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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: Shri Rajesh Kumar & Shri Ram Lal Negi
O R D E R Per Rajesh Kumar, Accountant Member
The aforesaid appeal has been filed by the Revenue against the order of the CIT(A)-29, Mumbai, dated 20.04.2016, which in turn arises out of the assessment order passed u/s 143(3) r.w.s 147 of the I.T. Act, 1961 for A.Y. 2009-10.
The only effective issue raised by Revenue in various grounds is against the deletion of addition of ` 65,00,000/- by the learned CIT(A) as made by the AO u/s 68 of the Act on account of unsecured loan from persons/entities engaged in providing accommodation entry.
ITA 1225/Mum/2018 DNH Spinner Pvt. Ltd.
The facts in brief are that the case of the assessee was re-opened u/s. 147 of the Act by issue of notice u/s. 148 after the AO received information from the DGIT (Inv), Mumbai, that the assessee is a beneficiary of bogus loan entries from Shri Pravin Kumar Jain Group companies/entities. During the year, the AO observed that the assessee had taken bogus loans to the extent of ` 65 lacs from Pravin Kumar Jain Group concerns comprising of ` 20 lacs from M/s. M/s. Olive Overseas Pvt. Ltd., ` 20 lacs from Jasoda Export, ` 10 lacs from Mohit International and ` 15 lacs from Ryan International. The said fact came to light when the investigation wing conducted a search on Pravin Kumar Jain & Associates. The AO in order to verify the genuineness of the loans raised from these parties issued notice u/s. 133(6) of the Act.
However, all the notices were returned un-served except in the case of Jasoda Export. The AO treated these loans as bogus and added the same to the income of the assessee by framing assessee u/s. 143(3) r.w.s. 147 of the Act.
In the appellate proceedings, the learned CIT(A) allowed the appeal of the assessee by holding that assessee has submitted sufficient documents to prove the genuineness of the loan transactions and, thus, deleted the addition.
At the outset, the learned counsel for the assessee submitted before the Bench that the issue at hand is squarely covered by the order of the co-
ITA 1225/Mum/2018 DNH Spinner Pvt. Ltd. ordinate Bench vide order dated 14.03.2019, in assessee’s own case in & 5887/Mum/2017 for A.Ys. 2011-12 and 2012-13, wherein the Bench dismissed the appeal of the revenue by holding that assessee has discharged its onus by filing evidences in the form of bank statements, income tax returns, PAN of lenders and confirmations, whereas the AO has merely relied on the statement of Shri Dinesh Kumar Jain a director of the assessee company, whose statement was recorded during the course of search. The learned AR submitted that the AO has relied on the statement of Shri Dinesh Kumar Jain, which stood retracted after three days from the date of recording. The learned AR therefore, submitted that the issue may be decided in favour of the assessee by following the decision of co-ordinate Bench by dismissing the appeal of the Revenue.
The learned DR, on the other hand, relied on the grounds of appeal and the assessment order.
After hearing both the parties and on perusal of the order of the Co- ordinate Bench in & 587/Mum/2017 (supra), we observe the identical issue has been decided in favour of the assessee in the above appeals. The operative part of the said order is reproduced as under:
“8. We have heard the rival submissions of both the parties and perused the material on record including the written submissions filed by the Ld. A.R. and the Ld. D.R. along with various case laws referred and relied by both the parties. The undisputed facts are that the assessee company was formed and constituted on 15.09.2010 and it has taken over business of M/s. D.N.H Spinners a partnership firm on going concern
ITA 1225/Mum/2018 DNH Spinner Pvt. Ltd. basis. There was a survey action under section 133A of the Act on the assessee on 25.03.2014. During the course of survey a statement under section 131 of the Act was recorded of Shri Dinesh Jain on 26.03.2014 who is director of the assessee company wherein the survey team informed him that various unsecured loans taken by the assessee from seven entities controlled by Shri Pravin Kumar Jain who has admitted before the Investigation wing in the course of search proceedings that he and his associated concerns were providing accommodation entries. Shri Dinesh Jain, director of the assessee company admitted that they have taken these entries from Shri Pravin Kumar Jain and associates. According to the assessee the statement of Shri Dinesh Jain was recorded under pressure. However, later on Shri Pravin Kumar Jain retracted his statement and likewise Shri Dinesh Jain also retracted his statement on 29.03.2014 within three days from the date of recording the same. In this case during the course of assessment proceedings the assessee has filed copies of bank statement, ITRs, confirmations, PAN numbers of the lenders etc. and thus the assessee has fully discharged the onus cast upon it and thus the addition under section 68 can not be made in the said circumstances qua the unsecured loans raised by the assessee. The AO has merely relied on the statement of Shri Dinesh Jain who is director in the assessee company by ignoring the fact that the statement given by the said director stands retracted after three days from the recording of the same. After perusing the order of Ld. CIT(A) who has dealt with the facts in great detail and also discussed the various decisions wherein it has been held that no such addition can be made under section 68 where the assessee has filed all the necessary evidences before the AO when AO has not made any further enquiry to to prove otherwise. The allegation of the AO that assessee has not proved identity and creditworthiness of the lenders and genuineness of the transactions is without any basis as stated above. The assessee filed the necessary evidences in the form of loan confirmations, balance sheets and profit and loss accounts, ITRs, bank statements and PAN cards of the lenders. The lenders companies were filing their ITR and ROC returns regularly and have duly shown the amount lent to the assessee in their respective balance sheets. Entire transactions were routed through the banking channels and thus the assessee has discharged the primary onus of proving the identity, creditworthiness and genuineness of the transactions. Another allegation of the AO is that assessee has failed to produce the parties and hence question of providing cross examination does not arise which is without merit as the assessee has discharged its onus by providing all the basic documentary evidences before the AO who just relying on the statement of Shri Pravin Kumar Jain treated the loan transactions as unexplained credit in the books of the assessee. On the issue that these lenders are showing low income or losses in the return of income filed, we observe that in the balance sheets the said loan advanced by the lender were duly reflected and thus there is no income in the particular year has no relevance and there were sufficient
ITA 1225/Mum/2018 DNH Spinner Pvt. Ltd. sources. Under these circumstances, we, after taking into consideration contentions m, submissions and written submissions of both the parties and after analyzing the various case laws relied upon by the rival parties , are of the view that order passed by the Ld. CIT(A) is well reasoned and there is no reasons to deviate from the findings of the ld CIT(A) and therefore same is being upheld by dismissing the appeal of the revenue.” Facts and circumstances being identical in the instant case vis-à-vis the appeals as decided by the coordinate bench above and there are no new evidences brought on record for the year under consideration by the revenue to the contrary, we, therefore, respectfully following the decision of the co- ordinate Bench in assessee own cases in earlier years, are inclined to uphold the order of the CIT(A) and dismiss the ground raised by the Revenue
In the result, Revenue’s appeal is dismissed. Order pronounced in the open court on this day of 27th June, 2019