TaxTMI 
TaxTMI 
2018 (12) TMI 742
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.... in the year relevant to A.Y. 2011-12 from a concern named M/s. Prime Star belonging to Shri Bhanwarlal Jain group. Accordingly the assessment of the assessment year 2011-12 was reopened by the Assessing Officer by issuing notice u/s.148 of the Act. The assessment of AY 2012-13 was pending before the AO and it was noticed that the assessee has taken a loan of ` 25 lakhs in the year relevant to AY 2012-13 also from a concern named M/s. Sonam Gems Pvt. Ltd., belonging to Shri Bhanwarlal Jain group. Hence the AO took up the return filed for AY 2012-13 for scrutiny. 3. In the assessment order, the Assessing Officer has narrated report given by search officials in respect of search undertaken in the Shri Bhanwarlal Jain group at length. During the course of search proceedings, a statement from Mr. Sheyans L. Jain, Managing partner of M/s. Prime Star was taken. It was found that he was wholly under the control of Shri Bhanwarlal Jain and was acting on his behalf. Accordingly, the Assessing Officer took the view that the loan of ` 75 lakhs taken by the assessee in A.Y. 2011-12 from M/s. Prime Star is an accommodation entry. Accordingly, the Assessing Officer asked the assessee to produ....
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.... Bhanwarlal Jain Group. The Ld A.R submitted that the assessee has requested for copies of statements and also requested for cross examination of those parties before the AO. However, the AO did not provide copies of statements and also did not afford opportunity to cross examine them. The Ld A.R submitted that the AO is not entitled to make additions on the basis of statements which were not provided to the assessee and also without providing opportunity for cross examination. In this regard, he placed reliance on the decision rendered by Hon'ble Supreme Court in the case of Andaman Timber Industries vs. CCE (2015)(281 CTR 0241). 7. The Ld A.R further submitted that the assessee has furnished all the details relating to the loans taken from M/s Prime Star and M/s Sonam Gems P Ltd before the AO in order to discharge the initial onus placed upon the assessee u/s 68 of the Act. He submitted that the assessee has also produced both the parties before the AO and the AO has also examined them by taking statements from them. In the statements, both the parties have confirmed the loan transactions. The Ld A.R further submitted that the AO has himself observed that the Customs authoriti....
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.... No. 7049 & 7050/Mum/2016) 11. Accordingly he contended that the impugned additions made in both the years and the consequential disallowances of interest are liable to be deleted. 12. On the contrary, the Ld D.R submitted that the investigation wing of the department has given a detailed report explaining the modus operandi followed by the Bhanwarlal Jain group, which clearly proved that they have provided only accommodation entries. He further submitted that the AO as well as Ld CIT(A) has come to the conclusion that the directors of both the lender companies are dummy directors and these concerns were providing only accommodation entries. He further submitted that the Hon'ble Supreme Court has held in the case of Kachwala gems (supra) that there is necessarily some amount of guess work involved in the best judgement assessment. Accordingly he contended that the orders passed by Ld CIT(A) do not call for any interference. 13. In the rejoinder, the Ld A.R submitted that the observations of Hon'ble Supreme Court relied upon by Ld D.R relate to the best judgement assessments, which is not the case here. He further submitted that the tax authorities had placed reliance on th....
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....assessee failed to render any explanation or the explanation offered by the assessee about the nature and source of any sum found credited in the books of the assessee maintained for the previous year, is unsatisfactory. In other words, it is for the assessee to prove the genuineness of the transaction by identifying the creditor and his capacity to advance money. The onus lies upon the asses-see to explain the credit entry but it shifts upon the Assessing Officer under certain circumstances. Where the assessee shows that the entries regarding credit in a third party's account were in fact received from the 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. The assessee was engaged in the business of supply of LPG stoves, pipes, burners, etc. For the financial year 2002-03, he filed a return showing the total sales of Rs. 22,62,814 having a credit entry of Rs. 86,737. The assessing authority doubted the veracity of the entry and called for an explanation. The explanation was not accepted by the assessing authority wh....
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....accounts from one of the lenders, which were not produced. In this regard, the Ld A.R submitted that the Customs officials have confirmed the trade transactions and further the assessee has furnished the financial statements relating to both the lenders, which documents have not been found fault with. The AO has further stated that the genuineness of loans have not been proved, since they are mere accommodation entries. Here also, the AO has made this statement despite the fact that the lenders have confirmed the loan transactions and their financial statements have also been furnished before the AO. Under these set of facts, various decisions relied upon by Ld A.R, which are mentioned in the preceding paragraphs, support the case of the assessee. Hence the AO was not justified in making addition of Rs. 75.00 lakhs and Rs. 25.00 lakhs respectively in AY 2011-12 and 2012-13 u/s 68 of the Act. Consequently the disallowance of interest expenses relating to the above said loans is also liable to be deleted in both the years. 19. We have noticed in the earlier paragraph that the AO has placed reliance on the report given by search officials, which inter alia, includes Statement....