TaxTMI 
TaxTMI 
2019 (8) TMI 1607
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....ssion of one of the directors of the assessee company Shri Dinesh Jain observed that the loans of Rs. 2,68,00,000/- unsecured loans raised by the assessee from following parties are bogus: Sr No Name of the Party PAN F.Y. Amount (Rs.) 1 Atharv Business PrivateLimited AAACF9430A 2012-2013 25,00,000 2 Casper Enterprises P Ltd AAACO7955M 2012-2013 35,00,000 3 Duke Business P Ltd VAABCJ6245N 2012-2013 23,00,000 4 Duke Business P Ltd AABCJ6245N 2012-2013 25,00,000 5 Nakshatra Business P Ltd AABCH4279G 2012-2013 10,00,000 6 Nakshatra Business P Ltd AABCH4279G 2012-2013 20,00,000 7 Nakshatra Business P Ltd AABCH4279G 2012-2013 30,00,000 8 Olive Overseas P Ltd AACCR4512K 2012-2013 15,00,000 9 Olive Overseas P Ltd AACCR4512K 2012-2013 30,00,000 10 Sumukh Commercial Pvt Ltd AACCC7400M 2012-2013 25,00,000 11 Sumukh Commercial Pvt Ltd AACCC7400M 2012-2013 20,00,000 12 Sumukh Commercial Pvt Ltd AACCC7400M 2012-2013 10,00,000 TOTAL 2,68,00,000 Accordingly, the AO issued show cause notice to the ....
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....of the director of the assessee company who also retracted the said statement and thus deleted the entire addition. 5. At the outset, the Ld. Counsel of the assessee submitted before the Bench that the issue is squarely covered by the decision of the co-ordinate bench of the Tribunal in assessee's own case in ITA No.5886 & 5887/M/2017 A.Y. 2011-12 & 2012- 13 vide order dated 14.03.2019. The Ld. A.R. submitted that the facts in the present case are identical and the lenders are also common therefore the appeal of the Revenue may be dismissed by following the decision of the co-ordinate bench of the Tribunal. 6. The Ld. D.R., on the other hand, relied on the order of AO and grounds of appeal. 7. After hearing both the parties and perusing the material on record and particularly the decision of the co-ordinate bench of the Tribunal as referred to above, we observe that the identical issue was decided by the co-ordinate bench of the Tribunal in assessee's own case by deciding the issue in favour of the assessee. The operative part is reproduced as under: "8. We have heard the rival submissions of both the parties and perused the material on record including the writte....
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....cessary evidences in the form of loan confirmations, balance sheets and profit and loss accounts, ITRs, bank statements and PAN cards of the lenders. The lenders companies were filing their ITR and ROC returns regularly and have duly shown the amount lent to the assessee in their respective balance sheets. Entire transactions were routed through the banking channels and thus the assessee has discharged the primary onus of proving the identity, creditworthiness and genuineness of the transactions. Another allegation of the AO is that assessee has failed to produce the parties and hence question of providing cross examination does not arise which is without merit as the assessee has discharged its onus by providing all the basic documentary evidences before the AO who just relying on the statement of Shri Pravin Kumar Jain treated the loan transactions as unexplained credit in the books of the assessee. On the issue that these lenders are showing low income or losses in the return of income filed, we observe that in the balance sheets the said loan advanced by the lender were duly reflected and thus there is no income in the particular year has no relevance and there were sufficient ....
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....00 12. The AO issued show cause notice to the assessee on the basis of information gathered during the course of survey conducted under section 133A of the Act on the assessee and also on the basis of statements of Shri Dinesh Kumar Jain who was one of the promoters/directors of the assessee company, mentioning therein that the said director Shri Dinesh Kumar Jain has accepted that assessee is beneficiary of hawala accommodation entries of unsecured loans and share capital from various dummy concerns related to Shri Pravin Kumar Jain who also during the course of search operation on him and his associated concerns admitted that he was engaged in the business of providing bogus hawala purchase entries, bogus unsecured loans and share capital etc. The assessee replied to the show cause notice by submitting that statement given by Shri Dinesh Kumar Jain during the course of survey on 25.03.2014 stood retracted vide letter dated 14.01.2016 and therefore no addition could be made on the basis of said statement which has no legal sanctity. Further, it was also stated before the AO that the Revenue is relying on the statement of Shri Pravin Kumar Jain but neither the statement of Shri ....
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....oduced before him. Needless to say, the same would also have been in line with various CBDT circulars as submitted by the appellant in his submission. Further, the statement of Shri Pravin Jain on which the AO has also placed reliance upon has not been confronted to the assessee ever. As held by the Hon'ble Apex Court in the case of the M/s. Andaman Timber Industries CIVIL APPEAL NO. 4228 OF 2006, placing reliance on such a statement would be in violation of the principles of natural justice and hence no reliance could have been placed by the AO on the statement of Shri Pravin Jain either. The A.O. had concluded that based on the test of human probabilities it is clear that the entire transaction is a pre-structured transaction and a colorable device used by the assessee company to introduce undisclosed income under the garb of unexplained cash credit. The AR has contended that the A.O. had missed the crucial fact that the applicant company is regularly doing the business and has filed its tax returns on regular basis. The taxes are paid by it on the income so earned. In the light of observations of the Hon'ble Supreme Court in the case of CIT Vs. Lovely Exports (P) Ltd. re....
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.... that he did, the A.O. did not consider it worthwhile to make any further enquiry. There is no finding to the effect as to how the alleged unaccounted cash/money of the assessee company was routed through various levels and it finally reached to the assessee. There is no evidence or material on record to show that the said amount representing unsecured loans moved from the assessee and reached to the assessee. The assessee company has received the money through banking channels and the applicants had shown the said amount as investment in their books of account. The money routed through banking channels and through account payee cheques/bank draft, undisputed given by the party. Even, the source of the loans was found in the bank account of the loan creditors not by any cash deposit; but through account payee cheques. Therefore, when all these documentary evidence are considered there appears not much basis for any addition. 5.7 The Bombay High Court in the case of CIT v. Creative World Telefilms Ltd. (in I. T. A. No. 2182 of 2009 decided on October 12, 2009) [2011] 333 ITR 100 has held that :- The relevant portion of this order is reproduced below: "In t....
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....that the donor was to receive suitable compensation from the assessees. The Assessing Officer held that the gifts though apparent were not real and accordingly treated all those amounts which were credited in the books of account of the assessee, as their income applying section 68 of the Act. The assessee did not contend that even if their explanation was not satisfactory the amounts were not of the nature of income. The Commissioner of Income-tax (Appeals) confirmed the assessment. On further appeal, there was a difference of opinion between the two Members of the Appellate Tribunal and the matter was referred to the Vice President who concurred with the findings and conclusions of the Assessing Officer and the Commissioner of Income-tax (Appeals). On appeal, the High Court re-appreciated the evidence and substituted its own findings and came to the conclusion that the reasons assigned by the Tribunal were in the realm of surmises, conjecture and suspicion. On appeal to the Supreme Court, the court while reversing the decision of the High Court held that the findings of the Assessing Officer, Commissioner of Income-tax (Appeals) and the Tribunal were based on the material on reco....
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....ledgement copy of the return of income of the investing company, their bank accounts statements for the relevant period; then even if the parties were not produced in spite of the specific directions of the Assessing Officer, the addition could not be sustained as the primary onus was discharged by the assessee by producing the PAN, balance sheet, copy of the acknowledgement copy of return of the applicants etc.. In the instant case, there is no dispute about the identity of the creditor companies, who had given the Loan money and the source of the loan was also found in the respective bank accounts of the investing companies and there was no trace of cash deposit in the bank accounts of the investing companies, then, the action of the Assessing Officer without making further detailed enquiry to establish that the provisions of section 68 of the Income Tax Act were attracted in the present case is difficult to sustain in appeal. The Assessing Officer has made addition on some doubts and suspicion but has not established any direct or indirect link of assessee's own money flowing out and then again received by the assessee in the form of loans. During the course of assessment pr....
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....re capital accommodation entries from the said entities. The fact was also confirmed by the statement as recorded under section 131 of Shri Dinesh Dulichand Jain one of the Directors of the assessee company whose premises were surveyed under section 133A of the Act who also admitted the same. It is immaterial and of no significance that Shri Dinesh Dulichand Jain retracted his statement by way of affidavit dated 29.03.2014 when he admitted the same during survey as it was mere an afterthought. The AO has sufficient material in the form of sworn in statement of the third party and also the director of the assessee and therefore the order passed by Ld. CIT(A) is wrong as this was a clear cut case of accommodation entries received by the assessee in the form of share capital. The Ld. D.R., therefore, prayed that since the investors/allottees of shares were related to Shri Pravin Kumar Jain as has been held by the AO in the assessment order, the same needs to be affirmed by this Hon'ble Tribunal by reversing the order of Ld. CIT(A). 15. The Ld. A.R. vehemently submitted before us that the order of the AO suffered from serious and fatal defects and infirmities for the reason that AO ....
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....d person by way of affidavit dated 29.03.2014. The Ld. A.R. also argued that during the year, the assessee has allotted shares to seven parties by drawing our attention to page No.7 of the paper book which formed part of notes to financial statements for the year ended 31.03.2014 whereas as a maater of fact the additions were only made in respect of 3 parties. The Ld. A.R. submitted that the assessee has submitted all the documents relating to the investors/allottees of shares such as bank statements, ITRs, ledger accounts, confirmations, PAN numbers of the lenders and also the statement of the assessees, share application forms duly filled in beside the copies of the balance sheet. The Ld. A.R. therefore contended that the assessee instead of making any further investigations/enquiries has relied on the statement made during the survey by Shri Dinesh Dulichand Jain a director of the assessee company which stood retracted as stated hereinabove. The Ld. A.R. also submitted that the decision of the Hon'ble Apex Court in the case of Pr. CIT vs. NRA Iron & Steel (P.) Ltd. (2019) 103 taxmann.com 48 (SC) is not applicable to the assessee's case as in this case the AO has made enquiri....
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.... all these three entries were related to Shri Pravin Kumar Jain. Further, we note that the AO has not made any investigation or enquiry despite the assessee having filed all the necessary evidences before the AO to prove the identities and creditworthiness of the investors and genuineness of the transactions. We also observe that the Ld. CIT(A) has examined the issue in great depth and has relied on a series of decisions of Apex Court of M/s. Andman Timber Industries civil appeal No.4228 of 2006 and the CIT vs. Lovely Exports Pvt. Ltd. 216 ITR 295 (SC). The ld CIT(A) also relied upon the decisions of the Hon'ble Bombay High Court in the case of CIT vs. creative World Telefilms Ltd (2011) 333 ITR 100 and decision of Hon'ble Delhi High Court in Osis Hospitality Pvt. Ltd. 333 ITR 119( Delhi) while deciding the appeal of the assessee. 17. We further find that the decision of the Apex Court in the case of Pr. CIT vs. NRA Iron & Steel Pvt. Ltd. (supra) is not applicable to the assessee as the facts are distinguishable in the case of Pr. CIT vs. NRA Iron & Steel Pvt. Ltd. (supra). The AO has issued notices under section 133(6) of the Act and the parties were non existent and did not re....