NISA INDUSTRIAL SERVICES PVT. LTD.,MUMBAI vs. ACIT- WD -10(3)(1), MUMBAI

O R D E R Per S. Rifaur Rahman, Accountant Member:

1. The present appeal has been filed by the assessee against the order of Ld. Commissioner of Income-tax (Appeals)-17 in short referred as “Ld. CIT(A)”, Mumbai dated 20.03.2018 for Assessment Year (in short AY) 2014-15.

2 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., (In short ‘Act’). The case was selected for scrutiny assessment and notices under section 143(2) and 142(1) of the Act was issued and served on the assessee. In response AR of the assessee attended and filed the relevant information as called for.

3. The assessee is engaged in the business of providing security personals consisting of security guards, supervisor, gunman, detectives etc., to various companies, industries, individuals etc. During the assessment proceedings, AO observed from the Balance Sheet and audit report submitted by the assessee that assessee has taken unsecured loans of ₹ 6,12,20,147/– under the head unsecured loans from the corporates. The details of unsecured loan are given below:

Amount of Maximum Squared Name Address PAN loan or balance up deposit o/s APRATEEM GEMS M-4, Floor mazz, New AAKCA7424R 25,57,144 25,00,000 NO PVT LTD AnantBhavan, Masjid,Chinchbunder Mumbai BABA BHOOTHNATH Martin Burn house, 3rd AALCS8277P 97,93,057 50,00,000 NO NIRMAN PVT LTD floor ,room no 326, 1RN Mukherjee Rd, Kolkata 700001 DAFFODIL TRADERS 31/1H Beadon Row AAECD3872E 50,45,863 50,00,000 NO PVT LTD Kolkata -700001 INDIAN INFOTECH D-207, Crystal Plaza, AAACI0350E 1,02,63,342 50,00,000 NO AND SOFTWARE PVT. New Link Road, LTD., Opposite Infinity mall, Andheri(W),Mumbai POKHRANA IMPEX Mehta Mansion, 1st AABCP7359P 25,54,370 25,00,000 NO PVT LTD floor, Jagannath Shankar sheth road, Mumbai-400004 SURAKSHA 16B, Phase IV, I.D.A. AANCS3042A 53,92,524 43,00,000 NO PROJECTS , PVT LTD patancheru , Medak district, Patancheru, Telangana

3 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd.,

Amount of Maximum Squared Name Address PAN loan or balance up deposit o/s VALLABH DIAMONDS Office No 307, Navratan AAECV4179L 2,56,13,847 30,00,000 NO PVT LTD Chambers, Bhojabhai ni sheri, Mahidharpura, Surat-395003 TOTAL 6,12,20,147

4. During the proceedings, assessee was asked to file the details of unsecured loans received in order to verify the identity, genuineness and creditworthiness, accordingly was asked to submit their IT returns, bank statements and financials. In order to verify the transactions, AO issued notices under section 133 (6) of the Act and commissions under section 131 (d) on the addresses available on the record as filed in audit report filed by the assessee. These notices were issued independently by the AO and found that some of the addresses given in the audit report are not correct and when the assessee was confronted with the above facts, assessee submitted the present addresses and some discrepancies were also noticed in the name of the companies, which were clarified. Then AO issued fresh notices and commissions to those parties. The AO discussed the issues partywise as below: a) M/s Suraksha Projects Private Limited:

AO observed that after issue of notice and commission, the company suo moto submitted the details of the financials of the company

4 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., in the dak on 26.12.2016. AO observed from the return of income of M/s.Suraksha Projects that the income declared by the company is ₹ 3.5 lakhs and the company has very low returned income. The directors of the company are Chiranjit Mahanta and Ranjit Gupta. He observed that the erstwhile director of the companies are Shri Umesh Singh, Neeraj Kedia and Pulak Bagchi and they are dummy director under the entry operator Shri Praveen Agarwal. He referred to the statement on the oath given by Shri Praveen Agarwal on 10.02.2015 under section 133A. AO discussed the various aspect of creation of shell companies and how it is created and run by the operators and finally came to the conclusion that mere filing of Balance Sheet and Profit and Loss account cannot be accepted as proof of creditworthiness. He came to the conclusion with the observation that it is accepted practice that A/R of the shell company will appear before the Department but directors will not appear since these are not genuine directors but bogus directors. Accordingly, he made the addition under section 68 of the Act. b) M/s Vallabh Diamonds Private Limited:

The AO came to the conclusion that there are no business activities carried out by this company in the premises for which the address was given in the audit report, he came to the above conclusion based on the 5 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., report from inspector of Surat wing. He observed that assessee has taken unsecured loans of ₹ 2.5 crores from this company and assessee has filed confirmation and bank statement for the period AY 2015–16 and assessee also filed Balance Sheet and other financial of the company on 16.12.2016 from the MCA website. AO observed that on going through the Balance Sheet it was found that the liability is mainly on account of creditors of ₹ 71 crores and assets is on account of Debtors of ₹ 61 crores and loans of ₹ 8 crores. The company has declared profit of ₹ 1.6 lakhs. He further observed that the company is incorporated in 2013 and carrying out manufacturing and other commercial activities, this company does not own any fixed assets in the Balance Sheet and assessee has not submitted any profit and loss statement. With the above observation he disallowed ₹ 2.50 crores under section 68 of the Act. c) M/s Pokhrana Impex Private Limited:

A summon was issued to the party on the address as per the audit report on 17.11.2016 calling for personal attendance of the party on 21.11.2016. But no one attended the hearing instead letter was filed containing unsigned Ledger account, copy of income tax returns and bank statements reflecting the payment. A show cause was issued to the assessee to produce the party and according to the AO there is no 6 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., creditworthiness in the party as evident from the ITR which shows Nil income. He observed that in the show cause notice, it is specifically asked to produce the party, therefore assessee has failed to discharge its onus to prove identity, creditworthiness and genuineness of the party. The AO observed that the return of income of the party is nil and the immediate source of funds are from M/s Suyansh Gems. On further analysis of the Balance Sheet shows that there are no fixed assets in the books of the company though it is a manufacturer, importer and exporter of diamonds. He observed that the company has shown book profit of ₹ 1.15 crores and has not paid any taxes (MAT) as per ITR filed by the assessee instead a refund was claimed of ₹ 9 lakhs. Since the assessee has not brought the party on record and the immediate source of funds is from Suyansh Gems, he treated the loan taken by the assessee as disallowable Under Section 68 of the Act. d) M/s Aprateem Gems Private Limited:

A notice was issued on the address mentioned in audit report and it was found that the party has only dak folder there are no business is carried out at the premises. A show cause notice was issue to the assessee and asked to produce the party to verify the genuineness and creditworthiness of the party. In response assessee submitted that there

7 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., was a mistake in the address and gave the proper address. The Aprateem Gems wide letter dated 12.12.2016 filed the details of loan confirmation, bank statement and copy of ITR acknowledgement. AO observed that there are multiple addresses mentioned in the various documents submitted by the party and he came to the conclusion that the onus is not proved on the creditworthiness of the party. Accordingly, he treated the loan taken by the assessee as disallowable under section 68 of the Act e) M/s Indian Infotech and Software Ltd:

A show cause notice was issue to the party and none appeared or responded to the show cause notice. When assessee was summoned specifically to produce the party and the party failed to appear therefore, AO came to the conclusion that assessee has not fulfilled the onus to prove the genuineness. Accordingly, he treated the loan taken by the assessee as disallowable under section 68 of the Act. f) M/s Daffodil Traders Private Limited:

A commission under section 131 (d) was sent to the investigation wing Kolkata on 17.11.2016 to verify the party and the address was as per the audit report submitted by the assessee. The investigation wing found that the address is not correct. When they issued show cause notice

8 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., to the assessee and assessee submitted that the party has moved to new address and gave the new address. Based on the report from investigation wing Kolkata that the party has declared returned income of ₹ 8172/– and the turnover is ₹ 19 lakhs. The company has only reserves and surplus on the liability side and on the asset side only investment and loans. In reference to survey conducted in the case of Soumen Choudhry, it was mentioned by him in the statement that this company is controlled by him and a bogus concern. Based on the above facts the assessee was asked to substantiate the same and why it should not be treated as bogus. In response, assessee has submitted the company profile from MCA, audited accounts, bank statement, loan confirmation et cetera. Based on the above observation of the investigation wing, AO came to the conclusion that identity, creditworthiness and genuineness of the party cannot be proved and he disallowed the unsecured loan under section 68 of the Act. g) M/s Baba Bhoothnath Nirman Private Limited:

AO observed that this company has very low returned income. A commission under section 131(d) was issued to ADIT investigation unit – 5, Kolkata to examine the party. ADIT investigation issued summons and in response they filed Ledger copy, ITR and Balance Sheet. The 9 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., investigation wing observed that the financials shows that there is increase in share premium of ₹ 6.2 crores in financial year 2013–14, these funds have come from Suraksha Projects, Careful Engineering Private Limited, Highrank Infrastructure Private Limited, Kingfisher Properties Private Limited, Limestone properties Private Limited, Suniyojit Hirise Ltd, Surakshit Real Estate Private Limited. The erstwhile director of these companies Shri Umesh Singh, Shri Chiranjit Mahanta and Shri Ranjit Gupta were a dummy director under the entry operator Shri Praveen Agarwal. Shri Praveen Agarwal admitted that these are shell companies maintained by him. Based on the above report from Kolkatta investigation wing, a show cause notice was issued to the assessee asking why the loan from the party should not be treated as bogus and loan should not be added back as its total income. In response assessee submitted company profile from MCA, audited accounts, bank statements, loan confirmation etc.,

5. AO by relying on the case of M/s Bisakha Sales Private Limited versus CIT Kolkata, in which it was explained the modus operandi in the case of shell companies. He observed that Baba Boothnath Nirman Private Limited is a shell company. He further observed that mere filing of Balance Sheet and Profit and Loss account cannot be accepted as proof of creditworthiness. By relying on the report from the 10 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., investigation wing, he came to the conclusion that this company is a shell company, accordingly AO treated the loan taken from this company as disallowable under section 68 of the Act.

11 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., 7. On the question of creditworthiness and genuineness, AO observed that money no doubt is received through banking channels but did not reflect actual business activity. The loan providers did not have their own profit making apparatus and are not involved in any business activity. They merely rotate money which is coming through the layers of bank accounts and therefore do not reflect the creditworthiness or even genuineness of the transaction. Further he rejected the contention of the assessee that the companies which provided unsecured loans to the assessee are borne on the file of ROC and he opined that every company Incorporated under the Companies act 1956 has to comply the statutory formalities and these companies are complying with such formalities does not add any credibility or evidentiary value.

12 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd.,

Sr.No. Name of the Loan Party Amount (Rs.) 7 Baba Bhoothnath Nirman Pvt. Ltd. 1,03,397/- Total 13,85,475/-

10. Aggrieved with the above order assessee is in appeal before us raising following grounds of appeal:

1. On the facts and in the circumstances of the case and in law the Commissioner of Income-tax (Appeals)-17 Mumbai has erred in passing the appeal order without considering all the documents

13 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., submitted by the appellant to prove identity, creditworthiness and genuineness of the transaction.

2. On the facts and in the circumstances of the case and in law the Commissioner of Income-tax (Appeals)-17 Mumbai has erred in rejecting all the supporting documents submitted by the appellant and treated all the unsecured of Rs.6,00,00,000/- as a unexplained cash credit under section 68 and interest payment of Rs.13,85,475/- as a unexplained expenditure under section 69C.

3. Appellant pray that pray:- That assessing officer may be directed to delete total unexplained cash credit addition and also interest paid and provided on such loan. The appellant craves leave to amend, alter or delete any of the above grounds of appeal.”

11. Before us, Ld AR submitted a detailed written submission and for the sake of clarity it is reproduced below: “During the relevant assessment year, the appellant company has taken loans from the following parties: SR. NAME OF PARTY AMOUNT(RS.) NO. 1. Aprateem Gems Pvt. Ltd. 25,00,000 2. Baba Bhoothnath Nirman Pvt. Ltd. 97,00,000 3. Daffodil Traders Pvt. Ltd. 50,00,000 4. Indian Infotech and Software Pvt. Ltd. 1,00,00,000 5. Pokhrana Impex Pvt. Ltd. 25,00,000 6. Surakhsha Projects Pvt. Ltd. 53,00,000 7. Vallabh Diamonds Pvt. Ltd. 2,50,00,000 TOTAL 6,00,00,000 11. At the outset it is submitted that, Learned Assessing Officer has ignored following vital facts outlined as under: a. The applicant had received short term loans during the F.Y 2014-15 for running its business activities. Interest was paid to the lender for the time interval between receipt and re- payment of loan.

14 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., Companies he is no where related and there is no information from investigation department. a. The Appellant Company's books of Accounts are Audited and were submitted to the learned Assessing officer and there were no adverse remarks of the Auditors in the said Report. Therefore, the transaction entered into by the assessee company cannot be doubted.

13. The Learned Assessing Officer had heavily relied on the statement of Mr. Praveen Kumar Agarwal. These statements were recorded at the back of the Appellant.

14. The Appellant had received loan from the said lender Companies which are duly registered under the provision of Companies Act and the lender companies are filing return of income regularly.

16. The Appellant had also filed confirmation of the said lender companies and submitted the copy of Acknowledgment of Income Tax return of the lender companies, where the said lenders had offered income by way of interest paid by the Appellant to the lenders with TDS claim. It is clear that the said lenders had shown interest income received in its entirety and it is not wrong to assume that the department has already accepted such income in the hands of the said lenders as total interest received by the lenders and has not assessed income by way of so called entry commission as has been alleged. Thus on one hand when it comes to charge of income the amount is assessed as total income treating the income as genuine whereas when it comes to allowance of same expenditure the same is treated as been disallowed treating it as non-genuine.

17. The learned assessing officer has failed to appreciate the facts that Appellant had obtained only temporary loan which has been repaid. Thus what is required to be seen is as to whether the said lenders had sufficient funds to advance Appellant. If for the sake of argument it is understood that the said lender companies were companies of Mr. Praveen Kumar Agarwal and then in that case whether the said Mr. Praveen Kumar Agarwal was capable of advancing such amount even without receiving cash is a vital question which should be asked and verified. ON appreciation of the fact and as per statement of various persons recorded it is quite clear that even without receiving cash beforehand the said lender companies were capable of advancing such amount.

18. Section 68 of the Act reads as under:-

15 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd.,

“Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of assessing Officer, satisfactory, the sum so credited may be charged to income -tax as the income of the assessee of that previous year:" It is settled position that to prove the genuineness of the transaction, the burden lies on the assessee and to discharge the onus, the assessee must prove the following - I. Identity of the Creditor II. Capacity of the Creditor III. Genuineness of the Transaction Once the above conditions are proved prima facie by the assessee and the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts on the department. Three conditions enshrined in section 68 are clearly proved by the documents submitted during the assessment proceedings as under I To prove the identity a) Name, Address, PAN, Income-tax Jurisdiction, etc. of the lender companies; b) Copy of Audit Report and Balance Sheet of the lender companies. The Company's Income-tax Jurisdiction details and financials of the lender's companies proved the identity as well as financial capacity i.e. creditworthiness of the lender's companies. Hence, the aforesaid documents has proved the identity of the lenders. II. To prove the creditworthiness The Appellant has submitted the Balance Sheet, Profit & Loss a/c and Return of Income for lenders. The financials of the lenders companies proved the identity as well as financial capacity i.e. creditworthiness of the lender's companies. a) Copy of Audited Balance Sheet of the Lender Company b) Relevant Bank Statement c) Copy of Ledger Account

16 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd.,

2. The CIT(A) treated unsecured loan as unexplained cash credit under section 68 of the Act on the alleged ground that the Appellant has not brought on record to prove the identity, genuineness of the transactions and creditworthiness of the investors without appreciating that the Appellant has submitted the copies of director report, balance sheet, bank statements etc., clearly brought out the nature of the transactions, amount involved and scope of the transaction. 3. The Appellant submit that the Appellant has discharged its onus of proving the identity of the parties, genuineness of the transactions and the creditworthiness of the lender. Therefore, the Appellant humbly submit that the addition made under section 68 of the Act be deleted. III. To prove the Genuineness The Appellant has submitted the Extract of Bank Statement of all above mentioned lenders, duly highlighting the entries of loan given by them to the Appellant company. a) Transaction through Account Payee Cheques. b) Bank Statement of the Appellant and Lender Companies c) Loan Confirmation Your honor can refer the page nos. 31-240 of the Paper Book; the details in length were submitted. Each and every lender has confirmed the transaction with the Appellant company. Therefore, the findings given by the Ld. CIT(A) were in contradiction of section 68 of the Act. On perusal of the financial statements filed by the appellant to assessing officer your honour will note that all seven companies are active in the website of Ministry of Corporate Affairs. a copy "enclosed herewith. This fact has been further supported by the letter of AO wherein the AO has accepted that these companies are active on MCA website. By submitting the above details, the Appellant has discharged his primary onus of proving the unsecured loan as Genuine Transaction. However, the Ld. Assessing Officer without considering the facts and circumstances of the case erred in making addition of Rs. 6,00,00,000/- being the amount received towards loan u/s. 68 as Unexplained Cash Credit without having any jurisdiction.

17 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., Thus all the ingredients of S.68 of the Act were fully proved and established before the Ld. CIT(A). Further, we hereby provide details about each party whose loan amount is added to the return income.

1. In case of SURAKSHA PROJECTS LIMITED. The learned assessing officer has sent summon wrongly to Surakha products Pvt Ltd, instead of Suraksha projects limited, where that party has replied that there is no transaction with this company which was later on informed to appellant who in turn given proper new address where summons u/s 133 (6) was issued and a commission was also sent. The learned officer has given copy of Summon to Appeallant who in turn asked c reditor loan company to provide all the required details. The Company Suraksha Project limited has submitted all the details on 26th December 2016 which were required. These details have been received by him as acknowledged by Assessing Officer in the Assessment Order but not accepted the reply by narrating unrelated story in the Assessment Order and added ₹.53,00,000/- and interest of ₹.93,924/-. He has mentioned irrelevant modes operandi of shell Company how it work and also statement given by one Mr. Pravin Kumar Agarwal in course of his search. Nowhere in search had proceeding and other document annexed by assessing officer to this related assessment order mentioned that the appellant has done any bogus transaction and there was cash involvement in the transaction. Financial details are as under:- Turnover (Rs.) 14,73,44,805 Capital (Rs.) 33,00,000 Reserves (Rs.) 13,73,50,459 Loan to NISA (Rs.) 53,00,000 There is no proof at all against the appellant that these loans are concealment of the income than such loan & interest amount cannot be added. This loan has been already repaid in financial year 2019- 20.

2. In case of VALLABH DIAMONDS PVT. LTD, A Commission u/s 131 (d) was sent to ADIT Surat who has reach to the office of party but that day it was closed. The inspector has affixed the summon on the premises and in turned party has submitted all the details on 16th December, 2016. Further Vallabh Diamonds Pvt. Ltd. its self has filed all the required details on 14th December, 2016. This company is having business turnover of more than 100 crores. The learned assessing officer has written that he has carried out through enquiry which is totally wrong. The learned assessing officer never asked AR of appellant to submit any missing details. This appellant has repaid total loan to this party. The company has provide all the required details which has been received by him as acknowledged by assessing officer in the assessment order but not accepted the 18 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., reply by narrating unrelated story in the assessment order and added Rs.2,50,00,000/- interest of Rs.7,50,257/-. Financial details are as under :- Turnover (Rs.) 205,14,72,103 Capital (Rs.) 1,00,000 Reserves (Rs.) 1,65,630 Loan to NISA (Rs.) 2,50,00,000 There is no proof at all against the appellant that these loans are concealment of the income than such loan & interest amount cannot be added. This loan has been already repaid in financial year 2014-15 and 2015-16.

19 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., There is no proof at all against the appellant that these loans are concealment of the income than such loan & interest amount cannot be added. This loan has been already repaid in financial year 2018-19.

6. In case of DAFFODIL TRADERS PVT, LTD,:- A Commission u/s 131 (d) was sent to ADIT Calcutta but there was change of address which has been informed to assessing officer by the appellant. The AR of the appellant has submitted all the required documents such as company profile from MCA, Audited accounts, bank statement, to prove identity & creditworthiness of the party and genuineness of the transaction than also learned assessing officer giving reference of get way financial services prv.ltd. Without any basis has added ₹.50,00,000/- of unsecured loan and ₹.50,959/- interest on these loan to income. Financial details are as under: - Turnover (Rs.) 19,09,222 Capital (Rs.) 9,98,000 Reserves (Rs.) 44,80,79,901 Loan to NISA (Rs.) 50,00,000 There is no proof at all against the appellant that these loans are concealment of the income than such loan & interest amount cannot be added.

20 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., bank statement, and audited balance sheet to prove the transaction. This loan has been repaid in the next financial year by the appellant. The AR of the appellant has also submitted vide letter dated 30th December, 2016 all the required documents such as company profile from MCA, Audited accounts, bank statement, to prove identity & creditworthiness of the party and genuineness of the transaction than also learned assessing officer giving reference of Getway Financial Services Pvt. Ltd. without any basis has added Rs.97,00,000/- of unsecured loan and Rs. 1,03,397/- interest on these loan to income. Financial details are as under:- Turnover (Rs.) 1,52,38,817; Capital (Rs.) 41,50,000 Reserves (Rs.) 7,31, 10,510 Loan to NISA (Rs.) 97,00,000 There is no proof at all against the appellant that these loans are concealment of the income than such loan & interest amount cannot be added. This loan has been already repaid in financial year 2017-18.

Out of the above seven parties learned assessing officer during assessment proceedings he has received information from Calcutta DDI statement of one Pravin Kumar Agarwal and others who are directly or indirectly involved in affairs of one Dafofodil Traders Pvt.Ltd. and another Surakha products Pvt Ltd. Based on the information received from Investigation Wing, the AO opined that though the assessee has furnished various details to prove identity, the loan transactions are not genuine and accordingly made addition u/s 68 of the Income tax Act, 1961. Besides, the AO also disallowed interest paid against the said bogus loans. Other companies such as Aprateem Gems pvt ltd. Pokharana Impex pvt. Ltd. and Vallabh Diamonds Pvt Ltd., he is no where related and there is no information other investigation department than there should not be any addition of such loan and interest to returned income. The assessee further submitted that in response to notice issued u/s. 133(6), other parties filed their replies along with required documents before the Assessing Officer, therefore, the Assessing Officer was totally incorrect in coming to the conclusion that the loan transactions are bogus accommodation entries only on the basis of information received from Investigation Wing regarding about two companies only. The Ld. CIT(A) opined that unsecured loans stated to be received from those companies are unexplained credit and hence made addition u/s 68 of the same under the Act without considering that they are supported by valid documents. The assessee further submitted that it has furnished confirmation letters along with copies of their bank statement and acknowledgement of IT returns showing the above transactions. The assessee further contended that in 21 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., response to notices u/s 133(6) issued by AO, the above parties replied along with documents mentioned in the notice, therefore, there is no reason for the AO to doubt the transactions only on the basis of information received from Investigation Wing that too, without providing any opportunity of cross examination of the parties. In this regard, we relied upon judgment of Hon'ble Supreme Court in the case of Lovely Exports Pvt Ltd vs CIT 216 CTR 295(SC). The AO has brought out facts in the light of statement of Shri Pravinkumar Agarwal & others deposed before the Investigation Wing to make addition 85 that is also you may related to two companies. Except this, there is no contrary evidence in the possession of the AO to disprove the loan transactions from these seven parties on the other hand, the assessee has furnished various details including confirmation letters from the parties, their bank statements along with their financial statements to prove identity, genuineness of transactions and creditworthiness of the parties. The assessee also furnished evidences to prove that the parties have responded to the notices issued u/s 133(6) by AO by filing various details. The assessee also filed bank statements to prove that the said unsecured loans have been repaid in few cases in the subsequent financial years. Therefore, we submit that there is no reason for the AO to doubt the genuineness of transactions despite furnishing necessary evidences including their financial statements, bank statements and IT returns.

The assessee has also relied upon the decision of the Hon'ble Bombay High Court in the case of CIT v. Archid Industries Pvt. Ltd., in ITA.No. 1433/Mum/2014 dated 5th July 2017. The Hon'ble Bombay High Court, after considering relevant facts held that the Tribunal has considered that the assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. Sir, we just draw your attention on recent judgment where our client relied (1) ITO vs Neelkanth finbuild LTD (2009) DEL honorable tribunal has held that once identity of creditor is proved than it is not the business of assessee to find out the source of the money of credit to account. (2) Income tax appellate tribunal, bench "C", Kolkata ITA No.l064/Kol/2011 :- for the Assessment Year 2007-08 in case of Nived Anoopkumar Dhandhania, v/s I.T.O. where it is held that 22 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd.,

C.I.T.(Appeals) erred and acted injudiciously in doubting the genuineness of and confirming the addition of unsecured loans from five parties to the appellant's total income though the transactions are entered through banking channels and the assessee has discharged its onus of identification of the creditors with PAN Nos., copies of balance sheet and bank statements (3) We as draw your attention to CBDT Circular No. F. No.286/2/2003/IT(inv) dated 11.03.2003 has directed its offices to focus on collection of evidence on undisclosed income and not on obtaining confession of undisclosed income and to make addition. (4) The Hon'ble Supreme Court in the case of CIT v/s Lovely Exports 6 DTR 308 it has held if there is bogus share holders and their name are appearing in books than department is free to reopen individual assessment in accordance with law but it cannot be regarded as undisclosed income of the assessee company.

(5) The Hon'ble Bombay High Court in the case of CIT v/c Creative World Telefilms Ltd.333 ITR 100 has held as under: "If the share application money is received by the assessee company from alleged bogus share holders who’s name are given to the Assessing Officer then the department can always proceed against them and if necessary reopen their individual assessments. Held, dismissing the appeal, that there was no dispute that the assessee had given the details of names and addresses of the shareholders, their PAN/GIR numbers and had also given the cheque numbers, name of the banks. The Assessing Officer ought to have found out their details through PAN cards, bank account holders, Thus, the view taken by the Tribunal could not be faulted. (6) The Hon'ble Supreme court of India in the case of CIT vs. Orissa Corporation reported in 159 ITR 78 (SC) has held as under: "That in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessee's. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notice under section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they are creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, If the tribunal came to the conclusion that the Respondent had discharged the burden that lay on it, then it could not be said that such conclusion was unreasonable or perverse or based on no evidence". (7) RAJASTHAN HIGH COURT in case of Shree Barkha Synthetics Ltd. [2006] 155 TAXMAN 289 (RAJ.)where assessee-company had received share application money from a company and from an 23 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., individual investor through banking channels and had furnished confirmation of investment in share capital by said company and had also proved existence of said individual investor, it could be said that assessee had proved genuineness of said transaction and, therefore, it is held, assessing officer cannot make any addition to income of assessee in respect of said share application money by treating same as unexplained cash credit under section 68. (8) CIT v. Steller Investment Ltd. [2001] 251 ITR 263/115 Taxman 99 (SC) where the Supreme Court held that even if it was argued that the subscribers to the increased capital were not genuine, under no circumstances could the amount of share capital be regarded as undisclosed income.

Reliance is also placed on the following decisions: Hon'ble Delhi High Court in case of Commissioner of Income tax v/s value capital services p.ltd.(2008) 307 ITR 334 (Delhi). Hon'ble Punjab and Haryana High Court in the case of commissioner of income tax v/s GP International Ltd. (2010) 325 ITR 25 (P&H) Hon'ble Madras High Court in the case of Commissioner of Income tax V/s Electro Polychem Ltd. (20047) 294 ITR 661 (Mad). Hon'b;e Rajasthan High Court in case of Commissioner of Income Tax v/s AKJ Granites P.Ltd.(2008) 301 ITR 298 (Raj.) Hon'ble Delhi High Court in case of Commissioner of Income tax v/s Oasis Hospitalities (Pvt.) Ltd. (2011) 51 DTR 74 (Delhi).

19. It is a settled law that it is mandatory for the Assessing Officer to confront the assessee with any material collected by the Assessing Officer at the back of the assessee, and in case of statement of third party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee, failing which the said material/statement etc. will be rendered unreliable and additions made on the basis of such material/statement etc. shall be rendered illegal. Reference in this regard can be made from the decisions made in the following judiciary ruling: - • R.B. ShreeramDurga Prasad 176 ITR 169 (SC), • KishanChandChellaram Vs. C.I.T. (1980) 125 ITR 713 (SC) • Jindal Vegetable (order of Hon'ble Delhi High Court in of 2007, 174 Taxmann 440 (Raj.) • LaxmanBhai Patel (order of Hon'ble Gujarat High Court dated 22.07.2008 in ITR no. 41/1997).

20. Shri Pravin Kumar Agarwal was never a DIRECTOR as well as SHAREHOLDER of lender companies, from whom the appellant company has received the unsecured loan amounting to Rs. 1,30,00,000/- of Daffodil Traders Pvt. Ltd. and Surakha products Pvt. Ltd. during the said Assessment Year.

24 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd.,

21. A person (Praveen Kumar Agarwal), who is neither holding managerial berth in the lender Company nor holding any ownership rights, cannot control the affairs of the lender Company.

22. Further, following legal position/ judicial rulings on the subject under consideration must be considered before arriving at any conclusion:- a. It is also settled law that where the assessee provides identity and details pertaining to the lenders/ creditors/ investor of share application money and is unable to produce them and requests the CIT(A) to issue summons u/s 131 for their attendance, it is the duty of the CIT(A) to issue such summons, failing which the addition would get deleted. Reference in this regard can be made from the decisions made in the following judiciary ruling:- • N.P. Garodia (order dated 13.01.2009 of Hon'ble P & H High Court in of 2008) • Brij Pal Sharma (order datedl7.02.2009 in ITA no. 685 of 2008 of Hon'ble P & H High Court) b. Similarly as held in the case of CIT v. Metachem Industries (2000) 245 ITR 160 (MP) where a credit is shown to have come from a person other than the assessee, there is no further responsibility of the assessee to show that it has come from accounted source of the lender, as long as the fact that he had made the advance and was capable of making the advance are established. c. It was held by the Hon'ble Madras High Court in Hastimal (S) v. CIT (1963) 49 ITR 273 that after a lapse of decade, the assessee should not be placed upon the rack and called upon to explain not merely the origin and source of a capital contribution, but also the origin of origin and source of the source. d. Recently in a similar/ identical case that of the Assessee, The honorable ITAT Delhi in the case of ITO, Ward 15 (2) vs. M/s. Rakam Money Matters P. Ltd. has held that "CIT(A) has to bring on record any valid material or evidence to discredit the evidences and the explanation given by the assessee company and cannot rely only on statement of third parties recorded by the investigation wing. e. In another landmark judgment of Hon'ble Gujarat High Court in the case of Varshaben S Patel vs. ITO,[2015] 64 taxmann.com 179 (Gujarat) has also held in notice u/s 148 that the issue of notice u/s 148 pursuant to direction by DG Investigation is bad in law as the satisfaction has to be on your own and not a borrowed satisfaction. Head note is as under:

25 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., f. As held in the case of R.B. Mittal v. CIT 246 ITR 283 (AP) in an enquiry u/s 68, the rule of audi alterant parterm has to be observed and the Assessee must be given a fair and reasonable hearing to discharge the burden cast on him u/s 68 of the Act. Further, it is settled law that in the matter of cash credit, the initial onus lies on the Assessee to prove the genuineness of the transaction along with the identity of the lender/investor and his creditworthiness. Having done so, the Appellant in the instant case has discharged the onus cast upon it. Beyond this, for the charge of unexplained cash credit to stick, the onus lies on the CIT(A) to disprove the claim of the Assessee by establishing that the evidence filed by the assessee was false and by bringing new material on record and failure to do so would vitiate the addition made on this count. g. It was also held in the case of CIT v. Bedi & Co. P. Ltd. (1998) 230 ITR 580 (SC) that where prima-facie the inference on facts is that the assessee's explanation is probable, the onus will shift to the revenue to disprove it and the assessee1 s explanation in such case cannot be rejected on mere surmises. Other similar judiciary ruling are as under :- • Khandelwal Constructions v. CIT (1997) 227 ITR 900 (Gau.) • CIT v. Orissa Corporation Pvt. Ltd. 158 ITR 78 (SC) • CIT v. Rohini Builders 256 ITR 360 (Guj.). h. It is also settled law that it is mandatory for the CIT(A) to confront the assessee with any material collected by the CIT (A) at the back of the assessee, and in case of statement of third party recorded at the back of the assessee, opportunity of cross examination has to be offered to the assessee, failing which the said material/statement etc. will be rendered unreliable and additions made on the basis of such material/statement etc. shall be rendered illegal. Reference in this regard can be made from the decisions made in the following judiciary ruling:- R.B. ShreeramDurga Prasad 176 ITR 169 (SC), KishanChandChellaram Vs. C.I.T. (1980) 125 ITR 713 (SC) Jindal Vegetable (order of Hon'ble Delhi High Court in of 2007, 174 Taxmann 440 (Raj.) LaxmanBhai Patel (order of Hon'ble Gujarat High Court dated 22.07.2008 in ITR no. 41/1997). i. It was held in case of ITA-.5589/Mum/2017 ACIT 30(3) Vs. M/s Shreedham Construction Pvt. Ltd. On 22.06.18 wherein same parties have given unsecured loan and addition was deleted-

26 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd.,

"ledger confirmation, ledger account of the assessee in the books of the lender and bank statement of the lender (in the case of Athrav Business Pvt Ltd. (page 58 to 72 of the paper book). Identically similar documents as a proof of evidence were filed from Casper Enterprises Ltd. (pages 71 to 83 of the paper book), Duke Business Pvt. Ltd. (J.P. K. Trading I. Pvt. Ltd.) (pages 84 to 96 of the paper book), Olive Overseas Pvt. Ltd. (pages 97 to 110 of the paper book), Viraj Mercantile Pvt. Ltd. (pages 111 to 119 of the paper book) and Nakshatra Business Pvt. Ltd. (Pages 120 to 131 of the paper book). All these documents neither disproved by the Ld. Assessing Officer nor any evidence was brought on record to falsify the claim of the assessee or the authenticity of these documents. Thus, it can be said that the assessee discharged its onus as provided under section 68 of the Act. The interest was paid through banking channel by the assessee on such loans. It is also noted that so far as the disallowance of interest portion is concerned, the same was deleted by the Id. FAA and has not been challenged before this Tribunal by the Revenue further fortifies the case of the assessee. The loans were repaid along with interest before the date of survey i.e. 17/10/2014 and no cash was found during survey further fortifies the claim of the assessee. All the concerned parties appeared before the Ld. Assessing Officer during remand proceedings, the Ld. Assessing Officer recorded their statement and nothing adverse was pointed out even Shri Pravin Jain himself appeared before the Ld. Assessing Officer and even during remand proceedings enquiries were carried out and no adverse remark was made by the Id. Assessing Officer. The assessee as well as the other parties furnished all possible documents evidencing that the loans are not bogus. No cash was found deposited in the accounts of alleged six parties, thus, keeping in view, the totality of facts, attendant circumstances, human probabilities, and in the presence of plausible explanation by the assessee, relevant material, and requirement of fulfillment of ingredients, enshrined in section 68 of the Act, we find that onus cast upon the assessee has been duly discharged, therefore, the addition made u/s 68 of the Act, which is purely based upon presumption or the statement recorded and later on retracted by the concerned parties, therefore, we find infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal), resultantly, the appeal of the Revenue is dismissed." j. It was held in case of DCIT 12(1)(2) vs. Bairagra Builders P Ltd. [ITA No. 4691 & 4692/Mum/2015] "We have gone through the orders relied upon by the learned DR. We noted that the decision of the Delhi High Court in the case of Bikram Singh, the assessee could not discharge the 27 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., onus as laid down by section 68 of the Act. Similarly, in the case of CIT vs. Jansampark Advertising & Marketing Pvt Ltd. (supra), the additions have been made u/s. 68 in respect of the share capital received by the assessee from various companies and during the course of investigation, it was found that the share capital has been received from three entry operators, who are allegedly in the business of providing accommodation entries. Notices issued u/s. 131 to these parties were returned undelivered by the postal authorities with the remark "left"/ "no such person". Under these circumstances, the Hon'ble High Court took a view that the assessee failed to discharge the burden to prove the creditworthiness as well as the genuineness of the transactions.

12. Being consistent with the view taken by this co-ordinate Bench in case ofKomal Agro techpvt. Ltd. (supra), and in view of the facts and circumstances, we do not find any illegality or infirmity in the orders of the CIT(A). It is accordingly, confirmed for both the years under appeal." k. It was held in case of Ito 4(3)(4), Mumbai vs Suchitra Fabtex P.Ltd, [ITA No. 2979 & 2980/Mum/2017]-

28 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd.,

"Ansh Merchandise Pvt .Ltd. (earlier known as New Planet Trading Co. Pvt. Ltd.) Thus, after careful considerations of the entire material on record, which may also be evident from the above given chart, it is found that the appellant has indeed proven the genuineness of the loans taken from all the parties referred above. Accordingly the addition made by the CIT(A) under section 68 of the Act on that count to the tune of Rs 40,00,000/- under the heading loan as cash credit cannot be sustained. Consequently, the addition of Rs. 1,51,694/-made under section 37(1) of the Act on account of disallowance of interest on the said amount also cannot be sustained. 5.1 notice that the Ld CIT(A) has passed a detailed order by examining the facts relating to the issues under consideration and also applying the law settled by Hon'ble Courts in this regard. I notice that the revenue could not furnish any material on record to rebut the reasoning given by Ld CIT(A). Under these set of facts, I am of the view that the orders passed by Ld CIT(A) do not call for any interference. Accordingly I uphold the same in both the years under consideration." I In a landmark decision by Hon'ble ITAT Mumbai, in an identical case of ITO -10 (2) (4) Vs. M/s. Superline Construction P. Ltd. (and many others in this consolidated order) pronounced on 30.11.2015 the summary of the case is outlined as under :- "The Revenue authority failed to appreciate that there is no documentary evidence against the Assessee Company to support impugned additions made solely on the basis of statement of Shri Mukesh Chokshi. The Assessing Officer failed to appreciate that as against the statements of any person recorded u/s 143(3) r.w.s. 147, the Assessee Company has fully discharged the burden of proof, onus of proof and established the identity, creditworthiness and genuineness of transaction by banking instruments with documentary evidences." The facts of the above case are very similar to the case under consideration and ratio decided in the case is requested to be applied. Further with the similar facts, similar judgments were pronounced and are hereby outlined as under:- ITAT E Bench in M/s. SDB Estate Pvt Ltd vs. ITO-(5)(3)(2) in ITA No. 584/Mum/2015: AY 2008-09 has decided similar issue by observing as under:-

"In view of the above stated legal position and in the light of reliable evidences brought on record by assessee to 29 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., substantiate identity, genuineness and creditworthiness of shareholders/ lenders, which have not been controverter by the Revenue, the additions made solely on the basis of general statement of Shri Mukesh Chokshi cannot be held to be justified and the same are accordingly ordered to be deleted.

In the result, appeal of the assessee is allowed in part, in terms indicated hereinabove." The following cases in favour of the assessee on similar issues. a) ITO - 10(2)(1) vs. M/s. Deep Darshan Properties Pvt Ltd in : AY 2006-07 and ITA No.2118/Mum/2014 : AY 2007-08 b) ITO -10(2)(3) vs. Aajivan Computers Pvt Ltd in ITA No.2160/Mum/2014 :AY 2006-07 c) ITO -10(2)(3) vs. Dignity Securities Trading Pvt Ltd in ITA No.2157/Mum/2014 :AY 2006-07 d) ITO -10(2)(1) vs. M/s. Blue Hill Properties Pvt Ltd in ITA No.2119/Mum/2014 :AY 2006-07 With the facts and various Judicial rulings as discussed above, it is crystal clear that the Unsecured Loan Received by the Appellant was genuine and cannot be treated as Accommodation entry. m. Jurisdictional Hon'ble ITAT, Mumbai for an identical case i.e. Arceli Realty Limited Vs. The Income Tax Officer 15(1) (1), Mumbai pronounced on 21.04.2017 ITA-6492/Mum/2016-17, the summary of the case is outlined as under: - "........A.O. merely relied upon the information provided bythe office of DGIT (lnv.), Mumbai and did not made any independent enquiry. The papers filed by the assesse do demonstrate the identity, credit worthiness, genuineness, Source of Source of the transaction. CIT(A) did not provide Opportunity to Cross Examine the concerned person and also the department has not provided authenticity of the information to the person against whom such information is used. The addition is made merely on surmises and conjectures. The statement recorded at the back of the Appellant cannot be utilized ignoring other verifiable evidences. The Id. Assessing officer has made the addition of Rs. 20,00,000/- disregarding the evidences on record and without discharging her onus and without establishing anything contrary to the agreement of the Appellant and without verifying the Bank Account, existence of Investor and without making fruitful investigation, thus the demand was directed to be deleted. "

30 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., n. Jurisdictional Hon'ble ITAT, Mumbai for an identical case i.e. Income Tax Officer, 12(2)(3) Vs. M/s Shreedham Construction Pvt. Ltd. On 14.11.2017 ITA-3754/3755/3756/Mum/2017, the summary of the case is outlined as under :- "We have considered the rival submissions of the parties and have gone through the material and the orders of the authorities below. We have noted that the assessing officer passed the assessment order on the similar lines as made for earlier year. The assessing officer has not given specific finding on the documentary evidences furnished by the assessee. The assessing officer while passing the assessment order has not given different finding though the facts for the year under consideration were at variance. The assessee specifically contented that they have paid interest on the loan availed and deducted TDS. The Id Commissioner (Appeals) while considering the facts noted that the assessing officer has not correctly appreciated the loan amount from Raghuveer Sales nor its share capital and reserve funds. Similar, other discrepancies were pointed out about VirajMerchantile P. Ltd, Park Tools Ltd and Utakantha Trading & Properties Ltd. In view of the above discussion we do not find any infirmity and illegality and we have already confirmed the order passed by Id CIT(A) for AY 2008-09 and 2009-10, hence, the appeal for the year consideration is also dismissed with similar observation." o. Recent Judgment delivered by Jurisdictional Hon'ble ITAT, Mumbai for an identical case i.e., M/s Shree Laxmi Estate Pvt. Ltd. V/s. Income Tax Officer 15(3)(3) On 29.12.2017 ITA- 5954/Mum/2016, the summary of the case is outlined as under:- "We have heard both the parties, perused the material available on record and gone through the orders of authorities below. The CIT(A) made addition towards unsecured loans received from Josh Trading Company Pvt Ltd. and Viraj Mercantile Pvt Ltd on the basis of information received from Investigation Wing which revealed that the assessee is beneficiary of bogus accommodation entries provided by Shri Praveen kumar Jain through his bogus companies.................. The CIT(A) has brought out facts in the light of statement of Shri Pravin kumar Jain deposed before the Investigation Wing to make addition. Except this there is no contrary evidence in the possession of the CIT(A) to disprove the loan transaction from Josh Trading Company Pvt. Ltd. and Viraj Mercantile Pvt. Ltd. On the other hand, the assessee has furnished various details including confirmation letters from the parties,

31 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., their bank statements along with their financial statements to prove identity, genuineness of transactions and creditworthiness of the parties. The assessee also furnished evidences to prove that the parties have responded to the notices issued u/s 133(6) by CIT(A) by filing various details" "............It is well settled legal position that the assessee has to discharge 3 main ingredients in order to discharge the initial burden of proof, i.e. the identity of the creditor9 the genuineness of transaction and creditworthiness of the creditors. Once the assessee discharges initial burden placed upon him, then the burden to disprove the said claim shifts upon the CIT(A)" "Coming to the case laws relied upon the assessee, the assessee has relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs Gagandeep Infrastructure Pvt. Ltd (2017) 394 ITR680 (Bom). We have gone through the case laws relied upon by the assessee in the light of facts of the present case and find that the Hon'ble High Court categorically observed that "..........the three essential tests while confirming the pre proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in Lovely Exports (P) Ltd. (supra) in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit." It is not out of place to bring under your Hon'ble members kind notice, that the Appellant has discharged the onus cast upon it u/s 68 of the Act by submitting the number of documentary evidences during the course of assessment proceedings. The Ld. CIT(A) has failed to demonstrate and establish that how the impugned addition of Rs. 6,0000,000/- was treated as Unexplained Cash Credit.

32 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., In view of the above, the appeal of the assessee deserves to be allowed. HUMBLE PRAYER The unsecured loan is genuine and duly supported by documentary evidence. Hence, the addition of Rs. 6,13,85,475/- made by the Ld. CIT(A) requires to be deleted as the same was on assumption basis which does not have any stand in law and requires to be deleted. Therefore, we request your honor to kindly delete the additions made.”

12. On the other hand, Ld DR relied on the orders passed by the revenue authorities.

33 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., return of income filed by them, the details as disclosed in MCA portals and more importantly confirmation letters from all the parties. We noticed that assessing officer has made detailed verification by issue of show cause notices and also commissions under section 131 (d) for the parties in the other states.

34 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., 15. The above information is against the own conclusion of AO that the company can give loan only when they have proper business on record and profit. From the records submitted before us, all the parties having substantial turnover achieved by them during this year except the company M/s Daffodil Traders Private Limited and it has achieved only ₹ 19,09,222/–. At the same time, we noticed that all the companies who has given unsecured loans to the assessee are having huge reserves and capital.

35 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., The criteria to invoke provisions of section 68 for unsecured loan transaction is slightly different compared to issue of share capital. In the present case, there is no dispute as far as identity is concerned since all the parties were traceable, it is only credit worthiness and genuineness has to be verified.

36 ITA.No.3171/Mum/2018 (A.Y: 2014-15) M/s. Nisa Industrial Services Pvt. Ltd., transactions. We find it absurd that AO is completely rejecting the relevance of PAN and its utilisation. If the PAN is so irrelevant, how the revenue is completing the assessment and tracing the tax dues and their collection from the assessee including the above mentioned parties. Further we notice that AO disregarding the importance of MCA and existence of ROC. The existence of the company under the Companies act 1956 depends upon the compliance under the Companies act 1956 by complying with the required statutory formalities. As long as the companies are in existence under the Companies Act, AO cannot treat the companies as dummy or dead or no longer relevant.