DCIT- CIRCLE- 1, THANE vs. DARSHAN ENTERPRISES , THANE

O R D E R PER ABY T. VARKEY, JM: These are appeals preferred by the Revenue against the action of the Ld.CIT(A)-Nashik dated 5-11-2018 for AY 2010-11. [One i.e. ITA 462 is against the quantum deleted by Ld.CIT(A) and ITA 463 is against the penalty u/s 271(1)(c) of the Income Tax Act, 1961(hereinafter “the Act”) deleted by Ld.CIT(A)].

4. Pursuant to which the AO issued notices under section 133(6) of the Act to selected 73 parties requiring them to furnish copy of the bank statements, PAN etc. According to AO, out of these, notices could not be served to 39 parties, and out of 34 parties who were served notices, 11 parties did not reply but 23 parties replied. And no notices were issued to 54 parties. And at the fag end of time barring of assessment, the AO informed the assesses’s representative to produce all the 127 lenders within a span of 24 hours before him. And since the assessee could not produce all the 127 lenders before the AO on 26.3.2013, the AO drew adverse inference against all the unsecured lenders and added the entire loan amount under section 68 of the Act of Rs.6,36,24,074/- only on the reason that the assessee could not produce the lenders/ creditor before him and framed the assessment order dated 28.03.2013 under section143(3) of the Act wherein the total income of the assessee was ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises determined to be Rs. 8,23,09,515/- by making addition/disallowances totaling to Rs.6,75,36,324/- as under:-

Sr. No. Particulars Amount (Rs.) 1. Addition of unsecured loan received as unexplained cash credit 6,36,24,074/-

2. Addition of interest on unsecured loan 34,06,250/- 3. Disallowance of business promotion expenditure 5,00,000/- 4. Disallowance of donation 6,000/- Total (Rs.) 6,75,36,324/-

5. Aggrieved by the aforesaid action of the AO, the assessee preferred an appeal before the Ld. CIT(A) and during the course of first appellate proceedings, the assessee again filed all the documentary evidences, which it filed before the AO to discharge the burden to prove the identity, creditworthiness of the lenders /creditors and genuineness of the transaction by submitting Confirmation of Account, Income tax returns, PAN, Bank statement and Annual Accounts (Balance sheet etc)with regard to all the 127 lenders. Since, as per the Ld. CIT(A) the documentary evidences were not verified by the AO during the course of assessment proceedings, the Ld. CIT(A) sent the same to the AO with following directions as under :

2. In this case a huge addition has been made u/s 68 on account of unexplained case credits along with consequential interest. The ld. AR of the assessee has filed a detailed written submission dated 31.7.2014 in a box file containing 596 pages of supporting documents. It has been claimed by the Ld.AR that all these documents in the form of confirmation, proof of filing Income tax return and copy of bank statements of the loan creditors were also filed before the AO.

ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises 3. It is also stated by the Ld.AR that at the last moment, the A.O. vide letter dated 22.3.2013 (served on 25.03.2013) required the assesse to produce all 127 parties before him on26.3.2013 giving a very short period of time for compliance.

4. In view of the above facts, you are requested to please examine the documentary evidences and also the loan creditors u/s 131 , if deemed necessary, and submit a comprehensive report by 14.8.2014 positively

7. Pursuant to which the AO submitted a remand report vide his letter dated 10.02.2017, the relevant extracts of the report are reproduced as under:-

8. The Ld. CIT(A) furnished copy of the remand report to the Assessee and in response to the comments by the AO in the remand report dated 10.02.2017, the assessee filed written submission before the Ld.CIT(A) vide letter dated 27.02.2017, explaining the reasons for inability to produce the parties before the AO. The gist of the submissions are as under: i. In support of the genuineness of the unsecured loans, the assessee has filed documentary evidences during the course of assessment proceedings as under: ii) Loan confirmations duly signed by the creditors containing name, address and PAN and ledger account of the party iii) Copies of IT Return of the lender parties with copy of ack for filing of return 5 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises iv) Copy of bank pass book of the loan parties reflecting transactions pertainingto assessee. The above filings has also been accepted by the AO in the assessment order. The AO in the remand report also admitted that copies of all the above documents are on record and are not in the nature of new evidences. ii. During the time window granted by the AO between 26.10.2015 to10.11.2015, the assessee could only produce four parties and these partieswere examined and their statements were recorded by the AO and no adverse comments was recorded with regard to these parties. iii. The assessee further sought to produce 3 more parties on 18/11/2015 but theAO did not entertain the assessee stating that period granted till10/11/2015 was over. iv. Thereafter, vide letter dated 30/11/2016 (Page No 23-24 of the Paperbook), theAO, almost after a year once again requested for production of all the loanparties. v. That the assessee filed letter dated 23.01.2017 (Page No 25-29 of thePaperbook) before the AO stating that the unsecured loan from theseparties have been repaid long back and therefore it was difficult to persuade the parties toappear before the AO. vi. It was further submitted that the assessee did not have direct contact withthese parties since the unsecured loans were borrowed through finance broker M/s. KAHConsultancy (Address: Plot No. 86, Ravi Kiran, MCCH Society, Panvel). The relevantcopy of bill of M/s. KAH Consultancy with voucher, bank statement reflecting paymentof brokerage after deduction of TDS (Page No 30-37 of the Paperbook) was placed on record. The assessee therefore requested the AO to enforce the attendance of the loan parties during the remand proceedings through its statutory powers.

ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises vii. The assessee filed copies of ledger accounts of the 127 loan parties from A.Y. 2010-11 till date to evidence that it had already repaid these parties long time back and therefore was unable to produce these loan parties before the AO. viii. The summary of the compliances by the 127 parties is as under 1. Out of 127 loan parties, no notices was sent to 54 parties even though all the documentary evidences like Loan confirmation, Ledger account, Bank statement and Annual accounts were filed before the AO. Therefore the onus u/s 68 stands discharged by the assessee.

3. With regard to 39 parties (out of 74) to whom notices could not be served earlier in the first instance, they were not available at the addresses and hence the notices were returned un-served. The finance broker contacted them personally and they had filed the necessary details with the AO.

4. Therefore all the 74 parties on whom notices were issued had complied with the notices of AO.

5. The burden placed upon by section 68 has been duly discharged to substantiate the cash credits and that the addition of the nature made by Ld AO is not warranted.

9. The Ld.CIT(A), after considering the relevant documents filed to prove the nature and source of the credit/loans and the remand report and considering the ratio laid in the decisions of CIT Vs Orissa Corporation P Ltd 159 ITR 78 (SC) , ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises Orient Trading Co Ltd v CIT, 49 ITR 723 (Bom) (1963), DCIT vs Rohini Builders 256 ITR 360 , Pr CIT V M/s Chawla Interbuild Construction vs Pvt Ltd ITA 1103 of 2015 , Pr CIT Vs Hi-tech Residency 257 Taxman 335 (SC) and CIT Vs Haresh Mehta 251 Taxman 346(2017) passed an order dated 05.11.2018 and deleted the addition made under section 68 of the Act. The relevant findings of the Ld CIT(A) from his impugned order are reproduced as under : (v) To sum up, in this case, the appellant firm had taken unsecured loan of Rs. 6.36 Crs from 127 persons, through finance broker KAH Consultancy. The appellant submitted confirmations with PAN, Bank account extracts and copy of I.T return in respect of these parties. The AO wanted to examine the credibility of these persons and genuineness of the transactions. He issued notices u/s 133(6) to 73 parties, out of which, 34 were served and 23 gave the replies. He issued summons to the remaining 11 persons, out of which, 8 persons gave reply in tapal. He could not issue 133(6) in respect of remaining 54 persons because of incomplete addresses. He thereafter, wanted the appellant to produce these persons. The appellant pleaded inability, as he had discharged the primary onus by giving the basic details, giving the identity, source of investment by giving the bank account and copy of Income Tax Return. Regarding genuineness of the transactions, it was stated that, all the loans have been prepaid long time back and therefore, it was difficult to persuade the loan parties for personal attendance. Further, the loan was taken through a broker, who was paid brokerage, after TDS deduction. The appellant submitted ledger accounts all the 127 parties showing the yearly payment of interest with deduction of TDS and repayments of loan in subsequent years and showing that nothing was payable to them even at the time of passing of the assessment order on 28.03.2013. Therefore, for non attendance by the loan creditors, cannot be the reason to treat as 8 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises unexplained cash credit u/s 58 of the Act, as the appellant has already discharged the primary onus of the transactions by proving Confirmations with PAN, copy of Income tax returns & Bank account extracts in respect of the loan creditors. (vi) In view of the facts of the case, the relevant provisions of law and judicial decisions cited above, I hold that there is absence of sufficient ground to dispute the cash credits. The AO has not pointed out any justified reason to doubt the veracity of the concerned loans. The appellant having discharged the onus u/s 68 and the AO not having pointed out any significant defect in the evidences furnished, neither during asst. proceedings nor during remand proceedings, the adverse view in respect of the said loans would not be appropriate. Accordingly, addition of Rs.6,36,24,074/- made by the AO u/s 68 of the I. T. Act, 1961 is held by me to be not justified and accordingly deleted.

10. Aggrieved by the aforesaid action of Ld.CIT(A), the Revenue is before us and has raised the following seven (7) grounds of appeal which are reproduced as under:- 1."Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs 6,36,24,074 made on account of unexplained cash credit u/s 68 of the IT Act 1961 without appreciating that mere submission of copies of return of income of the loan creditor and confirmation from loan creditor does not ipso facto establish the genuineness of the transaction which is one of the important ingredient to be established by the assessee".

2. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises Rs.6,36,24,074 made on account of unexplained cash credit u/s 68 of the IT Act 1961 without appreciating the fact that the assessee repeatedly failed to produce the loan creditors before the A.O. during the assessment and even remand proceedings in spite of sufficient time offered to the assessee, 3. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not taking cognizance of the finding of the assessing officer in paras 5, 6 & 7 of the remand report dated 10/02/2017 wherein the A.O. clearly mentioned that assessee has failed to produce all 127 loan creditors either in assessment or in remand proceedings and assessee showed his inability to produce these parties. 4."Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 6,36,24,074/- made on account of unexplained cash credit u/s 68 of the IT Act 1961 without appreciating the fact that the assessee cannot absolve itself from the onus of proving the genuineness and creditworthiness of the loan creditors only due to the fact that the loans were arranged through broker. 5. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) was justified in deleting the addition of Rs. 34,06,250/- made on account of interest paid on unsecured loans without appreciating that the assessee had failed to establish the genuineness of the transaction of the unexplained cash credits u/s 68 of the I.T. Act which is one of the important ingredient to be established by the assessee?". 6.The appellant craves leave to add, amend, alter or delete any grounds of appeal

7. The order of the CIT(A) may be vacated and that of the assessing officer be restored.”

ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises 11. During the course of hearing before us, the Ld. DR representing the Revenue, assailed the impugned action of Ld CIT(A), and brought to our notice the action taken by the AO while enquiring in to the credit entries and ultimately had to make the addition under section 68 of the Act because the assessee failed to prove the nature and source of credit entries, and so addition was warranted. And the Ld CIT(A) erred in deleting it. The Ld. DR also referred to and relied on the following decisions : CIT Vs Maithan International 375 ITR 123 (Cal) and Pavankumar Sanghvi V ITO 165 ITD 260(Ahmd –Trib) apart from relying on the decisions referred to in the assessment order viz Bharti Pvt Ltd Vs CIT (1978) 111 ITR 951(Cal) and Jamnaprasad Kanhayalal Vs CIT 130 ITR 244 (SC).

12. The Ld DR filed an affidavit dated 19.10.2022 from Pr.CIT pointing out that Para 7 and Para 8 of the remand report dated 10.2.2017 of the AO has been erroneously reproduced in the impugned order of Ld CIT(A). The extract of the affidavit are reproduced as under “After verfication of the above remand report and order No.NSK/CIT(A)- 1/254/2017018 dated 05.11.2018 of the CIT(A)-1, Nashik, it is observed that there is a variation in paragraphs 7 & 8 of the remand report and their reproduction on Page 26 of the above mentioned order of the CIT-A-1 Nashik are as under Paragraphs 7 & 8 of the remand report of DCIT, Cir-1, Thane submitted vide letter No. THN/DCIT/Cir-1/Remand Report/2014-15 dated 10.2.2017 “7. In view of the above, it is clear that the assessee has repeatedly failed to produce the loan creditors for the verification, hence failed to discharge its onus fully. Mere filing of loan confirmation and their respective return will not prove the genuineness of the transactions. Reliance is also placed on the ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises judgement in the case of Bharti Pvt Ltd Vs.CIT (1978) 111 ITR 961 (Cal) and Jamnaprasad Kanhaiyalal Vs CIT (1981) ITR 244 (SC). 8.In view of the above facts it is requested that the decision may kindly be taken on merits and submissions of the case. The submission of ld.AR dated 31/07/2014 alongwith all documents running into 596 pages in a Box file are returned herewith alongwith this report as directed.” Paragraphs 7 & 8 of the remand report as mentioned in page 26 of the order of the CIT(A)-1, Nashik “7. On verification of the records it is seen that the loan confirmations are duly signed by the loan creditors containing the names, complete addresses , PAN copies of IT returns and bank pass books reflecting the loan transactions barring the six parties where bank statements are not furnished (whose names are mentioned in the table of para 3 above ). On persual of the details filed as well as the assessment order , the assessee appears to have discharged its primary onus of explaining the nature and source of the borrowings. The matter may be decided on merits. 8.The submissions of the ld.AR dated 31.07.2014 alongwith all the documents running into 596 pages in a box file are returned herewith alongwith this report as directed.”

13. Since the Ld. DR has filed an affidavit taking exception to the wrong reproduction of Para 7 & 8 of the remand report [ as reproduced in the impugned order], that part of the wrong reproduction as alleged by Ld PCIT in the impugned order of CIT(A) is not given any credence and is ignored; and we make it clear that the same will not affect in anyway our adjudication of the action of Ld. CIT(A) which we will decide independently after considering the facts and evidences on record (refer para 7 supra where we have re-produced the correct para 7 & 8 of the remand report as stated in the Affidavit).

ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises 14. Further, the Ld. DR assailed the action of the Ld. CIT(A) and stressed that the assessee failed to produce the loan creditors which failure of the assessee should be viewed from the background that the AO during assessment proceedings had issued notices under section 133(6) of the Act and only few filed replies and appeared before him. Thus according to her, the assessee failed to prove the nature and source of credit to the tune of Rs. 6,36,24,074. Therefore the AO has rightly added the cash credits under section 68 of the Act and disallowed the interest purported to have been paid to the creditors. She emphasized that the Ld. CIT(A) failed to appreciate that the assessee during the assessment proceedings as well as during the remand proceedings failed to produce all the 127 parties before the AO. So, according to her, mere production of documents cannot absolve the assesse’s burden of proof. Thereafter, according to the Ld DR , the AO’s action to make addition under section 68 of the Act cannot be faulted and the Ld. CIT(A) ought to have upheld the addition. And therefore she pleaded that the impugned order of Ld. CIT(A) to be reversed and the AO’s action to be upheld.

15. Per Contra, the Ld. AR, supporting the action of the Ld. CIT(A) contented that the assessee when asked by the AO to prove the nature and source of the credit entries recorded in the books, the assessee had filed documents to prove that the nature of credit was loan borrowed from 127 creditors through finance broker M/s KAH consultancy; and to prove the source, furnished complete details of all 127 parties by giving their names , addresses, confirmation of loan from lenders, PAN , Income tax returns, bank statement evidencing the transaction and Financial accounts including balance sheet of lenders. Thus, according to him the initial burden of proving the identity of the lenders, their credit worthiness and the genuineness of the transaction has been discharged. According to him, the AO was 13 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises made aware of the fact that the assessee being in the business of purchase and sale of plots of land in the course of its business and in order to meet its working capital requirement had borrowed funds through a finance broker M/s KAH consultancy, which arranged the loans from several unsecured creditors / lenders whose details were furnished to the AO. And during the assessment proceedings the AO had issued notice under section 133(6) of the Act to 73 parties out of 127 parties and the AO himself acknowledges that 34 parties were served notices and out of them 23 parties replied by filing the requisitioned documents directlyto the AO. The AO also admits that out of 11 parties to whom summons under section 131 were issued, 8 parties filed replies in the tapal of his office. The AO at the fag end of time barring date vide letter dated 22.03.2013 (which was served on the AR of the assessee on 25.03.2013) was directed to produce all the 127 parties before him on 26.03.2013 ie within a span of 24 hours, which action of the AO according to him was arbitrary, whimsical and unreasonable. Drawing our attention to the list of 127 loan creditors and especially their addresses, the Ld. AR wondered as to how it was possible for any person to produce all the 127 parties who were residing at various far-flung places/districts within such a short time of 24 hours. The Ld. AR also pointed out that in response to the summons under section 131 of the Act, when the parties (8 nos) attended before the AO, it was the AO himself who directed the parties to file the documents in the tapal. According to the Ld. AR, even though the AO did not issue any notice/summons to 54 parties (out of 127 parties), still he drew adverse inference against them, without pointing out any defects about the documents filed to prove their identity and creditworthiness of the lenders and genuineness of the loan transaction, which action of AO according to Ld AR shows that he had prejudiced mind. Thus according to the Ld. AR, despite the assessee discharging the primary burden casted upon it as per section 68 of the Act, the AO without even pointing out any infirmity in the documents 14 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises filed by the assesse regarding the lenders who were regular income tax assessees, the AO has made high pitched assessment by just giving 24 hours notice to produce all the 127 parties and thereafter drew adverse inference against the assessee which was rectified by the Ld. CIT(A) by passing a reasoned order wherein he took note that assessee had discharged the initial burden of proof regarding the loan taken from 127 lenders as well as the fact that TDS was deducted on interest payment to these lenders and that loans have been re-paid to all the lenders and so he deleted the addition.

16. Thereafter, the Ld. AR painstakingly took us through the documents filed by the assessee before the AO as well before the Ld. CIT(A), [a copy of which has been filed before us in the form of paper-book (PB)] to prove the identity of creditors, their creditworthiness and the genuineness of the transaction with respect to 127 parties which we find are given in the tabular form wherein in the first column numerical numbers from One(1) to One hundred and twenty seven(127) are given; and against each column, the names of the lenders are given; and correspondingly in the third column, the loan amount given to assessee; and in the fourth column, the documents to substantiate the identity, creditworthiness of the lender and genuineness of the loan transaction is mentioned; and thereafter in the fifth column the pages in the paper-book where such documents are found placed therein are stated as under :

Sr. Name Amount Documents Page No. of No (Rs.) Paparbook 1. Aarti Pokar 488,250/- i. Copy of confirmation 153-158 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook. 15 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises 2. Amrut Jabuvani 542,500/- i. Copy of confirmation 159-164 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook.

3. Amrutben Patel 592,900/- i. Copy of confirmation 165-168 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook.

4. Amrutal Dadga 542,500/- i. Copy of confirmation 169-171 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook.

8. Ashok N. Makani (HUF) 620,600/- i. Copy of confirmation 188-191 ii. Name, Pan & Address iii. Copy of ITR Ack.

ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises iv. Copy of relevant extract of passbook.

9. Ashwin G Patel 516,167/- i. Copy of confirmation 192-197 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook.

10. Bharat H Vora 271,250/- i. Copy of confirmation 198-200 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook.

11. Bharat S Patel 568,225/- i. Copy of confirmation 201-203 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook.

12. Bharati R. Doshi 325,500/- i. Copy of confirmation 204-206 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook.

15. Bhavna B. Joshi 331,825/- i. Copy of confirmation 213-215 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook.

ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises iv. Copy of relevant extract of passbook 42. Kalaben A. Makani 620,600/- i. Copy of confirmation 330-333 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 43. Kamal A. Upadhyay 268,250/- i. Copy of confirmation 334-337 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 44. Kantaben A. Senghani 537,833/- i. Copy of confirmation 338-340 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 45. Kantaben D. Patel 434,000/- i. Copy of confirmation 341-344 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 46. Karanmshi. A. Dholu 409,333/- i. Copy of confirmation 345-349 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 47. Kasturben Patel 268,917/- i. Copy of confirmation 350-355 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 48. Keshav Ravatmal 618,000/- i. Copy of confirmation 356-358 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 49. Ketan Naliyapara 379,750/- i. Copy of confirmation 359-361 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 50. Ketan Senghani(HUF) 321,900/- i. Copy of confirmation 362-364 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 51. Kuddus Ali Shah 517,167/- i. Copy of confirmation 365-367 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 52. Laherish Galal 268,917/- i. Copy of confirmation 368-370 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 53. Laxmiben Paatel 516,333/- i. Copy of confirmation 371-375 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 54. Laxmiben Limbani 268,917/- i. Copy of confirmation 376-381 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises passbook 55. Lilaben Limbani 536,500/- i. Copy of confirmation 382-387 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 56. Lilaben S Patel 1032,333/- i. Copy of confirmation 388-390 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 57. Madhu Bhanushali 325,500/- i. Copy of confirmation 391-393 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 58. Mahadev V. More 434,000/- i. Copy of confirmation 394-397 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 59. Mahendra K. Sanghavi 321,900/- i. Copy of confirmation 398-400 (HUF) ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 60. Mahendra V Shah 676,458/- i. Copy of confirmation 401-403 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 61. Mahesh Raval (HUF) 189,875/- i. Copy of confirmation 404-406 ii. Name, Pan & Address ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 62. Maniben Surani 537,833/- i. Copy of confirmation 407-410 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 63. Manish Gangar (HUF) 517,167/- i. Copy of confirmation 411-413 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 64. Manish Jalawadia 361,433/- i. Copy of confirmation 414-419 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 65. Manisha Ramani 539,000/- i. Copy of confirmation 420-425 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 66. Manoj Thakkar 307,000/- i. Copy of confirmation 426-427 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 67. Meenaben Gosai 877,767/- i. Copy of confirmation 428-430 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises 68. Meeta Vikmani 379,750/- i. Copy of confirmation 431-433 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 69. Moghiben Patel 537,833/- i. Copy of confirmation 434-438 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 70. Mohanlal Patel 432,933/- i. Copy of confirmation 439-441 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 71. Mukesh Divani 516,333/- i. Copy of confirmation 442-447 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 72. Nanji Patel (HUF) 516,333/- i. Copy of confirmation 448-451 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 73. Naran K. Ramjiyani 516,333/- i. Copy of confirmation 452-455 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 74. Narayangiri Goswami 517,167/- i. Copy of confirmation 456-458 ii. Name, Pan & Address iii. Copy of ITR Ack.

ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises iv. Copy of relevant extract of passbook 75. Nayana Vashani 434,000/- i. Copy of confirmation 459-462 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 76. Nayanaben Jabuvani 563,500/- i. Copy of confirmation 463-466 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 77. Neeta Shah 306,300/- i. Copy of confirmation 467-468 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 78. Nilesh Hariya 268,250/- i. Copy of confirmation 469-472 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 79. Nirmala Singadia 614,000/- i. Copy of confirmation 473-475 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 80. Nirmalaben Patel 516,333/- i. Copy of confirmation 476-479 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 81. Pachan Charan 379,750/- i. Copy of confirmation 480-482 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 82. Pankaj Lalka (HUF) 437,750/- i. Copy of confirmation 483-485 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 83. Paresh Patel 434,000/- i. Copy of confirmation 486-489 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 84. Parsotam Ramji (HUF) 412,000/- i. Copy of confirmation 490-492 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 85. Piyush Senghani 1085,000/- i. Copy of confirmation 493-495 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 86. Pravin Modha 325,500/- i. Copy of confirmation 496-498 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 87. Premchand Chhabiya 516,167/- i. Copy of confirmation 499-501 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises passbook 88. Premilaben D Surani 271,250/- i. Copy of confirmation 502-506 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 89. Premilaben M Surani 409,333/- i. Copy of confirmation 507-511 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 90. Priti D. Vira 511,667/- i. Copy of confirmation 512-514 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 91. Priyanka Pokar 516,333/- i. Copy of confirmation 515-520 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 92. Rajendra Salvi 517,167/- i. Copy of confirmation 521-523 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 93. Rajesh Dani 271,250/- i. Copy of confirmation 524-526 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 94. Rakesh I Patel 325,500/- i. Copy of confirmation 527-531 ii. Name, Pan & Address ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 95. Ramesh G Senghani 516,333/- i. Copy of confirmation 532-537 (HUF) ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 96. Ramji Patel 268,250/- i. Copy of confirmation 538-543 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 97. Ranjana Atul Patel 360,500/- i. Copy of confirmation 544-549 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 98. Rashimita Patel 516,333/- i. Copy of confirmation 550-555 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 99. Rashmi Joshi 516,333/- i. Copy of confirmation 556-561 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 100. Rasila Thakkar 324,700/- i. Copy of confirmation 562-564 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises 101. Ratanshi Jabuvani 268,250/- i. Copy of confirmation 565-570 (HUF) ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 102. Ravilal Patel (HUF) 811,750/- i. Copy of confirmation 571-574 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 103. Rita Limbani 406,875/- i. Copy of confirmation 575-580 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 104. Rita Patel 409,333/- i. Copy of confirmation 581-586 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 105. Rupa Ravatmal 618,000/- i. Copy of confirmation 587-589 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 106. Sadul Solanki (HUF) 310,300/- i. Copy of confirmation 590-594 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 107. Sanjay Limbani 434,000/- i. Copy of confirmation 595-597 ii. Name, Pan & Address iii. Copy of ITR Ack.

ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises iv. Copy of relevant extract of passbook 108. Santosh Jain/Mehta 15,39,862/- i. Copy of confirmation 598-600 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 109. Saraswatiben Gusai 517,167/- i. Copy of confirmation 601-603 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 110. Shailesh Mavani 409,333/- i. Copy of confirmation 604-607 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 111. Shamant Charan 434,000/- i. Copy of confirmation 608-610 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 112. Shantilal Pokar (HUF) 703,157/- i. Copy of confirmation 611-614 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 113. Suresh Jain (HUF) 293,396/- i. Copy of confirmation 615-617 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 114. Suresh Chhabhaiya 516,167/- i. Copy of confirmation 618-620 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 115. Sushila Ramjiyani 516,333/- i. Copy of confirmation 621-626 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 116. Sushila Bhatt 360,500/- i. Copy of confirmation 627-630 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 117. Taraben Bhatt 257,167/- i. Copy of confirmation 631-634 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 118. Upendra Surani 511,667/- i. Copy of confirmation 635-639 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 119. Vaishali Hariya 847,467/- i. Copy of confirmation 640-644 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 120. Vasanti Dand 334,750/- i. Copy of confirmation 645-647 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises passbook 121. Vasantlal Gala (HUF) 511,667/- i. Copy of confirmation 648-649 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 122. Vijaykumar Rangani 539,000/- i. Copy of confirmation 650-655 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 123. Vinita Khetwani 2470,551/- i. Copy of confirmation 656-657 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 124. Vinod C. Solanki (HUF) 204,000/- i. Copy of confirmation 658-661 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 125. Vinod Joshi (HUF) 431,200/- i. Copy of confirmation 662-665 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 126. Vishal Patel 516,333/- i. Copy of confirmation 666-670 ii. Name, Pan & Address iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook 127. Yogesh Goswami 429,200/- i. Copy of confirmation 671-673 ii. Name, Pan & Address ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises iii. Copy of ITR Ack. iv. Copy of relevant extract of passbook

20. TheLd AR also relied upon the following case laws in support of the action of the Ld CIT(A)

Court / Case Laws Citation Tribunal Vs Superline Construction Pvt Ltd Mumbai ITAT 3645/Mum/2014 168 TTJ 751 ACIT Vs Sanjay M Jhaveri Mumbai ITAT (2015) Nemi Chand Kothari Vs CIT and 264 ITR 254(2003) Gauhati HC Another CIT Vs Orchid Industries Pvt Ltd 397 ITR 136 Bombay HC CIT Vs Vacmet Packaging (India) Pvt 367 ITR 217 Allahabad HC Ltd (2014) CIT Vs Dwarkadhish Investment Pvt Ltd 330 ITR 298 Delhi HC (2011) CIT Vs Oasis Hospitalitites P LTd 333 ITR 119 Delhi HC 35 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises CIT vs Kamdhenu Steel & Alloys Ltd 361 ITR 220 Delhi HC CIT Vs Lovely Exports Pvt Ltd 299 ITR 268 Supreme Court PCIT Vs Veedhata Tower P Ltd 403 ITR 415 Bombay HC Gaurav Triyugi Singh vs ITO 423 ITR 531 Bombay HC Orient Trading Co Ltd Vs CIT 49 ITR 723 Bombay HC CIT Vs Creative World Telefilms Ltd 333 ITR 100 Bombay HC 21. The Ld. AR submits that the following principles emerge from the various decisions referred above i. The identity of the credit entries can to be established by the assessee by providing name and PAN/ITR of the parties through whom it had received the sum of money. ii. Genuineness of the transaction can be demonstrated by showing that the assessee had, in fact, received money from the said lender and it came from the bank account of the lender and there was no cash deposits when the transaction took place. iii. The bank statements and balance sheet of the creditors / lenders would prove the credit worthiness or financial strength of the parties. It has been further held that when the initial burden is discharged by submitting primary evidences proving identity, creditworthiness of the lender and genuineness of the transaction, then the onus shifts to the AO/Department to prove that the same (documents) are bogus/forged etc, and if there is any adverse/infirmity in the documents, then again, the onus will shift back to the shoulders of assessee to prove the nature and source of the credit entry. b. According to the Ld AR, tested on the touch-stone of the judicial precedents, the assessee has discharged the burden of proving the nature and source of credit entry by proving the identity and creditworthiness of the lenders and genuineness of the loan taken from each creditors/lendors by submitting the following documents : With regard to identity of the lenders: a. Copy of Acknowledgement of Income Tax Return b. PAN of the lender parties. 36 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises c. Address of the lender parties. With regard to Genuineness of the transaction: a Copy of confirmation of the lender parties. b Copy of Bank statement. There are no cash deposits or cash withdrawals in the books of the lender parties. Thus even suspicion against transaction cannot be raised against the loan taken from such lenders. c. Copy of reply u/s 133(6)/131 of the Act furnished by the lender parties. d. Copy of ledger account of the lender parties reflecting TDS deducted on interest payments and subsequent repayment of unsecured loans by the assessee. With regard to Creditworthiness of the lender: Copy of relevant extract of Balance sheet reflecting that the amounts have been advanced by the lender parties through regular banking channel to the assessee filed alongwith the ITR c. Thus the Ld AR submitted that all the 127 lender parties are regular tax payers and the transaction with them have taken place through banking channels. The bank statement submitted by the assessee of the said party show that there is no cash deposit in their bank accounts prior to making payments to the assessee. Interest has been paid to these parties regularly and TDS has been duly deducted on the interest paid to the lenders. Further, the unsecured loans have been repaid by the assessee and the loansare no longer outstanding. d. The Ld. AR also submitted that the genuineness / authenticity of the documents submitted by the assessee has nowhere been doubted by the AO. e.The Ld AR drew our attention to the ratio-decidendi of important judgement which are reproduced here under 37 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises i. Judgement of Hon’ble Bombay High Court in the case of Orient Trading Co. Ltd vs. CIT reported at (1963) 49 ITR 723 (Bom) held as under:- When, however, in a case where the entry stands in the name of the third party. the assessee satisfies the ITO as to the identity of the third party and also supplies such other evidence which will show, prima facie, that the entry is not fictitious, the initial burden which lies on him can be said to have been discharged by him. It will not, thereafter, be for the assessee to explain further how or in what circumstances the third party obtained money and how or why he came to make a deposit of the same with the assessee. The burden will then shift on to the Department to show why the assessee's case cannot be accepted and why it must be held that the entry, though purporting to be in the name of a third party, still represents the income of the assessee from a suppressed source. In order to arrive at such a conclusion, however, the Department has to be in possession of sufficient and adequate material. In our opinion, the assessee has sufficiently discharged the burden which lay upon it to explain the nature and source of the cash credits appearing in its accounts and the burden clearly shifted in the present case on to the department to prove to the contrary and hold that in spite of the assessee's explanation, the entries could still be held to represent the assessee's income from undisclosed sources. There is no material whatsoever on the record on the basis of which the Department can be said to have discharged that burden....." ii. Judgement of Hon'ble Delhi High Court in the case of CIT vs. Kamdhenu Steel & Alloys Lad & Ors, reported at (2014)361 ITR 0220 (Del) held as under "3. It is, thus, clear that initial burden lies on the assessee to explain the nature und source of the share application money received by the assessee. It is also clear that the assessee has to satisfactorily establish the identity of the shareholders, the genuineness of the transaction and the creditworthiness of the shareholders. The manner in which such a burden is to be discharged has been explained in various judgments and noted by us above. At the same time, it is also well-established principle of law that in any matter, the onus brought is not a static one. 38 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises Though initial burden is upon the assessee, once he proves the identity of credits/share application by either furnishing PAN or copies of bank accounts and shows the genuineness of the transaction by showing money in the banks is by account payee cheques or by draft, etc., then the onus to prove the same would shift to the assessee [sic-Revenue). The question which assumes importance at this stage is as to what the Revenue is supposed to do to dislodge the initial burden discharged by the assessee and to throw the ball again in the assessee's court demanding the assessee to give some more proofs, as the documents produced earlier by the assessee either become suspect or are rendered insufficient in view of the material produced by the Department rebutting the assessee's documentary evidence. This is the aspect which has to be gone into in all these cases." The Hon'ble Supreme Court, vide order dated 17.09.2012, has dismissed the SLP filed by the revenue against the aforesaid decision of the Hon'ble Delhi High Court in SLP No. CC 15640/2012 (Page No 119 of the Paperbook). iii. Judgment of Hon'ble Delhi High Court in the case of CIT vs. Oasis Hospitalities P. Ltd reported at (2011) 333 ITR 119 (Del) held as under: "Genuineness of the transaction is to be demonstrated by showing that the assessee had, in fact, received money from the said shareholder and it came from the coffers from that very shareholder. Other documents showing the genuineness of transaction could be the copies of the shareholders register, share application forms, share transfer register, etc. As far as creditworthiness or financial strength of the creditor/subscriber is concerned, that can be proved by producing the bank statements of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the AO and he cannot go into the realm of suspicion."

ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises iv. Judgment of Hon'ble Gauhati High Court in the case of Nemi Chand Kothari vs. CIT & Another reported (2003) 264 ITR 0254 (Gau), wherein the Hon'ble High Court has held as under "Keeping in view the above position of law, when we turn to the factual matrix of the present case, we find that so far as the appellant is concerned, he has established the identity of the creditors, namely Nemichand Nahata & Sons (HUF) and Pawan Kumar Agarwalla The appellant had also shown, in accordance with the burden, which rested on him under s. 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors aforementioned. In fact, the fact that the assessee had received the said amounts by way of cheques was not in dispute. Once the assessee had established that he had received the said amounts from the creditors aforementioned by way of cheques, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter the burden had shifted to the AO to prove the contrary. On mere failure on the part of the creditors to show that their sub-creditors had creditworthiness to advance the said loan amounts to the assessee such failure, as a corollary could not have been and ought not to have been under the law, treated as the income from the undisclosed sources of the assessee himself, when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged 10, or were owned by the assessee. Viewed from this angle, we have no hesitation in holding that in the case at hand, the A0 had failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the sub-creditors from the assessee. In the absence of any such evidence on record, the AO could not have treated the said amounts as income derived by the appellant from undisclosed sources. The learned Tribunal seriously fell into error in treating the said amounts as income derived by the appellant from undisclosed sources merely on the failure of the sub-creditors to prove their creditworthiness."

ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises 22. Thus according to the Ld AR, by submitting the documents as aforesaid, the assessee has proved the nature and source of credit/loan entries; and the AO has drawn adverse inference against the assessee only because the assessee could not produce all the 127 lenders before him. According to the Ld. AR, the AO did not appreciate the fact that the assessee in order to meet the working capital had borrowed the loan through finance broker M/s KAH consultancy (details of the finance broker filed along with the fees paid to them after deduction of TDS). And that since the loan was repaid, these lenders residing in other districts of Maharashtra were not interested in appearing before the AO within 24 hours etc. Without appreciating these practical difficulties just because assessee could not produce all the lenders within a days time [at the fag end before framing assessment] has drawn adverse inference against the genuineness of loan under section 68 of the Act. On enquiry from the Bench, the Ld. AR explained about the action of the AO in directing the appearance of the lenders before him, which the Ld AR explained with the help of a chart which is given as under Sr. No No. of Parties Particulars Remarks by the assesse 1. 54 Parties No notice issued by AO. Relevant documentary evidences already with AO. 2. 34 Parties Notice issued u/s 133(6) of the Notice u/s 133(6) of the Act is served Act, issued and served on all 34 Parties and out of them, 12 parties filed a response directly before the AO (Page No 699-710 of the Paperbook) 3. 28 Parties Notice u/s 133(6) of the Act All the parties filed a response before originally not served. the AO (Page No 711-738 of the Paperbook) 4. 11 Parties Notice u/s 133(6) of the Act All the parties filed a response directly originally not served and later on before the AO (Page No 739-748 of summons u/s 131 of the Act was the Paperbook) issued and served by the AO Total 127 Parties

23. Referring to the above chart, the Ld AR submitted that i. out of the total unsecured loan of Rs.6.36.24,074 from 127 parties, the AO had not conducted inquiry in respect of 54 parties. So it 41 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises should be presumed that AO has accepted their loan transaction with the assessee because assessee had discharged its obligations by filing documentary evidences in the form of confirmation letters, PAN, address, Copy of IT Acknowledgement and copy of relevant extract of bank books/pass books/balance-sheet etc of all 127 parties. The AO’s action of not raising any defects means after verification he had accepted the veracity of the documentary evidences and so it may be presumed that he accepted the genuineness of these documents. And even during the course of remand proceedings, the AO did not issue summon to these 54 parties for verification Thus, it should be presumed that AO had no doubts about the genuineness of these parties. ii. Further in the case of 34 parties notice u/s 133(6) of the Act were issued and also served on them which fact substantiates that all the 34 lenders addresses were correct. And12 parties had directly filed response before the AO. Also, in case of other 39 parties on whom notice u/s. 133(6) was not served, summons were later issued u/s 131 of the Act and 11 parties were served who appeared before the AO and filed the documents at tapal. And later all the 39 parties had respectively filed requisite documents before the AO. iii. Further, the assessee did not had any direct contact with these lender parties since the unsecured loans were borrowed through finance broker M/s. KAH Consultancy (Address: Plot No. 86, Ravi Kiran, MCCH Society, Panvel). The relevant copy of bill of M/s. KAH Consultancy with voucher, bank statement reflecting payment of brokerage after deduction of TDS (refer Page No 30-37 of the Paperbook) were placed on record to show that brokerage had been paid by the assessee for arrangement of the loans. And since the lenders were repaid their loans and were residing in far- flung distincts of Maharashtra, and when they were given minimum reaction time to come to Mumbai, they might not have 42 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises come. However, it was brought to our notice that AO has accepted that number of lenders had appeared before him. The only allegation of AO is that all 127 lenders didn’t appear before him when he directed them to appear. And the Ld. CIT(A) after appreciating the entire facts and circumstances of the case found the loan transaction to be genuine and therefore he deleted it.

In the light of aforesaid facts and circumstances, the Ld. AR submits that the Ld CIT(A)has rightly deleted the additions made under section 68 of the Act since the assessee has proved the nature and source of credit entries and therefore he does not want is to interfere with the impugned action of the Ld. CIT(A).

(i) Identity of the creditors; ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises Ii Creditworthiness of the lender/ creditor; and iii Genuineness of the loan transaction.

In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index number was in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on 50 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises.

13. Hence, the judgment and order of the Tribunal is not sustainable. Accordingly, the sameis set aside. We restore the judgment and order of the Commissioner of Income- tax(Appeals). The appeal is allowed.

(a) PAN number of the companies;

(b) Copies of Income-tax return filed by these three companies for assessment year 2010-11; (c) Confirmation Letter in respect of share application money paid by them; and (d) Copy of Bank Statement through which cheques were issued.

(a) Identity of the creditor (b) Genuineness of the transaction (c) Credit-worthiness of the party

(i) In this case, the assessee has already proved the identity of the share applicant by furnishing their PAN, copy of IT return filed for asst. year 2010-11. (ii) Regarding the genuineness of the transaction, assessee has already filed the copy of the bank account of these three share applicants from which the share 58 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises application money was paid and the copy of account of the assessee in which the said amount was deposited, which was received by RTGS. (iii) Regarding credit-worthiness of the party, it has been proved from the bank account of these three companies that they had the funds to make payment for share application money and copy of resolution passed in the meeting of their Board of Directors. (iv) Regarding source of the source, Assessing Officer has already made enquiries through the DDI (Investigation), Kolkata and collected all the materials required which proved the source of the source, though as per settled legal position on this issue, assessee need not to prove the source of the source. (v) Assessing Officer has not brought any cogent material or evidence on record to indicate that the shareholders were benamidars or fictitious persons or that any part of the share capital represent company's own income from undisclosed sources. Accordingly, no addition can be made u/s.68 of the Act. In view of above reasoned factual finding of CIT(A) needs no interference from our side. We uphold the same."

24. Under these circumstances, we find no error or infirmity in the view taken by the Tribunal. No question of law, much less any substantial question of law, arises from the order of the Tribunal. Consequently, the appeal is dismissed. However, there shall be no order as to cost.”

The ratio of said decision has subsequently been followed by various judicial authorities in catena of judicial pronouncements. The said decision has been followed by Hon'ble Bombay High Court in the case of Gagandeep Infrastructure (P.) Ltd. case (supra) & subsequently in CIT v. Orchid Industries (P.) Ltd. [2017] 88 taxmann.com 502/397 ITR 136 (Bom.). The Hon'ble Delhi High Court followed the said decision in Pr. CIT v. Adamine Construction (P.) Ltd. [2019] 107 taxmann.com 84 against which revenue's Special Leave petition was dismissed by Hon'ble Supreme Court which is reported at 107 Taxmann.com 85. Similar is the position of decision of Hon'ble Delhi High Court rendered in Pr. CIT v. Himachal Fibers Ltd. [2018] 98 taxmann.com 172/259 Taxman 4 against which revenue's Special Leave Petition was 61 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises dismissed by Hon'ble Supreme Court which is reported at 98 Taxmann.com 173. Similar is the decision of Hon'ble High Court of Madhya Pradesh in Pr. CIT v. Chain House International (P.) Ltd. [2018] 98 taxmann.com 47/[2019] 408 ITR 561 against which revenue's Special Leave Petition has been dismissed by Hon'ble Supreme Court on 18/02/2019 which is reported at 103 Taxmann.com 435. Similar is the recent decision of Hon'ble Bombay High Court in Pr. CIT v. Ami Industries (India) (P.) Ltd. [2020] 116 taxmann.com 34/271 Taxman 75/424 ITR 219 (Bom.) which has been rendered after considering the principles laid down by Hon'ble Supreme Court in its recent decision titled as Pr. CIT v. NRA Iron & Steel (P.) Ltd. [2019] 103 taxmann.com 48/262 Taxman 74/412 ITR 161. Upon perusal of above documents, we find that the primary onus of establishing the identity of the investor entities, proving their respective creditworthiness and to establish the genuineness of the transactions was duly been discharged by the assessee. The assessee was not required to prove the source of source for this year. Therefore, the onus was on revenue to rebut these evidences by bringing on record cogent material to dislodge assessee's evidences. However, except for the fact that summons remained un-served, there is nothing in the armory of revenue to unsettle the assessee's claim. The allegations are not supported by any corroborative evidences. Once the initial onus was discharged by the assessee, it was incumbent upon revenue to carry out further investigation to support the allegation that the credits were unexplained. However, nothing of that sort has been shown to have been carried out. So far as the information of DGIT (Inv.) is concerned, we find that these were merely third party statements which were never confronted to the assessee and those statements on standalone basis could not form the basis of making additions in the hands of the assessee. It is trite law that no additions could be based merely on doubts, conjectures or surmises. Therefore, the additions as made by Ld. AO, in our considered opinion, are not sustainable in the eyes of law. The settled legal position as enumerated by us in the opening 62 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises paragraphs duly support the said conclusion. Therefore, we delete the impugned additions as sustained by Ld. CIT(A). The grounds, thus raised, stand allowed.”

In our opinion, the assessee has sufficiently discharged the burden which lay upon it to explain the nature and source of the cash credits appearing in its accounts and the burden clearly shifted in the present case on to the department to prove to the contrary and hold that in spite of the assessee's explanation, the entries could still be held to represent the assessee's income from undisclosed sources. There is no 63 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises material whatsoever on the record on the basis of which the Department can be said to have discharged that burden....."

“13. Section 68 of the Act has received considerable attention of the courts. It has been held that it is necessary for an assessee to prove prima facie the transaction which results in a cash credit in his books of account. Such proof would include proof of identity of the creditor, capacity of such creditor to advance the money and lastly, genuineness of the transaction. Thus, in order to establish receipt of credit in cash, as per requirement of section 68, the assessee has to explain or satisfy three conditions, namely : (i) identity of the creditor; (ii) genuineness of the transaction; and (iii) credit- worthiness of the creditor.

16. Considering the above, we are of the view that the Tribunal was not justified in sustaining the addition of Rs. 14 lakhs to the total income of the assessee as undisclosed cash credit under section68 of the Act.

“It has also come on record that the said loan amount has been repaid by the assessee to Shri Ishwar Adwani in the immediate next financial year and the Department has accepted the repayment of loan without probing into it. In the aforesaid facts and circumstances of the case, when the ITAT has held that the matter is not required to be remanded as no other view would be possible, we see no reason to interfere with the impugned order passed by the ITAT.” 65 ITA. 462& 463/MUM/2019 AY 2010-11 M/s Darshan Enterprises 44. For completence, we have also considered the decisions referred by the Ld. DR during the course of hearing before us viz. the decisions of the Hon’ble Calcutta High Court in the case of CIT Vs Maithan International and 375 ITR 123 and ITAT Ahmedabad Bench in the case of Pavankumar Saghvi V ITO 59 ITR(T) 389. The case of Maithan International (supra ) pertains to powers of the Commissioner of Income tax under section 263 to set aside the order of the AO on the grounds that the AO had not conducted proper enquiry to investigate the loans. In the case of Pavankumar M Sanghvi, the loan was taken from parties where there was a search operations and the investigation by the Income tax department had found that the loan creditors were not genuine. The case of Jamnaprasad Kanhayalal v CIT is on a completely different context where the Hon’ble Supreme Court held that where the creditors had surrendered the loan entries under the voluntary disclosure scheme and the question was whether benefit of the same can be granted to the assessee who has borrowed from him. Similarly in the case of Bharti Pvt Ltd (supra) the Calcutta High Court held that where the summons under section 131 is returned and the assessee had filed only loan confirmations and no other documents adverse view may be taken. Therefore, the cases referred and relied upon by the Ld. DR are on different set of facts and distinguishable, so it won’t help the revenue.