TaxTMI 
TaxTMI 
2019 (2) TMI 282
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....tted that on pages 10 to 13 of the paper book is the copy of reply of the assessee dated 02.02.2016 filed with the A.O. being reply to the show cause notice dated 02.02.2016. In particular, my attention was drawn to Para 9 of the same and it was pointed out that the assessee made a request to provide an opportunity of cross examination of any party whose statement was recorded at the back of the assessee. He placed reliance on the Judgment of Hon.ble apex court rendered in the case of Kishan chand Chellaram vs. CIT [125 ITR 713] in support of this contention that if an opportunity of cross examination of any party whose statement was recorded at the back of the assessee is not provided to the assessee, such statement cannot be used against the assessee. He submitted a copy of written submissions and made a request that the present appeal be decided after considering the arguments made by him and the written submissions. Ld. DR for the Revenue supported the order of the Ld. CIT (A). 4. First I reproduce the written submissions filed by the learned AR of the assessee. The same are as under:- > The Appellant has taken a unsecured Loan from M/s. Tanika Commodities Pvt. Ltd.....
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....t bring anything contrary on record to negate the documentary evidences furnished by the appellant. * Further the unsecured loan was confirmed by Lender M/s. Tanika Commodities Pvt. Ltd u/s. 133(6) to the Learned Assessing Officer. * The appellant had received loan from the said lender which is a company managed by its directors. The Lender is a company which is duly registered under the Companies Act, 2013 and is regular in filing of returns.(Page No.27) * The appellant had received a short term loan from Tanika Commodities Pvt Ltd and had repaid the same in the subsequent year, The entire transactions of receipts and payment were made by account payee cheque or through other banking channels. * The appellant had also filed certified Balance Confirmation of Accounts of the said lender Company and also submitted the copy of the lender company's balance sheet * The learned assessing officer has failed to appreciate the facts that appellant had obtained only temporary loan which has been repaid in subsequent year (Page No 31-32A). Thus what is required to be seen is as to whether the said company had sufficient funds to advance appella....
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....e the above conditions are proved prima facie by the assessee and the assessee has adduced evidence to established prima facie the aforesaid, the onus shifts on the department. Three condition enshrined in section 68 are dearly proved by the documents submitted during the assessment proceeding as under :- A. Identity i. Permanent Account Number (PAN) ii. CIN No iii. Income Tax Return Acknowledgment The above documents clearly prove the identity of the Lenders B. Creditworthiness i. Copy of Audited Balance Sheet of the Lender Company ii. Relevant Bank Statement iii. Copy of Ledger Account The above documents clearly prove the creditworthiness of the Lenders C. Genuineness i. Transaction through Account Payee Chq ii. Bank Statement of the Appellant and Lender Companies iii. Loan Confirmation The above documents clearly prove the genuineness of the Lenders Thus all the ingredients of S.68 of the Act were fully proved and established before the learned Assessing Officer. It is a settled law that !it is mandatory for the Assessing Offic....
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....tal v/s. CIT 246 1TR 283 (AF) in an enquiry u/s 68, the rule of audi alteram parterm has to be observed and the assessee must be given a fair and reasonable hearing to discharge the burden cast on him u/s 68 of the Act. Further, it is settled law that in the matter of cash credit, the initial onus lies on the assessee to prove the genuineness of the transaction along with the identity of the lender/investor and his credit worthiness. Having done so, the appellant in the instant case has discharged the onus cast upon it. Beyond this, for the charge of unexplained cash credit to stick, the onus lies on the Assessing Officer to disprove the claim of the assesses by establishing that the evidence filed by the assessee was false and by bringing new material on record and failure to do so would vitiate the addition made on this count. ii. It was also held by the Apex court in the case of CIT v. Bedi & Co. P. Ltd. (1998) 230 ITR 580 (SC) that where prima-facie the inference on facts is that the assessee's explanation is probable, the onus will shift to the revenue to disprove it and the assessee's explanation in such case cannot be rejected on mere under :- * Kha....
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....l as the credit worthiness have been proved and hence the addition would not be justifiable and would be against the law. viii. In another landmark judgment of Hon'ble Gujarat High Court in the case of Varshaben S Patel vs. ITO, [2015] 64 taxmann.com 179 (Gujarat) has also held in notice u/s 148 that the issue of notice u/s 148 pursuant] to direction by DG Investigation is bad in law as the satisfaction has to be on your own and not a borrowed satisfaction. ix. Similar to above referred judgment, The Appellant would like to humbly submit to learned assessing officer a recent landmark decision given by Jurisdictional Hon'ble ITAT Mumbai in an identical case of ITO -10 (2) (4) Vs. M/s. Superline Construction P. Ltd. (and many others in this consolidated order) pronounced on 30.11.2015 ITA No. 3645/Mum/2014 the summary of the case is outlined as under:- "The Revenue authority failed to appreciate that there is no documentary evidence against the assessee-company to support impugned additions made solely on the basis of statement of Shri Mukesh Chokshi. The Assessing Officer failed to appreciate that as against the statements of any person recorded u/....
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....ourt held in the ease of CBI v/s. V.C. Shukla that there must be at least an iota of Independent evidence in support of accusation levelled against the party. a. It was held in case of DCIT 12(1)(2) vs. Bairagra Builders P Ltd. [ITA No- 4691 & 4692/Mum/2015]- a. We have gone through the orders relied upon by the learned DR. We noted that the decision] of the Delhi High Court in the case of Bikrara Singh, the assessee could not discharge the onus as laid down by section 6S of the Act. Similarly, in the case of CIT vs. Jansampark Advertising & Marketing Pvt. Ltd. (supra), the additions have been made u/s. 68 in respect of the share capital received by the assessee from various companies and during the course of investigation, it was found that the share capital has been received from three entry operators, who are allegedly in the business of providing accommodation entries. Notices issued u/s. 131 to these parties were returned undelivered fry the postal authorities with the remark "left"/ "no such person". Under these circumstances, the Hon'ble High Court took a view that the assessee failed to discharge the burden to prove the credit worthiness as well as the....
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....ged the initial burden of proof. Apparently the assessee in the instant case has discharged the said primary responsibility. Now, it is the turn of the AO to disprove the claim of the assessee. In this regard, the AO has placed reliance on the general statement given by Mr. MukeshChoksi. There is no dispute with regard to the fact that the said statement of Mr. MukeshChoksi does not contain anything against the loans taken by the assessee. Further, the Hon'ble Rajasthan High Court has held in the case of A.L. Lalpuria Construction Pvt Ltd (supra) that the addition u/s 68 of the Act cannot be made merely on the basis of statement given by somebody, whether assessee has otherwise discharged the initial burden of proof placed upon him u/s. 68 of the Act. Accordingly, we are of the view that the assessing officer has failed to discharge the burden shifted to his shoulders, in which case, the addition made by him u/s. 68 of the Act is liable to be deleted" In view of the foregoing discussions, we set aside the order of Ld. CIT(A) and direct the AO to delete the impugned addition of Rs. 30.00 lakhs. In the result, the appeal filed by the assessee is allowed." Hence ....
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....ck of the appellant cannot be utilized ignoring other verifiable evidences. The ld. Assessing officer has made the addition of Rs. 20,00,000/- disregarding the evidences on record and without discharging her onus and without establishing anything contrary to the agreement of the Appellant and without verifying the Bank Account existence of Investor and without making fruitful investigation, thus the demand was directed to be deleted." xvi. Hon'ble ITAT, Mumbai for an identical case i.e. Income Tax Officer, 12(2)(3) Vs. M/s. Shreedham Construction Pvt. Ltd. On 14.11.2017 ITA-3754/3755/3756/Mum/2017, the summary of the case is outlined as under:- "We have considered the rival submissions of the parties and have gone through the material and the order of the authorities below. We have noted that the assessing officer passed the assessment order on the similar lines as made for earlier year. The assessing officer has not given specific finding on the documentary evidences furnished by the assessee. The assessing officer while passing the assessment order has not given different finding though the facts for the year under consideration were at variance. Th....
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....the Identity of the creditor, the genuineness of transaction and credit worthiness of the creditors. Once (he assessee discharges initial burden placed upon him, then the burden to disprove the said claim shifts upon the AO" "Coming to the case laws relied upon 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 m the fight of facts of the present case and find that the Hon'ble High Court categorically observed that ".........the three essential tests while confirming the pre proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share . premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court In Lovely Exports (P) Ltd. (supra) in the context to the pre-amended Sect....
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....d above, it is crystal clear that the Unsecured Loan Received by the appellant was genuine and cannot be treated as Accommodation entry. Jurisdictional Hon'ble ITAT, Mumbai for an identical case i.e., Arceli Realty Limited Vs. The Income Tax Officer 15(1)(1), Mumbai pronounced on 21.04.2017 ITA-6492/Mum/2016&17, the summary of the case is outlined as under- "...,.A.O. merely relied upon the information provided by the office of DGIT(Inv.), Mumbai and did not made any independent enquiry. The papers filed by the assess^ do demonstrate the identity, credit worthiness, genuineness, Source of Source of the transaction- AO did not provide Opportunity to Cross Examine the concerned person and also the department has not provided authenticity of the information to the person against whom such information is used. The addition is made merely on surmises and conjectures. The statement recorded at the back of the appellant cannot be utilized ignoring other verifiable evidences. The ld. Assessing officer has made the addition of Rs. 20,00,000/- disregarding the evidences on record and without discharging her onus and without establishing anything contrary to the agreemen....
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....of Rs. 20 Lacs from M/s Tanika Commodities Pvt. Ltd. is merely an accommodation entry under the guise of unsecured loan and made addition. There is no whisper about the assessee's request for providing the opportunity of cross examination. In the light of these facts, I examine the applicability of the Judgment of Hon'ble apex court rendered in the case of Kishan chand Chellaram vs. CIT (Supra). In this case, the addition was made on the basis of the statement of the manager of PNB, through which, money was sent by one branch of the assessee by way of TT to another branch of the assessee. The copy of this letter was not given to the assessee. It is observed on page 720 of 125 ITR that before the I. T. authorities could rely upon the letters of the bank manager, they were bound to produce it before the assessee so that the assessee could cotrovert the statement contained in it by asking to cross examine the manager of the bank with reference to the statement made by him. In my considered opinion, this is the Ratio decidendi of this judgment that no statement obtained behind the back of the assessee can be used against the assessee without providing to the assessee an opportunity of ....