DCIT, CC- 8 (1), MUMBAI vs. SURINDER ANANTRAM SABHLOK, MUMBAI

आदेश / O R D E R

PER AMERJIT SINGH (AM): All these appeals filed by the revenue against the order passed by the ld. CIT(A)-50, Mumbai, for A.Y. 2011-12 to 2014-15 in different order pertaining to the same group cases of the assessee. Therefore, for the sake convenience these appeals are adjudicated together by taking the as a lead case and its finding will be applied mutatis mutandis to the other appeals. The assessee has raised the following grounds before us:

2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs.2,38,00,000/- made by AO on account of unexplained cash credit u/s 68 of the I.T. Act, 1961 without appreciating the fact that the Hon’ble Supreme Court in the case Sumati Dayal Vs. CIT(1995) 214 ITR 801(SC) has held genuineness could validity be tested on the ground or principle of preponderance of human possibilities which form a valid ground or parameter for determining the genuineness.

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 3

Name PAN F.Y. 2010-11 F.Y. 2011-12 F.Y. 2012-13 F.Y.2013-14 Total Kamdhenu AAIFK8076E 1,00,00,000 50,00,000 - 1,00,00,000 2,50,00,000 Realities Renu Sabhlok AWLPS1491E 3,00,00,000 1,35,00,000 35,00,000 - 4,70,00,000 Surinder ABYPS6162L 50,00,000 2,88,00,000 20,00,000 20,00,000 3,78,00,000 Sabhlok Total 4,50,00,000 4,73,00,000 55,00,000 1,20,00,000 10,98,00,000 The A.O further stated that Investigation Wing, Mumbai had carried out search action u/s 132 of the Act in the case of Shri Bhanwarlal Jain and his son Shri Rajesh Bhanwarlal Jain on 03.10.2013 & Shri Bhanwarlal Jain in his statement on 11.10.2013 had admitted that they were involved in providing accommodation entries through their concern in the form of purchase and loan to various beneficiaries. The A.O has extensively discussed the detail of search action taken place in the case of Shri Bhanwarlal Jain & their related concerns from page No. 9 to 88 of the assessment order. After perusal of the assessment order it is noticed that in most of the pages the A.O has discussed the search proceedings taken place in the case of Shri Bhanwarlal Jain. The A.O stated that Shri Bhanwarlal Jain has made retraction from his statement given at the time of search.The A.O stated that the retraction made by Shri Bhanwarlal Jain was an afterthought and bad in law. The A.O also stated that search in the group cases of Bhanwarlal Jain had established beyond doubt that concern of Bhanwarlal Jain were involved in providing accommodation entries. The A.O further stated that on the basis of finding of search action carried out in the case of Bhanwarlal Jain, the assessee was also searched and admitted at the time of search that they had taken accommodation entries of loan from the concerns of Shri Bhanwarlal Jain. The A.O stated that retraction made by the assessee on 5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 5 the basis of retraction of Shri Bhanwarlal Jain was an afterthought, without any corroborative evidences and contrary to the evidences gathered during the course of search. The A.O concluded that since assessee had failed to discharge the primary onus cast upon it of proving the identity of person their creditworthiness and genuineness of the transactions, therefore, he treated the unsecured loan obtained from the concern of Shri Bhanwarlal Jain as unexplained under Sec. 68 of the Act after excluding an amount of Rs.50,00,000/- pertaining to M/s Minaxi Diam related to F.Y. 2010-11. Therefore, unsecured loan to the extent of Rs.2,38,00,000/- was added to the total income of the assessee under Section 68 of the Act.

3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has passed combined order for A.Y. 2011-12 to A.Y. 2014-15 vide order dated 04.10.2019. The ld. CIT(A) stated that on the similar facts and identical issues he had passed order in the case of the Mr. Hakim Lakdawala for the A.Y 2012-13 to A.Y. 2015-16 vide CIT(A)- 50/10152,10151,10150/2016-17 and No. CIT(A)-50/10186/2017-18. The ld. CIT(A) has reproduced his whole order in the case of Mr. Hakim Lakdawala for A.Y. 2012-13 at page 32 to 251 at his above referred order passed in the case of the assessee. The ld. CIT(A) has allowed the appeal of the assessee following the case of Hakim Lakadwala and the ld. CIT(A) has reproduced the finding given by him in the case of Mr. Hakim Lakadwala. He stated that in the case of Hakim Lakadwala also a search and seizure operation was conducted on the basis of information gathered from the search operation carried out in the case of Shri Bhanwarlal Jain. The ld. CIT(A) stated that in that case assessment was completed u/s 143(3) r.w.s 153A of the Act wherein addition on account of unsecured loan amounting to Rs.10,65,00,000/- was made u/s 68 of 5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 6 the Act by treating the said loan as accommodation entries obtained from the various concerns of Shri Bhanwarlal Jain and also corresponding disallowance made on account of interest claimed in the P & L account amounting to Rs. 74,64,837/- on such unsecured loan and further added commission payment amounting to Rs.21,36,000/- for obtaining such accommodation entries. It was stated that A.O had heavily relied on the finding of Investigation Wing, in the case of Bhanwarlal Jain wherein he had admitted that he was engaged in providing accommodation entries. The A.O had based on the statement of Shri Bhanwarlal Jain and his associate and the documents found from his premises concluded that the loan obtained from various concerns of Shri Bhanwarlal Jain were bogus. The ld. CIT(A) has also stated that not even a single incriminating material was found during the course of search operation conducted on him which could cast any doubt whatsoever on the genuineness of the unsecured loan. It is also stated, that during the course of appellate proceedings in that case the assessee contended thatA.O had failed to bring on record any statement of Shri Bhanwarlal Jain or his associates in which the assessee’s name had been specifically mentioned. In that case the assessee had also contended that despite the search operation carried out on the assessee and Shri Bhanwarlal Jain no documentary evidence had been found from any of the premises, which could show that unaccounted cash has been paid to Shri Bhanwarlal Jain by the assessee for obtaining the impugned unsecured loan. It was also stated that no incriminating material has been found during the course of the search operation in relation to the impugned unsecured loan either from the premises of the assessee or from Shri Bhanwarlal Jain. In that case the A.O was also asked to submit the Remand Report on the issue as to whether there were any incriminating

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 7 documents were on record against the assessee or not in relation to the unsecured loan under dispute. The ld. CIT(A) has issued five reminders to the A.O to submit remand report but the A.O had not responded to the reminder issued by the ld. CIT(A). Therefore, in that case the ld. CIT(A) held that contention of the assessee was true that not even a single incriminating material had been found from the premises of the assessee which could create doubt on the genuineness of the unsecured loan. The ld. CIT(A) in that case has also held that since the proceedings had not abated therefore the A.O was empowered only to make additions based on the incriminating seized material found during the course of search operations. The Ld. CIT(A) stated that A.O had failed to bring on record any incriminating material either during the course of the assessment proceedings or the remand proceedings, despite being provided with several opportunities. The ld. CIT(A) has also referred the decision of Hon’ble Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation (374 ITR 645) wherein it is held that the assessment has attained finality, then the A.O while passing the independent assessment u/s 153A of the Act cannot disturb the assessment/reassessment which has attained finality unless material gathered in the course of proceedings u/s 132 of the Act establish that the relief granted in the finalized assessment/reassessment were contrary to the facts unearthed during the course of search operation. In that case the circular No. 8 of 2003 dated 18.09.2003 of the CBDT was also discussed that the CBDT has clarified that on initiation of proceedings under Sec. 153A, the finalized assessment/reassessment do not abate. In that case the decision of Hon’ble Bombay High Court (Nagpur Bench) in case of Murli Agro Product Ltd. Vs. CIT 49 Taxman.com 172 also discussed wherein the Hon’ble Bombay High Court

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 8 that it is only the assessment proceedings that are pending on the date of conducting search u/s 132.

The ld. CIT(A) has also referred the decision of Hon’ble Delhi High Court in the case of CIT Vs. RRJ Securities (2016) 380 ITR 612) wherein it is held that in the absence of any incriminating material the concluded assessment could not be interfered u/s 153A of the Act.

The ld. CIT(A) has referred the decision of Hon’ble Delhi Court in the case Pr.CIT Vs. Lata Jain (ITA 274 & 276 of 2016) considering the ratio laid down in the case of CIT Vs. Kabul Chawla (2016) 380 ITR 573 held that Section 153A assessment cannot be made for the assessment year in which incriminating material is not recovered even though incriminating material may be recovered for other years in the block of this years.

The ld. CIT(A) has also referred the decision of Gurinder Singh Bawa Vs. DCIT (2012) 28 taxman.com 328 of the ITAT, Mumbai, held that wherein search assessment u/s 153A of assessment pertaining to six immediately preceding assessment year were completed the A.O cannot make addition therein unless there is incriminating material recovered from the search.

The ld. CIT(A) has also referred a number of decision similar to the ratio laid down in the above mentioned cases.

Regarding merit of addition made u/s 68 of the Act the ld. CIT(A) stated that assessee had filed confirmation of each and every lender which also contains the PAN of the said lender. It was also stated that the loan raised from such lenders have been repaid back by the assessee and hence same cannot be treated as his undisclosed income. The ld.

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 9 CIT(A) has also stated that creditworthiness of the parties had been established by placing on record audited financial statement of various lenders and the relevant portion of the bank statement of the lender had also been placed on record, which clearly shows that the payment have been made through banking channel. Further, it is stated that the bank account of the lender does not reveal any cash deposit, such companies have their own net worth and source of funds from which the said loan have been given to the assessee. It was also stated that each and every lender company has filed the return of income, copies of which have been placed on record during the course of assessment proceedings, the confirmation of the director of the lending company by way of an affidavit was also a part of the assessment record. The ld. CIT(A) has also stated that nature and source of credit entries appearing in the books of account had been fully examined and had been substantiated also with necessary documentary evidences. The ld. CIT(A) has also discussed a number of judicial pronouncements i.e in the case of Lalchand Bohra Vs. ITO of Hon’ble High Court of Rajasthan, 219 CTR 571. The decision of ld. Delhi High Court in the case of CIT Vs. Dwarkadhish Investment Pvt. Ltd. 330 ITR 298, decision of Hon’ble Patna High Court in the case of Sarogi Credit Corporation Vs. CIT 103 ITR 344. The decision of Hon’ble High Court of Rajasthan in the case of Aravali Trading Company Vs. ITO - 220 CTR 622.

The decision of the Hon’ble High Court of Gauhatiin the case of Nemichand Kothari Vs. CIT (2004) 264 ITR 254.

The Hon’ble CIT(A) has also discussed the case of Hon’ble Supreme Court in the case of CIT Vs. Orissa Corporation Pvt. Ltd. 159 ITR 78.

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The decision of Hon’ble Bombay High Court in the case of CIT Vs. Creative World Telefilm Ltd. 333 ITR 100 (Bombay High Court) wherein it is held that assessee had given the details of addresses of the shareholder their PAN/GIR numbers and had also given the cheque no. name of the bankers and the assessing officer ought to have found out their details through PAN card, bank/account detail of the banker so as to reach the shareholders. Thus, the view taken by the Tribunal could not be faulted. The CIT(A) also referred decision of Hon’ble Gujarat High Court in the case of CIT Vs. Apex Packaging Pvt. Ltd. 222 taxman.com 125.

The ld. CIT(A) has discussed the decision of Hon’ble Gujarat High Court in the case of CIT Vs. Ranchhod Jivabai Nakhava (208 taxman.com 35) (Guj) and the case of CIT(A) Vs. Ujala Dyeing & Printing Mills Pvt. Ltd. (Gujarat High Court) (ITA No. 375/2008). The ld. CIT(A) has also referred a number of judicial decision relied upon by the assessee in his order.

The ld.CIT(A) also stated that the A.O has heavily relied upon the retracted statement of Shri Bhanwarlal Jain and his associates. The ld. CIT(A) has stated that statement of Shri Bhanwarlal Jain had been retracted before the Investigation Wing, wherein he had statedthat his statement u/s 132(4)of the Act was recorded underundue pressure, and therefore, reliance on such a statement was incorrect. He also stated that assessee had explained that statement of the assessee recorded during the course of search was purely based on the statement of Shri Bhanwarlal Jain and that once the same has been retracted the statement of the assessee does not survive.

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The ld. CIT(A) has also referred the decision of Hon’ble Madras High Court in the case of M.Narayan and Brothers Vs. ACIT 339 ITR 192 wherein it is held that addition made by the A.O merely on the basis of retracted statement u/s 132(4) could not be sustained in the absence of any evidence, material or recovery of any movable or immovable assets at the time of search corroborated by the assessee.

The ld. CIT(A) has referred the decision of Hon’ble Supreme Court in the case of Vinod Solanki Vs. Union of India (92 SCL 157) and also referred of Hon’ble Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. Vs. State of Kerala & Others wherein held that it is open to the assessee who made the admission to show that it is incorrect and the assessee should be given a proper opportunity to show that the books of account do not disclose the correct state of facts.

The ld. CIT(A) has stated that except for the general retracted statement of Shri Bhanwarlal Jain and the assessee, no corroborating evidences has been brought on record by the Assessing Officer to disprove the claim of the assessee. It is also stated that there must be independent corroborative evidence or material to prove that income is chargeable to tax. The ld. CIT(A) has also discussed the Circular of the CBDT F. No. 286/2/2003-IT(Inv.) dated 10.03.2003) in which it is stated that during the course of search and survey no attempt should be made to obtain the confession regarding the undisclosed income. He further stated that spirit of the instruction is that confession of the statement should be based on credible evidence. Therefore, the ld. CIT(A) held that A.O has failed to carry out further inquiries in the light of evidences gathered during the course of search and survey to establish

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 12 thattransactions were not genuine, but merely relied upon the retracted statement of Shri Bhanwarlal Jain to make addition u/s 68 of the Act.

The ld. CIT(A) has also discussed other various judicial pronouncements in his order. The relevant part of some of the pronouncements and part of operating para of his order is repreoduced as under:

“1.145 in the case of ITO 18(2)4), Mumbai Vs. Shri Nemichand Lalchand Jain, in ‘ITA. No.159/Mum/2017 and C.O. No. 100/Mum/2018, the Hon'ble ITAT, Mumbai had held, as under:

6. We have heard counsels for both the parties at length and we have also perused the material placed on record as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to ‘evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised by the revenue in para no. 5 of its order. The operative portion of the order of Ld. CIT(A) is contained in para no. 5.2 to 5.2.2 of its order and the same is reproduced below: 5.2 The submissions of the appellant has been carefully considered. The appellant has provided information to substantiate the genuineness of the loan. The details provided by the appellant are the income tax return acknowledgement of M s Daksh Diamonds, account confirmation of M s Daksh Diamonds, bank statement of both the appellant and M s Daksh Diamond, audited financial statement, details of repayment of loan to M s Daksh Diamond. The AO has not said that these are bogus documents. In fact, he has not commented on the veracity of these documents. According ‘to the appellant, he had proved the identity, creditworthiness and genuineness of the loan by submitting all the relevant documents. The transactions of both the loan received and the repayment of the loan have passed through banking channels which is evidenced from the bank account statements of both the parties. There is no evidence of any cash being paid by the appellant to the party which has given the loan. The appellant had asked for copy of the statement of Shri BhanwarLal Jain on which the AO has placed complete reliance but the same was denied to him. The AG had issued notice u /s133(6) to M s. Daksh Diamond calling for certain details. The proprietor of M/sDaksh Diamonds, Shri. Ritesh Siroya replied to the notice with all necessary documents. The appellant offered to produce the party before the AG for examination but the AO was silent on that. The AO has merely relied upon the statement given by Shri. Bhanwar Lal Jain and the modus operandi and the affairs of BhanwarLal Jain group to make the addition. In fact, the extract of the Statement reproduced by the AO in the assessment order of Shri. Bhanwar Lal Jain does not speak about providing accommodation entries for the loans.

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Therefore, there can be no inference drawn from the statement thatShri. Banwarlal Jain or the concerns operated by him, provide entries for loans. Neither Mr. BhawarLal Jain nor Mr. Ritesh Siroya has taken the name of the appellant at any point of time to state that they had given an accommodation entry for loan to him Whatever inferences the AO has drawn have no connection whatsoever with the loan taken by the appellant. The AO has not controverted the evidences produced by the assessee nor has he brought any evidence to support his view that the loan taken is a mere accommodation entry and is not genuine. 5.2.1. The loan given by M s. Daksh Diamond are reflected in the balance sheet. The loan was received on two dates: Rs. 25 laksh on 08 03 2007 and Rs. 50 lakhs on 23 03 2007. The appellant has repaid the loan as under: Transaction Date Amount Del sited (Rs.) 26.07.2007 15,00,000 - 31.07.2007 5,00,000 - 31,07,2007 3,00,000 - 01.08.2007 18,00,000 - 07.08.2007 10,00,000 - 22.08,2008 5,00,000 - 10.07.2009 14,00 000 - 15.07.2009 5,00,000 - 5.2.2. All these transactions are reflected in the bank statements of both the parties. The transactions have passed through,the banking channels, both the parties have confirmed the transactions, the genuineness of the transactions has been established and the creditworthiness of the lender is also established. In view of this, the loan taken by the appellant of Rs. 75 lakhs is held to be genuine. The addition made on this count is directed to be deleted. This ground of appeal is allowed. ; After having gone through the facts of the present case as well as orders passed by the revenue authorities, we find that Ld. CIT(A) had appreciated the details provided by the assessee which leads to prove the genuineness of loans. The assessee had provided income tax return acknowledgement of Ms Daksh Diamonds, account confirmation, bank statement of the assessee as well as Ms Daksh Diamond, audited financial statement, details of repayment of loan. The Ld. CIT(A) while appreciating that the assessee had proved the identity, creditworthiness and genuineness of loans had taken into consideration that the transactions of both the loan received and the repayment of the loan had passed through banking channels. At the same time, the AO had not led any evidence that any cash was paid by the assessee to the parties who had given the loan. From the records, we also noticed that the statement of Bhanwar Lal Jain on which _ the AO has placed complete reliance was not given to the assessee. The ° proprietor of M s Daksh Diamonds, Shri. Ritesh Siroya replied to the notice issued by the AO u s 133(6) of the LT. Act and offered to produce theparty before the AO for examination. On the contrary, the AO merely relied upon the statement given by Shri. Bhanwar Lal Jain and the modus operandi and the affairs of BhanwarLal Jain group to make the addition. Ld. CLI(A) correctly appreciated the fact: that: from the extract of the statement reproduced by the AQ in the assessment order of Shri Bhanwar Lai Jain, it does not speak about providing accommodation entries for the loans. Therefore, there can be no inference drawn from the statement that Shri. Barnnwarnla Jain or the concerns operated by him, provide entries for loans. Apart from the above, it was also noticed that neither Mr. BhawarlLal Jain nor Mr. Ritesh Siroya had taken the nate of 5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 14 the assessee at any point of time to state that they had given an accommodation entry for loan to him. Even otherwise the loan were repaid by the assessee and the details of such repayment are recorded in para 5.2.1 of the order of La. CIT(A). Apart from that, all the transactions were reflected in the bank statements of both the parties. The transactions had passed through,the banking channels, both the parties had confirmed the transactions, the genuineness of the transactions has been established and the creditworthiness of the lender was also established. Thus considering all those facts, Ld. CIT(A) had rightly deleted the additions. We have also considered the decision relied upon by the assessee, wherein also, the Coordinate Bench of the Tribunal in Mum/16 in the case of ACIT Vrs. Dilip ; Chimanlal Gandhi and in case ITA No. 1069 to 1071 Mum 17 in the case of M s Reliance Corporation Vs. ITO had deleted the additions under the identical circumstances. Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld. CIT(A). Therefore, we see no reasons to interfere into or deviate from the findings recorded by the Ld.CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, these ground raised by the revenue stands dismissed.”

11.146 In the case of ACIT 32(1), Mumbai Vs. M s. Gujarat Estate, in for A.Y. 2008-09, vide order dated 05.02.2019, the Hon’ble ITAT, Mumbai had held as under:

“7. We have heard the rival submissions of both the parties and perused the material on record. The undisputed facts are that the assessee hasborrowed loans aggregating to Rs.63,44,882 - from five parties as detailed on page No.2 of the assessment order which were related to Shri Bhanwar Lal Jain. During the course of assessment proceedings upon being called upon by the AO the prove the transactions, the assessee filed the copies of the confirmation, affidavits of the parties, their IT M s. Gujarat Estate returns, balance sheets and bank statements evidencing all the transactions with the assessee. Even notices issued to these five parties under section 133(6) of the Act were duly responded by the lenders with - all requisite details evidencing the transactions. The Ld. CIT(A) considering all these aspects and various judicial decisions came to the conclusion that assessee has proved all the three ingredients as envisaged under section 68 of the Act and deleted the addition by reversing the order of AO. After considering the facts on record vis-a-vis the order of the Ld. CIT(A), we are of the considered view that in the present case there is no scope for doubting these transactions as assessee has proved beyond doubt the identity of the parties, capacity and creditworthiness of the parties and genuineness of the transactions. We are therefore inclined to uphold the order of Ld. CIT(A) on this issue by dismissing the appeal of the Revenue.

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“11.147 In the case of Income Tax Officer, Ward-2(2), Mumbai Vs. M/s. Span Venture, in for A.Y. 2012-13, vide order dated 26.04.2019, the Hon’ble ITAT, Mumbai had on this issue held as under: “8. We have heard the rival submissions of both the parties and perused the material on record including the impugned order of the Ld. CIT(A). The undisputed facts are that during the year the assessee took unsecured loans from five parties out of which three parties were related to Shri Praveen Kumar Jain group whereas the other two parties were unrelated parties. During the course of assessment proceedings, the assessee filed the copies of confirmations from the lenders, their bank statements, ITRs, audited annual accounts etc. to prove the genuineness, creditworthiness of the transactions and identities of the parties and even the notices issued under section 133(6) were not responded by three parties namely M/s. (Alka Diamonds, M/s. Duke Business Pvt. Ltd. and M/s. Sarup Developers Pvt. Ltd. whereas the notices were not served to two parties namely ShriDarshika R. More and M s. Nakshatara Business Pvt. Ltd. The AO has rejected the contentions of the assessee in respect of three parties related to Shri Praveen Kumar Jain on the ground that Shri Praveen Kumar Jain admitted in the statement recorded under section 132(4) of the Act that these were entities were engaged in issuing accommodation entries only without doing any real business. Whereas in respect of other two, the AO treated them as non genuine on the ground that notices under section 133(6) were Ms. Span Venture not replied or served. Whereas on the other hand we observe from the records before us that Ld. CIT(A) has given a finding of fact to this effect that the responses to the notices issued under section 133(6) were duly filed by these parties when the fact of non services non reply was confronted to the assessee though the same were responded by these parties when assessee perused the matter with them. We also note that the unsecured loans were repaid in the subsequent years. However, the AO has not conducted any further enquiry on the information filed by the assessee and these lenders in order to verify these transactions vis-a-vis informations furnished by the assessee or as received from the lender of the assessee. Moreover, in the statement recorded under section 132(4) of Shri Praveen Kumar Jain the said person nowhere named the assessee or claimed that the assessee is a beneficiary of these accommodation entries. Moreover the AO has relied on the statement of Shri Praveen Kumar solely to make the addition which stood retracted by him. The decisions relied upon by the Ld. D.R. are carefully perused and we observe that the same are distinguishable facts and not applicable to the present case. We also find that that the Hon'ble Bombay High in the case of CIT Vs Gagandeep Infrastructure Pvt Ltd. (supra) has held that the proviso is applicable from AY 2013-14. Moreover the case of the assessee is clearly covered by the various decisions referred to by the Id AR. Under these facts and circumstances, we are of the view that the order passed by Ld. CIT(A) is very reasoned and speaking order and department has failed to bring on record anything contrary to findings of 5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 16 the la CIT(A). Thus we do not find any infirmity in the order or Id CIT(A) to deviate from the M s. Span Venture conclusion reached by the appellate authority. Accordingly, we are inclined to uphold the order of La. CIT(A) by dismissing the appeal of the Revenue on this issue.

9. Since we have upheld the order of Ld. CIT(A) wherein the Ld. CIT(A) has deleted the addition of Rs.2,25,00,000/ in respect of unsecured loans, consequently the deletion of disallowance of interest paid on the unsecured loans of Rs.13,57,807/- is also upheld and the ground of revenue is also dismissed.”

11.148 In the case of D.C.I.T Circle -5(2)(2), Mumbai Vs. Ms. Manish Flour Mills Pvt. Ltd. in for A.Y: 2012-13, vide order dated 24.10.2018, it had been held as under:

“7. We have heard the rival submissions, perused the orders of the authorities below. Assessing Officer made addition by placing reliance merely on the statements of Shri Bhanwarlal Jain Group which were recorded u S$. 132(4) of the Act. No independent enquiry was carried out by the Assessing Officer, he has not brought any corroborative evidence to substantiate that the transactions are non-genuine. Assessee provided various evidences to establish that the transactions are genuine, creditors are identifiable and credit worthiness is proved. Following information is furnished by the assessee: (1) Confirmation of A/c. by the parties. (2) Income tax returns of the parties for A.Y.2012-13. (3) Bank Statements of the parties showing the loan transactions. (4) Audited Balance sheet & P & L A/c of the creditors along with the schedule wherein credit in the name of the assessee is outstanding in their books. (5) Reply given by the parties to the notice issued by the AO u/s 133(6) confirming the transaction with the assessee. (6) Payment of interest to creditors after subjecting the amount to IDS.

8. By providing all this information to the Assessing Officer the assessee has discharged the initial onus of proving genuineness of the transactions u/s. 68 of the Act. Even the creditors have responded to the notices issued u/s. 133(6) of the Act and confirmed the genuineness of the transactions with the assessee, therefore once the initial onus is discharged by the assessee the burden shifts to the Revenue to disprove the claim of the assessee. We notice that all the loans were taken through 6 ITA (NO36729/MUM/2016 (A.Y: 2012-13) Ms. Manish Flour Mills Pvt. Ltd., banking channels and the repayments for the same was also madethrough banking channels. The loans were repaid after paying interest and deducting TDS. The Assessing Officer ignored the documentary evidences submitted by the assessee and has exclusively relied on statements of third party in making the addition. In spite of request by the assessee the Assessing Officer did not provide any cross-

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 17 examination of the parties who have made the submissions. All these aspects have been considered by the Ld.CIT(A) and deleted the addition observing as under: “4.2.2 In the instant case, however, as seen from the details filed before the AO, a set of which were also filed before me, I do not find any inconsistency or incoherence in the receipt of loans from the parties. Firstly, as regards the transaction, the same has rooted through the banking channels and the source cannot be doubted. Secondly, as was held in several cases that whatever maybe the strength of presumption it cannot replace evidence. Even though, the transaction is from a tainted group, the AO has not gathered any additional independent evidence to show that the transaction with the appellant company was sham, fictitious or artificial except believing the statements given by the entry operators. He has failed to gather evidence to show that the unaccounted cash of the appellant had changed hands subsequently replacing the cheque payments. Thirdly, he has also not answered several valid points raised by the appellant nor proved how the details like PAN, the IT returns, confirmation letters, bank statements of the creditors, audited balance sheet of the creditors cannot be taken note of. Fourthly, the ITAT Mumbai in the case of Anant Shelters P Ltd. (2012) 20 taxmann.com 153 has laid down certain principles with regard to section 68 which the AO is bound to follow. They are reproduced as under(para-7)(i) Section 68 can be invoked when following three conditions are satisfied - (a) when there is credit of amounts in the books maintained by the assessee (b) such credit has to be a sum of money during the previous year (c) either the assessee offers no explanation about the nature and source of such credits found in the books or the explanation offered by the assessee, in the opinion of the AO, is not satisfactory. It is only then that the sum so credited may be charged to income-tax as the income of the assessee of that previous year. (ii) The expression the assessee offers no explanation means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. The opinion of the AO for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on the record. The opinion Of the AO is required to be formed objectively with reference to the material on record file. Once the explanation of die assessee is found unbelievable or false the AO is not required to bring positive evidence on record to treat amount in question as income of the assessee. While considering the explanation of the assessee, the AO has to act reasonably application of mind is the sine qua non for forming the opinion. (iii) Phrase appearing in the section - nature and sources of such credits - should be understood in right perspective, so that genuineness of the transaction can be decided on merits and not on prejudices. Courts are of the firm view that the evidence produced by the assessee cannot be brushed aside in a causal manner, Assessee cannot be asked to prove impossible. Explanation about ‘source of source’ or ‘origins of the origin’ cannot and should not be called for while making inquiry under section. (iv) In the matters related to section 68 burden of proof cannot be discharged to the hilt such matters are decided

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 18 on the particular facts of the case as well as on the basis of preponderance of probabilities. Credibility of the explanation, not the materiality of evidences, is the basis for deciding the cases falling under Section 68. (v) Confirmatory letters or A/c payee cheques do not prove that the amount in question is properly explained for the purpose of section 68. Assessee has to establish identity and creditworthiness of the creditor as well as the genuineness of the transaction. All the three ingredients are cumulative and not exclusive. (vi) In matters regarding cash credit the onus of proof is not a static one. As per the provisions of the section the initial burden of proof lies on the assessee. Amount appearing in the books of a/cs. Of the assessee is considered a proof against him. He can prove the identity of the creditors by either furnishing their PANs or assessment orders. Similarly, genuineness of the transaction can be proved by showing that the money was received by an account payee cheque or by draft. Credit worthiness of the lender can be established by attending circumstances. Once the assessee produces evidences about identity, genuineness and credit worthiness of the lender onus of proof shifts to the Revenue. Fifthly, the Honorable Supreme Court in the case of Lovely Exports Private Limited, (2008) 216 CTR 195 (SC), has stated that the AO is at liberty to bring to tax the amounts in their respective hands of the creditors if their identity, genuineness and creditworthiness is not proved. The AO should have made efforts to assess the amounts in the hands of the creditors at least on protective basis. Lastly, even if the creditworthiness of the creditors is notproved it will not automatically give license to the AO to make additions in the hands of the assessee u/s 68 unless it is proved that it is the unexplained money of the assessee which has been introduced in its books of account in the names of bogus non-existent entities. In the instant case the AO has not made any dent in these lines. On the other hand, the appellant has filed the following details in the case of all the three creditors to prove the identity, genuineness and creditworthiness of the creditors. (1)Confirmation of A/c. by the parties. (2)Income tax returns of the parties for A.Y.2012-13. (3)Bank Statements of the parties showing the loan transactions. (4)Audited Balance sheet & P & L A/c of the creditors along with the schedule wherein credit in the name of the assessee is outstanding in their books. . (5)Reply given by the parties to the notice issued by the AO u s 133(6) confirming the transaction with the assessee. (6)Payment of interest to creditors after subjecting the amount to IDS. 4.2.3 As seen from the above, the appellant has furnished all the details proving conclusively the three ingredients of identity and creditworthiness of the creditors and the genuineness of the transaction. The amounts were paid by the creditors from their running bank accounts which were accounted in the books of the appellant as well as the creditors as seen from the audited accounts filed. The transactions were also confirmed by 5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 19 all the creditors who are assessed to tax. Further, the appellant has paid interest through banks to the creditors by duly subjecting the interest amount to TDS as detailed in this order at para 5.2. I find that the AO was in possession of good information in the form of investigation report, to begin with, but he could neither succeed to repudiate the evidences filed by the appellant nor he could gather independent evidence even to establish the surrounding circumstances not to speak of leading evidence to prove his hypothesis. In view of the above discussion I hold that the loan taken by the appellant from the above three parties cannot be doubted and the addition made by the AO u/s 68 of the Act cannot survive the test ofappeal. I therefore, direct the AO to withdraw the addition. The ground is allowed.

5. The second issue is with regard to addition of Rs.8,32,607/- on account of interest expenses u/s 69C of the Act. The AO has noticed payment of interest to the creditors from whom loan was taken. As the credits were disbelieved by the AO since the credits were given by the bogus concerns floated by Banwarlal Group who are the only entry operators, the AO has also disallowed interest claimed to have been paid to these creditors u/s 69C of the Act. 5.1 The appellant has objected for the disallowance of interest truly been paid to the creditors from whom loans were taken. He has further submitted that the payments were made through banking channel after making TDS applicable. 5.2 I have carefully considered the facts and submissions of the Id.AR. As seen from the details the appellant has borrowed money from four parties and paid interest after making TDS as under: - Name of the lenders. Capital borrowed. Interest accrued. IDS made Net interest paid to lender. Meenakshi Diamonds Pvt. Ltd. 40 lacs 7,24,657 72,466 6,52,191 Roshan Gems Pvt.Ltd. 25 lacs 12,705 1,270 11,435 Abhiman Gems Pvt.Ltd. 75 lacs 35,245 3,525 31,720 Madhur Gems Pvt.Ltd. 75 lacs cl.bal. (Outstanding amount no borrowing during the year.) 60,000 6,000 54,000 Total 8,32,607/-. Since the loan given by the above parties were treated as genuine, in this order earlier paragraphs, the interest paid to those parties is also treated as genuine. Accordingly, the interest paid is allowed as expenditure and AO is directed to withdraw the addition made u/s 69C of the Act. The ground is allowed.”

9. On a careful reading of the order of the Ld.CIT(A), we do not find any infirmity in the order passed in deleting the addition made u/s. 68 of the Act and the consequential interest on the credits. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds raised

by the Revenue.

10. In the result, appeal of the Revenue is dismissed.” 11.149 In the case of Shri Naresh Hiran Vs. ITO 30(2)(4, Mumbai in (Assessment Year 2010-11), vide order dated 20.04.2018, on this issue, the Hon’ble ITAT had held as under:

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 20

“7 We have heard the rival contentions, and perused the record. The Assessing Officer has made impugned addition u s. 68 of the Act on the ground that loan of Rs.25 lakhs taken from Rose Impex was bogus since Rose Impex belonged to Mr. Bhanwarlal Jain group and Mr. Bhanwarlal Jain has accepted that his group was providing only accommodation entries. On the contrary, we noticed that the assessee has furnished all documents necessary to discharge burden of prove placed upon it u s. 68 of the Act. It is well settled proposition of law that the assessee has to prove three main ingredients in order to discharge burden of proof placed upon him u/s. 68 of the Act i.e. the assessee has to prove the identity of creditor, creditworthiness of the creditor and genuineness of the transactions. In the instant case, the assessee has furnished confirmation obtained from Rose Impex, which contained PAN and address of the creditor. The assessee has also furnished copies of return of income filed by the creditor. These documents prove the identity of creditor. The assessee has also furnished bank account of Rose Impex and also it’s own bank account in order to show that the loan transaction has been carried out through banking channel. Though, the learned CIT(A) has observed that there was huge transfer of fund before giving loan to the assessee, perusal of the bank account of Rose Impex would show that the funds have been transferred were through banking channels only and not by way of depositing cash. The assessee has also furnished bank statement to show that the above said loans have been repaid on 25.3.2013. Since transactions of taking loan and repayment of loan have taken place through banking channel, in our view, the genuineness of transaction also stands proved. The assessee has furnished financial statement of Rose Impex. Perusal of the balance sheet would show that the loan of Rs.25 lakhs given to the assessee is duly reflected in the balance sheet of the assessee. Further, it can be noticed that Rose Impex has taken loans from various persons, which formed source for giving loanto the Shri Naresh Hiran assessee. Hence, it cannot be said the Rose Impex was not having funds for giving loan to the assessee, meaning thereby, creditworthiness of the creditor also stands proved. Hence, there is merit in the contention of the learned AR that the assessee has discharged primary onus placed upon it u Ss. 68 of the Act. The Hon'ble Gujarat High Court has held in the case of Sachital Communications (2014) 227 Taxman 219, that if identity of creditor and capacity of the creditor is proved and the transactions have been carried out through banking channel, then no addition could bemade on account of unsecured loan. Identical view was expressed by Hon'ble Gujarat High Court in the case of Patel Ramniklal Hirji (2004) 222 taxman 15, 8. We noticed that the Assessing Officer did not examine various documents furnished by the assessee and did not show that the said documents are not reliable, Instead the Assessing Officer has totally placed rellance on the statement given by Mr. Bhanwarlal Jain, which is claimed to have been retracted, Since the‘addition has been made u/s. 68 of the Act and since we have noticed that the assessee has discharged burden of proof placed upon its shoulders u/s. 68 of the Act, we are of the 5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 21 view that the learned CIT(A) was not justified In confirming the addition by simply placing reliance on the statement given by Mr. Bhanwarlal Jain. The various documents furnished by the assessee, in fact, militate against the statement given by Shri Bhanwarlal Jain. Accordingly, we set aside the order passed by the learned CIT(A) and direct the Assessing Officer to delete the addition of Rs.25 lakhs and also disallowance of interest of Rs. 22,192/ 9. The assessee has also challenged the validity of reopening of assessment, Since we have decided the issues urged on their merits in favour of the assessee, we do not find {t necessary to adjudicate the legal ground.

11.150 In the case of Chandraprakash Paharia Vs. ITO 30(1)2), Mumbai in (Assessment Year 2011-12) &IT.A. No. 6443/Mum/2017 (Assessment Year 2012-13), the Hon’ble ITAT had vide order dated 12.9.2018 had held as under: “14. We have heard rival contentions and perused the record. We notice that the AO has made the additions to both the years u/s 68 of the Act. The AO has primarily formed the view that these loans are not genuine mainly on the basis of report given by the Investigation department of the revenue, There should not be any dispute that the provisions of sec. 68 of the Act place the initial onus upon the shoulders of the assessee to prove the cash credits. In order to discharge the onus, the assessee is required to prove three main ingredients, viz., the identity of the creditor, the credit worthiness of the creditor and the genuineness of transactions. In the instant cases, there is no dispute that the assessee has furnished all the documents and evidences to prove the above said three ingredients. Once the assessee discharges the initial onus, then the onus to disprove them is shifted to the shoulders of the assessing officer.

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 22 "Section 68 of the Income-tax Act, 1961, provides for charging of income of the assessee to tax, if, in the opinion of the Assessing Officer, the assessee failed to render any explanation or the explanation offered by the assessee about the nature and source of any sum found credited in Chan draprakash Paharia the books of the assessee maintained for the previous year, is unsatisfactory. In other words, it is for the assessee to prove the genuineness of the transaction by identifying the creditor and his capacity to advance money. The onus lies upon the asses-see to explain the credit entry but it shifts upon the Assessing Officer under certain circumstances. Where the assessee shows that the entries regarding credit in a third party's account were in fact received from the third party and are genuine, he discharges the onus. In that case the sum cannot be charged as the assessee's income in the absence of any material to indicate that it belongs to the assessee. ‘The assessee was engaged in the business of supply of LPG stoves, pipes, burners, etc. For the financial year 2002-03, he filed a return showing the total sales of Rs.22,62,814 having a credit entry of Rs. 86,737. The assessing authority doubted the veracity of the entry and called for an explanation. The explanation was not accepted by the assessing authority, who treated the entry of Rs.86,737 as an unexplained credit and ordered addition thereof to the income of the assessee. The Tribunal deleted the addition. On appeal to the High Court: Held, dismissing the appeal, that the assessee received the amount by way of an account payee cheque. The amount was returned by way of an account payee cheque. The transactions were reflected in the bank accounts of the assessee as well as of the creditor. The creditor was an Income-tax assessee. Its permanent account number card was placed on record. The assessee had sufficiently discharged the burden which lay upon {It to explain the nature and source of the credit entry appearing in its accounts and the burden clearly shifted to the Department to prove to the contrary to hold that in spite of the assessee's explanation, the entries could still be held to represent the assessee's income. The Assessing Officer failed to invoke the provisions under section 131 of the Act, the Tribunal had rightly concluded that it was sufficient to delete the addition.

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 23 the loan transactions. Instead the AO has placed reliance on the report given by search officials, brushing aside the confirmation given by the lenders and also brushing aside the various documents furnished by the assessee to prove the cash credits. Even though the AO has stated that the assessee has failed to prove the three basic tenets of a legal loantransaction, yet he has not substantiated the same with any credible reasons. Hence, it is a case of mere rejection of various evidences furnished by the assessee. We notice that the AO had asked the assessee to produce books of accounts from one of the lenders, which were not produced. In this regard, the Ld. A.R submitted that the Customs officials have confirmed the trade transactions and further the assessee has furnished the financial statements relating to both the lenders, which documents have not been found fault with. The AO has further stated that the genuineness of loans have not been proved, since they are mere accommodation entries. Here also, the AO has made this statement despite the fact that the lenders have confirmed the loan transactions and their financial statements have also been furnished before the AO. Under these set of facts, various decisions relied upon by Ld. A.R, which are mentioned In the preceding paragraphs, support the case of the assessee. Hence the AO was not justified in making addition of Rs.75.00 lakhs and Rs.25.00 lakhs respectively in AY 2011-12 and 2012-13 u/s 68 of the Act. Consequently the disallowance of interest expenses relating to the above said loans is also liable to be deleted in both the years.

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 24

11.151 In the case of ITO 4(2)(4) vs Khushboo Exports Pvt. Ltd [3647/M/2017],the Hon’ble ITAT Mumbai had held as under:-

“The assessing officer has made the impugned addition u s 68 of the Act. Under the provisions of sec. 68 of the Act, the assessee is required to discharge initial burden of proof placed upon his shoulders, ie., the assessee has to prove the identity of the creditor, the credit worthiness of the creditor and the genuineness of transactions. A perusal of documents filed before the tax authorities and also the observations made by Ld CIT(A) would show that the assessee has discharged the burden placed upon its shoulders. Once the assessee discharges its primary burden, then the burden to disprove the assessee’s version would shift to the shoulders of the assessing officer. In the instant case, the assessing officer has simply relied upon the general statement given by Shri Praveen Kumar Jain. As contended by Ld A.R, it was not shown that the transactions of the assessee with the above said companies have been declared as accommodation entries. On the contrary, the assessee has furnished confirmation letters obtained from the share applicant companies before the Ld CIT(A), after the sworn statement was given by Shri Praveen Kumar Jain. In my considered view, the AO has failed to discharge the burden shifted to his shoulders. The decision rendered by the Indore bench of ITAT in the case of Agrawal Coal Corporation (P) Ltd, in my view, has been rightly distinguished by Ld. A.R. On the contrary, I notice that the Ld CIT(A) has followed the decision rendered by the jurisdictional Hon’ble Bombay High Court in the case of Gagandeep Infrastructure (P) Ltd (supra). The Ld A.R also placed reliance on the decision rendered by Hon’ble Bombay High Court in another case named Paradise Inland shipping (P) Ltd (supra). In these cases, it was held that once the assessee has discharged the initial burden of proof placed upon him u s 68 of the Act, no addition could be made. It was further held that if the revenue’s case was that the share applicants are bogus shareholders, then it was for the revenue to proceed by reopening of assessments of such shareholders and assessing them totax in accordance with the law and it would not entitle the revenue to add same in assessee’s hand.

8. Since the Ld CIA) has passed a reasoned order by duly considering all the relevant facts: surrounding the issue and since he has followed the binding decision of Hon'ble Bombay High Court, I do not find any reason to Interfere with his order. In the result, the appeal filed by the revenue is dismissed.” 11.152 Thus, the undersigned is legally bound by the various decisions of the higher judicial authorities cited above, which have examined each and every aspect of the present issue at hand. Even if the undersigned is not agreeable with the above reproduced judgments, the CIT(Appeal) being a subordinate authority in the judicial hierarchy is bound to follow these judicial decisions of the superior authority.

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 25

11.153 The Hon'ble Supreme Court in the case of Union of India and Others vs Kamilakshi Finance CorporationAIR 1992 SC 711, 1994 (46) ECC 129, 1991 ECR 486 SC, has held that utmost regard should be paid by the adjudicating authorities and the appellate authorities to the requirements of judicial discipline and the need for giving effect to the orders of the higher appellate authorities, which are binding on them.The principles of judicial discipline require that the orders of the higher authorities should be followed unreservedly by the subordinate authorities. If this healthy rule is not followed, the result will only be undue harassment to the assessees and chaos in administration of tax laws. The relevant excerpts of Para 6 of the said order are reproduced hereunder: “6………..The High Court has, in our view, rightly criticised this conduct of the Assistant Collectors and the harassment to the assessee caused by the failure of these officers to give effect to the orders of authorities higher to them in the appellate hierarchy. It cannot be too vehemently emphasised that it is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities; The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal] is binding upon the Assistant Collectors and the Appellate Collectors who Function under the jurisdiction of the Tribunal. The principles of judiciay Discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not “acceptable” to the department. In itself an objectionable phrase - and is the subject matter of an appeal Can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessee’s and chaos in administration of tax laws.” 11.154 In the case of Kamlakshi Finance, referred supra, the Hon'ble Apex Court has also brushed aside the plea of the department that it would lose revenue and would also have no remedy to have the matter rectified. The Hon’ble Apex Court has emphasized that the orders of the higher authorities shall be followed and if the Department is correct, finally it will get its due taxes, though after some procedural delay. The relevant portion of the judgment in this regard, is reproduced below:

“7. The impression or anxiety of the Assistant Collector that, if he accepted the assessee's contention, the department would lose revenue and would also have no remedy to have the matter rectified is also incorrect. Section 35-E confers adequate powers on the department in this regard. Under Sub-section (1), where the Central Board of Direct Taxes come across any order passed by the Collector of Central Excise with the legality or propriety of which it is not satisfied, it can direct the Collector to apply to the Appellate Tribunal for the determination of such points arising out of 5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 26 the decision or order as may be specified by the Board in its order.Under Subsection(2) the Collector of Central Excise, when he comes across any order passed by an authority subordinate to him, if not satisfied with this legality or propriety, may direct such authority to apply to the Collector (Appeals) . for the determination of such points arising out of the decision or order as may be specified by the Collector of Central Excise in his order and there isa further right of appeal to the department. The position now, therefore, is that,if any order passed by an Assistant Collector or Collector is adverse to the interests of the Revenue, the immediately higher administrative authority has the power to have the matter satisfactorily resolved by taking up the issue to the Appellate Collector or the Appellate Tribunal as the case may be. In the light of these amended provisions, there can be no justification for any Assistant Collector or Collector refusing to follow the order of the Appellate Collector or the Appellate Tribunal, as the case may be, even where he may have some reservations on its correctness. He has to follow the order of the higher appellate authority. This may instantly cause some prejudice to the Revenue but the remedy is also in the hands of the same officer.He has only to bring the matter to the notice of the Board or the Collector so as to enable appropriate proceedings being taken under Section.35E (1) or (2) to keep the interests of the department alive. If the officer's view is the correct one, it will no doubt be finally upheld and the Revenue will get the duty, though after some delay which such procedure would entail.” 11.155 Thus, the decision of higher authority needs to be followed in the case of a quasi-judicial authority and, therefore, a lower officer is bound to follow the decision of the higher authority. Unless, in Appeal the order of the higher authority is stayed, it operates as a valid binding decision to the lower authority not only in the case of the same assessee but also in other cases where the same law point is involved. In the present case at hand, no stay has been granted by any Court on the operation of the 245D(4) orders passed by the Hon'ble ITSC and hence, the same are binding on the undersigned. 11.156 The law on Judicial Precedents & Contempt of Court has been elucidated upon by the Hon'ble Supreme Court in the case of CIT vs. Ralson Industries Ltd. - (2007) 288 ITR 322(SC), wherein it has been held that when an order is passed by a higher authority, the lower authority is bound thereby keeping in view the principles of judicial discipline. This aspect of the matter has been highlighted by the Hon’ble Apex Court in the case of Bhopal Sugar Industries vs. Income Tax Officer, Bhopal [AIR 1961 SC 182] in the following terms:

“……... We think that the leaned Judicial Commissioner was clearly in error in holding that no manifest injustice resulted from the order of the respondent conveyed in his letter dated March 24, 1955. By that order the respondent virtually refused to carry out the directions which a superior tribunal had given to him in exercise of its appellate powers in respect of 5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 27 an order of assessment made by him. Such refusal is in effect a denial of Justice, and is furthermore destructive of one of the basic principles in the administration of justice based as it is in this country on a hierarchy of courts. If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly condemning the respondent for refusing to carry out the directions of the superior tribunal, yet held that no manifest injustice resulted from such refusal. It must be remembered that the order of the Tribunal dated April 22, 1954, was not under challenge before the Judicial Commissioner. That order had become final and binding on the parties, and the respondent could not question it in any way. As a matter of fact the Commissioner of Income-tax had made an application for a reference, which application was subsequently withdrawn. The Judicial Commissioner was not sitting in appeal over the Tribunal and we do not think that in the circumstances of this case it was open to him to say that the order of the Tribunal was wrong and, therefore, there was no injustice in disregarding that order. As we have said earlier, such view is destructive of one of the basic principles of the ‘administration of justice. In fairness to him it must be stated that learned counsel for the respondent did not attempt to support the judgment of the Judicial Commissioner on the ground that no manifest injustice resulted from the refusal of the respondent to carry out the directions of a superior tribunal. He conceded that even if the order of the Tribunal was wrong, a subordinate and inferior tribunal could not disregard it; he readily recognised the sanctity and importance of the basic principle that a subordinate tribunal must carry out the directions of a superior tribunal. He argued, however, that the order of the Tribunal was unintelligible and the respondent did his best to understand it according to his light. This argument advanced on behalf of the respondent appears to us to be somewhat disingenuous……………” 11.157 Further in the case of Tej International Private Limited Vs. DCIT (69 TTJ Del 650), the Hon’ble Delhi High Court has held that in the hierarchical judicial system that we have in India, the wisdom of the court below has to yield to the higher wisdom of the court above. The relevant excerpts of the judgment referred supra, are reproduced below:

“7. It may be mentioned that some Benches of the Tribunal have either taken independent view on the issue in this appeal or have later on followed Hon'ble Gauhati High Court, referred to above. However, with the latest judgment of Hon'ble Karnataka High Court in Kwality Biscuits Ltd.'s case (supra) the situation is materially different. In the hierarchical judicial system that we have, better wisdom of the court below has to yield to higher wisdom of the court above and, therefore, once an authority higher than this Tribunal has expressed an opinion on that issue, ‘we are no longer at liberty to rely upon earlier decisions of this Tribunal even if we

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 28 were a party to them. Such a High Court being a non-jurisdictional High Court does not alter the position as laid down by Hon'ble Bombay High Court in the matter of CIT Vs. Godavari Devi Saraf (1978) 113 ITR 589 (Bom). Therefore, we do not consider it permissible to rely upon the earlier decisions of this Tribunal even if one of them is by a Special Bench. It will be wholly inappropriate for us to choose views of one of the High Court’s based on our perceptions about reasonableness of the respective viewpoints, as such an exercise will de lacto amount to sitting in judgment over the views of the High Courts something diametrically opposed to the very basic principles of hierarchical judicial system. We have to, with our highest respect of both the Hon'ble High Courts, adopt an objective criterion for deciding as to which of the Hon'ble High Court should be followed by us.” 11.158 In view of the above facts and circumstances, as also the various binding Judicial precedents, the AO is directed to delete the addition made u/s 68 of the Act. Accordingly, the Ground No. 1 & 2 of the present appeal are allowed.” 11.2 Following my appellate decision in the case of Mr. Hakim Lakdawala for the A.Y. 2012-13,the Grounds No. 1 & 2 of the present appeal for A.Y. 2011-12 are allowed, as the facts and circumstances have remained exactly the same.

Ground of Appeal No.3:

12.0 The Ground of Appeal No.3 of the present appeal reads, as under:

“On the facts and circumstances of the Appellant’s case and in law the LdAssessing Officer erred inestimating commission incomeof Rs.2,60,000/- for arranging alleged bogus unsecured loan without and concrete material on record.” A.O.’s Contentions:

13.0 The AO has in the assessment order in on this issue contended, as under:

“During the course of search and seizure proceedings conducted in case of ShriBhanwarlal Jain group of companies, it was established that Bhanwarlal Jain group of cases has charged commission on accommodation entries provided to various persons in the form of unsecured loans in exchange of cash. The details of commission charged are discussed in the above mentioned paras of the background note. During the post search enquiries it was established that the going market rate of commission charge for providing accommodation entries of loans and advances is 20 paise per Rs. 100 per month. This fact gets further validated from the party wise ledger of the loan parties in the parallel

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 29 account maintained on the pen drive by Bhanwarlal Jain group of cases. In the statement recorded u/ 132(4) of the Act dated18.02.2014, ShriSurinder Sabhlok has specifically stated that against the cheque issued a commission of Rs.0.20 per month per Rs. 100 was given to the broker who arranged these accommodation entries.” Appellant’s submission:

14. During the course of appellate proceedings, the Ld. Counsel for t Appellant had made the following submissions:

“2.1 In the impugned order, Id. A.O. has made an addition amounting to Rs.2,60,000/- on the footing that the appellant has taken accommodation entry in the form of unsecured loan and has paid commission in cash for obtaining such accommodation entry. 2.2 In this respect, it is submitted that the addition made on account of alleged commission payment is based on whims and fancies of the Id. A.O. and not based on any material. It is submitted that in-spite of an extensive search action, no evidence of payment of any such commission has been found by the search team. Therefore, the aforesaid allegation is baseless and incorrect. 2.3 In any case, it is submitted that once the unsecured loans are held to genuine and explained, the question of any commission payment would not arise. Therefore, this ground is consequential to ground no. 1 & 2 as above. 2.4 Accordingly, it is submitted that addition made by the Id. A.O. on account of alleged commission payment may kindly be deleted.” Decision on Ground No. 3:

15.0 I have gone through the various grounds of appeal, facts and circumstances of the case, the contentions of the Assessing Officer in the assessment order, submissions of the Appellant made during the course of the appellate proceedings and other materials on record.

15.1 I have noted that a similar issue had come up for consideration in Appeal No. CIT(A)-50 /10152, 10151, 10150/2016-17 & No. CIT(A)-50 /10186/2017-18 for the A.Y. 2012-13 to A.Y. 2015-16 in the case of Mr. Hakim Lakdawala, who belongs to the connected Group of cases. The facts and circumstances of the present appeals are exactly the same as in the case of Mr. Hakim Lakdawala. For the sake of ready reference, my detailed appellate decision in the case of Mr. Hakim Lakdawala for the A.Y. 2012-13 on this issue is reproduced hereunder:

“Decision on Ground No. 3: 15.0 I have considered the submissions of the Appellant, the assessment order and the other materials available on record on this issue.

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 30

15.1 The facts and issues involved in these grounds are consequential in nature. The addition on account of unsecured loans has already been deleted by me in the earlier grounds of appeal

, as discussed in the above paragraphs. Therefore, once the addition made by the AO on account of unsecured loans u/s 68 of the Act is deleted, the addition on account of corresponding commission expenses also needs to be added. Following the various orders of the Hon'ble ITAT, Mumbai on this issue referred supra, the addition of commission paid on such unsecured loans made by the AO is hereby, deleted. Accordingly, the Ground of Appeal No. 3 raised by the Appellant is allowed.” 15.2 Following my appellate decision in the case of Mr. Hakim Lakdawala for the A.Y. 2012-13, the Grounds No. 3 of the present appeal for A.Y. 2011-12 is allowed, as the facts and circumstances have remained exactly the same.”

4. During the course of appellate proceedings before us the ld. D.R referred assessment order of the A.O and contended that assessee has admitted that they have obtained accommodation entries from the concerns managed and controlled by Shri Bhanwarlal Jain. He also submitted that Bhanwarlal Jain had also admitted in his statement recorded during the course of search action on 11.10.2013 that his concerns were involved n providing accommodation entries of purchase and loans to various beneficiaries. The ld. D.R has supported the order of A.O.

On the other hand, the ld. Counsel has referred various pages of the order of ld. CIT(A) and submitted that ld. CIT(A) has rightly relied on the order of Hakim Lakadwala which was based on same facts and identical issue. He also referred para 11.5 of page 33 of CIT(A) order stating that not even a single incriminating material was found during the course of search operation conducted in the case of the assessee. He also mentioned that A.O has failed to bring on record any statement of Shri Bhanwarlal Jain or his associate in which the assessee’s name had been specifically mentioned. The ld. Counsel has referred the order of CIT(A) from page No. 63 to 80 wherein various judicial pronouncements

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 31 relied upon by the ld. CIT(A) stating that sasessee has produced the necessary documentary evidences to establish the genuineness of the loan transactions. The ld. Counsel has also referred page no. 80 of the order of CIT(A) stating that assessee submitted that Shri Bhanwarlal Jain had retracted his statement before the Investigation Wing. Therefore, reliance of such statement is incorrect. The ld. Counsel also referred the other pages of the ld. CIT(A) and submitted that ld. CIT(A) has rightly deleted the addition in the absence of incriminating material, retraction of statement both by the assessee and Shri Bhanwarlal Jain and after taking into consideration a number of judicial pronouncements.

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 32 authorities had mentioned that Shri Bhanwarlal Jain stated that loan given by his entities were mere accommodation entries. Therefore, the assessee was under bonafide belief that the loan taken from the entities of Shri Bhanwarlal Jain were no longer payable, therefore, the assessee had declared the loan taken from Bhanwarlal Jain and his entities as income in respective years. However on counter their claim the lenders had given the copy of affidavit of retraction of the statement dated 15.05.2014 filed on 17.05.2014 by Shri Bhanwarlal Jain before the office of Additional Director of the Income Tax Investigation Unit-19, Mumbai. Earlier, the assessee had declared the said loan as income on the basis of statement of Shri Bhanwarlal Jain shown by the departmental authorities and assessee was under bonafide belief that loan were not payable. The said statement no longer valid in the court of law therefore, the assessee ought to repay the loan taken from the said parties. The assessee was searched on the basis of finding of search conducted in the case of Bhanwarlal Jain Group. During the course of appellate proceedings before the ld. CIT(A) the assessee had also explained that on the basis of statement of Shri Bhanwarlal Jain, he was pressurized to accept the loan amount as its own money. It was also submitted during the course of assessment that no incriminating material was found which could even cast doubt on the genuineness of the unsecured loan. It was also explained that on retraction of the statement by Shri Bhanwarlal Jain, the lenders have asked the assessee to repay the said loan given by them to the assessee.Before the ld. CIT(A) the assessee had submitted the complete details of retraction made by Shri Bhanwarlal Jain. Since, the said statement was no longer valid and the assessee was ought to repay the loan, therefore, the statement was retracted and had not disclosed any additional income which was incorrectly offered during

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 33 the course of search action. It was also explained before the A.O that assessee was in the business of real estate and often falls liquidity crunch, therefore assessee takes unsecured loan on interest from various parties and the same were used for the purpose of business. The assessee had taken loan of Rs.2,38,00,000/- and has paid interest of Rs.31,79,189/- and incurred commission expenses of Rs.8,80,800/-. The payments have been made through proper banking channels and subsequently unsecured loan taken have been repaid to the lenders. There was no other evidence except the retraction statement of Shri Bhanwarlal Jain. The assessee explained during the course of search that unsecured loan were entirely genuine and they were received through proper banking channel. However, subsequently, the authorized officer produced the statement of Shri Bhanwarlal Jain and search official pressurized the assessee to accept the money as his own since the lenders have accepted the same. It is also submitted that recording of statement went through the entire days and in order to escape the entire mental duress he made a business decision that since the loan were no longer payable and the same was offered before the search party to put an end to search action. The assessee has also claimed that identify of the creditors has been established on the basis of PAN Card, return of income, account confirmations, genuineness of the transactions have been established on the basis of account confirmations and bank statements where all the loan were taken by account payee cheques and creditworthiness of the creditors were established on the basis of balance sheet and bank statement of the parties. The A.O had not controverted these material facts with any relevant evidences. In the appeal the ld. CIT(A) has deleted the amount after following the decision of coordinate bench of ITAT in the case of Nemichand Jain Vs. DCIT,CC-1(3), Mumbai,

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 34 in on similar facts as elaborated in his finding supra in the order. We have gone through the decision of coordinate bench of the ITAT in the case of Neminchand Jain Vs. DCIT as discussed in the finding of ld. CIT(A), wherein the addition on account of unsecured loan taken from companies controlled and operated by Shri Bhanwerlal Jain and his associate was made wherein also the assessee has filed various details in order to prove genuineness of transaction i.e confirmation letter, PAN, ITR acknowledgment , bank statement, affidavit etc. in the backdrop of admission of Shri Bhanwerlal Jain in his statement recorded u/s 132(4) of the Act. In the case of the assessee the facts are also similar and assessee has also filed the similar detail and copies of document as were filed in the case of Nemichand Jain. In the Nemichand Jain case as reproduced in the finding of ld. CIT(A) supra the coordinate bench of the ITAT held that the assessee had discharged initial burden by filing various documents to prove identity, genuineness of transactions and creditworthiness of the parties and held that the A.O was erred in making addition towards unsecured loans u/s 68 of the Act. In the case of the assessee A.O has also failed to controvert the submission of the assessee supported with the relevant material. In the light of the facts and findings of coordinate bench in the Nemichand Jain case as supra, we find that the issue raised before the Tribunal in this year pertaining to the case of the assessee are similar to the case of Nemichand P. Jain.

After taking into consideration the aforesaid facts, decision of coordinate benches and finding of the ld. CIT(A) we don’t find any infirmity in the decision of ld. CIT(A), therefore, ground No. 1 & 2 of the revenue stand dismissed. Since, the decision of ld. CIT(A) in deleting the addition on account of unsecured loan u/s 68 is confirmed by us,

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 35 therefore, we don’t find any merit on the ground No. 3 of the revenue of payment of commission of Rs.8,80,800/- and interest of Rs.37,79,189/-. In the result, the appeal of the revenue is dismissed.

Ground No. 1& 2: (Ld.CIT(A) deleted the addition of Rs.2 crores made by the A.O on account of unexplained cash credit u/s 68 of the Act)

Ground No. 3: (Ld. CIT(A) deleted the addition of Rs.2,60,000/- and Rs.32,055/- on account of commission income and interest expenses)

Ground No. 1 & 2: (Ld. CIT(A) deleted the addition of Rs.1,95,00,000/- on account of unexplained cash credit u/s 68 of the Act)

8. As the facts and issue involved in these grounds are the same as were there in ground no. 1 & 2 in therefore,

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 36 applying the finding of the same as mutatis mutandis both these grounds stand dismissed.

Ground No. 3: (ld. CIT(A) deleted the addition of Rs.10,39,000/- and Rs. 41,28,689/- on account of commission & interest expenses)

Ground No. 1 & 2: (ld. CIT(A) deleted the addition of Rs.4,50,00,000/- on account of unexplained cash credit u/s 68 of the Act)

10. As the facts and issue involved in these grounds are the same as were there in ground no. 1 & 2 in therefore, applying the finding of the same as mutatis mutandis both these grounds stand dismissed.

Ground No. 3: (ld. CIT(A) deleted the addition of Rs.6,00,000/- and Rs.9,57,946/- on account of commission & interest expenses)

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 37 Ground No. 1 & 2: (Ld. CIT(A) deleted the addition of Rs.1,95,00,000/- on account of unexplained cash credit u/s 68 of the Act)

Ground No. 3: (ld.CIT(A) deleted the addition of Rs.2,88,000/- and Rs.10,22,303/-)

Order pronounced in the open court on 23.06.2022 Sd/- Sd/- (PAVAN KUMAR GADALE) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 23.06.2022 PS: Rohit आदेशकी�ितिलिपअ�ेिषत/Copy of the Order forwarded to : अपीलाथ�/ The Appellant 1. ��थ�/ The Respondent. 2. संबंिधतआयकरआयु�/ The CIT(A) 3. आयकरआयु�(अपील) / Concerned CIT 4. िवभागीय�ितिनिध, आयकरअपीलीयअिधकरण, अहमदाबाद/ DR, ITAT, Mumbai 5.

5 Appeals DCIT, CC-8(1) Vs. Shri Surinder Anantram Sabhlok 38