TaxTMI 
TaxTMI 
2017 (12) TMI 1658
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....d from time to time and submitted the details, as called for. During the course of assessment proceedings, the AO noticed that information received from office of Director of Income-tax (Inv), Mumbai in the case of beneficiaries of accommodation entries obtained from Pravinkumar Jain. On going through the list furnished by the Investigation Wing, it was seen that the assessee was one of the beneficiaries of accommodation entries of loan being taken from group companies of Pravinkumar Jain. Therefore, the AO called upon the assessee to furnish details of loans taken from Josh Trading Company Pvt Ltd and Viraj Mercantile Pvt Ltd alongwith confirmation letters and their financial statements. In response to show cause notice, the assessee has furnished details of unsecured loans taken from Josh Trading Company Pvt Ltd and Viraj Mercantile Pvt Ltd alongwith confirmation letters, bank statements and financial statements of the parties to prove identity, genuineness of transaction and creditworthiness of the parties. The AO, after considering relevant submissions of the assessee and also taking into account information received from Investigation Wing, observed that the assessee is benefi....
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....sofar as addition towards cash expenditure u/s 40A(3), the assessee submitted that it has made purchase at construction site on urgent basis, therefore, the AO was erred in disallowing the same without considering the nature of business of assessee. As regards disallowance of MVAT u/s 43B, assessee submitted that it is following project completion method and said MVAT has been considered in AY 2014-15, therefore, the AO was erred in disallowing MVAT u/s 43B of the Act. The CIT(A), after considering relevant submissions of the assessee and also relying upon plethora of judgements confirmed additions made by the AO towards unsecured loan from Josh Trading Company Pvt Ltd and Viraj Mercantile Pvt Ltd. The CIT(A) also confirmed addition made by the AO towards estimation of net profit from Zoom Plaza and Aurm Park and also addition made towards cash purchases u/s 40A(3) of the Act; however, deleted addition made by the AO towards MVAT u/s 43B of the Act. Aggrieved by the order of CIT(A), the assessee is in appeal before us. 4. The first issue that came up for our consideration is addition made by the AO towards unsecured loan u/s 68 of the Act. The AO made addition towards unsecured lo....
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....odation entries provided by Shri Praveenkumar Jain through his bogus companies. The AO has made additions u/s 68 of the Income-tax Act, 1961 on the ground that though the assessee has furnished necessary evidences to prove identity of the parties, but failed to establish genuineness of transactions and creditworthiness of parties in the backdrop of clear findings of Investigation Wing that those companies are hawala companies involved in providing accommodation entries. The AO has brought out facts in the light of statement of Shri Pravinkumar Jain deposed before the Investigation Wing to make addition. Except this, there is no contrary evidence in the possession of the AO to disprove the loan transactions from Josh Trading Company Pvt Ltd and Viraj Mercantile Pvt Ltd. On the other hand, the assessee has furished various details including confirmation letters from the parties, their bank statements alongwith their financial statements to prove identity, genuineness of transactions and creditworthiness of the parties. The assessee also furnished evidences to prove that the parties have responded to the notices issued u/s 133(6) by AO by filing various details. The assessee also file....
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....68 by filing identity, genuineness of transaction and creditworthiness of the parties. Once, the assessee has discharged its initial burden, the burden shifts to the AO to prove otherwise. In this case, the AO made addition only on the basis of information received from Investigation Wing, but not based on any evidence to disprove the loan transaction from above companies are ingenuine. Therefore, we are of the view that there is no reason for the AO to treat loans from above 2 companies as unexplained credits u/s 68 of the Act. 7. Coming to the case laws relied upon by the assessee, the assessee has relied upon the decision of Hon'ble Bombay High Court in the case of CIT vs Gagandeep Infrastructure Pvt Ltd (2017) 394 ITR 680 (Bom). We have gone through the case laws relied upon by the assessee in the light of the facts of the present case and find that the Hon'ble High Court categorically observed that the Proviso to section 68 has been inserted by the Finance Act, 2012 wef 01-04- 2013 is applicable from AY 2013-14 onwards. The Court further observed that the Parliament did not introduce the proviso to section 68 with retrospective effect nor does the Proviso introduced states th....
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....sidered that the Assessee has produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money. It was also observed by the Tribunal that the Assessee has also produced the entire record regarding issuance of share i.e. allotment of shares to these parties, their share application forms, allotment letters and share certificates, so also the books of account. The balance sheet and profit and loss account of these persons discloses that these persons had sufficient funds in their accounts for investing in the shares of the Assessee. In view of these voluminous documentary evidence, only because those persons had not appeared before the Assessing Officer would not negate the case of the Assessee. The judgment in case of Gagandeep Infrastructure (P) Ltd (supra) would be applicable in the facts and circumstances of the present case." 9. The assessee has also relied upo the decision of Hon'ble Supreme Court in the case of CIT vs Lovely Exports Pvt Ltd (2008) 216 CTR 195 (SC). The Hon'ble Apex Court while deleting the addition made u/s 68 observed that ....
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....ding to the AO assessee can follow only one method of accounting and not many methods of accounting for its convenience. The assessee has not maintained separate accounts for both projects. Accordingly, the AO worked out net profit of 10% on total expenditure incurred towards both the projects. It is the contention of the assessee that it is consistently following project completion method for Aurm Park as the same is its own project whereas it is following profit method for Zoom Plaza for several years. The assessee further contended that it is maintaining separate books of account for both the project and the same has been furnished before the AO. The AO without assigning any reasons, estimated net profit of 10% on total expenditure incurred on both the projects. 13. Having heard both the sides and considered material available on record we find that the AO has estimated 10% net profit on both the projects without assigning any reasons for incorrectness in books of account maintained by the assessee for both the projects. We further notice that the AO is only on the point that the assessee can follow only one method of accounting for both the projects. We do not find any merit i....