THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, SURAT vs. SMT. FALGUNI SANDIPKUMAR NAIK, SURAT

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER IT(SS)A Nos. 19, 20 & ITA 659/SRT/2018 (Assessment Years: 2012-13, 2013-14 & 2014-15) (Hearing in Physical Court)

A.C.I.T. Smt. Falguni Sandipkumar Naik, Central Circle-4, Room No. D-40/41, Kishor Park Society, Vs. 508, 5th Floor, Aayakar Ghod Dor Road, Bhavan, Majuragate, B/h St. Xavier’s School, Surat-395001. Surat. PAN : AASPN 5647 G APPELLANT RESPONDEDNT

Department by Shri H.P. Meena, CIT-DR Assessee by Shri Rasesh Shah, CA Date of hearing 19/05/2022 Date of pronouncement 24/06/2022 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER:

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik In this appeal, the Revenue has raised following grounds of appeal: “1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the addition of Rs.4,23,79,328/- out of the total addition of Rs. 4,32,03,011/- on the basis of remand report of the A.O., whereas the A.O. at para no.8 of the remand report dated 25.06.2018 had specifically reported after verification of facts that the contention of the assessee was an afterthought and hence not acceptable. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in assuming that identity, creditworthiness and genuineness of the transaction have been proved only on the basis of the facts that the lenders submitted confirmation and statement of bank account/acknowledgment of return of income (in certain cases). 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in assuming that identity, creditworthiness and genuineness of the transaction have been proved, whereas the lenders even could not submit copy of bank statement or copy of acknowledgment of return of income in certain cases. 4. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent. 5. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 2. Brief facts of the case are that a search action was carried out under Section 132 of the Income Tax Act, 1961 (in short, the Act) in Surat based Surat Metallic Group on 28/11/2013. The assessee was also covered in the same search action. Consequent upon the search action, a notice under Section 153A of the Act was issued to the assessee on 06/04/2015 for filing return of income for subject assessment year. In response to notice under Section 153A, the assessee filed her return of income on 11/01/2016 declaring total income of Rs. 1.364 crore. During the assessment, the Assessing Officer noted that in the search action,

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik various incriminating documents with regard to unaccounted income of assessee pertaining to the year under consideration was found and seized. The Assessing Officer on perusal of Profit & Loss Account (P&L account) and balancesheet noted that the assessee has shown unsecured loan of Rs. 5.046 crores during the financial year under consideration. The assessee was asked to furnish the details of parties by the Assessing Officer. The assessee furnished the required details of the lenders. In order to verify the correctness of transactions, the Assessing Officer issued notice to all the parties. Out of total 30 parties, the Assessing Officer recorded that notice under Section 133(6) of the Act was issued and unserved. Further notice to 22 parties were issued and served. No reply was received from those parties. The details of all the parties were compiled by the Assessing Officer in the following manner: Notice u/s 133(6) dated 14.03.2016 issued and unserved

Sr. Unsecured loan taken Amount (Rs. Remarks No. from 1 Anil Trading Co. 31,890/- Identity, creditworthiness and genuineness of loan transaction unverified 2. Ashok Enterprise 10,02,959/- -----do----- 3. Divyesh Kantilal 5,27,781/- -----do----- 4. Malvi Corporation 11,00,000/- -----do----- 5. Shantilal Manilal HUF 25,00,000/- -----do----- 6. Shreenathji Trading Co. 20,05,918/- -----do----- 7. Tejas Gems J.S. 10,89,095/- -----do----- 8. Yug Exim 12,50,000/- -----do----- Total 95,07,643/- Notice u/s 133(6) dated 14/03/2016 issued and served:

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik Sr. Unsecured loan Amount (Rs.) Reply Remarks No. taken from received/not received 1. Sandip B Naik 15,00,000/- Not received Father in law of HUF assessee 2. Ushaben V 15,00,000/- Not received Identity, creditworthiness Patel and genuineness of loan transaction unverified 3. Blue Feather 36,00,000/- Not received Case of Blue Feather Infracon Infracon in which assessee is partner in the firm is under scrutiny in this office and it is verified from his books. 4. Om Sai 1,44,00,000/- Not received Identity, creditworthiness Developers and genuineness of loan transaction unverified 5. Siddikabanu 60,00,000/- Not received ----do---- Hafez Said Abdul Raheman 6. South City 11,00,000/- Not received Case of South City House House is under scrutiny in this office and it is verified from his books. 7. Aksh Gems 10,00,000/- Not received Identity, creditworthiness and genuineness of loan transaction unverified 8. Bhurabhai R 6,13,469/- Not received ----do---- Patel 9. Harshil Impex 12,00,000/- Not received ----do---- 10. Hemabhai 6,45,200/- Not received ----do---- 11. Ketankumar 53,859/- Not received ----do---- Rameshbhai 12. Khushi Gems 8,00,000/- Not received ----do---- 13. Lakhabhai 6,31,450/- Not received ----do---- Jivrajbhai 14. Mitul 20,11,178/- Not received ----do---- Manusukhbhai 15. Payal Diamond 11,00,000/- Not received ----do---- 4

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik 16. Rameshbhai 6,34,623/- Not received ----do---- 17. Sanghvi 10,57,863/- Not received ----do---- Entrprise 18. Vashrambhai 6,24,046/- Not received ----do---- 19. Vatsal 44,055/- Not received ----do---- Enterprise 20. Veer 7,39,814/- Not received ----do---- Corporation 21. Virabhai 6,39,911/- Not received ----do---- Denshibhai 22. Mahek 10,58,521/- Received Identity, Entrprise creditworthiness and genuineness of loan transaction verified 3. The Assessing Officer asked the assessee to furnish the confirmation of each of the parties’ along with name, address, PAN, relevant party wise transaction, amount and mode of payment/receipt, bank statement of parties showing the amount, copy of ITR along with P&L account and balance sheet of such parties. The Assessing Officer recorded that vide reply dated 09/03/2016 submitted some confirmation and further stated that she is unable to furnish details of unsecured loans of rest of the parties for the reasons that the lender parties are not cooperating with her. The assessee also stated that she has no legal authority to secure their cooperation and the Assessing Officer has power to get the confirmation by issuing notice under Section 133(6) of the Act. Further she has no objection to exercise such power for seeking document from those parties. The Assessing Officer recorded that the assessee furnished some reply on 14/03/2016 at the fag-end of scrutiny assessment proceedings. The Assessing Officer issued notice to one of such parties on 14/03/2016 but no reply was

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik received from such parties. The Assessing Officer took his view that the total transaction involving the loan amount is Rs. 5,04,61,532/-, out of which he has verified identity of lenders, genuineness of transactions of Rs. 72,58,521/-. Therefore, the remaining transaction of unsecured loan of Rs. 4,32,03,011/- is treated as unaccounted cash credit and made addition under Section 68 of the Act. 4. On appeal before the ld. CIT(A), the assessee filed detailed written submissions. The submission of assessee is recorded in para 5 of the order of ld. CIT(A). In the submission, the assessee submitted that the assessee filed all the details as called for by the Assessing Officer along with the name and address of all the depositors from whom unsecured loans were availed during the year under consideration. The assessee had also furnished confirmations along with other documentary evidences. The assessee submitted that in respect of some of the depositors from whom unsecured loan had been availed, during the year were not cooperating. The also submitted that the assessee is a female and all her financial affairs are being handled by her husband Sandip Naik and subsequent to the search, the assessee landed in huge financial crisis. The assessee's husband was a partner in a firm Valencia Corporation, which was developing a residential project in Vesu. In the said firm there were certain legal issues related to land and other matters and the assessee's husband even sold out his share in the said firm to some other partner. However, the other partner has not compensated/repaid the assessee's husband his share in the firm and the project

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik of the said firm is at standstill till date, leaving the entire capital of the assessee's husband being blocked therein. This worsened the financial crisis of the husband of the assessee and as a result of which the husband of the assessee was under great pressure, mental trauma and depression, which prevented him from attending even his day to day office and business routines. The further submitted that in view of the financial crisis, the assessee could neither pay the interest on unsecured loan to the depositors on time nor could the assessee repay the unsecured loans as per commitment. However, some of the depositors did not furnish the requisite papers and accordingly the assessee furnished the name and address of such depositors along with her bank statement showing the receipt of unsecured loans from them. The assessee submitted that the Assessing Officer issued notices u/s. 133(6) to the depositors who did not co- operate with the assessee and it may be noted that the said notices stands duly served on all the depositors from whom unsecured loans have been received during the year under consideration. On receipt of the notices under section 133(6) some of the depositors furnished all the documents as asked for by the Assessing officer, whereas some of the depositors did not furnish any reply before finalisation of the assessment proceedings. The submitted that the detail of additions of unsecured loans as made by the Assessing Officer during the year under consideration primarily for the reason that the reply to the notices under section 133(6) were not received. In respect of some of the depositors, the submitted that the amount of unsecured loan of Rs. 5,71,011/- as added by the

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik Assessing Officer is patently wrong, since the said amount is in respect of only interest amount credited to the account of the depositors and the same is not the receipt of any new funds. The ld. AR also submitted that in the event of the assessee not receiving any new unsecured loans from the said parties there is no question of making any addition u/s. 68 in respect thereof. The assessee has not even claimed any interest expenses on unsecured loans in her return of income and there is even no question of disallowing the interest expenses in respect of the alleged non genuine unsecured loans. In respect of unsecured loan received from parties shown in the table mentioned above, the l assessee has furnished her bank statement showing the receipt of loan from those parties, along with their names and addresses and on the basis of which the Assessing Officer has issued notices under section 133(6) which stands served on some of them. However, the Assessing officer has treated all such depositors as non- genuine from whom replies to the notice under section 133(6) was not received by him at the time of finalising the assessment order. The Assessing Officer has grossly erred in treating the said loans as unexplained only for the reason that the said depositors have not furnished their replies in response to the notices under section 133(6). 5. The ld. CIT(A) after considering noted that during the appellate stage, the assessee furnished details of lenders but some of the lender were not cooperating as the assessee was unable to pay interest on deposits due to financial difficulty and prayed for re-verification and reconfirmation of lenders.

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik On perusal of the detailed submissions of the assessee, the ld CIT(A) directed

the Assessing Officer to conduct enquiries from lenders for verification of

transactions and furnish his remand report. On the direction of ld. CIT(A), the

assessing officer initiated remand proceedings. During the remand proceedings,

the assessee was asked to furnish any other address in case of addresses of

lenders have been changed. The assessee vide her submission dated 08/05/2018

furnished details regarding addresses of lenders. On the new address, the

Assessing officer again issued notice under Section 133(6) of the Act. The Assessing Officer recorded that on sending such notices, he has received

confirmations and other related documents in the following manner:

Sr. Party Name Amount Interest Documents received Received Transaction date No. on as per statement Confirm IT Bank ation Ack. Statement 1. Akash Gems 1000000 - Yes - Yes 28/05/2018 21/03/2012 (Prop.P.T Rajput HUF) 2. Ashok 1002959 2959 Yes - Yes 08/06/2018 23/03/2012 Enterprise (Prop. Prakashchandra M Modi) 3. Bhurabhai R 613469 33469 Yes Yes Yes 22/05/2018 07/10/2011 Patel 4. Divyesh Kantilal 527781 27781 Yes Yes Yes 17/05/2018 14/10/2011 5. Harshil Impex 1200000 - Yes - Yes 28/05/2018 22/03/2012 (Prop. Anil B. Gandhi) 6. Hemabhai 645200 35200 Yes Yes Yes 25/05/2018 07/10/2011 7. Khushi Gems 800000 - Yes - Yes 08/06/2018 21/03/2012 (Prop. Pravinbhai K. Patel HUF) 8. Lakhabhai 631450 34450 Yes Yes Yes 22/05/2018 07/10/2011 Jivrajbhai 9. Malvi 1100000 - Yes - Yes 08/06/2018 21/03/2012 Corporation (Prop. Bharatbhai H Ponkia

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik 10. Mitul 2011178 11178 Yes Yes Yes 22/06/2018 14/03/2012 Manasukhbhai 11. Payal Diamond 1100000 - Yes - Yes 28/05/2018 21/03/2012 (prop. Kalubhai L. Bagatharia) 12. Rameshbhai 634623 34623 Yes Yes Yes 25/05/2018 07/10/2011 13. Sanghvi 1057863 57863 Yes Yes Yes 25/05/2018 07/10/2011 Enterprise (Prop. Arvindkumar S. Shah 14. Shantilal Manilal 2500000 - Yes - - 08/06/2018 13/10/2011 HUF 15. Shreenathji 2005918 5918 Yes Yes Yes 28/05/2018 22/03/2012 Trading Co. (Prop. Rohitkumar B. Shah) 16. Vashrambhai 624046 34046 Yes Yes Yes 22/05/2018 07/10/2011 17. Veer 739814 39814 Yes Yes Yes 22/05/2018 10/10/2011 Corporation (Prop. Chetankumar K. Shah) 18. Virabhai 639911 34911 Yes Yes Yes 17/05/2018 07/10/2011 Devshibhai 19. Yug Exim (Prop. 1250000 - Yes Yes - 28/05/2018 21/03/2012 Manishaben V. Ponkia) 20. Om Sai 14400000 - Yes Yes Yes 21/05/2018 29/03/2011 Developers 21. Siddikabanu 6000000 - Yes - Yes 05/06/2019 26/11/2011 Hafez Said Abdul Raheman 22. Tejas Gems 1089095 89095 Yes Yes Yes 29/05/2018 04/07/2011 (Prop. Bharat Mafatlal Shah HUF) 23. Ushaben V 1500000 - Yes Yes Yes 25/05/2018 24/02/2012 Patel 24. Anil trading Co. 31890 31890 Yes - - 28/05/2018 31/03/2012 (Prop. Anilbhai I. Kapadia) 25. Ketankumar 53859 53859 Yes Yes Yes 23/04/2018 31/03/2012 Rameshbhai 26. Vatsal 44055 44055 Yes Yes Yes 07/06/2018 31/03/2012 Enterprise (Prop. Hemantbhai D. Gajjar) 6. The Assessing Officer recorded that he was in receipt of information from the

Investigation Wing that Shri Chetan kumar Kantilal Shah (Proprietor of Veer

Corporation, one of the lender from whom the assessee received unsecured 10

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik loan of Rs. 7,39,814/- engaged in providing accommodation entry for unsecured loans/bogus purchases. Hence, the unsecured loan from the said parties to be treated as non-genuine. Further the interest payment of Rs. 44,055/- to Vatsal Enterprise, the assessing officer was also in receipt of information that proprietor of Vatsal Enterprise, namely Hemantbhai D Gajjar is also providing accommodation entry. With the above finding the assessing officer furnished his remand report dated 26.06.2018. 7. The copy of remand report dated 26/06/2018 was furnished to the assessee. The assessee filed her reply dated 09/07/2018. In the reply/rejoinder, the assessee submitted that all the persons from whom the assessee received unsecured loan have confirmed and submitted necessary document in the remand proceedings. All the notices were served either on receipt of such notices; they furnished their confirmation, ITR or bank statement. The Assessing Office has not raised objection except with regard to parties viz serial No. 17 and 26 i.e. Veer Corporation and Vatsal Enterprise. For both the lenders, the assessee explained that Vatsal Enterprise, the amount outstanding is only on account provision of unpaid interest and there is no acceptance of any loan from the said party in this assessment year. The amount of interest of Rs. 44,055/- is not claimed by assessee as expenditure but is debited to the capital account. Thus, there is no question of making any addition either under Section 68 for unexplained cash credit or under Section 37(1) for non-genuine interest expenses. The copy of her capital account was furnished. With regard to second objection in respect of Veer

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik Corporation, the assessee submitted that outstanding amount of Rs. 7,39,814/- consist of acceptance of new loan of Rs. 7.00 lacs during the year under consideration and provision of interest of Rs. 39,814/- thereon. The said interest payment has not been claimed as interest expenses but has been debited in the capital account of the assessee. Hence, there is no question of making addition in respect of said amount of Rs. 39,814/- either under Section 68 as unexplained cash credit or under Section 37(1) as disallowance expenditure. On the objection of Assessing Officer that he has received information from Investigation Wing wherein that the proprietor of Veer Corporation namely Chetankumar K Shah is engaged in the business of providing accommodation entry and the same is treated as non-genuine. The assessee submitted that in response to notice under Section 133(6), he has filed confirmation alongwith ITR and bank statement, confirming the transaction, thus information received from the Investigation Wing is not applicable in case of assessee. Moreover, no direct information is received from the Investigation Wing in case of assessee, hence the same cannot be directly made applicable unless there is a statement of Chetankumar K Shah against the assessee which is not available in the present case. The Assessing Officer want to rely upon the information received from the Investigation Wing without giving any opportunity of rebutting the information of cross examination of parties should have been provided but which has not been provided to the assessee.

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik 8. The ld. CIT(A) after considering the contents of assessment order, submission of assessee and remand report of Assessing officer held that the Assessing Officer made addition under Section 68 on account of unsecured loan and interest payment of Rs. 4.320 crore which includes unsecured loan of Rs. 4.263 crore plus interest of Rs. 5,71,011. In the remand report, the Assessing Officer reported that interest payment to Vatsal Enterprise and amount of Rs. 739814/- from Chetankumar K Shah was from entry provider. In the remand report, the Assessing Officer submitted the confirmation along with documentary evidence of all the lenders, except two cases of Veer Corporation and Vatsal Enterprise. The ld. CIT(A) on the basis of remand report of Assessing Officer treated unsecured loans and interest payment from Chetankumar K Shah of Rs. 739814/- and interest paid to Vatsal Enterprise as an accommodation entry and disallowance to that extent was upheld. 9. With regard to remaining amount of Rs. 4.237 crore, the ld. CIT(A) held that in the remand report, the Assessing Officer reported that the amount of Rs. 4.237 crores have been verified by the lenders which is supported with evidence in the form of confirmation, bank account and return of income and accordingly, deleted the addition by taking a view that identity, creditworthiness and genuineness of transactions have been proved. Accordingly the ld CIT(A) deleted the addition of Rs. 4.237 Crore. Aggrieved by the order of ld. CIT(A), the Revenue has filed the present appeal before this Tribunal.

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik 10. We have heard the submissions of learned Commissioner of income tax- departmental representative (ld. CIT-DR) for the revenue and the ld. Authorised Representative (AR) of the assessee and have also gone through the orders of the authorities below carefully. The ld. CIT-DR for the revenue submits that during the assessment proceedings, the Assessing Officer issued notice to various lenders. To verify the identity, the assessee was asked to prove the creditworthiness and genuineness of transactions. The assessee failed to discharge the onus lies upon the assessee. The Assessing Officer could verify the loan transaction of Rs. 5.046 crore thereby the assessee grated partial relief. Those transactions were treated as genuine and remaining transactions which remained unverified were added as unexplained cash credit. The ld. CIT(A), accepted the additional evidence in contravention of Rule 46A of the Income Tax Rules, 1962 (in short, the Rules). The assessee was not prevented from filing the documents which were filed for the first time in the remand report. The ld. CIT- DR prayed for restoring the order of Assessing Office by reversing the finding of ld. CIT(A). 11. On the other hand, the ld. AR of the assessee submits that it was a search case. Notice under Section 153A of the Act was issued to the assessee. No incriminating material was found during the search action. The assessee has shown income of Rs. 1.364 crore. During the assessment, the Assessing Officer on the basis of details provided by assessee, raised issue about unsecured loan. The assessee provided requisite details of the lenders, which consist of their

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik name, PAN, and other details. The lenders party were not cooperating during the assessment as the assessee was unable to pay interest to such depositors. Though, the transaction of unsecured loan was genuine. During the appellate stage, the assessee furnished detailed submission explaining the circumstances. The assessee also explained that she was unable to pay interest on unsecured loans on time to the lender thus, they were not cooperating with the assessee. The assessee furnished the similarly details to the ld. CIT(A). On the request of assessee, the submission and the details furnished by the assessee were forwarded to the Assessing Officer for fresh verification and his remand report. During the remand proceedings, the Assessing Officer issued fresh notice under Section 133(6) of the Act. In response to notice under Section 133(6), all the parties filed confirmation and other documents as desired by assessing officer. The parties further filed either their income tax acknowledgement or bank statement to prove the genuineness of transaction. Thus, not only before the Assessing officer but before the ld. CIT(A), the assessee proved identity of all the parties, creditworthy and genuineness of transaction. Before the ld. CIT(A), the assessee proved creditworthiness of parties and genuineness of transactions. The Assessing Officer objected against the interest payment to Vatsal Enterprise and loan transaction and interest payment to Veer Corporation. The transaction with both the parties were treated as non-genuine and the addition of their transactions were confirmed by the ld. CIT(A).

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik 12. The ld. AR submits that no separate grounds of appeal for violation of Rule 46A of the Rules was raised by the Assessing officer/Revenue. Even otherwise, there is no violation of condition of Rule 46A as the assessee has not filed any fresh evidence. The matter was remanded to the assessing officer on the written submission furnished by the assessee and the parties responded to the notice issued by the Assessing Officer under Section 133(6) of the Act and furnished their confirmation, either bank account and/or return of income to prove the genuineness of transactions. In the remand report, the Assessing Officer has not objected against the addition except transactions with two parties which has already been affirmed by the ld. CIT(A). the assessing officer in his remand report accepted that the transaction has been verified by him. 13. The ld. AR for the assessee submits that the case of A.Y. 2013-14 and 2014-15 are identical except variation of amount or transaction with two or more parties. The ld. AR for the assessee prayed for confirming the order of ld. CIT(A). In support of his submission, the ld. AR of the assessee relied upon the decision of Hon'ble Gujarat High Court in the case of PCIT Vs G&H Enterprises (2016) 72 taxmann.com 91 (Guj) wherein it was held that “where all relevant details related to customers who gave booking advance to assessee-developer were available with Assessing Officer, he could have easily verified advance booking amounts paid to assessee builder; if some of them did not appear, transactions could not be held to be non-genuine.”

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik 14. We have considered the rival submissions of both the parties and have gone through the orders of the authorities below. We find that the Assessing Officer made addition under Section 68 of the Act with regard to unsecured loans received by assessee from 26 parties in the want of sufficient evidence about the addresses/identity of parties, genuineness of transactions and creditworthiness of creditors. The Assessing Officer also held that the notice to the creditors was issued under Section 133(6) but no reply was received from any of the parties. The Assessing Officer treated the entire loan amount from 26 creditors as unexplained cash credit under section 68. As recorded above, before the ld. CIT(A), the assessee filed detailed written submissions. In the written submissions, it was stated that the ld. CIT(A) asked the assessee to furnish her remand report. During the assessment proceedings, the Assessing officer again issued notice to all the 26 creditors. The Assessing officer furnished remand report vide his letter dated 26/06/2018 and compiled the details of all the parties/lenders which we have recorded in para-5 (supra). 15. We find that the Assessing Officer objected about the genuineness of transactions with regard to transactions of Veer Corporation and Vatsal Enterprise only. The ld. CIT(A) on appreciation of remand report and the submission furnished by the assessee, treated the transactions of unsecured loans with two parties i.e. Veer Corporation and Vatsal Enterprise in the nature of accommodation entries and the addition of their transactions was upheld and transactions of remaining unsecured loan was deleted.

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik 16. We find that the ld. CIT(A) upheld the addition with regard to lenders on the allegation of Assessing Officer that those two parties were in the business of accommodation entry provider. We further find that for remaining 24 creditors, the Assessing Officer has accepted that their transactions have been verified with supporting evidences furnished by lenders in the form of confirmations, bank account and in some cases, return of income was also furnished. We find that the ld. CIT(A) accepted the transaction only on furnishing remand report by Assessing officer, wherein the Assessing Officer himself reported that the transactions with lenders have been verified. We find that against 24 lenders, there is no allegation of the assessing officer that they are in business of entry provider. 17. So far as the objection of ld. CIT-DR is concerned that the ld CIT(A) admitted additional evidence in violation of Rule 46A, we find that the objection is misplaced as neither any specific grounds of appeal is raised nor we find any violation of Rule 46A of the Rules, as the assessee has not furnished any new evidence or sought any permission for admission of additional evidence. The fresh details were called by assessing officer from lenders by issuing notice under section 133(6). Even otherwise at the time of conclusion of hearing, we directed the ld. CIT-DR to call the assessment record for all assessment years and be filed before the registry of this Tribunal. In compliance of our direction, the assessment order for all three years were filed. On perusal of assessment records, we find that all the parties have filed their confirmation and other

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik corroborative evidences which is recorded by assessing officer, (as per details in para-5 above), in response to notice of Assessing Officer under Section 133(6) of the record before assessing officer, which we have verified from the assessment record. Thus, the objection of ld CIT-DR has no substance. In view of the aforesaid factual discussion, we do not find any infirmity or perversity in the order passed by the ld. CIT(A), accordingly, we uphold the same. In the result, the grounds of appeal raised by the revenue fail. 18. In the result, this appeal of Revenue for AY 2012-13 is dismissed. 19. Now we take appeal for the A.Y. 2013-14 being IT(SS)A No. 20/Srt/2018 wherein the Revenue has raised following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the entire addition of Rs.3,63,64,249/- out of the total addition of Rs. 3,90,19,602/- on the basis of remand report of the A.O., whereas the A.O. at para no.8 of the remand report dated 25.06.2018 had specifically reported after verification of facts that the contention of the assessee was an afterthought and hence not acceptable. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in assuming that identity, creditworthiness and genuineness of the transaction have been proved only on the basis of the facts that the lenders submitted confirmation, acknowledgment of return of income and statement of bank account (in certain cases). 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in assuming that identity, creditworthiness and genuineness of the transaction have been proved, whereas the lenders even could not submit copy of bank statement in certain cases. 4. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent.

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik 5. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 20. In this appeal, the Revenue has raised similar grounds of appeal as raised in appeal for AY 2012-13, except variation of addition. We find that during the first

appellate stage, the ld. CIT(A) directed the Assessing Officer to furnish remand

report. The Assessing officer furnished remand report on 26/06/2018 along with

complied details of all the creditors in the following manner:

Sr. Party Name Amount Interest Documents received Received Transaction No. on date as per statement Confirm IT Bank ation Ack. Statement 1. Shantilal Manilal 2000000 - Yes - - 08/06/2018 11/04/2012 HUF 2. Charmi 1611452 111452 Yes - - 08/06/2018 17/08/2012 Corporation (Prop. Ashish S. Sanghvi) 3. Palm 1048658 48986 Yes Yes Yes 28/05/2018 03/11/2012 International (Prop. Ambadas C. Sonar) 4. Rashmi Shah 710816 - Yes Yes Yes 22/05/2018 12/02/2013 5. Sudhaben 812362 12362 Yes Yes Yes 28/05/2018 12/02/2013 Ramesh 6. V.D. 1048986 48986 Yes Yes - 28/05/2018 02/11/2012 International (Prop. Rita J. Gaglani) 7. Abhay H Mehta 1283753 33753 Yes Yes - 28/05/2018 17/12/2012 & HUF 03/01/2013 8. Dashrathbhai R 720252 20252 Yes Yes Yes 22/05/2018 02/01/2013 Mehta 9. Hitesh 950000 - Yes Yes Yes 21/05/2018 03/01/2013 Jagdishchandra 10. H K Mehta & 255960 5959 Yes Yes Yes 17/05/2018 03/01/2013 Co. (Prop. Hardik H Mehta) 11. M B System 10000000 - Yes Yes Yes 18/04/2018 04/09/2012 12. Mukesh J Mehta 1000000 - Yes Yes Yes 21/05/2018 03/01/2013 13. Nandlal 2000000 - Yes Yes Yes 17/05/2018 19/12/2012 Jekishan 14. Nidhi Export 2004164 54164 Yes Yes Yes 21/05/2018 17/12/2012 & (Prop. Abhay H 03/01/2013 Mehta) 20

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik 15. Parth Enterprise 500000 - Yes Yes Yes 21/03/2016 02/01/2013 (Prop. Vithalbhai N Vasoya HUF 16. Rameshbhai 1341238 141238 Yes Yes Yes 17/05/2018 07/04/2012 Jagmo 17. Ramila Shah 1183000 - Yes Yes Yes 21/03/2016 17/12/2012 18. Rinkal Gems 2561644 61644 Yes Yes Yes 21/05/2015 31/12/2012 (Prop. Pravinkumar P. Doshi) 19. Shripalkumar 500000 - Yes Yes Yes 21/05/2018 03/01/2013 20. Surya Rayon 2500000 - Yes Yes Yes 19/04/2018 28/09/2012 Pvt. Ltd. 21. Hotel JB 2566575 - - - - - - 22. Pashwa 1074301 74301 Yes - - 08/06/2018 17/08/2012 Corporation 23. Divyesh Kantilal 63334 6334 Yes Yes NA 17/05/2018 31/03/2013 24. Shreenathji 240710 240710 Yes Yes NA 25/05/2018 31/03/2013 Trading Co. (Prop. Rohitkumar B Shah) 25. Tejas Gems 130691 130691 Yes Yes NA 25/05/2018 31/03/2013 (Prop. Bharat Mafatlal Shah HUF) 26. Bhurabhai R 73616 73616 Yes Yes NA 22/05/2018 31/03/2013 Patel 27. Hemabhai 77424 77424 Yes Yes NA 22/05/2018 31/03/2013 28. Lakhabhai 75774 75774 Yes Yes NA 22/05/2018 31/03/2013 Jivrajbhai 29. Mitul 241341 241341 Yes Yes NA 22/05/2018 31/03/2013 Mansukhbhai 30. Rameshbhai 76155 76155 Yes Yes NA 22/05/2018 31/03/2013 31. Sanghvi 126943 126943 Yes Yes NA 22/05/2018 31/03/2013 Enterprise (Prop. Arvindkumar S. Shah) 32. Vashrambhai 74886 74886 Yes Yes NA 22/05/2018 31/03/2013 33. Veer 88778 88778 Yes Yes NA 22/05/2018 31/03/2013 Corpotation (Prop. Chetankumar kantilal Shah) 34. Virabhai 76789 76789 Yes Yes NA 17/05/2018 31/03/2013 Devshibhai 21. We find that the Assessing officer raised objection about the transactions with

Veer Corporation and Hotel JB. The ld. CIT(A) after considering the remand

report of Assessing Officer wherein he has reported that transaction of Rs. 3.636

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik crores is verified and Hotel JB has not given any confirmation as there was dispute between the assessee and lender. Thus, the transactions of unsecured loan except the transaction with Veer Corporation, proprietor Chetankumar Kantilal Shah and unsecured loan of Hotel HB of Rs. 25,65,575/- remained unverified and was upheld and remaining addition was deleted. Considering our finding in appeal for A.Y. 2012-13, the order of ld. CIT(A) for this year i.e. 2013- 14 is affirmed with similar observation. 22. In the result, this appeal of Revenue is dismissed. 23. Now we take appeal for the A.Y. 2014-15 being ITA No. 659/Srt/2018 wherein the Revenue has raised following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the entire addition of Rs.3,28,69,187/- on the basis of remand report of the A.O., whereas the A.O. at para no.7 of the remand report dated 25.06.2018 had specifically reported after verification of facts that the contention of the assessee was an afterthought and hence not acceptable. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in assuming that identity, creditworthiness and genuineness of the transaction have been proved only on the basis of the facts that the lenders submitted confirmation, acknowledgment of return of income and statement of bank account (in certain cases). 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in assuming that identity, creditworthiness and genuineness of the transaction have been proved, whereas the lenders even could not submit copy of bank statement in certain cases. 4. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent. 5. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 22

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik 24. In this appeal, the ld. CIT(A), during the appellate stage, on the submissions of assessee the ld CIT(A) obtained remand report from assessing officer, the

assessing officer furnished his remand report, vide report dated 26/06/2018. The

assessing officer furnished the details of various lenders in the following manner:

Sr. Party Name Amount Interest Documents received Received Transaction No. on date as per statement Confirm IT Bank ation Ack. Statement 1. Tejas Gems (Prop. 1000000 - Yes Yes NA 25/05/2018 Opening Bharat Mafatlal Balance Shah HUF) 2. Abhay H Mehta 115538 115538 Yes Yes Yes 18/05/2018 31/03/2014 HUF 3. H K Mehta & Co. 23026 23026 Yes Yes NA 28/05/2018 31/03/2014 (Prop. Hardik H Mehta) 4. Nidhi Export 180375 180375 Yes Yes NA 28/05/2018 31/03/2014 (Prop. Abhay H. Mehta) 5. Rinkal Gems 230548 230548 Yes Yes NA 28/05/2018 31/03/2014 (Prop. Pravinkumar P Doshi 6. Ramila Shah 6000000 - Yes Yes Yes 21/03/2016 17/05/2013 7. Jirawala 3500000 - Yes Yes Yes 21/05/2018 27/06/2013 & Corporation (Prop. 30/08/2013 Mahendra Kantilal Shah) 8. Mahalaxmi 1300000 - Yes Yes Yes 21/05/2018 28/06/2013 Corporation (Prop. Mahendra Kantilal Shah) 9. Mukesh N Desai 20519700 - Yes Yes Yes 17/04/2018 05/04/2013 & 21/05/2013 25. The ld. CIT(A) on the basis of remand report of assessee, held that the

Assessing Officer submitted that the confirmation along with documentary evidences of the lenders have been verified in the remand proceedings with

supported evidences. Thus, the ld. CIT(A) deleted the entire addition.

IT(SS)A 19, 20 & 659/SRT/2018 ACIT Vs Smt. Falguni Sandipkumar Naik Considering our finding in appeal for A.Y. 2012-13, we affirm the order of ld. CIT(A) with similar observation. 26. In this result, this appeal of the Revenue is dismissed. 27. Finally, all these three appeals of the Revenue are dismissed. One copy of this order be placed in respective files

Order pronounced on 24/06/2022, in open court and result was also placed on notice board. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated:24/06/2022 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File

By Order

Sr. Private Secretary, ITAT Surat