TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 460
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.... by the Gautuam Jain Group, wherein the Mr. Gautam Jain admitted that he and his group of companies are providing accommodation entries like bogus purchases and sales, unsecured loans etc. It was admitted that the accommodation entries of unsecured loans were provided through M/s. Karishma Diamond Pvt. Limited, M/s. Maniratnam Exim Pvt. and M/s. Marine Gems Pvt. Limited. It was noticed that the assessee herein has received funds from the above said three concerns as stated below :- M/s. Karishma Diamond Pvt. Limited Rs. 1,00,00,000/- M/s. Maniratnam Exim Pvt. Rs. 3,85,00,000/- M/s. Marine Gems Pvt. Limited Rs. 2,35,00,000/- Total Rs. 7,20,00,000/- Hence, the Assessing Officer reopened the assessment of the year under consideration by issuing notice under section 148 of the Act dated 8.12.2016. Copy of the reasons recorded for reopening the assessment was furnished to the assessee. In response thereto, the assessee vide letter dated 6.10.2016 objected to the reopening of the assessment. The Assessing Officer disposed of the same, vide his order passed on 21.10.2016. 4. The assessee company is engaged in the business of construction and development of residential/commercial....
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....ived from the parties in question. ii) Copies of bank statements reflecting payments and receipts. iii) Copies of letter given by these parties for cancellation of bookings from the above said three parties. iv) Copy of floor plan of P wing on plot no.32, Sector-5 at Kharghar. v) Copy of sample sale agreement of flat no.101 at 2A, Rohinjan, Panvel vi) Schedule of payments given to the above stated parties in question. vii) Copy of project approval letter (incomplete) which appears to be relating to residential project at Rohinjan, Raigad dated 23-04- 2015. The AO has further observed that the assessee has not submitted details of project approval letter of "Adhiraj Business Centre, Kharghar and complete document of "Samyama Project' at Rohinjan, Panvel, Copy of approved floor plan of 2nd Floor of building 2A, Samyama, Rohinjan, Panvel etc. 7. The AO also examined financial statements of the assessee and noticed that the projects of 'Samyama' at Panvel and Adhiraj Business Centre at Kharghar node was not started or initiated by the assessee company during this period. He also noticed that the approval letter for the Project Rohinjan, Panvel was received on 23-04-2015 o....
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....d in deleting the addition made u/s 68 of the Act if the assessee has discharged the initial burden and the revenue did not take any action on the information furnished by the assessee. 9. It was also submitted that it was common prevalent practice in those days to collect booking advances against flats even before starting of construction. With regard to discrepancies in the advance amounts, the assessee submitted before Ld CIT(A) that the AO has compared the booking advances received from the above said three parties with the amount repaid to them. It was submitted that there was no difference in the amount of booking advances received. 10. The Ld CIT(A), upon consideration of facts of the issue, evidences furnished by the assessee, case laws relied upon by the assessee, took the view that the addition of Rs.7.20 crores is not justified. Accordingly, he directed the AO to delete this addition. The revenue is aggrieved. 11. The Ld D.R submitted that the assessee has received bogus loan accommodation entries under the guise of advances against booking of flats, which fact has come out of the search conducted in the hands of Gautam Jain group. He submitted that the claim of "book....
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.... He has not stated anything with regard to "booking advances" given by his group of companies. Further, he has not referred to the name of the assessee company as one of the beneficiaries of accommodation entries. Accordingly, he submitted the AO could not have placed reliance on the Statement given by Shri Gautam Jain as the same was not confronted with the assessee. With regard to non-receipt of reply in response to the notices issued u/s 133(6) of the Act, the ld A.R submitted that the AO could have issued summons to them, instead of stopping at that stage. He submitted that the assessee has however, furnished confirmation letters and also their financial statements. 13. The Ld A.R further submitted that the assessee, as a seller of flats, is not expected to collect the financial details of the person who books the flats, since it is a case of normal trading transaction. Hence the assessee has furnished all the correspondences, the details of payments, bank account copies etc in order to prove the receipt of booking advances. However, when the AO proposed to examine them in terms of sec. 68 of the Act, then the assessee has furnished financial details of the three creditors and....
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....laced upon his shoulders of the assessee u/s 68 of the Act, the assessee is required to prove three main ingredients, viz., the identity of the creditor, the genuineness of the transactions and the credit worthiness of the creditor. If the assessee discharges the initial burden, then the burden would shift to the shoulders of the assessing officer, i.e., it is the responsibility of the AO to disprove the claim of the assessee by bringing evidences on record. 17. We shall now examine the facts prevailing in the instant case. It is noticed that it is not the case of the AO that the assessee did not discharge the initial burden placed upon it with regard to the advances received from three parties. There is no dispute that the assessee has furnished all the details relating to the three parties in order to discharge the burden placed upon it u/s 68 of the Act. However, it is the submission of the assessee that it has received only booking advances against sale of flats and not loans. Since the said claim has been rejected and the AO has proceeded to make additions u/s 68 of the Act, we prefer to examine the impugned addition in terms of sec. 68 only. We notice that the Ld CIT(A) has ....
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....t in form of 'advance against the booking of the residential units in the under construction building namely "Adhiraj Business Centre" at Kharghar and "Project Samyama" at Panvel. In order to justify the same, the assessee placed on record, the copy of allotment letters issued to the parties. However it was informed that in the subsequent year i.e AY 2013-14, the respective parties requested the assessee company to cancel their booking and refund the advance given by them at the time of booking. 7.2 The appellant has submitted before me that the following were produced before the AO. 1. Details of confirmation, assessment details and copies of Copy of bank account reflecting the payments and receipts as advance from the parties and Schedule of repayment given to the above stated parties in question 2. Copies of letter of provisional allotment of residential units 3. Letter of cancellation of allotment of residential unit 4. Copy of sample sale agreement 5. Copy of floor plan of P Wing 6. Copy of project approval letter The appellant has shown that identity of all the persons who had purchased the residential units and given advance for purchase of the flats is p....
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....ded to the income of the appellant. It was the duty of the AO to utilize the information to prove that the investment made by the persons was not genuine. Once the appellant had discharged its responsibility it was the duty of the AO to make inquires. Nowhere has AO stated that the documents produced by the appellant were not genuine. The has not brought any material on record to show that this money was the appellant's own undisclosed income. On perusal of the assessment order, it is seen that the entire focus of the AO was on the modus operands adopted by Gautam Jain Group of cases to provide bogus accommodation entry of loan. The main reason for making addition u/s 68 was on the basis of information provided by the Investigation Wing. While the information provided by the Investigation Wing can be a starting point of an enquiry, it cannot be a conclusion reached by the AO. The moot point before the AO was to examine the application of section 68 in the case of the appellant. Instead of establishing that the explanation offered regarding the nature and source of credit in the books of the appellant is not satisfactory the AO went to discuss in detail the facts related with Ga....