TaxTMI 
TaxTMI 
2024 (2) TMI 274
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....rties. It was alleged by the AO that the parties from whom unsecured loans were accepted by the assessee are paper/shell companies and managed by the entry provider Shri Mukesh Banka. The basis of such an allegation was the search proceedings carried out in the case of Shri Mukesh Banka group where certain evidence were found and statement of Shri Mukesh Banka was recorded under section 132(4) of the Act. Accordingly, it was unearthed that Shri Mukesh Banka is engaged in the activity of providing bogus accommodation entry in the form of unsecured loan, share capital or other forms through various paper/shell companies controlled and managed by him. As such, Shri Mukesh Banka has appointed dummy directors in those paper/shell companies. The paper/shell companies were not found on their given addresses after the search proceedings. On analysis of the bank statements of those companies, it was noticed that huge amounts of cash were withdrawn from their bank accounts. Further, based on analysis of bank statements, various beneficiaries of accommodation entries were identified, and the present assessee company was one of them. 3.1 Based on the above, the AO found that the assessee comp....
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....affidavit of Shri Mukesh Banka for retraction of his statement, copies of affidavit by the loans parties that they have no connection of whatsoever with Mukesh Banka. 5. The learned CIT(A) after considering the facts in totality deleted the addition made by the AO. The relevant finding of the Ld. CIT(A) is available on pages 22 to 36 of his order. 6. Being aggrieved by the order of the learned CIT(A) the revenue is in appeal before us. 7. The learned DR before us submitted that the loan companies were formed same day, at the same address and having same email ids. All the affidavits furnished by assessee were similarly worded and notarized from one person on the same date. Furthermore, only the Ledger copy was submitted by the assessee to justify the re-payment of the loan received by it. As such, there was no bank statement furnished by the assessee of the loan parties. As per the ld. DR, there was no need to furnish the opportunity of cross examination as there was sufficient collateral evidence against the assessee that the assessee had received bogus loans. The learned DR in support of his contentions has relied on the judgements discussed below: 1. Swati Bajaj  ....
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....and his statement recorded during the search. However, we note that the learned CIT(A) has given categorical finding that the search materials and statement relied upon by the AO for making addition against the assessee were neither supplied to the assessee for rebuttal nor the opportunity of cross examination of Shri Mukesh Banka has been provided. The relevant finding of learned CIT(A) reads as under: In brief, considering the facts of the case in light of the provisions of the Act, as eleborated by various courts as discussed in previous para, I hereby note that the show cause notice 05/04/2021 issued by the AO was not accompanied with material/information/copies of statements of Shri Mukesh Banka/copies of bank statements of paper/shell companies and other relevant information forming the basis of show cause notice, despite written request of the appellant, neither the information/ material collected at the time of search on Shri Mukesh Banka nor the copies of his statements which were being relied upon to draw adverse inference against the appellant were furnished by the AO to the appellant. Further, the written request of the appellant for cross-examination of Shri Mukesh B....
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....td. is found to be acceptable and the consequent disallowance resulting in addition to income made for Rs. 19,39,60,866/-, is directed to be deleted." 4. The ITAT by its judgment dated 16th May, 2014 relied on the self-same reasoning and dismissed the appeal of the revenue. Likewise, the High Court by the impugned judgment dated 5th July, 2017, affirmed the judgments of the CIT and ITAT as concurrent factual findings, which have not been shown to be perverse and, therefore, dismissed the appeal stating that no substantial question of law arises from the impugned order of the ITAT. 9.2 Be that as it maybe, the issue on hand has bearing on the provision of section 68 of the Act. The provision of section 68 of the Act suggests that if there is any sum credited in books of account maintained for the any previous year, then the assessee is required to offer proper and reasonable explanation regarding nature and sources of such credit to the satisfaction of the AO. Thus, the primary onus lies with the assessee to explain the source of credit in the books. Over the period, the Hon'ble Courts have laid down that the assessee to discharge its onus is required to furnish evidence with r....