TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 522
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent Order, dated 21.03.2016, passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). 3. The Appellant has raised the following grounds in the Appeal "1. On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in making addition on the basis of statements of Shri Gautam Jain whereas in his statement he had never alleged that the assessee was the beneficiary. 2. On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in not providing opportunity for cross examination of Sh. Gautam Jain whose statements he has relied upon. 3. On the facts and in the circumstances of the case and in law, the Ld. A.O, erred in adding loan amount of Rs.40,00,000/- though there was no evidences in his possession in that regard. He deliberately overlooked the fact that loan was repaid. 4. On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in making addition without doubting genuineness of evidences and transaction: 5. On the facts and in the circumstances of the case and in law, the Ld. A.O. erred in levied interest u/s 234A, 234B. 234C and 234D of the Income Tax Act. 6.....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../2016 passed under Section 143(3) of the Act, the Assessing Officer concluded that the Appellant had failed to discharge the onus cast upon the Appellant to prove genuineness of the transaction and creditworthiness of MGPL. 4.3. Being aggrieved, the Appellant preferred appeal against the Assessment Order, dated 21/03/2016, before the CIT(A). The Appellant filed submissions along with the documents before the CIT(A) who forwarded the documents to the Assessing Officer and called for a remand report. 4.4. The Assessing Officer furnished Remand Report, dated 16/04/2019, pointing out that some of documents furnished by the Appellant were not filed during the assessment proceedings. However, the Assessing Officer also examined the documents and proceeded to give his report after examining the documents and stated in the Remand Report that even if the documents, which according to the Assessing Officer were in the nature of additional evidence, were taken into consideration, there would be no change in the conclusion drawn by the Assessing Officer that the loan transaction of INR 40,00,000/- with MGPL was bogus/non-genuine. Even after taking all the documents into consideration, it can....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... He submitted that the Appellant was of bonafide belief that all the documents filed before the CIT(A) were furnished during the assessment proceedings, and that the same clearly established the genuineness of the transaction and the creditworthiness of the parties. 5.1. He submitted that even during the assessment proceedings for the Assessment Years 2011-12 and 2012-13, the loans taken by the Appellant from MGPL were accepted as genuine by the Assessing Officer. For the Assessment Year 2012-13, assessment was completed under Section 143(3) of the Act and the Assessing Officer had verified the loans received by the Appellant from various parties including MGPL. During the relevant previous year, the Appellant had taken loan from a number of parties including a loan of INR 40,00,000/- from MGPL. The aforesaid loan was taken in the normal course of business and was repaid in full to MGPL before the end of the relevant previous year. Tax was deducted at source from the interest paid to MGPL on the loan and deduction for the aforesaid interest was claimed in the return of income. The receipt of loan, payment of interest and the repayment of loan were thereof were through banking cha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to discharge the initial onus cast upon the Appellant in terms of Section 68 of the Act. He submitted that Gautam Jain Group was engaged in the business of providing accommodation entries. MGPL did not have any business and was engaged in the business of providing accommodation entries and therefore, creditworthiness of MGPL was doubtful. Referring to the Remand Report, the Ld. Departmental Representative submitted that MGPL did not have the requisite financial strength to grant loan to the Appellant. He submitted that the Appellant had not sought cross examination of Mr. Gautam Jain during the assessment proceedings. Further, he submitted the Appellant did not have any inherent right to examine Mr. Gautam Jain, who was not even examined by the Assessing Officer. The onus was on the Appellant to show that the loan transaction was genuine and the Appellant failed to discharge the same. The fact that in preceding assessment year loan transaction with MGPL were accepted as genuine is not relevant as by that time the report of the Investigation Wing was not available with the Assessing Officer wherein it was clearly stated that MGPL had taken accommodation entries. The Ld. Departmenta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as genuine transaction. For the assessment year before us, there was no change in the facts and circumstances except for the report of the Investigation Wing having been received by the Assessing Officer. Even this report from the Investigation Wing pertained to modus operandi of Gautam Jain Group unearthed after search and seizure operation conducted by the Revenue. On perusal of the Assessment Order, it can be seen that the only information regarding MGPL that was available and utilized by the Assessing Officer during the Assessment Year 2013-14, as compared to Assessment Year 2012-13, was that the Appellant had taken accommodation entries from MGPL forming part of Gautam Jain Group. We note that the Assessment Order is absolutely silent regarding MGPL and its activities and does not contain any discussion on the enquiry/investigation, if any, carried out by the Assessing Officer qua MGPL. The fact that MGPL was engaged in providing accommodation entry cannot lead to automatic conclusion that the loan granted by MGPL to the Appellant was an accommodation entry given the fact the Appellant has placed on record various documents to substantiate the loan transaction. In our view, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... initial onus by providing necessary information, details and documents during the assessment/appellate proceedings. Thus, in our view, the onus shifted on the Revenue, and instead of bringing on record any material/information to controvert the claim of the Appellant the Assessing Officer and the CIT(A) neglected to discharge the onus moving on the incorrect premise that the onus still vested with the Appellant. No independent inquiry was conducted by the Assessing Officer. Neither any notice under Section 133(6) nor summon under Section 131 of the Act were issued by the Assessing Officer. Therefore, in our view the addition of INR 40,00,000/- made by the Assessing Officer under Section 68 of the Act in the hands of the Appellant cannot be sustained. 7.3. We note that during the course of hearing the Learned Departmental Representative had cited judgment which, in our view, do not come to the aid of Revenue as the same are distinguishable of facts, inter alia, having been rendered in the context of share capital transaction, whereas in the present case the transaction under consideration is unsecured loan transaction. Similar loan transaction with the same lender was accepted as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the requirements of Rule 46A of the Income Tax Rules, 1962 has been, in spirit, complied with since, remand report on the documents was called by the CIT(A) from the Assessing Officer who despite objecting to the admission of additional evidence provided comments after examining the documents on merits. Further, another perspective to approach this issue could be that since the husband of the Appellant who was managing the affairs of the proprietorship concern was suffering from prolonged illness during the assessment proceedings and had passed away few months after framing of assessment, the Appellant was prevented by reasonable cause, being her husband"s illness, to furnish these additional documents during the assessment proceedings. It is settled legal position that the matter of procedure is a handmaid of justice and substantive justice must always prevail over procedural or technical justice. Accordingly, we have taken into consideration the entire set of documents filed by the Appellant before Assessing Officer and the CIT(A) while adjudicating the appeal. ITA No. 2527/MUM/2022 (Assessment Year 2014-15) 8.1. Both the sides had agreed that facts and issues raise in a....