TaxTMI 
TaxTMI 
2019 (4) TMI 1376
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....acts that as per enquiry & investigation made by this office as well as Investigation Wing, Mumbai, the alleged parties are mere accommodation entry providers who provide accommodation entry in the form of unsecured loans as per the requirements of the beneficiary". (ii) "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition made on account of deemed rent without appreciating the facts that the said premises were vacant during whole of the year and not let out at all during the year, hence the provisions Section 23(1)(c) would not apply and therefore assessee is not eligible for any deduction on account of vacancy and annual value of all the vacant properties should be taken in terms of Section 23(1)(a) of the Income-tax Act." (iii) The Appellant craves leave to add, delete, alter, amend and modify any or all of the grounds of appeal. 4. As per the facts of the present case, the assessee is an individual deriving remuneration as partner in M/s A.K. Motiwala and M/s Crown Jewel. During the assessment year 2009-10, he had earned income from business & profession, house property and other sources. Th....
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....ecessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised by the revenue in page no. 13 to 19 of its order and the same is reproduced below:- Grounds No. 4 to 5 is raised against the addition made of Rs. 3,09,00,000/- as unexplained cash credit u/s 68 of I.T. Act 1961. The Ld. AO has noticed that the appellant has during the year under consideration received unsecured loans of Rs. 3,09,00,000/-. During the appellate proceedings, the Id AR has filed detailed submissions and other relevant documents in a paper book. He has also referred to several case laws on which they rely in support of the ground of appeal. I have carefully considered the facts of the case and submissions of the Id AR. I have also gone through the decisions relied on by the AO and Id AR. It is observed that during the assessment proceedings the appellant has filed relevant details required to prove the identity and creditworthiness of the investing companies and the genuineness of the transactions in the form of PAN, incorporation certificate, memorandum of associate, IT return copies, confirmations, bank statements, audited accounts etc as evid....
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....or artificial except believing the statements given by the accommodation entry providers. He has failed to gather any evidence to show that the unaccounted cash of the appellant has changed hands consequently replacing the cheque payments. Further he has not provided the corroborative evidence or document which he relied on to the appellant and also failed to prove how the details like confirmation letter, PAN, IT returns, fmancials, bank statements etc can not be taken note of in this regard. The Honble Murribai ITAT in the case of Anant shelters P ltd 20 Taxmann.com 153(2012) has laid down certain principles with regard to section 68 which the AO is bound to follow. It has observed as under: "(i) section 68 can be invoked when following three conditions are satisfied - (a) when there is credit of amounts in the books maintained by the assesses (b) such credit has to be a sum of money during the previous year (c) either the assessee offers no explanation about the nature and source of such credits found in the books or the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory. It is only then that the sum so credited may be char....
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....regarding cash credits, the onus of proof is not a static one. As per the provisions of the section the initial burden of proof lies on the assessee. Amount appearing in the books of account of the assessee is considered a proof against him. He can prove the identity of the creditors by either furnishing their PANs or assessment orders. Similarly, genuineness of the transaction can be proved by showing that the money was received by an account payee cheque or by draft. Creditworthiness of the lender can be established by attending circumstances. Once the assesses produces evidences about identity, genuineness and creditworthiness of the lender onus of proof shifts to the revenue." Further, the Honourable Jurisdictional ITAT in its latest decision in the case of M/s Arceli Realty Limited in ITA No.6492/Mum/2016 (2017) has held the similar issue in favour of the assessee and observed as under: ...we are of the considered opinion that the onus cast upon the assessee, as provided u/s 68 of the Act, has been duly discharged by the assessee as the identity of the share subscribers, creditworthiness and genuineness of the transaction is not in doubt or ....
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.... has to be substantiated with facts. The information may and may not be correct. For fastening the liability upon anybody, the department has to provide the authenticity of the information to the person against whom such information is used. The principle of natural justice, demands that without confronting the assessee of evidence, if any, or the information, no addition can be made. Even otherwise, er Article-265 of the Constitution of India, only legitimate taxes has to be levied collected. In our humble opinion, the assessee has duly discharged the onus upon it, therefore, respectfully following the decisions from Hon'ble Apex Court, Hon'ble High Courts and Hon'ble jurisdictional High Court, we reverse the order of the Ld. Commissioner of Incometax(Appeal), resultantly, this ground of the assessee is allowed." 2.4.8 The Honble Apex Court in the case of Lovely Exports Pyt Ltd. 216 CTR 195(SC) 2008 held that the AO is at liberty to bring to tax the amounts in their respective hands of the investors if their identity, genuineness and creditworthiness is not proved. The AO should have made efforts to assess the amounts in the hands of the investors at least on ....
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..... From the records, we notice that to establish the identity and creditworthiness /capacity of the parties to provide loan to the assessee, the assessee had placed on record copy of PAN cars, complete names and addresses, copies of acknowledgement of return of income, copies of bank statements, evidencing advances having been made through banking channels thereby establishing their capacity to advance loans, audited statement of accounts. Apart from that, vide letter dated 06.09.16, the assessee had also established the source of source in the hands of lender. The AO even in spite of above documents had merely relied upon the statement of Bhawarlal Jain, whereas the documents placed on record by the assessee overrides the general statement of Bhawarlal Jain. Even the said statement of Bhawarlal Jain was subsequently retracted and no opportunity of cross examination was given to the assessee, thus the significance of the statement of Bhawarlal Jain had lost its credibility. The AO could not demonstrate that any movement of time during the course of search, the Investigating Team had ever made interrogation of the parties, who had advanced loan to the assessee. Thus in this way, t....
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....dits - should be understood in right perspective, so that genuineness of the transaction can be decided on merits and not on prejudices. Courts are of the firm view that the evidence produced by the assessee cannot be brushed aside in a casual manner. Assessee cannot be asked to prove impossible. Explanation about 'source of source' or 'origins of the origin' cannot and should not be called for while making inquiry under section. (iv) In the matters related to section 68 burden of proof cannot be discharged to the hilt - such matters are decided on the particular facts of the case as well as on the basis of preponderance of probabilities. Credibility of the explanation, not the 'materiality of evidences, is the basis for deciding the cases falling under section 68. (v) Though confirmatory letters or account payee cheques do not prove that the amount in question is properly explained for the purpose of section 68 and assessee has to establish identity and creditworthiness of the creditor as well as the genuineness of the transaction, it is also true that money received through foreign remittance with RBI approval is a strong indicator o....
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....ceived from Investigation wing. The ratio laid down by Hon'ble Delhi High Court in CIT vs Vrindaban Farms Pvt Ltd squarely gives shelter to the assessee, wherein, it was held that if the identity and other details of share application money can not be treated as undisclosed income in the hands of the company. In the present case, the assesses even has proved the source of source, therefore, the creditworthiness was also proved, consequently, no addition made u/s 68 of the Act can be said to be justified. ... The assessee duly furnished the proof of identity like PAN, bank account details from the bank, other relevant material, genuineness of the transaction, payment through banking channel and even the source of source, therefore, the assessee has proved the conditions laid down u/s 68 of the Act. It is also noted that inspite of repeated request, the Ld. Assessing Officer did not provide opportunity to cross examine the concerned persons and even the relevant information and allegation, if any, made therein, which has been used against the assessee, was not provided to the assessee. At this stage, we add here that mere information is not enough rather- // has....
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....ntrovert or rebut the findings so recorded by Ld. CIT(A). Therefore, we see no reasons to interfere into or deviate from the findings recorded by the Ld.CIT(A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, these ground raised by the revenue stands dismissed. Ground No. (ii) 15. This ground raised by the revenue relates to challenging the order of Ld. CIT(A) in deleting the addition made on account of 'deemed rent'. 16. Ld. DR relied upon the orders passed by AO and submitted that Ld. CIT(A) had erred in deleting the additions made on account of 'deemed rent' without appreciating the facts that the said premises were vacant during whole of the year and not let out at all during the year, hence the provisions Section 23(1)(c) would not apply and therefore assessee is not eligible for any deduction on account of vacancy and annual value of all the vacant property should be taken in terms of section 23(1)(a) of the I.T. Act. 17. On the other hand, Ld. AR relied upon the order passed by Ld. CIT(A) and reiterated the same arguments as were raised before Ld. CIT(A). 18. We have heard ....
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....ut prejudice to the submissions made herein above appellant submits that while arbitrarily computing the share of income of appellant from this properties, the AO has not considered the admissible deduction towards Municipal taxes and society maintenance charges. Appellant craves leave to submit here under the details of the admissible deduction in this behalf. Flat No. B-2/601 Serinity Towers- Rs. 13,728/- Flat No.B-2/602 Serinity Towers- Rs. 9,504/- Rizvi Mahal Premises -Rs.8,502/- Further the Ld AR has placed reliance on the decisions of the following case laws: ACIT v Dr Prabha Sat.;,:,; ITA No. 20l7/Del/2010 (Del Mb) Smt. Poonam Sawhney v ITO [2008] 20 SOT 69 (Del trib) Smt. Shakuntala Devi v Dy Director of Income tax ITA No.l524/Bang/2010 Shri Vikas Keshav Garud v itO [2016] (7) TMI 942 (Pune trib) - Premsuda Exports P Ltd v ACIT [2008] 110 ITD 158 (Mum trib) Renu Shamlal v ACIT 2016-TIOL-2017-ITAT Del Smt. Indu Chandra v DCIT (ITA No. 96 (LKW) 2011 Considering the facts of the case and submissions made as above, I am of the considered opinion that the addition made on ....