TaxTMI 
TaxTMI 
2018 (10) TMI 1917
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....earch and seizure operation in the case of Shri Bhanwarlal Jain Group by the Investigation wing of the Department and in the course of proceedings it was established that these persons are in the business of providing accommodation entries to various beneficiary companies. He observed that M/s. Meenaxi Diamonds Pvt. Ltd., M/s. Roshan Gems Pvt. Ltd, and M/s. Abhiman Gems Pvt. Ltd., have provided accommodation entries as these companies were managed by the Shri Bhanwarlal Jain Group. In order to verify the genuineness of the transactions Assessing Officer issued notices u/s.133(6) of the Act to the above parties and all the companies responded to the notices and filed necessary information regarding transactions made with the assessee. However, the Assessing Officer relying on the statements of Shri Bhanwarlal Jain Group concluded that the companies have provided only accommodation bills to the assessee and therefore the assessee has not proved the nature and source of the transactions. Accordingly, he made addition u/s. 68 of the Act treating them as unexplained credits. On appeal Ld.CIT(A) deleted the addition based on the submissions and information/evidences furnished by the asse....
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.... credit worthiness of the creditors have been proved and therefore no addition is warranted u/s. 68 of the Act. 6. Ld. Counsel for the assessee placed reliance on the following decisions in support of his submissions: - a. ACIT vs. Sumit J. Jain (ITA No. 145/M/17) b. ACIT vs. Shri Vashu Bhagnani (ITA.No.5648/M/16) c. ITO vs. Gujarat Construction (ITA No. 7040/M/16) d. DCIT vs. M/s YRV International (ITA No. 1414/M/17) e. ACIT vs Shri Dilip Chimanlal Gandhi (ITA No. 7079/M/16) f. ACIT vs Rajesh M. Shah HUF (ITA No. 7079/M/16) g. DCIT vs Meridian Chem Bond P. Ltd (ITA No. 7385/M/16) h. M/s Reliance Corporation vs. ITO (ITA No. 1069 to 1071/M/17) 7. We have heard the rival submissions, perused the orders of the authorities below. Assessing Officer made addition by placing reliance merely on the statements of Shri Bhanwarlal Jain Group which were recorded u/s. 132(4) of the Act. No independent enquiry was carried out by the Assessing Officer, he has not brought any corroborative evidence to substantiate that the transactions are non-genuine. Assessee provided various evidences to establish that the transactions are genuine, creditors are identifiable and c....
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.... 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 statements of the creditors, audited balance sheet of the creditors cannot be taken note of. Fourthly, the ITAT Mumbai in the case of Anant Shelters P Ltd. (2012) 20 taxmann.com 153 has laid down certain principles with regard to section 68 which the AO is bound to follow. They are reproduced as under(para-7)- (i) Section 68 can be invoked when following three conditions are satisfied - (a) when there is credit of amounts in the books maintained by the assessee (b) such credit has to be a sum of money during the previous year (c) either the assessee offers no explanation about the nature and source of such credits found in the books or the explanation offered by the assessee, in the opinion of the AO, is not satisfactory. It is only then that the sum so credited may be charged to income-tax as the income of the assessee of that previous year. (ii) The expression the assessee offers no explanation means th....
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....ing 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. Fifthly, the Honorable Supreme Court in the case of Lovely Exports Private Limited, (2008) 216 CTR 195 (SC), has stated that the AO is at liberty to bring to tax the amounts in their respective hands of the creditors if their identity, genuineness and creditworthiness is not proved. The AO should have made efforts to assess the amounts in the hands of the creditors at least on protective basis. Lastly, even if the creditworthiness of the creditors is not proved it will not automatically give license to the AO to make additions in the hands of the assessee u/s 68 unless it is proved that it is the unexplained money of the assessee which has been introduced in its books of account in the names of bogus/non-existent entities. In the instant case the AO has not made any dent in these lines. On the other hand, the appellant has filed the following details in the case of all the three creditors to pro....