TaxTMI 
TaxTMI 
TaxTMI 
2022 (7) TMI 1136
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....Act is bade in law. 2. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in confirming addition of Rs. 1.00 crore made by the A.O. u/s. 68 of IT. Act. The addition of Rs. 1.00 crore u/s. 68 of the Act is unjustified, arbitrary and deserves to be deleted. 3. That on the facts and in the circumstances of the case the assessment order passed u/s. 147 of the Act is violative of principles natural justice as no opportunity was given to the assessee to cross examine Shri Praveen Kumar Jain whose statement was relied by revenue to make the addition u/s. 68 of IT. Act. ITA 179/NAG/2017 - A.Y. 2011-12 "1. That on the facts and in the circumstances of the case reopening of assessment u/s. 148 and consequent order passed u/s. 147 of IT. Act is bade in law. 2. That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in confirming addition of Rs. 50 lacs made by the AO u/s. 68 of IT. Act. The addition of Rs. 50 lacs u/s. 68 of the Act is unjustified, arbitrary and deserves to be deleted. 3. That on the facts and in the circumstances of the case the assessment order passed u/s. 147 of the Act is violative of principles natural just....
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....at the AO ignoring the submissions of the Appellant and without giving the copy of the statement of Shri Praveen Kumar Jain and further without giving any opportunity to the Appellant to cross examine Shri Praveen Kumar Jain, by solely relying on the statement of Shri Praveen Kumar Jain proceeded to complete the assessment by making an addition of Rs. 1,00,00,000 and Rs. 50,00,000 respectively under section 68 of the Act. i. The said additions were confirmed by the CIT (Appeals). The Ld. AR during the course of hearing strongly opposed the actions of the AO and challenged the reopening of the assessment under section 147 as bad in law and further challenged the additions made on merits as well. 2. The Ld. DR relied on the order of the AO as well as Ld. CIT (Appeals) and also filed written submission in support of his arguments. 3. We have heard the rival contentions and perused the material available on record. It is an undisputed fact that the AO has reopened the assessment on the basis of information received from the investigation wing which suggested that the Appellant was a beneficiary of accommodation entries provided by the companies controlled by Shri Praveen Kumar Jai....
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....other hand, the Ld. DR relied on the orders of authorities below. 9. We have heard both the parties, perused the materials available on record and have gone through both the judgments relied by the Ld. AR and find that the facts therein are identical to the facts at hand. In the case of ACIT vs. Axykno Enterprises Ltd. (ITAT No. 154/Nag/2017) it has been held as under: 13. We have heard rival contentions and perused the material available on record. The Assessing Officer has made impugned addition under section 68 of the Act, on the ground that although the assessee proved identity of the subscribers, but failed to prove the genuineness of transaction and creditworthiness of the parties. The Assessing Officer has taken support from the statement of Shri Praveen Kumar Jain, which was given under section 132(4) of the Act at the time of search. Shri Praveen Kumar Jain, had also admitted that he was involved in issuing accommodation entries. Except this, the Assessing Officer has not carried out any independent enquiries in order to verify the genuineness of transaction in respect of alleged share application money received from three companies. The statement given by Shri Praveen ....
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.... charged by the assessee. According to the Assessing Officer, the assessee has not justified issue of share at a huge premium of Rs. 490 per share when there is no business activities and asset base. We do not find any merit in the finding of the Assessing Officer for the reason that the provisions to section 68 of the Act has been inserted by the Finance Act, 2012, w.e.f. 1st April 2013, to treat share capital and share premium within the ambit of provisions of section 68 of the Act. Prior to insertion of provisions of section 68 of the Act, the question of establishing the source of source in respect of share capital and share premium did not arise, This fact has been supported by the decision of the Hon'ble Jurisdictional High Court in CIT vs. Gagandeep Infrastructures Pvt. Ltd., [2017] 394 ITR 680 (Bom.). Prior to insertion of provisions, as per the decision of the Hon'ble Supreme Court in Lovely Exports (supra), if the Assessing Officer regards the share premium as bogus, he has to assessee the shareholders but cannot assess the same as the unexplained cash credit of the company issuing share capital. 15. The assessee has relied upon plethora of decisions in support ....
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....erely on the basis of statements of individuals contrary to such public documents. 10.8. Reliance further placed on CIT Vs. Laxman Industrial Resources Pvt. Ltd. (Delhi HC) (2017) 397 ITR 106 wherein it has been held that the fact that the investigation wing's report alleged that the assessee was beneficiary to bogus transactions and that the identity of shareholders, genuineness etc was suspect is not sufficient. The AO is bound to conduct scrutiny of documents produced by the assessee and cannot rest content by placing reliance on the report of the investigation wing. 10.9. Reliance further placed on CIT Vs. Gagandeep Infrastructure Pvt. Ltd. (2017) 394 ITR 680 (Bombay HC) wherein it has been held that the proviso to s. 68 (which creates an obligation on the issuing Co. to explain the source of share capital & premium) has been introduced by the Finance Act 2012 with effect from 01.04.2013 and does not have retrospective effect. Prior thereto, as per Lovely Exports 317 ITR 218 (SC), if the AO regards the Share premium as bogus, he has to assess the shareholders but cannot assess the same as the issuing company's unexplained cash credit. 16. In this view of the matte....
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....en place through banking channels, therefore the genuineness of the investment cannot be doubted. Hence the AR argued that appellant has discharged its onus and the identity, genuineness and creditworthiness of the four companies were proved beyond doubt The excessive reliance on the statements given by the third-party, i.e., key persons of Pravin Kumar Jam group, whom the appellant does not know is considered to be not proper even without giving the appellant a chance to cross-examine the persons who had given such adverse statements. He further argued that addition was made without providing the appellant the corroborative evidence in the possession of the assessing officer to prove that the appellant has paid the cash, as alleged, against the receipt of cheques on the other hand the learned assessing officer has believed the evidence (supporting documents) submitted before him was engineered to explain bogus investment saying that those were involved in accommodation entries in an organized way are meticulous in arranging the make-believe documents. He further believed that the said key-persons of Pravin Kumar Jain group have given categorical statements stating that they have i....
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....nation about the nature and source of such credits found in the books or the explanation offered by the assesses, in the opinion of the assessing officer, 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 the assessee offers, no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. The opinion of the assessing officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of maternal and other attending circumstances available on the record. The opinion of the assessing officer is required to be formed objectively with reference to the material on record file. Once the explanation of the assessee is unbelievable or false the assessing officer is not required to bring positive evidence on record to treat amount in question as income of the assesses 'Mule-considering the explanation of the assessee, the assessing officer has to act reasonably - application of mind is the sine qua non-for fo....
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.... have made efforts to assess the amounts in the hands of the investors at least on protective basis. Even in case, the creditworthiness of the investors is not proved it will not automatically give license to the assessing authority to make additions in the hands of the recipient under section 68 unless it is proved that it is the unexplained and unaccounted money of the appellant which has been introduced in its books of account in the name of bogus/non-existent entities. As it is observed that, in the instant case, the assessing officer has not made any dent on these lines. On the other hand the appellant has filed all the details and supporting documentary evidence to prove the identity, genuineness and creditworthiness of these three unsecured loan parties. 2.4.9 As seen from the above, the appellant has furnished all the documents and details proving conclusively-the-three ingredients of identity, creditworthiness of the share-applicants and the genuineness of the transaction. The amounts were paid by investors from, their running bank accounts were duly accounted in the books of the appellant as well as the investors as evident, from the audited financial statements filed....
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....mitted documents in respect of confirmation in respect of unsecured loans from the lending parties. It was submitted that the parties had responded to the notices issued under section 133(6) of the Act to the lending parties and had submitted the requisite details. The said loans were advanced through proper banking channels and in this respect, proper identity of the lending parties was proved. Learned AR also relied upon the decision of Hon'ble High Court in the case of CIT v. Kapurchand Mangeshchand, wherein it was held that if unsecured loans were advanced and repaid through account payee cheques, PAN No. of lenders were furnished and lenders had sufficient funds in their bank accounts, no addition can be made under section 68 of the Act. Besides this, learned AR also relied upon the decision of Hon'ble Supreme Court in the case of CIT v. Lovely Export Pvt. Ltd. (2008) 216 CTR 195 (SC) : 2009 TaxPub(DT) 0261 (SC). It was also submitted that since learned Commissioner (Appeals) has taken a balance view after appreciating in detail the documents and the legal position, therefore the present appeal may be dismissed. 11. After having heard the parties at length, we find t....
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....e banking channels and thus the source cannot be doubted. It is a settled law that suspicious howsoever strong may be, but cannot take place of prove. The assessing officer had not made any efforts to show that the transaction with the assessee were sham, fictitious or artificial. Simultaneously, the assessing officer failed to gather any evidence to show that the unaccounted cash of the assessee had changed hands consequently replacing the cheque payments. We have gone through the orders of the Coordinate Bench of ITAT in the case of Anant Shelters (P) Ltd. (2012) 20 Taxmann.com 153 (Mum) : 2012 TaxPub(DT) 2257 (Mum-Trib), wherein the principles with regard to section 68 of the Act has been laid down as under:-- '(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 assesses, in the opinion of the assessing officer, is not satisfactory. It is only then that the sum so c....
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....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 account 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 WOK received by an account payee cheque or by draft. 'Creditworthiness of the lender can be established by attending circumstances. Once the assessee produces evidences about identity, genuineness and creditworthiness of the tender onus of proof shifts to the revenue'.' 13. We have also considered the order of Coordinate Bench of Shree Sachdanand Developers v. ACIT, ITA No. 3292/Mum/15 : 2017 Tax Pub (DT) 1751 (Mum-Trib), ITO v. Shree Dham Construction Pvt. Ltd., ITA No. 3754, 3755, 3756, 2948/Mum/17 : 2017 TaxPub (DT) 5155 (Mum-Trib), wherein under the identical circumstances, the additions made on account of statement given by Pravin Kumar Jain group were deleted. 14. In this case, there is an important undisputed fact that the unsecured loan had already been repaid and in this respect, documents we....