TaxTMI 
TaxTMI 
TaxTMI 
2021 (4) TMI 478
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....f the business for the purpose of section 28 of the Act? 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the bogus loan of the assessee without taking the ratio of judgement of the Hon'ble Supreme Court in case of M/s Navodaya Castle (P) Ltd. vs CIT(2015) 56 taxmann.com18(18)230 Taxmann 268(SC), where in it was held that certificate of incorporation, PAN etc were not sufficient for the purpose of identification of subscriber company, when there was material to show the subscriber was a paper company and not a genuine company. 4. The applicant craves leave to add, amend or alter any grounds or add new ground which may be necessary." 3. The brief facts of the case are that the assessee filed its return of income on 29.09.2013 declaring total income to the tune of Rs. 17,76,890/- for the A.Y.2013-14. Thereafter, the case was selected for scrutiny and notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee company is engaged in the business of manufacturing of wheat products into Maida, Rava, Suji, Atta etc. A search and seizure action was conducted in the case of Shri Bhanwarlal Jain Group....
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....neness of loan need not be doubted. The excessive reliance on the statements given by a third-party i.e. key persons of Bhanwarlal Jain group, who the appellant does not know, is not proper even without giving the appellant a chance to cross-examine them who have given such adverse statements. He further argued that the addition was made without providing the appellant the corroborative evidence in the possession of the AO to prove that the appellant has paid cash, as alleged, against the receipt of cheque. On the other hand, the AO has believed that these documents submitted before him were engineered to explain bogus loans since those who involved in bogus transactions in an organised way are meticulous in arranging these make-believe documents. He further believed that the office bearers/key persons of Bhanwarlal Jain group have given categorical and unequivocal statements stating that they have involved only in bogus transactions by giving loan by cheque for exchange of cash through the companies/firms floated by them. 5.1.1 No doubt that there is some force in the arguments of the AQfirstly, the statements were given by the very authors of the fictitious firms/companies unde....
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....of the Investigation wing, Mumbai and statements recorded during the course of searches in the Bhanwarlal Jain group, the Ld. AO cannot conclude that all transactions are bogus or have no credential value. 5.1.3 In the instant case, as seen from the details filed before the AO, a set of which were also filed before me, do not find any inconsistency or incoherence in the receipt of loans from the parties. Firstly, as regards the transaction, the same has routed through the banking channels a source cannot be doubted. Secondly, as was held in sever whatever 'maybe the strength of presumption it cannot replace evidence. Even though, the transaction is from a tainted group, the AO has not gathered any additional/independent evidence to show that the transaction with the appellant company was sham, fictitious or artificial except believing the statements given by the entry operators. He has failed to gather evidence to show that the unaccounted cash of the appellant had changed hands subsequently replacing the cheque payments. Thirdly, he has also not answered several valid points raised by the appellant nor proved how the details like PAN, the IT returns, confirmation letters, bank....
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....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) Confirmatory letters or A/c payee cheques do not prove that the amount in question is properly explained for the purpose of section 68. Assessee has to establish identity and creditworthiness of the creditor as well as the genuineness of the transaction. All the three ingredients are cumulative and not exclusive. (vi) In matters regarding cash credit 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 a/cs. 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. Credit worthiness of the lender can be established by attending circumstances. Once the assessee produces evidences about identity, genuineness and credit worthiness of the lender onus of proof shifts to the Revenue." ....
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.... further they have also replied ta the same. Hence the identity of the creditors is also stand proved. In order to prove the creditworthiness, thé assessee has furnished the financial statements of these two editors. Contention of the revenue is that the capital balance and the disclosed by them are low. Accordingly it was contended that these two concerns could not have given such kind of huge amounts as loan. However, in our view, both of them are not determinative factors. What is required to be seen is whether the creditor could prove the availability of funds with it or not. A perusal of the financial statements furnished by both the creditors would show that the loans given to the assessee have been duly disclosed and further these creditors were having sources by way of loans taken by them from others. Further both the concerns were carrying of business having huge turnover. Hence the movement of funds in their accounts and also the availability of funds with them cannot be doubted. Hence, we are of the view that the Ld CIT(A) was justified in holding that the creditworthiness of these two creditors also stand proved. 14. We also notice that the assessing officer ....
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....rial available on record. The facts in brief are that the assessee an individual engaged in the business of builder and developer declared loss of Rs. 1,29,68,736 in his return on 15.09.2009. The assessment was completed u/s 143(3) of the Act on 30.11.2011 assessing the loss at Rs. 1,13, 73,448. The assessee carried the matter in appeal before the learned CIT(A) wherein vide order dated 03.02.2014, part relief was granted to the assessee. Later on, the case of the assessee was re-opened u/s 147 on the basis of information that the assessee has received accommodation entry of unsecured loan from M/s. Laxmi Trading Company, M/s. Mouli Gems, M/s. Minal Gems, M/s. Naman Exports and M/s. Prime Star, pertaining to Bhawarlal Jain Group. As per the assessee, during the assessment proceedings, documentary evidences pertaining to loan from aforementioned parties like confirmation, bank statement and acknowledgment of return of income of loan, bank statement of the assessee reflecting the amounts and genuineness of transactions were filed. However, the leamed Assessing Officer treated the loan as unexplained cash credit on the plea that the assessee could not produce the parties. Thereaft....
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.... record and the assertions made by the respective Counsels. There is a finding in the impugned order that the assessee duly produced the bank statement from where interests were paid also copies of form no.16A evidencing the TDS made and deposited into the Government account with respect to payment of interest. Since in earlier order since I have upheld the order of the learned CIT(A), therefore, the issue of interest is consequential in nature, therefore, the conclusion drawn in the impugned order is upheld. Finally, the appeal of the Revenue is dismissed." "22. Upon careful consideration we note that in support of the explanation of the unsecured loans, the assessee has submitted following details before the assessing officer: !. PAN details of creditors ll. Constitution and address of the creditors iii, Particulars of income-tax returns filed by the creditors. These show that the creditors are legitimate business entities, having the ability to advance the impugned loans to the appellant iv. Confirmatory letters given by the creditors V. Audited financial accounts (including balance sheets) of the creditors {These show that the loans are duly reflected in the books o....
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....g Officer has made impugned addition u/s. 68 of the Act on the ground that loan of 25 lakhs taken from Rose Impex was bogus since Rose Implex belonged to Mr. Bhanwarlal Jain group and Mr. Bhanwarial Jain has accepted that his group was providing only accommodation entries. On the contrary, we noticed that the assessee has furnished all documents necessary to discharge burden of prove placed upon it u/s.68 of the Act. It is well settled proposition of law that the assessee has to prove three main ingredients in order to discharge burden of proof placed upon him u/s. 68 of the Act ie., the assessee has to prove the identity of creditor, creditworthiness of the creditor and genuineness of the transactions. In the instant case, the assessee has furnished confirmation obtained from Rose Impex, which contained PAN and address of the creditor. The assessee has documents prove the Identity of creditor. The assessee has also furnished 'bank account of Rose impex and also it's own bank account in order to show that the loan transaction has been carried out through banking channel. Though, the learned CITA) has observed that there was huge transfer of fund before giving loan to the assess....
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....on of Re. 25 lakhs and also disallowance of interest of Rs. 22,192/-. v. DCIT(CC)-1(3) vs M/s. Jainam Investments ITA. No.6099/Mum/2016 . '23. We notice that the assessee has specifically asked the AO to issue summons to the loan creditors, but the assessing officer has failed to do the same. It is pertinent to note that the assessee has so requested the AO, even after discharging the initial burden of proof by furnishing all the relevant details available with it. In the case of Orissa Corporation P. Ltd (supra), the assessee furnished available details and then requested the AO to issue summons to the creditors, since it could not collect further details from them. The AO failed to do so and hence the Hon'ble Supreme Court held that the addition made u/s 68 is not justified. The assessee herein, in our view, stand on a stronger footing. The assessee has furnished all the relevant details, which has been summarized by the Ld CIT(A) in paragraph 6.3.31 of his order as under: "6.3.31 In the case before me, the record also shows that to prove the genuineness of the impugned loan entries from the 17creditors, the appellant has furnished to the Assessing Officer the followi....
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....e Act. 25. Since we have confirmed the order of Ld CIT(A) in deleting the addition made u/s 68 of the Act, the interest disallowance is also liable to be deleted. Accordingly, we confirm the order passed by Ld CIT(A) in respect of interest disallowance also. 26. The addition made towards commission expanses |s also off shoot of the addition made u/s 68 of the Act. For the reasons stated in the preceding Paragraph, we confirm the order passed by Ld CIT(A) on this issue also. 27, In the result, the appeal filed by the revenue is dismissed." ACIT-19 3 vs. Rajesh M. Shah (HUF) ITA. No. 7105/Mum2016. "after having gone through: the facts of the present case as well as considering the orders passed by revenue authorities, judgments cited and submissions made by both the parties, we find that Ld. CIT(A) considered the records, which the assessee had placed on record to prove the genuineness of the loan entries from the six creditors In the shape of i) PAN details of creditors, ii) Constitution and address of the creditors, {l)Particular of income-tax returns filed by the creditors [These show that the creditors are legitimate business entities, having the ability to advance th....
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....sue at hand stands adjudicated, as above, at multiple for a and is no longer res integra. 5.1.6 As seen from the above facts and judicial precedents, the appellant has furnished all the details proving conclusively the three ingredients of identity and creditworthiness of the creditors and the genuineness of the transaction. The amounts were paid by the creditors from their running bank accounts which were accounted in the books of the appellant as well as the creditors as seen from the audited accounts filed. The transactions were also confirmed by all the creditors who are assessed to tax. Further, the appellant has paid interest through banks to the creditors by duly subjecting the interest amount to TDS. I find that the AO was in possession of good information in the form of investigation report, to begin with, but he could neither succeed to. repudiate the evidences filed by the appellant nor he could gather independent evidence even to establish the surrounding circumstances not to speak of leading evidence to prove his hypothesis. In view of the above discussion | hold that the loan taken by the appellant from the above three parties cannot be doubted and the addition ma....