GOODLUCK METAL CORPORATION,MUMBAI vs. ASSESSING OFFICER, MUMBAI

On the apprec opportu Bhanw retracte the onl 3. On the additio same statem fact th said l eviden 4. On the disallo Rose Im 5. Appella ground 6. On the and no action for ass of th reasse 2. Briefly stated, f return of income elec Rs.29,49,289/. The the Income-tax Act, 1 2.1 Subsequently, i and seizure action ca case of Shri Bhawa received accommodat who was an entity o and his sons for p information, the Asse Good ITA e facts and in law, the Ld CIT (A) ciating the fact that appellant was n unity to cross examine or rebut the stat warial Jain, especially when his sta ed by filing an affidavit and the said s ly basis on which the addition was made e facts and in law, the Ld. CIT (A) erred on of unsecured loans of Rs. 35,00,000 b as unexplained cash credits us 68 on ment of Shri Bhanwarlal Jain without ap hat identity, genuineness and creditwort oan was proved by filing necessary nces. e facts and in law, the Ld. CTT (A) erred wance of interest of Rs. 6904 on loan mpex by treating the said loan as non-gen ant prays for leave to add, amend o d/s of appeal on or before the final date of e facts and in law, the Ld. CIT(A) erred ot taking into consideration the fact that u/s 132 forms the foundation of a case, sessing the total income, must proceed u/ he Income Tax Act, rather tha ssment u/s 147/148 facts of the case are that the a ctronically on 30.09.2009 declar return of income was processe 1961 (in short ‘the Act’). nformation was received on the arried out by the Income-tax De arlal Jain/Sh. Rajendra Jain tion entry of Rs.35 lakhs from M operated and managed by Shri providing accommodation entr essing Officer recorded reasons dluck Metal Corporation 2 A No. 1771/MUM/2025 erred in not not given an tement of Shri atement was statement was e. d in upholding by treating the n the basis of ppreciating the thiness of the documentary upholding the received from nuine. or delete any f hearing. d in upholding once a search , the Revenue, /s 153A/153C an invoking assessee filed its ring total loss of ed u/s 143(1) of e basis of search epartment in the n that assessee M/s Rose Impex, Bhawarlal Jain ies. In view of s to believe that income escaped asse of the Act on 28.0 objection raised by t and thereafter comm reassessment procee knowledge of the ass course of search on concerns controlled a Jain for name sak made, (ii) those dire members of Shri B including Shri Sachin (iii) the examination partners, proprietors Bhawarlal Jain/Shri miscellaneous office handing over parcel control and managem Shri Bhawarlal Jain/ partners etc. were no carried out in the re respect of salary mo persons were not hav the diamonds had be directors/partners a Good ITA essment and accordingly issued 03.2016. The Assessing Office the assessee to the notice u/s menced reassessment proceedin edings, the Assessing Officer essee the factual observations m n Shri Bhawarlal Jain interalia and operated by Shri Bhawarla e/dummy director, partnes/p ectors; partners and proprieto Bhawarlal Jain/Rejendra Jain n Pareek and Shri Manish Jain n on oath of name sake/du s revealed that they were em i Rajendra Jain and were loo e work like depositing chequ s to clients, making data entr ment of all those forms were i /Rejendra Jain (iv) those name ot having any knowledge of the b espective entities, (v) all those p ostly in cash (vi) those directo ving any contact with the impor een shown as imported. (vii) Th also admitted in the statemen dluck Metal Corporation 3 A No. 1771/MUM/2025 d notice u/s 148 er disposed off 148 of the Act ngs. During the brought to the made during the a; (i) in various l Jain/Rajendra roprietors were ors were family n and relative and Anup Jain, mmy directors, mployees of Shri king after from ues in banks, ry etc. The real in the hands of e sake directors, business activity persons were in ors/partners etc rters from whom hose name sake nt recorded u/s 132(4) of the Act tha (viii)Shri Rejendra Ja 05.10.2013 himself a and controlled by h shown as director an at the registered offi of the dummy direc Rejendra Jain. (x) T during statement rec were used mainly purchases and loans 2.2 In view of abov order sheet entry da the relevant party justification of ident transaction. In resp statement, income-ta loss account etc of s retracting the statem the assessee sub creditworthiness of t but the Ld. Assessing keeping in view the o Bhawarlal Jain and Good ITA at they were merely dummy dire ain in his statement u/s 132(4) admitted that all those entities him and those persons were nd partners. (ix) No stock of diam ce/ business premises or resid ctors/partners and proprietors The employees of Shri Rajendr corded u/s 132(4) of the Act tha for giving accommodation and advances to various benefi ve observations, the Ld. Assess ted 04.11.2016 asked the asse M/s Rose Impex for verificat tity, creditworthiness and genu onse, the assessee filed a cop ax acknowledgement, balance s said party. The assessee also f ment by Shri Bhawarlal Jain. In bmitted that identity, gen he loan given by the party was g Officer rejected the contention observation during the course o statement of Shri Bhawarlal J dluck Metal Corporation 4 A No. 1771/MUM/2025 ectors/partners. of the Act dated s were managed employees and mond was found dential premises including Shri a Jain revealed at those entities entries, bogus iciaries. sing Officer vide ssee to produce tion along with uineness of the py of the bank sheet, profit and filed an affidavit n view of above, nuineness and s duly explained n of the assessee of search of Shri Jain wherein he admitted that M/s Ro by him and was u purchase/sales and l 2.3 Regarding the d assessee, the Assess returned income of n Rs.1.02 crores. Copy filed by the assessee same was filed after a or coercion during r further relied on the the case of Orient Kolkata High Court in and decision of Hon Kala v. CIT (supra). loan of Rs.35 lakhs accounts for the ass section 68 of the Act 3. On further ap observing as under: “7.3 In this amounting to the assessme M/s. Rose Im loan. The M/ details. The p Good ITA ose Impex was a concerns which used for providing accommod loans. documents of M/s Rose Impex s sing Officer noted that said pa nearly Rs.2.08 lakhs as agains of retraction statement by Shri was also rejected by the Assess a considerable delay without any recording of statement. The As decision of the Hon’ble Bomba Trading v. CIT (supra); decis n the case of Precision Finance n’ble Supreme Court in the ca Accordingly, the Assessing Off shown from the said party i sessee as unexplained cash cre and made addition accordingly. ppeal, the Ld. CIT(A) upheld case, the appellant has taken uns o Rs.35,00,000/- from the M/s. Rose Im ent proceedings, the AO has issued summ mpex for substantiating the claim of gen /s. Rose Impex neither attended nor su primary onus is on the appellant to prove dluck Metal Corporation 5 A No. 1771/MUM/2025 h was controlled dation entry of ubmitted by the arty was having t loans given of i Bhawarlal Jain sing Officer that y proof of threat ssessing Officer ay High Court in sion of Hon’ble Pvt. Ltd. (supra) se of P. Mohan ficer treated the in the books of edit in terms of . d the addition secured loan mpex. During moned to the nuineness of ubmitted any the identity, creditworthine Rose Impex genuineness passed after directorate of relied on the statement gi investigation large number basis of evid various perso pointed that afterthought a view of this, Jain cannot Hence, the A. doesn’t have creditworthine needs to be a view of the A conducted by course of sea non-genuine cannot be es statement of S not found and the genuinene would be very Supreme Cou support the evidence in a rely on judgm Bajaj 139 Ta its landmark j cases wherei evidences and 7.4 Based on not been able and creditwo addition of R upheld. Accor 4. Before us, the L containing pages 1 t Good ITA ess and genuineness of the transaction did not attended in physical manner t of loan transaction especially when the r detailed investigation being conduc f Investigation, Mumbai. Further, the ap e fact that Shri Bhanwarlal Jain has r iven to the investigation wing. But, has been carried out in detailed man r of premises and conclusion has been d dence as well as statement recorded un on including Mr. Bhanwarlal Jain. The A retracement has been made much and with a view of avoid the legal cons the retracement of the statement of Mr. be considered as significant legal co .O concluded that submission given by t e force to satisfy the condition of t ess and genuineness of the transactions added to the income of the appellant. I ag A.O that considering the detailed exami y the investigation wing, evidence unea arch and subsequent statement recorded and accommodative nature of transa stablished to be genuine by merely ret Shri Bhanwarlal Jain. The physical appe d hence mere documentary trail also do ess of the loan transaction. In such circ y relevant and apt to rely on the judgmen urt in Sumati Dayal v. CIT [(1995) 214 IT use of surrounding circumstances a arriving at a conclusion. It would also be ment of Calcutta High Court in case of Pr. C axmann.com 352 (Calcutta) wherein Hon judgment has dealt about onus of proof in detailed investigation was carried o d circumstantial finding holds key. n the above findings, it is clear that the a e to discharge the burden of proving the orthiness of the loan transaction and Rs.35,00,000/- made by the A.O under S rdingly, ground no. 1 is dismissed.” Ld. counsel for the assessee file to 148. The Ld. counsel for th dluck Metal Corporation 6 A No. 1771/MUM/2025 s. Since, the to verify the finding was cted by the ppellant has retracted the , since the nner covering drawn on the nder oath of A.O has also later as an sequences. In Bhanwarlal onsequences. the assessee the identity, and hence it gree with the ination being arthed in the reflected the action which tracement of arances was on’t establish cumstance, it nt of Hon’ble TR 801 (SC)], and material e relevant to CIT Vs Swati n’ble court in especially in out and how assessee has genuineness d hence the Section 68 is ed a Paper Book he assessee also filed the documents comprising of proof e to M/s Rose Impex , submission filed bef those authorities. 5. As far as groun not raised before the ground but no obje Representative (DR) therefore, same was legal ground going to of fresh facts, theref for adjudication. 5.1 Challenging the the assessee subm borrowed satisfactio Assessing Officer. Th even nature of the Assessing Officer in was no tangible mat no live link of the m submitted that basis of Shri Bhawarlal Jai Good ITA s at serial No. 13 to 18 of evidencing subsequent repayme claiming that same were referre fore the Ld. CIT(A) but were nd No. 1 of the appeal is conce e Ld. CIT(A). It was in the natu ection was raised by the Ld for admitting same by way admitted as additional ground o root of matter and not requiri fore, same was admitted as ad ground No. 1 of the appeal, the mitted that reasons have bee on and without application o he Ld. counsel for the assessee transaction has not been sp the reasons recorded. He subm terial to reopen the assessment material and the reasons record s on which reasons for the reco in which has already been retra dluck Metal Corporation 7 A No. 1771/MUM/2025 the paperbook ent of the loans ed in the written not filed before erned same was ure of additional d. Departmental y of oral plea, d being a purely ing investigation dditional ground e Ld. counsel for n recorded on f mind by the submitted that pecified by the mitted that there t and there was ded. Further, he orded statement acted by him. In view of these sub reassessment proceed 5.2 On the contrar Officer has recorded with him which was basis of which had assessment. He sub during the course of Jain and their statem application of the m Officer has particular given loans to the related to the assesse 5.3 We have heard the relevant material the Assessing Officer Name of the assesse PAN Status Asst. Year Reasons for re Act. The assessee h the year under the I.T. Act. Good ITA bmission, the ld Counsel c dings are liable for setaside as v ry, the Ld. DR submitted that reasons on the basis of inform relevant to the case of the asse d made requisite belief that i bmitted that in view of obse search action of Shri Bhawarla ments, reasons have been record mind by the Assessing Officer. rly referred to the name of the e assessee. Thus there is spec ee. rival submissions of the parti ls on record. The relevant reaso are reproduced as under: “Annexure e M/s. GOODLUCK METALS 98 Khethw Road. Mumbai 400004. AAAFG1441R Firm 2009-10 e-opening of the assessment u/s. 147 of the has file return of loss of Rs.29,49,289/- on 3 r consideration which was been processed u dluck Metal Corporation 8 A No. 1771/MUM/2025 contended that void ab-intio. t the Assessing mation available ssee and on the income escaped ervation noticed al Jain/Rajendra ded after proper The Assessing entity which has cific information ies and perused ons recorded by wadi Main e Income Tax, 30.09.2016 for u/s. 143(1) of 2. Search Mumbai in the 03.10.2013. Du that these grou through variou Bhanwarlal Ja indulged in fra entries which materials and b 3. On the records of the assessee has Concerns durin 4. Details obtained accom given as under Sr.No. Name 1. ROSE

3 We are of the op the copy of the affida whom the assessee i for verification of ide assessee to produce alongwith shri Bhan statement. Merely f period after the date evidence of duress o authenticity of statem circumstances, the c statement by Shri Bh 6.4 Further, the Ld that loan received fr therefore, no addition Counsel referred to Those documents th written submission constitute in the natu 6.5 Taking accomm giving cash payment said loan entry( by w part of transaction opinion, what is imp Good ITA pinion that it is the assessee wh avit of retraction of Shri Bhawarl is alleged to have received loan entity of M/s Rose Impex, the o e concerned proprietor of M/ nwarlal jain for verification of r filing a copy of retraction affida e of recording statement that t or coercion, is not sufficient en ment recorded u/s 132(4) of th claim of the assessee based o hawarlal Jain is accordingly reje d. counsel for the assessee be from M/s Rose Impex was retu ns made in the hands of the a the documents supporting r hough referred before the lowe however same were not filed ure of additional evidence.. modation entry of loan (by way of t) is one part of transaction a way of cheque and receive cas of accommodation entry. Th portant is the Explanation for n dluck Metal Corporation 13 A No. 1771/MUM/2025 ho has produced lal Jain through n and therefore, onus was on the /s Rose Impex retraction of his avit after a long too without any nough to dilute he Act. In such on retraction of cted. efore submitted uned back and assessee. The ld return of loan. r authorities in d and therefore f cheque against nd returning of h) is the other herefore, in our nature of source of the credit received returning of the cred not discharge the li creditworthiness and when the director, p Impex admitted they entries. When the a and which is appear onus is on the asse identity, creditworthi 6.6 Further, the consideration, the fin creditworthiness and course of the search shows that the credit of the goods and on also pointed out tha was not commensur appearing in the boo referred to Paper Boo Impex on perusal o advances of Rs.100,2 sundry creditor of Rs Good ITA d during the year under consid it in the subsequent year, which iability of the assessee of expl d genuineness of the transact partners of those entities inclu y were engaged in providing assessee has taken loan from M ring in the books of accounts o ssee to produce such party fo ness and genuineness of the tra Assessing Officer has als nancial statement of creditor f d also various observation ma at the premises of Shri Bhawa tor was only a dummy entity wi ly paper entity. Further, the A t the return of income shown rate with the loan of more tha oks of accounts of the said ent ok page 17 which is balance sh f which we find that on the 237,864/- is appearing whereas s.249,326,675/- are appearing. dluck Metal Corporation 14 A No. 1771/MUM/2025 deration and not h in any way do laining identity, tion particularly uding M/s Rose accommodation M/s Rose Impex of assessee, the or verification of ansaction. so taken into for rejecting the ade during the arlal Jain which ithout any stock Assessing Officer by the assessee an Rs.10 crores tity. The Ld. DR heet of M/s Rose said loans and s on the liability Thus there was no actual creditworth the assessee. 6.7 On verification the confirmation by signed by the propri claiming to be his observation made du was managed and o Jain. 6.8 Further, in the (PB-17) and other d Rose Impex is appea acknowledgement of as Sh. Gautam Pokh documents filed by th 6.9 The retraction s Paper Book page 35 Impex and therefore, of the assessee. 6.10 Before us, the decision of the Hon’ Orissa Corpn. (P.) L finding of the Hon’ble Good ITA hiness with the assessee for ext of the Paper Book page 14, wh M/s Rose Impex, we find th ietor and it has been signed by s authorized signatory, which uring the course of the search operated by the Bhawarlal Jain profit and loss account (PB-16) documents the name of the pr aring as Sh. Gautam Pokharaj J return of income (PB-15) he ha hraj Mehta. All these facts dou he assessee statement of Shri Bhawarlal Ja onward refer to entities other said statement is also not relev Ld. counsel for the assesse ’ble Supreme Court in the cas Ltd. [1986] 25 Taxman 80F (SC e Supreme Court is reproduced dluck Metal Corporation 15 A No. 1771/MUM/2025 tending loans to hich is a copy of hat same is not y Mr. R.K. Jain h confirms the that this entity n and Rajendra )/ balance sheet roprietor of M/s Jain whereas in as been referred ubt credential of ain available on than M/s Rose vant to the facts e relied in the se of Ld. CIT v. C). The relevant as under:

16 The ground No accordingly dismissed 7 As far as ground Ld. DR objected that and therefore, same Ld. counsel for the a in support of those dismissed as infructu 8. In the result, th Order pronoun (RAJ KUMAR C JUDICIAL M Mumbai; Dated: 22/09/2025 Rahul Sharma, Sr. P.S.