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2017 (5) TMI 1261
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....ening of assessment u/s 147 of the Income Tax Act, 1961. Therefore, ground no.2 is dismissed as not being pressed. 3. In the remaining grounds the issue raised by the assessee is against the confirmation of additions of Rs. 1,29,04,231/- as made by the AO as unexplained cash credit u/s 68 of the Act and Rs. 3,45,000/- as unexplained expenditure u/s 69C of the Act. 4. Facts of the case are that the assessee filed its return of income on 15.10.2010 declaring a total income at Rs. 56,732/-. The return was processed under section 143(1) and the assessment was completed u/s 143(3) assessing the total income of the assessee at an income of Rs. 33,82,280/- vide order dated 20.3.2013. The case of the assessee was re-opened under section 147, on the basis that the information has been received from DGIT(Inv), Mumbai upon search and seizure action u/s 132 of the Act carried out on the group of Shri Bhanwarlal Jain that the assessee has received accommodation entries from the said parties/ concerns managed and operated by him. According to the information , the assessee obtained accommodation entries in the form of unsecured loans from M/s Laxmi Trading Company, M/s Rose Impex and Megha....
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....roup of cases. The AO asked the appellant to show cause as to why loan taken from Mls Laxmi Trading Company & Mls Rajan Diamonds should not be disallowed and added to the total income. As per the assessment order the appellant did not file any written submission on this issue. The AO added the amount of fresh loans and interests on existing doubtful loans paid during the AY 2010-11 to the total income of the appellant. In this way, addition of Rs. 1,29,04,231/- was made to the total income of the appellant. 4.2 During the course of appeal proceedings, no one appeared nor was any written submission made. In the statement of facts and grounds ofappeal only general facts are stated. In absence of any written submission against the view taken by the AO in the assessment order it is held that the AO has rightly made the addition. The grounds of appeal No.1 is accordingly dismissed. 5 Decision on grounds of appeal no.2: 5.1 As per the assessment order the AO took a view that the appellant had introduced unexplained cash credits from entities related with Bhanwarlal Jain group of cases through accommodation entries arranged on commission basis. The AO accordingl....
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....e assessment proceedings. The assessee also provided the loan confirmation from the creditors, PAN of creditors ledger extract copy of Income tax return, profit and loss account, balance sheet and bank statement of the creditors and also of the assessee and form no.16 issued qua the TDS deducted and deposited. The ld. AR further submitted that the assessee has completely discharged its onus cast upon it by filing necessary informations/details before the AO and the AO without carrying out any further investigations and verification in the matter solely relied upon the information received from the DGIT(Inv) Mumbai that the creditors were engaged in issuing accommodation entries. In support of his contention, the ld.AR relied on the decision of the Hon'ble Supreme Court in the case of ITO V/s Lakhmani Mewal Das reported in (1976) 103 ITR 437 (SC), the decision of the Hon'ble Delhi High Court in the case of CIT V/s Gangeshwari Metal (P) Ltd reported in (2013) 96 DTR 299, wherein it has been held that there was a clear lack of enquiry on the part of the AO. Once the assessee had furnished all the material including PAN, loan confirmations and bank statements, in such an eventual....
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....rom DGIT(Inv), Mumbai that the assessee was one of the beneficiary of the said accommodation entries provided by Mr.Bhanwarlal Jain and group. We find from the record that the assessee filed during the course of assessment proceedings all the details like loan confirmation letters from the creditors, PAN of the creditors, bank statements og the creditors and the assessee, form no.16 qua TDS on interest ,profit and loss account and balance sheet including the ledger account of the creditors, and ITR etc. Moreover, the loan creditors also appeared before the AO in compliance to the notice issued under section 133(6) of the Act and filed confirmations before the AO that loans were actually given to the assessee. From all these details and facts on record, we find that the assessee has discharged its onus cast upon it by filing all the necessary details as called for by the AO to corroborate the transactions of borrowing the money and thereby satisfied all the three main ingredients i.e. creditworthiness of the creditors, genuineness of the transactions and identity of the creditors by filing all the details as discussed above which proved that the identity of the creditors, genuinenes....
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....riginal assessment by allowing deduction of interest paid to certain creditors - Subsequently, he reopened assessment for reasons recorded in report submitted to Commissioner for obtaining sanction under section 147(a) that one creditors had confessed that he was doing only name lending and that other creditors were only name lenders - There was no material to show that confession made by said creditor related to loan to assessee and not to some one else and also that said confession related to period which was subject matter of assessment - There was also no material to show that other creditors were name lenders - Whether live link or close nexus which should be there between material before Income-tax Officer and belief which he was to form regarding escapement of income of assessee from assessment because of latter's failure or omission to disclose fully and truly all material facts was missing in case - Held, yes - Whether, thus, High court was not in error in holding that said material could not have led to formation of belief that income of assessee had assessment because of his failure or omission to disclose fully and truly all material facts - Held, yes In the case of ....
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.... 10] * In view of above, impugned order passed by the Tribunal was to be upheld. [Para 11] In the case of Varinder Rawley (supra), the Hon'ble Punjab and Hariyana High Court has held as under : "where the assessee shows that the entries regarding credit in a third party's account were in fact received from third party and are genuine, he discharges the onus. In that case, the sum cannot be charged as the assessee's income in the absence of any material to indicate that it belongs to the assessee", particularly in a case where no summons u/s 131 is issued against the third party" In the case of Sachitel Communications P.Ltd (supra), the hon'ble Gujarat High Court has held as under : ""II. Section 68 of the Income-tax Act, 1961 - Cash credit (Loans) - Assessment year 2006-07 - Commissioner (Appeals) and Tribunal concurrently found that assessee proved identity of creditor and capacity to pay and that payment was made through banking channel - Whether no addition could be made on account of unsecured loan - Held, yes [Para 3] [In favour of assessee]" In the case of Patel Ramniklal Hirji, the Hon'ble Gujrat High Court has held as under : "Th....
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....snactions, which he has with the assessee. The reason why we have formed the opinion that it is not the business of the assessee to find out the actual source or sources from where the creditor has accumulated the amount, which he advances, as loan, to the assessee is that so far as an assessee is concerned, he has to prove the genuinenss of the transaction and the creditworthiness of the creditor vis- a-vis the transactions, which had taken place between the assessee and the creditor and not between the creditor and the sub-creditors, for, it is not even required under the law for the assessee to try to find out as to what source or sources from where the creditor had received the amount, his special knowledge under section 106 of the Evidence Act may very well remain confined only to the transctions, which he had with the creditor and he may not know what transaction(s) had taken place between his creditor and the sub-creditor. No such additional burden can be placed on an assessee, which is not envisaged by section 106 of the the Evidence Act. The Revenue/Assessing Officer, however, remains free to show that the amount, which has come to the hands of the assessee by way of loan ....
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....could not be regarded as mere findings of facts, but must be treated as substantial questions of law. Therefore, the question raised in the appeal was a substantial question of law because it went to the very root of the assessment made. The aforesaid view has been also considered and fortified and favourably referred to by the Allahabad High Court in the case of C.I.T. v. Shalimar Buildwell Pvt. Ltd. (2014) 220 Taxman 138 (All.) In the case of Lalpuria Construction P. Ltd (supra) the Hon. Rajasthan High Court has held that "that in the case of Accommodation entry - without giving an opportunity of cross examination merely on the basis of oral statement additions cannot be made u/s. 68. It is further held that: "The oral statement of a third party recorded by Search authorities which was never placed to be confronted by assessee and no documentary evidence was supplied to assessee, could not be considered in making addition u/s. 68 on account of alleged accommodation entries. " Besides, it is further submitted that the Hon'ble Bombay High Court in the case of Mls. Rushabh Enterprise v. ACIT had occasion to go through the identical issue an....