TaxTMI 
TaxTMI 
2021 (4) TMI 478
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....king it into consideration for computing profit and gains of 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....
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....discharged its onus. The Ld.AR has further argued that the transaction has taken place through banking Channels, therefore the genuineness 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 ....
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....king any enquiry or investigation to examine the genuineness of the particular transaction which is under suspicion. Simply relying on the report 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....
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....on. (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) 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 th....
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....nsactions have taken place through the banking channels and hence the genuineness of transactions is not in doubt, Both the above said creditors are assessed to Income tax and further the notices Issued by the AO u/s 133(6) of the Act were duly served Upon them and 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 fu....
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....the present case. Thus we notice that the Ld CIT(A) has reached his decision in @ systematic manner. Accordingly we affirm the decision rendered by Ld CIT(A). 16. in the result, the appeal filed by the Revenue is dismissed." '3. I have considered the rival submissions and perused the material 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, ....
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....e Revenue. 5. The next ground pertained to deletion of addition of Rs. 5,78,278, made on account of interest expenditure on alleged bogus loans. The learned D.R. defended the addition, whereas, the learned Counsel for the assessee invited my attention to the finding recorded in Para-6.1 of the impugned order. On a perusal of 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....
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....als) are germane and duly supports the case of the assessee. In the background of the aforesaid discussion and precedent, we uphold the order of the Id. Commissioner of Income Tax (Appeals). 25. In the result, this appeal by the Revenue stands dismissed." iv. Shri Naresh Hiran vs. ITO 30 (2)(4) I.T.A. No, 1236/Mum/2017 7. We have heard the rival contentions, and perused the record. The Assessing 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 confir....
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....f placed upon shoulders u/s. 68 of the Act, we are of the view that the learned CIT(A) hot justified in confirming the addition by simply placing reliance on the statement given by Mr. Bhanwarlal Jain. The various documents furnished by the assessee, in fact, militate against the statement given by Shri Bhanwarlal Jain. Accordingly, we set aside the order passed by the learned CIT(A) and direct the Assessing Officer to delete the addition 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 ....
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....ould make the addition to fail. Even in respect of documents relied upon by the AO, the Ld CIT(A) has found the same to be inadequate to warrant the additions made u/s 68 of the Act. Hence, we are of the view that the Ld CIT(A) has passed a reasoned order by considering the facts of the case, applicable case laws and has taken a justifiable view in this matter. Hence we do not find any infirmity in the order passed by Ld CIT(A). Accordingly we confirm the order passed by Ld CIT(A) In deleting the addition of Rs. 24,75 crores made u/s 68 of the 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. ....
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.... 17. Moreover, ho new facts or contrary Judgments have been brought on record before us in order to controvert or rebut the findings $0 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, considering the facts of the case as well as following the decision of the Coordinate Benches and in order to maintain judicial consistency, we are of the considered view that the findings so recorded by the ld. CIT (A) are judicious and are well reasoned. Resultantly, these grounds raised by the revenue stands dismissed." 5.1.5 Accordingly, the issue 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 con....