TaxTMI 
TaxTMI 
2020 (10) TMI 651
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.... had obtained bogus entries from M/s Shipra Fabrics Pvt. Ltd. amounting to Rs. 26,37,951/- and from M/s Victory Sales Pvt. Ltd. amounting to Rs. 51,82,213/-, the case was reopened after issuing notice u/s 148 of the Act. During the assessment proceedings, it was noticed that the assessee had received unsecured loans to the tune of Rs. 2,07,38,443/- from B.K. Dyeing and Printing Mills Pvt. Ltd., Dolex Commercial Pvt. Ltd., Hunger Real Estate Pvt. Ltd., Shipra Fabrics Pvt. Ltd. and Victory Sales Pvt. Ltd. Accordingly, the AO asked the assessee to establish the genuineness of transaction. In response thereof the authorized representative of the assessee submitted that the company had received the said loans for the purpose of business for a short term and the same has been repaid. The AR also furnished the confirmations to substantiate the claim of the assessee. 3. A search action was carried out in the case of M/s Shri Bipul Vidur Bhatt, M/s B.K. Dyeing and Printing Mills Pvt. Ltd., M/s Dolex Commercial Pvt. Ltd., M/s Hunger Real Estate Pvt. Ltd., M/s Shipra Fabrics Pvt. Ltd. and M/s Victory Sales Pvt. Ltd. On the basis of the documents seized from the premises of Shri Bipul Vidur....
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....actually availed for the business purpose". 5. Before us, the Ld. Departmental Representative (DR) submitted that the loans amounting to Rs. 2,07,38,443/- was mere accommodation entry provided against cash receipt by the M/s B.K. Dyeing and Printing Mills Pvt. Ltd., M/s Dolex Commercial Pvt. Ltd., M/s Hunger Real Estate Pvt. Ltd., M/s Shipra Fabrics Pvt. Ltd. and M/s Victory Sales Pvt. Ltd. from the assessee company. Since, there is no entry in the books of account of the assessee with regard to the said transactions, the provisions of section 69A of the Act are attracted. Hence, the Ld. CIT (A) has wrongly deleted the addition made by the AO. The Ld. DR further submitted that search and seizure action revealed that Sh. Bipul Vidur Bhatt and his family members were engaged in the business of providing bogus entries against cash received from the concerned parties. During the search action Sh. Bipul Vidur Bhatt explained that his companies used to provide accommodation entries against cash of equal amount after taking commission in cash for facilitating these entries. Since, the assessee failed to establish the genuineness of the aforesaid transactions to the satisfaction of the ....
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.... The Ld. CIT (A) has deleted the addition made by the AO holding that the AO has not brought any fact on record to established that cash was introduced prior to advancing the loan to the assessee and there is no evidence on record to show that the assessee had paid cash to the loan creditors in lieu of loan received from them. It is an admitted fact that the unsecured loans under consideration have been repaid over a period of time and the appellant has paid interest and deducted TDS thereon as per the provisions of the Act. Relying on the various decisions of the Courts and the Tribunal, the Ld. CIT (A) has held that the assessee has discharged its onus of proving genuineness of the transaction of furnishing the identity of the creditors and documents to prove the transactions. The Ld. CIT (A) has pointed out that no addition/disallowance can be made solely on the basis of statement made u/s 132 (4) of the Act without bringing any corroborative evidence on record. As pointed out by the Ld. counsel for the assessee, the "I" Bench of the Mumbai Tribunal has decided the identical issue in favour of the assessee in the case of DCIT vs. M/s Manba Finance Ltd. ITA Nos. 1448, 1449, 14....
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....e Act. In this regard, it is noted that it is the claim of the assessee which has been found correct by the ld. CIT(A) that the assessee has duly paid interest on these loans, deducted TDS, filed the TDS return. The ld. CIT(A) has also found that this loans have been duly repaid. 34. The addition in this case has been made on the ground that some of the corporate entities were found to have been controlled and operated by Shri Pravin Kumar Jain, who was one of the leading entry operator. For the other corporate entities, it was found that the assessee has obtained loan from these companies which was arranged by Shri Rakesh Doshi, who on survey had admitted to be arranging bogus accommodation entries. These findings have come out as a result of survey against the assessee's premises.As regards Shri Pravin Kumar Jain, it was noted by the A.O. that in the Revenue's action against Shri Pravin Kumar Jain, he has admitted to have been arranged bogus accommodation entries. The A.O. has noted in detail his modus operandi.As regards Shri Rakesh Doshi, it was noted that survey action u/s. 133A was conducted in his case and he was found to have arranged the accommodation entries. The....
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.... supplied the following in this regard: (i) Confirmation of the party who gave the loan. (ii) Copy of Return of Income filed by them alongwith PAN No. of the loanees. (iii) Copy of Balance Sheet, P/L Account alongwith all Schedules, (iv) Copy of Certificate of incorporation, original and the latest one. (v) Copy of Bank Statement of the loanee from which the loan have been given to the assessee, as well as Repayment made if any by the assessee. 37. The A.O. has disregarded the evidences submitted by the assessee on the ground of a statement of Shri Pravin Kumar Jain and Shri Rakesh Doshi and the director of the assessee company. In this regard, as already referred hereinabove, the ld. CIT(A) has already found the issues of non submissions of the details obtained from Shri Pravin Kumar Jain and Shri Rakesh Doshi to the assessee, and not given an opportunity to cross examine them to be gross violation of principles of natural justice. Furthermore, the A.O. has also drawn adverse inference on the statement from the Director of the assessee company obtained during survey. In this regard, the ld. CIT(A) has given a finding that the a....
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....tion offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10.] 39. In this regard, we note that by giving the confirmation, return of income, the detail of PAN, copy of balance sheet and P & L account and copy of its bank statement, the assessee has duly discharged its onus. The A.O. has not found default in these documents. It is also not the case that cash has been deposited in the bank statement before granting of loans by these companies as pointed out by the ld. CIT(A). The A.O.'s grouse is that the assessee has not produced the directors of these companies, and these corporate entities have a....
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...., it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso. In any view of the matter 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. (ii) 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 sh....
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.... reflected in the books of account of the creditors.] VI. Relevant bank statements of the creditors [These show that the loan amounts were paid through legitimate banking channels. Further these bank statements do not reflect any movement of cash, essential to hawala transactions.] 23. The assessing officer has made no enquiry with reference to the above. He did not seek any further explanation or detail from the assessee. He solely relied upon the investigation wing enquiry regarding the Bhanwarilal group. The ld. Commissioner of Income Tax (Appeals) in this regard has correctly made the observation that the assessee having given all the necessary details and has discharged its onus, it was incumbent upon the assessing officer to make furtherenquiry if he was not convinced by the submissions of the assessee. We find that assessing officer has displayed total lack of application of mind by not even issuing a notice to the loan creditors. 24. We find that it is settled law that while making any disallowance/addition, the Assessing Officer needs to make due enquiry. In this case, the Assessing Officer has not made any enquiry whatsoever. As noted hereinabov....
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....Ltd. (2014) 227 Taxman 219 (Mag) and others. 42. In our considered opinion, these case laws duly support the proposition canvassed by the assessee. In our considered opinion, the A.O. has not brought on record any cogent, adverse material to rebut the credibility of the corporate entity from whom loan has been taken. As already pointed out by us as above, that these corporate entities were found by the A.O. to have acquired funds by borrowals and acceptance of share capital and share premium. This by itself cannot lead to presumption that these sources are bogus without any enquiry. In these circumstances, in our considered opinion, the ld. DR's request that this issue be again remitted to the file of the A.O. to make further necessary enquiries cannot be entertained. The decision of the Hon'ble Karnataka High Court referred by the ld. DR was on a different set of facts, wherein, the Hon'ble Karnataka High Court on the facts and circumstances of the case had upheld the certain direction of the ITAT. In the present case, as pointed out hereinabove, in our considered opinion, the assessee has discharged its onus. As noted above, the A.O. has not brought on required cogen....