ACIT 29(1), MUMBAI vs. DHIREN P. NANDU (HUF), MUMBAI

O R D E R

PER AMARJIT SINGH, JM:

1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in deleting the addition of Rs.1,00,00,000/-made by the AO on account of unexplained income.

2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) failed to appreciate the fact that the AO has made the addition on the basis of the concrete information received from the investigation wing of the department that Mr. Pravin Kumar Jain was operating and managing 71 benami concerns through which they are involved in providing bogus entries of unsecured loans and bogus purchases to various beneficiaries.

3. On the facts and in the circumstances of the case and in law. the Ld. CIT(A) failed to consider the fact that the assessee has received unsecured loan from M/s. Ansh Merchandise which is a benami concern of Mr. Pravin Kumar Jain.

4. On the facts and in the circumstances of the case and in law. the Id. CIT(A) failed to consider the fact that assessee was unable to produce the concrete evidences regarding M/s. Ansh Merchandise.

5. The appellant craves leave to add, to amend, alter, substitute or modify any of the above ground or add a fresh ground as and when found necessary either before or at the time of hearing."

4. The brief facts of the case are that the Assessee filed his return of income on 28.07.2009 declaring total income to the tune of Rs.3,90,173/-. The return was processed u/s 143(1) of the Act. The case of the assessee was reopened u/s 147 of the Act. Thereafter, the order u/s 143(3) of the I.T. Act was passed assessing the total income to the tune of Rs.2,56,31,569/-. An information received from the DGIT(Inv.), Mumbai 2 CO. No.359/M/2018 A.Y. 2009-10 to the fact that the assessee indulged in the bogus unsecured loans, bogus share application and bogus sales etc. The assessee was one of the beneficiary of the accommodation entries provided by Shri Pravin Kumar Jain group concern. The notice u/s 148 of the Act was issued and after the reply of the assessee, the loan from the various parties in sum of Rs.1,00,00,000/- was treated as bogus and added to the income of the assessee. The total income of the assessee was assessed to the tune of Rs.1,07,86,749/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us.

5. All the issues are in connection with the allowance of claim of the assessee in connection with the taking the loan from M/s. Ansh Merchandise Pvt. Ltd. disallowed by the AO u/s 69/69A/68 of the Act. The Ld. Representative of the revenue has argued that the claim of the assessee has wrongly been allowed by CIT(A), therefore, the finding of the CIT(A) is not justifiable, hence, is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has strongly relied upon the order passed by the CIT(A) in question. Before going further, we deem it necessary to advert the finding of the CIT(A) on record.:-

“8.2 I have considered the facts and circumstances of the case as transpires from assessment order, submission of the assessee and relevant judicial pronouncements as applicable to the facts of the case. The Ld.AO received an information from the Investigation wing that the appellant had taken accommodation entries of Rs.1,00,00,000/- from M/s Ansh Merchandise Pvt. Ltd. operated by Shri Pravin Kumar Jain and group in the form of loan transactions. The Ld.AO has not accepted the transactions as genuine and added Rs.1,00,00,000/- to the total income of the assessee u/s.69/69A/68 of the IT Act for this assessment year. The appellant has stated that it had taken deposit of Rs.1,00,00,0001- from the said MIs Ansh Merchandise Pvt. Ltd. through cheque and has also repaid the same by cheque only. 3 CO. No.359/M/2018 A.Y. 2009-10 8.2.1 From the assessment order, it transpires that the Ld. AO has solely relied upon the statements of Pravin Kumar Jain which has subsequently been retracted by Shri Jam, and the fact that the appellant has not produced the said panics before him. Ld. AO did not carry out any worthwhile independent inquiry in the matter. He has totally ignored the documentary evidences submitted by the appellant. The Ld.AO in the assessment order, has admitted existence of these details. The Ld. AO has not pointed out any defect in the above mentioned documentary evidences submitted during assessment proceedings. Without pointing out any lacuna in the evidences submitted by the appellant, the source and the genuineness could not be doubted. Once evidences relating to a transaction is submitted before the Ld. AO. the onus shifts on him to prove these as non-genuine or bogus. The U. AO has not discharged the onus east on him by conducting any independent enquiry. The loan has been repaid in the financial year 2008-09 which was even before the date on which the information of the said loans was stated to have been received by the Ld.AO from the investigation wing. and even before the on Pravin Kumar Jain group. in my opinion, merely based on the statement of a third person without any corroborative evidence will not make the transactions, in question. as non-genuine or bogus transaction more so when even the statement on the basis of which the additions have been made, was found to be retracted. As such, in the absence of any contrary evidence placed on record, the transaction cannot be treated as bogus or paper transaction. 8.2.2 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 the not 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. There is no evidence brought in the assessment order to prove the above conclusion drawn by the Ld. A0. 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. A0. The outcome of investigation carried out in the case of Pravin Kumar 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 4 CO. No.359/M/2018 A.Y. 2009-10 suspicion. Simply relying on the report of the Investigation wing. Mumbai and statement of Shri Pravin Kumar Jain. the Ld. AO cannot conclude that all transactions are bogus or have no credential value. 8.2.3 In view of the facts and circumstances mentioned above, in my opinion, the appellant has submitted sufficient evidences to prove the genuineness of transactions during the year under consideration. The Ld.A0 has solely relied upon the statements of Pravin Kumar Jain and did not carry out any worthwhile independent inquiry in the matter. He has totally ignored the documentary evidences submitted by the appellant. The Ld.A0 has not pointed out any defect in the above mentioned documentary evidences submitted during assessment proceedings. Without pointing out any lacuna in the evidences submitted by the appellant or bringing any adverse findings on record through independent enquiry as to the genuineness of transaction, the sources and the genuineness cannot be rejected, unless and until proved otherwise by the Ld. AO, which he has failed to do. The facts available on records suggest that the appellant had taken the deposit for sale of land and there is an MOU to support the same which has been produced before the Ld. AO and the appellant has also produced bank statement to prove receipt of the said advance, and all such evidences were produced before the Ld. AO. The appellant also submitted copy of the cancellation deed dated 6.5.2008 in lieu of which the advance received earlier was repaid in the month of May and August 2008. And the appellant has furnished the source of the said repayments and all such evidences were produced before the IA. AO. Thus even the said advance received in May 2005 was duly repaid by cheque in May and August 2008. The Ld. AO has not discredited these evidences submitted by the appellant. The ground on which the Ld. AO has rejected the appellant’s submission is that he could not produce the party for verification. In view of the facts and Circumstances of the case, I am of the considered opinion that the Ed. AO has not brought anything on record to discredit the evidences submitted by the appellant. The documentary evidences available on records cannot be ignored unless the same is disproved. Without pointing any defect and lacuna in these evidences submitted during the course of assessment proceedings, the Ld. AO was not justified in rejecting the same. Once the evidences relating to a transaction is submitted before the Ld. AO. the onus shifts on him to prove that the same as non-genuine or bogus and in the present case the Ld. AO has failed to discharge the onus casted on him. In absence of any evidence to the contrary the transactions under consideration have to be considered as genuine. In the present case the appellant has not taken any amount as loan or deposit in the year under consideration but has actually repaid the amount taken as deposit. and has furnished the source of money for making the repayment, which has not been disputed by the Ed. AO. As the source of the money for repayment made 5 ITA. No.2362/M/17 CO. No.359/M/2018 A.Y. 2009-10 in the year has not been disputed, it cannot be said that there was any unexplained cash credit/unexplained investments/unexplained money etc. In view of the facts and circumstances of the case, the decision of the Ld. A0 of treating the amount of Rs.1.00,00.000/- as income u/s. 69/69A/68 is not in order and cannot be justified. The Ld. A0 is accordingly directed to delete the addition of Rs.1,00,00,000/-. Ground No II is accordingly allowed.