RACHANA KIRTI DOSHI,MUMBAI vs. ITO WARD 19(3)(1), MUMBAI

We have heard the counsels for both parties, perused the material placed on record, the judgments cited before us, and the order passed by the Revenue Authorities. From the records, we notice that information was received by the AO from the office of the ADIT (Investigation), Mumbai to the effect that a survey action was undertaken in the case of Mr. Shailesh M. Shah. During the said proceedings, some loose papers were found at the residence of Mr. Shailesh M. Shah which mentioned that the assessee had made bogus transactions/accommodation entries in the form of unsecured loans taken from the following parties, the details of which are contained herein below:

Therefore, after providing an opportunity of being heard and seeking a reply from the assessee, the AO made additions under Section 68 of the Act. Subsequently, the Ld. CIT(A), in the appellate proceedings, restricted the additions to Rs. 17,50,000/- , against which the assessee has preferred the present appeal.

It was pointed out by the assessee that he had taken loans only from the following parties:

We noticed that, in order to prove the identity and creditworthiness of the parties and the genuineness of the transactions, the assessee had furnished loan confirmations along with PAN and addresses, bank statements of the lenders, and ITRs of all the parties.

Even in some of the cases, the AO issued notices under Section 133(6) of the Act, and consequently those parties appeared before the AO. However, the additions were made by the AO only on the basis of the information received from the ADIT (Inv.) report.

It was pointed out during the course of arguments that the loans availed by the assessee had already been repaid, the details of which are mentioned by the assessee in the table below:

After having gone through the facts of the present case, we find that all the loan confirmations along with copies of the acknowledgements of returns filed and the bank statements of the parties were submitted, which goes to prove the identity, genuineness, and creditworthiness of the parties.

It is important to mention here that the AO could not bring on record any evidence to the effect that at any time any cash was withdrawn or deposited in the bank accounts of the lenders. Even the statement of Mr. Shailesh M. Shah was not provided to the assessee despite the fact that the assessee had requested the same time and again during the course of the assessment proceedings.

From the entirety of the facts and circumstances mentioned above, we find that the assessee had already discharged his onus by placing on record all the concerned and relevant documents in the shape of loan confirmations along with PAN and addresses, bank statements of the lenders, and ITRs of the parties.

Moreover, documents have been placed on record to show that the entire loan has already been repaid by the assessee.

We find that there is no finding with regard to the repayment of the loan by the assessee. Be that as it may, we are of the view that the assessee has successfully proved his case. However, in order to ascertain/verify the repayment of the loan, the matter is restored to the file of the AO to verify the said fact. In case it is found that the loan has already been repaid, the AO is directed to delete the addition. Consequently, these grounds raised by the assessee stand allowed for statistical purposes.

Ground No. 1: Since we have already adjudicated Ground Nos. 2 to 4, in view of our detailed findings, this ground raised by the assessee becomes academic in nature and thus needs no adjudication.

In the result appeal filed by the assessee is allowed for statistical purposes.