Income Tax Appellate Tribunal - Delhi
Acit, Central Circle, Ghaziabad vs Nidhi Sharma, New Delhi on 16 October, 2023
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'C', NEW DELHI
Before Sh. C. M. Garg, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
ITA No. 1842/Del/2022 : Asstt. Year : 2019-20
Ankit Sharma, Vs DCIT,
KA-5, Kavi Nagar, Central Circle,
Ghaziabad-201001 Ghaziabad
(APPELLANT) (RESPONDENT)
PAN No. CWCPS4668A
ITA No. 2125/Del/2022 : Asstt. Year : 2016-17
ACIT, Vs Ankit Sharma,
Central Circle, KA-5, Kavi Nagar,
Ghaziabad-201002 Ghaziabad-201001
(APPELLANT) (RESPONDENT)
PAN No. CWCPS4668A
ITA No. 2124/Del/2022 : Asstt. Year : 2016-17
ACIT, Vs Smt. Nidhi Sharma,
Central Circle, 17/32, Shakti Nagar,
Ghaziabad New Delhi-110007
(APPELLANT) (RESPONDENT)
PAN No. AJTPB9404D
ITA No. 2126/Del/2022 : Asstt. Year : 2016-17
ITA No. 2127/Del/2022 : Asstt. Year : 2017-18
ACIT, Vs Shri Jaipal Singh Sharma Trust,
Central Circle, 40-41, Maliwara Chowk, Addl.
Ghaziabad-201002 Sihani Gate, Ghaziabad-201011
(APPELLANT) (RESPONDENT)
PAN No. AANTS7037E
Assessee by : Sh. Rajiv Khandelwal, CA &
Sh. Gagan Khandelwal, Adv.
Revenue by : Mr. Waseem Arshad, CIT-DR
Date of Hearing: 10.08.2023 Date of Pronouncement: 16.10.2023
ORDER
2 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022
Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust
Per Dr. B. R. R. Kumar, Accountant Member:
The present app eals have been filed by the assesses and the Revenue against the orders of ld. CIT(A)-4, Kanpur dated 27.06.2022.
2. In ITA No. 1842/Del/2022, following grounds have been raised by the assessee:
"1 . That on the facts of the cas e, in law and under the circums tanc es, the Commissi oner of Inc ome Ta x (Appea l )- 4, Kanpur erred in c onfirming the action of the ass es sing offic er t o make an additi on of Rs. 20,44,870/- (1/3 of Rs. 61,34,610/-treated as unex plained jewell ery) to the inc ome of t he appel lant in r esp ect of the alleged un- explai ned gold orname nts found a t the time of se arch by invoki ng the provisions of s ecti on 69A rea d with s ectio n 115BBE of the Ac t. The addition confirm ed is unj us tified and bad in la w.
2. Tha t on the facts o f the case, in la w and under the circums tanc es, the Commissi oner of Inc ome Ta x (Appea l )- 4, Kanpur err ed to c onfirm t he action of the as s es sing offic er to make an additi on of Rs. 20,44,870/- (1 /3 " of Rs. 61,34,610/- tr eated as unexplai ned jew ellery ) by i nvoki ng the provisions of s ec tion 69A read with s ec tion 115BBE of the Act under s ection i gnori ng t he pl ea that jewellery bel ongi ng t o t he daughter is a lso kept i n the hous e. The additi on confirmed by Hon'ble C ommissioner of Inc ome Tax (Appeal )-4, Kanpur is unjus tifi ed, unwarra nted bas ed o n surmises , conj ectures, a nd the sa me is bad i n la w.
3 That on t he fa cts of the ca se, in law and under the circums tanc es, the Commissi oner of Inc ome Ta x (Appea l )- 4, Kanpur err ed to c onfirm t he action of the as s es sing offic er t o make an a dditio n of R s 92,00,000/- to the inc omer of the appella nt for the alleged loa n figur es jotted on the rough paper beari ng number Z-1, of A nnexure LP-3, page number 27 by invoki ng the provisions of section 69A of the Act, whil e no suc h loa n was ever rec eiv ed but these were only figures jotted to s how hi ghe r c ost . The addition confirmed by the Hon'ble C ommis sioner of Income Tax (Appeal ) 4, Ka npur is ba sed on s ur mises, c onjec tures and on mer e hy potheti cal reas oni ngs a nd the same is unj usti fied unwarr anted and bad i n l a w 4 Tha t on the facts a nd i n law and under the circums tanc es, the as sessi ng officer err ed t o is sue the
3 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust penalty notice under s ection 271AAB a nd als o the i nteres t charged under s ec tion 234A, 2348, 234C and 234D i s thus illegal and bad i n l aw."
3. In ITA No. 2124/Del/2022, following grounds have been raised by the Revenue:
"1 . On facts and ci rcumsta nces of the cas e and in law, t he Ld. C IT(A ) e rred in dele ti ng the a ddition made by Asses si ng Offi cer of Rs. 75,00,000/- o n acc ount of unex plained loa n u/s 68 of t he IT Act, 1961 without consideri ng tha t lender c ompa ny i.e. M/s Sa rvotta m Sec urities Pvt. Ltd. doe s not hav e the cr editwort hi ness t o pay huge amount of loa n i. e. Rs. 1,50,00,000/- to t he as sess ee as t he lender compa ny had decl ar ed i nc ome o f Rs 9,99,730/- o nly duri ng t he y ear. Further, e nquiries were made b y the I nv esti gati on Wing and it was fo und tha t the lender company is a bogus entity and merely worki ng for provi ding a cc ommodati on entries to v ari ous entities. Thus , the creditwor thi ness of lender and genui nenes s of the lo a n receiv ed by the a ss es se e fro m M/s S arvottam Securities could not be proved.
2. On fac ts a nd ci rc umsta nces of the cas e a nd i n la w, the Ld. C IT(A ) e rred in dele ti ng the a ddition made by Asses si ng Offi cer of Rs. 50,00,000/- o n acc ount of unex plained loa n u/s 68 of t he IT Act, 1961 without consideri ng that l ender c ompany i. e. M/s Aspire Sal es Pvt. Ltd. does no t have the cr editwo rthi ness to pay huge amo unt of l oan i.e. Rs. 50,00,000/- to the ass ess ee as the lender c ompany had declared i ncome of Rs 6,36,870/- only duri ng the year . Besides, from t he perus al of bal a nc e sheet of the lender c ompany for the period e nding 31.03.2016, it is seen that it has shown total loa n a nd adv ances giv en (short term a nd lo ng ter m) of o nl y Rs. 1,83,359/- dur i ng the yea r a nd no other loa ns a nd adv ances hav e been mentioned i n the bala nce s he et. Further, duri ng assess ment proceedings, summo n u/s 131 was iss ued to the lender company to v erify t he clai m of the asses se e b ut no res ponse wa s made by it. Si nc e the as sess ee fail ed to prove the ge nui neness of his rec eipt of loa n from M/s Aspire Sales Pvt. Ltd., a ddition of Rs. 50,00,000/- ma de by the AO as unexpl ai ned l oan u/ s 68 of the Act, is justi fied.
3. On fac ts a nd ci rc umsta nces of the cas e a nd i n la w, the Ld. C IT(A ) e rred in dele ti ng the a ddition made by Asses si ng Offi cer of Rs. 25,00,000/- o n acc ount of unex plained loa n u/s 68 of t he IT Act, 1961 without consideri ng that l ender c ompa ny na mely M/s Moral S al es 4 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust Pv t. Ltd. does not have the creditworthi ness to pay huge amo unt of l oan i.e. Rs. 25,00,000/- to the ass ess ee as the lender c ompany had decl a red inc ome of Rs.
1,05,690/- only duri ng the yea r. Only tra nsac tion thr ough banki ng c hannel does not ma ke a tra ns ac ti on genuine. Further, the ass ess ee ha d not shown the a mount of loa ns forwar ded to t he ass ess ee in its ba lance s heet. Sinc e the as sess ee failed to prov e the genui neness of her receipt of loa n from M/s Moral Sales Pv t. Ltd. , addition of Rs.25,00,000/- m ade by the AO as unexplai ned l oa n u/s 68 of the Act, is j ustified. "
4. In ITA No. 2125/Del/2022, following grounds have been raised by the Revenue:
"1 . On facts and ci rcumsta nces of the cas e and in law, t he Ld. C IT(A ) e rred in dele ti ng the a ddition made by Asses si ng O fficer o f Rs. 1,50,00, 000/- o n ac count of unex plained loa n u/s 68 of t he IT Act, 1961 without consideri ng tha t lender c ompa ny i.e. M/s Sa rvotta m Sec urities Pvt. Ltd. doe s not hav e the cr editwort hi ness t o pay huge amount of loa n i. e. Rs. 1,50,00,000/- to t he as sess ee as t he lender compa ny had decl ar ed i nc ome o f Rs 9,99,730/- o nly duri ng t he y ear. Further, e nquiries were made b y the I nv esti gati on Wing and it was fo und tha t the lender company is a bogus entity and merely worki ng for provi ding a cc ommodati on entries to v ari ous pers ons/entities. T hus, the cr editworthi nes s of lender and genui nenes s of the lo a n receiv ed by the a ss es se e fro m M/s S arvottam Securities could not be proved.
2. On fac ts a nd ci rc umsta nces of the cas e a nd i n la w, the Ld. C IT(A ) e rred in dele ti ng the a ddition made by Asses si ng Offi cer of Rs. 50,00,000/- o n acc ount of unex plained loa n u/s 68 of t he IT Act, 1961 without consideri ng that l ender c ompany i. e. M/s Aspire Sal es Pvt. Ltd. does no t have the cr editwo rthi ness to pay huge amo unt of l oan i.e. Rs. 50,00,000/- to the ass ess ee as the lender c ompany had declared i ncome of Rs 6,36,870/- only duri ng the year . Besides, from t he perus al of bal a nc e sheet of the lender c ompany for the period e nding 31.03.2016, it is seen that it has shown total loa n and adv ances giv en (short term a nd lo ng ter m) of o nl y Rs. 1,83,359/- dur i ng the yea r a nd no other loa ns a nd adv ances hav e been mentioned i n the bala nce s he et. Further, duri ng assess ment proceedings, summo n u/s 131 was iss ued to the lender company to v erif y t he clai m of the asses se e b ut no res ponse wa s made by it. Si nc e the as sess ee fail ed to prove the ge nui neness of his rec eipt of loa n from M/s Aspire Sales Pvt. Ltd., a ddition of Rs.
5 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust 50,00,000/- ma de by the AO as unexpl ai ned l oan u/ s 68 of the Act, is justi fied."
5. In ITA No. 2126/Del/2022, following grounds have been raised by the Revenue:
"1 . On facts and ci rcumsta nces of the cas e and in law, t he Ld. C IT(A ) e rred in dele ti ng the a ddition made by Asses si ng O fficer o f Rs. 2,55,00, 000/- o n ac count of unex plained loa n u/s 68 of t he 1.T Act, 1961 without consideri ng that the lender compa ny na mely M/s KG Fiv est Pv t. Ltd. do es not have the creditwor thi nes s to pa y huge amount of loan i.e. Rs . 2,55,00,000/- to t he as sess ee as t he lender compa ny had decl ared i nc ome o f Rs 28,47,920/- only during the year . Further, e nqui ries were made b y the I nv esti gati on Wing and it was fo und tha t the c ompany is a b ogus entit y and merely worki ng for providi ng acc ommoda ti on e ntries to various entities. In such facts and circums tances, the creditworthi nes s of lender and genuine ness of the loa n rec eiv ed by t he as sess ee from M/s KG Fi nvest Pvt. L td. could not be prov ed.
2. On fac ts a nd ci rc umsta nces of the cas e a nd i n la w, the Ld. C IT(A ) e rred in dele ti ng the ad dition made by Asses si ng Offi cer of Rs. 37,00,000/- o n acc ount of unex plained lo an u/s 68 of the I.T Act , 1961 without consideri ng that as the le nder compa ny M/s Sarv otta m Sec urities Pvt. Ltd. doe s not hav e the cr editwort hi ness t o pay huge amount o f loan i.e . Rs. 37,00,000/- to t he as sess ee as t he lender compa ny had decl ar ed i nc ome o f Rs 9,99,730/- o nly duri ng t he y ear. Further, e nquiries were made b y the I nv esti gati on Wing and it was fo und tha t the c ompany is a b ogus entit y and merely worki ng for providi ng acc ommoda ti on e ntries to various entities. In such facts and circums tances, the creditworthi nes s of lender and genuine ness of the loa n rec eiv ed by t he as sess ee f rom M/s S arv ottam S ec urities c oul d not be prov ed.
3. On fac ts a nd ci rc umsta nces of the cas e a nd i n la w, the Ld. C IT(A ) e rred in dele ti ng the a ddition made by Asses si ng Offi cer of Rs. 80,00,000/- o n acc ount of unex plained loa n u/s 68 of t he IT Act, 1961 without consideri ng t hat the le nder compa ny na mely M/s Upaj Leasing a nd Fi nance C ompa ny Pvt. Lid does not ha ve the creditwo rthi ness to pa y huge amount of loa n i.e. Rs. 80,00,000/- to the ass essee as the lender c ompa ny had decla red i nc ome of Rs 13,63,530/- only during t he y ea r. Further, enqui ries were made by the Inv estigati on Wi ng
6 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust and i t was found tha t the c ompa ny is a b ogus e ntity a nd mer ely worki ng for prov iding a cc ommodati on entri es to vari ous e ntities. Since the assessee faile d to pr ove the genui nenes s of hi s receipt of l oa n fro m M/s Upaj L eas ing and Fi nanc e C ompany Pvt. Ltd., addition of Rs. 80,00,000/- mad e by the JAO as unexplai ned l oa n u/s 68 of the Act, is justi fied.
4. On fac ts a nd ci rc umsta nces of the cas e a nd i n la w, the Ld. C IT(A ) e rred in dele ti ng the a ddition made by Asses si ng Offi cer of Rs. 50,00,000/- o n acc ount of unex plained donat ion u/s 68 of the IT Act, 1961 without consideri ng t hat t he doner compa ny namely M/s Amsoft Glob al Pv t. Ltd. does not hav e the credit worthi ness t o pa y huge amount of loa n i.e. Rs. 50,00,000/- to the as ses se e as the doner c ompany had dec lare d i nc ome of Rs 1,40,880/- o nl y duri ng the year. It ha d als o not f urni shed its financial stat ement to prove its ne t worth a nd c apital to f orward lo a ns . Further, enquiri es were ma de by the Investi ga tion Wi ng a nd it was found tha t t he compa ny is a bogus pa per company and the tra nsaction of givi ng l oan to the as sess ee trust is bogus . It is a lso note worthy her e tha t duri ng search proc eedi ngs, t he said amo unt of dona tion were acc ounted as corpus dona tions in t he books of the as sessee, however, after filing the return i n consequenc e of notic e u/s 153A, it co nv ert ed the same from corpus donati on to vol unatry do nati on. Whereas t he donor com pany had categorically sta ted t hat it had prov ided c orpus do nati ons to the assess ee. In s uc h fac ts and ci rcumstances , the creditworthi nes s of dono r company a nd genuineness of the dona tion r ecei ved by the as sess ee fr om M/s Amsoft Gl obal Pvt . Ltd. c ould not be prov ed."
6. In ITA No. 2127/Del/2022, following grounds have been raised by the Revenue:
"1 . On facts and ci rcumsta nces of the cas e and in law, t he Ld. C IT(A ) e rred in dele ti ng the a ddition made by Asses si ng O fficer o f Rs. 1,00,00, 000/- o n ac count of unex plained lo an u/s 68 of the I.T Act , 1961 without consideri ng that the lender compa ny na mely M/s Sarvo ttam Securi ties Pv t. Ltd. does not have the creditwo rthi ness to pa y huge amount of loa n i.e. Rs. 1,00,00,000/- to the a ss ess ee a s the lender c ompa ny had decla red i nc ome of Rs 19,89,470/- only during t he y ea r. Further, enqui ries were made by the Inv estigati on Wi ng and i t was found tha t the c ompa ny is a b ogus e ntity a nd mer ely worki ng for prov iding a cc ommodati on entri es to vari ous entities. In s uc h fac ts a nd circums tanc es , the
7 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust creditwo rthi ness o f lender and genui neness of the loan rec eiv ed by the assess ee from M/s Sarv ot tam S ec urities could not be prov ed.
2. On fac ts a nd ci rc umsta nces of the cas e a nd i n la w, the Ld. C IT(A ) e rred in dele ti ng the a ddition made by Asses si ng O fficer o f Rs. 3,30,00, 000/- o n ac count of unex plained dona ti on u/s 68 of t he I.T Act, 1961 without consideri ng t hat the doner doner compani es namely M/s Moral S ales Pvt . Ltd. & M/s A ms oft Global Pvt. Ltd. do not hav e the creditwo rthi ness to pay huge a mount of loa n i.e. Rs. 2,80,00,000/- & Rs. 50,00,000/- respec tiv ely to the as sess ee as the done r compani es had decla red v ery low inc omes during the year. It had also not furnis hed its financia l sta tement t o prove its net worth a nd ca pita l to forwar d loa ns . Further , enqui ries were made by the Investi ga tion Wi ng a nd it was found tha t t he compa ny is a bogus pa per company and the tra nsaction of givi ng l oan to the as sess ee trust is bogus . It is a lso note worthy her e tha t duri ng search proc eedi ngs, t he said amo unt of dona tion were acc ounted as corpus dona tions in t he books of the as sessee, however, after filing the return i n consequenc e of notic e u/s 153A, it co nv ert ed the same from corpus donati on to vol unta ry do nati on. Whereas t he donor com pany had categorically sta ted t hat it had prov ided c orpus do nati ons to the assess ee. In s uc h fac ts and ci rcumstances , the creditworthi nes s of dono r compani es and genui ne ness of t he dona tio ns rec eiv ed by the assess ee from M/s Moral S ales P vt. Ltd. & M/s Ams oft Glob al Pvt. Ltd. could no t be pr oved. "
ITA No. 1842/Del/2022 (Ass essee Appeal)Ankit Shar ma Vs. ACIT Unexplained Jewellery - Rs.20,44,870/-:
(1 /3 r d o f Rs . 6 1 , 3 4 ,6 1 0 / -)
7. Keeping in view the similarity of facts, the adjudicatio n in the c ase of Sh. Ankur Sharma applies mutatis mutandis.
8. For the sake of ready reference, the order of Sh. Ankur Sharma in IT A No.1843/Del/2022 vide order dated 03.10.2023 is reproduced hereunder:
8 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust "Unexplained Jewellery - Rs.20,44,870/-:
( 1 / 3 r d o f R s. 6 1 , 3 4 , 6 1 0 / -)
3. Proceedi ngs before the Assessi ng Officer:
"D ur ing t he c o u rs e o f s ea rc h & s eiz ur e op er at ion c o nd u ct ed u /s 13 2 o f t h e In c om e Ta x Ac t , 19 6 1 a t t he r es id ent ia l p r e mis es o f t he a s s es s ee a t KA -5 , Ka v i N a ga r G ha z ia b a d , g o ld j e w e lle r y w eig hing 3 8 7 7 .5 Gr am s a m ou nt i n g t o R s . 1 ,4 6, 1 5 ,6 3 5 /- wa s f o u nd . D ur ing t he c o u rs e o f s e a r c h p r o c e e d ings , t he a s s es s e e c o uld no t e xp la in t he s o ur c e of t h e a b o v e j e w e lle ry . In t h is r e ga rd , t h e a s s es s e e v id e n ot ic es u/ s 1 4 2 (1 ) o f t h e I nc o m e T a x A ct , 19 61 da t ed 20 .1 0. 202 0, 05 .0 1 .20 2 1 a nd 1 6 .01 . 2 0 21 , w as re q uir ed t o e xp la in t he a b ov e c a s h, a l on g w it h s up p o r t in g do c um ent s and w as al so r e q uir ed t o e xp la in t h e s o ur c e o f t he a b o v e c a s h, a lo ng w it h s u pp o rt i ng d o c um e nt s . H ow ev er no r ep ly w as r ec e ive d . H e nc e, t he a s s es s ee , v i d e s ho w c a use no t ic e dat e d 2 3 . 02 . 2 0 21 , wa s s p e c if ic a lly r eq u ir ed t o ex p la in th e a b o v e s ai d c a s h, a lo ng w it h d oc um e nt a ry ev id e nc es a nd w as r eq u ir ed t o ex p la in t he s o u rc es of t he a bo v e s a id c as h, a lo ng w it h d oc um e nt a r y e v id e nc es . I n r es p o ns e t o t h e s h o w c a us e , t he AR of t he as s es s e e v id e r ep ly f ur n is hed o n 06 .08 .2 0 21 , ha s s t a t ed t hat t he je w e ll er y ha s b ee n in her it e d a n d r ec e iv e d in ma r ri a ge s of t he fa m il y me m b e rs . H o w ev er , t he s o ur c e o f j ew el l ery has not b e e n p rop er l y ex p la ine d b y t he as s es s e e. I n o rd e r t o f o llo w p ri nc ip le s o f na t ur a l j us t ic e , t h e C BD T 's i ns t r uc t io n no . 1 9 16 d a t ed 11 /05 /19 9 4 a nd pr es s r e l ea s e d at ed 01 / 12 / 20 1 6 re ga rd ing t he e ligib le a mo u nt of j e w e lle ry that c a n b e k e p t by t he fa m il y m em b e rs is a pp lie d . T h e fa m ily o f t he as s e s s ee c ons i s ts o f t h e fo llo w ing m em b e rs w ho ar e e ligib le t o c l a im b e ne fit o f a b o ve s aid je w e l le ry t o t h e e xt e nt o f l i m it a s pr es c r ib ed in t h e a b ov e s a id c i rc ul a r.
Sl . N o . N a m e o f t he fa m il y m em b e r El igib le W e ight of j ew el l er y t o b e c la ime d
1. Sh . Ga n ga S ar a n Sh arm a 10 0 GM S (F a t he r)
2. Sm t . Sha s hi Sha r m a (M ot h er ) 50 0 GM S
3. Sh . A nk ur S har ma (B ro t h e r ) 10 0 GM S
4. Sm t N i d h i Ba n s a l (S is t er in la w ) 50 0 GM S
5. Sh . A nk it S ha r ma (S el f) 10 0 GM S
6. Sm t N e h a G o e l (W i f e ) 50 0 GM S 9 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust
7. K ia a r a Sha rm a (D a ught e r) 25 0 GM S
8. Ad va y S ha r m a (N ep he w ) 10 0 GM S
9. Ad ya nt Sh a r m a (N e ph ew ) 10 0 GM S T ot a l 22 50 GM S The r e m a i ning go ld j e w e l ler y of 16 27 .5 G ra m s am o un t i n g to Rs .61 , 3 4 ,6 1 0 /- r e m a ins u ne xp l ai n ed . T h e re fo r e, c o ns id e r in g t h e fac t s o f t he c a s e a nd CB D T ' s ins t r uc t io n no . 1 91 6 d at ed 1 1 .0 5 . 1 994 an d p re s s r e l eas e da t ed 0 1 .1 2 .2 0 1 6 , t he r e ma in i n g j e w e ll e r y o f 1 6 27 .5 GM S f or t h e t ot a l v a lue o f Rs . 61 ,3 4, 61 0 / - (as on d at e of s e ar c h) is t re at ed as un exp la ined j ew e lle ry . T h e a m ou nt o f R s .20 ,44 ,8 70 / - ( 1 /3 s ha re ) is a d d e d t o t he t ot a l inc o m e of t h e as s es s e e f o r t he y ea r und e r c ons i d e r at io n u /s 69 A r .w .s . 1 1 5 BB E o f t h e I nc o m e Tax Ac t , 1 9 6 1 . T he r em a in ing a m o unt is a dd ed in t h e i nc o m e o f Sh. G a n ga S ar an Sha rm a, f at he r o f as s es s ee a n d Sh . A nk ur S h ar ma , B r ot he r o f a s s es s e e.
4. Proceedi ngs befor e the ld. CI T(A):
" Be f or e t h e l d . C I T (A), t he app ell ant s u bm itt ed t ha t it ha d be en ex p la ine d t ha t t h e ma j o r a m o unt of go ld or na m e nt s w er e inh er i t e d by Sh ri Gan ga Sa ra n Sha rm a o n t he d ea t h o f his m o t her , b e s i d es Sh r i Ga n ga S ar a n Sh a rm a w a s ma r r ied in eq u a ll y ric h a n d b us i nes s c la s s f am ily and r ec e i ved go ld j ew ell er y in ma r r ia g e. Su bs e q ue nt ly, b o t h t he s o ns na m e ly S h ri An k ur Sh a r m a a nd Shr i An k it Sha r ma a ls o go t ma r r i ed in eq ua ll y w e ll- pl a c ed b us in es s c la s s fa m il i es and r ec e iv ed go ld o r nam e nts i n m a rr ia g e a nd a ls o in s ubs eq ue nt c e r e m o nia l fu nc t i o ns t ha t t o ok p la c e in b ot h t he fam i lie s . It is c us t om a r y to o ff e r gol d i t ems and s i l ve r w a r es in m a r r ia ge/c er e m o ni a l fu nc t i ons t o t he d a ugh t e rs i n t h e fam i ly , s p e ci al ly t o t he m a r r ie d da ught e rs . T he fa m il y is in th e b us i n es s s inc e g en er at io ns a nd do ing g o o d b us in e s s , b es id es t he fa m i ly has e sta b lis h ed a c ha r it ab le H os p it a l. T h at p r o v es t he f i n a nc ia l s t at us of t he f am il y . It w a s f ur t he r s ub m it t e d t hat ho us e - la d ies a re f ur t he r ve ry s ys t e m at ic a nd int e lli ge nt e nou gh t o m a k e s a v ings f r om t h e m o ne y r ec e iv e d by t he m f o r m a na gi n g ho us e h o ld . T h e ho us e -lad ie s s p e nd m on ey w it h a t ig ht h a n d a nd w hat e v e r t he y s a v e , it is in v es t e d b y the m ve ry w is e ly i n b uy in g g o ld it em s a nd / o r c lo t hs . T he AR s u b m it s t ha t t h e app e lla nt a nd h is fa m ily me m b er s ha v e go od f ina nc ia l s t at u s and t he re a r e t o t a l n et d raw i ngs o f m o r e t ha n 1 3 . 50 c r or es d u rin g t h e p e r io d o f nine y ear s a nd t h e s ma ll va lue of j e w e ller y f o u nd d u r ing s e a r c h st a n ds fu lly c ov e red a nd v er y w e l l e xp la ine d b ei n g 10 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust m er el y o f t h e t o ta l va lu e o f Rs . 1, 46 , 1 5 ,6 3 5 / - a n d a s suc h, n o p a r t o f t h e j ew el l ery b e t r ea t ed a s un e xp la in e d .
Aft e r goin g t h ro ug h t he s ub m is s io ns of th e as s es s e e, t h e ld . C IT ( A) he ld t ha t t h e a pp e lla nt ha s r eli ed on w i t hd r a wa ls o f va r io us f am ily m e mb er s i n la s t 1 0 y ea rs b ut o nly w it h d r aw als c a nno t e x p la in t he us e o f t h e c as h i n pu rc ha s e of j ew e l l e ry . Com p le t e a nal ys is of w i t hd ra wa ls as w e ll as dep o s i ts o f c as h i n va r io us b a nk a c c o u nts of t he fa m ily m em b e rs, u se o f dr aw ings for ot he r ho us e h o ld e xp e ns es has not been taken i nt o c o ns id e ra t io n w hile m a k in g a c la im t h at t ot a l w it hd raw a l s of Rs . 1 3 .50 c r or es ha v e b e en m ad e by v ar io us fam i ly m e mb e rs in t h ei r b a nk ac c ou nt s . T h e r ef o r e, t he ld . CI T (A ) he ld t ha t t he s ub mis s io n is q uit e va gue a nd la c ks s pe c if ic it y in pr ov id i ng t he ev id e nc e a nd p ro v in g t he s o urc e of t h e j ew el l ery fo un d i n t he r es id e n t ia l p r em is e . T he b il ls o f p urc has e, t h e w e a l t h t a x ev i d en c es , v a lua t io n c e rt if i c at es al on g w it h d at e o f p u rc ha s e c o u ld not be f ur n i s h ed in case of j ew e ll e r y f o u nd in t he r es id e nt i a l pr em is e, w h ic h a re c o ns id e r ed as c linc h ing e v id enc es t o p r ov e t h e t im e a s w e ll a s s o urc e o f th e p urc ha s e o f j ew e l le ry . T he ld. C I T (A) he ld t hat t h e AO h as a l re a d y c o ns id e re d as ex p la i n ed t h e j ew e lle ry o f 2 25 0 g r m s in a cc o rd a nc e t o CB D T I ns t r uc t io n N o . 19 1 6 d t . 11 .0 5 .1 9 9 4 p er t a inin g t o al l m a l e a nd f e ma le m em b er s of t h e fa m il y a n d h as b e e n r ea so na b le e n o u gh t o a d d o n ly 16 2 7. 5 gr ms j ew ell e r y va l ui n g Rs . 61 ,3 4 , 610 /- an d d i v id e d t h e s am e in t he h a nds o f m a in fam ily m e mb e rs i .e . t he ap p e lla nt , his fa t he r a nd b ro t h e r. The ld . CI T (A ) he ld t ha t w it h re ga rd to th e j e w e ller y be lo ngin g to da ug ht e r of S mt . S has h i S har ma i. e . the s is t e r of t he a pp e l la nt , th e a p p el l a n t c o uld n ot f ur n is h t h e re q uis i t e e vid enc e , w hic h m ay c o nc lus iv el y p r ov e t ha t t he j ew e lle ry b e lo ng in g t o his s is t er w as a ls o k ep t i n t he re s id e nt ia l p r em is e o f t he a p pe lla nt. T he r efo r e , th e l d. C I T (A) wa s of t h e op in i on t h a t t h is s ub m is s io n a s a n a ft e rt ho u gh t a nd s inc e t he s am e w a s h e ld t o b e d e v o id of me r it , t he a r gum e nt s of t he as s ess e e w er e s um m ar i ly d i sm is s ed . I n ef f ec t , t he o rd e r o f t h e AO has b e en co nf i rm e d. "
9. The addition of Rs.61,34 ,610/- has been mad e in the ha nds of Sh. Ganga Sar an Sharma, the patriar ch of the fa mily and the sib lings Sh. Ankit Sharma and Sh. Ankur Sharma at the rate of 33.33% each.
10. Aggrieved, the assessee filed appeal before the Tribunal.
11 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust
11. During the hearing before us, the ld. AR relied on the submissions and the arg uments taken up before the revenue authorities and the ld. CIT D R relied upon the orders of the authorities below .
12. Heard the arguments of bo th the parties and perused the material available on record. We have gone through the fa cts of the c ase and the judgments of various Courts on this issue .
13. At the outset, we hold that C BDT's instructio n no. 1916 dated 11.05.1994 and press release dated 01.12.2016 pertains to seizure of jew ellery. It postulates that by going through the arche typal Indian family standard, a persons of an Income Tax payee of co nsiderable amount could have had the prescr ibed amount of jewellery in the circular. It was broug ht into force after a series of due deliberatio n and its impact on taxation. It is never envisaged that the Assessing Authority should restrict the amount o f e ligible jewellery to the quantity mentioned in the circular. The assesses were tr ustee of a med ical college and also have the returned income in the range of Rs.21.27 lacs to 49.34 lacs as per the re turns.
14. The statement show ing the incomes of the asse ssess is as under:
Name AY 20-21 AY 19-20 AY 18-19 AY 17-18 AY 16-17 AY 15-16 Ganga 64,85,556 49,44,669 46,68,812 44,59,800 37,43,180 35,00,511 Saran Sharma Ankit 22,92,434 23,08,783 24,27,493 20,56,646 19,79,056 19,96,871 Sharma Ankur 36,78,301 29,59,519 20,18,119 22,99,113 29,74,995 25,33,227 Sharma
15. The to tal withdrawals of the family over the period of assessments was to the tune of more than Rs.10 Cr . The assessee sta ted that the income for all the years had fallen into the highest tax bracket which shows that the asse ssee has 12 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust been earning substantial Income clear ly establishing the status. It has time and again been held that due credit of the s ame has to be allowed by the assessing officer looking and appreciating the s tatus, customs, and traditions relating to the family. Reliance is being placed upo n fo llowing decisions:
Ashok C haddha vs. ITO, 14 taxma nn.c om 57 (Delhi) Vibhu Agga rwal v s. DCIT, 93 taxmann.c om 275 (Delhi - Trib.) Tara Devi Goenka v s. C IT 122 ITR 1 4 (C al) Ms. Pooj a Shree Chouksey Vs. AC IT in ITA No . 572/l nd/2018 CIT Vs. Kailas h C ha nd S harma 198 C TR 201 (Raj) Suneela S oni Vs . DC IT i n I TA No. 5259/DEL/2017 DC IT Vs. S hri Haro on Mohd . Unni i n ITA No.463/M/2012 Susan S ures h Chandra Til wa Vs. DC IT i n ITA No.270/RJT /2015 DC IT, CC -8 (3), Mumbai Vs. Shr i Ma nekc ha nd Kothari ITA No. 194/Mum/2018
16. The Hon'ble De lhi High Co urt in the case of As hok Chaddha vs. Income-tax Officer 14 taxma nn.com 57 (Delhi) held that collecting jewe llery of 906.900 gms by a woman in a married life of 25 years in form of stree dhan or on other occasions is no t abnormal. The operative part of the judgment is reproduced below:
"3 . Lea r ne d C o uns e l fo r t h e r es p o nd e nt o n t he o t he r h an d r el ied up o n t he r eas o n in g gi v e n by t h e a ut ho r it i es b elo w . Af t e r c o ns id er i n g t he af o res a i d s ub m is s io ns w e a r e o f t he v ie w t h at a d dit io n m ad e is t o ta ll y ar b it ra r y a nd is n ot f ou nd ed o n a n y c oge nt b as is o r e v id e nc e. We ha v e t o k e ep in m i nd t ha t t h e as s e ss e e w as ma rr i ed f o r mo r e t ha n 25 -3 0 y e ars . T he j e w el le r y in qu es t io n is not v er y s u bs t a nt ia l. T he l ea r ne d c o u ns e l fo r the a pp e l la nt /as s e ss e e is c o r re c t in he r s ub m is s io n t hat it i s a no rm al c us t o m f or w om a n t o r ec eiv e j ew el l er y in t h e f or m of "s t r ee d h an" o r o n ot he r o cc a s io ns s uc h as bi r t h o f a c h ild e t c . Co ll ec t in g j e w e ll e ry of 9 0 6 .9 00 gr a m s by a w om a n i n a m ar r ie d li fe of 2 5 -3 0 yea r s is no t a b n orm a l. F urt he rm or e, t h er e wa s no va li d a nd /o r p r op er y ar ds t ic k ad op t e d b y t h e As s es s in g O ff ic e r t o t re at on ly 40 0 gr a ms as " r ea so n ab l e a l l ow an ce " a nd
13 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust t r ea t t h e ot h er a s " u ne xp la i n ed ". Mat t e r w ou ld ha v e b e e n d if fe r e nt if t h e qu a nt um a n d va lue of t h e j e w e lle ry f o u nd w as s ub st ant i a l.
4. W e a r e, t h er ef or e, of t he o p i nio n t h a t t he f in d in gs o f t h e T rib una l ar e t ot a l ly pe r v er s e a nd fa r fr om t he r e a lit i es of lif e . I n t he pe c ulia r fa c ts o f t his c as e w e a ns w e r t h e q u es t ion i n fa vo ur o f t he as s es se e a nd a ga i ns t t he r ev e nu e t he r eb y d e l et in g t h e af o r es a id a dd it i o n of Rs . 3 ,87 ,3 64 . "
17. The Hon'ble Delhi High Cour t in the case of Suneela Soni Vs. DC IT in ITA No . 5259/DEL/2017 he ld as follow s:
"6 .1 A ft er p e r us i n g th e af o re sa id d e c is io n o f t he H o n 'b le D e lhi H i gh Co u rt , I a m of t h e c o ns id e re d v iew t h at fa c ts a nd c irc u mst a nc es of t he p r es en t c as e a re s im i la r t o t he a f or es a id d ec is io n of t he H o n'b le D e lhi H i gh Co ur t a nd he nc e , t he is s u e in d is p ut e is s q u a re ly c ove r ed b y t he af o r es a id dec is ion .
6.2 K e ep ing in v ie w o f t he a fo r es a id f ac t s a nd c ir c um st a nc es of the cas e a s w el l a s t he s ta t us o f t h e fa m il y a n d o n t h e a nv il of t he j u d gem e nt o f t he H i gh C our t of D el h i in t h e c a s e o f As h o k Cha d ha v s . I T O re p o rt ed i n 14 t a x m a nn .c o m 5 7 (D e l hi. ) /2 02 Ta xm a n 39 5 , t h e ex p l ana t io n gi v e n b y t he as s es s e e's c ou ns el is a c c ep t ed. Ac c o r d in gl y t he o rd e rs of the a ut h o r it ie s b el ow are c a nc e l led a nd a dd it i on m ad e by t he AO a nd c o nfi r m ed by t he L d. C I T (A) am o unt in g t o Rs . 1 0 , 6 5, 312 / - o n a c c o unt o f pu rp o rt ed u ne xp la in ed J ew elle ry c la im e d b y t he a s sess ee is d ele t ed .
7. I n t he r es u lt, As s es s ee 's ap p ea l is all ow e d. "
18. The Co-ordinate Bench of ITAT Delhi in the case of Vib hu Aggarwal vs. DCIT 93 tax mann.com 275 (Delhi - Trib.) held that w here Assessing Officer under section 69A made addition on acco unt of jewellery found in search of assessee, since assessee belonged to a wealthy family and jewellery was received on occasions from relatives, excess jewellery was very much reasonable and, thus, no addition under section 69A was called for. The operative part of the judgme nt is reproduced below:
14 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust "2 . T h e b r i ef f a c ts of t he c a s e ar e t hat a s e ar c h & s eiz ur e o p e rat io n u nd e r s ec t i on 13 2 of t he IT Ac t w as c o nd uc t ed at t h e b us in es s pr em is es of M /s Be s t G ro up a nd a s w e l l a s i n t h e r es id e nt i al p r e m is e o f t h e D i r ec t o rs o n 28 .0 3 .20 1 1, i n c o ns eq ue nc e t o w h ic h t he c as e of t he ass e s see w as t ak en up fo r s c r ut in y . T h e AO ha s c om p le t e d t he a s s es sm ent by m ak i ng an a dd it io n of 3 0 ,7 3 ,3 7 3 o n a c c o un t o f u n e xp la in ed in ves t m e nt in j e w e ller y a nd a dd it io n of R s . 1.8 7 ,0 8 2 /- o n ac c o u nt of u ne xp l a in ed in v es tm ent i n pr op er t y . T h e t o t a l j ew el ler y fo un d d ur i ng t h e c our s e o f sea rc h w as 25 31 . 5 gm s , o ut o f w h ic h t he A O ha s g i v e n a s s ess e e t h e b en ef it o f 95 0 gm s , a s p e r t he C B DT I ns t r uc t io n N o . 19 1 6 da t ed 11 . 4 .19 94 o n a cc o unt o f w if e a nd tw o c h ild r e n o f t h e as s es s e e. T he L d . CIT (A ) in ap p e a l ha s f ur t h e r a ll ow ed t he b e n e f it o f 6 0 0 gm s . Of j e w e lle ry o n ac c o u nt o f m ot her a nd fa t h er o f t he a s s es s ee , h o ld i ng t ha t t h e s am e w a s al lo wab le t o t he a s s es s ee as p er t he CB D T I ns t r uc t io n No. 1916, b ut h ow e v e r, s us t a i n e d t he b a la nc e a dd it i o n m ad e by t he AO , v id e o rd e r da t e d 22 .1 2 .20 1 4 t r e a t ing t h e b a la nc e j ew e ll e ry w e i gh t in g 1 0 50 gm s o f g ol d a s un exp la ined .
6.3 K e ep ing in v ie w o f t he a fo r es a id f ac t s a nd c ir c um st a nc es of the cas e a s w el l a s t he s ta t us o f t h e fa m il y a n d o n t h e a nv il of t he j u d gem e nt o f t he H i gh C o u rt o f D e l hi in t h e c as e o f As ho k C ha d d ha (Su p ra ) & o f Sus h ila D e v i (s u p r a ) a nd t he IT A T D e lh i d ec is i o n in t h e ca s e of S une ela So ni (s up ra ), t he ex p la na t io n gi v e n by t h e a ss es s ee's c oun s el is a cc e pt ed .
Ac c o rd in gl y t he or d e rs o f t h e a ut h o r it i es b e low a re c a nc ell ed an d ad d it i on m ad e b y t he AO a nd pa rt ly c on fi r m ed by t he Ld . C I T ( A) o n ac c o u nt o f ba la nc e j ew e lle ry w eig ht ing 1 0 50 gms o f g o ld a s u n e xp l a in ed is h e r eb y de le t e d. "
19. Hence, keeping in view the facts and circumstances of the instant case and also the jewellery found, the total income declared and in view of the vario us judgments cited above, we direct that the addition made on this account be deleted.
20. Owing to the facts narrated above, the appeal of the assessee is allowed.
15 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust Uns ecured Loa ns:
Sh. Vaibhav Tyag i and Sh. Vibhor Tyagi
21. Proc eedings before the Assessing Officer:
" Duri ng the c ours e of s ea rc h & se izure acti on at t he residential premise KA-5, Kavi Nagar, Gha zia bad , a hand written a nd typed written page c ontaini ng the details of l oa ns as on 2 1.09.2018 was found a nd s eized which was inventoried as Z-1, L P-3, Page 27.
On goi ng through this page, it is s een tha t this page c onta ins the details of uns ecured a nd sec ured loans tak en from v arious pers ons and entitie s a t di fferent rates of interest. Vide Notice u/s 142(1) dat ed 20.10.2020 and s how ca use notic e dated 23.02.2021, the assessee wa s specifical ly asked t o explai n t he above doc um ent a nd furnish the details of l oa ns menti oned i n the abov e doc uments alongwit h doc umentary evidenc es . V ide reply dat ed 14 .06.2021, the AR of t he asses se e has stated that:
"That vide thi s query, a doc um ent has been sc anned in the notice, beari ng pa ge num ber 27 of Annexure LP-3, t he a ssesse e has been required to e xpl ai n the nature a nd cont ents of this doc ument, a nd i n this regards, i t is stat ed tha t this doc ument is an estimate s eem to be fi nalized on 21.09.2018 and as s uc h p erta ins to t he as ses s ment ye ar 2019-20. It i s explai ned tha t the fa mily trus t by the na m e of Jai pal Si ngh S har ma Trust ha d been in the proces s of es ta blishing and runni ng medical colle ge at Pil ukhwa si nc e 2013-14. H owever , i n spite of best efforts , t he soci ety could not get medical sea ts for pretty long time and had been r unning i n to heavy los ses as will be apparent fr om the Inc ome Tax retur ns filed by the tr ust y ear after ye ar. It was s omewher e for the end of fina nci al yea r 2018 the tr ustees were a pproache d by group of persons through a c ommon family fri end t o work o ut a pr oposal to t a ke over t he c ollege on 'as and where' basis. The tr ustees' held sev eral r ound of meeti ngs a nd an estimated pr op osal was bei ng worked out on the s heet all eged to
16 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust be page number 27 and after consideri ng los ses suffered, the investment was requi red for a round 130 crores incl usive of bank liabilities. However, t he propos al coul d not get t hrough, beca use still, the allocation of medical seat s was yet to b e approved. The real estate sector ha d bee n passi ng through he avy rece ssion a nd looki ng t o the quantum of i nv estment required, t he pr opos al c ould not get fi nal nod of the i nv es tors a nd as s uc h, it is only a dump doc ument and has nothing to do wit h the ass ess ee and the trus t. Moreov er, ther e i s no name writt en on t he doc ument to c onne ct the same wit h the ass ess ee i n a ny manne r a nd as s uc h, c annot be us ed to ma ke addition wit hout prop er bri ngi ng corrobora tive evidenc e of rec ords. "
Alter natively, it is stated tha t t his d ocume nt has b een c onfronted to almost all t he family member s by sca nni ng the s ame i n the s how cause notic e iss ued to them . T hough, as sta t ed ab ove it do es not bel ong to any part icular entity but is an overall proposal for t he sal e of college . By goi ng through the ent ries as c ontained in the doc ument , the followi ng fac ts ca n be note.
The above has been pe ruse d a nd exami ned. The AR of assess ee ha s explai ned that the pa ge also c ontai ns details of s ec ur ed lo ans from different bank loa ns whos e det ails, sa nction lette rs, repayment sche dul es and ba nk stat ements ha ve been furnis hed. Rega rdi ng the ot her lo ans, t he AR of ass essee ha s stated tha t t hes e a r e alr eady reflected in the books of t he S hri Jai pa l Singh S harma trus t and the family members of Dr. A nkit S harma. The names agai nst thes e l oans in t he doc ument a re of peopl e who helped to arrange the l oa ns from different p ers ons, entities a nd NB FC s. The reply of the as sess ee has bee n c onsidered alongwi th its supporti ng evidenc es. T he s ec ured loans a nd t heir agree ments a l ongwi th repayments sc hedule, s ancti on letters a nd ba nk sta teme nts have been exami ned. The uns ec ured loans as mentioned i n the above s ei zed doc ument s hav e been dealt in the separ at e a ssessments o f the Shri Jaipal Si ngh Sharma trus t and Dr. A nkit Shar ma and hi s family members .
17 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust Ho wever, no documentar y evidence has been furnis hed in ca se of loans rec ei ved from Sh. Vaibha v Ty agi - Rs .30,00,000/- a nd S h. Vibhor Tyagi - Rs 62,00,000/- a s mentioned i n t he above page. These l oans have also not been reflected i n the books of the trus t and the family m embers of Dr. A nkit S ha rma. Als o, no detai ls in res pect of t hes e l oans ha ve been filed. H enc e, in abs enc e of any explanati on a nd doc umentary evidenc es the l oa ns rec eived from Sh. Vaibhav Tyagi - R s.30,00,000/- a nd S h. Vibhor Tyagi - Rs.62,00,000/- amo unti ng to a t otal of Rs .92,00,000/- a re a dde d to the i nc ome of t he a ss essee u/s 69A of the IT Ac t, 1961."
22. Proceedings before the ld. CIT(A):
" Before the ld. C IT(A), t he appella nt has s ubmitted that additio n of Rs. 92,00,000/- based on the s eiz ed pape r Z-1 , LP-3 , page no. 27, is unj ustifi ed si nc e no s uch l oa n was ever rec eived by the appella nt. In this rega rd t he AO obser ves tha t t his page contai ns the deta ils of unsec ured a nd s ecur ed l oa ns taken fr om va ri ous pers ons a nd entities a t differ ent ra tes of interest . Almost all the loans were found a s refl ected in the books of S h. Jaipa l Singh S harma Tr ust a nd only two amounts were found in the b ooks of S h. Ank ur Sha rma (loans from Sh. P. C. Sharma a nd Sh. A nkit Vi jh) a nd one a mo unt i n the books of Sh. Ganga Sa ran Sharma (loa n from S h. P. C. Sha rma ). Ho wever l oan a mounts o f Rs. 30,0 0,000/- from S h. Vaibha v Tya gi and Rs . 62,00,000/- from S h. Vibhor Tyagi we re not fo und refl ec ted in t he books of any of the gro up entities, t herefore Rs . 92,00,000/- were added as unacc ount ed income u/s 69A of IT Ac t in the ha nds of Sh. A nkit S harma, se cretary of the tr ust. In t his regard the AR submits that this doc ument is just a proposal prepa red by t he family to s ell t he hospi tal and t he college on account of heavy loss es suffered by the tr ust duri ng t hi s period a nd further a setbac k of not getti ng approval for the c ollege. He cla ims tha t wha tever is jotted on t his paper, the sam e is not in r eference to a ny pa rticular person in t he family but is a mer e sal e-pro posal a nd as s uch, no addi tion is 18 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust called for on the bas is of t he fi gures jot ted on thi s paper being a mer e dumb doc ument . T hus the AR conc l udes t ha t a ny addition made on the basis of a rough propos al based on the document/loose sheet pr epared by the f amil y a s sale proposal for c ollege ta ki ng its value as on 21.09.2018, canno t b e s us tai ned.
Before the ld. CI T(A), the ld. AR furt her submit ted that t his doc ument (page no 27 of Annexure LP -3 ) is an es tima te whic h was finalized on 21.09.2018 a nd as s uch pertai ns t o t he a ss ess me nt year 2019- 20. He cla ims tha t this was explai ned t o the AO tha t the family tr ust i.e. Shri Jaipal Si ngh Sha rma Trust had been i n the proc ess of establis hi ng a nd runni ng medical c ollege at Pil khuwa since 2013-14, however, i n s pi te of best effort s, the college could not get medical seats for pretty l ong time a nd had been runni ng i n to heav y loss es as is appa rent fr om the Inc ome Tax Ret urns fil ed by the trus t, y ear after y ear. It was a t the end of fi nanc ial year 2018 the tr ust ees wer e approached by gr oup of pers ons through a common family friend t o work out the pr opos al to take over the college on "as i s where is" bas is. The trus tees held s everal round of meeti ngs and an estimated proposal was bei ng worked out on the sheet alleged t o be pa ge number 27 and a fter c onsideri ng loss es suffered , the i nvestment was requi red for a round R s. 130 crores incl usiv e of ba nk liabil ities . H owever, the propos al c ould no t get thr ough, b eca use sti ll, t he alloc ation of medi cal s eat s wa s yet t o be appr oved. The real est ate se ct or had been passi ng t hrough hea vy rec ession and l ooking to the qua ntum o f inves tment required, the prop os al c oul d not get final nod of the i nves tors . The ld. AR submitt ed t hat the appella nt has explained the cont ents of t his page to A O and t he AO has acc epted t hat thi s contai ns the det ails of loa ns from various p erso ns and also the s ecured a nd uns ec ur ed l oa ns fr om banks a nd ot her instituti ons by Sh. Jaipal Sing h Sharma Trus t . Ho wever t he l oans amounti ng to Rs. 92,00,000/- ta ken from Mr. Vaibhav Tyagi a nd Vibhor Tyagi were a dded in the hands of the appella nt. The l d. AR s ubmitted t hat ther e is no logi c to consider this amount as income of Sh. Ankit Sharma si nce no l oan has been 19 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust taken by him. It is also submit ted tha t t he s ea rch was als o conduc ted i n the official a nd resi dential premises of Sh. V aibhav Tyagi a nd S h. Vibhor Tyagi on 03.11.2016 and no corrobora tive evidences c ould be found whi c h m ay l ink thes e entries wi th Sh. Ankit S harma, i .e. t he a ppellant.
The ld. C IT(A ) held that the pres umpti on of s ec tion 132(4A) a nd 292C of IT Act a ppl ies in c as e of a seized paper whi ch mea ns that the contents of t his paper i.e. page no. 27 of A nnexure LP-3 are correct. The ld. C IT(A) held t ha t fr om the fac ts of the c as e it is c lear tha t the s eized pa ge contai ns o verall situation o f loans taken from Banks and other pers ons by Sh. Jaipal Singh Shar ma trus t. The l d. CIT(A) held that the AR s ucce ssfully explai ned all the entri es o f t his page but the two entri es appeari ng in serial no. 1 0 & 11 in the names of Mr. Vaibhay Tyagi (Rs . 30,00,000/-) a nd Mr . Vi bho r Tyagi (Rs. 62,00,000/-) which s um-up to Rs. 92,00,000/- could not be succ es sfully explained by t he a ppel lant."
23. Aggrieved, the assessee filed appeal before the Tribunal.
24. During the hearing before us, the ld. AR relied on the submissions and the arg uments taken up before the revenue authorities and the ld. CIT D R relied upon the orders of the authorities below .
25. Heard the arguments of bo th the parties and perused the material available on record. We have gone through the fa cts of the c ase and the judgments of various Courts on this issue .
26. The entr ies as contained in the document reveals the following:
P. C. Shar ma - Amount written Rs. 3,70,00,000/-
- L oa n r efl ec t e d in t he b o o ks of t h e t r us t Rs . 2 ,0 3, 6 0 ,0 00 / -
- L oa n r efl ec t e d in t he b o o ks of An k it S h ar ma R s. 8 9, 40 ,0 0 0 / -
- L oa n r efl ec t e d in t he b o o ks of Sh . G. S. Sha r ma R s. 6 3, 0 9 , 7 00 / -
20 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust Anil Kumar Garg :- Rs. 1,87,00,00 0/-
- L oa n r efl ec t e d in t he b o o ks of t h e t r us t Rs . 7 7, 00 , 0 00 /- o nly ,
- L oa n r ef lec t e d in t he na m e of V igo ur F in ves t Pv t . Ltd . Rs . 25 ,0 0 ,00 0 /-
- L oa n r e f lec t ed in t he na m e of Kis l e y P r o mo t e rs P vt . Lt d . Rs . 5,0 0 , 0 00 / -
- L oa n r efl ec t e d in t he na m e o f K a r na k E xim Pv t . Lt d. Rs . 50 ,0 0 ,0 00 /
- L oa n i n t he na m e o f F r ee Bi rd I nd us tr ie s P vt. Lt d . Rs . 1 5 , 0 0, 0 00 /-
- L oa n r efl ec t e d in t he na m e o f K ir a n D ev i Rs . 1 5, 00 ,00 0 /-
27. The aforesaid deposit to be received from the group comprising of Sh. Anil Kumar, Sh. Vibhor Tyagi and Sh. Vaibhav Tyagi had he lped in getting settlement of lo an and interest payable with Sar vottam Secur ities Pvt. Ltd.
Ankit Vij:- Rs. 20,00,000/-
- L oa n r efl ec t e d in t he b o o ks of t h e t r us t Rs . 1 2, 80 ,0 00 / -
- L oa n r efl ec t e d in t he b o o ks in t he nam e o f Ve er b a la Rs . 7 ,2 0 ,0 00 / -
28. We have also gone through the statement of Sh. Vib hor Tyagi and Sh. Vaibhav Tyagi produced by the ld. DR wherein they have categorically denied in the statement recorded u/s 131 of giving a ny loan to Dr. Ankit Sharma. They stated that they were trying to open a petrol pump a partnership of wife of Dr. Ankit Sharma and due to no n-allotment of petrol pump the business could not start. On the other hand, the revenue has not brought anything on record to prove that the loan has been extended to Dr. Ankit Sharma. The ld. C IT(A) at para 8.3 also observes that the loans have been taken by Sh. Jaspal Singh Sharma Trust. Even on that count also , the addition o ught not to have been made in the hands of the asse ssee . Thus, keeping in view that the above twin facts into consideration, we hold 21 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust that no additio n can be made in the hands of the assessee. The appeal of the assessee on this ground is allowed .
ITA No. 2125/Del/2022 (Revenue App eal)ACIT Vs. A nkit Sharma Uns ecured Loa ns:
29. During the year, the assessee received loa ns from two entities namely, M/s. Sarvottam Secur ities Pvt. Ltd. and M/s.
Asp ire Sale s Pvt. Ltd. The AO held that the amounts received from these entities are bogus, conversely the ld. CIT(A) held that they canno t be considered so.
30. Proceedings before the Assessing Officer:
M/s . Sarvottam Securities Pvt. Ltd.
"On pe rusal of details available on the s ystem, it was se en tha t S h. Ankur Go el, CA of M/s NJ & Ass ociates , F-36, Gali No.-1, Madhu Vihar, Patpar ga nj, Del hi has audited the books of ac counts of t his compa ny for the AY-2017-18. Acc ordingly, o n 19.02.2019, summ ons were issued, by the Investigati on wi ng, in his na me a nd got s erved. In response to t his S h. A nkur Goel a tt ended t his offic e on 10.06.2019 and hi s s ta tement was recor d ed u/s 131(1 A) of IT Ac t, 1961. He s ta ted that he ha d audit ed the books of ac counts o f M/s K.G. Finvest Pvt. Ltd., M/s Sa rvottam Sec urities Pvt., Ltd. and M/s Upaj L easi ng and Fi na nce Pvt. Ltd. duri ng the FY-2015- 16 & 2016-
17. When he was as ked abo ut the vari ous direc tors of the se compa ni es duri ng different F Ys, he sta ted that he did not know these pers ons. He accepted tha t he had a udit ed books of a cc ounts of above three c ompa ni es wi thout knowi ng the dir ectors of the se compa ni es. S h. Ankur Goel was a sked t o state whether a ll loa n agre ements of abo ve t hree NBFCS were put before hi m during audit of the books of ac counts of the se compani es . I n res pons e t o this he 22 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust stat ed that loa n a greements mad e by t hes e compani es were not put before him during t he audit of books of ac co unts of these compa ni es. Fr om t he statement of Sh. A nkur Goel , i t is also s een tha t the direc tors a re not the shar eholders of the c ompany. It is also obs erved that the dir ectors appear to be o nl y for names ake as they have low i nc ome I TRS . Shri Ankur Goel has f ur ther stated that all directors are dummy for names ake a nd are there only to sign doc uments. From the ong oi ng, it is clearly seen tha t the se compa ni es ar e bogus . When S h. A nkur Goel wa s as ked about the nat ure of e ntries made by the above menti oned NB FC s to Shri Jaipal Singh Sharma Trust, he c l earl y stated that thes e entries were Bogus."
31. The salient features of the statement of Sh. Ankur Goel are that, The aurhtoir zed signatories in three companies namely, M/s . Sarvottam Securities Pvt. Ltd., M/ s. KG Finvest Pvt. Ltd. and M/s. Upaj Leasing & Finance Pvt. Ltd. are respective Directors but these Directors are dummy for name sake only and all banking or cash transactions are handled by persons namely, Sh. Himanshu Verma and Sh. Hari Shankar Yadav.
M/s . Sarvottam Securities Pvt. Ltd., M/ s. KG Finvest Pvt.
Ltd. and M/s. Upaj Leasing & Finance Pvt. Ltd . are bogus NBFCs which provides accommodatio n entries in the form of loans to various entities on commission basis .
Accommodation entr ies of bogus loan are given in lieu of cash from the clie nt, cash is received including commission from client and money is tr ansferred to the account o f clie nt thro ugh RTGS, NEFT from the accounts o f the se three NBFCs.
23 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust Blank cheque s are singed by the Directors of the companies and kept with Sh. Har i Shankar Yadav.
32. The Assessing Officer held that, "In his stat ement Shri A nkur G oel a ccepted that the loa ns a dvanc ed by M/s Sarv ottam Securities Pv t. Ltd ., al so M/s Upaj Leasi ng a nd Fi nance Company Limited a nd M/s KG Finvest Priva te Limited are bogus. He also s tat ed that the direc tors of the compa ni es are dummy directors and a ct ual bene fi cial owners of the c ompany are two other perso ns, namely, S h. Himanshu Verma and S h. Hari Shankar Ya dav.
Thr ough the above, stat ement rec orded , t he a udit or of the company Sh. Ank ur Gupta has hi msel f a dmit ted, i n reply t o Q.40, that the entities M/s Sarv ottam Securiti es Pr ivate Ltd, M/s Upa j Leasi ng a nd Fi nance C ompa ny Ltd. a nd M/s KG Fi nv est Pvt. Ltd. p r ovide accommodation e ntries to vari ous entities. "
33. The AO held that the statements have not been retracted or withdrawn during the search, post search or assessment proceedings. The AO held that the declared income of the loan party was Rs.9,99,730/-. Hence, he treated the amounts received of Rs.1.50 Cr. as bogus.
Aspire Sales Pv t. Ltd.:
34. With regard to the loan received from, the AO held that the entity has d eclared returned income of Rs.6,36,870/- and the NBFCs has issued to tal loan of Rs.1 Cr. to the assessee as well as to Ms. Nidhi Shar ma the other family member. This NBFCs has no other b usiness activity and in the succeeding year, the loans given were of Rs.1,83,359/- and in the preceding year it was Rs.3,07,520/- and hence, the credibility of the loan par ty is no t proved.
24 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust Proceedings Be fore the ld. CIT( A) :
35. The submissions of the assessee before the ld. CIT(A) are as under:
SARVOTTAM SECURITIES PVT L TD.
A. T h e a p p e lla nt ha s be en re q u ir e d by y o ur h o no ur t o e xp la i n as t o w h y t he s um m on s is s ue d b y t h e I n v es tig at io n w i ng c o ul d n ot b e s e r v e d up o n t he c om p a ny to p r o ve t he ir id e nt ity , a n d c r ed it w or t h ines s w it h s up p o rt i ng ev i d en c e. T he a s s es s in g o ff ic e r ha s re c or d e d t ha t s um m o ns c o u ld n ot b e s e rv ed on A nk u r G upt a a nd P re m na t h b ot h D ire c t o rs of t he c om p a ny a t 2 46 / 68 , S ec o nd F l oo r, Eas t Sc h oo l Bloc k , M a nd w al i, D elh i-9 2 .
A1 . I n r ep l y it is s ta ted t ha t t he c o p y o f t he b a la nc e s he et o f t he c om pa ny Sa rv ot t a m Sec ur it ie s Pr iv a t e lim i t ed is has b e en f il ed b e f or e y o ur ho no ur f or t he y e a r und e r c o ns id e ra t i on. T h e a fo re s a id Ank u r Gu pt a and P re m nat h a re n ot t he d ir ec t o rs o f t he c o mp an y du ri n g t h e ye a r. T he d i re c t o rs ar e Sh r i Ris hi Jind a l a n d Shr i As h ok K um a r . Ac c o rd in gl y, i t has no r el e v anc e if t he s um m o ns c o uld no t be s er v ed on t h es e p ers ons ev en at t he ir r es id e nc e . As far K .G. F i n ves t, it s ha ll be d e alt with in t he ir c as e s ep a r at e ly , it is h o w e v e r c l ar i fie d t h at t he o ff ic e of t h e c om pa ny is s it ua t ed o n t h e f irs t f lo or o f t he s a m e p r em is e s a nd n ot o n t h e s eco n d f lo o r w h er e t h e l et te r s e em s t o ha v e b ee n s e nt . T h e a d dr es s c a n b e v eri fie d f r om t he c o py o f t he I T R. A2 . It is fu r t h er s ta t ed that t h is p l ac e wa s t ak e n o n r en t f r om D imp le Ve r ma v id e r e nt a gr eem e nt d at e d 2 1 .0 5 . 20 16 . C op y of t he r ent ag re em en t a nd c op y of t he e l e c t r ic it y b i ll i n t he nam e o f D i mp le V e r m a is e nc lo s ed i n e v id e nc e. F r om t h e c op y o f t h e r e nt a gr ee m ent a nd e lec t r ic it y b i l l, t h e a dd r es s 24 6 /68 , F ir s t F l o or , E as t Sc ho o l B lo c k , Ma nd a w a li, D e l hi-1 1 00 9 2 s ta n d s p r o v ed. I t c lea r ly e s t ab lis h es t ha t t he c o r re ct a ddr es s w as no t e xp l o r ed e it h er t h r ou gh p os t or t h r o u gh I nc om e Ta x In s pect o r a nd /o r as t he c as e m ay be. It is s ub m it t ed t ha t the inv est iga t io n w ing n ev e r in fo rm ed t he a p p e lla n t in r e g a rd t o t he fac t t ha t s um m o ns c o uld n o t b e s er v e d . A nd it c a nno t b e pr es u m ed t ha t in o ne p r em is es , t he r e c a n n ot b e m or e t ha n o ne t e n a n t m ore s o , t h e le t t e rs w er e w r o n gly a dd r es s e d t o
25 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust s ec o nd f lo o r w hile t h e of fic e o f t h e c o m pa ny h ad b ee n fu nc t io n i ng f ro m t he f irs t flo o r.
A3 . I t is fu rt h er s t at ed t h at c o mp a ny ha d a ga i n s hift e d it s o f fic e in t h e y ea r 2 01 9 to t h e ne w ad d r es s and pr o pe r re nt a gr ee me nt w as exe c ut e d f ina l ly on 1 8. 0 2 .2 0 1 9 w it h Sh ri K . Pa nd e y s o n o f S hr i R. D . P and ey o w ne r o f t h e p ro p e rty b e a r i ng unit nu mb er 1 1 4, V ar d hm a n, Ma y ur M a rk et , CS C, Ma y u r Viha r , P h a s e -3 , Ko nd li , G ha r o l i, D elh i-11 009 6 . Copy of r en t a gre em e nt in r es p e c t of t his p r op ert y i s a ls o e nc lo se d. Un f ort un at ely a s i s w e ll k no w n , re nt a l m a rk e t op er at es i n s uc h a w a y t ha t t h e o w n er s d o not r e nt o ut t h e p r op er ty u nd er a n a gre em e nt f o r a p e r i od o f m o r e t ha n 1 1 m on t hs f ea r in g t it le d is p ut es in lo ng p e r iod a gr e e m e nt s .
A4 . T he c o mp a n y h ad s h ift e d it s o f fic e t o t he ot h er ad dr e s s and c op y o f t he r e nt a gr e em e nt bet w e e n t he c o mp a n y a nd t h e l a nd l o r d is e nc lo se d i n e v id e nc e. H o w c ou l d t he c om p a ny f o r es e e, t h e is s ue o f a ny n ot ic e f ro m t he d epa rt m e nt a nd f ur t h e r, t he app e ll ant ha d n e v er b e en inf o r m ed as t o 'w hic h a d d r es s , t h e I nc om e T ax I ns pe c to r h ad v is ite d. Ac c or d in gly , t he c o nt e nt io n o f t h e i nv es t iga t i on w i n g a s i nc o r p o ra t e d in t h e b od y o f t h e a ss e s s m e nt o r d er is ba s ed o n m er e as s u mp t io ns a nd w hi m s o f t h e o ffi ce r c o nc er ned a nd t hus c an no t b e r e lie d up o n t o d o ubt t he g e n uin e n es s o f t he le nde r c om p a ny .
B. T he ap p e ll a n t ha s be en f urt he r r eq u ir ed t o e xp lain t he c o nt e nt s of las t pa ra gr a p h a t p a ge 3 of t he as s es s m e n t or d er w he r e i t is r end e r ed t hat t he in v es t i ga t ion w ing h a d s um m o ned an d ex am in e d Sh ri Ank ur G o el, t he C ha rt e r ed Ac c o u nt a nt w h o ha s c la im e d t o hav e a u d it ed th e b o ok s o f a cc o unt of t h e c om p a ny f o r t he y e ar u nde r c o ns id e ra t io n . T he ap p el la nt o n t he la st d at e o f hea ri n g h ad b ee n a ls o re q u i re d by y o ur H o n o u r t o ex p la in t he c o n t e nt i o n o f t he Au d it o r Ank ur G o e l t hat t h e d i re ct o rs a re n ot k no w n to h im a nd the c om p a ny is a b og us e nt it y e n ga g ed in p r ov id i ng a cc o m m oda t io n e n t r i es o n ly a nd t ha t th e d i r ec t or s b ei n g d u mm y, t h e be ne f ic ia l d i rec t o r s a r e H im a n s hu Ve r m a a n d H a r i S h an ka r Ya d av .
B1 . I n r ep ly , a t t h e v er y o u ts e t, it is exp la in e d t ha t f o r t he y e a r u nd e r c o ns id e ra t io n r e l ev an t to t h e as s es s m e nt y ea r 2 0 16 - 1 1 , t he b oo k s o f a cc o unt o f t he c o m p a ny w ere a ud i t ed b y Sh ri Sh en u A g ga rw a l, Cha rt er e d Ac c o u nt a nt , P ro p r ie t or of M /S S hen u A gg a rwa l & C om p a ny . T he b oo ks o f a cc o unt o f t he c o mp an y we re n ev er a ud i t ed b y S hr i A nk u r Go el , Ch a rt e re d 26 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust Ac c o u nt a nt a n d t he r e i s n o e vid enc e o n re c o rd t o p r ov e t ha t A nk ur Go el m ay b e p a r t n er of S hen u A gga wa l. Ac c o rd i n gly , all his as s er t i o ns t hat t h e le nde r c o mp a n y i s bog us a nd e nt ry pr o v id e r is t o t al ly fa ls e s t at em ent s ee ms t o be giv en o ut of p r of es s i o na l j e a lo us ly o nly . Si nc e , bo ok s ar e not a ud it ed by Ank ur Go el , C h a rt e r ed Ac c o u n t an t for th e y ea r u nd e r c o ns id e ra t io n, a l l t h e a s s e rt i o ns m ad e b y h im a nd i nc or po ra t e d i n t he bo d y o f t h e o r d er a r e m ea ni n gle s s . Mo re ov er , t he inv es t ig a t io n w i ng has fa il e d to s u mm o n a nd r ec or d t h e s tat e me nt of H im an sh u Ve r ma a nd Ha ri Sh a nk a r Y a d a v a nd as s uc h t he c o nt e nt io n of CA S h. A n ku r Go el lac k ed c o rr o b or a t iv e e v id enc e a nd is ac c or d in gly , n ot hing m o r e t ha n a d um p do c um en t a n d c a n n ot b e r eli ed up o n t he a ns w e r t o q u es t io n n um b e r 40 gi v e n b y A nk u r G oe l th es e a r e e nt it ie s p ro v id in g a cc o mm o d at io n e nt r ie s i s w i t ho ut a ny a ut ho ri t y a nd b e i ng ne it h e r a n aud it o r no r dir t ec to r and is m a r r ed by p r o f es s i o na l j ea l ous l y o n ly .
R e ga rd in g ot h er t w o e n t it i es , U pa j L e a s in g a nd F in a nc e C o m p an y L t d a nd K . G. F i nv es t P vt . Lt d . , ne c es s ar y re p ly s hal l b e f ile d in t h e re le va nt y e a r.
C. O n t h e ot he r ha nd , t h e a s se s s ing o f fic e r ha s p er s o na lly co nd uc t ed dis c r ee t enq ui r ies o n t h e is s u e and a t p a ge n um b er 2 o f a ss e s sm e nt o rd e r a dm it t ed t ha t t ot a l i n f o rm a t io n in r es p ec t o f uns e c ur ed l o a n ra is e d f ro m t hes e e nt it i es has be en s ub m itt e d i n c o mp lia nc e t o n ot ic e is s ued u nde r s ec t i on 13 3 ( 6 ) o f t he Ac t a nd s umm o n s is s u ed u nd er s ec tio n 13 1 o f t he Ac t in t he n am e o f t he C om p a ny/ D i r e c t ors t hat ha s be e n sew ed a s w ell t ha t go es t o p r ov e t he id e nt it y , gen uin e n es s and c r ed it w o rt h ines s o f t h e lo a ns r ec e iv ed . T h e l oa n c o nf i rm a t io n, c op y of b a nk a cc o unt , IT R , b ala nc e s he et a nd a ud it r e po rt h a s be e n al r eady fil ed b e f o r e yo ur ho no ur. It is t hus e xp la in ed t ha t onc e , t h e as s es s i n g o f fic e r h as m a de ind ep en d en t e nq u ir ie s , he c a n no t br us h as id e t h e m at e ria l inf o r m at io n c oll ec t ed b y he r s im p ly t o f ol lo w t h e a ge nd a s et b y in ve s tig at io n w i ng .
C 1. T h e ev id e nc e f ile d ha d b e en c o mp let e in a ll r esp ect s a nd n o d e fe c t wa s p oi nt e d o ut i n th e doc u m e nt s s ub m it t ed o n r ec o rd s b y t he r es p e ct iv e le nde r c o mp a n ies in c om p li anc e t o n ot i ce s e r v ed u nd e r s e c ti o n 1 33 ( 6 ) of t he Ac t no r a n y fu rt he r q ue ry is ra is ed . Th e b a la nc e sh ee t of th e c om p a ny Sa rv ot t a m Sec u rit ie s P vt . Ltd . fo r t he as s e ss m e nt y ea r 20 1 6 -1 7 r e fle c ts t ot a l a s s ets of R s . 1 07 ,6 0 ,35 ,34 6 / - a n d an am o un t o f Rs . 1 05 ,8 5 ,84 ,04 9 / - is s h ow n a s s h ort t er m loa n an d a dv anc es . T h e t r ad ing acc o unt o f t h e c om p a ny s h ow s t ot a l r e v e nu e r ec e ipt s o f Rs .1 ,70 ,7 3 ,9 1 0 / -. Ac c o r d in gl y , 27 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust t he r eq u ir em e nt o f s e c t io n 6 8 s ta nds f ull y c om p l ied w it h, th e id e nt it y o f t he c o m pa ny is p r o v e d, t he ge nu in e n es s of t ra ns ac t i on s t a nd s pr o v ed a nd t he c re d it w or t h in es s of t he c om pa ny is pr ov ed b ey o n d an y do ubt s .
R EGA RD I N G A S PI R E S A L E S P R I VA TE LI M I TE D D. O n t h e la s t da t e of h e a r ing, a p p e lla nt w as r e q ui r ed t o e xp l a in t he o bj ec t io ns rec o rd ed by t he a ss e s s ing off ic er a t pa ge nu m b e r 7 o f t h e a ss e s s m e nt o rd er , w h er e it is obs e rv e d t ha t to en q uir e a b out t he ge nu in e ne ss o f t he lo a n su mm ons w e r e is s ued t o t h e l end er c om p a ny o n 08 .0 9 .20 2 . H ow e v e r , in r es p o ns e , n e it her t he d i re ct or o f t he c om pa ny no r a ny a ut h or iz e d r ep r es e nt a t iv e of t h e c o m pa ny a pp e a re d.
D1. It is ex p la in e d th a t th e su mm ons is s ued b y t he as s ess in g of fi ce r w e re p r o p e r ly s e r v ed up o n t he c om p a n y b ut no n c o mp li an c e c an b e fo r o b v i ous re as o ns . I t wa s t he p er iod , w h e n o n ac c o unt o f CO V ID - 19 , p e op le pr on e t o t he in fec t io n p r efe rr ed t o r em a in ind oo rs . Th e c o pie s of b ala nc e s he et a nd I T R ha d b e en s e nt a l on g w i t h c op ies o f t h e l o an a gr e e m e n t s a nd o t he r s up p o rt i ng d o c um e nts and t h e c op ies ha v e b ee n a ls o en c los e d fo r t he p er us a l b y y o ur H o n o ur .
D 2 . I t i s f urt he r e xp l a ined t o yo u r H o no ur s q u e ry t ha t th e net i nc om e dec l ar ed i n t he I T R is no t t h e s ol e c r it er ia t o j u d ge t h e c r ed i t w o rt h ine s s o f a ny le n d er c o m pa n y . T h e t r ad i n g ac c o unt o f t he le n d e r c om pa n y s ho w s R e v e nu e fr om op e r a t io ns at R s . 9 , 54 ,76 ,0 41 / - a nd t he bal a nc e sh eet r e f lec t s t o ta l a s s e t s / in v es t m e nt s at Rs . 5 , 21 ,4 1 ,8 82 / - t hat inc l ud es t ra d e r ec e iv a b le s a t Rs . 1,6 3, 85 ,2 83 / - b es id es Rs . 1 ,83 ,3 5 9 /- r ef l ect ed u nd e r s ho rt t er m lo a n a n d a d va nc es a nd ev e ry au d it o r h as its ow n sys t e m o f in d ic at ing a d va nc es a nd /o r re c eiv ab le i n t h e b a la nc e sh ee t . A nd t hat t h e lo a n r ec e iv e d s ta nd s r ef lec t ed in the l is t of T ra d e Re c eiv ab le a nd ne c es s a ry c o n f irm at io n is e nc lo s ed . T he as s es s i ng o ffic e r in t he b od y o f t he as s es s m e nt o r de r ha s int e nt i ona l ly m e nt io n e d t he f i gu r e of Rs . 1,8 3 , 3 59 / - only to ind ic a t e th e f ina nc i a l h ea lt h of t he c om pa ny . Ac c o rd in gl y , it is s ta t ed t ha t t h e f in a nc ia l h ea lt h o f t he e nt it y is v er y s o u nd a nd t h e b a nk a c c o unt d o es no t r e f lec t a n y c a sh d e p os i t at a ll a nd t he a s s es s ing o ff ic e r has n ot ma d e o ut th e c as e o f ent r y i n lieu of c as h w i t h s uf f ic ie nt d oc um en ts a n d c o r rob o r at iv e ev id e nc e o n r e co rd .
28 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust
36. After going through the entire evidences, the ld. C IT(A) deleted the additio n. For the sake of ready reference and brevity, the relevant part of the order of the ld. CIT( A) is reproduces as under:
"I ha ve c ar e f ully p e rus e d t he ob s e r vat i o ns of t he AO a nd th e s ub m i ss i o n o f t he a p p e lla nt . In th e a s s es s m e nt or de r, t h e is s u es o f u ns ec u r ed lo a ns o f Rs . 7 5 ,0 0 ,0 00 /- ta ke n f ro m M /s . S ar vo tt a m S ec u r it ies . Pvt . Ltd . , Rs . 50 ,0 0 ,00 0 /- ta ke n f ro m M / s. As p ir e Sa les Pv t . Ltd . a n d Rs . 2 5 ,00 ,0 0 0 / - t ak en fr om M /s . M or a l S a le s Pvt . Lt d . ha ve b e en e xa m i n ed s ep a ra t e ly . I n t he m at t e r of un s e c ur ed lo a n of Rs. 7 5 ,0 0, 0 0 0 /- t ak en from M /s . Sa rv ot ta m S ec ur it i e s Pvt . Lt d . t he AO obs e rv es t h at a s p e r I T R t h is lo a n c r ed it o r ha s s ho w n t he i nc om e o f o nly Rs . 9 ,99 ,7 30 /- . T he AO ob s er v es t ha t t he loa n c re d it o r la c ks th e c r ed it w o r t h in es s . I n t he as s es sm e nt ord e r, t he AO r ec o rds t ha t d ur in g p o s t s ea rc h p roc e ed ing s, s um mo ns w e r e is s ued in t he na m e o f S h. A n ku r G up ta a nd Sh . P r em Na t h , b o t h d i r ect or s in M /s . Sa rv ot ta m Sec ur it ie s Pv t . Lt d . , how ev er t he ins p e c to rs c o uld no t f i nd t he gi v e n a dd r es s at P lot N o . 2 4 6 /6 8, SF E as t Sc ho o l Bloc k , M a nda wa li D e lhi- 92 . T h e A O f ur t h e r o bs e rv es t ha t t he s um m ons c o u ld a ls o no t b e s e rv e d a t t he re s id e nt ia l a d d r es s o f S h. A nk u r G upt a at D- 1 /2 4 5 , Bl o c k D-1 , Bu d d ha Vi h a r, P ha s e -1 , D e lhi. I t is o bs e rv at i o n of t h e A O t h at S h. A n ku r G o e l CA o f M /s . N J a nd As s oc ia t e s , F -3 6, G a li N o. 1 , M ad hu Vih ar , Pa tp ad G a nj , D elh i ha s a ud it e d t he b o oks of t h is c om p a ny f o r AY 2 01 7 -1 8 a n d h is s ta t e m ent w a s r ec o rd ed u/s 1 3 1 (1 A ) of I T Ac t o n 1 0 . 06 . 20 1 9 a nd h e s ta t e d t ha t he ha d au d it ed t h e b o o ks o f M /s . K G F i nve st P vt . Lt d. , M /s . Sa rv ot ta m S ec u rit ies Pvt . L td . a n d M / s . U paj L ea s ing a nd F ina nc e P vt . L td . f or F Y 20 1 5 -16 a n d FY 2 0 16 -17 . Sh . An k ur G o e l s t at ed t ha t he a ud it e d bo ok s o f t h es e t hr ee c o nc er ns w it ho u t k n o w ing t h e ir d ir ec t o rs a nd t ha t lo a n a gre em e nt s m a d e by t h es e c om p a nie s w er e not p ut b e f o re hi m d ur i n g t he a u d it o f b o ok s o f th es e c o mp a n i es . He c lai m ed t h at t h e d i r ec t ors o f t hes e c o m pa n ie s a pp e a r to be on ly f or nam e-s a k e an d t h at t h es e c om p a ni es a r e b og us . T he A O ob s er v e s t hat Sh . Ank u r G o e l s t at e d t ha t t he d i re c t or s of t he s e t h re e c o m p a ni es a r e d u mm y a n d ac tu al b e n e f ic ia l o w ne rs a r e Sh . H im a ns h u V e r m a an d S h. Ha r i Sha nk ar Y a d av . T h us t h e AO c o nc lud e s t ha t t h es e t hr e e ent it ies i. e. M /s . K G F i nv es t P vt . Lt d ., M / s . Sa rv ot ta m S ec u rit ies Pvt . L td . a n d M / s . U paj L ea s ing a nd F ina nc e P vt . L td . pr ov id e a c c o mm o d at io n e nt ri es . T he AO fu rt her obs er ve s t hat t he di r ec t o r s of M /s . Sa r vo tt a m Se c ur it ie s Pvt . Lt d. d id n ot a p pe ar pe rs o na lly 29 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust du r in g t he as s es s m e nt p ro c e ed in g s . The c re d it w o rt h ine ss of M/s Sa rv ot ta m Sec u ri t ie s Pv t . Ltd . w as a ls o c onc l ud ed to b e in s u ffic ie nt d ue t o it s m ea g er inc o me o f Rs . 9 , 9 9, 73 0 /- i n A Y 20 1 6 -17 ag a ins t th e loa n o f Rs . 75 ,0 0 ,00 0 /-.
6.5 O n t he ot he r ha nd t he AR s ub m it s t hat t he c op y o f t he b ala nc e s he et o f t he loa n c re d it or c o mpa ny i .e. M /s . S a rv ot ta m Sec ur it ies P r iv at e lim it ed h as b e e n f ile d a nd fr o m t he s am e , it c a n b e v er ifi ed t h at S h. Ank ur G upt a a nd P r em na t h a r e n ot t he d i re c t o rs o f t he c om pa n y d u r in g t he y ea r . T h e d i r ec t or s a r e Sh r i Ris h i Jind a l a nd Shr i As h ok K u ma r, th er e fo r e, it has no r el ev a nc e if t h e s um m o ns c o uld n ot b e s e rv ed o n t h es e pe rs o ns ev en a t t he i r r es id e nc es . Th e A R s ub m it s t hat t h e of f ic e of t he l en de r c omp any is s it ua t ed o n t he f irs t f lo or o f t he s a m e p r em is e a nd n o t o n t h e s ec o nd f l oo r w h er e t h e le t t er s e em s t o ha ve b ee n s ent . T he ad d r es s c an b e v e ri fie d f ro m t he c o p y of t he I T R. T h e A R f u rt he r s u bm i ts t ha t thi s p la c e was t ak en on r ent fr o m S mt . Dim p le Ve rm a v id e re nt a g r ee m en t d a t ed 21 .0 5 .20 1 6, c op y of t he re nt a g re em en t a nd c op y of t h e e l ec t r ic it y b i ll i n t he nam e o f S mt . D i mp le V er ma has b ee n e nc l os ed in e v id e nc e . F ro m t h e c op y of t h e r en t a g r eem e nt and e lec t r ic it y b ill , t h e a d d r es s 24 6 /6 8 , F i rs t F lo o r, Ea s t Sc hoo l B l oc k, Ma n da w a l i , De l hi- 1 10 0 9 2 s ta nd s p r o v ed . It c le a r l y es ta b lis h es t ha t t he c o r r ec t add r es s wa s no t e xp lo r ed e it he r t hr o ug h p os t o r t h r ou g h I nc om e Ta x I n s p ec t or a nd / o r a s t h e c a s e m a y b e . I t is s ub m is s i on of t h e AR t hat t he i n v es t ig at io n w i ng nev er i n fo rm e d t h e a pp e l la nt in r e ga r d t o t h e fa c t t h at s um m o ns c o uld no t b e s e r ved . M or e s o, t he lett e rs w e r e w r ong ly a dd r es s ed t o s ec o nd f lo o r w h ile t h e o f fic e o f t he c o mp a n y ha d b e e n f unc t i on ing fr o m th e f i rs t fl o o r. T he A R b r ing s t o t he no t ic e t ha t t h e lend e r c om pa ny ha d ag a in s hi ft ed it s o ffi c e i n t he y ea r 20 19 t o t h e n ew a d dr es s a nd p r op e r r en t ag re em e nt w as e xec u t ed f ina lly o n 1 8 .0 2. 201 9 w it h S hr i K. P a nd e y s o n of Shr i R. D. P an d e y o w ne r of t he pr op er t y b e a r ing un it numb e r 11 4 , V ar dhm a n , Ma y u r M a rke t , CS C , M ay ur Vi h a r, P ha s e -3 , Ko nd li , G ha r ol i, D e lhi-1 10 0 9 6. C o p y of r en t ag r e em e nt in r es p ec t o f t h is p r op e rt y ha s a ls o b e en e nc los ed .
6.6 T h e AR c la i ms t hat i n AY 2 0 16 -1 7 , t h e b o ok s of t h is l oa n c re d it o r i. e. M /s . Sa r vo tt a m S ec ur it i es P vt . Lt d . hav e b ee n a ud it e d b y She nu Ag ga r wa l, c ha rt e r ed a c c ou nt a nt , p ro p , of M /s . Sh en u Ag ga rw al and C o mp a ny a nd t h e b o oks o f t he c r ed i to r ' co m p a ny w e r e no t a ud it ed by Sh . An k ur G o e l, c ha rt e r ed a c c o un ta nt a nd t he re is n o ev id e nc e o n r ec o rd t o pr ov e t ha t A nk ur G o e l m a y b e p ar t ne r o f She nu A gg ar w a l. T he A R c la ims 30 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust t ha t a ll t he a s s ert io ns o f S h. A n ku r Go el t hat le nd e r c om p a ny is b og us a nd e nt r y p r ov id er a r e t ot a l ly fa ls e an d s e e m to b e g iv en ou t o f pro fes s ion a l j ea lo us y . H e s ub m i ts t ha t t he inv es t i gat i o n w ing fa i led t o c o nf ir m t h e s ta t e m ent o f S h ri An ku r G oe l f ro m S h. H i ma ns hu Ver m a a n d Sh . Ha r i Sh a nk a r Y ad a v , w h o ha ve b e e n c la im ed t o b e ma in p e rs o ns co nt r o lli ng t h e lo a n c re d i t or . T he A R c la i ms t hat t h e A O has p e rs o n a ll y c o nd uc t e d d is cr eet e nq u ir ie s on the is s u e a nd at pa g e numb e r 2 of a s sess m ent or d e r a dm it t ed t ha t t ot a l i n f o rm a t io n in r es p ec t o f uns e c ur ed l o a n ra is e d f ro m t hes e e nt it i es has be en s ub m itt e d i n c o mp lia nc e t o n ot ic e is s ued u nd e r s ec t i on 1 3 3 ( 6 ) of t h e Ac t t h at g oes t o p r ov e t h e id e nt it y , g e n ui ne nes s a nd c r ed it w o rt hine s s of t he l oa ns r ec eiv ed . T he lo a n co n f ir m at i o n , c op y o f ba nk a c c o un t, I T R, b a la nc e s he et a nd a ud it r ep o rt ha s b ee n a lr e a d y f il ed . I t is t hus e xp l a i n ed t ha t onc e , t he as s es s ing o f fic e r ha s m ad e ind ep en d ent e nq u ir ie s , he c a n no t br us h as id e t h e m at e ria l i nf o r m at io n c oll ec t ed b y he r s im p ly t o fo llo w t he ag e n da s e t b y inv es t ig a t io n w ing . T he A R c la ims t ha t ba la nc e s h eet o f t h e l e nd e r c o mp any M /s . S a rv ot ta m Se c ur it ie s Pv t . L td . f or AY 20 16 -1 7 r efl ec ts t o ta l a s s et s o f Rs .1 0 7, 60 ,3 5 ,3 4 6 /- and a n am o unt o f Rs . 10 5, 8 5 ,8 4 ,0 4 9/ - is s how n a s s ho r t t er m l oa ns a nd a dv a nc es . I t i s t he s ubm is s io n o f t h e AR t h at t h e t r ad i ng ac c ou nt ' o f t he c omp a ny s h ow s t ot a l r ev enu e r ec e ipt s of Rs . 1 ,7 0 ,7 3, 91 0 /- and t h is t u r n-o v e r c a nno t b e br us he d a s id e t o c la im t h at c o mp a n y is a b og us e nt it y . T h us t h e AR c o nc lud e s t h a t t h e r eq u ir e m e nt of s ec t i on 68 s t a nds f u lly c omp lie d w it h , s inc e t he id e nt it y of the c om p a ny is p r o v ed , the gen uin ene s s of t ra ns a c t io n s t a n ds pr o v ed a nd t h e c r ed i tw o rt hin es s of t h e co m pa n y is pr ov ed b ey o nd a n y d o ub ts . H e f ur t he r c la ims t ha t t h is N BF C has g iv en lo a ns to s o m a ny l ar g e nu mb er of ot he r p er s o ns an d t h e s am e c a n b e v er ifie d f ro m t he s c he d ule s o f ba la nc e s h e et . T h e AR f urt h e r c la im s t ha t t he r el ied s ta t e m e n t o f S h. Ank ur Go el , w ho wa s ne i t h e r t h e d ir ec t o r no r t he a ud it o r of the c o nc e r n, has a ls o n ot b e en p r o v id e d by the I nve s t ig at io n W i ng o r b y t h e AO t o t h e a pp e l la nt . H e c la ims tha t t he re was no p a rt n e rs h ip b et w e e n t w o p rof es s i ona l c ha r t e r ed ac c o u nt a nt s i. e. She nu Ag ga r wa l a nd An k ur G oe l a nd Sh . S h en u A gg a rw a l w as pr op , o f M /s . Sh e nu Agg a rw a l a n d Co m pa ny a nd he onl y a ud it e d t h e b o o ks o f M /s . Sa rv ot ta m Sec ur it ie s Pvt . L t d . t h e r efor e t he s t a t em ent o f S h. Ank ur Go el is f a ls e a nd p r ej ud i c ed a n d m a rr ed w it h p r o fes s io n a l r iv a lr y a nd t h us t h e s am e c a nno t b e re lie d t o fa s t e n t h e a pp e lla nt w it h t a x li a b il it y o f t ho se lo a ns w h ic h hav e be en s ubs t a nt i all y r et ur n ed by v ar io u s c o nce r ns of a pp e l la nt Gr o up.
31 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust 6.7 F r om t h e r ec o r ds it has b e en f ou nd t ha t Sh . An k ur Go el ha s no t a ud it ed t he b o o ks of a c c o unt s o f M /s . Sa rv ot ta m Sec u rit i es Pvt . L t d . i n t he y ea r un d e r c o ns id e r at io n . I nfac t the b o oks h av e b e e n a ud it ed b y Sh e nu A g ga r w a l, C ha r t er e d ac c o unt a n t wh o is p r op , o f Sh en u A gg a rw a l a nd C omp a ny. F u rt h er t he not ic es is s ued b y t he A O ha v e b ee n c om p l ied a nd a l l t he r eq u is it e de t a ils ha v e b ee n fi led o n b e ha l f of lo a n c r ed it or M /s . Sa rv ot ta m Se c ur it ie s Pv t . Ltd . F r o m t h e r et u rn of i nc o me i t ha s be en f o u nd t ha t t he a d d r es s o f M /s . Sa r v ot t a m S ec ur it ies P vt . Lt d . is P lot No . 24 6 /6 8, 1s t F lo o r, Ea s t Sc ho o l B loc k, M a nd aw a li , D e l hi-1 10 0 92 . T he a pp e l la nt ha s a ls o f u rn is hed t he r e g is t e r ed r en t ag r eem e nt b e t w ee n S mt . D imp le Ve rm a a n d M /s . Sa rv ot ta m S ec ur it ie s P vt . Ltd . d t . 2 1 .0 5 . 20 1 6 as a n e v id e nc e. T he A R c la im s t hat t he i nq u ir y w as c ond uc t ed o n t he 2 nd f lo o r o f t his p r em is e a s is m e nt io ne d in t he a s s es s m e nt o rd e r . T he AR f ur t he r cl a im s t h at t h e o ff ic e of t he c o mpa ny wa s s hift ed in 20 1 9 a t 1 14 , Va rd hm a n, Ma yur Ma rk et , C S C, Ma y u r Vih ar, P has e -3 , K on d li, G h a r o li , D elh i-11 00 9 6 . T he co p y of r e nt ag r e em e nt of t his p r em is e is a ls o f ur n is hed . T he r ef o r e t h e AO c an not c l a im t ha t t he i d en t it y of t his lo a n c r ed it o r could not be p r ov ed . F ro m the b a la nc e s he et of t h is NBFC c om p a ny it ha s b ee n f ou n d t ha t t hi s h as s har e cap ita l of Rs . 3,0 1 , 8 7 ,000 /- a nd r es er ve an d s ur p l us o f Rs . 65 .0 9 c ro r es . F ro m t h e Sc he d u l e of S hor t te rm L o a ns a nd a d v anc es , i t i s fo un d th at lo an s ar e gi v e n to v a rio us p e rs o ns . L oa ns ha ve be en r ec e ive d b y th e ap p e l lan t t hr o ug h ba n k ing c ha nne l a nd r e l ev an t ba nk s t at em e nts ha v e b ee n f ile d . T h is c o mp a ny h as e a r ne d int e re s t i nc o me o f Rs . 1 .3 9 c ro r es and ac hie ve d t he s a le s t u r n -o ve r o f Rs . 3 9.5 0 L ac s . I t is fo u nd t h at t h e n et inc o me o f Rs . 9 ,9 9 ,73 2 /- ha s b e e n o ff er ed f or t ax b ut t h e inc o m e o f c u rr e nt y ea r c an no t b e m ad e a c rit er i a o f c r ed itw o r t hin es s of t h e lo an c r ed i t o r. T he s ta t e m ent o f Sh . A nk ur G o e l s u ff e rs fr om f ac t ua l i nc o rr e ct n es s a nd t he s am e ha s a ls o n ot be en ta k e n t o l og ic al c o nc l us io n b y v e r i fyin g t he s am e f ro m t he a ffec t e d p a rt ies . T his s t at em e nt h as als o n ot b e en p r o vid ed t o t he a pp e lla nt . F u rt h e r a ll t he t h r e e lim bs o f g e nui ne c as h c r ed it i. e . id e nt it y, c r ed it w o rt hi nes s and g en uin e ne s s of t r a nsac t io n , ha v e b e en pr ov ed b y f ur nis h i ng a ll t h e r el e v a nt d et a ils . T h e r eli a nc e p la c ed b y t he a pp e l la nt on va r io u s j ud ic ia l r e no unc e me nt s ha s b ee n fo und c o r r ec t in t he s ens e t ha t t he a p p e ll a nt ha s d is c ha rg e d h is o n us by p r ov i ng id e nt ity a nd c r ed it w o rt hine s s of t he lo an c r ed it o r a l o ng with g e nui n en es s of t ra ns a c t io n, w h ic h is p ro ved s inc e a ll t h e lo a ns o f ad v anc e d t hr o ug h ba nk i ng c h a nn els .
32 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust 6.8 F r om t he d et a i ls fu r n is hed by t he a pp ella n t in the as s ess m en t pr oc e ed ings a nd a ls o f iled in t he a p p e l la t e p r oc e ed ing s , it has b e e n f ou nd t ha t a t t he t im e o f a c c ept ing l oa n , a n ag r ee m en t wa s e x ec ut ed , t h e a pp e l la nt a ls o ex ec ut e d p r o m is s or y n o t e a s s ec ur ity a n d t he ap pe l lan t is s ue d u nd a t ed c ro s s ed c h eq ue in t he na m e o f t h e l e nd er c om p a ny a s a dd it io na l s e c ur it y . F u rt h e r t he s ubm is s i on o f t he AR has b ee n f o u nd c o rr ec t t ha t ov er a ll a na lys is of a c c o u nt s va r io us - y ea rs i . e. AY 2 0 1 5 -1 6 t o 20 18 - 19 of S h. Ja ip a l Sing h Sh ar ma Tr us t a nd o f va r io us f a m il y m e m b er s le ad s t o t h e c o nc lus i o n t ha t w ha t eve r l o ans w er e r ais e d b y t he a p p e lla nt a nd ot he r fa m i l y m e m b e rs , t h e m aj or p o rt io n o f t he am o unt is t ra nsf e rr ed a nd d ep o s it ed w it h th e t r us t t o m e et t h e c ha ri t ab le g oa l o f t h e t r us t . I t ha d b e en s pe c i fic a ll y s t ip u lat ed in t h e lo a n d oc u m e nt t hat if t h e lo an is no t r e pa id w it h in t h e t im e f r a m e, t he i nt er es t e l em e nt s ha ll c om e in t o pl a y t ha t s t a nd a d d ed t o t he d oc um en t /p r o m is so r y n ot es . and f u r t he r w it h a dva nc e a s s ur a nc e f or r ep a ym e nt o f l oa n am o unt b y is su ing u nda t ed c heq u es . It ha s b e en em p ha s iz e d t h at t r us t ha d been fac in g g ra v e f ina nc i a l c r is is in t he a bs e nc e o f s a n c t io n of m e d ic a l b a t c hes and t h e t r us t ha d be en ex t e nd ing it s m ed ic a l fa c il it ie s on t h e OP D s lip of R s. 10 /- o nly . T h e t r us t had b e e n f o ll ow ing a n d p u rs uin g it s c ha r it ab le ob j ec t i ves a nd du e t o t he s a m e, t he t r us t had s uf f er ed lo s s es t o t he t un e o f a r o und m or e t ha n Rs . 2 0 C ro r es . T h e r e f or e t h e c ir c ums t an c es ind ic at e t hat , t he t r us t ne ed e d a c t u a l m one y t o r un t he h os p i ta l s m o ot h ly in v iew o f t he m ou nt i n g lo s s es and n ot m er e a c c om m o d at i o n ent r ies . Th e r e is fo rc e in t he a rg u m e nt of t he AR t ha t the c irc u ms t ant i a l ev id e nc es lead to t he c o nc lus i o n t ha t t h e T rus t n e ed e d ac t u a l m o ne y a n d t he r e w as n o s uc h b ig c as h g e ne ra t i n g ot h er b us ines s a c t iv it y f ro m w h ic h ex c es s c a s h w as b ei ng ge ne r a t ed fo r w h ic h f a m il y m e mb er s o f th e s ea rc hed g r o up w ou l d ha v e r es or t ed t o a c c o m m od a t io n e nt r ie s t o i nt r od uc e t h e unac c o unt ed inc o m e. T h e s ta t e m e nt g ive n b y S h. An ku r Go y a i, C A aft er m o r e t han 5 mo nt hs o f t he s e a rc h , ha s b e e n f o und inc o rr ec t in t he lig h t o f t he fac t t hat t he b o o ks o f t he ac c o u nt s of M /s . S a rvo t t a m S ec u rit ies Pv t . Ltd . h av e no t b ee n a ct u a l ly a ud i t ed b y h im a nd t h e s a m e ha v e b e e n aud it ed b y Sh . S he n u Ag ga r wa l, p r op . of She nu Ag g a rw a l a nd Com p a n y, ( me m b e rs hi p No. 52 72 6 7 a nd p ro p, c o nc e rn r eg is t ra t io n n o . 0 26 5 0 1 N ). F u rt h er t h e AR ha s br ou g ht int o f or e t h e fa c t t ha t no c as h t ra i l c o u l d b e est ab lis h ed b y t he in ves t ig at ion w i n g or by t h e AO . T h e s t a t em e nt w as n ot c on f r on t ed t o t he AR a n d t h e s am e w a s a ls o no t ta ke n t o i ts log ic a l c onc l us io n b y ex am i ni n g Sh . H im a ns h u Ve rm a a nd S h . H ar i S ha n ka r Y ad a v , w h o ha v e b e e n c la im e d 33 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust a s c o nt r ol le rs of t h es e t hr ee N B F Cs . T h es e N BH Cs ar e r e gu l at ed b y R BI la ws . T he o bj ec t iv it y o f s ta t em ent o f S h. Ank ur G o ya i c o uld a ls o n ot b e e xa m in ed w h en t h e q u es t io ns w er e r a is ed b y t he a pp el la nt t hat t he s am e is r ec or d e d a ft e r t h e 5 m o nt hs of t h e s ea rc h ac t io n an d h e has no t b ee n a ud it o r o f t he N BF C le nd e r in t h e ye a r u nd e r c ons id er at io n, in -fac t h e was pa rt ne r o f N J As s o c iat es a nd M /s . N J As s oc ia t es h as b e e n a ud it o r o f t hi s le nde r c om pa n y in F Y 2 0 1 6 -1 7 o nl y an d a s p e r his c la ri f ic at io n i n t he s ta t e m ent o n o a t h . Sh . A n ku r G u pt a h as j us t s i g ned t he aud it ed r ec o rds a nd ha s n ot b ee n i n vo lv e d i n t he ac t u a l aud it p roc es s.
6.9 I n t he m at t e r of un s ec ur e d l oa n of Rs . 50, 00 ,0 0 0 / - t ak e n f r om M /s . As p i re Sa le s P vt . Lt d ., t he AO o bs er v es t hat t h is ent it y ha s d e cl ar ed inc o m e of o n ly Rs . 6,3 6, 87 0 /- , how ev er t he tot a l l oa n of Rs . 1,0 0 , 0 0 ,000 /- is a d va nc ed t o t h e ap p el l ant a nd his fa m i ly me m b e rs d ur i ng t he ye a r. T he A O a c c e pt s t h at t h e n ot ic e i s s u ed u/s 1 33 (6 ) o f I T Ac t ha s be en c o m p li e d. H ow ev er t h e A O ob s e rv es t h at f ro m t he ba la nc e s he e t o f t his le n d e r c o mp a n y it ha s b ee n f o und th at it has s ho w n tot a l lo a ns a nd a dva nc es of o nly Rs . 1 ,8 3 , 35 9 /- h enc e t he t ot a l loa ns of Rs . 1,0 0 , 0 0 ,000 /- g iv en t o t he a pp e lla nt a nd h is f a m ily d o es not a p p ea r ge nu in e . T h e AO o bs e r ves tha t s um m o ns u/s 1 31 of I T Act w er e is s ued a nd t h e s a m e w e r e not c om p lie d . T h er efo r e t h e AO c o nc lud es t hat t he le nde r s uf fer s f r om c r ed it w o rt h ine ss a n d h enc e t h e g e nu in e n es s o f lo a n o f Rs .50 , 0 0 ,0 0 0 /- g i ve n b y M /s . As p ir e Sa l es P vt . Ltd . ha s n ot b ee n ac c e pt e d by t h e A O .
6.1 0 O n t h e o t he r ha nd th e AR su bm its t hat in t he m a t t e r o f M / s. As p i r e Sa les P vt . Ltd ., t he no t ic es is s ue d u/s 1 33 ( 6 ) of IT Ac t were d u ly c om p l ied , h o w ev e r t h e s um m o ns is s u e d u/s 1 3 1 c o uld n ot b e c om p li ed d ue t o Co v id -19 s it u at io n t hro ug ho u t t he c o u nt r y . T h e AR s ub m it s t h at c o p i es o f t h e ba la nc e s h e e t a nd IT R had b e e n f u r n is hed a l o ng w it h c o p ies o f lo a n a g re em e nts a n d ot he r s upp o rt ing d oc um e nt s . T h e A R f ur th er o m it s t ha t t he n et i nc om e d ec l a r ed in t h e I T R is not t h e s o le c rit er ia t o j ud g e t h e c r ed it w o rt hine s s o f a ny l e nd e r c om p a ny, t h e t rad i ng ac c o unt o f t he le nd e r c om p a ny s ho ws Re ve nu e fr om o p e r at i ons at Rs . 9, 5 4 ,7 6 ,04 1 / - a nd t h e ba la nc e s h eet r ef le ct s to ta l a s s et s / inv es t m e n t s at Rs . 5 ,2 1, 4 1, 88 2 /- t ha t inc l ud e s tr a d e r ec e i va b les at Rs . 1 , 6 3 ,85 ,2 83 / - b es id es Rs . 1 ,83 ,3 5 9 / - r e f lec t ed u nd e r 's ho rt t e rm loa n a nd a d v anc es ' .
34 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust T h e A R e xp la ins t ha t e ve ry a ud i t o r has h is o w n s ys t e m of ind ic a t i ng a dva nc es a nd /o r r e c e iva b les i n t he b a la nc e s he et , he c lar if ies t hat t h e lo a n r ec e iv e d s t a nd s r e fle c t ed in the l is t of Tr ad e R ec e ivab l e ' a nd ne c es s a ry c o n f irm at io n is e nc lo s ed . T he as s es s i ng o f fice r in t he b od y o f t he as s es s m e nt o r d er h as w ro ng f ull y m e n t i o ned t he f ig u re of Rs . 1,8 3 , 3 59 / - only to ind ic a t e th e f ina nc i a l h ea lt h of t he c om pa ny . Ac c o rd ing l y , it is s ta t ed t ha t t h e f in a nc ia l h ea lt h o f t he e nt it y is v er y s o u nd a nd t h e b a nk a c c o unt d o e s n ot re fl ec t a ny c ash d e p o s it at a ll a nd t he a s s es s ing o ff ic e r has n ot ma d e o ut th e c as e o f ent r y i n lieu of c as h w i t h s uf f ic ie nt d oc um en ts a n d c o r rob o r at ive ev id e nc e o n r e co rd .
T h e AR e x p la i ns t h a t lo a ns a nd a d va n c es g iv e n t o Sh. A nk it Sha r m a a nd Sm t . N id h i Sha rm a ha v e b ee n s h ow n u nd er t r ad e r ec e iva b le s in s c he d u le 10 w hic h s um s up t o Rs . 1 , 63 , 85 ,2 83 /- a nd t h e b if ur cat i on of t he s a m e is a s u nd e r:
Name of Parties Amount
Bright View Telecom Pvt. Ltd. 24,39,177.00
ID Pearl India 39,46,106.00
Ankit Sharma Loan A/c 50,00,000,00
Nidhi Sharma Loan A/c 50,00,000.00
1,63,85,283.00
T h us t h e AR s u bm it s t ha t t h e AO has w r o ng ly c o nc l ud ed t ha t t he lo an s a nd a dva nc es g ive n t o t he a pp e ll a nt g r o up a m o unt ing t o Rs . 1 ,0 0, 00 ,0 0 0 /- ar e wa y m o r e t ha n t h e Sho rt t e rm lo a ns a nd a d v anc e s s how n b y t he len d er a t Rs . 1 ,8 3,3 5 9 / -, w h ic h s s h ow n in s c h e d ule 12 o f t he bal a nc e s hee t . T h e AR s ubm i t s t ha t t he o p p o r t un it y o f e xp lai n in g t he b a la nc e s he et b ef or e r eac h ing t o a n y c on c lus i o n has not b ee n g iv en a n d w ro ng c o nc l us io ns ha v e be en d ra w n .
6.1 1 Th e AR fu r t h er s u bm it s t ha t fi na nc ia l h ea lt h o f t he e n t it y is v er y s o u nd a nd ba nk ac c o u nt d o es not re f le c t a ny c as h d e p os it at all an d t he a ss e s s ing o f f ic e r h a s fa ile d t o p r ov e t h e a ll eg a t i o n of e nt r y i n li eu of c as h w i t h s uf fic i ent d oc um e nts an d c o rr ob o rat iv e e v id e nc e on r ec o rd e xc ept i n g t ha t t he A O ha s t rie d t o t o e t h e li ne d r aw n b y i nve s t ig at io n w ing . T he AR f ur t he r s ub m its t ha t i nc o m e o f c ur r e nt ye ar is no t a c r it e ri a t o j ud g e t h e c r ed it w o rt hine s s o f t he le nd e r. H e p o int e d o ut f r om t he b a la nc e s h e et a nd 35 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust pr of it a nd l os s a cc o u nt t ha t le nd e r c om pa ny i. e. M /s. As p ire S al es P vt . Ltd . h ad s ha r e' c a p i ta l a n d r es e rv es o f m o r e t ha n Rs . 5.2 1 c r o re s o n 31 .0 3 .20 1 6 a nd t h e co m p a ny h as re v e n ue fr o m o p e ra t io ns of Rs . 9. 54 c r or es i n F Y 201 5 -1 6 . H e c la im s t ha t c o m pan y w it h s uc h a h ug e t ur n-o v e r a nd s uc h a g o od c re dit w o rt h i nes s c a nno t b e c lai m ed as Bo g us by t he AO ."
37. The ld. CIT(A) has diligently relied upon the following case laws as applicable to the facts of the cases before us:
Abhijavala developers (P.) Ltd. vs ITO 9(1)(1), Mumbai, [2021] 124 taxmann.com 72 (Mumbai - Trib.)/[2021[ 187 ITD 222 (Mumbai - Trib.)[03-12- 2020], Moongipa Dev. & Inf. Ltd. vs DC IT , Mum. [2021] 127 taxmann.co m 808 (Mumbai -- Trib.)/[2021] 189 ITD 388 (Mumbai -- Trib.) [03-05-2021] PCIT-5 vs Lax man Industrial Reso urces Ltd., [2017] taxmann.co m 648 (Delhi)/(2017) 397 ITR 106 (D elhi[14- 03-2017] Bini Builders (P) Ltd. vs DCIT, Central range-7(3), [2020] 118 taxmann.com 447 (Mumbai-Trib [2020] 185 ITD 236 (Mumbai-Tr ib.[12-03-2020) Ancon C hemp last (P) Ltd. vs ITO , Ward-2(4), Ne w Delhi, [2021] 127 taxmann.com 150 (Delhi - Trib.)2022) 93 ITR(T) 167 (Delhi - Trib.).[2021] 189 ITD 156 (Delhi-Tr ib [30-04-2021] PCIT vs. E Smart Systems (P) Ltd. (2019) 105 taxmann.co m 15 8 [Del.-HC].
PCIT vs. Hi-Tech Residency (P) Ltd., [2018] 96
taxmann.co m 40 2 [Del-HC]
Mod Creations (P.) Ltd. vs. ITO [2013] 354 ITR 282 [Del.-
HC] Flourish Builders & Developers ( P) Ltd. vs. DCIT (2019) 176 ITD 409 [Del Tribe] 36 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust AC IT vs. Vikrant Puri [2015] 47 IT R (T) 708 [Delhi-Tribu.] Rajesh Bhatia vs. DCIT [2017] 88 taxmann.com 350 (Delhi-Tr ibu.] CIT vs. Diamond Products Limited [2009] 177 Taxman 331 [Delhi-HC).
Prayag Tendu Leaves Processing Co. vs . CIT [2017] 88 taxmann.co m 23 [Jharkhand HC) PCIT vs. Veedhata Tower Pvt. Ltd. [2018] 403 ITR 415 [Bombay-HC]
38. We have gone thro ugh evide nces co llected by the Assessing Officer, the reply submitted by the ass essee before the AO and the ld. CIT(A) , examinatio n of each is sue and contentio n raised by the revenue with reference to the facts relied upon by the ld. CIT(A) and reports of the investigation. The ld. C IT(A) cogently brought on record that the loa ns received by the asse ssee could not be treated u/s 68 as the identity, genuineness and creditworthiness of the parties has been duly proved. In view o f the above facts and the ratio given by the ld. CIT(A), no interference is calle d in the well reasoned order of the ld. CIT(A) .
Nidhi Shar ma ITA No. 2124/Del/2022
39. The assessee has received loans from M/s Mora l Sales Pvt. Ltd. in addition to Sarvottam Securities Pvt. Ltd . and Aspire Sales Pvt. Ltd. The adjudication in the case of Ankit Sharma in ITA No. 2125/De l/2022 applies mutatis mutandis with reference to the unsecured loans re ceived from M/ s Sarvottam Sec urities Pvt. Ltd. and M/s Aspire Sales Pvt. Ltd.
40. M/s Moral Sales Pvt. Ltd. During the year, the assessee has received loan of Rs 25,00,00 0/- from the lender entity. The 37 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust entity has declar ed inco me of Rs. 1,05 ,690/- during the year. Fur ther, the entity has forwarded total lo an of Rs. 80,00,000/- to the assessee and his family members, during the year, na mely Sh. Ankur Sharma and Smt. Shashi Sharma.
41. Notice u/s 133(6 ) was issued to the company, in response to which it furnished reply. The AO held that the company does not have creditworthiness to forward suc h huge amount of loans . However, from the perusal of Balance sheet of the entity for the period ending 31.03 .2016, it was seen that it has shown total loans and advances given of only Rs. 52,97,148/- during the year. No other loans and advances have been mentioned in the balance sheet. Also, no additional investments has also been shown by the company. Henceforth, the total loans of Rs.80,00,000/- which has been forwarded to the assessee and his family members is not re fle cted in the Balance sheet of the lender company during the year under consideratio n which does not prove the genuineness and creditworthiness of the above loan transactio n.
42. Hence, Summons u/s 131 were also issued to the company on 08.09.2021. In response the authorized representative of the company Sh. Santosh G upta, CA and internal auditor in the company appeared alongw ith copy of power of attorney issued by the Director of the company Sh. Har Dayal and copy of loan agreements. He stated that the sour ce of loans was o ut of acc umulated pro fits and loans o f the company. However, as mentioned in the preceding paras the company ha s no t s hown the amount o f loans forwarded to the assessee and her fa mily members in its balance sheet. Thus, the AO held that the genuinenes s of the transaction is not established.
38 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust
43. The AO held that during the post search proceedings, summons were issued by the investigation wing in the name of Sh. Vivek Dutta and Sh. Har Dayal both Directors in M/s Moral Sales Pvt. Ltd for compliance. However summon could not be served at the re gistered office of the co mpany in this case as the premises were found locked and no whereabouts o f the company could be known. Since, the o ffice of the compa ny as reported by the IT Is was locked, accordingly, IT Is were again directed to serve the se summons and submit their report. Again the summons co uld no t be served and it was reported that the premises is the office of M/s Rajesh Vipin and Associates C A. And , Sh. Bije ndra Chauhan wor king in the ir office to ld that neither there is any person with the name Sh. Hardayal nor M/s Moral Sales Pvt. L td., exists at this address. Summon was also sent, by the investigation wing, thro ugh speed post. In response to summon, the authorized signatory of the company submitted the w ritte n submission thro ugh speed post. In this reply the authorized signatory of M/s Moral Sales Pvt. Ltd. submitted that the matter is old and they need 15 days more to collect the requisite docume nts/information. However, after that none attended nor any written reply from M/ s Moral Sales Pvt. Ltd. was received.
44. The details of Gross Total income of the co mpany declared in the ITRs during differe nt FYs are obtained and are summarized as under:-
Sl. No. F.Y. Gross Total Income ( Rs.)
1. 2014-15 1,10,673/-
2. 2015-16 1,05,685/-
3. 2016-17 1,64,632/-
4. 2017-18 2,04,312/-
39 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022
Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust
45. M/s Moral Sales Pvt. Ltd. has given substantial lo an to the assessee and h family members and donatio ns to M/s Shri Jaipal Singh Sharma Trust. The loans given by the company are not getting reflected the Balance sheet o f the co mpany. From the perusal of above table, it is seen that the maximum gross total inco me of the company dur ing the per iod from FY 201 15 to 2017-18 is Rs.2 ,04,312/- o nly in FY-2017-18. Further, juxtaposition income profile to the outcome o f enquiries made regarding genuineness of the company make it amply clear that such loans and donations received by the asse ssee and her family members from M/s Moral Sales Pvt. Ltd. are bogus.
46. Hence, the AO treated the loan as unexpla ined money of the assessee that has been routed as loan and added to the income of the assessee.
47. Before the ld. C IT(A), the assessee submitted as under:
R EGA RD I N G M OR A L S A L E S P RI V A T E L I MI T ED " E. O n t he las t da le o f hea r in g, t h e ap p e ll a nt ha d b ee n r e q uir e d t o e xp la in t he r ea s o n as t o w hy d ur i ng p os t s e arc h e nq u i ry , t he s um m on s is s ue d b y t h e inv es t iga t io n w in g in t he na m e o f S h r i V iv ek Dut t a a nd S h ri H ar Da ya l, bo t h D i r ec t o rs of t h e c om p any M o ra l Sa l es P ri v at e L im it ed c o u ld n ot b e s er v ed a t t he ir re gis t e r ed o ffic e t hat w as f oun d t o b e l oc k e d. E1 . It is re s p ec t f ully e xp la i ned t ha t the r ep o r t / obs e r vat io n of the in v es t i ga t ion w i ng is a b s o lut e ly w r o ng a nd m is -c o nc e iv e d . It is st at ed t ha t ne it he r Sh r i Viv ek D ut t a n or Sh ri H a r D aya l is t he d i re ct o r o f t h e c om pa n y Mo ra l S a les P ri v a t e L im i t e d . T h e c op y o f t he b al a nc e s he et au d it ed by CA D e ep a k Ja i n h as b ee n a lr ea dy s u b m it t e d b e for e y o u r h o n o ur . T h e nam e o f t he d ir ec t o rs as i nc o rp o ra t e d o n t h e b a la nc e s h e e t a re Sh r i Ar un K u ma r Sh a rm a a nd Vis ha l Ja in.
It cl ea r ly p r ov es th a t t he i n ve s t ig at io n w ing ha s m ess ed up t h e num b er o f c as e s in t he i r a pp ra i s a l r ep o r t in o r d er to d em o ns t rat e their m ig ht . F urt he r if the offi c e is f o und loc k e d , h ow d o es t h is p r ov e t h at t he 40 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust c om p a ny d o es n ot e xis t s . F u rt her , t h e a dd r es s w h e r e t he i ns p ec t o rs w er e s ent by t he inv es t iga t io n w in g t o o is no t m e nt io n e d at a ll. As s uc h, it d o es no t le a d t o n e ga t i ve c o nc lus io n b y t he a s s e ss i n g o ff ic e r .
E2 I t is fu rt he r n ot ed in t he s ec ond las t p a r a at p a g e 1 0 of t he o rd e r , t ha t t he no t ic es w e r e a g a in s e nt t hr o ugh I TI b ut it c o uld no t b e s e rv ed . F ina lly in t he la s t p a r a at p a g e num b e r 1 0 , it is r ec o r d ed t h at t h e s umm o ns w er e s ent t hr o ug h s p e ed po s t b y t he in v es ti gat io n w i n g a nd r ep ly r ec e iv e d t hr o ugh a ut h o riz e d s ig n a t o ry of t h e c o mp a n y M o ra l Sa les Pr iv at e L im it e d t ha t ma t t e r b ei n g o f th e o ld , p er iod , ne ed 1 5 da ys tim e - t o f ur nis h in fo rm at io n . f ro m o b s e rv a t io n r ec o rd ed in la s t pa rag ra p h at pa g e 1 0 o f t he a s s es s m ent or de r, it ha s b ec o m e ab s o lu t e ly c le ar t hat t he n ot ic e s ta n d s s er v e d on th e company m o ra l s a les p r iv at e lim it e d, how t he in v es t i ga t ion w i n g has c onc l ud e d t ha t it is pap e r e nt it y w it h n o o ff ic e a nd e nga ged i n p r ov id in g ac c o mm od at io n e nt r ie s o nly .
E3 . To sum up , t h e a s s es s i n g of f ic e r ha d als o iss u ed n ot ic e u nd e r s ec t i on 1 3 3 ( 6 ) o f t he Ac t t o t h e len d e r M o ra l Sa le s P r iv a t e L im it ed . T h e no t ic e ha d be e n p r o p e r ly r ec e i ved b y th e c o mp any an d i n r es p o ns e, t he le nde r c om pa ny f ur nis hed re p ly . Th is fac t s t a nds a d m it t e d by the a ss e s s ing o ffic e r in la s t p a ra gra p h at p ag e nu mb er 2 of t he as s ess m en t o rd e r . I t is fu rt he r exp la ine d t hat t he t ra d in g ac c o u nt o f t he le nd e r c om p a ny M or a l Sa l es Pr i va t e L im i t ed s ho ws R ev en u e f r o m o p e r at i ons a t Rs . 5 , 2 1, 45 ,3 40 /- an d b a la nc e s he et r ef le c ts t ot al in ve st m en ts at Rs . 5,0 3 , 4 5 ,177 /- t ha t inc l ud es a c c um u l at ed p r of its / r es e rv e a nd s urp lus a t Rs . 4 ,9 4, 41 ,90 8 /- a nd t r a d e re c eiv ab les at Rs . 1 ,4 4 ,2 3 ,6 5 3 / - bes i d es s ho rt t e rm - l o ng t er m loa n, a nd a d va nc es a t Rs . 5 2, 97 ,1 4 8 /- a nd e v er y a ud it o r h as its ow n s y s t em o f in d ic a t in g ad va nc es a nd /o r re ce iv ab le in t h e ba la nc e s he et . T h e br ea k up o f t he f ig ur e o f l o an a nd ad va n c es d ec la r ed a t t he net a mo un t of Rs . 5 2 ,9 7 ,1 4 8 /- is en c l os e d .
E4 . F u rt h e r , s um mo ns und er s ec t i o n 1 3 1 was is s ued t o t h e c om p a ny on 08 .0 9 .20 2 1, in re s po ns e, t he a ut ho r iz ed re p r es e nt at ive o f t h e com pa n y Sh r i S a nt os h Gu pta , C A a nd int e r nal au d it or of t h e c om pa ny a p p e ar ed a l o ng w it h c op y of t he p ow e r o f a tt or n ey is s ue d b y t h e D i r ec t o r a nd he ha d f il e d t h e c o p i es o f t he l o an ag re e m en t a nd f u rt h e r ex p la ine d t o t h e a ss e s s ing o f fic e r t hat t h e s o u rc e of l o an was o ut of a c c um ula t e d p r of it s a nd loa n of t h e c om pa ny . Acc o rd ingl y , it is s t at e d t ha t f i n a nc ia l h ea l t h o f t he e nt it y is v er y s o u nd a nd b a nk a c c o unt d o es n ot r e fle c t a ny c as h 41 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust dep o s i t at a l l a n d t he As s es s in g O f fic e r has fa il e d t o pr o ve t he a lle gat i o n of en try in li eu of ca s h w it h s uf fic i e nt d oc um e n ts a nd c o rro b or at iv e e v id e nc e o n r ec o r d e xc e pt ing t hat t h e A O has t ri e d t o t o e t he lin e d ra w n by i nv es t iga t io n w in g.
F. H ow a ny CA l ik e An k u r Go e l w h o is n ot a ud i t o r o f a ny o f t he a fo r es a id c om pa ni e s fo r t he re le va nt y ea r c an gi v e st at em e nt t h at it is a m er e pa p e r c o mp a ny . It is f o r t h is r eas on t ha t n ei t he r of t h e t w o, in v es t i ga t ion w i ng a nd t he a s s es s ing o ffic e r t oo k s t e ps t o p r ov id e t h e c op y o f t he s t a t em en t o f S h r i A nk u r G o e l t o t h e ap p ella nt b ef or e us ing t he s am e t o c om p l et e t h e a ss e s s m e nt a ft e r ma k i n g unc a lle d f o r a d d it io ns .
F 1. Ac c o rd i ng ly , it is e xp la in ed t ha t Sh ri An k ur G o el h as giv en on l y s el f s er v i ng st at em e n t to d a m a g e t he p ro f e s s io na l w ork o f ot h e rs in t he f ie ld . Sh r i A n k ur G oe l ha s no t a t a l l a ud i t ed th e bal anc e s he e t of S av ot t a m Se c ur it ie s P vt . L td . f or t he ye a r u nd e r c o ns id e r at io n a nd th at b o o ks f o r t his c o m pa n y w e r e a u d it ed by Sh enu A g ga rwa l, b ei n g t h e pr o p r iet or of h is c om p a ny na m e ly S h e n u Aggar w a l & Co mp a ny and b o ok s o f ot he r t w o c om p a ni es Ams o ft G lob a l P ri v at e L i m it ed a nd m or a l s a l es p r iv a t e lim it ed ha v e been a ud it e d by D e ep a k Jai n , c har t e re d a c c ou n t a nt . N ec es s ar y e v id e nc e in s up p o rt of t h is c o nt ent io n is e nc lo s ed a nd a nd a s s uc h t he r e i s no p a r t ne rs h ip b et w e e n t he two p r of es s i o na l c ha rt er ed a c co un ta nt s na m e l y S he n u Agg ar wa l a nd A nk u r Go e l . t h e s t at e m ent is a m er e in pr of es s io na l j ea l ous y a n d d es e rv es t o b e d is c a rd e d.
It is s t r a ng e t h at t h e as s e ss in g offic e r re lie d u po n t he s ta t em e nt o f s o m e C A S hr i Ank ur G o e i s r ec or d ed by t he inv es t iga t io n w i n g, not t o t h e k n ow led ge of t he a p pel la n t, b ut r eg re t f ull y, t he ma nd at or y no t ic e u nd e r s ec t i on 14 2 (1 ) o f t he Ac t is not s e r v e d, t he s tat e m e nt of th e s a id t hi r d pe rs o n n e v e r c o n fr o nt ed t o t he ap p el lan t b e f or e us ing t he s am e a ga i ns t t he a pp e lla nt f o r m a k i ng a dd it io n no r t h e sa i d w it n es s /p e rs o n w as a ll ow ed t o b e c ro s s -ex am ine d to a rr iv e a t t he b o t t o m of t h e m att e r. T he r ec o rd ing o f th e s ta t e m e nt w a s k ept und e r w ra ps f ea r i ng t h e t r ut h m a y not s u rfac e , if t h e c op y o f t h e s ta t e m ent is p ro v id ed t o t he a pp e lla nt .
R e fe re nc e is i nv it ed to the j u d gm ent d e liv er ed by t he I nco m e Ta x Ap p el lat e T ri b un a l Cha nd i g a r h B e nc h, C ha nd ig a r h in t he c as e o f N irm a l R a ni Vs . D e p ut y Co mm is s i o n er o f I nc o me T a x, Amb a la , r ep o rt ed in 1 63 IT D 4 91 ; w he r e as s es s e h a d ad eq u at e ly d is c ha r g ed h e r o nus of p r o vi n g 42 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust id e nt it y of d o no r , c ap a c it y o f d o no r as als o g e n uin e ne s s o f t ra ns ac t i on , a dd it io n c o uld no t be ma d e und er s ec tio n 68 o f t he Ac t an d b y as k i n g a ss e s s e e t o fil e t he i r inc om e t ax r et ur n and ba nk s ta t em ent , r ev e nu e wa s v eri fy i ng s o ur ce of s o urc e w h ic h c o uld not b e d o n e .
R e fe re nc e is in v it e d t o t h e j ud g m e nt de l iv e r ed b y t he H ig h C ou r t o f Bo mb a y , in t h e c as e o f Co m m is s io ne r o f I nc o m e Ta x vs H ars h D M eh ta , r ep o rt ed in 2 51 Ta xm a n 3 4 6 : w her e as s es s e e p rov e d l o an t ra ns ac t i o ns f ro m v a ri ous p a rt ie s b y p r o v id i ng d e t a ils l ik e c op y o f P AN c a rd , c op y o f r et u rn o f inc o m e, b a la nc e s h ee t a nd c op y of t h e ba nk s t at em en t of t h e c r ed it o r s , t r ib u na l was j us t if ie d i n d el et ing add it io ns ma d e b y As s es s i n g O ff ic e r u nd er s ec t io n 68 i n r es p ec t o f s a id t ra ns ac t i on.
R e fe re nc e is i n v it e d to t h e j ud g me nt d eliv e red b y D e l hi H igh C o urt , i n t h e c as e o f P r . Co m m is s io ne r of I nc om e T ax v s M a noj H o ra , r ep o rt e d in 4 02 IT R 1 75 ; s ea rc h a nd s eiz e r- as s es s m ent in s ea r c h c a s e s , s tat e m e nt o f t hi rd pa rt y re c or d e d und e r s ec t i on 1 3 2 (4 ) o f t he Ac t , n o i nc r im ina t i ng m at er ia l at t r ib ut a b le to a s s es s e e f o u nd d ur ing s ea rc h to c o r ro b o rat e s ta t e m ent -' a d d it i o n ma d e by a s s es s ing o ffic e r uns us ta ina b le .
32 2 I T R 3 9 6 ; D e l hi H igh C o u r t ; Co m m is s io ne r o f I nc om e Ta x v s . As hwa ni G upt a ; Se a rc h a nd Seiz ur e- Bloc k a s s es s m ent -c o p ies o f s ei ze d m at er ia l no t pr ov ed to a s s e s s ee no r as s e s s ee g ive n an o pp o rt uni ty to cross e xa m in at ion of p ers o n o n w h os e s tat e me nt as s es s ing o f fi ce r r e li ed up o n- v iola t io n of na t u ra l j u st ic e- fa t a l t o pr oc e ed in gs -I nc om e T ax Ac t , 1 961 T h e t r ib una l c o n fi r me d t he o rd e r p a s se d b y t he C om m is s i o ne r of I nc om e Ta x (A pp ea ls ) w h ic h he ld t he e nt ir e a dd it io n m ad e b y t he a s sess i ng of fic e r t o b e i nv a li d a nd ha d t o b e d el et ed it o n t he gr ou nd o f t he as s es s i n g o ff ic e r ha d p a s s ed t h e as s e ss m e nt o rd e r in v i o lat ion of t h e p r inc ip l es o f na t u ra l j us t ic e i n as mu c h as h e ha d ne it he r p r ov id e d co p i e s of t he s e iz ed m at er ia l to the as s es s e e no r h ad he a l low ed the as s es s e e to c ro ss e xa m in e t he p er s o n o n t h e bas is o f w hos e s t at em e nt t he ad d it io n w as m ad e.
T h e a l le g ed s t a t em ent o f S hr i Ank u r Go e i C A r ec o rd ed b y t h e inv est i ga t i on w i ng h a d b e en n ot t a k e n t o its log ic al c on c l us io n b y b r in g in g c o r r ob o rat iv e e v id e nc e o n r ec o rd t o s up p o rt t h e s el f- s e rv in g s t at em ent . F ur t h er it is not o ut o f p la c e t o s t r e s s up o n t h e f ac t t hat t he as s e s si ng o ff ic e r ha d m ad e dis c r ee t enq u ir ies b y s e n d i ng n ot ic es u nd e r s ec t i o n 1 33 (6 ) o f t he Ac t T h e 43 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust no t ic es w e r e s e rv e d an d re ce iv ed b y t h e le nd e r c om pa nies a nd t he d es ir ed do c um en ts , c o n fir ma t i o ns , ba la nc e s h e ets a nd c o p ie s of the ba nk s ta t e m ents w er e f u rnis h ed in c om p li a nc e t o t he re q u i re m e n t s as ra is ed in t he no t ic e is s ue d und er s e c t io n 13 3 (6 ) o f t he Ac t .
48. The ld. C IT(A) after exa mi na tion of the loan held that the matter of unsecured loan of Rs. 25,00,000/- taken from M/s. Moral Sales Pvt. Ltd., the AO o bserves that this entity has declared income of only Rs. 1,05,690/-, however the total loan of Rs. 80 ,00,000/- is advanced to the appellant and his fa mily members during the year. The AO accepts that the notice issued u/s 133(6) of IT Act has been complied. However the AO observes that fro m the balance sheet of this lender company it has been found that it has shown total loa ns a nd advances of only Rs. 52,97,148/- hence the total lo ans of Rs . 80,00,000/- given to the appellant and his family does not appear genuine. The AO observes that summons u/s 131 of IT Ac t were issued and in complia nce to the same Sh. Santosh Gupta CA attended and furnished the copies of lo an agreements and explained that the loans have been given out of accumulated profits and loans of the company . The AO further mentions that summo ns were issued by Investigatio n Wing in the names of Sh. Vivek Datta and Sh. Hardayal, directors of M/s. Moral Sales Pvt. Ltd. however the summons could not be served at the regis tered office of the company and it w as reported by the inspectors that the given premise belo ngs to M/s. Raje sh Vipin and Associates. T he AO states that Sh. Bijendra Chauhan present in that office claimed that neither there is any person with the na me of Sh. Hardayal nor M/s. Moral Sales Pvt. Ltd. exists at that address. However it is stated by the AO in the assessment order itse lf that in response to the Summons the authorized signatory of the company submitted the written submis sion thro ugh the spe ed post. Further the AO has given details of 44 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust returned income of four years of the le nder company which is very less and the maximum income of these four years is only Rs. 2 ,04,312/- in FY 2017-18. Therefore the AO concludes that the lender suffers fro m creditworthiness. On the other hand the AR submits that in the matter of M/s. Moral Sa les Pvt. Ltd. the report/observation of the investig ation w ing is abs olutely wrong since neither Shri Vivek Dutta nor Shr i Har D ayal was the director of the company Moral Sales Private Limite d The copy of the balance sheet audited by CA Deepak Jain has been submitted as an evidence, from the same it is claimed that the na mes of the dir ectors are Sh. Arun Kumar Shar ma and Vishal Jain. The ld. CIT(A) was inconfirmity with the ar gument of the ld. AR that in the assessment order itself the AO has accepted that the summo ns sent throug h speed post by the investigation wing were duly served and reply received through authorized signatory of the company i.e . M/ s. Moral Sales Private Limited. It is claim of the AR that the assessing officer had also issued notice under section 133(6) of the Act to the lender Moral Sales Private Limited and this no tice had been property received by the company and in response, the lender company furnished reply. This fa ct stands admitted by the assessing officer in last paragraph at page number 2 of the assessment order. The AR claims that the trad ing account of the lender company M/s. Moral Sale s Private Limited shows Revenue from operations at Rs. 5,21,45 ,340/- and balance sheet reflects tota l investments at Rs. 5 ,03,45,177/- that includes accumulated p rofits/reserve and surp lus at Rs. 4,94 ,41,908/- and trade rece ivables at Rs. 1,44,23 ,653/- besides short term-long term loan and advances at Rs. 52,97,148/-. The AR clar ifies that every auditor has his own system of indicating advances and/or receivable in the balance sheet. T he breakup of the figure of loa n and advances declared at the net amount o f Rs. 52,97,148/- is provided with 45 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust the clarific ation of auditor Sh. Deepak Jain that this is net amount of advance to others/ receivables of Rs. 2 ,32,68,050/- less unsecured loan/ payables of Rs. 1,80,00,000/- and TDS amount of Rs. 29,098/-. Thus the AR sub mits that the AO has wrongly co nclud ed that the loans and advance s given to the appellant group amo unting to Rs. 80,00,000/- ar e way more than the loa ns and advances shown by the lender at Rs. 52,97,148/- with the fo llowing gross situation of the advances and receivables as net off to lo ans/ payables:
49. In the FY15-16, in the balance sheet of Moral Sales Private Limited, shor t term loans and advances was shown after netting off of unsecured loan payable/receivable.
Advance to o thers & Re ceivab les Rs.2 ,32,68,050/- Less: Unsecured Loan Payables Rs.1 ,80,00,000/-
Net Amount Rs.52,68,050/- Add: TDS (as shown in BS) Rs. 29,098/- Amo unt Rs. 52,97,148/-
50. The ld. CIT(A) held that in compliance to the summo ns issued under section 131 on 08.09.2021, the authorized representative of the company Shri Santo sh Gupta CA and internal auditor of the co mpany appeared along with copy of the power of attorney issued by the Dire ctor and he had filed the copies of the loan agree ment and further explained to the assessing o fficer that the source of loan was o ut of acc umulated profits and loan of the company. Accordingly, it was held that financial health of the entity is ve ry sound and bank account does not reflect any cash deposit at all and the assessing officer has failed to pr ove the allegation of entry in lieu of cash with sufficient documents and corroborative evidence on re co rd excepting that the AO has tried to toe the line draw n by investigation wing. The ld. CIT(A) relied on the 46 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust balance sheet and profit and loss account that lender company i.e. M/s. Moral Sales Pvt. L td. had share capital and reserves of more than Rs. 5 crores on 31.03.2016 and the compa ny has revenue from operations of Rs. 5 .21 crores in FY 2015-16. He claims that company with such a huge tur n-over and such a good creditwor thiness cannot be claimed as Bogus by the AO . Holding thus, the ld . C IT(A) delete d the additio n.
51. Having gone thro ugh evidences collected by the Assessing Officer, the reply submitted by the assessee befor e the AO and the ld. CIT(A) , e xamination of each issue and contention raised by the revenue with reference to the facts relie d upon by the ld. CIT(A) and reports of the investigation, the ld. C IT(A) cogently brought on record that the loans received by the assessee could not be treated u/s 68 as the identity, genuinenes s and creditworthiness of the parties has been duly proved. In view of the above facts and the ratio given by the ld. CIT(A), no interference is called in the well reasoned order of the ld. CIT(A) .
Ja ipal Singh Sharma Trust ITA No. 2126/Del/2022 : A.Y. 2016-17 ITA No. 2127/Del/2022 : A.Y. 2017-18
52. The amounts received by the trust are as under:
For the A.Y. 2016- 17
1. Loan fro m Sarvottam Securities Pvt. Ltd.
2. Loan fro m K.G. Finvest Pvt. Ltd .
3. Loan fro m Upaj Leasing & Finance Company Pvt. Ltd.
4. Donatio n from Amsoft Glob al Pvt. Ltd.
47 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust For the A.Y. 2017- 18
1. Loan fro m Sarvottam Securities Pvt. Ltd.
2. Donatio n from Amsoft Glob al Pvt. Ltd.
3. Donatio n from Moral Sales Pvt. Ltd.
53. The issue of receipt o f mo nies from Sarvottam Secur ities Pvt. Ltd. and Moral Sales Pvt. Ltd. have already been dealt above in the case of Nidhi Shar ma in IT A No. 2 124/Del/2022. With regard to K.G . Finvest Pvt. Ltd., the facts and the arguments of the revenue and the assessee are s imilar to that of Sarvottam Securities Pvt. Ltd . Hence, the same ratio applies in the case of Jaipal Sing h Shar ma Trust.
54. Hence, receipt of monies from Amsoft Global Pvt. Ltd. and Upaj Leasing & Finance Company Pvt. Ltd. are being dealt now.
M/s Up aj leasing and Finance comp any Pvt. Lt d.
55. The re levant part of the Assessment Order is as under:
" Du rin g t he y ea r, t he as s e s s e e ha s r ec e iv ed lo an o f Rs . 8 0,0 0 ,0 00 / - f r om t he c om pa ny . T h e l e nd e r c om pa n y has d ec l ar e d inc o me o f Rs . 1 3 , 6 3, 53 0 /- du r in g t he y ea r . I n r es p ec t o f t h e ab ov e, f irs t l y t h e len d er c ompa ny d o es no t h a v e t he c r ed i t w o r t hi n es s t o p ay hu g e am o u nt o f l oa n t o ass e s s e e a nd it s f a m ily m e mb e rs . O n ly t ra ns ac t i ng th ro u gh b a nk i ng c h an ne l d oe s no t m ak e a t ra ns a c t io n g e n ui n e.
In t h is c a s e N o t ic e u /s 1 3 3 (6 ) w as is s u ed t o t he lend e r c om pa ny o n 18 .1 2 .20 2 0. I n r es p ons e t o w hic h t h e le n d er c om pa n y f ur nis he d r e p ly a l o ngw i t h c o nf ir m a t io n, I T R an d Ba nk s tat e m e nt . F u r t h er , s umm o n u /s 13 1 w as is s u ed t o t h e c om p a ny o n 08 .0 9.2 02 1 . I n re sp ons e th e a ut h or iz ed r ep r es e nt a t iv e of t he c om p a ny Sh . P an ka j Wa li a , Ad v o c at e ap p e ar e d a l o ngw i t h c o p y o f po w er of at t o r n e y is s u ed o n e -s t am p pa p e r b y t h e D i re c t o r o f t h e c om pa ny S h . Sh r e e R am Y ad av , c op y o f lo a n a gr e em ent w i t h t he t r us t . H e s ta t e d t h at h e p r o v i d es c o ns ul t an c y t ax a nd c ivi l 48 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust m at t e rs t o M /s U p a j L ea s ing a nd F ina n c e Pr i vat e L im it ed . H e s t at e d t ha t t he s ou rc e o f l oa n wa s o ut of ac c um ul at e d p r of i t s a nd loa ns r ec e iv ed ba ck by t h e c o mp a n y. H e f ur t he r s ta t ed t h at t he l oa ns ha ve b e e n r ep ai d b y t h e t r us t .
F urt he r, d uri n g t h e p os t s e a r c h in v es t ig at io n, en q uir ie s w e r e mad e b y t he In v e s t ig at io n w ing an d i t w a s fo und t ha t t he c o mp a n y is a bo gus p ap e r e nt i ty .
T o e n q u i re a b out t he g en u ine ne s s of s u c h loa ns , o n 1 0 . 0 5. 20 1 9 , su m m on wa s is su ed i n t h e na m e of Sh . R a vin de r Kum a r Y ad av & Sh. Pre m N at h bo t h d ir ec t o rs in t h i s c omp a ny . T he s e s um m o ns ne it he r c o u ld b e s e r v ed a t t he re gis t e re d of f ic e o f t he c om pa ny no r a t t he r es id en t ia l addr es s o f t h e di r ec t o r s . S h . An k u r G o e l, C A of M /s N J & As s oc ia t es , F -3 6 , Ga l i N o . - 1 , Ma d h u Vih a r , P a t p a r ga nj , D elh i ha s a u di t ed t h e b o ok s of ac c o unt s o f t his c om p a ny a ls o fo r t he AY -2 017 -1 8 . Ac c or d i n gly , s um m o ns w as s e r v e d up o n him . T he s ta t e m en t o f Shr i Ank u r G o el w a s r ec or d ed w he re i n h e h as a cc e pt ed t ha t t h e loa ns ad v a nc ed b y M /s Up a j L e as ing a nd F ina nc e Co . (P ), Lt d . a r e b og us .
O n p e r us a l o f d et a il s av a il a b l e o n t he s y s te m , it w as s e en th at Sh . Ank ur G oe l, CA of M/s NJ & A s s oc iat es , F- 3 6 , Ga li N o . -1 , Mad hu V iha r , P at p a r ga nj , D e lhi h as a ud it ed t h e b o ok s o f a c c o u nts of t h is c om p a n y fo r t he AY 20 17 -1 8. A cc o rd ingl y, o n 1 9 . 0 2 .2 019 , s um m o ns w er e is s ue d, b y t he M /s Sh ri Ja ip a l S ing h Sha r m a T r us t -A . Y . 201 6 -1 7 In v e s t ig at io n w i ng , i n his na me an d got s e r ved . In r es p o ns e t o t hi s S h . An k ur Go el at t e nd e d t his o f fic e on 1 0.0 6 .2 01 9 a n d his s t at em e nt was r ec or d ed u/s 131 (1 A) of I T Ac t , 19 61 . He s t a t ed t ha t he ha d a u d it ed t h e bo ok s of a c c oun ts o f M /s K. G. F inv es t P vt. L td ., M /s Sa r v ot t am Se c u r it i es P vt ., Lt d. a nd M /s U pa j L ea s i ng a nd F in anc e P vt . L td . d u r in g t he F Y 20 1 5 - 16 & 20 16 - 17 . W h en h e w a s a s ke d ab o ut t he v a r io us d ire c t o rs of t hes e c om p a ni es d u ri n g di ff e r ent FY s , h e s t at ed t h at h e d i d no t k n o w t hes e pe rs o ns . H e a c c e p t ed t ha t h e h a d a u di t ed b o ok s o f ac c o unts o f ab o v e t hr e e c o mpa ni es w ith out k n o w i n g t h e di r ec t or s o f t h es e c o mp an i es . Sh . An k ur G oe l wa s a s k ed t o s t at e w h et he r al l lo a n a gr e em e nt s of a b ov e t hr e e N BF C s w e r e p ut b ef or e him d u rin g a ud i t of t h e b oo ks o f ac c ou nts of t hes e c om p a ni es . I n re s p o ns e t o t h is h e s ta ted t hat lo a n a gr e e me n t s ma d e b y t hes e c o mp a n ies w e r e no t put b ef o r e h im d u r ing t h e a u dit o f bo o k s o f 49 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust a cc o unt s o f t h es e c om pa nie s . F r om t he s ta te m e nt of Sh . Ank u r G o el, it is a ls o s ee n t ha t t he d i re c t or s a r e n ot t he s ha r eh o l d ers o f t h e c om p a ny . It is a ls o o bs e rv ed t ha t t he d ir ec t o rs a pp ea r t o b e o nl y f o r n am es ak e a s t h e y ha v e lo w i nc o m e IT RS . S hr i Ank ur Goel h as f u rt h er s tate d t ha t a ll di r ec t o r s a r e d um m y fo r na m e sa k e a nd ar e t h e re o nly t o si gn doc u m e nt s . F r om t h e o n go in g , i t is c le a r ly s ee n t ha t thes e c om p a nie s ar e b o gus . Wh en Sh . A n k u r Go el w a s as k ed a b ou t t he na t ur e o f ent r i es ma d e b y t he a b ov e m en t io ned N BF Cs t o Sh r i Ja i pa l S i n gh S ha r ma T r us t , he c l ea rly s t a t ed t ha t t hes e e nt ri es w e re B o gus . T he r e lev ant p or t io n o f h is s ta t em ents is as und e r :
...... ...... ...... ... ... . .
In h is s t at em e nt Sh r i A nk u r Go e l ac c e p t ed t ha t t h e lo a ns ad va nc ed b y M /s Sa rv ot t a m Se c u r it i es P vt . Ltd ., als o M /s Up aj Le as i ng a nd F ina nc e C o mp a ny L im it e d a nd M /s KG F inv es t Pri va t e Li m it ed a r e bo gu s. H e a ls o s ta t e d t ha t t he d ir e c to rs o f t h e c o m pa nie s a re d um my d i re c to rs a nd ac t ua l be ne f ic ia l o w n er s o f t h e c o mp any a r e t w o ot he r p e rs o ns , na m e l y, Sh . H im a ns h u Ver m a a n d S h . H a ri Sha nk ar Y ad av .
T h r o ugh t he ab ov e, s ta te m ent rec ord e d , t he a ud it o r o f t he co mpa n y Sh . An k ur G upt a ha s him s elf a dm it t ed , in r ep l y t o Q .40 , t ha t t he e nt i t ie s M /s Sa rv ot t a m Sec ur it ie s Pr iv a t e L td , M /s U p aj L eas ing and F ina nc e C om pa n y Ltd . and M /s KG Fi nv e s t P vt . L td . pr o vid e a c c o mm oda t io n e nt ri es t o v a r i o us e n t it ie s .
In v i ew of t h e a b o v e , t h e as s es s e e 's r ep ly has no t b ee n f o u nd t o b e s at is fa c t o ry .
W it h o ut pr e j ud ic e to the ab o ve , t he c r ed it w or t hin ess of the ab o v e c om p a ny w a s a ls o a na lyz e d b y e xa m ini n g t he IT R . Th e co m pa ny ha s o n ly dec l ar ed in c om e o f Rs .13 ,6 3 ,5 30 / - f o r t he AY 2 0 16 - 17 a g a inst t he lo an o f Rs .80 , 0 0 ,0 0 0 /- .
F urt he r, d u rin g t he a s se s s me nt p roc e ed ings als o , t h e D ir ec t o r s d id not a pp ea r per s o na lly w h il e s um m o ns w e r e is s u ed fo r c on fr on t in g t h e a b ov e fac t s u nea rt h e d d u ri ng t he s e a rc h in v es t iga t i on. F r om the ab o v e dis c us s i ons , it is v e ry m uc h cl ea r t h at M /s U p a j L eas in g an d F ina nc e C o mp a ny L t d . , ha s pr o v id ed ac c o m mo d a t io n ent ri es i n t he f or m o f l oa n o f Rs .80 , 0 0 ,0 0 0 /- d ur i ng t h e y ea r , t o Shr i Ja ip a l S in gh Sh a rm a T r us t . T h e 50 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust c r ed it w o rt hine s s o f le nd e r an d ge n ui n en es s o f t h e lo an r ec e ive d b y t h e a ss e s s e e f ro m M /s S a rv o tt am S ec u r it ie s P vt. Lt d . is n ot p r ov e d.
In c o nn ec t i on with t he above le nd er s, the s ta te m e nt s r ec o rd e d as m en t io ned above in a ll the t h r ee c a s es hav e no t b ee n ret r ac t e d or w i t hd r a w n d u r ing t he s ea rc h, p os t s ea rc h an d a s s es sm ent p ro c e e d ings . F urt he r t he s t at em ents r ec o r d ed ha v e a ne xus w it h the s ur r ou nd i n g c irc ums t a nc e s of t he c as e w her e in t he c r ed it w o rt h ine ss h as n ot b e en pr ov ed i n c a s e o f t he a b o v e p a rt i es .
In c a s e o f B. K is ho r e K um a r Vs . D ep ut y Co m m is s io ne r o f I nc o m e T ax , C e nt ra l C irc le -I V (1 ) , Ch e nn ai (20 1 4 ) 52 t a xm a nn.c o m 4 49 [m a d ras ) H C ha s r u l ed t ha t w he r e inc o m e, s a m e wa s t o b e l ev ied t a x o n b as is o f a dm is s i o n w it h o ut s cr ut i niz i n g d o cu me nt s , T h is d ec is i on has b e en c o nfi r m ed b y a p ex c o urt v id e or d er d at ed Ju ly, 02 , 20 1 5 [ 2 01 5 ] 62 t am xa m n n.c om 215 (S C) . F u rt h er , i n t he c as e St e r line M a ch ine T o o ls Vs . C I T 1 22 I T R 9 2 6 t he c ou rt he l d t ha t t h e le gal v a lu e o f an ad m is s io n is t ha t is t he b es t ev id e nc e t h at a n o p p o s it e p a r ty c an re ly u p on and t ho ugh not c o nc lus iv e, is d ec is iv e o f t he m at t e r u n les s uns u cc e s s fu lly w it hd r aw n o r pr ov ed e r r on eo us .
4.1 F r om t he a b ov e d is c us s io n o n t he u ns ec u r ed lo an s r ec e iv e d b y t he a ss e s s e e t rus t d u r i ng t h e F Y 20 1 5 -1 6 , it is c l e a r t h at u nd is c l os e d fu n ds ha v e b e e n r o ut ed t h ro ug h d iff e r e nt e n tit ies and u lt im at el y r ece iv ed by a ss e s s e e . T hus t he uns ec ur e d lo a ns r e c e i ve d b y t he as s es s e e d u r in g t he y ea r a r e no t g en uine a n d r ec eiv ed as l oa n w hic h is a co lo u ra b le d e v ic e . T h us , t h e b o gu s u ns ec u re d lo a ns t o t he t un e o f Rs . 3, 7 2 ,0 0 , 000 /- ar e a dd ed t o t h e inc o m e of t he as s es s e e un de r s ec t i on 6 8 o f I T act , 1 961 ."
56. Before the ld . CIT(A) , the assessee filed written submission w hich are reproduced as under:
" C. It has b ee n r ec o rd ed b y a s s es s in g off ic er t ha t d ur ing y ea r u nd e r r e fe r enc e , a ss e s s e ha s re c eiv ed l oa n o f Rs . 8 0, 0 0 ,0 0 0 /- f ro m M / S Upa j L ea s ing a nd F ina nc e C o m p an y Pvt . L t d. a nd t he le nd er c o mp any h as dec l ar ed inc om e o f Rs . 13 ,6 3, 530 A o n ly fo r t h e ye ar . I n r es p ec t of t h e a b ov e, t h e a s s es s in g off ic e r w it h ou t f ir s t l o o k in g a t he r o w n inv est i ga t i on r ec or d ed t ha t t h e le nd e r c omp a ny d o es n ot h av e t he c r ed it w o rt h ine ss t o pa y h uge a m ou n t o f lo a n t o as s es s e .
51 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust C 1. I t i s e xp la i ned i n c o m p lia nc e t o the s p e c if ic q u e r y r a is ed b y y o ur H o n o ur o n t h e la s t d at e o f h ea rin g t ha t no t ic e und e r s ec t io n 1 33 (6 ) w as is s ue d t o t h e l e nd er c om p a ny on 18 . 1 2 .2 02 0 b y t he a s s es s ing of f ic er t o v eri fy t he ge nui n en es s o f t he lo a n r ec e iv ed b y t h e c o mp a n y. In r es p o ns e t o w hic h, t h e le n d e r c o m p a ny f u r nis hed r ep ly a lo ng w it h c o nf irm at io n , IT R, a nd ba nk s ta t e me nt F u rt he r s um m o ns u nd e r se c t io n 1 31 w as is s ue d t o t h e c om p a ny o n 08. 0 9 .2 0 2 1 , in r es p o ns e, t h e aut ho riz e d re p r es en tat i v e o f t he c om p a ny Shr i P a nk a j W a lia , Ad v oc at e a p p ea red a lo ng w i t h c op y o f t he p o w e r of at t o r n e y is s u e d o n e-s t am p p ap e r b y t he D ir ec t o r o f t h e c om p a ny S hr i S h r ee Ra m Y a da v a nd t he c o p y of t he lo a n a gr ee me nt w it h t he t r us t . H e s t at ed t ha t t h e s ou rc e o f lo an w a s o ut of a c c um ula t e d p r o f its a nd lo a n ha s b e en p a rt ly r ep ai d b y t he t r us t t o t he c omp a n y .
C 2. It is f ur t h er r ec o rd ed b y t he as s es s in g o ff ic er t ha t o n 1 0.0 5 . 20 1 9 s um m o ns wa s is s u ed b y t he I nv es t iga t i o n W ing, i n t h e na m e of Sh . R a v in d er Ku ma r Ya d a v a nd Sh ri P r em N at h bo t h d ir ec t or s in t he c o m pa ny . T h es e s um m o ns es c o uld no t b e s e rv ed .
IT IS EX P LAI N ED TH AT PREM N A TH IS NOT TH E DI R EC T O R OF TH E C O M PAN Y . F U R TH ER I T I S N O T M EN T I ON ED AS T O WH I CH AD D RES S, TH E SU M M ON S W ER E S EN T WH IL E T H E A S P ER IT R O F TH E RE LE VAN T Y E AR , TH E AD D R ESS OF T H E CO M P AN Y I S N OT ED AS 2 2 4 , SE C O ND F LO O R , VA RD H M AN C IT Y CE N TR E , GU LA BI BAG H, SH A KT I N A GA R, N EAR R AI LW AY UN D E R B R ID GE , D E L HI -11 005 2 .
C3 Si r , in c o nt in uat i on it is fu rt he r exp l a ined t ha t t he t r ad i ng a cc o un t of the le nd e r c o mp a n y s h ow s Revenue f r om op er at i on s at Rs . 6,9 7 , 4 4 ,205 /- a nd b a la nc e s h e e t r e f lec t s t ot a l as s e t s /in v est m e nt s at Rs . 13 7 ,5 1 ,2 0 ,5 93 / - t hat I nc l ud es ac c um ul a t ed p ro fit s /re s er v e an d s ur p lus a t Rs . 64 ,2 3 ,3 2, 8 1 7 / an d a ls o s ho rt t e rm lo a n a nd a d v a nc es at Rs . 13 5 ,5 6 ,2 9 ,5 34 / -. A c c or d i ng ly, it is s t a t ed t hat t h e f ina nc ia l he al t h of t h e e nt i ty is v e ry s o und a nd t h e ba n k a c c o unt d o es n ot r e fle c t a n y c as h dep o s i t at a ll a nd t he a s s es s in g o ff ic e r ha s fa il ed t o p ro v e t he al l e ga t i on of en try in li eu of ca s h w it h s uf fic i e nt d oc um e n ts a nd c o rro b or at iv e e v id e nc e o n r ec or d e xc e pt ing , t ha t AO has t r ie d t o t o e t h e lin e d ra w n b y in v es t i ga t ion w i ng.
D. T h e ap p el la n t d ur ing t h e c o ur s e of t he ap p e ll at e p r oc e edi ngs has be en f u rt h er r eq u ire d to e xp la in t he c o n te nt s o f la s t par a g r ap h - at p a g e 3 52 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust o f t he as s e ss m e nt o rd e r w he re it is r ec o rd ed t hat t he inv es t i gat io n w i ng ha d s um m o n ed a nd ex am ined Sh ri Ank u r G oe l, t he C ha rt er ed Ac co un ta nt w h o ha s c la i m ed t o ha v e a ud it ed t h e b oo k s of ac c ou nt o f t h e c o m p an y fo r t he y ea r u nd er c o ns id e ra t i o n. T he a p p e l l ant o n t he l as t d at e o f he ar i n g ha d b e en a ls o r eq uir ed b y y our H o no ur t o e xp la in t he co nt ent io n of t he Au d it o r An k u r Go el t ha t t he d ir ec t o rs ar e no t k no w n t o him a n d t h e c om p a ny is a b o gu s e nt it y e ng a ged in pr o v id in g ac c om m od at io n e nt r ie s o n ly a nd t h at t h e di re ct or s b e i ng d um my , t h e b e n e f ic ial d ire c t o rs ar e H im a ns h u Ver m a a n d Ha r i Sha nk a r Y ad av .
D 1 . Res p ec t ed Sir , it is e xp l ain ed t ha t fo r a s s es s m e nt y ea r 20 1 6 -17 , t he bo ok s of ac c o unt of th e c o m p a ny w e r e A ud it ed by Sh ri S h e n u A gg ar w a l, C ha rt e r ed Ac c o u nta nt , P r op r iet or of M / s Sh enu Ag ga r wa i & Co m p a n y. T h e bo ok s o f ac c o u nt of t he c om pa ny w e re ne ve r a ud it e d b y S hr i A nk ur G o e l , C ha rt e r ed Ac c o un t a nt a nd t he re is no e v id e nc e o n r ec o r d t o pr o ve t ha t An k ur G oe l m a y b e pa rt n e r of S he nu A gg a rw al . N ec es s a r y c o nf ir m at i o n f ro m S he n u Ag ga rw a l, C A is enc l os ed a nd if d es i r ed , S he nu A gg a rw al c an be exa m ine d.
Ac c o rd in gl y , a ll t h e as s e rt io ns b y An k ur G o el t h at le nd e r c om p a ny i s bo gus a nd ent r y p ro v id e r i s t ot al ly fa l s e a n d s e e ms t o b e giv en o ut o f pr of es s io na l j ea lo us l y o n ly . Sinc e , b o o ks a r e not au d it ed b y Ank u r G o e l , C A f o r t h e y ea r u n de r c o ns id e ra t io n, al l t h e a s s e rt i o ns ma d e b y h im a nd inc o rp o ra t e d in t he bod y o f t he o rd e r a re m ea ni ngle ss . M O RE O V ER , TH E IN V E S TI G AT I O N WING H AS F AI L E D TO SU M M ON AN O R EC O R D TH E ST AT EM EN T O F HI M AN SH U V ER M A AN D H AR I SH AN K AR Y AD A V AN D AS SU CH T H E C O N T EN T I ON OF C A Sh . AN KU R G OE L L AC KED C O R RO BO R AT I VE EV I D EN C E A ND I S N O T H I N G M O R E TH AN A D U M P D O C UM E N T AN D C AN N O T BE R E L I ED U P ON . TH E A N SW AR TO QU ES T I O N N U M BE R 4 0 GI VE N BY AN KU R G OE L TH AT TH ES E AR E ENT I TI E S P R OV ID I N G A C CO M O D A TI O N E N T RI ES IS WI TH OU T AN Y AU TH O RTY AN D BEI N G N EI T H E R AN AU D I T OR NOR D I R T EC T O R A ND I S M AR R ED BY PR O F E S SI ON A L J E L OU SL Y ON L Y .
D 2 . H o w a ny C A l ik e An k ur G o e l w ho is n ot a ud it or o f a ny of t h e af o r es a id c om p a ni es fo r t h e r ele va nt y ea r c a n giv e st at em e nt t ha t it is a m er e pa p e r c o m pa n y, i t i s f o r t h is r ea s o n t h at ne it h e r o f t he t w o , in v es t iga t i o n w i ng a nd t he a s s e s s i ng off ic e r t o ok s t ep s t o p r o v id e t he c o py o f t h e s ta t e m ent of Shr i Ank ur G o e l t o t he a p pe lla n t b ef o re us i n g t h e s am e t o c om p l et e t h e a s s es s me nt a ft e r m ak i ng u nc al le d f or a dd it i o ns .
53 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust D 3 . It m a y b e p o i nte d o ut t hat t h e t ru st ha d b ee n f ac i n g g ra v e fi n anc ia l c r is es t o r u n t h e h o s pit a l fo r c ha r i ta b l e ob je c ts w h il e t he me d ica l c o ll eg e di d n ot get s a nc t io n o f t h e m ed ic al s eat s a nd t h us d ay b y d ay , t he f ina nc i a l s it u at io n wa s g et t in g b a d t o w or s t w h ile t he t r us t ha d b e e n e xt en d ing it s m ed ic a l fa c ilit ies on t he O PD s lip o f Rs . 1 0 / - o nly . T h e t r us t ha d b e en fo l lo w i ng a n d p er us i ng i ts c ha r it ab l e ob j e c t i v e in tru e s p ir it s .
TH E MOTIVE WAS TO R AIS E M O N EY F OR M E ET IN G CH A RI T AB L E O BL I G A T I ON S UN D E RT A KE N B Y TH E F A MI L Y . T H E A C T U AL M O N EY WAS N EED ED AN D N O T A CC O M OD AT I O N EN T R I E S T H AT AR E GEN E RA LL Y T A KE N IN T H E EVEN T OF H EAV Y SU RP L US I N CO M E TH AT M A Y B E N EED ED T O BE BR T O U GHT B A C K T O T H E B O O K S OF A CC O U N T H ER E T H E T RUS T A N D TH E F AMI L Y H AD B E EN RU NN I N G I N T O H EA VY L O S SES I N EXC ES S O F M O RE TH AN Rs . 20 CR O R ES. Si nc e t he a c t u a l f unds /m on ey w e re n eed e d t o r u n t he h os p i ta l , a n d it is a bs o l ut e ly w r ong t o a ll eg e t ha t t he a pp e lla nt t r us t ra is e d a c c om m od a t ion e nt ri es o nly . I n t h e r un u p t o m o unt in g l os s es o f m or e t ha n Rs . 20 c r or es , h o w t he t r us t c a n b e la b e lle d t o b e e n ga g ed in a cc e pt ing a c c om m o da t io n e nt r ies o n l y .
F 1. Ac c o rd i ng ly , it is e xp la in ed t ha t Sh ri An k ur G o el h as giv en on l y s el f s er v i ng st at em e n t to d a m a g e t he p ro f e s s io na l w ork o f ot h e rs in t he f ie ld . SH R I AN KU R G O EL H AS N O T AT AL L AU D IT ED TH E BAL AN CE SH E ET OF TH E L EN D E R C O MPA NI E S F O R T H E Y EAR UN D E R C ON S ID E R A TI ON AN D TH AT BO O KS F O R TH E SE CO M P AN Y W ERE AU D IT ED BY S H E NU AG GAR W A L , BEI N G TH E P RO P R IE T O R OF HIS CO M P AN Y N AM EL Y SH EN U A G G ARW AL & C O M PAN Y . N ECE SS AR Y E VID EN C E I N S UP P O RT OF T H I S C O N T EN T I ON IS EN C L OS ED AN D AS S UC H T H E R E I S N O P AR T N ER SH I P B E T W E EN T H E TW O P R OF ES SI O N AL CH AR T E R ED A CC O U N T A NT S N A M EL Y SH E N U AG G A RW AL AN D AN KU R G O EL T H E ST AT E M EN T I S A ME R E I N P RO F ESSI O N AL JE LO VS Y AN D D ESE R VES T O BE D IS CA RD ED .
It is s t r a ng e t h at t h e as s es s in g o ffic e r re lie d up o n t he s ta t em e nt o f s o m e C A S hr i Ank ur G o e l s r ec or d ed by t he inv es t iga t io n w i n g, not t o t h e k n ow led ge of t he a p pel la n t, b ut r eg re t f ull y, t he ma nd at or y no t ic e u nd e r s ec t i on 14 2 (1 ) o f t he Ac t is not s e r v e d, t he s tat e m e nt of th e s a id t hi r d pe rs o n n e v e r c o n fr o nt ed t o t he ap p el lan t b e f or e us ing t he s am e a ga i ns t t he a pp e lla nt f o r m a k i ng a dd it io n no r t h e sa i d w it n es s /p e rs o n w as a ll ow ed t o b e c ro s s -ex am ine d to a rr iv e a t t he b o t t o m of t h e m att e r. T he r ec o rd ing 54 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust o f th e s ta t e m e nt w a s k ept und e r w ra ps f ea r i ng t h e t r ut h m a y not s u rfac e , if t h e c op y o f t h e s ta t e m ent is p ro v id ed t o t he a pp e lla nt ."
57. The ld. CIT(A) after going throug h the submissio ns of the assessee deleted the addition made by the Assessing Officer. For the sake of ready reference and completeness, the re levant part o f the order of the ld. CIT(A) is reproduced below:
"8 .1 In t he m at t e r o f un s ec ur ed lo a n of Rs . 8 0, 00 , 00 0 /- ta k e n fr om M /s . Upa j L ea s ing a n d F i na nc e Co m pa n y Pv t. L t d. , t h e A O ob s e rv es t h at a s p e r IT R t his l o a n c re d it o r ha s s ho w n t h e in c om e o f o nly Rs . 13 ,6 3 , 5 30 /- . T he AO o bs e rv es t h a t n ot i c e u/s 1 3 3 (6 ) o f IT Ac t w a s is s ued to t hi s le nd e r c om p a ny a n d re p ly wa s fu r nis h ed al o n g w it h c o nf ir m at io n, IT R and B ank St a t em e n t. Th e AO f urt he r re c o r ds t ha t in r es p o ns e t o t he s um m o ns is s ue d u/s 13 1 o f I T Ac t , t h e AR o f th e c omp a ny Sh . Pa nk aj Wa l ia Ad v o ca t e a t t e nd ed a nd c o p y of l oa n a g r e em e n t w it h t h e tr us t w as f ile d . T h e AR a ls o s ub m it t ed t h at t h e s o urc e o f t h e lo a n wa s o ut of ac c um ula t ed pr of it s a nd lo a n s r ec e iv ed by t h e c o mp an y . It is a ls o b ro ught t o t h e f or e t ha t t he l oa n ha s b e en pa id b a ck b y t he t rus t H o w e v e r i n t he as s ess m en t o rd e r t he A O h as r ec o rd e d fin d in gs o f t h e i nve s t i gat or w ing a nd obs er v ed t ha t t h e p o s t s e a r c h inv es t i ga t i o n in q uir ies c o nc l ud e d t hat t h e le nd e r c om p a ny w a s b o gus pa p e r e n t it y. I n t he a s s es s m e nt o rd er , t he AO r ec o rd s t ha t d ur ing p o s t s ea rc h p r oc e ed ings , s u mm o ns w er e is s ued in t h e na m e o f Sh . R a v ind e r K um a r Ya d a v a nd Sh. P re m nat h, b o t h d ir ec t o rs in M /s . Up a j L ea s ing a nd F ina nc e Co mp a ny , ho w e v e r th e ins p e c to rs c ou l d not s e rv e t h e s um m o ns e it he r on the r eg is t er e d o ffic e of t he c o m pa ny or at the r es id e nt i a l a dd re s s o f t he d ir ec t or s . I t is obs e r vat i o n o f t he AO t ha t Sh . An k ur G o e l C A o f M /s . N J a nd A ss oc iat es , F -3 6 , Ga l i N o . 1 , M ad h u Vih a r, P at p a d G a n j , D e l hi ha s a ud it e d t he b o ok s o f t h is c o mpa ny f or A Y 2 0 17 - 18 a nd his s ta t em e nt w as r ec o r d ed u /s 13 1 (1 A ) o f I T Ac t o n 1 0 .0 6 .2 01 9 a nd he s t at ed t ha t h e h a d a ud it ed t he b o o k s of M /s . KG F i nv es t Pv t L td . , M /s . Sa rv ot t a m S ec u rit ies Pvt . L td . a n d M /s . U paj L ea s ing a nd F ina nc e P vt . L t d . f or F .Y . 2 0 15 - 1 6 a n d F .Y . 20 16 -1 7 . S h . Ank ur G o e l s t at ed th at h e a ud it ed bo ok s o f t he s e t hr ee c o nc er ns w it ho u t k n ow ing t hei r d ir ec t o rs an d t ha t lo a n a gre em e nt s m a d e by t h es e c om p a nie s w er e not p ut be f o re hi m d ur i n g t he a ud it of b o ok s o f t he s e c om p a nie s . F ie c la im e d t hat t he d ir ec t o rs o f t hes e c o m pa n ie s a pp ea r to be o n ly f or na m e-s ak e an d t h at t he se c om p a ni es a r e b o g us . T he A O ob s e rv e s t hat Sh . Ank ur G o e l s t at e d t ha t 55 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust t he d i re c t or s of t he s e t h re e c o m p a ni es a r e d u mm y a n d ac tu al b e n e f ic ia l o w ne rs a r e Sh . H i m a ns hu V e r m a an d Sh. Ha ri Sh a nk ar Y ad av . T h us t h e AO c o nc lud e s t ha t t h es e t hr e e ent it ies i. e. M /s . K G F i nv es t P vt . L t d ., M /s . Sa rv ot t a m S ec u rit ies Pvt . L td . a n d M /s . U paj L ea s ing a nd F ina nc e P vt . L t d . pr ov id e a c c omm o da tio n e nt r ies . T h e c r ed it w o rt hin es s of M /s . Upa j L eas i ng a nd F ina nc e C o m p a ny P v t . L t d . wa s al s o c o nc lu d ed t o b e ins uffic i e nt d u e t o i ts m ea ge r inc om e of Rs . 1 3,6 3 , 5 30 / - i n A. Y. 20 1 6 -1 7 a ga i ns t t he lo a n o f Rs . 8 0,0 0 , 0 00 /- .
8.2 O n t he ot he r ha nd t h e AR s ub m its t h at n ot ic e u nd e r se c t i o n 1 33 (6 ) wa s is s ued t o t h e len d e r c o mp a n y o n 18. 12 . 2 0 20 by t he as s ess in g of fi ce r t o v e r if y t he g en uine nes s of t he lo an r ec eiv ed b y t he c o m p a ny a nd in r es p o ns e t o t he s a m e , t h e len d e r c o m pa ny f ur n is hed r ep ly a l o ng w it h c o nfi r m at i on , I T R, an d b a nk s ta t e m e nt . F u rt h e r s um m o n s un d e r s ec t i o n 13 1 w e r e is s u ed to th e c o m pan y on 08. 09 .2 0 2 1 a nd , in resp o ns e, t h e a ut h o r iz ed r ep r es ent a t iv e o f t he c om pa ny Shr i Pa nk aj Wa li a , A d vo c at e a pp ea r ed a l o n g w it h c o p y o f t h e p ow e r o f a tt o rn ey is s ue d on e-s t am p pa p e r by t he D ir ec t o r o f t he c om p a ny Sh ri Shr e e R a m Ya d av a nd t h e c op y o f th e lo a n a g r e em ent w it h t h e tr us t a n d he s t at ed t ha t t h e s ou rc e of lo a n wa s o ut o f a c c um ula t ed p ro f it s and lo an has b ee n re pa i d b y t he t r us t t o t he c om p a ny . T he A R s u bm it s t ha t t h e AO me n t io ned t ha t t h e s um m on s is s ue d b y t he I nv e s ti g at ion W in g, in t he nam e of Sh . R av ind e r Kum a r Ya d a v a nd Shr i P r e m N a t h b ot h d ir ec t o rs i n t he c om p a ny , c oul d n ot b e s er v e d b ut t h e m a t te r o f fa c t is t ha t P re mn at h is no t t he dir ec t or o f t h e c om p a ny a n d a s pe r I TR o f t h e r el ev ant ye ar , t h e ad d re s s o f th e c om p a ny is n ot ed a s 22 4 , s e c o nd fl oo r , Va rd h m a n C i t y C e nt r e , G ul ab i Bag h, Sh ak t i N a g ar , ne a r r a ilw a y u nd e r b r id g e, D e lhi- 110 0 52 b ut it a pp e a rs t ha t t h e s um m o ns w e r e not is s ue d t o t h e c o r r ec t a dd res s b y I nve s ti g at ion W ing . T h e AR f u r t he r e xp l a i ns t ha t t h e t rad i ng ac c o u nt o f t he le nd e r c om pa ny s ho ws R e v e nu e f r o m o p e ra t i o ns a t Rs .6 ,9 7 ,4 4, 20 5 / - a nd ba la nc e s h ee t r e f lec t s t ota l as s et s / in v es tm en ts at Rs .1 3 7, 51 ,2 0 ,59 3 / - t hat inc lud e s a cc um u lat ed pr o f its /r es e rv e a nd s u r p l us at Rs . 6 4 ,23 ,3 2 ,8 172 /- a nd a ls o s ho rt t e rm lo a n a nd a d v a nc es at Rs . 1 3 5 ,5 6, 2 9 ,5 3 4 / - . B as e d o n t he s a m e, he c la im s t ha t t he f i na nc ia l hea lt h o f t he e nt i ty is ve ry s o und a nd t he ba nk ac c o u nt d o es n ot r efl ec t a ny ca s h d ep os it a t a ll an d th e as s es si n g o ff ic e r has fa i le d t o p r ov e t h e a lle gat i o n o f en t ry i n li e u of c as h w it h s uf f ic i ent d oc u m e nt s and c or ro bo r a t iv e ev id e nc e on r eco rd exc ep t in g t ha t AO ha s t r ied t o t oe the line d ra w n b y inv es t igat io n w in g.
56 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust 8.3 T h e AR s ub m it s t h a t f o r AY 2 01 6 -1 7 , t h e b o ok s o f a cc oun t of t h e c om p a ny w e re a ud it ed b y Shr i She nu Agga rw al , C h art er ed Ac c o unta nt , P ro p r ie t o r of M / S Sh e n u A gg ar w a l & C o mp any a n d t h at t he bo o k s o f a cc o unt of t he co m p a ny w er e no t a ud i ted b y Sh r i A nk u r G o e l, C ha rt e re d Ac c o u nt a nt a n d t he r e i s n o e vid enc e o n re c o rd t o p r ov e t ha t A nk ur Go el m ay b e p a rt ne r of S he n u Agg a rw a l, as a n e v id e nc e, c o nf irm at ion f r o m Sh e nu A g ga r wa l , CA has been e nc l os ed . The AR c la ims that a ll t he a ss e rt ion s by Ank u r G oe l, C A t h a t le nd er c om pa ny is bo gus an d e nt r y pr ov id e r is tot a ll y fa ls e a nd s e em s . -t o be g iv e n p ut of pro f es s ion a l j ea lo us ly s in c e , b o oks a r e no t a ud it ed by h im. T h e AR s ub m it s t ha t t h e in v es t i ga t ion w in g e v e n fa il e d t o s um mo n a nd r ec or d t he s t at e m e nt o f H im a ns h u Ver m a a n d H a r i Sh a n k a r Y a dav an d as s uc h t he c ont ent i o n o f C A S h. Ank ur G o e l la c ke d c o rr o b o ra t iv e e v id e nc e . T he A R d ra ws a t t e nt i o n ba s e d o n a c co un ts o f t h e t rus t a nd s ea rc he d fa m i l y m e mb e rs th at t h e t r us t ha d b ee n fa c in g grave f ina nc i al c r is is to run the h os p i t al fo r c ha rit ab le ob j ec t s w h ile t he m ed ic a l c o l le g e d id n ot g et s a nct io n o f t he m ed ic al s ea ts a nd t hu s d ay b y d a y, t h e fina nc i al s it u at ion w as gett ing b ad t o w o rs t w h il e t h e t r us t ha d b e e n ext e nd i ng it s me d ic a l fac ili t ies o n t h e O PD s l ip o f Rs . 10 / - o nly . H e c la im s t ha t t he T r us t ha d b e e n f o llo w ing a n d pe rus ing its c ha r it ab le obj e c t iv e i n t r u e s p i r its a nd f o r t h e s a m e, t h e m ot iv e w as to r a is e mo n ey fo r m e et ing c ha rit ab l e o b lig at i ons a nd t he r ef o r e a c t ua l m on e y w as ne ed ed and not ac c om mo d at io n e nt r ies t ha t a re ge n e ra l ly ta k e n in t he e v e nt o f hea v y s urp lus inc om e t hat m a y b e ne ed e d t o b e b r o ug ht b a c k t o t he b oo ks of a cc o unt . H e c la im s t ha t t h e T r us t a nd t h e fa m il y ha d b e en ru nni n g in t o he a v y lo s se s i n e xc es s o f m or e t ha n Rs . 2 0 c r or es a nd s inc e t he ac t ua l f un ds /m on ey we r e n ee d e d t o r u n t h e ho s p it a l, t he re w as no c a us e t o ind u lge i nt o ac c om m o da t i on e nt r ies .
8.4 F r om t h e r ec o r ds it has b e en f ou nd tha t Sh . Ank ur Go el has no t a ud it ed t he b o ok s o f ac c o u nt s of M /s . U paj Le as in g a nd F i na nc e C om pa ny P vt Ltd . in t he y e a r u nd er c o ns id e ra tio n. I n - fac t t h e b oo ks ha v e be en a ud it ed b y She nu A gga rw a l, Cha rt er ed ac c o u nt a nt w h o is p rop , of She nu Ag ga r w a l a nd C om p a ny . F ur t he r t he n ot ic es a nd s um m o ns is s ued b y t h e AO ha v e b e e n c o mp lied a nd a l l t h e re q uis i t e d et a il s hav e b e e n f ile d o n be ha lf o f lo a n c r ed ito r M /s . U pa j L e as in g a nd F in anc e C o mpa ny Pv t. L td . T h e r ef o r e t h e A O c a n not c la im t ha t t he i d en t it y o f t h is lo a n c re d it or c o uld no t b e p r ov ed . F ro m t h e b a la nc e s he et o f t h is N BF C co m p an y it has b ee n 57 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust f o u nd t ha t t his h a s e q uit y a nd liab ili t ies o f Rs .13 7 .5 1 cr o r es . F r o m t he Sc he d u l e o f Sho r t t e rm L oa ns a nd ad va nc es , it is f o u nd t ha t loa ns o f Rs . 13 5 .5 8 c r or es a r e gi v e n t o v a r io us p e rs o ns . L o a ns ha v e b e e n r ec e iv ed b y t he ap p e ll a nt t h ro u gh b a nk in g c h a nn e l a nd r e l ev a nt b a nk s ta t em e nts h av e be en fi l ed . T h e i n c om e o f c u r re nt y ea r c a n no t b e ma de a c r it e r ia o f c r ed it w o rt hine s s o f th e loa n c r ed it o r. T he s ta t e m e nt o f Sh. A nk u r Go e l s uf f e rs fr om fac t u a l i nc o r r ec t nes s a n d th e s a m e has a ls o n ot b e e n t a k e n t o lo g ic a l co nc lu s io n by v er if y in g t h e s am e f r om t h e a f f ec t ed p art ie s . T h is s ta t e m ent h as a ls o no t b e e n pr ov id e d t o t h e ap p e lla nt . F ur t h er all t h e t hr e e li m bs of ge nui n e c as h c re d it i.e . id en t it y, c re d it w or t h ine s s a nd ge nu in e ne ss of t ra ns a c t i o n, ha v e b e en p ro ve d by f ur nis h in g a ll t he r e l e va nt d et a ils a n d t he loa ns ha v e b ee n pa id bac k by t he tr us t . T he r e l ia nc e p la c ed by th e a p p e lla nt o n va ri o us j ud ic ia l p r o no un ce m en t s ha s be en fo u nd c o rr ec t in t h e s e ns e t hat t he app e lla nt has d is c har g e d h is o n us by p r o v i ng id e nt it y a nd c r ed it w o rt h ine s s o f t h e l o a n c r ed it or a l o ng w it h ge nu in e ne ss of t r a ns ac t i on, w h ic h is pr ov ed s i nc e a ll th e l oa ns of a dv a nc e d t h ro ugh b a n k i n g c ha n ne ls .
9.1 F r om t he d et a i ls fu r n is hed by t he a pp ella n t in the as s ess m en t pr oc e ed ings a nd a ls o f iled in t he a p p e l la t e p r oc e ed ings , it has b e e n f ou nd t ha t at t he t im e of a c c ep t i n g l oa ns f r om t hes e c o nc e r ns , an a gr e em en t wa s e xec ut ed, t he a pp e l la nt a ls o e xec ut ed p ro m is s o ry n o t e as s e c u r it y a nd t he app ell a nt is s ue d und at e d c ro s s ed c he q u e in t h e na m e o f t h e le nde r c om p a ny a s ad d it io n a l s ec u r it y. Fu rt h er t he s ubm is s io n of t h e AR ha s b e en f oun d c o r re c t t h a t o v e ra ll a na lys is o f ac c o unt s of v a r io us y ea r s i. e. AY 20 1 5 - 16 t o 2 0 1 8 - 19 of Sh . J a ip a l Sin g h Sh a rm a T r us t an d of v a r i o us fa m i ly me m b er s le a ds t o t h e co nc l us i o n t h at w h at ev er lo ans w er e ra is e d by t he ap p el l a nt a n d o t he r f am il y m e mb ers , t h e m aj o r p o rt i o n o f t he a m o unt is d iv e rt ed a nd d ep os it e d w i th t h e t r us t t o m ee t t he c ha r it ab le go a l o f t he t r us t . I t ha d b e en s p e c if ic a lly s t ip ul at ed i n t h e l oa n d oc um ent t ha t i f t he lo a n is n ot re p a id w it hin t he t im e f ra m e, t he in te r es t e le m ent s ha ll c o m e in t o p la y t ha t s t a nd a dd ed to t he d o c um e nt /p r om is s or y not es a nd f ur t h e r w i t h a d va nc e as s ur an c e f o r r ep a y m en t of lo an am o u n t b y is s ui n g u n da t e d c h eq ues . I t has b ee n e mp ha s iz e d t ha t t r us t ha d b e en fac i n g gr a v e f i na n c i a l c ris es in t h e ab s enc e of s a nc t io n o f me d ic a l b at c h es a nd t h e t r us t ha d b ee n ex t e n d i n g its m ed ic al fac i lit i es o n t h e O PD s lip o f Rs . 1 0 /- o n ly . T he t r ust ha d b ee n fo llo w ing a nd p e ru s ing it s c ha r it ab le o bj ec t iv es a nd d u e t o t h e s am e , t he t r us t ha d s u ff e r ed lo s s es t o t h e t un e
58 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust o f a r o und m or e t ha n Rs . 20 C ro r es . T h er ef o r e t he c irc ums t a nc es ind icat e t ha t , the ap p el l a n t tr us t n eed e d a c t ua l m o ne y to ru n the hos p it a l s m oo t hl y i n v ie w o f t he m ou nt in g l os s es a nd n ot m er e ac c om m oda t i o n e nt r ies . T her e i s f o rc e i n t h e a rg um en t o f t he AR t ha t t he c i rc u ms ta nt i a l e v id e nc es lea d t o t he c o nc lus io n t hat t h e Tr us t n ee d ed a c t ua l m o n ey a nd t he r e wa s no s uc h big c as h ge ne ra t in g o t h er b us i ne ss ac t i v it y fr o m w hic h e xc ess cash was be i ng ge n e r a t ed for w hic h fam i ly me mb e rs of t he s ea rc h ed gro up w o uld ha v e r es o rt ed to ac c o mm od at i on ent r i es to int ro d uc e t he u na c c o unt ed inc o m e . T he s ta t e m e nt giv en by Sh . Ank ur G oy a l, C A a ft e r m o re t ha n 5 m o nt h s o f t he s e a r c h, h as b e e n f ou nd inc o r r ec t i n t he li gh t o f t he f ac t t ha t t h e b oo k s of t h e ac c oun ts of t hes e t hr e e c o nc e r ns i. e. M /s . S a r v o tt a n Sec u rit ies P vt . Lt d . , M /s . K G F i nv es t P vt . L t d . a nd M /s . U p aj L ea s in g a nd F i nan c e C o mp an y Pv t . Lt d . ha v e not be en a c t ua l ly a ud it ed b y h im a nd t he s ame ha v e b e e n au d it ed b y Sh . Sh e nu A g ga r w a l, p r op , of Sh e nu Ag ga r wa l a nd C om pa n y (m em b e rs hip N o . 52 72 6 7 a nd p ro p, c o nc e rn r e gis t ra t io n n o . 0 2 65 0 1 N ). F u rt h er t h e AR ha s br ou ght int o f or e t h e fa c t t ha t n o c as h t ra i l c o u l d b e est ab lis h ed b y t he in v es t i ga t ion w i n g or by t h e AO . T h e s t at e me nt w a s n ot c o n fr o nt e d t o t h e AR a n d t h e s am e wa s a ls o no t ta k e n t o i ts lo g ic a l c onc l us io n b y ex am i ni n g Sh . H im a ns h u Ve rm a a nd S h . H ar i S h a nk a r Y ad a v , w h o hav e b e en c la im ed a s c o nt r o lle rs o f t he s e t h re e N BF C s . Th es e N BF Cs a r e r e gu lat ed b y R BI la ws . A nd t h e lo a ns , t a k e n by t rus t ha ve b e en re t u r ned b ac k c om p l e t e ly . The o bj ec t iv ity of s t at e m e nt of S h. An k u r G oy a i c o ul d als o no t be e xa m in ed w h en t h e q u es t io ns w er e r a is ed b y t he a pp el la nt t hat t he s am e is r ec or d e d a ft e r t h e 5 m o nt hs of t h e s ea rc h ac t io n an d h e has no t b ee n a ud it o r o f t he N B F C le nd er s in t he y ea r und er c o ns id e r a t io n, i n-fa ct he wa s pa rt n e r of N J As s oc iat es a nd M /s . N J As s oc ia t es ha s bee n a ud it o r o f t hes e l e nd e r c om pa n ies in F Y 2 01 6 -1 7 o n ly a nd as p e r h is c lar i f ic at io n i n t he s t at em en t o n oa t h , S h . An k ur G up t a ha s j ust s ign ed t he a ud it e d r ec or ds a n d ha s no t b ee n inv ol v ed i n t h e ac t ua l a ud it p r oc e s s.
9.2 T h e ap p e l la nt has exp l a ined t h e 's o urc e ' o f t h e c r ed it or in i ts bo o ks by f i lin g t he c o nf irm a t io n a nd fin a nc ia l st a t e m e nt of l oa n c r ed it o r . As pe r t he f in a nc ia l s ta t em en ts / Ba n k S tat e m e nt s of t h e lo a n c r ed it o r, it h ad t h e a va ilab ili t y of t he fu nd . U nd er s ec t i o n 6 8 o f t he Ac t , w h at is mat e r ia l i n t he 's o urc e ' o f t he f und . T h e s ou rc e n e e d n ot t o b e f r om t h e c ur r e nt y ea r 's inc o m e o nly . T he s o u rc e c a n b e inc om e , ow n e d fu nd s , b o r r ow ed fu nd s o r o t he r f u nds a v a il ab l e w it h t he c r ed ito r s . Und e r s uc h s it ua tio n, if t he AO 59 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust s ti ll .d o ub ts th e s o u rc e o f lo an g iv e n b y t he lo a n c r ed i t ors , ad v er se in fe r e nc e c a n b e d r a w n in t h e c as e of loa n c r e d it o r a nd n ot in c as e o f t he a pp e l la nt c o mp a ny .
T h e A R ha s c o nc lud e d h is s ub m is s io n b y p la c i ng r e l ianc e o n t he f ol l o w i ng j ud gm e nt s :
Ab hij a v a la d e v e lop e rs ( P. ) Lt d. v s I T O 9(1 )(1 ), M um b a i, [2 021 ] 1 24 t ax ma nn.c om 7 2 (M umb a i - T rib .) / [2 0 21 [ 1 87 I T D 2 2 2 (M um bai - T r ib . )[0 3 -1 2 -2 0 20 ], Mo on gip a D ev . & I nf. L td . v s D C I T, M um . [2 02 1 ] 1 27 t ax m an n .c o m 80 8 (M um ba i-T rib .)/ [20 2 1 ] 18 9 ITD 3 88 (M um b a i - T ri b . ) [ 03 - 0 5 - 20 21 ] , P C IT - 5 v s L ax m a n In d us t r ia l Re s o u rc e s Lt d ., [2 0 17 ] t ax m an n .c o m 64 8 (D el h i)/ [2 017 ] 39 7 ,I T R 10 6 (D elh i) [1 4 -0 3 -20 17 ] , Bi n i B uild ers ( P .) Lt d . vs D C IT , C en t r al ra ng e- 7 (3 ), [ 2 0 20 ] 1 18 t ax ma nn.c om 44 7 (M umb a i - T ri b .) /[2 0 20 ] 1 85 I TD 2 36 ( M umb a i -
T r ib . )[1 2 -0 3 -2 0 20 ].
An c o n C hem p l as t (P. ) L td . v s I T O , Wa r d -2 (4 ), N ew D e lh i , [2 02 1 ] 12 7 t ax ma nn.c om 1 5 6 (D elh i - T ri b . ) /[2 0 22 ] 93 IT R(T ) 167 (D e l hi - T r ib . ). [2 0 21 ] 1 8 9 I T D 1 5 6 ( D el hi - T r ib. ) [3 0 -0 4 -2 0 21 ] , P C IT v s . E S ma rt Sys t e ms (P . ) L t d ., [2 019 ] 1 05 t a xm ann .co m 1 58 [D el . -H C ] , P C IT v s . H i- T ec h R es id e nc y (P ) Ltd . , [2 01 8 ] 9 6 t a xm a nn.c o m 4 02 [D el . -H C ] , Mo d Cr e at i ons ( P. ) L td . vs . I T O [2 0 1 3 ] 3 54 IT R 28 2 [ De l . -H C ], F lo u r is h Bu il d er s & D ev e lo p e rs ( P . ) Lt d. vs . D C IT [2 019 ] 1 7 6 I T D 40 9 [D el . Tr i b u . ].
AC I T vs . V ik r a nt P ur i [2 0 16 ] 4 7 IT R ( T ) 70 8 [D el h i-T r i b u.]. R a j e s h Bha t ia vs . D C I T [ 20 1 7 ] 8 8t a xm a nn. c o m 35 0 [ D e l hi- T r ib u. ] C I T vs . D ia mo nd P r od u ct s Lim it ed [ 20 0 9 ] 17 7 Ta xm an 3 3 1 [D e l hi- H C ].
P ra y a g T end u L ea v e s Pr o c es s in g C o . v s . CI T [20 1 7 ] 88 t ax m an n .c o m 23 [ Jh a rk h a nd H C ].
P C IT v s . V e e d hat a T ow e r Pvt . L td ., [2 0 18 ] 4 03 IT R 41 5 [ Bo m b a y - HC] 60 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust
58. Having gone thro ugh evidences collected by the Assessing Officer, the reply submitted by the assessee befor e the AO and the ld. CIT(A) , e xamination of each issue and contention raised by the revenue with reference to the facts relie d upon by the ld. CIT(A) and reports of the investigation, the ld. C IT(A) cogently brought on record that the loans received by the assessee could not be treated u/s 68 as the identity, genuinenes s and creditworthiness of the parties has been duly proved. In view of the above facts and the ratio given by the ld. CIT(A), no interference is called in the well reasoned order of the ld. CIT(A) .
Amsoft Globa l Pvt. Ltd .
59. The re levant portion of the Asse ssment Order on this issue is as under:
"M /s Am s o ft G lob a l Pv t Ltd . T he as s es s ee h as rec eiv ed d o n at io n of Rs . 50 ,0 0 ,00 0 /- fr om M /s A ms o ft Gl oba l P vt . Lt d . H ow e v er , af t er fil ing t h e r et u rn i n c o ns eq u e nc e of n ot i c e u/s 153 A, t h e as s es s e e c o n ve rt ed t h e s am e f rom c o rp us do na t io ns t o v ol u nt ar y d o na t i o ns a nd f ile d am e nd e d F o rm 10 B. T he s a m e wa s c on fr ont e d t o t he as s e s s ee . In t h is r e ga rd , v id e r ep ly da t ed 2 6. 03 . 20 2 1 , t h e as s es s e e ha s s t at ed t ha t t h e d o nat i o n w as v o lu nta ry d o nat ion a n d n o t c o rp us d o nat i on .
T o v er if y t h e a bo v e c o nt e nt io n o f t he as s e s s ee , No t ic e u /s 1 33 ( 6 ) w as is s ue d t o t h e d on or c o m p a n y. As p e r t he r ep l y fi led , t he don or c om p a ny ha s c at eg or ic a ll y s t at ed t ha t it h as p r o vid ed 'c o rp us d o nat io ns ' t o t he a ss e s s e e . H e nc efo rt h, t h e c on t e nt ion of t he a s s es s ee is not a c c ep t a b le a s c o rp u s d ona t io ns a re giv en fo r a s p e c i fic p urp os e an d w it h a s p ec i fic c la us e o f go i n g t o wa rd s c or p us fu n d o f t h e t r us t . D ur in g t he c o urs e o f s ea rc h t h e d o na t io n w a s s ho w n a s r ec e iv e d as c or p us d o nat ion . T he a ss e s s e e c a nno t a r b it r a r i ly c ha n g e t h e na t ur e of d on at i ons fro m co rp us t o v o lu nta ry at h is w him s a n d fa nc ies .
F urt he r t he c r e d it w or t h i nes s a nd ge nu ine nes s o f t h e a bo v e t r a ns ac t i on wa s a ls o a na lyz ed Du r in g t h e AY 20 1 7- 18 , t h e do n or co m pa n y ha s f i led 61 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust IT R o f o nl y Rs . 8 2 , 120 /- w hi le it has g iv e n d o na t i on of Rs .50 ,0 0, 00 0 / - t o t he a s s es s ee t r us t . T hus , c lea r ly the c om p a ny d o es not ha v e c r ed it w o rt hine s s t o f or w a r d s uc h hu ge am o unt o f loa ns a nd d o nat io ns . I t ha s a ls o not f ur nis he d it s f ina nc ia l s t a t em e nt t o p r o ve it s ne t w o rt h a nd c ap it a l t o fo r w a rd lo a ns .
H en c e, S um m o ns u / s 131 w er e als o is s u ed t o t h e c o m pa n y o n 0 8. 0 9 .2 0 2 1 . H ow ev er , in r es p o ns e ne it h er t he di r ec t o rs n or an y a ut h or iz e d r ep r es e nt a t iv e o f t he c o m p a ny a p p e a re d , d es p it e p ro v id ing am p l e t im e t o a pp ea r . T hu s , fr o m t he fo re go ing d is c us s i on it i s c lea r t h at t h e d o na t i on a nd lo a ns r ec e iv e d by a s s es s e e a nd his fam i ly m em b e rs f r om t hi s c om p a ny M /s Ams o f t Gl ob a l Pv t. Lt d . a r e no t ge nu i ne .
Als o , d ur i n g p os t s ea rc h in ves t i g at i on , e nq ui ri es were mad e by the in v es t i ga t ion w ing a nd it w as f oun d t h at t he c o m pa ny is a bo gus p ap e r c om p a ny a n d t he t r ans a c t io n o f giv ing l oa n t o t h e as s es s e e t r us t is b o gu s .
T o e nq u ir e a b o ut ge nu ine nes s of s uc h c o rp us d o nat i on , o n 0 6. 02 .2 01 9 , s um m o ns w er e is s ue d , by I nv es t i gat i on w ing , in t h e na m e of Ms . M amt a P a nd ey a nd Mr s . S w et a Sa u ra b h Gupt a b ot h d i r ec t o rs i n A ms o ft G l ob a l P vt . L td . f or c om p lia nc e on 13 . 02 .2 01 9 .
T h e I T Is w ho w e r e s e nt t o s e rv e t h e s um m o n r ep o r t e d t ha t t h e o f f ic e w as lo c k ed a nd a ft er m a ki ng enq u ir ies f r o m S h. Ra m es h K al r a, CA , p r es e nt in t he s a m e b uild ing i n his o f f ic e to l d t ha t in t his loc k ed of fic e Sh. D e ep a k Ji , C ha rt e r ed A cc o unt a nt w o rk s he re b ut h e d o es n ot k n ow m or e ab o u t M /s Am s o ft G lob a l P v t . L td . T hus s um m o ns in t his c as e c o uld no t b e s e r ved .
O n goi ng t h r o ugh t he d et a i ls o b ta ine d f r om t h e s ys t e m , it is s ee n t h at S h . D e ep a k Ja in , M /s Ja i n D eepa k & C o mp any , 2 , N a ri nd er Bh awa n , 4 48 , Ri ng R o ad, Az a d p ur , D elh i h as a u d it ed t h e b o ok s o f M /s Am s o ft G lo b a l P vt . Ltd . du r in g t he F Y 20 1 6 -1 7 a nd 2 017 -18 . Ac c ord ing ly , on 11 . 0 2 . 20 1 9 , s um m o n wa s is s ue d in his na m e, b y t h e I nve s tig at io n w in g. T h is s um m o n a ls o c o u ld not b e s e rv ed . I n t h eir r ep o rt t h e I T I S r ep or t ed t ha t o n ma k i n g e nq u ir ie s fr o m t h e n e igh b o r hoo d i t is fo und t ha t th is is o f f ic e o f M /s V ip in a nd As s oc ia te s , C A. T h e d et a ils of Gr os s T ot a l in c o m e of t h e c o mp an y d ec lar ed in t h e I T RS du r in g d if f er ent F Y s a re o bt a i ned fr om I T BA a nd a r e s u mm a r iz ed a s u nd er :
62 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust Sl . N o . F . Y. Gr os s T ot a l I nc o me ( Rs .)
1. 2 0 14 -15 1,3 8 , 13 5 / -
2. 2 0 15 -16 1,4 0 , 88 4 / -
3. 2 0 16 -17 82, 1 2 2 /-
M /s Ams o ft G lob a l Pv t . L td . has ma d e c o rp us d o na t i o n t o th e t u n e o f Rs . 50 l a c s to M /s Shr i J a ip a l S ing h S ha r ma T r us t w h ile gr os s t ot a l inc o m e o f t he c om p a ny is a s lo w a s Rs . 8 2 ,1 20 / - in AY 20 17 - 1 8 . T his is b e y o nd c om m o n c om p r e he n s i o n t ha t a c om pa n y ha v i ng v e ry lo w inc o m e o f it w ill m ak e any ge nui n e do na t io ns of s uc h hu ge a m o unt s . Th e fin anc ia l s ta t e m ents o f t he c om pa ny hav e a ls o no t b ee n p ro d uc ed t o e s ta b li s h t he ne t w o rt h a nd c r ed it wo r t hin es s o f t he c o mp a n y.
Su b s ta nt ia l d o na t io ns o f Rs . 50 l ak hs i n e ac h y e ar w e re ma d e t o S h ri Ja ipa l S ing h Sha r m a T rus t i n F Y 20 15 -16 a nd F Y 20 1 6-1 7 . F ro m t h e pe rus a l o f a b o v e t a b le, i t is s e e n t ha t t he gros s t o ta l inc o m e o f t h e c om p a ny d ur i n g F Y 2 0 14 -15 t o 2 01 6 -17 is be lo w Rs . 1 .5 la khs i n ea c h FY . F urt he r, j uxta p o s it io n o f inc o m e p r o fil e to t h e out c o m e o f e nq uir i es m a d e r e ga rd ing g e n ui ne n es s of t h e c om pa ny m a k e it amp ly c l ea r t h at s uc h do na t io ns r ec e iv ed by Sh r i Jaip al Sing h Sha rm a T r us t fr o m M /s Am s oft G lob a l Pv t . L t d . a r e b o gus a nd lia b le to b e ad d e d t o t he inc om e of a ss e s s e e .
T h us , t h e to ta l d o n a t io n o f Rs .3 ,30 , 0 0 ,0 0 0 / - r ec e iv e d by th e t r us t f r o m a b ov em e nt i o ne d e nt it i es a r e b o g us a n d li ab l e t o b e ad d e d to t h e i nc om e o f t he a s s es s ee u /s 68 r .w .s 11 5 B BE o f I T Ac t , 1 961 ."
60. After going thro ugh the submissio n, the ld. CIT(A) deleted the additio n made on account o f the donatio n r eceived from Amsoft Global Pvt. Ltd. holding as under:
"I n t he m a t t e r of do n at i on o f Rs . 2 ,8 0 ,0 0, 00 0 / - t ak e n f r o m M / s. M or a l Sa les Pv t . Lt d , a nd d o n at io n o f Rs . 5 0, 0 0, 00 0 /- t ak e n f r o m M /s Am s oft G lob a l P v t. Lt d ., t he A O o bs e rv es tha t t h es e d onat io ns w e r e ac c o un t ed f o r a s c o rp u s d o na t io ns , h ow e v er aft e r f i lin g t he r et u r n in c o nse q u e nc e t o t h e no t ic e is s ue d u/s 1 5 3 A of IT Ac t t he as s e s se e c o n v e rt e d t he s am e f r o m c o rp u s d o na t i o ns t o v o l unta ry d o na t io ns and f i le d a m end e d F o rm no . 1 0 B . T h e AO f ur t he r ob s e rv es t hat v id e re p ly d t . 26 .03 . 2 0 2 1, t he as s ess e e 63 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust s ta t e d t hat t his d o na t io n wa s v o lun ta r y d ona t i o n a nd n ot co rp us d onat io n . T h e AO obs e rv es t h a t in c o mp lia nc e t o th e not ic e is s ued u /s 1 3 3 (6 ) o f I T Ac t , t he d o n or c o m p a ni es h av e c la im e d th at t h es e w e re c or p us d o nat i on s T h e AO ha s a ls o b r ou g ht to t h e fo r e t ha t M /s . M o ra l Sa le s Pv t Ltd . ha d m ea ge r i nc om e o f Rs . 1 ,6 4, 630 /- in t h is y ea r b ut ga v e d o na t io n o f Rs . 2,8 0 . 0 0 .000 /- a n d f ur t h e r M / s Am s of t Gl ob a l Pv t. L t d . ha d m ea ger i nc om e o f R s . 8 2 ,12 0 /- b ut ga v e do na t io n of Rs . 50 , 0 0 ,0 00 / - . T he AO f u rt he r o bs er v es t ha t in c o m p lia nc e t o t h e s u mm ons is s u ed u/s 1 31 o f IT Ac t , t h e di r ec t o r o f M /s . M o ra l Sa l es P v t Lt d, c o m p l ied b ut d id no t f ur nis h s p ec ifi c det a ils ho w e v e r t he d ir ec t o r o f M /s . Am s o ft G lo b a l P vt . Lt d . , d id not c om p l y . T h e A O ha s a ls o p ro d uc ed t he f in d ings o f in v es t ig at io n w ing t o m ak e a case t ha t t h es e do no r c omp a ni es ar e b o gus a nd la ck c r ed it w o rt hine s s s inc e t hey had ve ry s m al l i nc om e s in F Y 201 4 - 1 5 , 20 1 5 - 16 a nd 2 0 16 -1 7 .
O n t h e ot he r ha n d th e A R s ub m it s t ha t all t he d o na t i o ns r ec e iv ed w er e ut i liz e d s t r ic t ly t o a c hie v e t he o bj ec t s o f t he a pp el l a nt T ru s t t o p ro v id e f r ee t r eat me nt to po o r i r r es p e c t iv e of c as t e , c r eed an d c o lou r a nd do na t io n in c o m p let e w er e t a k e n t o t he i nc o m e an d exp e nd i t u r e ac c o unt a nd a s s uc h, t h e s a m e am o unt o f d o na t io n c a nno t b e t ax ed t w ic e b y m ak ing ad d it i on t o t he i nc o m e. T he AR f ur t h e r ex p la ins t h at t h e as s es s e e t r us t d ur i ng t h e y e ar u nd e r c o ns id er at ion h ad r ec e i v ed d ona t i ons w hic h w e re in ad v er t e nt ly de c lar e d as 'c or p us fun d' , h ow ev er , o n r e- ex am ina t i on o f t he s t a t e o f af fa i rs , t he d o na t io n b ei n g v ol u nt a r y d on at i ons hav e b e en inc o rp o ra t e d in t h e inc om e a nd e xp e n dit ur e a c c o unt a n d t he c op y of t he r e -c a st ed inc om e a nd exp en d it u re ac c o unt and b al a nc e s he et ha d b e en a ls o fil ed d u ri n g as s es s m ent p r oc ee d in gs w it h t h e as s e ss in g o ff ic er a nd t he c op ies o f t he ba la nc e s h e et a n d r ec e ipt a nd e xp e ns es ac c ou nt ha d be en en c l os ed w it h t he I nc o me Ta x R et ur n s ub mit t ed in r es p o ns e t o t he no t ic e is s ued u nd er s ec t io n 1 53 A o f t he Ac t a nd t his r et ur n had b een m ad e b a s is f or c om pl et ing c as e s a ft e r s e ar c h. N e c es s a ry d et a i ls a b o ut t h e do na t io ns t r a ns fer r ed f r o m t he c o r p us fu nd t o t he v o lu nt ar y d o na t io n i n t he Rec e ipt a nd E x pe nd it u r e ac c o u nt h ad b een a ls o s ub m itt ed w i t h t h e a ss e s s ing o ff ic e r. T he as s es s in g o f f ic er has m ad e t he s e d o c um e nts s uc h as Ba la nc e She et , R e c e ip t a nd e xp e ns e s ac c o unt as t he b as e fo r the c om p l et ing c as e . Ac c or d i ng ly, t he v o lu nt a ry d o na t i ons fo rm p a r t of t he inc o m e.
64 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust T h e AR s u b m i ts t ha t d ur in g t h e y e ar u nd e r r ef er en ce , t h e ap p e l la nt ha d r ec e iv e d t ot a l d on at i ons to t he t u ne of Rs 5 , 9 5, 36 , 0 0 0/ - and t h es e do na t io ns a t t h e t i m e of s ub m it t i n g r et ur n o ri gi na l l y ina d ve rt ent l y a n d und e r b o na f id e b e li e f w er e a d j us t ed u nde r t he c o rp us d o n at io ns b ut aft e r t he re c eip t of not ic e un d e r s e c t io n 1 53 A o f t he Ac t , t he ap p e ll a nt s c a nne d a l l t he d o c um en ts c o nne c t ed w i t h t he d o na t i o ns re c e iv ed , t he l a ng ua ge in m os t o f th e c o n fir ma t i o n w e re n ot v er y s p ec ifi c a nd t o ok a p ru d en t dec is ion to c o ns i d er a nd c o ns e q ue nt ly d ec la r e a ll t he d o nat i o ns a g gr egat ing t o Rs . 5 , 95 , 3 5, 00 0 /- t o t he r ev en ue ac co u nt fo r w hic h t h e r et u rn h as b e e n a lr e a d y f iled b as e d o n t h e r e- c as t ed Inc om e a n d Ex p e ns e s a cc o unt a n d a ls o r e-c as t ed B a lanc e S he et at t ac h e d w it h t he r et ur n. T he AR s ub m its t ha t t he ap p e ll ant had r ec eiv ed t o t al a mo un t of Rs . 3,3 0 , 0 0 ,000 /- t o wa rd s d o nat io n f ro m t he s e d o n o r c om p a nie s i .e. M /s . Mo ra l Sa les P v t . L t d . (d o nat io n o f Rs . 2 ,8 0, 00 ,0 0 0 /- ) a nd M /s . Am s o ft G lob a l Pr iv a t e L im ited ( d o nat i o n of Rs . 50 , 0 0 , 0 00 /- ). H e c lai ms t ha t c op ies of c on fi r m at i o n let t e rs a lon g w it h c op y o f th e b a nk ac c o unt of t h e c om p a ny a nd I T R h as b ee n e nc l os ed gi v i ng t h er e i n c o m p le te a d d r es s an d P AN o f t he c om p a ni es . I t is s u bm is s i on o f t he ap p e lla nt t ha t e v e n if t h e o bs er v a t io n ma d e by the as s es s i ng o ffic e r in as s es s m ent o r de r is c o ns id e re d t o b e c o r re c t f o r t he s ak e o f ar g um e nt , t he ap pe l la nt has not pl a y e d a n y fra ud up o n t h e r ev e n ue s y s t em , t h e a pp e lla nt has tr a ns fe rr ed c o rp u s d o na t io n to r ec eipt ac c o unt as v o l unt ar y d on at ion a nd not o t he rw is e T h e 'c or pus d o na t io n ' r ep r es e nts 'c a p ita l r ec e ip t w h ile , t he v o lu nta ry d o na t io ns ' a r e a lwa ys p a rt o f t he ' r ev en ue re c e i pt s' a nd if t he c o nd it i ons la i d d o w n i n s ec t io n 1 1 an d 1 2 a r e not c o mp l ie d w it h, t he ' r ev enu e r ec e ip ts ' in t h e f o rm o f ' vo lun t ar y d o na t io ns ' i f a ny , w o u l d bec om e t a x ab l e. In v i ew of t h is l ega l pr op os it io n , t he ap p ell a nt h as no t c om m itt ed a ny f ra ud up o n t he re v e nu e and t ha t to o in t h e bac k g ro und o f t he fac t t hat t he r e wa s n o s p ec if ic d i r ec t io n a t t ac he d t o 'c o rp us d o na t io n ' a nd no s uc h na r ra t i o n h as b e en p o int ed o ut b y t h e as s es s in g o ffic e r aft e r de ep e xa m i na t io n o f t h e co nf irm a t io ns a nd c er t if ic a t e o f c o rp us d o na t i o ns s ub m it t e d b y t he d o no rs . I n t h is c as e , t h e ve r if ic at io ns o f t h e r ec o rds ha v e b ee n m ad e b y ca l lin g f o r t he r ec o rd s f rom t he O l o D C I T Ce nt r a l C ir cl e, G ha z i a b a d a nd it ha s b ee n fou n d th at t hes e a m o unt s ha v e a l re ad y be en c re d it ed as r ev e n ue re c eip ts ' , t he r ef o r e the s ub m is si o n of the a pp e l la nt ha s f o rc e t ha t fu rt h er ad d it io n of t h es e a mo u nt s as d eem e d inc o m e wo uld b e no th ing b ut t he d oub le a d d i t io n of t h e s am e a m o un ts .
65 ITA Nos. 1842, 2124, 2125, 2126 & 2127/Del/2022 Ankit & Nidhi Sharma, Jaipal Singh Sharma Trust In t h e m at t e r o f d ona t i on of Rs .2 ,8 0 ,0 0,0 0 0 /- giv en b y M /s . M o r al Sa le s P vt . Ltd . a nd d o na t i o n of Rs . 5 0 ,0 0, 000 /- gi v e n b y M /s . Am s oft G lo b a l P vt . Ltd ., s in c e t h e a p p el la nt i. e. S h. Ja ip a l S ing h S h a r ma T r us t has its el f c o ns id e re d t h es e d ona t i ons of Rs . 3 , 3 0 ,0 0 , 00 0 /- a s r e v e n ue rec e ip t s , b y c o ns id e ri ng t he d o na t i o ns as ' v o lu nt a ry d o na t i o ns , t he re is no n eed t o f ur t he r ad d t he s a me in t he inc o m e as ' de e m ed inc o me as p er the pr ov is i ons o f s ec t io n 6 8 of I T Ac t . I nf ac t m ak in g t hi s a d d it io n u /s 6 8 of I T Ac t a ga i n, is no t hi ng b ut t h e do u b le a dd it i o n . I n t h e l igh t of t hes e o bs er v a t io ns , t h e a dd it i o n o f Rs . 3 ,3 0 ,0 0, 0 00 /- m a d e u /s 68 of I T Ac t i s he re b y d ele t ed . "
61. Having gone thro ugh evidences collected by the Assessing Officer, the reply submitted by the assessee befor e the AO and the ld. CIT(A) , e xamination of each issue and contention raised by the revenue with reference to the facts relie d upon by the ld. CIT(A) and reports of the investigation, the ld. C IT(A) cogently brought on record that the loans received by the assessee could not be treated u/s 68 as the identity, genuinenes s and creditworthiness of the parties has been duly proved. In view of the above facts and the ratio given by the ld. CIT(A), no interference is called in the well reasoned order of the ld. CIT(A) .
62. In the result, the appeal of the assessees is allowed and the appeals o f the Revenue are dismissed.
Order Pronounced in the Open Court o n 16/10/2023.
Sd / - Sd / -
(C. M. Garg) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 16/10/2023
*Subodh Kumar, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR