TaxTMI 
TaxTMI 
2023 (3) TMI 512
X X X X Extracts X X X X
X X X X Extracts X X X X
....d for issuing notice under section 148 of the Act is that the Sales Tax Department shared information with the Income Tax Department about certain hawala dealers, who are involved in providing bogus accommodation entries/bogus loan accommodation entries. It was noticed that the assessee is also one of the beneficiary of the above said dealers and this information was shared by the ITO-14(1)(3), Mumbai with the Assessing Officer of the assessee. It was noticed that the assessee had availed bogus purchase/accommodation entries as detailed below :- Sr. No. Name of the Hawala operator PAN Transaction Amount 1. Atharva Business Pvt. Ltd. (Faststone Trading (I) Pvt. Ltd.) AAACF9430A 1,76,95,000 2. Josh trading Co. Pvt. Ltd. AACCJ4233H 40,30,000 3. Nakshatra Business Pvt. Ltd. (Hema Trading Co. Pvt. Ltd.) AABCH4279G 23,00,000 4. Olive Overseas Pvt. Ltd. (Realgold Trading Co. Pvt. Ltd.) AACCR4512K 30,00,000 5. Viraj Mercantile Pvt. Ltd. AADCV3852H 1,41,00,000 TOTAL 4,11,25,000 3. Based on the above said information the Assessing Officer issued notice under section 148 of the Act. We notice ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es under section 68 of the Act and also disallowed interest expenditure of Rs. 12.17 lakhs relating to the above said loan. 5. In the appellate proceedings, the learned CIT(A) deleted the disallowance and addition and hence the Revenue has filed this appeal before us. 6. The Ld D.R, on the contrary, placed his reliance on the assessment order and submitted that the AO has made the addition, since there was credible information that the assessee has availed loans from entities providing accommodation entries. Accordingly, he submitted that the Ld CIT(A) was not justified in deleting the addition. 7. The ld A.R, on the contrary, submitted that the AO has made addition u/s 68 of the Act. The assessee has furnished all the details relating to unsecured loans availed by it and has thus discharged the onus placed upon it u/s 68 of the Act. Hence the AO was not justified in making addition u/s 68 of the Act. He further submitted that the AO has also issued notices u/s 133(6) of the Act and the above said parties have also duly replied by furnishing necessary documents. He submitted that the AO did not disprove the above said documents and hence there is no scope to disbelieve the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Confirmation 188 Yes Active Audited Accounts 190-207 Income Tax Return 189 Ledger A/c 208 4,11,25,000/- A perusal of the above said details would show that the assessee has furnished all the details required for the purpose of discharging the initial onus placed upon it u/s 68 of the Act. Once the initial onus is placed upon the assessee, then the burden to disprove the same would shift to the shoulders of the assessing officer. We noticed that the AO has issued notices u/s 133(6) of the Act to the above said parties and they have also responded to the notices by furnishing the details that were called for. Though the AO has stated that the inspector of income tax could not find above said parties in the addresses given by them, the details of any of his report was not given to the assessee nor its explanation was called for. Hence no credence could be given to the so called report given by the Inspector. At the end, the AO has only placed reliance on the statements given by Praveen Kumar Jain and two others and those statements w....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Pravin Kumar Jain and his related parties. However, as stated by the Learned Representative for the appellant, neither Shri Pravin Kumar Jain nor any other related parties has ever mentioned about meeting the appellant or having personal knowledge of the Directors of the appellant. It was further argued, that even those statement have been retracted. It was further argued that no cross-examination of these parties was given by the AO to the Assessee. It is submitted by the appellant that it has been held in various cases that non-granting of cross-examination results in quashing of the entire order. It has been so held by the jurisdictional High Court in the case of H. R. Mehta v. Asst. CIT - Income Tax Appeal No.58 of 2001 that if cross-examination is not granted to the Assessee then the entire order gets vitiated and hence deserves to be quashed. A similar view is taken by Bombay High Court in the case of CIT v. Ashish International Income Tax Appeal 4299 of 2009. Further in the case of CIT v. Sunita Dhadda - D.B. Tax Appeal 197/ 2012 which has been affirmed by Honourable Supreme Court in the case of SLP (Civil) Diary No.9432 of 2018 it has been held that if the copy of the stat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th law. Further in the case of PCIT V Paradise Inland Shipping P. Ltd.-255 Taxman 160 (SC) which affirmed the Judgment of the Bombay High Court in CIT vs Paradise Inland Shipping P. L Income Tax Appeal No. 66 of 2016 it has been held that the AO cannot make an addition u/s 68 merely on surmises especially when the Assessee has furnished various details and evidences including those in the form of Government records. The AO is not empowered to make an addition u/s 68 totally disregarding the said evidences and without raising even slightest doubt about the genuineness of the said documents. In fact the Hon'ble Supreme Court has in the case of CIT V. Orissa Corporation Ltd. 159 ITR 78 (SC) held that even if summons or notices u/s 133(6) are served on the party, but he does not appear before the AO, then the Assessee cannot be faulted for the same and no addition could be made in the hands of the assessee on the ground that the party has not appeared before the AO. Further it has been held in the case of CIT v. Creative World Telefilms (2011) 333 ITR 100 (Bombay) that if the Assessee has furnished detailed evidences in support of its claim and if the AO is not satisfied with the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... made through banking channels. The Assessing Officer ignored the documentary evidences submitted by the assessee and has exclusively relied on statements of third party in making the addition. The ITAT Mumbai deleted the addition after considering the decision of Satish N.Doshi HUF vs ITO (Mumbai ITAT) ITA No 2329/Mum/2009 and decision of Shaf Broadcast Pvt Ltd v/s ACIT ITA No.1819/Mum/2012 and held that appellant has proved the identity, credit worthiness and genuineness of loans, then addition cannot be made. 5.3.7 Further, in the recent judgment of Shri Jafferali K.Rattonsey v/s DCIT reported in 5068/Mum/2009, the Mumbai Bench of the Income Tax Appellate Tribunal has also held that the mere statement of a person cannot be a deciding factor for rejecting the genuineness of the purchase of shares by the assessee specially when all other supporting evidences filed by the assessee were neither proved to be false or untrue The Hon'ble ITAT Mumbai in the case of ITO vis Anand Shelters Pvt Ltd (2012) 20 Taxmann.com 153 has enumerated certain principles which would be extremely useful in understanding the issue in hand. It has been stated in the said judgment that over the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....M/2017 (2019), the ITAT Mumbai held that addition u/s 68 cannot be made when the assessee has provided all the information in order to prove identity, genuineness and credit worthiness of the party. The relevant paragraphs are reproduced hereinbelow :- We have heard the rival submissions of both the parties and perused the material on record including the case laws cited by both the parts The undisputed facts are that assessee has raised money by way of share capital and share application money from 12 parties during the Financial year 2008-07 from Shri Pravin Kumar Jain group companies. A search conducted on the said group revealed that the salt group was engaged in providing hawala accommodation entries without any business. This was also confirmed by the directors during the recording of their statements during search. So the AO treated the entire money raised as bogus share capital and share application money just on the basis of statements of the directors of these companies it is also pertinent that the assessee's name was nowhere mentioned by the said entities during search to be beneficiaries of such entries During the course of assessment proceedings the asses....