Case Law Details
South West Drilling and Infrastructure Ltd Vs ACIT (ITAT Delhi)
ITGAT find that the facts and circumstances narrate in the order of the authorities below clearly indicate that it is classic case of circuitatious rotation of unaccounted money. The lender has no identity in as much it is nonexistent its sources of credits itself is share premium. So there is no creditworthiness of the lender company. It is a clear cut case of circuitatious rotation of unaccounted money and being such rotation of unaccounted money is absolutely not a genuine loan transaction. The authorities have duly dealt with the issues. In this view of the matter, we do not find any infirmity in the orders of the Revenue authorities below and hence we uphold the same.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of the Ld. CIT(A)-30, New Delhi, dated 18.05.2018 pertaining to Assessment Year 2014-15.
2. Grounds of appeal reads as under:-
“1. On the facts and in the circumstances of the case as well as in law the Ld. Commissioner of Income Tax (Appeals) grossly erred in holding that the impugned assessment order is valid in law.
2. On the facts and in the circumstances of the case as well as in law the Ld. Commissioner of Income Tax. (Appeals) grossly erred in upholding the addition of Rs.45,00,000/- U/s 68 of the Income Tax Act, 1961 made by Ld. Assessing Officer.
3. On the facts and in the circumstances of the case as well as in law the Ld. Commissioner of Income Tax (Appeals) grossly erred in capaciously rejecting the legally tenable documentary evidences, submission and judicial precedents relied by appellant.”
3. Brief facts of the case are that the assessee company is engaged in the business of transportation. Regarding unsecured loan, the Assessing Officer observed that during the year under consideration, the assessee company had received loans amounting to Rs.45 lakhs from M/s Satya Lakshmi Trade Link Pvt. Ltd. For A.Y. 2014-15, the company was shown to be a filling a return of Rs.31,154/- and also the bank account of the company clearly showed sequential credit and debit entries. Hence, the Assessing Officer enquired about the creditworthiness of the company to extend the loan and commission u/s 131(1)(d) was sent to Kolkata. Report of the DDIT(Inv.) was referred by the Assessing Officer in his order is as under:-
“Summons u/s 131 of the Income Tax Act, 1961 were issued against Principal Officer of the company.
..Neither the principal officer nor the Authorised Representative of the companies appeared at the office of the undersigned in compliance to the summons notice in case of Satya Lakshmi Trade Link Pvt. Ltd…. “
An inspector from the office of DDIT(Inv.), Kolkata was also deputed to enquire about the company. Relevant extract of the inspector’s report is reproduced below :
| S. No. | Name & Address | Date of visit | Remarks |
| 1. | M/s Satya Lax mi Trade Link Pvt. Ltd., 2B, 2nd Floor, Room No. 74, Grant Lane, Kolkata – 700012. | 15.11.2016 | I reached at the said address on 15.11.16. No such company was found in the said address. 1 reached at 2nd floor and found Room No. 74 but I could not find the enquired company that room. A name plate bearing the name of Jain Consultancy Services. 1 enquired about the company from that office but no one could provide any whereabouts about existence of the said company. |
4. The Assessing Officer also asked for information u/s 133(6) of the Act from Principal Officer of the lender vide letter dated 04.08.2016 but no reply was received. The assessee responded in its plea that documentary evidences have been submitted; hence unsecured loan should be accepted. However, the Assessing Officer rejected these submissions by stating that the lender was non-existent. After quoting certain case laws and referring to section 68 of the Act, the Assessing Officer concluded as under:-
“4.8. The inspector in his report has categorically stated that the company M/s Statya Lakshmi Tradelink Pvt. Ltd. was not found at the address listed on the ROC website. Moreover, none of the directors produced themselves before the office of DDIT(Inv.), Kolkata in response to summons u/s 131 of the Income Tax Act. Thus, these parties have not discharged their duty to the Department as required u/s 131 of the I.T. Act. These persons may never come before any Income Tax Authority as they may only be entry operators either absconding or evading service of any kind of notice from the Income tax Department or avoiding appearance before any Income-tax Authority because they do not have any real identity, creditworthiness and business.
4.9. Therefore, in view of the above discussion, the amount of Rs.45,00,000/- is hereby added in its capital account as its income being unexplained cash credit u/s 68 of the Income Tax Act. Since, the assessee has furnished inaccurate particulars of its income, penalty proceedings under section 271(1)(c) is being initiated separately.”
5. Against the above order, the assessee appealed before the Ld. CIT(A). The Ld. CIT(A) after due elaboration found that the transaction was bogus and accommodation entry in nature. He observed that the finding, that the lending company was non-existence was correct. That the auditor’s reports said that the company has no address its own, that the lender company had very minimal income, that for loan given itself the lender had received share premium of Rs.9.9 Crores. He also referred to and found that Board’s proceedings and Board’s report also indicated to the shell company related matter. Hence, he upheld the order of the Assessing Officer.
6. Against this order, the assessee is in appeal before us.
7. We have heard the ld. DR and perused the records. None appeared on behalf of the assessee. None has been appearing also for the past six posting for hearing. In this view of the matter, we are disposing of the appeal by hearing the Ld. DR and perusing the records. We find that the facts and circumstances narrate in the order of the authorities below clearly indicate that it is classic case of circuitatious rotation of unaccounted money. The lender has no identity in as much it is nonexistent its sources of credits itself is share premium. So there is no creditworthiness of the lender company. It is a clear cut case of circuitatious rotation of unaccounted money and being such rotation of unaccounted money is absolutely not a genuine loan transaction. The authorities have duly dealt with the issues. In this view of the matter, we do not find any infirmity in the orders of the Revenue authorities below and hence we uphold the same.
8. In the result, the appeal of the assessee stands dismissed.
Order pronounced in the open court on 15/07/2022.
