TaxTMI 
TaxTMI 
2022 (9) TMI 571
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....y, the case was selected for scrutiny and assessment u/s.143(3) of the Act was completed and loss was assessed at Rs..13,67,107/-. Subsequently based on the information received from Investigation wing of the department it was gathered that assessee has taken accommodation entries by way of bogus loans from entities belonging to Shri Pravin Kumar Jain (PKJ) who has been found to be provider of accommodation entry by the investigation of the department. Accordingly, assessment was reopened u/s. 147 of the Act. A satisfaction note was duly prepared in writing, recorded the reasons for issue of notice u/s. 147/148 of the Act and the reasons recorded were supplied to the assessee. The notice u/s. 148 of the Act was duly issued and served on the assessee. 4. Assessee is engaged in the business of construction of property. Subsequently assessee raised various objections in respect of the reassessment proceedings and the Assessing Officer disposed off the objections raised by the assessee and the Assessing Officer after rejecting the submissions of the assessee proceeded to make the addition u/s. 68 of the Act to the extent of loan taken by the assessee from the three parties during th....
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.....com 272 " It was next submitted that no enquiry was done by the Assessing Officer to find out whether the donor had received money from one 'C' as claimed. Nor any inquiry was done to find out whether the sister had in fact earned amounts on account of foreign exchange transactions as claimed by her. The enquiry of a source of source is not the requirement of law." The appellant also vide letter dt. 03.03.2016 (Page 34-40) submitted affidavit of all parties duly confirming the transactions. There is an affidavit of shri Pankaj Jain sworn on March 1st 2016 as a director of M/s. Easy Mercantile Pvt. Ltd, confirming advancing of loan of Rs. 1,00,0,000/, he has also referred to retraction dtd 15/5/2014 of Shri Praveen Jain (Pg. 35-36). The affidavits of other two lenders, being proprietors of their respective concerns, were submitted. These affidavits also refers to retraction of Shri Pravin Jain (Pg 37-40). These affidavits contains their current addresses. The Ld. Assessing Officer only took a ground that notices as issued u/s 131, on registered addresses could not be served. A reference to the statement of Shri Pravin Jain show that nowhere a reference is made to t....
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..... 25-11-16, The seller under statement STATED TO HAVE SOLED AT HIGHER PRICE. ORAL EVIDENCE CANNOT OVER RIDE DOCUMENTORY EVIDENCE. 4.5 Appellant during the course of assessment proceedings had filed 3 affidavits of the loan creditors confirming the genuineness of the transactions. The Ld. Assessing Officer has just ignored such affidavits, once the transactions are confirmed under affidavit, same cannot be disregarded. 4.5.1 In the case of Mehta Parikh & Co. vs. CIT - 30 ITR 181 (SC), ..... 4.5.2 High Court of Bombay in the case of Dilipkumar Roy s. CIT 94 ITR 1 (Mumbai). ..... 4.6 The Ld. Assessing Officer has just relied upon the statement of Shri Pravin Jain U/s.132(4) without providing a copy of the statement and even not evaluating the statement and its retraction during assessment proceeding. No cross examination is allowed. It is well recognized that no statement can be used against the appellant without giving an opportunity of cross-examination. High Court of Delhi in case of C/T vs. Sunil Aggarwal 237 Taxman 512 (Delhi) deleted the addition made of Rs, 1.38 crore based on statement of Mr. S who furnished various details which we....
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....Jain retracted his statement under an affidavit filed thereafter dtd.15/05/14. During assessment proceedings, affidavit of the loan creditors has been filed which reflects address. In the case of M/s. Easy Mercantile Pvt. Ltd, Director Shri Pankaj Kumar Jain, 504, Pawan lndraprasth Complex, Satyanagar, Sal Baba Mandir Road, Borivali (West), Mumbai-400 092, In case of Seven Star Gems, proprietor Shri Mukesh Kumar Gadhiya, filed an affidavit giving its residential address at A302, Rajlaxmi CHS Ltd, Padma Nagar, Bldg No.8, Chikuwadi, Borivali (West), Mumbai-400 092. Similarly M/s. Ryan International, Proprietor Shri Pankaj Kumar Dani gave his residential address at 1105-Bm Upvan Tower, Upper Govind Nagar, Mated (East), Mumbai-400 097. Thus all the addresses were available, acknowledgement of income tax returns as filed in case of 3 creditors along with their PAN as well as their bank statements were submitted. Hence it cannot be said that parties are not available for verification. The Hon'ble Supreme Court in the case of Orissa Corporation 159 1TR 78 (SC) held that merely issuing summon u/s.131 and not perusing, it further is not a proper compliance of legal provision. T....
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.... is no allegation that any cash is passed over by appellant to any of the loan creditors. A copy of affidavit retracting his earlier statement dt15th may 2014 was submitted (Pg. 41-45),he stated that he is in business of diamond trade and finance, entire business activity is genuine(Pg.43). In statement there is no reference to appellant, hence it is a general statement ,of no evidential value, there is a retraction on record, in view of Ld Assessing Officer, the same is rebutted by wing, haw ever there is no evidence brought on record for such rebuttal, in assessment proceeding confirming affidavits are filled (Pg. 35-40). Ld. Assessing Officer has not brought any evidence on record to show any wrong doing on appellant pad. Section 68 casts the initial burden of proof on the assesse to show prima facie and to explain the nature and source of credit found in its books. When the statute places the burden of proof in income tax cases on the tax payer, it is understood to be only the initial burden. When the tax payer explains the credit by providing evidence of identity, confirmation and credit worthiness, the burden shifts on the revenue to show that the explanation is not satisfact....
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....39;ble Appellate Tribunal, Bombay has considered loan /share premium taken from certain entities belonging to Shri Pravin Kumar Jain. It will be apt to refer to decision arrived at in those cases:- 6.1.1 Anil Chhaganlal Jain ITA No.369/Mum/2017 'A' Bench, Mumbai dtd.13/04117.(Pg.149-174) ..... 6.1.2 M/s. Shreedham Construction Pvt. Ltd ITA No. 3754/Mum/2017 A. Y. 2008- 09 'E' Bench, Mumbai dt.14/11/2017.(pg175-214) ..... 7. The Ld. Assessing Officer in the present case has made an addition based on the allegation as made in search report that the loan creditors have taken accommodation entries without bringing anything on record to show that in compensating payment is being made by appellant. It is well recognized that merely an allegation of cash payment is not sufficient for making the addition, cash payment is to be proved by the Ld. Assessing Officer by bringing a definite evidence on record, which is lacking. A reliance is placed on the decision of MOD Creations (P) Ltd, (Delhi) (5.1.5) as well as Gangeshwari Metal Pvt. Ltd (Delhi) (5.1.6). It is also submitted that non-service of notice u/s.131 should not be a groun....
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....fice but at a place at Thane. Certain parallel books of accounts were found to have been kept on a pen drive, statement of certain brokers were recorded who were involved in the business of accommodation as provided in his Pravin Jain Group. The Assessing Officer referred to the loans received by the appellant stated that three lenders were not operating from the address as reflected in the their respective returns of income and were not physically located at their registered address. On going through the bank statement provide by the lender companies it is observed that before making the payment of loans, similar amount is deposited in the bank account of the lender company through unknown source a few days earlier. Company has disclosed a minimum income. The various brokers engaged in providing accommodation entries from bogus concerns have confirmed on oath to be so engaged in accommodation entries. The Assessing Officer concluded that three lenders were the companies belonging to Pravin Kumar Jain were engaged in providing accommodation entries stating so made an addition of 2 Crs. to the income of the appellant. 2.1 The appellant during course of assessment proceeding....
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....dited Rs.36,6671- TDS deducted Rs.3,777/- the amount borne was duly reflected as received in the bank statement of the appellant with Andhra Bank. Seven Star Gems is a proprietary concern of Shri Mukesh Kumar Ghadiya and acknowledgement of return is submitted. The PAN: AMNPG6653N is transaction duly reflected in the bank statement of the said lender party. The amount was repaid on 03/08/09 along with interest has duly reflected in the bank statement of the appellant. The appellant made a request for providing copies of all the, statements, report and affidavits as relied upon for recording of reasons as well as for making the assessment under its letter dated 12/02/2016. However appellant claims same not being provided. It was also submitted that all the parties are income tax assesses having bank account hence their presence should be enforced and parties should be made available for cross examination. The Affidavits of the lenders were submitted under submission dated 03/03/2016 wherein Shri Pankaj Kumar Jain director of M/s. Easy Mercantile Co(p).Ltd. provided his current address, identity, no. of the company, PAN, reference to retraction of Pravin Kumar Jain and confirmed the l....
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.... Mumbai dated 10th April 2017 2) Anil Chhaganlal Jain ITR 369/ MUM /2017 dated 13th April 2017 3) Shreedham Construction Pvt.Ltd., ITA 3754/Mum/2017 datedd 14/11/2017 He has also relied upon certain decision during the course of personal hearing. 2.2 I have given my careful consideration to the fact as summarized by Assessing Officer in the assessment order, written submissions made as well as oral submission made by A R before me during the course of appellate proceedings. I have considered the evidences relied by appellant, there is no dispute that all the three borrowings are through cheques duly reflected in respective bank statements of lenders. All the three lenders are assessed to tax, acknowledgement of their respective returns of income are submitted. Loans are short period loan and were repaid through cheques, much earlier to search action. The AO has not brought on record any material to show any payment of compensatory payment by appellant. Loans are confirmed under duly sworn affidavits of three lenders which are nor rejected. Thus appellant has duly discharged its obligation to prove identity, genuineness as well as credit worthines....
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....the record, tribunal notice that the assessee had discharged the initial burden of proof placed upon it by furnishing the required documents to prove the three main ingredients, viz., the identity of the creditor, the credit worthiness of the creditor and the genuineness of transactions. Tribunal also notice that the AC had summoned the creditor and the creditor also had appeared before the assessing officer and confirmed the loan transactions. Despite these facts, AO chose to place reliance on the general statement given by Shri Bhanwarlal Jain, meaning thereby, there was merit in the contentions of Ld A.R that the Assessing Officer had failed to discharge the burden shifted upon his shoulders. (Para 10) Tribunal noticed that identical addition was made in the case of MIs Reliance Corporation (supra) and the assessee therein also furnished all the relevant details in order to discharge the burden of proof placed upon it u/s 68 of the Act. The creditor also appeared before the AO and confirmed the transactions. The AO, however, made the addition by placing reliance on the statement given by Shri Bhanwarlal Jam. When the matter reached the Tribunal, the division bench delet....
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....m had taken loan from 14 firms out of which loan from four firms were, not found by Assessing Officer as genuine because those firms were, allegedly, related to one "G" involved in providing accommodation entries - Assessing Officer thus invoked section 68 and made addition to assessee"s income on account of unexplained cash credits - Commissioner noticed that lenders were regular income-tax assessee and their PANs were on record - It was also undisputed that amount had been advanced through account payee cheques and further before issuing cheques lenders had got sufficient balance in their account - Moreover, amount had also been repaid through account payee cheques - In view of above, Commissioner (Appeals), taking a view that loan transactions were genuine, deleted addition made by Assessing Officer - Tribunal upheld order of Commissioner (Appeals) - Whether on facts, impugned addition made in hands of assessee was rightly deleted - Held, yes [Papa 5] [In favour of assessee]." In the case of Varinder Rawlley (supra) the Hon'ble High Court has held as under: - "Section 68 of the Income-tax Act, 1961 - Cash credit (Sale of goods) - Assessment year 2002-23 - W....
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..... 7049 & 7050/Mum/2016 and in the case of ITO vs. Vikram Muktilal Vorha ITA No. 842/Mum/2017 for A.Y. 2007-08. After having gone through the case law relied upon by the assessee and in the light of the facts of the present case we find that the Hon'ble High Court in the case of Gagandeep Infrastructure Pvt. Ltd. (supra) has categorically observed that proviso to section 68 has been inserted by Finance Act, 2012 w.e.f. 01.04.2013 and is applicable to A.Y. 2013-14. The court observed that the Parliament did not introduce proviso with retrospective effect not does the proviso introduced to state that it was introduced for removal of doubts. Therefore, it is not open to give retrospective effect. The assessee has also relied upon the decision of the Hon'ble Bombay High Court in the case of Archies Industries Pvt. Ltd. in ITA No. 1433 of 2014 wherein the Hon'ble High Court, after considering the relevant facts and also following the judgment in the case of Gagnadeep Infrastructure Pvt. Ltd. (supra), upheld the above said proposition. The assessee has also relied upon the decision of the Hon'ble Supreme Court in the case of CIT vs. Lovely Exports (2008) 2016 CTR 195 where....
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....e from Daksh Diamonds in the year 2006 was refunded in the year 2010. One has to respect the transactions which occurred more than three years before the search and seizure action by the Department. Thus the addition made by the AO without any documents is devoid of merit. Accordingly, we uphold the order of the Ld. CIT(A). As we have decided the case on facts, we are not adverting to the case-laws relied on by the Ld. counsel," v. Anil Chhaganlal Jain ITA No.369/Mum/2017 'A' Bench, Mumbai dtd.13104/17 In this case a taken loan of Rs. 1.77 crore was taken from M/a. Encee Securities Pvt. Ltd. The lender confirmed the loan. The department made addition as an arranged transaction. It was claimed that lender got its capital on premium from certain companies of Mr Pravin Jain who was searched by investigation wing Mumbai The bench held " In the present appeal, we note that the assessee has duly proved the identity of the party from where loan was taken, therefore, identity is not in dispute, since, the loan was taken through banking channel, and therefore, its genuineness cannot be doubted. So far as, explanation is concerned, the assessee duly explained the sa....
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....to the appellant. The only link is that the investors have invested in appellant company. That the appellant has given cash to the investors in lieu of entry is merely alleged but not demonstrated. Layering of transactions is alleged but not demonstrated. Opportunity for cross examination is not provided to the appellant. Papers/evidence found in the search action raises presumption but the same is available in the case of person searched but not in the case of third parties unless proved and corroborated. Similarly, retraction may be rejected or as motivated, but the same can be considered only against the person who has retracted in his assessment. Such statement in the case of another person loses its sanctity unless opportunity of cross examination is granted and/or is corroborated with other evidences. When the investor company is filing regular return of income and there is a transaction through banking channel, no addition can be made without having any contrary or cogent evidences in possession. Over such issue there are plethora of judgments to support the appellant." Ld CIT(A) allowed the appeal. As per para 13 the Appellate Tribunal dismissed the Revenue's appeal. ....
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....SOT 0234 that in matters regarding cash credit the onus of proof was not a static one. As per the provisions of the section 68, the initial burden of proof lies on assessee. Amount appearing in books of accounts of the assessee was considered a proof against him. He can prove the identity of the creditors by either furnishing their PANS or assessment orders. Similarly, genuineness of transaction could be proved by showing that money was received by an account payee cheque or by draft. Credit worthiness of the lender could be established by attending circumstances. The AO has not pointed out any defect in the above mentioned documentary evidences submitted during assessment proceedings. Without pointing out any lacuna in the evidences submitted by the appellant, the sources and the genuineness of transactions cannot be doubted. Once evidences related to a transaction is submitted before the A.O.; the onus shifts on him to prove these as non-genuine or bogus. The AO has not pointed out any defect in the above mentioned documentary evidences submitted during assessment proceedings. "Without pointing out any lacuna in the evidences submitted by the appellant, the sources and the genuin....
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....ntent that was recorded by the DDIT(inv). The Search operation continued for 9 days and Pravin Kumar Jain in his Retraction affidavit has said that he signed the statement to ensure that the 9 days long search action ends." 19 Considering the documentary evidence filed before the lower authorities, the CIT(A) has recorded categorical findings to the effect that the assessee has discharged the burden cast on him with regard to the identity of the loan creditors, genuineness of the transaction and creditworthiness of loan creditors. The detailed finding so recorded by CIT(A) are as per material on record which has not been controverted by learned DR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the findings so recorded by CIT(A)." I find that during the course of assessment proceeding appellant has filed requisite evidences to prove the identify in the form of acknowledgements of return of income and bank statements. The creditworthiness of the parties is proved by bank statements, transactions being through banking channel and no cash being found deposited in either of their bank account before the issue of cheq....
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....se transactions are transacted from the companies promoted by PKJ and Assessing Officer has verified the transactions and he came to the proper conclusion that the assessee company has availed bogus loan of Rs..2 crores from three entities during this assessment year. The assessee company has failed to offer a satisfactory and authentic explanation about the genuineness, identity and creditworthiness of such loan creditors. Accordingly, he supported the findings of the Assessing Officer. Further he brought to our notice Page No. 51 of the Ld.CIT(A) order and took us through the finding of the Ld.CIT(A) and conclusion reached by the Ld.CIT(A) in his order. He opposed the finding of the Ld.CIT(A) and submitted that assessee has not produced any loan agreement nor declared any security against the loan, he wondered how assessee contacted the lenders and which source. He submitted that assessee not able to produce any parties before the Assessing Officer. Therefore, assessee failed to prove the genuineness of the transactions. He prayed that the finding of the Assessing Officer may be sustained. He submits that the other appeal filed by the revenue is also having similar facts and issu....