M/S GREEN VALLLEY HOMES DEVELOPERS P. LTD.,MUMBAI vs. DY CIT - 2(3), MUMBAI

Per Anikesh Banerjee (JM):

Instant appeal of the assessee was filed against the order of the Learned
Commissioner of Income-tax (Appeals)-48, Mumbai *in short, ‘Ld.CIT(A)+ passed under section 250 of the Income Tax Act, 1961 (in short, ‘the Act’) date of order
22/09/2020 for A.Y. 2012-13. The impugned order emanated from the order of the Learned Deputy Commissioner of Income-tax, Central Circle 2(3), Mumbai (for 2
M/s Green Valley Homes Developers Pvt Ltd brevity the “Ld. AO”), passed under section 143(3) of the Act, date of order
31/03/2015. 2. The assessee has taken the following grounds of appeal:-
“1. (a) The Id. CIT (A) erred in facts and law in confirming the addition of Rs.5,99,00,000/-on account of loan received u/s. 68 made by the Id. Assessing
Officer following peak theory as unexplained cash credit and confirming the disallowance of interest paid of Rs.1,25,43,806/- on his surmises and conjectures that loans taken were sham transactions.

(b) The Id. CIT (A) erred in facts and law in not appreciating the fact that the identity of the payer, genuineness of the transaction and capacity of the payer were duly established.

(c) The Id. CIT (A) and Id. Assessing Officer erred in facts and law in making the addition solely relying on the statement of a third party and not granting any opportunity of cross examination.

(d) The Id. CIT(A) erred in facts and law in not appreciating that name of the appellant company is not appearing in the statement on oath recorded of the third party, which is the basis on which addition made.

(a) Addition of Rs.5,99,00,000- u/s.68 as unexplained cash credit, be deleted,

(b) Disallowance of Rs. 1,25,43,806/- of interest paid on alleged loans taken; be deleted,

(c) Such other relief, as may be deemed fit in the matter, be granted.

3
M/s Green Valley Homes Developers Pvt Ltd

Total
790,00,000/-

4
M/s Green Valley Homes Developers Pvt Ltd

In reply, the assessee submitted that in case of the following six companies, the assessee has not made any transaction:-
Sr.No.
Name of the Party
1
Anchal Properties (P) Ltd
2
Casper Enterprises (P) Ltd
3
Raghunandan Reyons Ltd
4
Triangular Infocom Ltd
5
Vanguard Jewels Ltd
6
Taj impex P Ltd

Finally, the assessee submitted all relevant documents, but without any issuance of notice under section 131 or 133(6) of the Act, the Ld.AO added back the loan transaction on peak credit basis amount to Rs.5,99,00,000/- and also the interest amount of Rs.1,25,43,806/- to the total income of the assessee. Considering this, the assessee filed an appeal before the Ld. CIT(A). But the Ld.CIT(A) upheld the impugned assessment order. Being aggrieved on the impugned appellate order, the assessee filed this appeal before us.
4. The Ld.AR argued and filed a paper book spanning pages 1 to 743, which is kept on the record. The Ld.AR argued that the assessee has taken loan of Rs.7,90,00,000/- during the impugned assessment year. The Ld.AO has considered the repayment of loan and accordingly, the addition is worked out amount to Rs.5,99,00,000/-. The assessment was completed on the basis of the report of DGIT(Inv), Mumbai and on the statement of “Shri Praveen Kumar Jain”
which was taken on 06/10/2013. 5
M/s Green Valley Homes Developers Pvt Ltd

It is mentioned that the name of party is showing ‘Green Valley Deve’ where there is no matching with the assessee’s name. Further, no cross verification was allowed by the Ld.AO during the assessment proceedings. It is further noted that the said “Shri Praveen Kumar Jain” has retracted the recorded statement dated
06/10/2010 by an affidavit dated 15/05/2014, which is enclosed in paper book

6
M/s Green Valley Homes Developers Pvt Ltd pages 334(a) to 334(d). So, the Ld.AO entirely relied on the recorded statement of “Shri Praveen Kumar Jain”, which was retracted later. The Ld.AR further stated that during the assessment proceedings, the assessee submitted all the relevant documents by a letter dated 25/03/2015 which is annexed in APB pages 329 to 334. The said documents are also annexed in the paper book filed before the ITAT. All the relevant documents in compliance of section 68 were duly submitted which are also annexed in paper book filed before the ITAT. The list of the documents are as follows: -
S.No.
Name of the parties
Documents
APB Page Nos
1

Ansh Merchandise i)
LedgerConfirmation
60-61

ii)
Bank Statement
62
iii)
Copy of ITR
Acknowledgement
63
iv)
Copy of PAN Card
64
v)
Copy of Audited Financial
Statement
65-84
2

Atharv Business Pvt Ltd i)
Ledger Confirmation ii)
Bank Statement
85-86
87-92

iii)
Copy of ITR
Acknowledgement
93
iv)
Copy of PAN Card
94
v)
Copy of Audited Financial
Statement
115
3

Duke Business Pvt Ld i)
LedgerConfirmation ii)
Bank Statement
116-118
iii)
Copy of ITR
Acknowledgement
119
iv)
Copy of PAN Card
120
v)
Copy of Audited Financial
Statement
121-140
4

Josh Trading Pvt Ltd i)
LedgerConfirmation
141

ii)
Bank Statement
141-154
iii)
Copy of ITR
Acknowledgement
155
iv)
Copy of PAN Card
156
v)
Copy of Audited Financial
Statement
157-174

7
M/s Green Valley Homes Developers Pvt Ltd

Nakshtra Business Pvt
Ltd i)
Ledger Confirmation
175-176
ii)
Bank Statement
177-180
iii)
Copy of ITR
Acknowledgement
181
iv)
Copy of PAN Card
182
v)
Copy of Audited Financial
Statement
183-202

Alka Diamond Industries
Ltd i)
Ledger Confirmation
203
ii)
Bank Statement
204-205;236
iii)
Copy of ITR
Acknowledgement
206-234
iv)
Copy of PAN Card
235
v)
Copy of Audited Financial
Statement
237-238

8
M/s Green Valley Homes Developers Pvt Ltd

9
M/s Green Valley Homes Developers Pvt Ltd

(iii)Theassessee has failed to discharge its onus to establish the genuineness of the loans taken from concerns of Shri Praveen Kumar Jain and that the same is not in the form of accommodation entries.
(iv)The statement of Praveen Jain was recorded during the course of search and has evidentiary value.
(v) All the paper submitted by the party are paper work to prove the non - genuine loan as genuine. It is clear cut finding of investigation wing that Shri
Praveen Jain is indulged in providing accommodation entries in various form and the same fact is accepted by Shri Praveen Jain also. The retraction filed by Shri
Praveen Jain merely to save the parties.
(vi)As the loan amount received from these companies are non-genuine and are accommodation entry, therefore interest paid of Rs. 1,25,43,806/- on the said loan also treated as non-genuine as the same is paid to reduce the profit of the company.
In view of the above discussion, the loans taken during the year under consideration amounting to Rs.7,90,00,000/- remains unproved and are held of accommodative in nature. Therefore, considering the peak theory on the loans accepted and repaid amongst the aforesaid parties during the year, the addition worked out in this regard amounts to Rs. 5,99,00,000/- which is accordingly made to the total income of the assessee.”

Tribunal. The loans were obtained from nine companies, and the assessment was framed solely on the basis of a report from the Investigation Wing of the Income-tax Department, wherein the assessee was alleged to be a beneficiary of accommodation entries purportedly provided by “Shri Praveen Kumar Jain” and his group. However, we find that the assessee had furnished all requisite documentary evidence in compliance with Section 68 of the Act, including Form 16, quarterly TDS statements on interest, profit and loss account, balance sheet, ledger accounts of creditors, and income tax returns. Despite the availability of such documentation, the Ld. AO did not undertake any independent verification or issue notices to the loan creditors to ascertain the genuineness of the transactions. The Ld. AR placed reliance on the judgment of the Hon’ble Bombay High Court in PCIT-27 v. Parth
Enterprises, ITA No. 786 of 2016, dated 11.12.2018. The relevant portion of paragraph 7 of the said judgment reads as under:
“7. We find that there are concurrent finding on facts rendered by the CIT(A) and the Tribunal holding that only Rs.36 lakhs can be added to the declared income and the balance amount of Rs.2.99 crores was not hit by section 68 of the Act. This finding is premised on the fact that no enquiry was made in respect of 76 creditors out of 77
creditors and the respondent had provided required documentary evidence in respect of the 76 creditors. Thus, these are essentially finding of fact and the view taken by the Tribunal is a possible view on these facts. In view of the above, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
8. Accordingly, appeal is dismissed. No order as to costs.”

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M/s Green Valley Homes Developers Pvt Ltd

We observe that the Hon’ble juri ictional High Court has clearly held that in the absence of any verification undertaken by the Assessing Officer, such an addition under Section 68 is unsustainable in law.
Further reliance was placed on the decision of the Co-ordinate Bench of the ITAT,
Chennai Bench-D, in ITO v. Central Finance Co [1982] 13 TTJ 248 (Mad), which held that mere general statements by hundi bankers regarding their engagement in hawala transactions, without any specific statement linking the assessee's transactions to such hawala activities, cannot justify the reopening of assessments. In the present case, the assessee's name was not even correctly mentioned in the recorded statement, appearing merely as “Green Valley Deve.”
The assessee had obtained loans from nine companies, which were subsequently repaid along with interest in the succeeding years. It is also pertinent to note that these very companies have been adjudicated upon in other matters before the Tribunal, and the transactions involving them have been held to be genuine. The Ld. AR placed reliance on several orders of the Co-ordinate Benches of the ITAT,
Mumbai, where the genuineness of transactions with these companies has been upheld. A summary is as follows:
ITA No.193/Mum/2018 & 232/Mum/2018, dt of order 15/05/2019
2
Atharv Business Pvt Ltd
Sumukh Commercial
Nakshatra Business Pvt Ltd
ITO Vs M/s Manav Finance Ltd
ITAs 1448, 1449 & 1449 & 1467/Mum/2017, date of order 05/10/2018
3
Josh Trading
DCIT vs M/s Trinity Infra Tech Pvt Ltd ITA
No.2721/Mum/2017, dt of order 06/02/2019

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M/s Green Valley Homes Developers Pvt Ltd

4
Alka Diamond Industries Ltd
Diwali Capital & Finance Pvt Ltd vs DCIT ITA
No.2091/Mum/2018, dt of order 10/01/2019

In our considered opinion, the assessee has duly discharged the onus cast upon him under Section 68 of the Act by submitting all relevant documentary evidence, which has neither been discredited nor rejected by the revenue. The Ld. AO, instead of conducting any independent enquiry or verification, merely relied upon the report of the DGIT (Investigation), Mumbai, and the statement of “Shri
Praveen Kumar Jain”, which was subsequently retracted. No opportunity for cross-examination was granted to the assessee, and such adverse material was used without adhering to the principles of natural justice.
The Ld. DR has also not brought any material on record to controvert the submissions made by the Ld. AR.
In view of the above, we find no merit in the impugned appellate order.
Accordingly, the addition made by the Ld. AO towards the loan amount of Rs.5,99,00,000/- and interest of rs.1,25,43,806/- stands deleted.
9. In the result, appeal of the assesseebearing ITA No.57/Mum/2021 is allowed.
Order pronounced in the open court on 22nd day of May, 2025. (MS. PADMAVATHY S)
JUDICIAL MEMBER
Mumbai,दिन ांक/Dated: 22/05/2025
Pavanan

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M/s Green Valley Homes Developers Pvt Ltd

Copy of the Order forwarded to:

BY ORDER,
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(Asstt.