Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM
IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM आयकर अपील सं/ (िनधा"रण वष" / Assessment Year: 2013-14) बनाम/ ITO 15(3)(3) Satyam Roller Flour Mills R. No.452, Aayakar Bhavan, Pvt. Ltd. Vs. R-12, TTC Industrial Area, Mumbai-400020. MIDC Near Rabale Telephone Exchange, Navi Mumbai-400701. "थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACS4131R (अपीलाथ" /Appellant) (""थ" / Respondent) .. Revenue by: Shri T. S. Khalsa (Sr. AR) Assessee by: Shri Suchek Anchaliya सुनवाई की तारीख / Date of Hearing: 04/02/2021 घोषणा की तारीख /Date of Pronouncement: 17/03/2021 आदेश / O R D E R PER AMARJIT SINGH, JM:
The revenue has filed the present appeal against the order dated 05.10.2018 passed by the Commissioner of Income Tax (Appeals) -24 Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2013- 14. 2. The revenue has raised the following grounds: - "
1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the entire disallowance on account of bogus loan, without considering the findings of the DGIT(Inv.) during the search that the assessee had deliberately made A.Y.2013-14 accommodation entry in the Profit & Loss account and balance sheet.
2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in presuming that loans have been received from unknown sources by the assessee and taking it into consideration for computing profit and gains of the business for the purpose of section 28 of the Act?
3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the bogus loan of the assessee without taking the ratio of judgement of the Hon'ble Supreme Court in case of M/s Navodaya Castle (P) Ltd. vs CIT(2015) 56 taxmann.com18(18)230 Taxmann 268(SC), where in it was held that certificate of incorporation, PAN etc were not sufficient for the purpose of identification of subscriber company, when there was material to show the subscriber was a paper company and not a genuine company.
4. The applicant craves leave to add, amend or alter any grounds or add new ground which may be necessary."
3. The brief facts of the case are that the assessee filed its return of income on 29.09.2013 declaring total income to the tune of Rs.17,76,890/- for the A.Y.2013-14. Thereafter, the case was selected for scrutiny and notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee company is engaged in the business of manufacturing of wheat products into Maida, Rava, Suji, Atta etc. A search and seizure action was conducted in the case of Shri Bhanwarlal Jain Group on 03.10.2013 by DGIT(Inv.), Mumbai. The Investigation Wing, Mumbai covered certain name sake/dummy directors/partners/proprietors of various concerns that were being actually managed, controlled and operated by Shri Bhanwarlal Jain Group, u/s 132 and 131 of the I. T. Act, 1961. During the course of search, it was found that all the name sake/dummy 2 A.Y.2013-14 directors/partners/proprietors of various concerns belong to the native place of Shri Bhanwarlal Jain Group in Rajasthan and have either known Shri Bhanwarlal Jain Group personally or through their families. An information was received from the DGIT(Inv.), Mumbai that the assessee has taken the accommodation entries of unsecured loans from the following parties which is hereby reproduced as under.:
S. No. Name of the hawala Parties Amount 1 Look at me Retall Pvt. Ltd. 9073233 2 Sankhala Exports Pvt. Ltd. 9073233 3 Kothari & Co. 2569164 20715630 The AO raised the said addition. On perusal of the computation of income, it was seen that the assessee has shown in sum of Rs.30,800/- as dividend income and claimed the same as exempt u/s 10 of the I. T. Act. Thereafter, the total income of the assessee was assessed in sum of Rs.2,24,95,760/-. Feeling aggrieved, the assessee filed an appeal before the CIT(Appeals) who allowed the appeal of the assessee, therefore, the Revenue has filed the present appeal before us.
We have heard the arguments advanced by the Ld. Representative of the parties and perused the record. Before going further, we deem it necessary to advert the finding of the CIT(A) on record.: - “5. I have given my careful consideration to the rival submissions, material on record and duly considered the factual matrix of the case as also the applicable legal position. Ground No. 1 is raised against the addition made of Rs. 2,07,15,630/- unexplained cash credit u/s 68 of I T Act, 1961. 3 A.Y.2013-14 During the course of assessment proceedings, the appellant has filed several details required the prove the identity and creditworthiness of the persons, and the genuineness of the transaction in the: form of PAN cards, IT return copies, bank statements, confirmations, affidavits, audited accounts etc. as is evident from the records and claimed that it has discharged its onus. The Ld.AR has further argued that the transaction has taken place through banking Channels, therefore the genuineness of loan need not be doubted. The excessive reliance on the statements given by a third-party i.e. key persons of Bhanwarlal Jain group, who the appellant does not know, is not proper even without giving the appellant a chance to cross-examine them who have given such adverse statements. He further argued that the addition was made without providing the appellant the corroborative evidence in the possession of the AO to prove that the appellant has paid cash, as alleged, against the receipt of cheque. On the other hand, the AO has believed that these documents submitted before him were engineered to explain bogus loans since those who involved in bogus transactions in an organised way are meticulous in arranging these make-believe documents. He further believed that the office bearers/key persons of Bhanwarlal Jain group have given categorical and unequivocal statements stating that they have involved only in bogus transactions by giving loan by cheque for exchange of cash through the companies/firms floated by them. 5.1.1 No doubt that there is some force in the arguments of the AQ- firstly, the statements were given by the very authors of the fictitious firms/companies under oath under section 132(4) of the Act during the course of search and seizure operations and in subsequent statements, admitting the activity of giving accommodation entries for purchases, loans and investment and Share application money to various parties seeking such accommodation by following unethical practices to defraud the revenue. Secondly, the appellant IS one of such companies who have taken such accommodation entries Since some of the concerns floated by entry operators (about 70 such Concern) are very much appearing in the books of the appellant compass 4 A.Y.2013-14 unethical practices are not uncommon in the business community as ‘is evident from a series of operations conducted by investigating agencies revealing similar practices. 5.1.2 As far as the question of validity of the transactions are concerned, even if some of the transactions entered into by the above parties are found to be net genuine, it does not lead to the conclusion that all the transactions ‘entered into by the said parties were bogus or non-genuine including the transaction related to the appellant. The information received by the Ld. AO could be said to be sufficient to raise a doubt about genuineness of the transactions. However, further enquiry was required to be conducted to form an opinion or belief as to the transactions being non-genuine. A transaction which is supported by documentary evidences could not be treated as bogus or non-genuine merely on the basis of doubts raised regarding the same. The Ld. AO did issue notices u/s 133(6) of the Act to the loan parties, all of whom duly replied and confirmed the genuineness of the transactions with the appellant, there is no further evidence brought in the assessment order to prove the above conclusion drawn by the Ld. AO. The assessment proceedings were wide open and the Ld.AO could have carried out independent investigation to prove his argument regarding the transactions being non-genuine. No such investigation has been carried out by the Ld.AO. The outcome of investigation carried out in the case of Bhanwarial Jain and the conclusions drawn therein cannot be applied ipso facto and in a sweeping manner to all other cases who have entered into transactions during that period without making any enquiry or investigation to examine the genuineness of the particular transaction which is under suspicion. Simply relying on the report of the Investigation wing, Mumbai and statements recorded during the course of searches in the Bhanwarlal Jain group, the Ld. AO cannot conclude that all transactions are bogus or have no credential value. 5.1.3 In the instant case, as seen from the details filed before the AO, a set of which were also filed before me, do not find any inconsistency or incoherence in the receipt of loans from the 5 A.Y.2013-14 parties. Firstly, as regards the transaction, the same has routed through the banking channels a source cannot be doubted. Secondly, as was held in sever 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) 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. (i) The expression the assessee offers ne 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 ls required to be formed objectively with reference to the material on record file, Once the explanation of the assessee is found unbelievable or false the 40 is not required to bring positive evidence on record to treat amount in Weston as income of the assessee, While considering the explanation of the 6 A.Y.2013-14 assessee, the AO has to act reasonably application of mind, application of mind is 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 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.”
7 A.Y.2013-14 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 gy least on protective basis. Lastly, even if the creditworthiness of the additions In the hand of the assesses u/a 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 rove the identity, genuineness and creditworthiness of the creditors. i) Confirmation of Ledger ii) Copy of Loan Confirmation iii) Copy of Acknowledgement of ITR for A.Y. 2013-14 iv) Copy of Financials Statements for A.Y. 2013-14 v) Copy ef Bank Statement vi) Copy of PAN vi) Copy of Affidavit Further, the Honourable Income Tax Appellate Tribunal, Mumbai, has in numerous cases decided on the issue at hand, bearing identical facts, as in the present case. I find the issue has been adjudicated, as under:
DCIT 25(1) vs. Ms. YRV International “12. We have heard rival contentions and perused the record. We notice that the AO has made the impugned addition u/s 68 of the Act. It is a well settled Principle of law that the initial onus to prove the genuineness of the cash credit is placed upon the assessee and in order to discharge the initial onus, the assessee is required to prove three main ingredients, viz., the identity of the creditor, the creditworthiness of the creditor and the genuineness 8 A.Y.2013-14 of transactions, Once the assessee discharges the Initial anus, then the onus to disprove the same Is shifted upon the shoulders of the assessing officer.
In the instant case, the assessee has taken loans from M/s A2 Jewels and M/s Daksh Diamonds, All the loan transactions have taken place through the banking channels and hence the genuineness of transactions is not in doubt, Both the above said creditors are assessed to Income tax and further the notices Issued by the AO u/s 133(6) of the Act were duly served Upon them and further they have also replied ta the same. Hence the identity of the creditors is also stand proved. In order to prove the creditworthiness, thé assessee has furnished the financial statements of these two editors. Contention of the revenue is that the capital balance and the disclosed by them are low. Accordingly it was contended that these two concerns could not have given such kind of huge amounts as loan. However, in our view, both of them are not determinative factors. What is required to be seen is whether the creditor could prove the availability of funds with it or not. A perusal of the financial statements furnished by both the creditors would show that the loans given to the assessee have been duly disclosed and further these creditors were having sources by way of loans taken by them from others. Further both the concerns were carrying of business having huge turnover. Hence the movement of funds in their accounts and also the availability of funds with them cannot be doubted. Hence, we are of the view that the Ld CIT(A) was justified in holding that the creditworthiness of these two creditors also stand proved.
We also notice that the assessing officer has also made independent enquiry with these two creditors by issuing notices u/s 133(6) of the Act and in response to the same, both these creditors have confirmed the loan transactions. We also notice that the AO did not find fault with the financial statements of these two creditors. We also notice that the AO has proceeded to make the addition u/s 68 of the Act only for the reason that Shri Ritesh Siroyahas admitted that his group has provided bogus sales bills. As observed by Ld CIT(A), Shri Ritesh Siroya has not implicated 9 A.Y.2013-14 the assessee nor did not he mention that the loans given to the assessee were bogus. On the contrary, the very same Shri Ritesh Siroya has furnished affidavits, during the course of assessment proceedings, confirming the loan transactions. We notice that the AO could not prove that these financial statements, confirmation letters and affidavits filed by Shri Ritesh Siroya are wrong. Thus the Ld CIT(A) has rightly pointed out that the AO has ignored the documentary evidences furnished by the assessee. Thus the assessee has discharged the initial onus placed upon u/s 68 of the Act. On the contrary, it is seen that the AO has failed to discharge the onus shifted upon its shoulders.
We notice that the Ld CIT(A) has followed the principles laid down in various case laws extracted above. Before us, none of the case laws wag controverted. The foregoing discussions also show that the AO has brushed aside various documents furnished by the assessee and proceeding, to make the addition only on the basis of information received from the investigation wing and the statement given by Shri Ritesh Siroya. The Ld CIT(A) has rightly pointed out these facts end acoordingly concluded that the addition mace by the AO was not justified. In view of the foregoing discussions, we are of the view that the decision rendered by Ld CIT(A) does not call for any interference, since the first appellate authority has rendered his decision by considering the legal principles enunciated in various case laws relied upon by him and further applying the same to the facts of the present case. Thus we notice that the Ld CIT(A) has reached his decision in @ systematic manner. Accordingly we affirm the decision rendered by Ld CIT(A). 16. in the result, the appeal filed by the Revenue is dismissed.”
‘3. I have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee an individual engaged in the business of builder and developer declared loss of Rs. 1,29,68,736 in his return on 10 A.Y.2013-14 15.09.2009. The assessment was completed u/s 143(3) of the Act on 30.11.2011 assessing the loss at Rs. 1,13, 73,448. The assessee carried the matter in appeal before the learned CIT(A) wherein vide order dated 03.02.2014, part relief was granted to the assessee. Later on, the case of the assessee was re-opened u/s 147 on the basis of information that the assessee has received accommodation entry of unsecured loan from M/s. Laxmi Trading Company, M/s. Mouli Gems, M/s. Minal Gems, M/s. Naman Exports and M/s. Prime Star, pertaining to Bhawarlal Jain Group. As per the assessee, during the assessment proceedings, documentary evidences pertaining to loan from aforementioned parties like confirmation, bank statement and acknowledgment of return of income of loan, bank statement of the assessee reflecting the amounts and genuineness of transactions were filed. However, the leamed Assessing Officer treated the loan as unexplained cash credit on the plea that the assessee could not produce the parties. Thereafter, the learned Assessing Officer computed the peak of unsecure loan amounting to Rs. 1,91,00,000/- and made addition of Rs. 40,00,000/- u/s 68 of the Act. On appeal, before the learned CIT(A), the addition so made was directed to be deleted in appeal before the Tribunal. If the observations made in the assessment order leading to the addition and the conclusion arrived at in the impugned order, if kept in juxtaposition, and analysed there is a factual finding in Para-5.3 that the assessee discharged the primary onus as the lender had responded to notices issued u/s 133(6) of the Act confirming the transaction. The learned Assessing Officer did not controvert the claim of the assessee. The loans were taken through banking channel and the receipt of taking the loan has been duly examined in Para-5.3 (Page-13) of the impugned order. The loans were duly reflected in the loans and advances column in the Balance Sheet and there is further factual recording that there was neither any cash deposit nor any withdrawal in any bank account castigating the same as accommodation entries. It is further noted that the assessee duly paid the interest on the loan amount and deducted. Copy of Form no.16A was also filed and the learned 11 A.Y.2013-14 Assessing Officer has not brought on record any evidence / reason to disbelieve the evidence filed by the assessee. | am satisfied with the reasoning of the learned CIT(A) that the addition was merely made on the basis of presumption that all the five concerns from whom loan was taken were managed and controlled by Shri Bhawarlal Jain. The statement was also recorded wherein there is no mention that any accommodation entry was obtained. Rather, the case of the assessee is fortified by the reply to question no.40 and 41 wherein it has been tendered that the loan was advanced and interest @ 9% p.a. was charged. The name of the assessee is nowhere mentioned in the list of suspicious dealer / person. Thus, | find no infirmity in the conclusion of the learned CIT(A), resulting into dismissal of the impugned ground raised by the Revenue.
5. The next ground pertained to deletion of addition of Rs. 5,78,278, made on account of interest expenditure on alleged bogus loans. The learned D.R. defended the addition, whereas, the learned Counsel for the assessee invited my attention to the finding recorded in Para-6.1 of the impugned order. On a perusal of record and the assertions made by the respective Counsels. There is a finding in the impugned order that the assessee duly produced the bank statement from where interests were paid also copies of form no.16A evidencing the TDS made and deposited into the Government account with respect to payment of interest. Since in earlier order since I have upheld the order of the learned CIT(A), therefore, the issue of interest is consequential in nature, therefore, the conclusion drawn in the impugned order is upheld. Finally, the appeal of the Revenue is dismissed.” “22. Upon careful consideration we note that in support of the explanation of the unsecured loans, the assessee has submitted following details before the assessing officer: !. PAN details of creditors ll. Constitution and address of the creditors 12 A.Y.2013-14 iii, Particulars of income-tax returns filed by the creditors. These show that the creditors are legitimate business entities, having the ability to advance the impugned loans to the appellant iv. Confirmatory letters given by the creditors V. Audited financial accounts (including balance sheets) of the creditors {These show that the loans are duly reflected in the books of account of the creditors. vi. Relevant bank statements of the creditors [These show that the loan amounts were paid through legitimate banking channels. Further these bank Statements do not reflect any movement of cash, essential to hawala transactions 23. The assessing officer has made no enquiry with reference to the above. He did not seek any further explanation or detail from the assessee. He solely relied upon the investigation wing enquiry regarding the Bhanwarlal group. The Id. Commissioner of Income Tax (Appeals) in this regard has correctly made the observation that the assessee having given all the necessary details and has discharged its onus, it was incumbent upon the assessing officer to make further enquiry if he was not convinced by thé submissions of the assessee. We find that assessing officer has displayed lack of application of mind by not even issuing a notice to the loan creditors. 24. we find that it is settled law that while making any disallowance/addition, the Assessing Officer needs to make due enquiry. In this case, the Assessing Officer has not made any enquiry whatsoever. As noted hereinabove, the assessee has given all the documentary evidences including confirmatory letters, bank statements and financial statement of the creditors. The Assessing Officer has not found any error therein. It has been held in number of cases that when the assessee has given all the loan creditors, including the Identity, necessary details of the creditworthiness and genuineness of the transaction, the onus upon the assessee is discharged. In these circumstances, in our considered opinion, the assessee has discharged its onus. The Assessing Officer has not 13 A.Y.2013-14 rebutted any of the submission of the assessee and the documentary evidence in this regard. Hence, in our considered opinion, there is no infirmity in the order of the Id. Commissioner of Income Tax (Appeals). The various case laws referred by the Id. Commissioner of Income Tax (Appeals) are germane and duly supports the case of the assessee. In the background of the aforesaid discussion and precedent, we uphold the order of the Id. Commissioner of Income Tax (Appeals).
In the result, this appeal by the Revenue stands dismissed.”
iv. Shri Naresh Hiran vs. ITO 30 (2)(4) I.T.A. No, 1236/Mum/2017 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 25 lakhs taken from Rose Impex was bogus since Rose Implex belonged to Mr. Bhanwarlal Jain group and Mr. Bhanwarial 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 ie., 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 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 CITA) 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 14 A.Y.2013-14 assessee hag also furnished bank statement to how 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 loan to 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/s, 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 be made on account of unsecured loan. Identical view was expressed by Hon'ble Gujarat High Court in the case of Patel Ramniklalhirji (2004) 222 Taxamn 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 reliance on the statement given by Mr. Bhanwarlel 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 shoulders u/s. 68 of the Act, we are of the view that the learned CIT(A) hot 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 15 A.Y.2013-14 Assessing Officer to delete the addition of Re. 25 lakhs and also disallowance of interest of Rs. 22,192/-. v. DCIT(CC)-1(3) vs M/s. Jainam Investments .
‘23. We notice that the assessee has specifically asked the AO to issue summons to the loan creditors, but the assessing officer has failed to do the same. It is pertinent to note that the assessee has so requested the AO, even after discharging the initial burden of proof by furnishing all the relevant details available with it. In the case of Orissa Corporation P. Ltd (supra), the assessee furnished available details and then requested the AO to issue summons to the creditors, since it could not collect further details from them. The AO failed to do so and hence the Hon'ble Supreme Court held that the addition made u/s 68 is not justified. The assessee herein, in our view, stand on a stronger footing. The assessee has furnished all the relevant details, which has been summarized by the Ld CIT(A) in paragraph 6.3.31 of his order as under: “6.3.31 In the case before me, the record also shows that to prove the genuineness of the impugned loan entries from the 17creditors, the appellant has furnished to the Assessing Officer the following details copies of which were also furnished in the present proceedings: i. PAN details of creditors iI. Constitution and address of the creditors Iii. Particulars of income-tax returns filed by the creditors These show that the creditors are legitimate business entities, having the ability to advance the impugned loans to the appellant. lV. Confirmatory letters given by the creditors 16 A.Y.2013-14 V. Audited financial accounts (including balance sheets) of the creditors [These show that the loans are duly reflected in the books of account of the creditors.] Vi. Relevant bank statements of the creditors [These show that the loan amounts were paid through legitimate banking channels. Further statement do not reflect any movement of cash, essential to hawala transactions.) Vii. Details of interest paid to the creditors Viii. Details of TDS deducted end paid”. Even though the assessing officer did not find any fault with these documents, still the assessee has requested the AO to issue summons to these parties. As stated earlier, the assessing officer did not issue summons and instead relied upon the inferences drawn by the search officials. Hence, in our view, the decision rendered by Hon'ble Supreme Court in the case of Orissa Corporation (P) Lid (supra) will also come to the support of the assessee.
We notice from the operative portion of the order passed by Ld CIT(A) that the first appellate authority has placed reliance on various other case laws also. in effect, the Ld CIT(A) has examined the documents furnished by the assessee and has held that the assessee has discharged the initial burden of proof placed upon it u/s 68 of the Act. He has also held that the non-furnishing of documents relied upon by the AO and non-providing of opportunity to cross examine the Shri Bhanwarlal Jain and others would make the addition to fail. Even in respect of documents relied upon by the AO, the Ld CIT(A) has found the same to be inadequate to warrant the additions made u/s 68 of the Act. Hence, we are of the view that the Ld CIT(A) has passed a reasoned order by considering the facts of the case, applicable case laws and has taken a justifiable view in this matter. Hence we do not find any infirmity in the order passed by Ld CIT(A).
17 A.Y.2013-14 Accordingly we confirm the order passed by Ld CIT(A) In deleting the addition of Rs.24,75 crores made u/s 68 of the Act.
25. Since we have confirmed the order of Ld CIT(A) in deleting the addition made u/s 68 of the Act, the interest disallowance is also liable to be deleted. Accordingly, we confirm the order passed by Ld CIT(A) in respect of interest disallowance also.
The addition made towards commission expanses |s also off shoot of the addition made u/s 68 of the Act. For the reasons stated in the preceding Paragraph, we confirm the order passed by Ld CIT(A) on this issue also. 27, In the result, the appeal filed by the revenue is dismissed.” ACIT-19 3 vs. Rajesh M. Shah (HUF) ITA. No. 7105/Mum2016. “after having gone through: the facts of the present case as well as considering the orders passed by revenue authorities, judgments cited and submissions made by both the parties, we find that Ld. CIT(A) considered the records, which the assessee had placed on record to prove the genuineness of the loan entries from the six creditors In the shape of i) PAN details of creditors, ii) Constitution and address of the creditors, {l)Particular of income- tax returns filed by the creditors [These show that the creditors are legitimate business entities, having the ability to advance the impugned loans to the appellant.], iv)Confirmatory letters given by the creditors, v) Audited financial accounts (including balance sheets) of the creditors [These show that the loans are duly reflected in the books of account of the creditors.], vi) Relevant bank statements of the creditors [These show that the loan amounts were paid through legitimate banking channels. Further these bank statements do not reflect any movement of cash, essential to hawala transactions.], vii) Details of interest paid to the creditors and viii) Details of TDS deducted and paid.
In this way, the assessee has provided all possible documentary evidence to prove 18 A.Y.2013-14 the identity of the creditors from whom the impugned loan was obtained.
Another important aspect of this case is that, that all the loans as were obtained were also repaid through the banking channel regarding this, a duly notorised affidavit was filed by the assessee and the details of which are already contained in para no. 6.3.12 of the order of Ld. CIT(A). Even otherwise, it is a settled law that once the assessee discharges its onus by proving the satisfactory nature of the loan transactions, then the onus shift upon the AO and in his wisdom, the AO has option of making inquiries from the alleged lenders.
Even the Coordinate Benches of ITAT in series of decisions have deleted the additions under the similar circumstances. In this respect, we refer case tiled ITO Vrs. M/s Vikram Muktilal Vora in ITO Vrs. Gujrat Construction in ITA No. 7040/Mum/2016, ACIT Vrs. Shri Dilip Chimanlal Gandhi in ITA No. 7079/Mum/2016, Maraeh Hiran Vrs. ITO in ITA No. 1236/Mum/2017, ACIT Vrs. Bhagneni in ITA No. 5648/Mum/201 6 and ACIT Vrs. Shri Sumit J. Jain in ITA No. 145/Mum/2017, 17. Moreover, ho new facts or contrary Judgments have been brought on record before us in order to controvert or rebut the findings $0 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, considering the facts of the case as well as following the decision of the Coordinate Benches and in order to maintain judicial consistency, we are of the considered view that the findings so recorded by the ld. CIT (A) are judicious and are well reasoned. Resultantly, these grounds raised
by the revenue stands dismissed.” 5.1.5 Accordingly, the issue at hand stands adjudicated, as above, at multiple for a and is no longer res integra. 5.1.6 As seen from the above facts and judicial precedents, the appellant has furnished all the details proving conclusively the 19. A.Y.2013-14 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 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. 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 | 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 of appeal. 5.1.7 With regard to addition of Rs. 2,16,630/- on account of Interest expenses u/s 88 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 Bhanwarlal Group who the only entry operators, the AO has also disallowed interest have been paid to these creditors u/s 68 of the Act. 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. I have carefully considered the facts and submissions of the Id.AR. Since the loan given by the above parties were treated as genuine, in this order in 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 68 of the Act. I therefore, direct the AO to withdraw the addition. Therefore, Ground No. 1 is allowed. In the result, the appeal for the AY 2013-14 is allowed.”
20 A.Y.2013-14 5. On appraisal of the above mentioned finding, we find that the CIT(Appeals) has decided the matter of controversy on the basis of the decision of Hon’ble Supreme Court in the case of Lovely Exports Pvt. Ltd. (2008) 216 CTR 195 (SC), Anant Shelters Pvt. Ltd. (2012) 20 taxmann.com 153 and various decision of the Hon’ble Courts mentioned above. Moreover, no law contrary to the law relied by the CIT(A) has been produced before us. The facts are not distinguishable at this stage. CIT(A) has considered the each and every aspects of the facts of the case.Taking into account, all the facts and circumstances, we are of the view that the finding of the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, we affirm the finding of the CIT(A) on this issue and decide these issues in favour of the assessee against the revenue.
In the result, the appeal filed by the revenue is hereby dismissed.
Order pronounced in the open court on 17 /03/2021 (SHAMIM YAHYA) (AMARJIT SINGH) लेखा सद" / ACCOUNTANT MEMBER "ाियक सद"/JUDICIAL MEMBER मुंबई Mumbai; िदनांक Dated : 17 /03/2021 Vijay Pal Singh (Sr. P.S.)