TaxTMI 
TaxTMI 
2022 (9) TMI 1699
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....der of the Ld CIT(A) is against the principle of natural justice as it was passed without affording the opportunity to the Assessing Officer and therefore, same in perverse. 2. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,50,00,000/- in respect of unsecured loans taken from M/s Jayant Securities and finance Ltd and Rs. 85,00,000/- form M/s Jay Jyoti India Pvt Ltd, without considering the fact the companies such as M/s Jayant Securities and Finance Ltd and M/s Jay Jyoti India Pvt Ltd have been prove to be entry provider companies after investigation by DDIT(Inv.), Unit-2(1), Kolkata who disseminated a very important report in respect of the malpractice of accommodation entries by shell companies M/s Jayant Securities and finance Ltd and M/s Jay Jyoti India Pvt Ltd. 3. Whether on the facts in the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,50,00,000/- and Rs. 85,00,000/- ignoring the information available that assessee has taken and accommodation entry from M/s Jayant Securities and Finance Ltd and M/s Jay Jyoti India Pvt. Lt....
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.... from M/s Jayant Securities and Finance Ltd. and M/s Jay Jyoti India Pvt. Ltd. respectively. 6. During assessment-proceeding, Ld. AO treated M/s Jayant Securities and Finance Ltd. and M/s Jay Jyoti India Pvt. Ltd. as paper companies and the loans taken by assessee therefrom as mere accommodation-entries and, therefore, assessed the loans as undisclosed income of assessee u/s 68 of the act. During appellate-proceeding before Ld. CIT(A), the assessee made a detailed submission with documentary evidences to prove that the loans were genuine. The Ld. CIT(A) carefully considered the submission of assessee and deleted addition by holding as under: "5.17 It is clear from the above facts and judicial decisions so discussed above that the AO had made the addition solely on the basis of nonappearance of the Principal Officer before the AO. But in the written reply, the appellant has relied on the decision of Delta Transformer (supra) of Jurisdictional Bench of ITAT, Indore wherein the Hon'ble Bench had given its findings that merely for not producing the cash creditors before the Ld. AO even when all the necessary documents as required to prove the identity, creditworthiness and ....
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.... experience of 26 years. This company is regularly assessed to tax and has also been subjected to scrutiny assessment and the additions made thereon have traveled before Coordinate Bench Ahmedabad in the case of M/s. Jayant Security and Finance Ltd. in ITANo.753/Ahd/2012. We also find that the loan taken from alleged company has been treated as genuine and the additions made in the hands of other loan receivers have been deleted by this Tribunal in the case of M/s Tirupati Construction ITANo.533/Ind/2014 and M/s K.K. Patel Finance Ltd. ITANo.440/Ind/2010. We, therefore, find no reason to doubt the genuineness and creditworthiness of Jayant Security and Finance Ltd. and identity is well proved which has been rightly appreciated by Ld. CIT(A) in order to delete the addition made u/s 68 of the Act at Rs.1.25 cr and interest disallowance at Rs. 8,79,041/-. 12.6. As regards the cash creditor namely M/s Jay Jyoti India Pvt. Ltd. Mumbai we find that this company was incorporated in 1999. As on 31.03.2013 it had share capital of Rs. 6,33,50,500/- and net reserves and surplus of Rs. 1,08,62,25,646/-. Bank statement, confirmation of account, ledger statement, audited financial state....
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....s just a commission of 1.50% on stamps value and for such small income, how can he invest a sum of Rs. 1,21,49,560/-? Ld. AO also issued notices u/s 133(6) and 131 to Shri Nilesh Jain, but there was no response from Nilesh Jain. Finding no response, Ld. AO once again confronted the assessee in the matter, to which the assessee filed following reply: "7. With reference to your query regarding Shri Nilesh Jain, it is submitted that we have already given you the confirmation, PAN No. and income-tax return of Shri Nilesh Jain. Also we are given the copies of registries in which they provide the stamps. Also we have requested you vide in our earlier reply that you may call their records directly at the cost of the assessee. We therefore request you kindly consider the above and oblige." After this reply from assessee, the Ld. AO did not make further efforts and just completed assessment by making an addition of Rs. 24,52,910/-. 11. During appellate-proceeding, Ld. CIT(A) deleted addition by observing as under: "7.2 The appellant has submitted the confirmation duly signed by Shri Nilesh Jain and his income tax return was also submitted by the appellant. (Vouchers ....
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....ing a small amount of commission. Ld. DR submitted that the opportunity cost for making credit-sale would be much higher than earning commission. Ld. DR submitted that the Ld. AO has also served notices u/s 133(6) and 131 upon Nilesh Jain but he has not appeared to support the assessee's stand. Ld. DR submitted that, in such circumstances, it is quite obvious that the nature and source of credit-entry of Rs. 24,52,910/- appearing in books of account of assessee is not satisfactorily explained. Ld. DR further submitted that the Ld. CIT(A) has not dealt with this issue adequately. With these submissions, Ld. DR made a strong contention that the Ld. AO has rightly made an addition of Rs. 24,52,910/-, which must be upheld. 13. Per contra, Ld. AR submitted that the assessee has filed sufficient documentary evidences to Ld. AO during the course of assessment proceeding in the form of A/c Confirmation and Copy of income-tax return of Nilesh Jain. Ld. AR submitted that non-compliance of notices u/s 133(6) / 131 by Nilesh Jain is not within the control of assessee and that is why the assessee has even written to Ld. AO to proceed at his cost. Ld. AR has also invited our attention to the ....
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....l) No. 29855 of 2018, dated 05.03.2019. The relevant paras are reproduced below: "13. The lower appellate authorities appear to have ignored the detailed findings of the AO from the field enquiry and investigations carried out by his office. The authorities below have erroneously held that merely because the Respondent Company - Assessee had filed all the primary evidence, the onus on the Assessee stood discharged. The lower appellate authorities failed to appreciate that the investor companies which had filed income tax returns with a meagre or nil income had to explain how they had invested such huge sums of money in the Assessee Company - Respondent. Clearly the onus to establish the credit worthiness of the investor companies was not discharged. The entire transaction seemed bogus, and lacked credibility. The Court/Authorities below did not even advert to the field enquiry conducted by the AO which revealed that in several cases the investor companies were found to be non-existent, and the onus to establish the identity of the investor companies, was not discharged by the assessee." "15. On the facts of the present case, clearly the Assessee Company-Respondent....
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....ssing Officer, else addition can be made. Interpreting this section, it has been vehemently held in several decisions that section 68 requires satisfaction of all three ingredients, viz. (i) identity, (ii) genuineness, and (iii) creditworthiness. We observe that creditworthiness is also an important ingredient and the same has to be proved by assessee. But, however, the creditworthiness is not satisfactorily proved yet in this case. We observe that the Ld. CIT(A) has also not given meticulous attention to this core point, he has simply iterated submission of assessee or dealt with other aspects. For instance, Ld. CIT(A) has mentioned "Vouchers were also presented before the AO during assessment proceedings who also verified them"; "The Registries and sale deed have been provided to substantiate purchase of stamps. Books of accounts, bills and vouchers have been presented before the AO and been verified by him and no fabrication has been pointed out"; "The appellant has further stated that even if we go as per the version of the AO that Shri Nilesh Jain has not shown the income of sale of stamps in his return of income then also additions must be made in his income and not in the in....