DCIT CENTRAL CIRCLE-2(3), MUMBAI vs. M/S. SIDH GRANITES PVT. LTD., KOLKATA

DCIT, Central Circle-2(3) Vs. M/s Sidh Granites Pvt. Room No. 803, 8 th Floor, Ltd., 2nd Floor, Room No. Pratishtha Bhavan, 21, 155B, Rabindra (Annexe), M.K.Road, Sarahi Burra Bazar, Churchgate, Kolkata – 400007 Mumbai - 400020 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAECS2639G Appellant .. Respondent [ Appellant by : Anil Kumar Das Respondent by : Vimal Punamiya Date of Hearing 15.06.2023 Date of Pronouncement 31.08.2023 आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the revenue is directed against the order passed by the ld. CIT(A)-48, Mumbai, dated 06.01.2023 for A.Y. 2018- 19. The revenue has raised the following grounds before us: “1. Whether, on the facts and in the circumstances of the case and in law, The Ld. CIT (A) has erred in deleting the addition on account of bogus unsecured loan of Rs. 8,82,00,000/- treated as unexplained cash credit in the books of the assessee u/s 68 of the Act.

2. The appellant craves leave to add, delete, alter, modify, rectify, substitute or otherwise any or all of the grounds of appeal at or before the time of hearing of the appeal.

3. The appellant, therefore, prays that on the grounds stated above, the order of the Ld. CIT (A), Mumbai, may be set aside and that of the Assessing Officer restored.”

P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd 2. Fact in brief is that assessee company is engaged in the business of trading and import of marble blocks and granites. The assesse filed return of income for the year under consideration declaring total loss of Rs.12,51,225/-. A search and seizure action u/s 132 of the Act was carried out in the case of Marble Group including M/s Trident Marble Group and other related entities on 14.02.2019. A survey action u/s 133A of the Act was conducted in the case of the assessee company on 14.02.2019 at its office premise at Mumbai and Silvasa. During the course of survey action it was found that the assessee company had taken unsecured loan from various parties mostly based in Kolkata. Therefore, assessment was reopened by issuing of notice u/s 148 of the Act on 20.03.2020. In response the assessee filed return of income declaring total income of Rs.50,05,740/-. The detail of loan taken in assessment year 2018-19 is reproduced as under:

Sr. No. Name of the loan party Loan taken in A.Y. Loan taken in 2018-19 A.Y. 2019-20 1. Amrutya Vaniya Pvt. Ltd. 4700000 - 2. Akritya Vanijay Pvt. Ltd. 6000000 - 3. Balramimpexpvt. Ltd. 4100000 - 4. DayanidhiVanijaypvt. Ltd. 4300000 - 5. Murli Vinimay Pvt. Ltd. 1500000 - 6. Prabhu Deal Trade Pvt. Ltd. 9800000 - 7. Shivam Tradevinpvt Ltd. 6000000 - 8. Sri HariVinimaypvt Ltd. 2500000 - 9. Tribhuvan Trading Pvt. Ltd. 3500000 - 10. Benchmark Buildconpvt.Ltd. 45800000 2500000 Total 8,82,00,000 25,00,000 During the course of post survey proceedings the assessee was asked to furnish the detail of loan taken along with their ledger confirmation, bank statements and to establish identity, creditworthiness and genuineness of the above loan transactions. In the statement recorded on 11.04.2019, the director of the assessee company explained that the assessee company had legitimately taken loan and repaid the same in P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd due course through banking system and also paid interest and deducted applicable TDS on the same on 14.04.2019. The assessing officer also stated that these were the paper/shell companies which was not found at the registered address on field verification by his inspector. The assessing officer issued notice u/s 133(6) of the Act to the aforesaid loan lenders calling information relating to the unsecured loan advanced by them to the assessee such as detail of loan given to the assessee note on business activity, copies of ITR along with annexures, financial capacity to the loans source of funds and rate of interest etc. The assessing officer stated that the said notices issued u/s 133(6) of the Act have been dispatched by speed post and have been delivered at the addresses (loan creditors as per the details available on the postal department website). The AO further stated that in response to the said notices the detail were received. However, the AO stated that loan creditors companies were engaged in providing accommodation entries to different beneficiaries in the form of loan, share application money, purchases etc. and these facts were stated in their statement recorded during the course of investigation. The AO stated that assessee has failed to prove the genuineness of the unsecured loan and creditworthiness of the loan companies, therefore, treated the same as unexplained u/s 68 of the Act.

3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). however, the ld. CIT(A) has allowed the appeal of the assesse. The relevant part of the decision of CIT(A) is reproduced as under: “6. 1 I have carefully considered the above submission of the appellant in the light of findings in the assessment order. It is observed that in the re- assessment proceedings, the genuineness of the loans received by the appellant amounting to Rs. 8,82,00,000/- from ten concerns have been questioned. Since, the impugned transaction of receiving the loan from the ten companies are not doubted by the AO; what has been doubted is the bonafide or genuineness of the ten companies, as these have been termed as "Kolkata based listed shell/paper companies" at different places of the assessment order.

P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd 6.2 The A.O., in para 7.1 of the assessment order has made the following observation:- “7.1 During the course of post search enquiry and verification, it is seen that the assessee has taken unsecured loans from various parties, which are Kolkata based listed shell I paper companies. During the course of investigation prior to search, the financial profiling of the above shell/ paper companies and their analysis were done and other information was gathered from various sources. It is seen from the details that these loan creditor companies are appearing in the list of business associates belonging to various entry providers who are involved in providing various types of accommodation entries, of various means, through their several entities in Mumbai/ Kolkata.” The list of the companies, the extract of the financials and remarks have been mentioned in para 7.5 and 7.6 of the order. The report of the Inspector dated 08.04.2019 is mentioned in para 7.9 where the Inspector has reported that these companies are not found in existence at the available address at the time of his visit. 6.3 From the above observation of the A.O., it appears that his inference of these ten companies being paper/shell companies primarily lie on three aspects, ie, these are Kolkata based companies sharing same addresses having poor financials and found non existent at the time of visit of the Inspector in April, 2019. In my considered view, these are aspects which raise doubts about the conduct of these leader companies but to establish the loan transactions as bogus (the transactions were done through banking channel, repaid later on, paid interest and TDS being deducted on it as confirmed by Shri Rajesh Kumar Agarwal, Director of the appellant company in the statement recorded on 11.04.2019), the onus is on the Assessing Officer to establish it with evidences or find lacuna or discrepancies in the evidences submitted before him, by the appellant. Nothing to that effect has been brought on record by the A.O. in this regard. 6.4 It is further observed from para 7.11 of the assessment order that the A.O. had issued notices u/s 133(6) to the loan lenders calling for information viz., details of loans given to the assessee, notes on business activity, copies of ITRS, financial capacity to raise the loan, source of funds, rate of interest, etc. It is clearly mentioned in the order that the notices have been delivered to the addresses (loan creditors). It is further mentioned in para 7.12 that:- *”7.12 In response to the said notices, replies have been received from the parties. After verification of credentials of these replies, it is noticed that these companies are shell companies" 6.5 From the above comment of the A.O., it is observed that the A.0. has. concluded upon verification of the replies of the loan creditors that these companies are shell companies. However, the A.O. has not elaborated the reasons for arriving at this conclusion. It is not explained as to how he has reached to this conclusion. What details in the financials of the loan creditors prompted him to arrive at this conclusion, is not elaborated in the order. 6.6 It is also observed from the submission of the Id. AR that in order to prove identity of the lenders copy of PAN cards, IT acknowledgement, ROC

P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd master data, etc. were submitted before the A.O. In order to prove genuineness of loan transactions, confirmation of loan account with address, PAN, cheque numbers, bank details and appellant's bank details are submitted. In order to prove credit worthiness of the lenders, bank statement of the lenders disclosing source of the fund and balance sheet of the lenders are filed. No adverse comment has been given by the A.O. with respect to these documentary evidences submitted during the assessment proceedings 6.7 In the written submission, the appellant has also highlighted the following facts:- 6.7.1 that the AO has failed to appreciate that the assessee company itself has registered office address at Kolkata situated at 02nd Floor, Room No. 21, 1558, Rabindra Sarani Burra Bazar, Kolkata 700007. Merely an assumption that loans have Kolkata nexus cannot be a reason for such additions as assessee company also is Kolkata based company and has taken genuine loans from such business acquaintances in Kolkata for business purposes (acquisition of Factory premises) 6.7.2 that the directors Mr. Rajesh Agarwal and Mr. Mahendra Agarwal belong to Kolkata only and their brothers Mr. Ashok and Naresh Agarwal are staying in Kolkata for last 45 decades and carrying out Italian marble business (same line of business which assessee company also carries out). Hence assessee is having a close business relation and exclusive approach in Kolkata business circle wherein temporary business finance can be arranged and raised. 6.7.3 that the AO failed to appreciate that such funds were taken to acquire/invest in factory premises at Silvassa from M/s. Mour Marble and such can be reflected from Bank statements and balance sheet of assessee company as such factory premises is reflected under Fixed Assets. 6.7.4 that the bank statements of the lenders disclose the source of their funds made through banking channel. The appellant had furnished the relevant bank statements of the lenders corresponding to the disputed loans and is not required to prove the source of the lenders funds. In any case, as verifiable from the bank statement the loans are not sourced out of cash deposits. The A.O. had not brought any contrary material on record even to doubt the intermingling of funds. 6.8 In my considered view, looking to the overall facts and circumstances of the issue involved and evidences brought on record by the AO/appellant, the addition of Rs. 8,82,00,000/- as unexplained cash credit u/s 68 of the IT. Act is unjustified and unsustainable. There are ample judicial authorities supporting the above conclusion, some of which are highlighted by the appellant in his written submission. Hence the impugned addition is directed to be deleted. Thus, grounds of appeal no. 1, 2, 3 and 4 are allowed.”

4. During the course of appellate proceeding before us the ld. D.R referred the assessment order and submitted that assesse has failed to P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd establish that the loan creditors were genuine. The ld. D.R placed reliance on the order of assessing officer. On the other hand, the ld. Counsel vehemently submitted that assessee has discharged the onus to prove the identity, genuineness of the loan and creditworthiness of the loan lenders. The assessee company had filed various documents to prove the genuineness and creditworthiness of the lender company at the time of assessment proceedings, however, the assessing officer has failed to prove contrary and the addition had been made purely on the basis of assumption and surmises. The ld. Counsel further contended that assessing officer has carried out independent inquiry by issuing notices u/s 133(6) of the Act which has been responded by the lenders along with required submission. He also submitted that all documentary evidences to establish the identity and creditworthiness and genuineness of such transactions have been submitted vide letter dated 18.12.2022, 23.12.2022 and 26.02.2021 and 05.03.2021. However, the AO has not disproved the genuineness of the said evidences and made additions on assumption basis. It is also submitted that assessee had also furnished the relevant bank statement of the lenders corresponding to the loan however the AO has not brought any contrary material on record but doubt intermingling of the fund. The ld. Counsel has also referred the various judicial pronouncements which were also submitted before the ld. CIT(A).

P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd Rajesh Kumar Agarwal director of the assessee company. The ld. CIT(A) has referred the finding of the assessing officer given at para 7.11 of the assessment order wherein the AO stated that notice u/s 133(6) were issued to the loan lenders calling for information i.e detail of loan given to assessee, notes on business activities, copies of ITR, financial capacity to raise loan, source of fund and rate of interest etc. The assessing officer has mentioned in the order that the notices have been delivered to the addresses of loan creditors. Further, in order to prove the identity of the lenders copy of PAN card, IT acknowledgment, ROC master data were submitted before the AO. In order to prove the genuineness of the loan transaction confirmation of the loan account with addresses, PAN, cheque no. bank detail of lenders and assessee’s bank detail were submitted. In order to prove the creditworthiness of the lender, bank statement of the lenders disclosing sources of the funds and balance sheet of the lenders were filed. The ld. CIT(A) also stated that no adverse comments has been given by the AO with respect to these documentaries evidences submitted during the assessment proceedings. The ld. CIT(A) in his finding also discussed that AO has not brought any contrary material on record but just doubted the genuineness of the loans. During the course of assessment as required by the assessing officer the following information and copies of documents pertaining to the loan creditors were submitted: - (i) copies of PANs of lenders (ii) copies of ROC companies, master data (iii) copies of ITR acknowledgments (iv) copies of confirmation of account in the books of lenders and ledger account of the lender in the books of account of the assessee; (v) copies of the assessee’s bank statement showing receipt of loan from lenders;

P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd (vi) copies of lender bank statement showing payment to the assessee; (vii) copies of balance sheet and accounts of the lenders for 30.03.2018; (viii) copies of submission made by lenders in response to notice issued u/s 133(6) of the Act.

The notices u/s 133(6) were served to all loan lenders and reply were furnished on assessment record on income tax portal. The assessee has submitted before the ld. CIT(A) that all documentary evidences to establish the identity creditworthiness and genuineness of loan transaction in respect of all parties have been duly submitted vide letter dated 18.12.2020, 23.12.2020, 26.02.2021 and 05.03.2021. However, the AO has not brought any material on record to disprove the supporting documentary evidences and concluded on general assumption that such loan transactions were ingenuine. During the course of appellate proceedings before the ld. CIT(A) the assessee made detailed submission and extracts of the same is reproduced as under:- Ground No.1-2. Addition u/s.68 of Unsecured loans accepted during the year of Rs8,82,00,000/- Section 68 of the Act reads as under "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year: It is settled position that to prove the genuineness of the transaction, the burden lies on the assessee and to discharge the onus, the assessee must prove the following 1. Identity of the Creditor II Capacity of the Creditor III. Genuineness of the Transaction Once the above conditions are proved prima facie by the assessee and the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts on the department. Three conditions enshrined in section 68 are clearly

P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd proved by the documents submitted during the assessment proceedings as under: 1.1 The appellant, during course of assessment, had filed the exhaustive documents to prove the identity, genuineness and credit worthiness of the loan transactions, stated as under: CIT (A148/17 To prove the identity of the Lenders a) Copy of PAN Cand b) IT acknowledgement receipts ng PAN and add of the dec c) Copy of the ROC Master data indicating the Active of the Company AO details of the loan lenders duplying the jurisdiction where such lenders are assessed To prove the Genuineness of the loan transactions e) Confirmation of loan account with their address PAN, cheque numbers, bank details 1 Appellant's bank statement evidencing the receipt of loans though banking channel To prove the Credit worthiness of the Lenders g) Bank statement of the Lenders disclosing the source of their funds (Not sourced out of cash deposits h) Balance sheet of the Lenders and reflection of the loan recoverable from the appellant 1.2 The appellant had thor discharged the ones to prove the identity genuineness of the loans and credit worthiness of the loan lenders The appellant company had duly disclosed the said loan transactions and the books of the Lenders is duly audited alongwith various documents were submitted to prove the genuineness as well as the credit worthiness of the lenders company at the time of assessment proceedings. However, Ld AO severely failed to discharge the heavy onus casted upon him to prove contrary the facts in absence of which the additions us.68 is unjustifiest 1.3 The entire addition had been made purely on the basis of assumption ans surmise. The Ld. AD erred in ignoring the above stated documentary evidences and made the additions on report of investigation wing. Further the Ld AO also carried an independent enquiry to adjudge the loan transactions by issuing notice us 133(6) of the Act to which response have been received and complied from all lenders 1.4 The Ld. AO, as per para of the assessment order, stated that purely based on the report of investigation wing which linked such lenders as have Kolkata nexus and in absence of any neporting documentary evidences to prove satisfactorily, the identity and creditworthiness and genuineness of such transactions, such loan transactions are bogus and hence sec 68 is applicable. The appellant respectfully submits that the above stated findings of Ld. AO is erroneous and is not relevant for the reasons that: a) The notices u/s. 133(6)

P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd were served to all loan lenders and reply were furnished on assessment record on income tax portal b) All documentary evidences to establish the identity and creditworthiness and genuineness of such transactions in respect of all parties have been duly submitted vide letter dated 18th Dec 2020, 23rd December 2020, 26th Feb 2021 and 05th March 2021 c) The Ld. AO has not taken cognizance of such documents in its assessment order which shows that no examination of such documents were made and purely considering it a Kolkata nexus and wild assumptions, concluded that such loan transactions are ingenuine and bogus d) The Ld. AO failed to appreciate that assessee company itself has registered office address at Kolkata situated at 02nd Floor, Room No. 21, 155B, Rabindra Sarani Burra Bazar, Kolkata 700007. Merely an assumption that loans have Kolkata nexus cannot be a reason for such additions as assessee company also is Kolkata based company and has taken genuine loans from such business acquaintances in Kolkata for business purposes (acquisition of Factory premises) e) The Directors Rajesh Agarwal and Mahendra Agarwal belong to Kolkata only and their brothers Mr. Ashok and Naresh Agarwal are staying in Kolkata for last 4-5 decades and carrying out Italian marble business (same line of business which assessee company also carries out). Hence assessee is having a close business relation and exclusive approach in Kolkata business circle wherein temporary business finance can be arranged and raised f) The Ld AO failed to appreciate that such funds were taken to acquire/invest in factory premises at Silvassa from M/s Mour Marble and such can be reflected from Bank statements and balance sheet of assessee company as such factory premises is reflected under Fixed Assets g) The bank statements of the lenders (filed on assessment record) discloses the source of their funds made through banking channel. In any case, the appellant is not required to explain the source of source of funds. The appellant had furnished the relevant bank statements of the lenders corresponding to the disputed loans and is not required to prove the source of the lenders funds. In any case, as verifiable from the bank statement the loans are not sourced out of cash deposits. The Ld AO had not brought any contrary material on record even to doubt the intermingling of funds. h) The Ld. AO's allegation that the loan lender's worth is nominal is incorrect since their own capital of each lenders exceeds the loans given to the appellant; stated as under: is context, the appellant relies on understated direct judicial decisions: a) M/S NISARG LIFE SPACE LLP VERSUS ITO 28 (2) (3) MUMBALITA No. 629/Mum/2020 June 11, 20211 3.1. We have heard the rival submissions and perused the materials available on record We find that the assessee is engaged in the business of builders and developers. The return of income for the Asst Year 2013-14 was filed by the P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd assessee LLP on 24.9.2013 declaring total loss of 13,36,999/- This return was duly processed u/s 143(1) of the Act accepting the some. Thereafter, the case was selected for scrutiny by issuance of notice u/s 143(2) of the Act on 3.9.2014. Various details and documents that were called for by the Ld AO were duly submitted by the assessee during the course of assessment proceedings. The Ld AO observed thot on perusal of tax audit report for the year under consideration, it was seen that assessee had taken unsecured loans of 4 crores from 4 parties. A search and seizure action u 132 of the Act was conducted by the investigation wing of Income tax department on Shri Praveen Kumar Jain and the concerns managed by him on 1.10.2013, wherein it was unearthed that they were found to be indulged in the business of providing accommodation entries of bogus sales/purchases/loans and advances to many parties. The ld AD alleged that the assessee had taken accommodation entries of bogus loans from the concerns used by Shri Praveen Kumar Jain group to run its business 3.2. We find Page that the assessee had received unsecured loans during the year under consideration from the following parties for the purpose of its business, apart from other parties together with the details of interest paid to these parties are as under: Name of the Loan Creditor Loan Amount Interest Amount Sumukh Commercial Pvt. 50,00,000 4,81,667 Ltd. Olive Overseny Pvt. Ltd. 1,00,00,000 10,21,667 Josh Trading Co Pvt. Ltd. 1,00,00,000 9,01,667 Casper Enterprise Pvt Ltd. 50,00,000 5,45,000 Nakshatra Business Pvt. 1,00,00,000 10,20,000 Ltd. 3.3. We find that the id AO had observed that the aforesaid concerns were operated by Shri Praveen Kumar Jain and belong to his group. During the course of search action u/s 132(1) of the Act on 1.10.2013, Shri Praveen Kumar Jain had given statement on oath that his concerns are engaged in the business of providing accommodation entries and that his concerns do not indulge in real business activities. Accordingly, the Id AO issued a show course notice to the assessee as to why the aforesaid loans should not be treated as unexplained cosh credit u/s 68 of the Act and consequential disallowance of interest thereon should not be made, 3.4. We find that the assessee had responded to the hd AO by stating that a general confession mode by a third party that all his transactions are bonus or that he had indulged only in bogus transactions cannot be the basis for addition in the hands of the assessee. It was specifically pointed out that in none of the statements given by Shri Praveen Kumar Jain or his accomplices, the name of the assessee had been mentioned. It was pleaded that the AO had not found any material pointing that the transactions of the assessee with the aforementioned loan parties are not genuine. It was also pointed out to the id AO that Shri Praveen Kumar Jain had retracted his statement subsequently on 15.5.2014 by way of on affidavit filed before the income tax department. The assessee filed a copy of the said affidavit before the lid AO Accordingly, it was pleaded that the sole basis for proposal for addition u/s 68 of the Act is only statement of Shri Praveen Kumar Jain, which stool subsequently retracted by him. We find that the assessee from its part, had duly discharged its onus, by P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd furnishing the following documents before the ld AO for all the 5 loan creditors: a) Confirmation letter from the companies (loan creditors) duly confirming the amount of loon given by them b) Master data of the companies (loan creditors) extracted from the website of the registrar of companies (ROC) showing that the compliance have been made by thems with ROC and that the company is fully active c) Copy of the financial statements of the companies (loon creditors) for the financial year 2012-13, d) Copy of ITR acknowledgement of the companies (loan creditors) for the Asst Year 2013-14. e) Extracts of the bank statements of the companies (loan creditors) showing the amounts paid by them to the assessee. 1) Declaration given by the companies (loan creditors) duly confirming the loan transactions g) Copy of the letter filed by the said companies (loan creditors). 3.5. It was pleaded that based on the aforesaid documents, the loans taken by the assessee from the aforesaid 5 parties are genuine loans taken for commercial expediency for business purposes and not accommodation entries. The assessee also sought for cross-examination of Shri Praveen Kumar Jain before the Id. AO, which was not provided by the ld AO. 3.6. We find that the ld AO completely ignored the aforesaid contentions of the assessee and the documentary evidences filed hereinabove and concluded that the assessee had not been able to satisfactorily explain the nature and source and creditworthiness of the unsecured loan credits totalling to 4 crores purported to have been taken from those 5 parties and accordingly treated the same as unexplained cash credit u/s 68 of the Act. Since the loans were added as income, the interest paid on such loans amounting to 39,70,001/- was sought to be disallowed by the ld AO in the assessment. This action of the ld AO was upheld by the Id CITA 3.7. From the perusal of the assessment order, we find that the ld AO had given more emphasis in the entire assessment order to discuss the modus operandi adopted by Shri Praveen Kumar Jain and his group which had been unearthed during the search action carried out on him on 1.10.2013, We find that the assessee had submitted before the ld AO that nowhere in the statements of Shri Praveen Kumar Jain or his accomplices, the name of the assessee LLP had been mentioned. This fact has not been controverted by the id DR before us. Moreover, the assessee had also sought for cross-examination of Shri Praveen Kumar Jain, which was never afforded to the assessee either by the ld AO or by the Id CITA. Hence we hold that the entire addition made by the id AO and confirmed by the id CITA, merely based on the statement of Shri Praveen Kumar Jain (third party) (which also stood subsequently retracted by him by way of an independent affidavit), deserve to be deleted on this count itself. No other corroborative evidence was brought on record by the revenue to even remotely suggest that the loan transactions carried out by the assessee with the aforesaid 5 loan creditors to be ingenuine.

P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd 3.7.1. It is pertinent to note that the assessee had duly discharged its onus by submitting all the relevant details (as listed supra) that are available with it before the id AO. All these documents clearly prove the identity of the loan creditors, creditworthiness of the loan creditors and genuineness of transactions. We find that the ld AO had not even bothered to issue notice u/s 133(6) of the Act to the loan creditors to verify the veracity of the documents submitted by the assessee. In other words, the Id AO simply remained silent after receiving all the documentary evidences from the assessee. It is settled law that when documentary evidences are submitted by the assessee, the Id AO is duty bound to examine its veracity by making further enquiries in the manner known to law. Without testing such documents by making proper enquiries, no adverse inference could be drawn by the ld AO on those documents. We hold that once all the relevant documents are submitted by the assessee regarding the loan creditors together with the latest addresses available with it supported by confirmations from them, the onus cast on the assessee u/s 68 of the Act stands duly discharged and no addition could be made in its hands. Reliance in this regard is placed on the decision of Hon'ble Jurisdictional High Court in the case of CIT vs Orchid Industries P Ltd reported in 397 ITR 136 (Bom). We further hold that no addition could be made on mere presumption that the assessee routed its own cash in the form of unsecured loans without any concrete evidence to this effect. Reliance in this regard is placed on the decision of Hon'ble Jurisdictional High Court in the case of PCIT vs Aquatic Remedies P ltd in of 2016 affirming the tribunal decision in ITA No 6356/Mum/2014. We further find that all the loans were duly repaid by the assessee either in the same assessment year or in the immediately succeeding assessment year with interest ofter subjecting the interest to due deduction of tax at source. These facts are not controverted by the revenue before us. Hence the addition mode u/s 68 of the Act deserve to be deleted on merits also. Correspondingly, the interest paid on such loans would become allowable expenditure u/s 36(1XW) of the Act as there is no dispute that the monies received in the form of loans had been utilised by the assessee LLP for its business purposes 3.8. Moreover, we also find that all the aforesaid loan parties had been accepted to be genuine and additions made u/s 68 of the Act had been directed to be deleted by this tribunal in the following cases: a) DCIT vs D.N.H.Spinners Pvt Ltd in ITA Nos. 6315 & 6316/M/2017 for Asst Years 2013-14 & 2014-15 dated 8.8.2019 (Mumbai Tribunal) b) ACTT vs Hetali Enterprises in ITA No. 421/Mum/2018 for Asst Year 2013-14 dated 9.4.2021 (Mumbai Tribunal) 3.9 In view of aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we direct the ld AO to treat the loons received from aforesaid 5 parties as genuine and delete the addition mode u/s 68 of the Act. Correspondingly, the interest paid on such loans also should be allowed as deduction. Accordingly, the grounds 2 to 4 raised by the assessee in this regard are allowed 4, in the result, the appeal of the assessee is parthy allowed." b) Bharti Lifestyle Pvt Ltd vs ITO 92X1) (ITAT-Mum) dated 29/00/2022-ITA No. 2416- 2420/Mum/2021 15. On the merits of the case this issue is covered by the decision of Coordinate bench P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd M/S NISARG LIFE SPACE LLP VERSUS ITO 28 (2) (3) MUMBAI (TTA No. 620/Mum/2020 June 11, 20211 where the some party on identical facts and circumstances was considered and addition was deleted" e) ACII vs. M/s. H.K. Pujara Builders in ITA.No. 930/Mum/2017 dated 31.10.2018 held as under "6. We have heard the rival submissions, perused the orders of the authorities below. Assessing Officer made addition by placing reliance merely on the statements of Shri Praveen Kumar Jain Group and Shri Bhanwarlal Jain Group which were recorded us. 132(4) of the Act. No independent enquiry was carried out by the Assessing Officer, he has not brought any corroborative evidence to substantiate that the transactions are non-genuine. Assessee provided various evidences to establish that the transactions are genuine, creditors are identifiable and credit worthiness is proved. Following information is furnished by the (1) Confirmation of Ale, by the parties (2) Income tax returns of the parties for 4.Y 2012-13, (3) Bank Statements of the parties showing the loan transactions. (4.Y: 2007-08) M/S II.K. Pujara Builders 7. By providing all this information to the Assessing Officer the assessee has discharged the initial onus of proving genuineness of the transactions w/s, 68 of the Act. Even the assessee requested Assessing Officer for issue of notices w/s 133(6) of the Act to the lenders to find out the genuineness of the transactions with the assessee. Therefore, ance the initial ons is discharged by the assessee the burden shifts to the Revenue to disprove the claim of the assessee. We notice that all the loans were taken through banking channels and the repayments for the same was also made through banking channels. The Assessing Officer ignored the documentary evidences submitted by the assessee and has exclusively relied on statements of third party in making the addition In spite of request by the assessee the Assessing Officer did not provide any cross- examination of the parties who have made the submissions. All these aspects have been considered by the LA CITA) and deleted the addition observing as under 5.9. From the assessment order, transpires that the 40 has solely relied upon the statement of Mr. Pravin Kumar Jain and did not carry out any worthwhile independent inquiry in the matter. He has totally ignored the documentary evidences submitted by the appellant. The 40 in the assessment order has admitted existence of these details. The 40 has not pointed out any defect in the above mentioned documentary evidences submitted during assessment proceedings. Without pointing and any lacuna in the evidences submitted by the appellant, the sources and the genuineness of transaction cannot be doubted Once evidences related to a transaction is submitted before the 4.0, the onus shifts on him to prove these as non-genuine. The 4.0. has not discharged the onus casted on him. In my opinion, merely based on the statement of a third person without any corroborative evidence will not make the loan transactions, in question, as accommodation entries. As such, in the absence of any contrary evidence placed on record, the transaction cannot be treated as accommodation entries P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd (AY 2007-08) M/s K. Pujara Builders 3.10 As for as the question of validity of the transaction done through JPK Trading (0) Pvt 11d and New Planet Trading Co Pvt. Ltd are concerned, even if some of the transactions entered into by Shri Pravin Kumar Jain are found to be not genuine. it does not lead to the conclusion that all the transactions were non genuine including the transactions related to the appellant. There is no evidence brought in the assessment order to prove the above conclusion, by the 40. The outcome of investigation carried out in the case of Mr.Pravin Kumar Jain the conclusions drawn therein cannot be applied ipso facto to all other cases. Simply relying on the report of the DGFT(nv), Mumbai and statement the AO cannot conclude that all transactions are accommodation entries. 5.11. The case of the appellant is covered by the decision of ITAT, I Bench, Mumbai, in the case of Satish N. Doshi HUF V. ITO, Ward 21(2)(4), Mumbai in ITA No-2329/Mum/2009 and the decision of ITAT, E Bench, Mumbai in the case of Shaf Broadcast Pvt. Ltd Vs ACIT, Cir- 9(3), Mumbai in ITA No.1819/Mum/2012. Both the cases relate to re opening of assessment on the basis of statements of Mr. Mukesh Choksi and Mr. LC. Choksi and associated brokerage companies The Hon'ble ILAT on the analysis of the findings made in the assessment orders has reached to the conclusion that the re-opening itself is bad in law and quashed the orders accordingly. The ratio of these judgments is applicable to the facts of the instant case. This is confirmed by the Delhi Bench of the Income Tax Appellate Tribunal in the case of DCTT v. Nipun Builders & Developers P Lid (ITA No 557/DE1/2010) wherein the Tribunal dismissed the Revenue appeal by holding that the Assessing Officer has primarily relied upon the Report of the Investigation wing which cannot conclusively prove that assessee's own money was invested in the form of share application money 5.12 Further, in the recent judgment of Shri Jafferali K Rattonsey V. DCIT reported in 5068/Mum/209, the Mumbai Bench of the Income Tax Appellate Tribunal has also held that the mere statement of a person cannot be a deciding factor for rejecting the gemaneness of the purchase of shares by the assessee specially when all other supporting evidences filed by the assessee were neither proved to be false or untrue. The Hon'ble ITAT Mumbai in the case of ITO vs Anand Shelters Pvt Ltd (2012) 20 Taxmann.com 153 has enumerated certain principles which would be extremely useful in understanding the issue in hand. It has been stated in the said judgment that over the years, law regarding cash credits have evolved and has taken a definite shape. A few aspects of law w/1.68 can be enumerated 1. Sec. 68 can be invoked when there is a credit of amounts in the books maintained by the assessee, such credit is a sum of money during the previous year and either the assessee offers no explanation about the nature and source of much credits or the explanation by the assessee in the opinion of the AO is not satisfactory.

P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd

5. The identity of credators an be established by either furnishing their PANS or assessment orders. The genuineness of the transaction can be (AY: 2007-08) M/s. HK. Pujara Builders proved if it was shown that the money was received by Account payee Cheque Creditworthiness of the lender can be established by attending circumstances. 5.13. During the assessment proceedings, the appellant has submitted Loan Confirmations, Copy of Acknowledgement and Copies of the Bank Statements of these two parties. If the above referred principles are applied to the facts of the case under consideration, it can be seen that the identity of the creditors has been established as they are having PAN and they are regularly filing return of income The genuineness of the transaction is established from the fact that both the acceptance and repayment of loan has been through banking channels. The creditworthiness of the lenders can be established from the statements In the assessment order, the A.O did not at all discuss the merit of submission made by the appellant and casually brushed aside the details filed by the appellant. Further, the appellant has stated that he had furnished all the relevant details during the course of the assessment proceedings and accordingly had duly discharged its onus by furnishing the identity and address of the parties. Further, the source of receipt through banking channels to substantiate the genuineness of the credits reflected in its books of Account 5.14. Further, it may be pointed out that section 68 under which the addition has been made by the Assessing Officer reads as under: "68. Where any sum is found credited in the books of an assesses maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. 5.15. The phraseology of section 68 is clear. The Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this, case the legislative mandate is not in terms of the words "shall be charged to income tax as the income of the assessee of that previous year" The Supreme Court while interpreting similar phraseology used in section 69 has held that in creating the legal fiction the phraseology employs the word "may" and not "shall". Thus the unsatisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [1999] 237 ITR 570. 3.16. After considering the totality of facts, the rival submissions, the applicable law and on the basis of discussions mentioned above, I have come to the conclusion that nature and source of credit in the books of account of appellant stands explained Consequently, addition w/s. 68 cannot be sustained. Therefore, AO is directed to delete the addition of Rs. 1,27,50,000/-. This ground of appeal

is allowed"

8. On a careful reading of the order of the LACITA), we do not find any infirmity in the order passed in deleting the addition made us. 68 of the Act and the consequential interest on the credits. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the Revenue P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd d) Jurisdictional Hon'ble ITAT, Mumbai for an identical case Le. Arceli Realty Limited Vs. The Income Tax Officer 1511) (1), Mumbai pronounced on 21.04.2017 ITA 6492/Mum/2016-17, the summary of the case is outlined as unders. A.O. merely relied upon the information provided by the office of DGIT(Inv.), Mumbai and did not made any independent enquiry. The papers filed by the assesse do demonstrate the identity, credit worthiness, genuineness, Source of Source of the transaction. AO did not provide Opportunity to Cross Examine the concerned person and also the department has not provided authenticity of the information to the person against whom such information is used. The addition is made merely on surmises and conjectures: The statement recorded at the back of the Respondent cannot be utilized ignoring other venfiable evidences. The Id. Assessing officer has made the addition of Rs. 20,00,000/- disregarding the evidences on record and without discharging her onus and without establishing anything contrary to the agreement of the Respondent and without verifying the Bank Account, existence of Investor and without making fruitful investigation, thus the demand was directed to be deleted." e) Jurisdictional Hon'ble ITAT, Mumbai for an identical case Le, M/s Shree Laxmi Estate PM. Ltd. V/s. Income Tax Officer 15(33) On 29.12.2017 ПTA- 5954/Mum/2016, the summary of the case is outlined as under "We have heard both the parties, perused the material available on record and gone through the orders of authorities below. The AO made addition towards unsecured loans received from Josh Trading Company Pvt. Ltd and Viraj Mercantile Pvt. Ltd on the basis of information received from Investigation Wing which revealed that the assessee is beneficiary of bogus accommodation entries provided by Shri Praveen kumar Jain through his bogus companies. The AO has brought out facts in the light of statement of Shri Pravin kumar Jain deposed before the Investigation Wing to make addition Except this there is no contrary evidence in the possession of the AO to disprove the loan transaction from Josh Trading Company Pvt. Ltd. and Viraj Mercantile Pvt. Ltd. On the other hand, the assessee has furnished various details including confirmation letters from the parties, their bank statements along with their financial statements to prove identity, genuineness of transactions and creditworthiness of the parties. The assessee also furnished evidences to prove that the parties have responded to the notices issued u/s 133(6) by AQ by filing various details" It is well settled legal position that the assessee has to discharge 3 main ingredients in order to discharge the initial burden of proof, Le. the identity of the creditor, the genuineness of transaction and creditworthiness of the creditors. Once the assessee discharges initial burden placed upon him, then the burden to disprove the said claim shifts upon the AO "Coming to the case laws relied upon the assessee, the assessee has relied upon the decision of Hon'ble Bombay High Court in the case of CII vs Gagandeep Infrastructure Pvt. Ltd (2017) 394 ITR680 (Bom). We have gone through the case laws relied upon by the assessee in the light of facts of the present case and find that the Hon'ble High Court categorically observed that the three essential tests while confirming the pre proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. Further it was a submission on behalf of the P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders ie. they are bogus The Apex Court in Lovely Exports (P) Ltd. (supra) in the context to the pre amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit" f) DM/s. KP.Manish Global Ingredients 2451/CHNY/2017 (ITAT-Chennai) Pvt Ltd.

The ld. CIT(A) held that merely on the basis of visit made by the inspector and general observation like location etc. the AO had taken adverse view without establishing that the loan transactions were not genuine. The ld. CIT(A) in his finding also referred at para 6.2 various judicial pronouncements referred by the assessee as reproduced supra in this order. Before the AO and the ld. CIT(A) the assessee has claimed that identity of the creditors has been established on the basis of PAN card, return of income account confirmation, genuineness of the transaction have been established on the basis of account confirmation and bank statement where all the loan were taken by account payee cheques and creditworthiness of the creditors were established on the P a g e | DCIT ,CC-2(3) Vs. M/s Sidh Granites Pvt. Ltd basis of the balance sheet and bank statement of the parties. The AO has not brought on record any concrete material to controvert such supporting evidences furnished in the case of the assessee. The assessee has placed reliance on various judicial pronouncements in its submission which are reproduced in the order of ld. CIT(A). The assessee has referred the case of M/s Nisarg Life Space LLP Vs. ITO 28(2)(3) Mumbai 11.06.2021 wherein it is held that the assessing officer simply remained silent after receiving all the documentary evidences from the assessee. The assessing officer is duty bound to examine its veracity by making further inquiries in the manner known to law. It is also held that without testing documents by making proper inquiries no adverse inference could be drawn by the AO on those documents. The assesse has also referred the decision of Hon’ble Jurisdictional High Court in the case of CIT vs. Orchid Industries Pvt. Ltd. reported in 397 ITR 136 (Bom) wherein held that no addition could be made on mere presumption that the assessee routed its own cash in the form of unsecured loan without any concrete evidence to this effect. The assessee has also placed reliance on the decision of jurisdictional High Court in the case of PCIT vs. Aquatic Remedies P. Ltd. vide ITA No. 83 of 2016 affirming the decision of the Tribunal held that all the loans were duly repaid by the assessee either in the same assessment year or in the immediately succeeding assessment year with interest after subjecting the interest to due deduction of tax at source and these facts were not controverted by the revenue. The ld. Counsel also referred various judicial pronouncement mentioned in the submission made before the ld. CIT(A). The ld. Counsel also referred following judgment: