TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 404
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....e and result of the same would be applicable mutatis mutandis to both the appeals under consideration. 3. Brief facts relevant for adjudication of the ITA No.2912/M/2024 are as under: The Assessee, during the AY under consideration, being a partnership firm engaged in the business of developers by filing its return of income offered "nil" income. Meanwhile, information was received from the Director General of Income Tax (Investigation), Mumbai, which reads as under: "4. Meanwhile, information was received from the Director General of Income Tax (Investigation), Mumbai that the assessee is one of the beneficiaries of obtaining accommodation entries purchase from Bhanwarlal Jain group. A search & seizure action u/s. 132 of the I.T. Act 1961 was carried out by the Investigation Wing, Mumbai on Bhanwarlal Jain and Rajesh Bhanwarlal Jain and also certain covered namesake/ dummy directors/partners/proprietors of various concerns that were managed, controlled and operated by Bhanwarlal Jain, Rajesh Bhanwarlal Jain and Manish Bhanwarlal Jain. During the course of search, statement u/s 132(4) of the IT Act, 1961 of the above person has been recorded and all of them categoric....
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....said parties, in response to which the confirmation and copy of bank statements were received through courier/post. However, the AO finding the details filed as insufficient to establish the identity, creditworthiness and genuineness of the transactions, issued a questionnaire along with show cause notice to the Assessee, for furnishing details or documents qua the following transactions carried out by the Assessee: S. No. Name of the party Amount received during the year consideration Interest claimed 1. Suman Export 1,32,28,483/- 8,09,425/- 2. Suman Export 1,75,00,000/- 3. Meenaxi Diamond 30,48,822/- 54,247/- 4. Meenaxi Diamond 50,00,000/- Total 4,07,77,305/- 8,63,672/- 5. The Assessee in response to the notice and questionnaire, filed its explanation vide letter dated "Nil", which was received by the AO in its office on 24.02.2016. The relevant portion of the reply reads as under: "5.5 In response to the same, the AR of the assessee filed its explanation vide letter dated NIL received in this office on 24.02.2016 the relevant portion of the same is reproduce as under; "Vide the above no....
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....iv) Statement of accounts and annual report etc. Further, the Assessee also demonstrated that the aforesaid companies had sufficient bank balance during the period, when the loans of Rs. 1,25,00000/- and Rs. 50,00,000/- respectively by the M/s. Suman Exports and M/s. Meenaxi Diamonds Pvt. Ltd., were given to the Assessee. The Assessee also demonstrated the turnover of M/s. Suman Exports and M/s. Meenaxi Diamonds Pvt. Ltd. respectively to the tune of Rs. 211.24 crore and Rs. 166.16 crore. The Assessee by submitting the ledger copies also claimed and established that it has repaid the unsecured loan amounts during the F.Y. 2014-15. The Assessee also claimed that it has also paid the interest on the aforesaid cash credits and the interest expenditure claimed by the Assessee has also been offered as income by the lenders in their return of income. 6. The AO by considering the claim of the Assessee though accepted that the Assessee has taken unsecured loans of Rs. 1,25,00,000/- from M/s. Suman Exports and Rs. 50,00,000/- from M/s. Meenaxi Diamonds Pvt. Ltd. totaling to Rs. 1,75,00,000/- as against alleged amount of Rs. 4,07,77,305/- which was mentioned in the show cause notice alo....
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....3,672/- as claimed by the Assessee and added to the total income of the Assessee, by holding as under: "5. Claim of interest expenses on bogus unsecured loans: In view of the discussion in preceding para it is proved that the assessee has introduced his unaccounted money by way of loan from the above parties mentioned, it is further noticed and has claimed interest expenses on the above unexplained loans amounting to Rs. 8,63,672/- as discussed. As the original cash credit is found to be bogus therefore the claim of interest on the bogus cash credit is not the actual expenditure but an accommodation entry as such the aforementioned interest expenditure of Rs. 8,63,672/- is disallowed and added to the total income of the assessee. Penalty proceedings u/s 271(1)(c) of the act are separately initiated for furnishing inaccurate particulars and concealment of income." 7. The Assessee, being aggrieved, challenged the said additions before the Ld. Commissioner, who more or less on the same reasoning as given by the AO, affirmed the aforesaid additions of Rs. 1,75,00,000/- and Rs. 8,63,672/-, by reiterating and holding mainly as under: "That Bhanwarlal Jain was "an acc....
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.... being satisfied with the confirmation of copy of bank statement received through courier/post issued the show cause notice to the Assessee for furnishing the details. In response to the same, the Assessee vide letter dated "Nil" received by the AO on 24.02.2016 as noted in the assessment order, filed the following relevant documents, which were neither controverted and nor in denial by either of the authorities below: 1. Suman Export: A. Ledger A/ c for the period of 01/04/2012 to 31/03/2013. B. Confirmation of Accounts for A.Y. 2013-14. C. Copy of Pan Card of proprietor Mr. Ramniwas Jairam Choyal. D. ITR Acknowledgement of proprietor Mr. Ramniwas Jairam Choyal. E. Tax Audit report for the year ending 31/03/2013. F. Copy of Bank Statement of Suman Export. II. Meenaxi Diamonds Put. Ltd.: A. Ledger A/ c for the period of 01/04/2012 to 31/03/2013. B. Confirmation of Accounts for A.Y. 2013-14. C. Copy of Pan Card. D. ITR Acknowledgement for A. Y. 2013-14. G. Annual Tax Audit report for the year ending 31/03/2013. E. Copy of Bank Statement of Meenaxi Diamonds P ....
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....at this would establish that there were indeed real creditors; that they have indeed the funds available with them; that the transactions were genuine. 9.4 The Jurisdictional High Court in the case of HR Mehta vs. Assistant Commissioner of Income Tax, Mumbai (2016) 72 taxmann.com 110 (Bom.) as well, has also taken into consideration the peculiar facts, where the loan was advanced and repaid through account payee cheques, then the AO should have provided the Assessee the material used against him apart from providing him an opportunity to cross-examine the witnesses whose statements were relied upon. The opportunity to the Assessee to meet the case against the Assessee by providing the material sought to be used against the Assessee before passing the order of reassessment if not having been done so, then the denial of such opportunity goes to the root of the matter and strikes at very foundation of the reassessment, therefore renders the orders passed by the CIT(A) and Tribunal vulnerable. 9.5 The Hon'ble Gujarat High Court in the case of Pr.CIT vs. Ambe Trade Corp (P) Ltd. (2022) 145 taxmann.com 27 (Guj.) has also dealt with the situation wherein the Assessee has furnish....
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.... Representative for the Appellant were placed before the Assessing Officer during the assessment proceedings. A perusal of the extract of bank statement of the lenders furnished by the Appellant shows that there were no cash deposit/ withdrawal during that limited period. Since the Appellant had placed the aforesaid information/ documents along with the financial statements of the lenders before the Assessing Officer, the Appellant had, in our view, discharged the primary onus cast upon the Appellant under Section 68 of the Act. The Assessing Officer brushed aside the documents/ details furnished by the Appellant by merely stating that the lenders-concerns giving loan to the Appellant were part of the Bhanwarlal Jain Group and that the Appellant had failed to provide any evidence of identity & creditworthiness of the lender and the genuineness of the transaction. We note that the assessment order as well as the order passed by the CIT(A) are silent as to inquiry, if any, conducted by the Assessing Officer. There is no reference to any material on the basis of which additions under Section 68 of the Act were made by the Assessing Officer. From the facts and circumstances of the case....
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.... Laxmi Diamods 29.11.2012 50,00,000 26.12.2012 50,00,000 120 Malhar Exports 26.07.2012 16.08.2012 30,00,000 5,00,000 21.01.2013 35,00,000 130 Meenakshi Exports 28.05.2012 60,00,000 31.03.2013 60,00,000 138 Navkar Diamond 23.11.2012 55,00,000 12.01.2013 55,00,000 148 Parvati Exports 25.09.2012 160,00,000 02.01.2013 28.01.2013 56,00,000 104,00,000 157 158 Prime Star 26.07.2012 110,00,000 07.11.2012 09.02.2013 22.02.2013 27.02.2013 (part) 20,00,000 50,00,000 20,00,000 20,00,000 98 100 101 102 Suman Exports 04.10.2012 100,00,000 14.06.2013 100,00,000 Total 630,00,000 Total 630,00,000 22.2. The facts and circumstances being identical to Assessment Year 2012-13, adopting the reasoning given in paragraph 15 to 15.2 above while allowing Ground No. 2 raised in appeal for the Assessment Year 2012-13, we allow Ground No. 2 raised in the present appeal and delete the addition of INR 6,30,00,000/- made by Assessing Officer under Section 68 of the Act. Thus, Ground No. 2 raised by the Appe....