TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 1695
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....ve to amend or alter any ground or add new ground which may be necessary." 3. The brief facts of the case are that the assessee company is engaged in the business of trading of cloths and wholesalers, filed its return of income for AY 2007-08 on 25/10/2017, declaring total income of Rs. 3,76,660/-. Thereafter, the case has been reopened u/s 147 of the I.T.Act, 1961, on the basis of information received from the DGIT(Inv.), Mumbai, as per which a search and seizure action u/s 132 was carried out, in the case of Shri Praveen kumar Jain, where it was revealed that he was involved in providing accommodation entries of bogus purchases, unsecured loans and share capital ect. It was further, observed that Shri Praveen Kumar Jain, through his shell companies issued accommodation entries of share capital to various beneficiaries and accordingly, it was observed that the assessee M/s Agarwal Cloth Agency Pvt.Ltd. is one of the beneficiaries, who had obtained accommodation entries of share capital from M/s Nakshatra business Pvt.Ltd., M/s Olive overseas Pvt.Ltd. and M/s Lexuss infotec Ltd. amounting to Rs. 1,25,00,000/-,which resulted in under assessment of income chargeable to tax, accordin....
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....t has discharged onus cost upon u/s 68 of the I.T.Act, 1961, by the filing enormous documents including confirmation from the parties, name and address and PAN number of the shareholders, income tax acknowledgment of the shareholders, CIN Master data, Share application forms, Board resolution, return filed in ROC and bank statement to prove identity, genuineness of transactions and credit worthiness of the parties. The assessee has also filed affidavit from the shareholders, where they have categorically admitted that investment in shares of assessee company is a genuineness transactions. The Ld. CIT(A), after considering relevant submissions of the assessee and also taken note of various evidences filed, in support of share capital received from three companies held that the assessee has discharged three ingredients provided u/s 68 of the Act, including identity by filing enormous details. The Ld. CIT(A), further observed that when, the assessee has filed necessary documents and discharged its onus then, the onus shifted to the AO, in such circumstances, it is for the AO to carry out further enquiries in light of information received from DGIT(Inv.) to ascertain true nature of tra....
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....lant to cross examine witnesses, whose statement might have been relief upon; and (4) failure to recognize the satisfactory nature of the explanation /evidence tendered by the appellant to explain identity of creditors, creditworthiness of the creditors and the genuineness of the Joan transactions. Hence the impugned addition cannot be sustained. 5.3.24. In view of the facts and circumstances of the case as well as Judicial pronouncements referred and relied above by me and a/so certain judicial pronouncements relied upon by the appellant in its written submission which has been produced above, addition made by the AO under the heading share capital/ share application money amount cannot be sustained and therefore the AO is directed to delete the amount of Rs. 1,25,00,000/- 6. The Ld. DR submitted that Ld.CIT(A) deleted additions made by the AO towards share capital received from three companies belongs to Shri Praveen Kumar Jain, without appreciating the fact that the assessee has failed to prove the identity, genuineness and credit worthiness of the shareholders. The Ld. DR, further submitted that when the department has collected sufficient evidences during search proceedings....
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....here is no evidencery value for such statement. The Ld. CIT(A) after considering all these facts has rightly come to the conclusion that the assessee discharged its onus and accordingly, deleted the additions made by the AO and therefore, his order should be upheld. 8. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The provision of section 68 of the I.T.Act, 1961, deals with a cases, where any sum found credited in the books of accounts of an assessee, for which no explanation is offered or explanation offered by the assessee is not in the opinion of the AO is satisfactory, then sum so found credited may be treated as income of that year. A plain reading of section 68 of the Act, makes it very clear that in order to bring any credits within the ambit of Section 68 of the Act, the AO should prove that the credit found in the books of accounts of the assessee is unexplained and also the assessee has failed to prove identity, genuineness of transactions and credit worthiness of the parties. In this legal background, if you examine, the credits found in the books of accounts of the assessee in form of share c....
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....sesse, it is the duty of the AO to provide said information to the assessee and also allow opportunity of cross examination, if such opportunity was asked by the assessee specifically. In absence of said information was available to the assessee and also opportunity of cross examination was not given to the assessee, then additions made on the basis of third party information amounts to gross violation of principles of natural justice, as held by the Hon'ble Supreme Court in the case of Kishanchand Chellaram vs CIT 1980 125 ITR 713 (SC). Therefore, we are of the considered view that the Ld.AO was erred making additions towards share capital received from three companies, even though the assesee has discharged, its onus cast upon u/s 68 of the Act, on the basis of third party information without providing such information to the assessee and also to provide cross-examination of the person, who gave statement. Further, as regards, the additions towards share capital, once the assessee has discharged its onus by filing various documents, then the onus shifts to the AO to prove otherwise. Unless, the AO has discharges its onus, by conducting necessary enquiries, he cannot proceed to ma....
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....pon by the Assessing Officer for making the addition. It is noted that on 11/11/2014, Shri Ajay Maheshwari filed an affidavit retracting the statement recorded during survey after 23 days, wherein, he sworn (in the affidavit) that the loans were genuine and there were no corroborative evidence was found at the business premises during survey and the entire Shreedham Builders ITA No.5589/Mum/2017 46 transactions were conducted through banking channel/account payee cheque. As per this retraction, the survey party put mental pressure and the statement was recorded under high BP/hyper diabetic conditions. It is noted that the loan confirmations and copy of ITRs of the concerned parties were filed along with the address of the broker Shri Jitu Bhai. Summons were also issued to Shri Ajay Maheshwari. The addresses of the concerned persons were also filed by the assessee. The Ld. Assessing Officer issued summons under section 131 of the Act to all the lenders and other necessary details were collected from the bank. In response to the summons all the lenders filed their replies on 03/02/2005. The Ld. Assessing Officer observed that most of the lender companies opened their new bank account....
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....g Officer. It is noted that before the First Appellate Authority, the assessee challenged the validity of assessment by raising an additional ground as the assessee was not allowed opportunity to cross examine Shri Pravin Kumar Jain and other material used against the assessee, which was not confronted to it. The Ld. Commissioner of Income Tax (Appeal) vide letter dated 05/07/2016 asked the Ld. Assessing Officer to handover the statements pertaining to Shri Pravin Kumar Jain or its staff members or dummy directors to allow the assessee an opportunity to cross examine Shri Pravin Kumar Jain. The Ld. Assessing Officer was also asked to provide the evidences found during the course of survey action or any evidence that payment was made for obtaining unsecured loans and also efforts so made to examine the loan creditors. The Assessing Officer was asked to conduct necessary enquiries with respect to genuineness of the unsecured loans. The Ld. Assessing Officer vide letter dated 07/01/2017, submitted the remand report as has been reproduced at page-10 onwards of the impugned order. It has been mentioned in para 6.3 of the impugned order that Shri Pravin Jain produced the ledger accounts ....
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....r nor any evidence was brought on record to falsify the claim of the assessee or the authenticity of these documents. Thus, it can be said that the assessee discharged its onus as provided under section 68 of the Act. The interest was paid through banking channel by the assessee on such loans. It is also noted that so far as the disallowance of interest portion is concerned, the same was deleted by the ld. FAA and has not been challenged before this Tribunal by the Revenue further fortifies the case of the assessee. The loans were repaid along with interest before the date of survey i.e. 17/10/2014 and no cash was found during survey further fortifies the claim of the assessee. All the concerned parties appeared before the Ld. Assessing Officer during remand proceedings, the Ld. Assessing Officer recorded their statement and nothing adverse was pointed out even Shri Pravin Jain himself appeared before the Ld. Assessing Officer and even during remand proceedings enquiries were carried out and no adverse remark was made by the ld. Assessing Officer. The assessee as well as the other parties furnished all possible documents evidencing that the loans are not bogus. No cash was found de....