TMI Blog2019 (11) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... from Kunal Gems filed by the assessee and the bank statements showing loan and repayment. He has not done so. Also we find that the ld. CIT(A) confirmed the addition made by the AO after examining (i)the statement recorded on oath u/s.132(4) dated 01.10.2013 of Shri Praveen Kumar Jain, (ii)the statement of Shri Nilesh Parmar, proprietor of M/s. Mohit International recorded u/s.131 dated 02.10.2013, (iii) note on the findings of search action u/s. 132 by the Investigation Wing of the Department in the case of Shri Praveen Kumar Jain group. The ld. CIT(A) could have remanded the matter to the AO u/s. 250(4) of the Act to make further enquiry before disposing of the appeal. To arrive at a finding without any verification of the transactions, would lead anyone to the realm of pure conjectures. The reliance placed by the ld. DR on the decision in McDowell Co. Ltd [ 1985 (4) TMI 64 - SUPREME COURT] is misplaced as in the instant case the AO has not done any enquiry. It is well-settled that u/s.68, the primary onus as to the receipt of the amount is on the assessee to show the identity of the lenders, their creditworthiness and the genuineness of the transactions. Only wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to ₹ 10,15,730/- after giving effect to the order of the CIT(A). Subsequently, the AO received information from the Investigation Wing of the Department that the assessee had taken accommodation entry amounting to ₹ 10,00,000/- from M/s. Kunal Gems, a concern controlled by Mr. Praveen Kumar Jain. On the basis of the above information, the AO reopened the assessment by issuing notice u/s.148 dated 30.03.2015 to the assessee. In response to the said notice, the assessee vide letter dated 02.04.2015 requested the AO to treat the original return filed on 27.09.2008 as the return filed in response to notice u/s. 148. 4. In appeal, the ld. CIT(A) held that the assessee was a beneficiary in as much as the unsecured loan has been claimed to have been taken from Kunal Gems, which was a Praveen Kumar Jain group entity and it had not disclosed that it had taken accommodation entries of unsecured loans from Praveen Kumar Jain group. Further, it was observed by him that there was definite failure on the part of the assessee to disclose true and full material particulars in respect of its income. With the above observations, the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court cautioned that the power of assessment is not one of review and that it does not admit of information of a second opinion. The scope of the phrase reason to believe was examined by the Supreme Court previously in M/s. Phool Chand Bajrang Lal and Anr. v. Income Tax Officer and Anr., (1993) 203 ITR 456 (SC). In Phool Chand, the court made observations which remain undisturbed in Kelvinator: Thus, where the transaction itself on the basis of subsequent information, is found to be a bogus transaction, the mere disclosure of that transaction at the time of original assessment proceedings, cannot be said to be disclosure of the true and full facts in the case and the I.T.O. would have the jurisdiction to reopen the concluded assessment in such a case. It is correct that the assessing authority could have deferred the completion of the original assessment proceedings for further enquiry and investigation into the genuineness to the loan transaction but in our opinion his failure to do so and complete the original assessment proceedings would not take away his jurisdiction to act under Section 147 of the Act, on receipt of the information subsequently . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the accommodation entries to various beneficiaries have been given in cheque/RTGS which have been routed through the bank account of the bogus concerns of Praveen Kumar Jain group. Against the cheque/RTGS, equivalent amount of cash is received from those beneficiaries through the Angadias and the recorded transactions are routed through banks and the same get reflected in the regular books of accounts of the benami concerns of Praveen Kumar Jain group. With the above observations, the AO made an addition of ₹ 10,00,000/- as unexplained cash credit u/s. 68 of the Act. Further, he disallowed the interest of ₹ 58,849/- to M/s. Kunal Gems against the above loans. 10. In appeal, the ld. CIT(A), confirmed the addition made by the AO after examining (i)the statement recorded on oath u/s.132(4) dated 01.10.2013 of Shri Praveen Kumar Jain, (ii)the statement of Shri Nilesh Parmar, proprietor of M/s. Mohit International recorded u/s.131 dated 02.10.2013, (iii) note on the findings of search action u/s. 132 by the Investigation Wing of the Department in the case of Shri Praveen Kumar Jain group. 11. Before us, the ld. counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, we discuss the case laws relied on by the ld. DR. In the case of McDowell Co. Ltd (supra), the issue was tax avoidance and the Hon ble Supreme Court held that Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by restoring to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subterfuges. Courts are now concerning themselves not merely with the genuineness of a transaction, but with the intended effect of it for fiscal purposes. No one can now get away with a tax avoidance project with the mere statement that there is nothing illegal about it. In the case of Divine Leasing Finance Ltd (supra), it is held that if the Revenue merely issues summons u/s.131 and does not pursue the matter further, the assessee does not become responsible for the same, even if the creditors do not appear and addition cannot be made u/s.68 of the Act. In the instant case, the AO has made an addition of ₹ 10,00,000/- as unexplained cash credit u/s. 68 and simultaneously disallowed inter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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