AI Drafter 
TaxTMI 
TaxTMI 
2019 (12) TMI 745
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....d. amounting to Rs. 25 lacs each and the AO had made the addition holding that the assessee had failed to discharge his onus with regard to establishing the identity, genuineness and creditworthiness of the loan depositors. Our attention was drawn to the facts of the case as mentioned at para 3 of the CIT(A)'s order as under: "3. Brief facts of the case are that the appellant is an individual and filed his return of income for the year under consideration on 25.09.2013 declaring therein an income of Rs. 38,84,870/-.The Assessing Officer completed the assessment at an assessed income of Rs. 88,84,870/- vide order under section 143(3) of the Act after making an addition of Rs. 50,00,000/- to the returned income of the appellant. During the course of assessment proceedings, the Assessing Officer noticed that the appellant has procured two unsecured loans from two companies, namely M/s Freak Bui-ldcon pvt. Ltd. and M/s Strum infra development pvt. ltd. amounting to Rs. 25,00,0007- respectively, on asking the details of the unsecured loans, the appellant has completely failed to discharge its onus with regard to identity, genuineness and creditworthiness of loan depositors o....
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....t he was disposing of the appeal ex parte. Thereafter drawing our attention to the subsequent paragraphs, The Ld.Counsel for the assessee pointed out that the Ld.CIT(A) while passing the order did not admit the additional evidences but at the same time, relying on the same drew adverse inferences regarding the genuineness of the transaction. It was further pointed out that she downloaded certain adverse information regarding the depositors from the internet and using it dismissed the contentions of the assessee and held that the transaction was not genuine and the addition therefore rightly made by the A.O. Ld. Counsel for the assesse stated that the CIT(A) neither confronted the evidences gathered nor afforded the assessee an opportunity of hearing before using the same against the assessee. Our attention was drawn to paras 5.3 to 5.6 of the order as under: "5.3. At the time of appellate proceedings on 12/01/2018, the appellant has filed written submission along with the application for admission of additional evidence under Rule 46A, to admit bank statement's of unsecured loan depositors companies namely M/s Freak Buildcon private limited and M/s Strum infra developm....
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....gone through the assessment order and I find myself in agreement, with the contention of Assessing officer that, the assessee has deliberately dragged the proceedings till the fag end of the assessment year and has failed completely to discharge his onus to prove genuineness identity and creditworthiness of unsecured loan depositors. Moreover the appellant has not filed any rejoinder also on the remand report of appellant, which was sent along with fixation notice dated 03/12/2018, fixing the case to 20/12/2018, when no one appeared on appellant's behalf. Hence the assessee's application for admission of additional evidence under Rule 46A, is hereby rejected. 5.4. While going through the assessment order it is transpired that undoubtedly at the time of assessment proceedings the Id. Assessing Officer had given ample opportunities, to the assessee for furnishing requisite documentary evidence and submission to discharge his onus in order to prove identity.genuineness and creditworthiness of unsecured loans taken by the assessee from two companies namely. M/s Freak Buildcon private limited and M/s Strum Infra Development Private Limited from Whom the assessee has tak....
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....y on the Internet regarding information from these two companies and I have found that in the case of there are two common director in M/s Freak Buildcon private limited and M/s Strum infra development private limited namely Nitin Kumar Jain. Vinod Kumar. Further in the case of M/s Strum infra development private limited it has been found from the information available on internet that the companies name has been found in the list of struck off companies on the website of MCA. The information is reproduced as under: "STRUM INFRA DEVELOPMENT PRIVATE LIMITED Strum Infra Development Private Limited is a Non-govt company, incorporated on 05 Jul, 2010. It's a private unlisted company and is classified as 'company limited by shares'. Company's authorized capital stands at Rs. 25.0 lakhs and has 98.2448% paid-up capital which is Rs. 24.56 lakhs. Strum Infra Development Private Limited last annual general meet (AGM) happened on 30 Sep, 2014. The company last updated its fmancials on 31 Mar, v 2014 as per Ministry of Corporate Affairs (MCA). Strum Infra Development Private Limited is majorly in Real Estate and Renting business from last 8 ....
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....in figure. Therefore, for the sake of reference and facility, facts in case of M/s Zoom Heritage Properties Pvt. Ltd. vs. ACIT CC-28, New Delhi in ITA 2774/Del/2017 (AY 2013-14) are being discussed and the grounds of appeal raised in this Appeal are reproduced hereunder:- 1. That the assessment order passed u/s. 143(3) of the IT. Act, 1961 on 31.3.2016 as upheld by the Ld. CIT(A) are perverse to the law and to the facts of the case because of not following proper law and procedure while completing the assessment proceedings. \ 2. That the AO has grossly erred in law and to the facts of the case in making lump sum addition of Rs. 25,12,5'97V- being commission income in the hands of the appellant at the rate of 0.60% merely on the basis of his presumption and guess work, without the support of any material either collected or placed upon records, which the Id. CIT(A) has not appreciated while adjudicating the appeal. 3. The brief facts of the case are that the assessee filed its ereturn of income declaring income of Rs. 3,08,850/- on 26.11.2014, which was later processed u/s. 143(1) of the Income Tax Act, 1961 (in Short "Act"). The AO observed that sinc....
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....see company is an entry provider. However, the next question to be answered is regarding estimation of commission income taxable in the hands of assessee company which is engaged in the business of providing accommodation entry. The Assessing Officer and Ld. CIT(A) have applied 0.60% (60 paise to Rs. 1 per Rs. 100) on total credit entries appearing in the bank account whereas the Ld. AR is relying upon the assessment order for AY 2012-13 and affidavit of the Director wherein, it has been stated that appellant was charging 0.10% (10 paise to Rs. 1 per Rs. 100). However, on specific query from the Bench, neither of the sides could substantiate the basis for arriving at rate of 0.60% or 0.10%. I am also aware of the fact that in case of business of providing accommodation entry, there cannot be a single rate of commission and same vary from case to case and largely depends upon the quantum of entry. 7.Keeping in view of the facts and circumstances of the case, contention of both the parties and principle of equity and fairness, I deem just and proper to estimate the average commission @30% (30 paise to Rs. 1 per Rs. 100) on credit entries appearing in the bank account of the ....
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....ness and creditworthiness of unsecured loan depositors at the time of assessment proceedings. In my considered opinion the appellant has failed badly to prove all three limbs of section 68 that this identity genuineness and creditworthiness. I have also perused and considered, various case laws relied upon by the appellant. After careful consideration of the facts of the case and the various submission filed by the appellant and the case laws relied upon the appellant, I am not in agreement with the contention of appellant as it has failed to discharge its basic onus to prove the unsecured loans at the time of assessment proceedings. Merely furnishing of PAN and confirmation and producing financial statement is not enough. It is equally important to prove credit worthiness of these loan depositors. Various courts have also upheld this view of Id AO that there are three limb of section 68 and it is the primary onus of assessee only to prove the identity, genuineness and creditworthiness." 4. The Ld.Counsel for the assessee contended out that the order passed by the Ld.CIT(A) was against the principles of natural justice since it was based on evidences not admitted for adjudicatio....
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....ere not genuine. 7. Undeniably, the aforesaid information was not confronted to the assessee. Even the Ld. DR has admitted to the said fact and we have not been able to find anything in the order of the CIT(A) showing that the said information was confronted to the assessee. Clearly, the impugned order has been passed in gross violation of the principles of natural justice, that none should be condemned unheard. The Hon'ble Delhi High Court ,while elucidating on the said principle, in a full bench ruling in the case of J.T.(India) Exports vs Union of India(2003) 262 ITR 269(Delhi), noted that notice is the first limb of this principle. That a party should be apprised of the case to be met with and adequate opportunity be given to make its representation. That it is an approved rule of fairplay that the party should be put on notice to the case before an adverse order is passed against it. The Hon'ble High Court noted as under: "3. Natural justice is another name for commonsense justice. Rules of natural justice are not codified canons. But they are principles ingrained into the conscience of man. Natural justice is the administration of justice in a commonsense liber....