TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 966
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....832/-. The case of the assessee was selected for scrutiny under CASS and statutory notices were duly issued and served upon the assessee. During the assessment proceeding, the AO observed that assessee had taken unsecured loan from M/s. Fairplan Vincom Pvt. Ltd. to the tune of Rs. 5,23,50,000/- and accordingly, the assessee was called upon to file the necessary evidences/information proving the identity, creditworthiness of the loan creditor and genuineness of the transaction, which were duly filed before the AO. The AO also in order to independently verify the transaction issued notice u/s. 133(6) of the Act to the above lender but the notice was returned unserved. Thereafter, the assessee again provided the correct address and the AO issued summon u/s. 131 of the Act to the said investor through notice server but the same could not be served again. The assessee finally produced the director of the investment company before the AO and his statement was recorded on 13.12.2016 u/s. 131 of the Act. In the said statement, the director of the investor company admitted that he arranged an accommodation entry of Rs. 5,23,50,000/- in the form of unsecured loan to M/s. Super Iron foundry f....
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....as asked to produce the director of company. 5. In this case Cross Examination: the Ld. AO has stated categorically in page No. 4 of the impugned Assessment Order dated 27.12.2016 that Appellant firm was also provided a certified copy of statement of Mr. Ishwar Dayal Sharma. It was also provided for an opportunity of cross-examination. But, the director of the Fairplan Vincom Pvt. Ltd. didn't turn up. He was given some more time but since director of Fairplan Vincom Pvt. Ltd. didn't turned (sic turn) up, the cross examination couldn't take place. Therefore, in the premises, for the reasons aforesaid, there has been in the facts and circumstances of the case, no infraction of any principle of natural justice by the absence of a formal opportunity of oral cross-examination. 5.1.5 Further, the appellant mentioned in para 5 of his Written Submission that he had returned Rs. 47,00,000 out of Rs. 5,23,50,000 and in para 31 of the same, the appellant mentioned that the claimed lender M/s. Fairplan Vincom Pvt. Ltd. had issued cheques/RTGS totalling Rs. 5,23,50,000 of which cheques worth Rs. 47,00,000 were not cleared. Thus, the appellant had received loan of Rs. 4,76,50,000....
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....ter 3 to 4 hours, he was called again and asked to sign in a statement which was already kept ready and Ld. AR also referred to retracted statement wherein the lender stated that the loan given to assessee Shri Sharma is genuine loan and no cash was given by the assessee in lieu of the said loan. The Ld. AR finally argued that the addition made by the AO on the basis of the statement which has been retracted by Mr. Sharma and which too was recorded at the back of the assessee is against the principle of natural justice and therefore additions made on the basis of said statement have to be deleted. The ld. AR submitted that even in the assessment framed in the case of lender u/s. 143(3) of the Act the said transaction of loan has been accepted by the AO and a copy of which is placed at page 62 to 63 of the paper book. The Ld. AR relied on a series of decisions to defend his arguments as under: i) Andaman Timber Industries Vs. CIT 2015 (10) TMI 442 SC) ii) CIT (Exemption) Vs. Mitra Parishad ITAT/91/2018 dated 12.09.2022 (Cal.) iii) Pr. Commissioner of Income Tax Vs. M/s. Sreeleathers ITAT/18/2022 (IA No. GA/02/2022) dated 14.07.2022 (Cal) iv) CIT(E) Vs. Sanskriti Sagar, ITAT/....
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....nged accommodation entries on various dates to the assessee and charged commission in lieu of arranging accommodation entries for the assessee on commission basis. We further note that the said statement was retracted by Mr. Sharma vide affidavit dated 17.02.2017 wherein he has stated that during the course of his attendance before the DCIT, Circle-36, Kolkata his Chartered Accountant was asked to leave the office and he was asked to wait outside his chamber. He further stated that after 3/4 hours of waiting he was called and asked to sign in a statement which was already kept ready. We also note that Mr. Sharma retracted the statement by stating that the loan given to assessee was a genuine loan and no cash was ever given by the assessee in lieu of the said loan. Thereafter, in para 9 of the affidavit, he stated in reply to question Nos. 30 and 31 that loan was in fact given by M/s. Fair Plan Vincom Pvt. Ltd. to M/s. Super Iron Foundry. Considering these facts, we are of the considered view that the addition made on the basis of said statement cannot be sustained. Further, we note that assessee was not allowed cross examination of Shri Sharma despite specific request from the asse....
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....skar Sengupta, learned advocate for the respondent/assessee. The short issued involved in this appeal is whether the Commissioner (Exemption) (CIT(E) was justified in cancelling the registration granted in favour of the respondent society that too with retrospective effect. The learned tribunal has allowed the appeal filed by the respondent taking note of the fact that the opportunity to cross-examine the persons who were in charge of the company which had extended a donation of Rs. 50 lacs to the assessee was fatal. That apart, on facts the tribunal found that the amount of Rs. 50 lacs was being utilised for purchase of property and, therefore, even though the receipt of donation has to be treated as unexplained receipt of the assessee as per Section 68, the addition cannot be made because the assessee itself has applied the entire receipt for the objects of the assessee society. Further, the learned tribunal after taking note of the various decisions of the High Court, on facts, found that the assessee has shown the donation as corpus fund and had applied the same by advance money to the land and building which was shown in the balance-sheet as at 31.3.2011 which was placed bef....
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....uestion of law arises for consideration in this appeal we need to take note of Section 68 of the Act. This provision deals with cash credits. It states that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. The crucial words in the said provision are "assessee offers no explanation". This would mean where the assessee offers no proper, reasonable and acceptable explanation as regard the amount credited in the books maintained by the assessee. No doubt the Income Tax Act places the burden of proof on the tax payer. However, this is only the initial burden. In cases where the assessee offers an explanation to the credit by placing evidence regarding the identity of the investor or lender along with their conformations, it has been held that the assessee has discharged the initial burden and, therefore, the burden shifts on the Assessing Officer to examine the source of the....
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.... stated that mere filing PAN details, balance sheet does not absolve the assessee from his responsibility of proving the nature of transaction. There is no discussion by the assessing officer on the correctness of the stand taken by the assessee. Thus, going by the records placed by the assessee, it could be safely held that the assessee has discharged his initial burden and the burden shifts on the assessing officer to enquire further into the matter which he failed to do. In more than one place the assessing officer used the expression "money laundering." We find such usage to be uncalled for as the allegations of money laundering is a very serious allegations and the effect of a case of money laundering under the relevant Act is markedly different. Therefore, the assessing officer should have desisted from using such expression when it was never the case that there was any allegations of money laundering. Paragraph 5.4 and 5.5 of the assessment order are all personal perception and opinion of the assessing officer which needs to be ITAT 18 OF 2022 ignored. Much reliance was placed on the statement of Shri Ashish Kumar Agarwal, which statement has been extracted in full in the as....
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....uineness of the transaction or establish the creditworthiness of the lender. In the absence of any such finding, we have to hold that the order passed by the assessing officer was utterly perverse and rightly interfered by the CIT(A). The Tribunal re-appreciated the factual position and agreed with the CIT(A). The tribunal apart from taking into consideration, the legal effect of the statement of Ashish Kumar Agarwal also took note of the fact that the notices which were issued by the assessing officer under Section 133(6) of the Act to the lenders where duly acknowledged and all the lenders confirmed the loan transactions by filing the documents which were placed before the tribunal in the form of a paper book. These materials were available on the file of the assessing officer and there is no discussion on this aspect. Thus, we find that the tribunal rightly dismissed the appeal filed by the revenue. 6. For all the above reasons, we find that no question of law much less, substantial question of law arises for consideration in this appeal. 7. Accordingly, the appeal fails and is dismissed. No costs." iv) In the case of CIT(E) Vs. Sanskriti Sagar, the coordinate bench has bee....
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....n by order dated 06.01.2017 with retrospective effect from 01.04.2010 is bad in law; the reasons given by the CIT(E) for cancellation of the registration are contrary to law and on facts. Further it was contended that the registration was cancelled without examining the genuineness of the activities of the assessee and without any evidence whatsoever, the CIT erred in holding that the activities of the assessee are not being carried out in accordance with the objects of the assessee. Further it was contended that the CIT(E) erred in cancelling the registration even though the genuineness of the donations was confirmed by herbicure subsequently. Further it was contended that the CIT(E) cancelled the registration without affording an opportunity to the assessee to cross examine the Director of Herbicure and therefore the order is in violation of the principles of natural justice. Further, the CIT(E) failed to record any satisfaction with regard to the conditions prescribed in Section 12AA (3) of the Act and therefore exceeded its jurisdiction. Further the CIT ignored the fact that there is no iota of evidence that the activities of the assessees are not genuine and the cancellation o....
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....properly taken note of by the tribunal. Further the tribunal ignored the findings rendered by the CIT that the activities of the assessee are not genuine. It is further submitted that the case has to be viewed in its entirety and the nexus has been established which will go to show that the assessee was indeed engaged in money laundering and the order of the Commissioner cancelling the registration was fully justified. The Learned Senior Standing Counsel placed reliance on the decision of the Hon'ble Supreme Court in Commissioner of Income Tax (Exemptions), Kolkata Vs. Batanagar Education and Research Trust 1. We have heard the Learned Advocates appearing for the respondents on the above submissions. 5. In order to invoke the power under Section 12AA(3) of the Act a statutory duty has been cast upon the CIT(E) to examine as to whether the activities of the Trust or Institution are not genuine or are not being carried out in accordance with the objects of the Trust or Institution. Thus, we are required to see as to whether any finding of fact has been recorded by the CIT(E) on these two aspects which are primordial for the exercise of power under Section 12AA(3) of the Act. As....
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....018 case of the department that Herbicure was indulging in money laundering. That by itself would not be sufficient to hold that the assessee was also indulging in money laundering in the absence of any evidence to connect the assessee with the money laundering activities of Herbicure. Thus, after examining the facts, the Tribunal found that there is no evidence to show that the two conditions required to be fulfilled under Section 12AA(3) of the Act, stand attracted warranting cancellation of the registration. Thus, in the absence of any incriminating material to connect the assessee with the money laundering activities of the third party, there was absolutely no justification for cancellation of the registration granted in favour of the assessee that too with retrospective effect. The decision in Batanagar Educational Research Trust is clearly distinguishable on facts as in the said case the Hon'ble Supreme Court took note of the answers given to various questions posed to the managing trustee of the Batanagar Trust. It was held that the Trust therein misused the status enjoyed by them by virtue of registration under Section 12AA(3) of the Act. Further, there was material to ....
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.... interfere with the said order. Accordingly, the appeal is ITAT No. 46 of 2018 dismissed and the substantial questions of law are answered against the revenue." v) In the case of Pr. CIT Vs. M/s. Samapran Synthetics Pvt. Ltd. (supra), the Hon'ble Rajasthan High Court has been held as under: "After hearing the learned counsel for the appellant and going through the various orders passed by the authorities concerned, we find that AO had made additions merely on the statement of Shri Praveen Kumar and Shri Uttam Singh Hinger, whereas, they have already retracted from the statement by way of specific affidavits filed by them. On the other hand, no other evidence was produced by the appellant herein to show that cash was paid by the Company to Shri Praveen Kumar Jain or any other person for accommodating the entries. In these circumstances, we find that the assessee succeeded in proving its identity and bona fide of the shares and the transactions. Thus, it being a pure question of fact, we find no reason to interfere in the impugned order. Dismissed accordingly." vi) In the case of M/s. Lalbaba Seamless Tubes Pvt. Ltd. Vs. DCIT (Supra) the coordinate bench has been held as ....
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....ote that all the companies are active and have invested the money out of their own resources as is apparent from the details filed by the assessee as comprised in from page 58 to 67 of PB. It is also undisputed that a survey was conducted on Shri K.M. Naita who controlled the M/s. Clubside Dealcom Pvt. Ltd. and during survey it was revealed that the said company was providing accommodation entries. However the said fact was never brought to the notice of the assessee during the assessment proceedings of the assessee. We also note that Mr. Sushil Kumar Naita has given a sworn affidavit a copy of which is filed at page 110 of PB stating that no accommodation entry was ever provided to the assessee. We note that said affidavit was available before both the authorities below but has remained uncontroverted. Mr. K.M. Naita was neither examined by the AO nor any cross-examination was afforded to the assessee. It is settled legal position that the statement given during survey cannot be used to make addition in the hands of the assessee unless the assessee was allowed to cross-examine the person who gave statement which was used against the assessee to make the addition. The case of the a....
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....on fact having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this fact findings. Indeed the Tribunal did not really touch the aforesaid fact finding of the Ld. CIT(A) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 463, the Supreme Court has observed as follows: "The Income-Tax Appellate Tribunals performs a judicial function under the Indian Income-tax Act. It is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and records its findings on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law." The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its findings on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tri....