2017 (5) TMI 1270

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....mmodation entries of loan CC Rs. 40,00,000/- from M/s.Daksh Diamond and M/s.Laxmi Trading Co., operated bv Shri.Bhanwarlal Jain and Group. Based on the said information the AO reopened the assessment by way of issue of notice u/s.148 dt.28-03-2014. The A.O. has not accepted the transactions as genuine and considered income of Rs. 40,00,000/- from undisclosed receipt. Further, the A.O. has disallowed interest expenditure of Rs. 1,88,273/- on account of bogus accommodation entry and added back to the total income of the assessee. 5. By the impugned order, CIT(A) deleted the addition after observing as under:- 6. Ground No.2, 3 are pertains to disaIlowance of Rs. 40,00,000/- and Rs. 1,88,273/-. For the sake of convenience, all the grounds are disposed together. 6.1 The AO received an information from the Investigation Wing that a search and seizure operation was carried out in Bhanwatlal Jain Group of cases wherein it was found that Shri.Bhanwarlal Jain along with his associates have provided that accommodation entries in form of unsecured loans/deposlts/purchases entries to a large number of parties through various benami concerns controlled by the appellant. The assessee wa....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ntification of the source and the nature of the source, so that the genuineness or otherwise could be inferred. The Hon.ble Supreme Court, in Kale Khan Mohd.Hanif vs. CIT, pointed out that the onus on the assessee has to be understood with reference to the facts of each case and proper inference drawn from the facts. If the prima facie inference on the fact is that the assessee's explanation is probable, the onus will shift to the Revenue. As far as the creditworthiness or financial strength of the creditor/subscriber is concerned, that can be proved by producing the bank statement of the creditors/subscribers showing that it had sufficient balance in its accounts to enable it to subscribe to the share capital. Once these documents are produced, the assessee would have satisfactorily discharged the onus cast upon him. Thereafter, it is for the Assessing Officer to scrutinize the same and in case he nurtures any doubt about the veracity of these documents, to prove the matter further. 6.4 Element of credit worthiness and satisfaction of AO thereafter is subjective and requires more efforts/inquiry on t e part r f the Aa to give a finding in the order that lender is not credit....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

...., the burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. What follows, as a corollary, is that it is not the burden of the assessee to prove the genuineness of the transactions between his creditor and sub-creditor nor is it the burden of the assessee to prove that the sub-creditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been, eventually, received by the assessee. It is not the business of the assessee to find out the source of money of his creditor or of the genuineness of the transaction, which took place between the creditor and sub-creditor and/or creditworthiness of the sub-creditors, since, these aspects may not be within the special knowledge of the assessee. 6.7. The assessee must satisfy three important conditions, namely (i) the identity of the creditor (ii) the genuineness of the transaction; and (iii) the financial capacity of the person, i.e., the credit worthiness of the creditor. However, the onus of the assessee is limited to the extent of ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....usion that all the transactions entered into by these parties were bogus or non-genuine including the transactions related to the appellant. There is no evidence brought in the assessment order to prove the above conclusion, by the AO. The reassessment proceedings were wide open and the AO could have carried out independent investigation to prove his argument regarding the bogus or non-genuine transactions. No such investigation has been carried out by the AO. The outcome of investigation carried out in the case of Bhanwarilal Jain, the conclusions drawn therein cannot be applied ipso facto to all other cases who have dealt in the transactions during that period. Simply relying on the report of the inv. Wing, Mumbai and statement the AO cannot conclude that all transactions are bogus or have no credential value. 6.10 The. case of the appellant is covered by the decision of ITAT, 'I' Bench, Mumbai, in the case of Satish N. Doshi HUF Vs. ITA, Ward 21(2)(4), Mumbai in ITA No-2329/Mum/2009 and the decision of ITAT,.~' Bench, Mumbai in the case of Shaf Broadcast Pvt. Ltd Vs. ACIT, Cir-9(3), Murnbai in ITA No.1819/Mum/2012. Both the cases relate to re-opening of assessment....