TaxTMI 
TaxTMI 
2018 (11) TMI 1593
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..... CIT(A) has erred in law and on the facts of the case in confirming the action of assessing officer in not verifying confirmations and affidavits of lenders by not issuing notices u/s 133(6) of The Income Tax Act. All the lenders have confirmed the genuineness of loans and all are assessed to tax. (3) The Ld. CIT(A) has erred in law and on the facts of the case in violating principle of natural justice by referring certain information and producing certain data in the appellate order without giving an opportunity to your petitioner for cross examination and rebuttal. The action is bad in law. (4) The Ld. CIT(A) has erred in law and on the facts of the case in confirming the action of assessing officer in taxing Rs. 12,20,00,000/- as unexplained cash credit under section 68 of the Income Tax Act. The action is unjustified, unwarranted and against the Provisions of the Act. Without prejudice the addition is excessive. (5) The Ld. CIT(A) has erred in law and on the facts of the case in confirming the action of assessing officer in not passing the order judicially and in accordance with the Provisions of the Law as he has failed to give show caus....
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....er Section 69 of the Act. On appeal the learned CIT(A) upheld the order of the AO and held that since all the impugned loans were taken from the concern of Bhanwarlal Jain group, hence while disclosing the modus operandi of the said creditor, CIT(A) dismissed the appeal filed by the assessee. 6. The learned A.R. reiterated the arguments as were raised before the CIT(A), which are recorded in para 7 of the order of the CIT(A) and the same reproduced as below: - "7.0 During the course of appellate proceedings, the AR of the appellant has submitted as under:- "With reference to the above appeal pending before Your Honour and fixed for hearing today, we are instructed to submit that certain documents confirming the identity of the lenders, capacity and creditworthiness of the lenders and genuineness of the loan transactions, could not be filed before the Assessing Officer by the Assessee Company in absence of proper communication from the Assessing Officer. The Assessee Company now desire to file several documents as additional evidence. The additional evidence in form of affidavits of the lenders, audited accounts and bank statements of lenders are releva....
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....ha Impex * Laxmi Diamonds . . Megha Gems * Mehul Gems * Navkar India * Roshan Gems Pvt. Ltd. * Sankhala Exports Pvt. Ltd. * Money Diam The additional evidences established identity, creditworthiness of lenders and genuineness of transactions by way of the following documents 1. Identity of lenders a) Confirmations of parties are enclosed. b) Copies of Acknowledgements of return of income filed by the lenders for assessment year 2012-13 are enclosed. c) Copies of bank statements of lenders which establish the payment towards loan of received during the year are enclosed. All these documents clearly establish the identity of Lenders. 2. Genuineness of transactions a) All the transactions with lenders are genuine as they have been done through banking channel. b) From the confirmations which are filed in the form of ledger account, you will observe that the Assessee Company has received amounts through RTGS. C) Affidavits of the lenders. All these documents clearly establish the genuineness of the transactions. 3. Credit worthiness of....
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....ot in the hands of the Assessee Company. Your Honour's attention in invited to the decision of Hon'ble Mumbai Tribunal in the case of Superline Construction Pvt. Ltd (ITA no. 36451Mum/2014) where on similar facts the Court / Tribunal has held that once the lenders are assessed to tax and their identity has been proved, then inquiry can be made in their hands and if found unsatisfactory, income can be taxed from undisclosed sources, in their hands. (v) Without prejudice the figure of Rs. 12,20,00,000 is wrongly mentioned As per the audited accounts, unsecured loan availed from unrelated parties are Rs. 11,00,00,000 and not Rs. 12,20,00,000. We do not know from where the figure of Rs. 12,20,00,000 has been picked-up. Therefore the Assessing Officer may be directed to give the working of Rs. 12,20,00,000 to the Assessee Company. (vi) Appeal order of other CIT(A) on similar facts We enclose herewith a copy of CIT(A) 44 Mumbai in respect of Reliance Corporation where the CIT(A)on the similar facts has deleted the addition made under section 68 of the Act. In this case also the entire addition was made on the basis of report o....
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....(ci) Decision of Bombay High Court in the case of CIT Vs Ivan Singh (51 taxmann.com 275) In the case the Hon'ble Jurisdictional High Court has held that once the creditor file confirmation letter along with documentary evidence and payments were made through account payee cheques and both the creditors are assessed to tax, then in such case, addition under section 68 cannot be made in the hands of Assessee as unexplained cash credit. Since the Assessee Company has filed all the documentary evidences, no addition is warranted on account of loan transactions as unexplained. (e) Decision of Ailahabad High Court in the case of CIT Vs Vijay KumarJain (41 taxmann.com 433) The Hon'ble Allahabad High Court, in this case, has held that when it is apparent from the material on record that lenders were regular income-tax assessee with PAN on record and had granted loan to the Assessee through account payee cheque and they had got sufficient balance in their account before issuing cheque, loan amount cannot bejadded to the Assessee taxable income under section 68 of Income Tot Act merely on the ground that lenders are engaged in providing commodation....
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....roved the identity of the lender, creditworthiness of the lender and genuineness of the transactions. In the present case since no opportunity was granted to the Assessee Company, the other documents could not be filed. However, the same are available before Your Honour. Your honour would appreciate that the Assessee Company has filed all the documents that prove the identity of the lenders, creditworthiness of the lenders and genuineness of the transactions. (k) Decision of Delhi High Court in the case of Multiplex Trading & Industrial Co. Ltd (63 taxmann.com 170) In this case the Hon'ble High Court has held that inference that entries pertaining to loan are accommodation entries must be supported by evidence and not on the basis of suspicion and presumption. In this case the Assessing Officer has not produced any evidence which leads to inference that loan entries are in the nature of accommodation entries. (1) Decision of Punjab & Haryana High Court in the case Varinder Rawliey (51 taxmanncom 524) In this case the Hon'ble High Court has held that burden is always on the Assessee to prove genuineness of transa....
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....wledgement of return of income for A.Y. 2012 -13 of M/s Laxmi Diamonds 3. Copy of bank statement of M/s Laxmi Diamonds 4. Copy of Audited Accounts of M/s Laxmi Diamonds 5. Affidavit of Mr. Manish Agarwal, proprietor of M/s Laxmi Diamonds confirming the loan 4 Megha Gems 1. Confirmation of M/s Megha Gems of Loan of Rs. 1,50,00,000 2. Copy of Acknowledgement of return of income for A.Y. 2012 -13 of M/s Megha Gems 3. Copy of bank statement of M/s Megha Gems 4. Copy of Audited Accounts of M/s Megha Gems 5. Affidavit of Mr. Mitesh Pamecha, proprietor of M/s Laxmi Diamonds confirming the loan 5 Mehul Gems Pvt. Ltd. 1. Confirmation of Mehul Gems Private Limited of loan of Rs. 50,00,000 2. Copy of Acknowledgement of return of income for A.Y. 2012-13 of Mehul Gems Private Limited 3. Copy of bank statement of Mehul Gems Private Limited 4. Copy of Audited Accounts of MeTiul Gems Private Limited 5. Affidavit of Mr. Mohit P. Kaw....
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....ear under consideration and the same is reproduced below: - Sr. No. Name & Address PAN NO. Date of Loan "Xmotlnt ot loan taken/addition during the year Closing Bal. as on 31.03.2012 Amount repaid Bank & Mode of Payment/ Repayment 1 Astha Impex 228/229, Mejestic Shopping Centre, 144, J.S.S.Road, Girgaum, Mumbai 400004 AEOPL0917R 28.03.2012 20,000,000 20,000,000 20,000,000 paid in F.Y.2013-14 AXIS BANK/ RTGS 2 Laxmi Diamonds 316, Panchratna, Opera House, Mumbai 400004 AAEFL4266F 28.03.2012 5,000,000 5,000,000 5,000,000 paid in F.Y.2013-14 AXIS BANK/ RTGS 3 VIegha Gems 316, Panchratna, Opera House, Mumbai 400004 AJOPP5347M 28.03.2012 15,000,000 15,000,000 15,000,000 paid in F.Y.2013-14 AXIS BANK/ RTGS 4 VIehul Gems pvt Ltd. 228/229, Mejestic Shopping Centre, J.S.S.Road, Opera House, Mumbai 400004 AAGCM9256M 28.03.2012 5,000,000 5,000,000 5,000,000 paid in F.Y.2013-14 AXIS BANK/ RTGS 5 Slavkar India 316, Panchratana, Opera House, Mumbai 400004 AAHFN4207H 28.03.2012 15,000,000 15,000,000 15,000,000 paid in F.Y.2013-14 AXIS BANK....
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....Veer Gems Tax Appeal No.338 of 2017 (Guj) xxvi) M/s Komal Agrotech (Hyd-Trib) xxvii) Bairagra Builders P. Ltd. (Mum-Trib) It was further submitted that since the assessee had established identity and creditworthiness of the lenders and genuineness of the transactions by way of placing on record documents to prove identity of lenders. The assessee has also submitted confirmations of all the parties, copy of acknowledgement of return of incomes filed by the lenders for A.Y. 2012-13, copies of bank statement of lenders, which shows payment towards loans received during the year. 8. In order to prove the genuineness of transactions, the learned A.R. submitted that all the transaction with the lenders have been routed through banking channels, from the confirmations which are filed in the form of ledger accounts it is proved that the assessee has received loans through RTGS. It was also submitted that all the above documents clearly establish the genuineness of the transactions. 9. In order to prove the creditworthiness of the lender assessee has submitted that they have already placed on record the audited accounts which reflect the creditworthiness of the le....
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....of statement of accounts and documents to show that the transactions were carried out through banking channels and the confirmations which were filed in the form of ledger accounts which reflect that the assessee had received the amount through RTGS, affidavits of the lenders. All those documents prove the genuineness of the transactions. Now as far as creditworthiness of the lenders are concerned, we have perused the audited accounts of the lenders which shows the creditworthiness of the lenders to grant loans and advances. Further, we also noticed from the record that the lenders have not only granted loans to the assessee but also to various other persons. We have also considered the affidavits of the lenders and from all those documents we find creditworthiness of the lenders to make payment of loans to the assessee. 12. We have also considered that the loans, which were taken by the assessee has also been repaid and all those repayments have been made by the assessee in subsequent years and those details have also been filed by the assessee in the para mentioned above. In the case of Pr.CIT vs. Paradise Inland Shipping Pvt. Ltd. (supra) the Hon'ble High Court has catego....
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....hannel and in such a situation the Hon'ble High Court in the case of Rahul Vineet Traders (supra) has held as under: - "Section 68 of the Income-tax Act, 1961 - Cash credits [Loan] - Assessment year 2000-01 - Assessee-firm had taken loan from 14 firms out of which loan from four firms were not found by Assessing Officer as genuine because those firms were, allegedly, related to one „G‟ involved in providing accommodation entries - Assessing Officer thus invoked section 68 and made addition to assessee‟s income on account of unexplained cash credits - Commissioner noticed that lenders were regular income-tax assessee and their PANs were on record - It was also undisputed that amount had been advanced through account payee cheques and further before issuing cheques lenders had got sufficient balance in their account - Moreover, amount had also been repaid through account payee cheques - In view of above, Commissioner (Appeals), taking a view that loan transactions were genuine, deleted addition made by Assessing Officer - Tribunal upheld order of Commissioner (Appeals) - Whether on facts, impugned addition made in hands of assessee was rightly deleted -....
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.... of Reliance Corporation vs. ITO ITA Nos. 1069 to 1071/Mum/2017 for assessment years 2008-09 to 2010-11 has deleted the addition. Similar addition was also deleted by the Coordinate Bench in the case of Jitendra M. Kitavat vs. ITO ITA Nos. 7049 & 7050/Mum/2016 and in the case of ITO vs. Vikram Muktilal Vorha ITA No. 842/Mum/2017 for A.Y. 2007-08. After having gone through the case law relied upon by the assessee and in the light of the facts of the present case we find that the Hon'ble High Court in the case of Gagandeep Infrastructure Pvt. Ltd. (supra) has categorically observed that proviso to section 68 has been inserted by Finance Act, 2012 w.e.f. 01.04.2013 and is applicable to A.Y. 2013-14. The court observed that the Parliament did not introduce proviso with retrospective effect not does the proviso introduced to state that it was introduced for removal of doubts. Therefore, it is not open to give retrospective effect. The assessee has also relied upon the decision of the Hon'ble Bombay High Court in the case of Archies Industries Pvt. Ltd. in ITA No. 1433 of 2014 wherein the Hon'ble High Court, after considering the relevant facts and also following the judgemen....
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....sp;(1) The Ld. CIT(A) has erred in law and on the facts of the case in confirming the action of the assessing officer in violating principle of natural justice by not providing evidences to your Petitioners nor providing opportunity to cross examination of the persons on whose statements reliance has been placed by him. The action is unjustified, unwarranted and against the settled law pronounced by Apex Court and Jurisdictional High Court. (2) The Ld. CIT(A) has erred in law and on the facts of the case in confirming the action of assessing officer in not verifying confirmations and affidavits of lenders by not issuing notices u/s 133(6) of The Income Tax Act. All the lenders have confirmed the genuineness of loans and all are assessed to tax. (3) The Ld. CIT(A) has erred in law and on the facts of the case in violating principle of natural justice by referring certain information and producing certain data in the appellate order without giving an opportunity to your petitioner for cross examination and rebuttal. The action is bad in law. (4) The Ld. CIT(A) has erred in law and on the facts of the case in confirming the action of assessing officer in tax....