. Rejecti ng the vari ous expl anati ons gi ven by the assessee and rel ying on the deci si on of the Hon'bl e Supreme Court i n the case of B. Ki shore Kumar vs. DCIT , the AO made addi ti on of Rs.29,50,00,000/- to the total income of the assessee bei ng the amount of share capi tal and share premium of Rs.15 crore recei ved from M/s Pabl a Leasi ng & Fi nance Pvt. Ltd., and Rs.14 ,50,00,000/ - bei ng the share capi tal and share premi um recei ved from M/s Ci ndy Goods & Suppl y Pvt. Ltd.
Para 13 - So far as the addi ti on of Rs.15 crores i n A.Y. 2013-14 and Rs.2.51 crore i n respect of M/s Pabl a Leasi ng & Fi nance Pvt. Ltd., Rs.14.50 crore from M/s Ci ndy Goods & Suppl y Pvt. Ltd. i n A.Y. 2013 -14 and Rs.18 crore from M/s Gi ri Financi al Servi ces in A.Y. 2014 -15 i s concerned, the l d. Counsel for the assessee drew the attenti on of the 31 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
Bench to the vari ous detail s of the parti es from whom the assessee has recei ved non -cumul ati ve redeemabl e share capi tal during the year. Refer ri ng to vari ous pages of the paper book , the l d. Counsel for the assessee drew the attenti on of the Bench to the copi es of the i ncome -tax returns, bal ance sheets, copy of annual reports of the compani es, bank statements, copi es of the assessment orde rs of those compani es, etc., and submi tted that the assessee has di scharged the onus cast on it by substanti ati ng the i denti ty and credi t worthi ness of the credi tors and genui neness of the transacti ons. Para 15 - So far as M/s Ci ndy Goods & Suppl y Pvt. Ltd., i s concerned, the l d. Counsel for the assessee drew the attenti on of the Bench to the paper book page 182 whi ch i s the copy of noti ce dated 21.11.20 17 i ssued by the AO u/s 133(6) to M/s Ci ndy Goods & Suppl y Pvt. Ltd. Referri ng to page 183 to 243, the l d. Coun sel for the assessee drew the attenti on of the Bench to the submi ssi on of the sai d company i n response to noti ce u/s 133(6). Referring to page 244 to 246 of the paper book, he drew the attenti on of the Bench to the copy of the statement of Mr. Vi pul Kumar, Di rector of M/s Ci ndy Goods & Suppl y Pvt. Ltd., whose statement was recorde d by the AO u/s 131 of the IT Act wherei n he has admi tted to have invested in the assessee company. Referri ng to page 165 to 16 7 of the paper book, he drew the attention of the Bench to the orde r passed u/s 143(3) i n the case of M/s Ci ndy Goods & Suppl y Pvt. Ltd., wherein the AO has consi dered the 32 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
i nvestment made by the sai d company at Rs.38,20,21,000/ - as on 01.04.2 010 and 36,92, 01,000/- as on 31.03.2011 for computi ng the di sall owance u/s 14 A of the Act r.w. Rul e 8D of the IT Rul es. Referri ng to vari ous pages of the pape r book , he submi tted that thi s company has shown conti nuou s profi t whi ch is Rs.1,40,89,252/ - for A.Y. 2012-13, Rs.75,37,804/ - for A.Y. 2013-14 and Rs.11,81,118/ - for A.Y. 2015-16. He submi tted that whil e the AO has accepted the am ount recei ved from Intell ectual ITA Nos.929 & 930/Del /2019 Securi ti es Pvt. Ltd. as g enui ne whi ch i s al so a Kol kata based company and from whom the shares were recei ved at a premi um of Rs.90 per share, however, he di sbeli eved the capaci ty of the sai d investor compani es for the i mpugned assessment year and i ssue of shares at a premi um. He submi tted that for A.Y. 2015 -16, the AO, i n the order passed u/s 143(3), has accepted the amount recei ved from M/s Pabl a Leasi ng & Fi nance Pvt. Ltd., an d no addi ti on has been made. Si milarl y, i n the case of M/s Ci ndy Goods & Suppl y Pvt. Ltd., the AO has acc epted an amount of Rs.3,50,00,000/ - i n the order u/s 143(3) and no addi ti on has been made. Therefore, the addi ti on made by the AO and sustai ned by the CIT(A) i s not justifi ed. Para 26 - We have heard the ri val arguments made by both the si des, perused the orde rs of the AO, CIT(A) and the paper book fil ed on behal f of the assessee. We have al so consi dered the vari ous deci si ons ci ted before us. We fi nd the AO, in the i nstant case, made addi ti on of 33 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
Rs.29,50,00,000/ - to the total income of the assessee bei ng the amount of Rs.14,50,00,000/ - from M/s Ci ndy Goods & Suppl y ITA Nos.929 & 930/Del /2019 Pvt. Ltd., and Rs.15 crores from M/s Pabl a Leasi ng & Fi nance Pvt. Ltd., on account of non -genui ne share premi um/share capi tal . Si mil arl y for A.Y. 2014 -15, the AO made an addi ti on of Rs.20,51,00,000/ - bei ng an amount of Rs.2,51,00,000/ - recei ved from M/s Pabl a Leasi ng & Fi nance Pvt. Ltd. and Rs.18 crores from Gi ri Fi nanci al Servi ces Pvt. Ltd. treati ng the same as non -genui ne and by i nvoki ng the provi si ons of secti on 68 of the IT Act. We find the l d.CIT(A) uphel d the addi ti on so made by the AO. It i s the submi ssi on of the l d. Counsel for the assessee that t he assessee has fi l ed the requi site detail s such as copy of t he ban k account, copy of the Income-tax returns, copy of confi rmati ons, detail s of all otment of shares, etc. before the AO to substanti ate the i denti ty and credi t worthi ness of the i nvestor compani es and the genui neness of the transacti on. It i s al so hi s submi ssi on that the di rectors of the investor compani es were produced before the AO whose statements were recorded u/s 131 i n whi ch they have confi rmed to have i nvested i n the shares of the assessee company. It i s al so hi s submi ssi on that in the precedi ng and sub sequent assessment years, such share capi tal at hi gh premi um has been accepted by the AO in the order passed u/s 153A/143(3) and no adverse vi ew has been taken. Further, i t i s al so hi s submi ssi on that such non -cumul ati ve non - parti ci pati ng opti onall y conver ti ble redeemabl e preference 34 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
shares were redeemed to the i nvestor compani es i n the F.Y. 2014-15 much before the search and, therefore, unde r the facts and ci rcumstances of the case no addi ti on i s call ed for.
Para 28 - A perusal of the submi ssi on filed by th e assessee whi ch has been reproduced at para 19 of thi s orde r sh ows that the AO, i n the order passed u/s 143(3) has accepte d an amount of Rs.3,50,00 ,000/ - recei ved by the assessee from M/s Ci ndy Goods & Suppl y Pvt. Ltd. towards share capi tal and share prem i um and no addi ti on has been made. ....Therefore , the all egati on of the AO that these compani es are pape r compani es wi thout doing any busi ness and these compani es are exi sting only for bei ng used by di fferent accommodati on entry operators to faci litate accommodati on entri es in di fferent forms to vari ous benefi ci ary groups i s factuall y incorrect i n vi ew of the orde rs passe d in case of these i nvestor compani es i n precedi ng and subsequent years.
42. We find that the Co-ordi nate Bench of the ITAT has dul y consi dered the i denti ty of the company and found it to have been i ncorporated i n the year 1995, the amounts have been accepted as genui ne duri ng the assessments compl eted u/s 143(3), the returned income range from Rs.1.4 crores, Rs.7 5 l acs, Rs.11 l acs for the A.Y. 2012-13, A.Y. 2013 -14 and A.Y. 2015-16 respectivel y provi ng that the l ender company cannot be consi dered as a accommodati on entry provi der/pape r company. The company has dul y responded to noti ces i ssued 35 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
u/s 133(6) to the revenue authori ti es. Furth er, the Di rector of the company namel y, Mr. Vi pul Kumar has confi rmed the i nvestments made in the assessee company duri ng the statement recorded u/s 131 of the IT Act by the AO. Hence, keepi ng i n vi ew, the facts narrated above, we fi nd that the observati on of the revenue authori ti es hol di ng that the i denti ty, genui neness and credi tworthi ness of the l ender company coul d not be proved i s contrary to the facts on record. Hence, the addi ti on made by the revenue authori ti es is li abl e to be obl iterated.
43. In the resul t, the appeal of the assessee in ITA No. 926/Del /2021 for A.Y. 2011 -12 and ITA No. 927/Del /2021 for A.Y. 2012-13 i s all owed.
ITA No. 928 /Del/2021 for A.Y . 2013 -14 ITA No. 929 /Del/2021 for A.Y . 2014 -15
44. Duri ng the A.Y. 2013 -14 and A.Y. 2014-15, the assessee company i ssued 8% non -converti bl e, non -parti ci pati ng compul sory remedi abl e preference shares to the compani es whose detail s are furni shed as under:
For the A.Y. 2013 -14 Sl. Name of th e No. of sh ares S h are Cap S h are Tot al No. i n vest or Premi u m
1. G i ri Fin an ci al 3 7 0 00 0 0 3 7 0 00 0 00 1 4 8 00 0 00 0 1 8 5 00 0 00 0 S ervi ces Pvt .
Lt d.
2. Pabl a Leasi n g 2 0 0 00 0 0 2 0 0 00 0 00 8 0 0 00 0 00 1 0 0 00 0 00 0 Fi n an ce Pvt .
Lt d.
Tot al 2 5 5 00 0 00 0 36 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
For the A.Y. 2014 -15
Sl. Name of th e No. of sh ares S h are Cap S h are Tot al
No. i n vest or Premi u m
1. G i ri Fin an ci al 9 0 0 00 0 9 0 0 00 0 0 3 6 0 00 0 00 4 5 0 00 0 00
S ervi ces Pvt .
Lt d.
2. Pabl a Leasi n g 3 3 0 00 0 0 3 3 0 00 0 00 1 3 2 00 0 00 0 1 6 5 00 0 00 0
Fi n an ce Pvt .
Lt d.
Tot al 4 2 0 00 0 00 1 6 8 00 0 00 0 2 1 0 00 0 00 0
45. The AO hel d that Gi ri Fi nanci al Servi ces Pvt. Ltd. i s a pri vate li mited company in corporate on 19.01.1995 and regi stered at ROC Kolkata. The earli er Di rectors were Sh. Ramesh Kumar and Sh. Ranjan Kumar whereas the present Di rectors are Sh. Vi pin Kumar, Sh . Madan Gopal Sharma, Sh. Anshul Mi ttal and Sh. Vi rendera Tri pathi . The AO hel d that the i nvestor company was found to have received moni es i n the form of share capi tal and share premi um recei ved mai nl y from M/s Strong Vi nimay Pvt. Ltd. and M/s Murl i dhar Deal com Pvt. Ltd.
46. Wi th regard t o Pabl a Leasi ng Fi nance Pvt. Ltd. , the AO hel d that the i nvestor company recei ved moni es mai nly from M/s Fling Management Consul tant Pvt. Ltd. and M/s Ori ent Commodeal Pvt. Ltd. whi ch are having same address an d common Di rectors. The AO further hel d that the statement of Sh. Ami t Bagri has been recorded by the Investi gati on Uni t Kol kata wherei n Sh. Ami t Bagri admi tted that these compani es have been used for provi di ng entri es to the vari ous benefi ci ary compani es on the commi ssi on basi s. The AO hel d that duri ng 37 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
the post search proceedi ngs, the statement of Sh. Anshul Mi ttal was recorded on 20.10.2015 wherei n Sh. Anshul Mi ttal admi tted that he i s a dummy Di rector of se veral company from whi ch the l oans and share capi tal has been recei ved b y Nimbus Group of company. It was al so hel d that Sh. Vi pi n Kumar brother of Sh . Anshul Mi ttal has al so admi tted in the statement recorded u/ s 131 that he was a dummy Di rector i n the compani es controll ed and managed by Sh. Vi pi n Agarwal .
47. The AO was i n recei pt of report from the DDIT(Inv.), Unit - 2(2), Kol kata wi th regard to the above two i nvestors compan y namely, Gi ri Financi al Servi ces Pvt. Ltd. and Pabl a Leasi ng Fi nance Pvt. Ltd. The report of the DDIT(Inv.) wi th regard to these two enti ti es whi ch have contri buted to 8% non - converti bl e, redeemable preference shares i s as under:
"As direct ed by th e DDIT(In v.), U nit -2(2), we visited th e giv en addresses of Pabla Leasing & Finance Pvt. Ltd. and Giri Financial Service Pvt. Ltd. The entities hav e not bee n found at th e given addreses. On visiting the spot at the given address of the Intellec tual Securities Pvt. Ltd., Padma Estates Pvt. Ltd........ it has been found that a notic e b een hang ed indicating the shif ting of th e said three companies to a new address at 2 77, B.B. Ganguly Street, 3rd Floor, Room No. 306, Kolkata -70001 2. On visiting the n ew address a signboard at the en trance of the single room office reflecting th e names of all th e 5 (fiv e) companies has been notic ed. It was found that few computers wer e placed in that room indicating that some accounts were being maintained there. Howev er, no business activity was visible as to be carried out at t hat place. It was, however, report ed by th e employee o f that o ffice Mr. Viv ek 38 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
Sharma that all the said 5 (fiv e) companies are having their registered office at that address. Th ereafter, summons es in t he cas e of all the said companies were s erved at that address. "
48. The AO hel d that the onus of provi ng the i denti ty and credi tworthi ness of i nvestors and genui neness of transacti ons i s on to the assessee com pany. The fi nanci al s of these purportedl y Investor Company i s so weak such that i t fil es i ts ITRs at negli gi bl e or negative i ncomes and that i ts turnover i s al so not very si gni fi cant. The AO summari zed h i s concl usi ons as under:
"i . In view of thes e observations, t he AR vide questionnaire dated 19.12.20 17 was required to produce the repres entativ es/ directors/ contact persons of t hes e purported investor companies for thei r examination otherwise th e onus of p roving identity of such persons, the genuinen ess of such transactions and creditworthiness of suc h investor parties shall lie on the assessee, failure to do which would convince th e revenu e authorities to make adverse infer ence that ail these purported share capital/premium investments are sham and nothing but accommodation entries.
ii. Further, it cannot be believ ed tha t investors inv est their crores of rupees in a non -listed company without any return and the recipien t company even do es not have the particulars/contact details, of such investors. Further, creditworthiness of inves tors is not proved sinc e the sourc e of funds with company pu rported investors remains highly suspicious. Moreover th e ass essee company also failed t o produc e even a single do cument in respect of due diligence and valuation report to justif y th e premium to sup port his contention. Also, ther e is no reason to believe that th e assessee is not able to trace th e 39 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
investors for personal deposition since had the inv estor been genuine; th ey would hav e been in co ntact of t he ass essee.
Further, during the assessment proc eedings the, assess ee was given an opportunity to furnish its comments on the / enquiry report of th e investigation unit , Kolkata which was filed on 22.12. 201 7. Furth er vide lett er d ated 19.1 2. 201 7, th e As sessee was asked to produce th e directors/ principal officer of the co mpany for examination on oath. During the statem ent, it was again reiterated that th e details hav e already been filed a nd th e transactio ns within the ITT L Nimbus group for companies are bona -fide and genuine. Since, th e company does not have any physical set up at the given address, the address given is only a postal address and the same address is used as postal address for multiple companies indulging in to the same activity of providing accommodation entries. Th e dire ctors of the companies are non-exist ent or even if they exis t, they are illiterate or s emi illiterate individuals who do not have compet ence or credibility to operate any investment company. The company is rec eiving hug e amount as loan and giving the same to other concerns without any apparent motive of conducting any actual business and the directors of the company are not ev en aware of such huge transactions made by the company for, conside ring the doctrine of business purposes.
In th e view of above, it is h eld that in case of credits in th e name o f third parties, it is the du ty of th e assessee to prove identit y or credits, capacity of creditor to advance money and genuin eness o f transaction. In the instant case capacity of creditor could not b e proved. Mere filing of confirmation or transaction through banking channel is not enough to prove th e g enuinen ess o f cash credit and it can be assessed. Creditworthiness must also be proved and the 40 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
transactions should also invite confidence of normal business principle of profit.
Secondly, when t he account of th e a ssess ee Company and th e transactions are doubted by the AO, then to prove th e genuinenes s of such transactions assessee has to go some steps f urther of its ow n to prove th e gen uinen ess of transactions by direct and corroborative evidences and must establish the c apacity to inves t/ advance such funds by such person. "
49. Hol di ng thus, the AO made addi ti on of the 8% non - converti bl e, prefe rence shares recei ved by the assessee u/s 68 of the IT Act.
50. Aggri eved the assessee filed appeal before the l d. CIT(A).
51. Before the l d. CIT(A), the l d. AR submi tted that the matter i s covered by the orde r of the ITAT i n the case of Ni mbus Indi a Ltd. However, the l d. CIT(A) hel d that si nce the facts of every case are di fferent in many respects i ncl udi ng the statement gi ven by the concern persons w ho have managed the en tri es and al so si nce the i ssue has not reached fi nali ty as yet, the deci si ons of the case has been taken based on the judgments of the vari ous Hon'bl e Courts.
52. The rel evant porti on of the order of the l d. CIT(A) on thi s aspect i s as under:
"10.1 Ground no. 3 to 5 pe rtai n to addi ti on of Rs.28,50,00,000/- & R s.21,00,00 ,000/ - for A.Y. 2013-14 & A.Y .41 ITA No. 923/Del/2021
Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
2014-15 respecti vely on account of i ssue of 8% non - cumul ative preference share , as per fol l owi ng tabl e:
S. Name o f th e A . Y. 2 0 1 3 -1 4 A . Y. 2 0 1 4 -1 5 No . C r ed i tor S h ar e S h ar e p r emi u m S h ar e S h ar e C ap i tal @ Rs . @ Rs . 4 0 /- p e r C ap i tal @ p r emi u m @ Rs .
1 0 / - p er s h ar e R s . 1 0 / - p er 4 0 / - p er s h ar e
s h ar e s h ar e
1. M /s P a b la 2 , 0 0 , 0 0 , 000 8, 00, 00, 000 3, 30, 00, 000 13, 20, 00 , 0 0 0
le a s in g &
F in a n c e P vt .
Ltd.
2. M /s Girl 3 , 7 0 , 0 0 , 000 14, 80, 00, 000 90, 00, 000 3, 60, 00 , 0 0 0
F in a n c ia l
S e rvic e s P vt .
Ltd.
T o tal 5 , 7 0 , 0 0, 0 0 0 2 2 , 8 0 , 00 , 0 0 0 4 , 2 0 , 0 0, 0 0 0 1 6 , 8 0 , 00 , 0 0 0
Gra n d To t a l Rs 28, 50, 00, 000 Rs . 21, 00, 00 , 0 0 0
(5 , 7 0 , 0 0 , 000 + 22, 80, 00000) (4, 20, 00, 000 + 1 6 , 80, 00, 0 0 0 ) It was noted by the AO i n detailed and el aborate assessment orde rs that, the enti ti es to whom non -cumul ati ve preference share were i ssued are the paper enti ti es i nvol ved i n provi di ng accommodati on entries. AO has depi cted the enqui ry and i nvesti gati on report in c ase of these all eged enti ti es, as conducted by the i nvesti gati on wi ng of the department at Kol kata, wherei n, the di rectors of the all eged enti ti es have accepted in the sworn statements that, thei r concerns are i nvol ved in the busi ness of provi di ng accommod ati on entri es i n the form of share premi um/share capi tal /non -cumul ative preference share/unsecured l oans. It was al so noted by the AO that, each debi t entry i n the Bank statements of the all eged credi tors i s preceded by the equi val ent amount of credi t on t he same or on the pri or date. He nce, the genui neness of the 42 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
transacti on and credi t capaci ty of the creditor is not substanti ated by the appell ant. Therefore, AO came to the concl usi on that the credi ts from these all eged enti ti es are bogus, fi cti ti ous and u nexpl ai ned and accordi ngl y, addi ti on i s justi fi ed by the AO u/s 68 of the Act.
................
10.3 The undersi gned has carefull y gone through the assessment orders, wri tten submi ssi ons as well as verbal arguments of the Ld. A.R. It i s seen that during these rel e vant assessment years, the appell ant company has recei ved funds on account of i ssui ng non -cumul ati ve preference shares, as pe r foll owi ng detail s:
S. Name o f th e A . Y. 2 0 1 3 -1 4 A . Y. 2 0 1 4 -1 5 No . C r ed i tor S h ar e S h ar e p r emi u m S h ar e S h ar e C ap i tal @ @ Rs . 4 0 /- p e r C ap i tal @ p r emi u m @ Rs .
Rs. 10/- s h ar e R s . 1 0 / - p er 4 0 / - p er s h ar e
p er s h ar e s h ar e
1. M /s P a b la 2 , 0 0 , 0 0 , 000 8, 00, 00, 000 3, 30, 00, 000 13, 20, 00 , 0 0 0
le a s in g &
F in a n c e P vt .
Ltd.
2. M /s Girl 3 , 7 0 , 0 0 , 000 14, 80, 00, 000 90, 00, 000 3, 60, 00 , 0 0 0
F in a n c ia l
S e rvic e s P vt .
Ltd.
T o tal 5 , 7 0 , 0 0, 0 0 0 2 2 , 8 0 , 00 , 0 0 0 4 , 2 0 , 0 0, 0 0 0 1 6 , 8 0 , 00 , 0 0 0
Gra n d To t a l Rs 28, 50, 00, 000 Rs . 21, 00, 00 , 0 0 0
(5 , 7 0 , 0 0 , 000 + 22, 80, 00000) (4, 20, 00, 000 + 1 6 , 80, 00, 0 0 0 ) The all eged credi tor enti ti es namely M/s. Pabl a L easi ng & Fi nance Pvt. Ltd. and M/s. Gi ri Financi al Servi ces Pvt. Ltd. were subjected to enqui ri es and i nvesti gati on by di rectorate of i nvesti gati on, Kol kata. The revenant report as submi tted by the 43 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
DDIT(l nv.), unit-2(2), Kol kata, has al ready been scanned and reproduced i n precedi ng paras.
10.4 Careful perusal of the enquiry reports notes the foll owi ng rel evant observati ons:
i) All eged credi tor enti ti es do not exi st on the gi ven addresses. Al l the all eged enti ties are operati ng from si ngl e room in a buil di ng at Kol kata wi th onl y a computer and tabl e. There were no evi dence of any busi ness activi ti es being carri ed by these al l eged credi tor enti ti es.
ii ) All eged credi tor compani es are i denti fi ed paper compani es of known accommodati on entry operators. iii ) Statement of entry operators have been recorded on oath to evi dence that, these all eged entiti es are carryi ng on the busi ness of provi di ng accommodati on entri es on commi ssi on basi s in rel ati on to share premi um/share capi tal /non -cumul ati ve preference share/unsecured l oans.
i v) Pri nci pal Offi cer or the di rector to whom summons u/s 131 of the Act were i ssued on the known address of the all eged credi tor enti ti es, they di d not attend i n response to summons.
10.5 Further, duri ng the post se arch i nvesti gati ons, statement of Shri Anshul Mi ttal one of the Di rector of the M/s. Pabl a l easi ng & Fi nance Pvt. Ltd. and M/s. Gi ri Fi nanci al Servi ces Pvt. Ltd. was recorde d on 20 .10.201 5 and Shri Anshul Mittal has 44 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
ITA No. 924/Del/2021Bipin Agarwal ITA Nos. 925 to 929/Del/2021 Nimbus Project Ltd.
admi tted i n the sworn statements that, he i s a dummy di rector of the all eged credi t or compani es from whi ch, l oans/snare appl i cati on/share premi um have been recei ved by IITL - Ni mbus group of compani es. Further, other di rectors of the group compani es Shri Vi pul Kumar, brother of Shri Anshul Mi ttal , duri ng the statement recorded u/s 131 of the Act on 20.10.2015 has admi tted the fact that, he i s a dummy di rector i n the compani es control l ed and managed by Shri Bi pin Agarwal .
10.6 During the course of search i n the case IITL -Ni mbus group of compani es the i ncri minati ng di ary wri tten by Shri Bi pi n Agarw al was found from the hi s su itcase at B-128, Surajmal Vi har, New Del hi -92. Thi s i ncri minati ng document i nvento ri ed as Annexure A-2. From Page-8 of An nexure A-2 i t i s evi dent that, the A/c No. 00030340061364 bel ongs to one of the group company. Thi s i ncri mi nati ng document depi cts the systemati c date-wi se payment of cash and re cei pt of cheque. For exampl e on 24.12.2014, cash of Rs. 20,00,00,000/ - i s represented by the entry C/20CR ------24.12.2014 and further, cash payment of Rs. 15,00,00,000/ - on 23.02.20 15 i s depi cted as 23.02.2015 -
------C/15CR. Further, the recei pt of cheque on vari ous dates i s al so noted i n the i ncri mi nating document whi ch, matches exactl y wi th the recei pt of cheque in the bank account of the company on account of i ssue of 8% non -cumul ati ve preference share to the all eged credi tors entiti es menti oned here -i n-above. Al so, the commi ssi on of Rs. 43,40,000/ - i s pai d for obtai ning accommodati on entries, as could be evi denced from sei zed i ncri mi nati ng document. Al so, Shri Bi pi n Agarwal has 45 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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surrende red Rs. 35,00,00,000/ - for A.Y. 2015 -16, as a undi scl osed i ncome on the basi s of thi s i ncr i minati ng document, Annexure A-2, page-8. Therefore, i t i s concl uded that, appell ant group compani es are i n the habit of re cei ving the cheques from the all eged credi tor enti ti es after i ssui ng cash to the accommodati on entry provi ders. Al so, chargi ng of the huge premi um of Rs. 90 per share was not justi fied by the appell ant wi th cogent evi dences in the form of val uati on report etc. Al l these above menti oned f actors corroborate the fact fi ndi ng of the AO that, al l eged credi ts i n the form of preference shares are fi ctiti ous and concocted.
10.7 Further, undersi gned has n oti ced that the credi t capaci ty of the share appl i cants al so stands unsubstanti ated. The foll owi ng tabl e shows the total credi ts by the credi tors i n the form of share capi tal/premi um, and th ei r i ncome di scl osed i n the ITR:
S. Name o f th e T o tal cr ed i ts T o tal i n co me d i s cl os ed i n No . C r ed i tor s ( i n cl u d i ng sh ar e cap i tal / I T R p r emi u m) A Y 2 0 13 -1 4 A Y 2 0 14 -1 5 A Y 2 0 13 -1 4 A Y 2 0 14 -1 5
1. M /s P a b la le a s in g & 1 0 , 0 0, 00, 000 16, 50, 00, 000 3 0 , 85, 542 Nil F in a n c e P vt . L t d .
2. M /s Giri F in a n c ia l 1 8 , 5 0, 00, 000 4, 50, 00, 000 3 , 39, 176 9, 16, 779 S e rvic e s P vt . L t d .
From the above tabl e, i t i s evi dent that the enti ti es advanci ng huge money to appell ant company are having very meager i ncome to substanti ate such huge share ca pi tal /premi um. For exampl e, M/s Gi rl Financi al Servi ces Pvt. Ltd., havi ng i ncome of onl y 9,00,000/ - odd has advanced huge sum i n the form of 46 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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preference share of Rs.4 ,500, 000/-, whi ch appears to be beyond human probabi li ty. The case of other credi tor i s no di fferent, as coul d be evi denced from the above menti oned tabl e. Thus, i t can be concl uded that the appell ant has fail ed to prove the credi t capaci ty of the credi tors. Al so, there i s no agreement or the co-l ateral securi ty arrangements or payment of i nterest on the preference share between the appel l ant and credi tor compani es. Further, a careful , perusal of Bank statements of these alleged credi tors reveal the astoni shi ng si mil ari ty in the pattern of fund flow. It i s i nvari abl y noted that the credi tor's accounts we re deposi ted wi th cheque of equi val ent or more amount of cre di t on the same date or pri or to advanci ng the l oan to the appell ant company. Foll owi ng tabl e shows the credi t entry pri or to advanci ng credi t to appell ant company by the alleged credi tors:
S. Na m e o f t h e Da t e a n d am o u n t o f d eb it in Da t e a n d am o u n t o f c re d it No C re d it o r B a n k c re d it o r B a n k a c c o u n t in c re d it o r B a n k a c c o u n t account no.
1. M /s P a b la L e as in g & 1 0 . 0 1. 2013 25, 00, 000 10. 01. 2013 50, 00, 000 F in a n c e P vt . L t d .
I DB I B a n k L t d . , Ko lka t a A /c No . -
0291102000006668
2. -do- 1 0 . 01. 2013 25, 00, 000 14. 01. 2013 25, 00, 00 0
3. -do- 1 4 . 01. 2013 25, 00, 000 17. 01. 2013 25, 00, 00 0
4. -do- 1 7 . 01. 2013 25, 00, 000 22. 01. 2013 3, 09, 85, 31 4
5. -do- 2 4 . 01. 2013 50, 00, 000 05. 02. 2013 50, 00, 00 0
6. -do- 2 4 . 01. 2013 50, 00, 000 07. 02. 2013 25, 00, 00 0
7. -do- 2 4 . 01. 2013 50, 00, 000 07. 02. 2013 25, 00, 00 0
8. -do- 2 4 . 01. 2013 50, 00, 000 08. 02. 2013 50, 00, 00 0
9. -do- 2 4 . 01. 2013 50, 00, 000 08. 02. 2013 25, 00, 00 0 47 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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10. -do- 2 4 . 01. 2013 50, 00, 000 08. 02. 2013 25, 00, 00 0
11. -do- 0 5 . 02. 2013 50, 00, 000 08. 02. 2013 25, 00, 00 0
12. -do- 0 7 . 02, 2013 50, 00, 000 11 02. 2013 25, 00, 00 0
13. : -do- 0 8 . 02. 2013 50, 00, 000 27. 02. 2013 25, 00, 00 0
14. -do- 0 8 . 02. 2013 50, 00, 000 27. 02. 2013 25, 00, 00 0
15. -do- 0 8 . 02. 2013 25, 00, 000 01. 03. 2013 25, 00, 00 0
16. -do- 1 1 . 02. 2013 25, 00, 000 01. 03. 2013 25, 00, 00 0
17. -do- 2 7 . 02. 2013 50, 00, 000 01. 03. 2013 19, 00, 00 0
18. -do- 0 1 . 03. 2013 50, 00, 000 01. 03. 2013 50, 00, 00 0
19. -do- 0 1 . 03. 2013 50, 00, 000 01. 03. 2013 31, 00, 00 0
20. -do- 0 1 . 03. 2013 50, 00, 000 01. 03. 2013 50, 00, 00 0
21. -do- 0 1 . 03. 2013 50, 00, 000 02. 03. 2013 25, 00, 00 0
22. -do- 0 2 . 03. 2013 25, 00, 000 0 2 . 03. 2013 25, 00, 00 0
23. -do- 0 2 . 03. 2013 25, 00, 000 05. 03. 2013 35, 00, 00 0
24. -do- 0 5 . 03. 2013 35, 00, 000 08. 03. 2013 10, 00, 00 0
25. -do- 0 8 . 03. 2013 15, 00, 000 08. 03. 2013 5, 00, 000
26. -do- 0 2 . 04. 2013 1, 00, 00, 000 20. 03. 2013 80, 00, 00 0
27. -do- 0 2 . 04. 2013 65, 00, 000 20. 03. 2013 80, 00, 00 0
28. -do- 0 2 . 04. 2013 1, 00, 00, 000 20. 03 2013 25, 00, 00 0
29. -do- 0 2 . 04. 2013 1, 00, 00, 000 30. 03. 2013 50, 00, 00 0
30. -do- 0 2 . 04. 2013 1, 00, 00, 000 30. 03. 2013 50, 00, 00 0
31. -do- 0 2 . 04. 2013 1, 00, 00, 000 30. 03. 2013 80, 00, 00 0 32 -do- 0 2 . 04. 2013 1, 00, 00, 000 30. 03. 201 3 80, 00, 00 0 33 -do- 0 2 . 04. 2013 1, 00, 00, 000 30. 03. 2013 80, 00, 00 0
34. -do- 0 2 . 04. 2013 1, 00, 00, 000 30. 03. 2013 80, 00, 00 0
35. -do- 0 2 . 04. 2013 1, 00, 00, 000 30. 03. 2013 80, 00, 00 0
36. -do- 0 2 . 04. 2013 1, 00, 00, 000 30. 03. 2013 80, 00, 00 0
37. -do- 0 3 . 04. 2013 1, 20, 00, 000 02. 04. 2013 50, 00, 00 0
38. -do- 0 3 . 04. 2013 1, 00, 00, 000 02. 04. 2013 80, 00, 00 0
39. -do- 0 3 . 04. 2013 40, 00, 000 02. 04. 2013 t 00 0 50, 00,
40. -do- 10.04.2013 1,00,00,000 02.04.2013 80,00,000
41. -do- 10.04.2013 1,00,00,000 03.04.2013 25,00,000
42. -do- 10.04.2013 1,25,00,000 03.04.2013 15,00,000 48 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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43. -00- 08.04.2013 2,00,00,000
44. -do- 08.04.2013 2,00,00,000
45. -do- 09.04.2013 50,00,000
46. -do- 09.04.2013 1,00,00,000 26,50,00,000/-
47. M/s Giri Financial 25.01.2013 35,00,000 24.01.2013 50,00,000 Services Pvt. Ltd.
Punjab National Bank, A/c No. -
0954002100021187
48. -do- 25.01.2013 40,00,000 24.01.2013 30,00,000
49. -do- -- -- 24.01.2013 10,00,000
50. -do- -- -- 25,01.2013 20,00,000
51. -do- -- -- 25.01.2013 10,00,000
52. -do- 28.01.2013 35,00,000 28.01.2013 20,00,000
53. -ao- 29.01.2013 30,00,000 08.02.2013 25,00,000
54. -do- 09.02.2013 25,00.000 11.02.2013 50,00,000
55. -do- 12.02.2013 30,00,000 11.02.2013 40,00,000
56. -do- 12.02.2013 35,00,000 11.02.2013 35,00,000
57. -do- 12.02.2013 30,00,000 18.02.2013 55,00,000
58. -do- 12.02.2013 30,00,000 18.02.2013 45,00,000
59. -do- 19.02.2013 35,00,000 22.02.2013 25,00,000
60. -do- 19,02.2013 35,00,000 22.02.2013 25,00,000
61. -do- 19.02.2013 30,00,000 22.02.2013 25,00,000
62. -do- 25.02.2013 35,00,000 22.02.2013 30,00,000
63. -do- 25.02.2013 35,00,000 25.02.2013 35,00,000
64. -do- 25.02.2013 35,00,000 05.03.2013 60,00,000 1
65. -do- 26.02.2013 35,00,000 08.03.2013 35,00,000
66. -do- 06.03.2013 30,00,000 08.03.2013 30,00,000
67. -do- 05.03.2013 30,00,000 08.03.2013 35,00,000
68. -do- 09.03.2013 25,00,000 09.03.2013 25,00,000
69. -do- 09.03.2013 25,00,000 11.03.2013 40,00,000 49 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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70. -do- 09.03.2013 25,00,000 11.03.2013 30,00,000
71. -do- 09.03.2013 25,00,000 11.03.2013 30,00,000
72. -do- 11.03.2013 25,00,000 12.03.2013 30,00,000
73. -do- 12.03.2013 25,00,000 12.03.2013 20,00,000
74. -do- 12.03.2013 25,00,000 13.03.2013 25,00,000
75. -do- 12.03.2013 50,00,000 13.03.2013 25,00,000
76. -do- 12.03.2013 25,00,000 13.03.2013 20,00,000
77. -do- 13.03.2013 25,00,000 13.03.2013 30,00,000
78. -do- 13.03.2013 25,00,000 14.03.2013 25,00,000
79. -do- 14.03.2013 25,00,000 18.03.2013 40,00,000
80. -do- 14.03.2013 25,00,000 18,03.2013 40,00,000
81. -do- 14.03.2013 25,00,000 19.03.2013 30,00,000
82. -do- 14.03.2013 25,00,000 19,03.2013 40,00,000
83. -do- 15.03.2013 25,00,000 20.03.2013 30,00,000
84. -do- 19.03.2013 30,00,000 20.03.2013 40,00,000
85. -do- 19.03.2013 25,00,000 20.03.2013 30,00,000
86. -do- 19.03.2013 25,00,000 21.03.2013 35,00,000
87. -do- 20.03.2013 35,00,000 21.03.2013 35,00,000
88. -do- 20.03.2013 35,00,000 21.03.2013 30,00,000
89. -do- 21.03.2013 30,00,000 22.03.2013 20,00,000
90. -do- 21.03.2013 40,00,000 22.03.2013 30,00,000
91. -do- 21.03.2013 30.00,000 22.03.2013 20,00,000
92. -do- 22.03.2013 30,00,000 22.03.2013 30,00,000
93. -do- 22.03.2013 40,00,000 23.03.2013 25,00,000
94. -do- 22.03.2013 30,00,000 23.03.2013 25,00,000
95. -do- 23.03.2013 50,00,000 25.03.2013 25,00,000
96. -do- 23.03.2013 50,00,000 25,03.2013 30,00,000
97. -do- 30.03.2013 10,00,000 25.03.2013 30,00,000
98. -do- 26.03.2013 22,00,000 50 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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99. -do- 26.03.2013 37,57,878 100 -do- 26.03.2013 30,00,000 .
101 -do- 26.03.2013 35,00,000 .
102 -do- 26.03.2013 35,00,000 .
j -do- 26.03.2013 25,00,000 103 . 104 -do- 26.03.2013 40,00,000 . 105 M/s Giri Financial 09.02.2013 50,00,000 08.02.2013 50,00,000 . Services Pvt. Ltd. ICICI Bank Ltd, A/c No. - 0954002100021187 106 -do- 11.03.2013 25,00,000 09.03.2013 20,00,000 . 107 -do- 11.03.2013 25,00,000 09.03.2013 25,00,000 . 108 -do- 11.03.2013 25,00,000 09.03.2013 25,00,000 . 109 -do- 11.03.2013 25,00,000 09.03.2013 15,00,000 . 110 -do- 12.03.2013 25,00,000 09.03.2013 15,00,000 . 111 -do- 12.03.2013 25,00,000 11.03.2013 25,00,000 . 112 -do- 12.03.2013 25,00,000 11.03.2013 25,00,000 . 113 -do- 12.03.2013 25,00,000 11.03.2013 50,00,000 . 114 -do- 14.03.2013 25,00,000 13.03.2013 25,00,000 . 115 -do- 14.03.2013 25,00,000 13.03.2013 30,00,000 . 116 -do- 14.03.2013 25,00,000 13.03.2013 40,00,000 . 117 -do- 14.03.2013 25,00,000 14.03.2013 25,00,000 . 118 -do- 15.03.2013 25,00,000 . 119 M/s Giri Financial 02.04.2013 35,00,000 26.03.2013 37,57,878 . Services Pvt. Ltd. Punjab National Bank, A/c No. - 0954002100021187 120 -do- 02.04.2013 20,00,000 26.03.2013 30,00,000 . 121 -do- 02.04.2013 35,00,000 26.03.2013 35,00,000 . 122 -do- 02.04.2013 35,00,000 26.03.2013 35,00,000 . 123 -do- 02.04.2013 35,00,000 26.03.2013 25,00,000 . 124 -do- 02.04.2013 35,00,000 26.03.2013 40,00,000 . 51 ITA No. 923/Del/2021
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125 -do- 02.04.2013 35,00,000 02.04.2013 25,00,000 .
126 -do- 02.04.2013 35,00,000 02.04.2013 25,00,000 .
127 -do- 03,04.2013 35,00:000 02.04.2013 25,00,000 .
128 -do- 03.04.2013 30,00,000 02.04.2013 25,00,000 .
129 -do- 03.04.2013 30,00,000 04.04.2013 50,00,000 .
130 -do- 05.04.2013 35,00,000 10.04.2013 40,00,000 .
131 -do- 05.04.2013 20,00,000 10.04.2013 25,00,000 .
132 -do- 11.04.2013 35,00,000 .
23,00,00,000/-
Thus, the evi dence submitted by the appell ant does not i nspi re the confi dence regardi ng credi t capaci ty of the credi tors and genui neness of the transacti ons, especi ally consi deri ng the fact that, lenders have di scl osed meager i ncome in thei r returns and each credi t of unsecured l oans to the appell ant company i s preceded by the equi val ent or more amount of deposi ts of credi t on the same date or on the pri or dates. Al so, AO has recorde d the fi ndi ng of fact that, most of the l enders do not exi st and operate on the gi ven address and are paper compani es provi di ng the accommodati on entri es of share capi tal /unsecured l oans. Al so it i s noted from the bal ance sheet of the credi tor compani es that, they do not possesses any tangi bl e or i ntangi bl e fi xed assets to cond uct busi ness acti vi ti es. Thus, i t i s concl uded that, genuineness of the transacti on and credi t capaci ty of the credi tors stands u nsubstanti ated. Appel l ant, on the other hand has not pl aced any materi al before the undersi gned to di sl odge the fi ndi ng of the AO. Therefore , consi deri ng the totali ty of facts and ci rcumstances of the case, 52 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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i t i s concluded that, appel l ant has mi serabl y fail ed to prove the credi t capaci ty and genuineness of the transacti on.
10.8 It i s a settl ed preposi ti on of l aw u/s. 68 of the IT Act that the ini ti al burden of proof rests u pon the appel l ant to establi sh the i denti ty, credi t capaci ty of the credi tor and to establ i sh the genui neness of transacti on. For t he sake of cl ari ty provi si on of secti on 68 of the Act as amended reads as under:
"68. Where any sum i s found credi ted i n the books of an assessee mai ntai ned for any previ ous year, and the assessee offers no expl anati on about the nature and source thereof or the expl anati on offered b y hi m is not, i n the opi ni on of the [Assessi ng] Offi cer, sati sfactory, the sum so credi ted may' be charged t o i ncome -tax- as the i ncome of the assessee of that previ ous year:
"[Provi ded that where the assessee i s a company (not bei ng a company i n whi ch th e publi c are substanti all y i nterested), an d the sum so credi ted consi sts of share appl i cati on money, share capi tal , share premi um or any such amount by whatever name call ed, any expl anati on offered by such assessee -company shall be deemed to be not sati sfa ctory, unl ess--
(a) the person, bei ng a resi dent i n whose name such credi t i s recorded in the books of such company al so offers an expl anati on about the nature and source of such sum so credi ted; and 53 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
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(b) Such expl anati on i n the opi ni on of the Assessi ng Offi cer aforesai d has been found to be sati sfa ctory:
Provi ded further that nothi ng contai ned i n the fi rst provi so shall appl y i f the person, i n whose name the sum referred to therei n i s recorde d, i s a venture capi tal fund or a venture capital company as referred to i n cl ause (23FB) of secti on 10.]"
The present facts of the case are squarel y covered by the provi si ons of l aw' menti oned here -i n-above, wherei n i t was i mperati ve for the appell ant to si mul taneou sl y prove the i denti ty and credi tworthi ness of the credi tors al ong with the genui neness of transacti on. In t he i nstant facts of the case, appel l ant has mi serabl y fail ed to prove genui neness of the transacti on and credi tworthi ness of the creditors. Hence, addi ti on made by Assessi ng Offi cer i s perfectl y justi fi ed.
10.9 It is al so an establi shed l aw that mere fili ng of confi rmati on l etter and the ITR copi es are not enough to prove the credi t capaci ty of the credi tor. Hon'bl e Kol kata Hi gh Court: i n the case of CIT Vs Korl av Tradi ng Company Ltd.(Cal . ) 232 ITR 280 and CIT Vs Preci si on Fi nance P. Ltd. (Cal .) 208 ITR 465 have observed and hel d that mere filing of confi rmati on and transacti on through the banki ng channel i s not enough to prove the genui neness of cash credit and i t can be assessed. Further, Hon'bl e Apex Court in the case of Shri Roshan D. Haiti Vs CIT (SC) 107 ITR 938 hel d that i n the case of credi ts i n the name of thi rd party, i t i s the duty of the appell ant to prove the i denti ty or credi t capaci ty of the credi tors to advance money and 54 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
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genui neness of transacti on. Further, Hon'bl e Del hi Hi gh Court i n the case of Sanraj Engineering Pvt. Ltd. Vs. CIT i n ITA 79/2016 has hel d that, "addi ti on made u/s 68 of the Act on account of unsecured l oans was not justi fi ed, where ini ti al onus of provi ng the credi tworthi ness of the l enders were not di scharged by the assessee." Al so, Hon'bl e Gujarat Hi gh Court i n the case of Pawan Kumar Sanghvi [2018] SO taxmann.com 290 has hel d that, "where assessee recei ved loan from two compani es, i n vi ew of fact that on date of advanci ng l oan to assessee there were credi t entri es of al most si milar amounts and bal ance after these transacti ons was a small amount and moreover assesse e fail ed to produce these l enders for veri fi cati on, i mpu gned amount was ri ghtly brought to tax under secti on 68." Hon'bl e Delhi Hi gh Court i n the case of Seema Jai n Vs ACIT [2018] 96 taxmann.com 307 (Delhi ) has hel d that, "where AO made addi ti on to assessee's income i n respect of l oan avail ed, i n vi ew of fact that l ender company di d not have tangi bl e or i ntangi bl e fixed assets and, moreover, i t had decl ared a meage r i ncome and, thus, i t was not i n a positi on to gi ve such a huge l oan to assessee, i mpugned addi ti on was to be confi rmed." Further, Hon'bl e Delhi Hi gh Court i n the case of C IT Vs Ul tra Modern Exports (P.) Ltd [2013] 40 taxmann.com 458 (Del hi )/[2014] 220 Taxman 165 (Delhi )(MAG.) has hel d that, "where i n orde r to ascertai n genui neness of assessee's cl ai m rel ati ng to recei pt of share appli cati on money, Ass essi ng Offi cer sent noti ces to share appl i cants whi ch returned unserved, however, assesse e still managed to secure documents such as thei r i ncome tax returns as wel l as bank account parti cul ars, in such 55 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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ci rcumstances, Assessi ng Offi cer was justi fi ed in dra wi ng adverse i nference and addi ng amount i n questi on to assessee's taxabl e i ncome under secti on 68." Al so, Hon'bl e Cal cutta Hi gh Court i n the case of C!T Vs Mai than Internati onal 56 (2015] 375 ITR 123 (Cal cutta) has hel d that, "Assessi ng Offi cer coul d not accept genui neness of l oan taken by assessee from vari ous credi tors merel y on basi s of thei r bank statements and l etter of confi rmati ons as he was requi red to exami ne credi tworthi ness of sai d credi tors as well ." Hon'bl e Madras Hi gh Court i n the case of B.R. Pet rochem (P.) Ltd. Vs ITO [2017] 81 taxmann.com 424 (Madras) has observed and hel d that, "where assessee received share capi tal from vari ous contri butors, i n vi ew of fact that those contri butors were persons of i nsi gni fi cant means and thei r credi tworthi ness to have made contri buti ons had not been establi shed, i mpugned addi ti on made by authoriti es bel ow in respect of amount i n questi on under secti on 68 was to be confi rmed." Further, Hon'bl e Supreme Court whil e di smi ssing the SLP of the assessee i n the cas e of Ri ck Lunsford Tra de & Investment Ltd Vs CIT 2016 TIOL - 207-SC-IT has hel d that, "i t i s open to the Revenue Department to make addi ti on on account of alleged share capi tal u/s 68, where the assessee company has fail ed to show genui neness of i ts sharehol ders." Al so, Hon'bl e Apex Court in the case of Navodaya Castl e Pvt . Ltd. Vs CIT [2015] 230 Taxman 268 (SC) observed duri ng di smi ssal of SLP of the appel l ant that, "Hi gh Court rul i ng that certi fi cate of i ncorporati on, PAN etc., are n ot suffi ci ent for purpose of i dentifi cati on of subscri ber company when there i s materi al to show that subscri ber was a paper company and not a genui ne 56 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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i nvestor." i n the i nstant case, the undersi gned i s of the vi ew that the credi t capaci ty of the credi tor and genuineness of the transacti on are not proved by the appel l ant company.
10.10 Further, Hon'bl e Del hi Hi gh Court i n the case of PCIT Vs Vi kram Si ngh (2017) 85 taxmann.com 104 has obse rved and hel d that "even i f transacti on of l oan i s made through cheque, i t cannot be presumed to be genui ne in absence of any agreement, securi ty and interest payment . Mere submi ssi on of the PAN and bank statements of the credi tor does not establi sh the authenti ci ty and genuineness of huge l oan transacti on parti cul arl y when the ITR of the l ender does not i nspi re such confi dence. Mere submi ssi on of ID proof and the fact that the l oan transacti on were through banki ng channel does not establi sh the authenti ci ty of transacti on. The l oan entri es are generall y masked to pump the bl ack money i nto the banking channel and such practi ces conti nued to pl ague Indi an Economy." Furth er, i n the case of CIT Vs. N.R , Portf oli o Pvt. Ltd. (ITA No. 1018, 1019/2100 dated 22.11.2013) Hon'bl e Del hi Hi gh Court has observed and hel d that:
"mere producti on of i ncorporati on detail s, PAN Nos. or the fact that thi rd persons or company h ad fil ed i nc ome tax detail s i n case of a pri vate li mi ted compan y may not be suffi ci ent when surroundi ng and attendi ng facts predi cate a cover up. These facts indi cate and refl ect proper paper work or documentati on but genui neness, credi tworthi ness, i denti ty are deeper and obtrusi ve compani es no doubt are arti fi ci al or juri sti c person but they are soull ess and are dependent upon the indi vi dual s behind 57 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
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them who run and manage the said compani es. It i s the person behi nd the company who tak e the deci si ons, control s and manage them."
The cases reli ed upon by the Ld. AR are on thei r own footi ngs and di sti ngui shabl e on facts and are not appl i cabl e to the present case. Further, Hon'bl e Calcutta Hi gh Court has observe d and hel d i n the case of Pragati Financi al Management Pvt. Lt d. Vs. CIT i n C.A. 887 & 998 of 2016 and others dated 07 .03.2017 , that, AO is enti tl ed to make enqui ry u/s. 68 of the -Act regardi ng genui neness of the transacti on, Further, i t i s hel d that, i n the foll owi ng judi ci al pronouncements of the Hon'bl e Hi gh Courts that, unsecured l oans/share capi tal received from the enti ti es i nvol ved i n provi ding accommodati on entri es are li abl e to be taxed u/s 68 of the Act:
i) CIT vs. Nova Promoters & Fi nl ease (P) Ltd. 342 ITR 16 9 [Del hi ] 2013.
ii ) CIT vs. D.K. Garg [2017] 84 taxmann .com 257 [Del hi ] 10.11 The AR of the appell ant has submi tted that the AO di d not all ow assessee to make the cross examinati on of the persons on whose statement Ld. AO rel i ed for maki ng the assessment agai nst the assessee even after speci fi c request of the assessee whi ch i s agai nst the pri nci pl e of natural justi ce, hence the assessment made i s bad i n l aw. In thi s regard i t i s observed that ail the materi al facts, whi ch have been used agai nst the assessee, have been provi ded to the appell ant, therefore the pl ea of the appell ant that non provi di ng the opportuni ty of cross 58 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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examinati on, vi ti ates the income escapi ng assessment proceedi ngs has not been found correct.
10.12 On the i ssue of cross exami nati on, i t i s noti ced that all the documents were shown to the appell ant. Therefore, no separate opportuni ty to further cross exami ne i s requi red to be gi ven to the appell ant. Further, Hon'bl e Supreme Court, i n the well -known Dhakeswari Cotton Mill s (26 ITR 775 at 782) case, rul ed that the Evi dence Act may have no appli cati on i n tax assessment proceedi ngs. However, the court al so cl ari fi ed l ater, i n Chuharmal vs CIT (172ITR 250at 255 SC), that when the taxing authori ti es are desi rous of i nvoking the pri nci pl es of the Evi dence Act in proceedi ngs before them, they are n ot prevented from doi ng so. All that i s requi red i s that whatever materi al they coll ect will have to be pl aced before the tax - payi ng assessee, i f adverse i nference i s goi ng to be drawn - audi al teram partem i s a well -known pri nci pl e of natura l justi ce. Thi s pri nci pl e i s establi shed by the judgment of the Supreme Court i n Dh akeswari Cotton Mill s Ltd. v. CIT (26 ITR 775,783), and appli ed by that court i n Ki shin chand Chell aram vs. CI T (125 ITR 713), where an assessment based on the resul t of pri vate i nqui ri es conducted behi nd the back of the assessee was set asi de because the evi dence so gathere d was n ot pl aced before the assessee . In Gunda Subbayya vs. CIT (7 ITR 21, 28) , Hon'bl e Madras Hi gh Court has held:
"Information which the Income -T ax Officer has received may not always be accurate and it is only fair when he proposes -t o act on material which he has obtained from an outside source 59 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.ITA No. 924/Del/2021
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that he should give the assessee an opportunity of showing, if he can, that the Income Tax Officer has been mis informed; bu t the Income-Tax obviously not bound to disclose the source of his information"
10.13 Further, juri sdi cti onal Hon'bl e All ahabad Hi gh Court in the case of Motil al Padampat Udyog Ltd. Vs. CIT 293 1TR 656 has l ai d down the correct preposi ti on of l aw of cross exami nati on and hel d as foll ows:
"Right of cross-examination of persons from whom the Assessing Officer has collecte d the evidence is not required by law. The requi rement of the statute for a valid assessment would be met if all the evidence collected which is to be used against the assessee while fram ing the assessment orde r is placed before the assessee and he is given opportunity to rebut the evidence."
In thi s case, all the materi al used agai nst the assessee has been provi ded, therefore t he contenti on of the AR that the assessee has not been given opportuni ty of cross exami nati on i s not found tenabl e in the li ght of above judgments.
10.14 In vi ew of the above detail ed di scussi on of the factual matri x of the case and consi deri ng the enumer ated judi ci al pron ouncements, i t i s concl uded that appell ant company has mi serably fail ed to prove the vi tal ingredi ents of credi tworthi ness of the creditors and genuineness of the transacti on. Therefore, undersi gned fi nds no reason to i nterfere 60 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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wi th the addi ti on made by Assessing Offi cer, u/s 68 of the Act. The same i s therefore, confi rmed and ground of appeal of the appel l ant i s di smi ssed for A.Y. 201 3 - 14 & A.Y. 2014 -15."
53. Aggri eved with the order of the l d. CIT(A) the assessee filed appeal before t he ITAT.
54. Duri ng the heari ng, at the outset, the l d. AR brought t o our noti ce that the i denti ty, genuineness and credi t worthi ness of the i nvestors namel y, Gi ri Fi nanci al Servi ces Pvt. Ltd. & Pabl a Leasi ng & Finance Pvt. Ltd. has been wi del y exami ned i n detail duri ng the proceedi ngs before the Tri bunal in the case of Ni mbus Indi a Ltd. for the A.Y. 2013 -14 and reli ed on the order of the Co-ordi nate Bench of ITAT.
55. On the other hand, the l d. DR strongl y supported the orde rs of the revenue authori ti es.
56. We have gone through the order of the Co -ordi nate Bench of ITAT i n ITA No. 929 & 930/De l /2019 in the case of Ni mbus Indi a Ltd. Vs. DCIT for the A.Y. 2013 -14 and A.Y. 2014-15.
57. The rel evant poi nts wi th regard to exami nati on of genui neness of Gi ri Fi nanci al Servi ces Pvt. Ltd. & Pabl a Leasing & Finance Pvt. Ltd. by the Tri bunal i n the above sai d order i s as under:
Para 7 - From the report of the Investi gati on Un i t, Kol kata, he noted that thi s company along wi th Gi ri Fi nanci al Servi ces Pvt. Ltd., M/s Pabl a Leasi ng & Finance Pvt. Ltd.61 ITA No. 923/Del/2021
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and Intell ectual Securiti es Pvt. Ltd., are used by di fferent accommodati on entry operators to faci litate accommodati on entry operato rs. Further, the Di rectors of these compani es have admi tted that they were involved in provi di ng accommodati on entri es on commi ssi on basi s to IITL Ni mbus group of compani es.
Para 9 - So far as A.Y . 2014 -15 i s concerned, the AO made addi ti on of Rs.20,51,00, 000/- being the amount of share capi tal recei ved from M/s Pabl a Leasi ng & Fi nance Pvt. Ltd. of Rs.2,51,00 ,000/ - and the amount of share capi tal recei ved from M/s Gi ri Fi nanci al Servi ces Pvt. Ltd. of Rs.18 crores.
Para 13 - So far as the addi ti on of Rs.15 c rores i n A.Y. 2013-14 and Rs.2.51 crore i n respect of M/s Pabl a Leasi ng & Fi nance Pvt. Ltd., ........and Rs.18 crore from M/s Gi ri Fi nanci al Servi ces i n A.Y. 2014 -15 i s concerned, the l d. Counsel for the assessee drew the attenti on of the Bench to the vari ous detail s of the parti es from whom the assessee has recei ved non -cumul ati ve redeemabl e share capi tal during the year. Referri ng to vari ous pages of the paper book , the l d. Counsel for the assessee drew the attenti on of the Bench to the copi es of the i ncome -tax returns, bal ance sheets, copy of annual reports of the compani es, bank statements, copi es of the assessment orde rs of those compani es, etc., and submi tted that the assessee has di scharged the onus cast on it by substanti ati ng the i denti ty and credi t wor thi ness of the credi tors and genui neness of the transacti ons.62 ITA No. 923/Del/2021
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Para 16 - So far as the am ount of Rs.18 crore recei ved from M/s Gi ri Financi al Servi ces (P) Ltd. i n A.Y. 2014 -15 i s concerned, the l d. Counsel for the assessee submi tted that the assessee has fi l ed the requi si te documents such as th e copy of bank statement of the i nvestor company, thei r audi ted accounts, i ncome -tax return acknowl edgement, Form 2 fil ed wi th the ROC, etc., to substanti ate the i denti ty and the credi t worthi ness of the i nvestor com pany and genui neness of the transacti on. Referring to pape r book page 254, he submi tted that Gi ri Fi nanci al Servi ces (P) Ltd., is regi stered wi th RBI as a NBFC w.e.f.
16.02.2001. He submi tted that in response to noti ce u/s 133(6), the di rector of the compa ny Mr. Anshul Mi ttal had appeare d and filed rel evant document and he had confi rmed to have invested in the assessee company. He submi tted that in the A.Y. 2015 -16, the AO, in the orde r ITA Nos.929 & 930/Del /2019 passed u/s 153A/143(3) has accepted a sum of Rs.11.3 4 crores towards share capi tal and share premi um i n the assessee com pany and no adverse vi ew has been taken. Further, the i nvestor company i s showi ng conti nuous substanti al i ncome and, therefore, no addi ti on i s call ed for u/s 68 of the Act when the assessee has proved the three i ngredi ents of secti on 68 of the IT Act, 1961.
Para 26 - We have heard the ri val arguments made by both the si des, perused the orde rs of the AO, CIT(A) and the paper book fil ed on behal f of the assessee. We have al so consi dered the vari ous deci si ons ci ted before us. We fi nd 63 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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the AO, in the i nstant case, made addi ti on of Rs.29,50,00,000/ - to the total income of the assessee bei ng the amount of Rs.14,50,00,000/ - from M/s Ci ndy Goods & Suppl y ITA Nos.929 & 930/Del /2019 Pvt. Ltd., and Rs.15 crores from M/s Pabl a Leasi ng & Fi nance Pvt. Ltd., on account of non -genui ne share premi um/share capi tal . Si mil arl y for A.Y. 2014 -15, the AO made an addi ti on of Rs.20,51,00,000/ - bei ng an amount of Rs.2,51,00,000/ - recei ved from M/s Pabl a Leasi ng & Fi nance Pvt. Ltd. and Rs.18 crores from Gi ri Fi nanci al Servi ces Pvt. Ltd. treati ng the same as non -genui ne and by i nvoki ng the provi si ons of secti on 68 of the IT Act. We find the l d.CIT(A) uphel d the addi ti on so made by the AO. It i s the submi ssi on of the l d. Counsel for the assessee tha t t he assessee has fi l ed the requi site detail s such as copy of t he bank account, copy of the Income-tax returns, copy of confi rmati ons, detail s of all otment of shares, etc. before the AO to substanti ate the i denti ty and credi t worthi ness of the i nvestor co mpani es and the genui neness of the transacti on. It i s al so hi s submi ssi on that the di rectors of the investor compani es were produced before the AO whose statements were recorded u/s 131 i n whi ch they have confi rmed to have i nvested i n the shares of the ass essee company. It i s al so hi s submi ssi on that in the precedi ng and subsequent assessment years, such share capi tal at hi gh premi um has been accepted by the AO in the order passed u/s 153A/143(3) and no adverse vi ew has been taken. Further, i t i s al so hi s submi ssi on that such non -cumul ati ve non -
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parti ci pati ng opti onall y converti ble redeemabl e preference shares were redeemed to the i nvestor compani es i n the F.Y. 2014-15 much before the search and, therefore, unde r the facts and ci rcumstances of the case no add i ti on i s call ed for.
Para 28 - .......... In the case of M/s Pabl a Leasi ng & Fi nance ITA Nos.929 & 930/Del /2019 Pvt. Ltd., the AO, i n the order passed u/s 143(3) for A.Y. 201 5 -16, copy of whi ch i s pl aced at pages 503 and 504 of the paper book, has accepted an am ount of Rs.2,64,60,000/ - towards preferenti al share capi tal and Rs.11,34,00,000/ - towards equi ty share capi tal and no addi ti on has been made. Si mil arl y, i n the case of Gi ri Fi nanci al Servi ces Pvt. Ltd., the AO, i n the order passed u/s 143(3)/153A for A.Y. 2015-16, copy of whi ch i s pl aced at pages 505 and 506 of the paper book, has accepted th e same and no addi ti on has been made. Therefore, the all egati on of the AO that these compani es are paper compani es wi thout doi ng any busi ness and these compani es are ex i sti ng only for bei ng used by di fferent accommodation entry operators to facili tate accommodati on entri es in different forms to vari ous benefi ci ary groups i s factuall y i ncorrect i n vi ew of the orders passed i n case of these i nvestor compani es i n precedi ng and subsequent years.
58. We find that the Co-ordi nate Bench of the ITAT has consi dered the i dentity of the compani es and found that Gi ri Fi nanci al Servi ces Pvt. Ltd. to have been incorporated i n the 65 ITA No. 923/Del/2021 Nimbus Multicommodity Brokers Pvt. Ltd.
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year 1995, the amounts have been accepted as genui ne du ri ng the assessments compl eted u/s 143(3), the returned i ncome range from Rs.53 .9 l acs, Rs.9.16 l acs, Rs.148 l acs for the A.Y. 2013-14, A.Y. 2014 -15 and A.Y. 2015 -16 respecti vely in the case of Gi ri Fi nanci al Servi ces Pvt. Ltd. and i n the case of Pabl a Leasi ng & Fi nance Pvt. Ltd. Rs.30.85 l acs for the A.Y. 2013 -14, Rs.(-) 52.22 l acs for A.Y. 2014 -15 and Rs.93.18 l acs for A.Y. 2015-16 whi ch undi sputedly proves that the i nvestor compani es cannot be consi dered as a accommodati on entry provi der/pape r company. The company has dul y responded to noti ces i ssued u/s 133(6) to the revenue authori ti es. Further, Shri Vi rendra Tri pathy, Managi ng Di rector of M/s Pabl a Leasi ng & Fi nance Pvt. Ltd., has confi rmed the i nvestments made i n the assessee company duri ng the statement recorde d u/s 131 of the IT Act by the revenue authoriti es . Mr. An shul Mi ttal , Di rector of the company has submi tted all the rel evant detail s before the revenue authori ti es. Hence, keeping i n vi ew, the facts narrated above, we find that the observation of the revenue authori ti es hol di ng that the i denti ty, genui neness and credi tworthiness of the l ender company coul d not be proved i s contrary to the facts on record. Hence, the addi ti on made by the revenue authori ti es i s li abl e to be obliterated.
59. In the resul t, the a ppeal of the assessee in ITA No. 928/Del /2021 for A.Y. 2013 -14 and ITA No. 929/Del /2021 for A.Y. 2014-15 i s all owed.
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ITA No. 923/Del/2021 for A.Y . 2012-13Nimbus Mult icommodity Broker s Pvt. Ltd.
60. Duri ng the year, the assessee recei ved unsecured l oans from three entiti es whi ch are as under:
S r. No. Name of Part y A mou nt (Rs.)
1. Ci n dy G oods & S u ppli ers 2 ,0 0 ,0 0 ,0 00 / -
2. Newways Fi n an ce Pvt . Lt d. 1 ,0 5 ,0 0 ,0 00 / -
3. RCJ I n vestmen t Tru st Lt d. 7 0 ,0 0 ,0 00 / -
Tot al 3 ,7 5 ,0 0 ,0 00
61. The AO has made addi ti on under Secti on 68 of the IT Act on account of the unsecured l oan recei ved from M/s Ci ndy Goods & Suppl y Pvt. Ltd. accepti ng the unsecured l oans recei ved from the other two l enders namel y, Newways Fi nance Pvt. Ltd. and RCJ Investment Trust Ltd.
62. The i ssue of i denti ty, genui neness and credi tworthi ness of the l ender namel y, M/s Ci ndy Goods & Suppl y Pvt. Ltd. has al ready been di scussed i n the ITA No. 926/Del /2021 for A.Y. 2011-12 and ITA No. 927/Del /2021 for A.Y . 2012 -13. Hence, foll owi ng the same rati o, the addi ti on made by the AO i s di rected to be del eted.
63. In the resul t, the appeal of the assessee in ITA No. 923/Del /2021 for A.Y. 2012 -13 i s all owed.
ITA No. 924 /Del/2021 for A.Y . 2012 -13 Bipin Agarwal
64. Duri ng the year, the assessee recei ved unsecured l oans from seven enti ti es whi ch are as under:
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Sr. No. Name of Party Amount(Rs.)
1. Vin iyas Finance & Inv estment Pvt. Lt d. 2,50,00,0 00/ -
2. M/s Cindy Goods & Supply Pv t. Ltd. 2,50,00,0 00/-
3. M/s Mysore Fin lease Pvt. Ltd. 4,00,00,0 00/ -
4. RCJ Inv estmen t Trus t Pvt. Ltd. 50,00,00 0/-
5. M/s Mysore Fin lease Pvt. Ltd. 2,00,00,0 00/ -
6. M/s Jardine Infrastructure & Develo pers 1,25,00,0 00/ -
Pvt. Ltd.
7. M/s Tavish i Ho ldings Pv t. Ltd. 2,00,00,0 00/ -
65. The AO has made addi ti on u/s 68 of the I.T. Act on account of unsecured l oan re cei ved from M/s Ci ndy Goods & Suppl y Pvt. Ltd. onl y accepti ng the unsecured l oans recei ved from the other l e nders.
66. The i ssue of i denti ty, genui neness and credi tworthi ness of the l ender namel y, M/s Ci ndy Goods & Suppl y Pvt. Ltd. has al ready been di scussed i n ITA No. 926/Del /2021 for A.Y. 2011 - 12 and i n ITA No. 927/Del /2021 for A.Y . 2012 -13. Hence, foll owi ng the same rati o, the addi ti on made by the AO i s di rected to be del eted.
67. In the resul t, the appeal of the assessee in ITA No. 924/Del /2021 for A.Y. 2012 -13 i s all owed.
Orde r Pronounced i n the Open Court on 12 /01/2022.
Sd/- Sd/-
(Amit Shukla) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 12/01/2022
*Subodh Kumar, Sr. PS*
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Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT ASSISTANT REGISTRAR Date Initial
1. Draft punched on computer 07 & PS 10.01.2022
2. Draft placed before author 11.01.2022 PS
3. Draft proposed & placed before the JM/AM second member
4. Draft discussed/approved by Second JM/AM Member.
5. Approved Draft comes to the Sr.PS/PS PS/PS
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk PS
8. Date on which file goes to the AR
9. Date on which file goes to the Head Clerk.
10. Date of dispatch of Order.
11. Date of uploading