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2022 (12) TMI 199 - AT - Income TaxUnexplained Credit u/s 68 - unexplained transaction entered into by the assessee - onus to prove - sham transaction and an accommodation entry against payment of unaccounted income - Reliance on statement recorded under s.131 - CIT-A deleted the addition - HELD THAT:- We notice that the allegation of alleged accommodation entry of receipt/repayment of existing loans receivable by assessee from M/s. Sunderdeep Builders is largely centered around a statement recorded under s.131 of the Act of Accountant, Deepak M. Gajjar of Venus Group in which he has merely deposed that the unaccounted cash books were written by him as per the direction of Ashok Sunderdas Vaswani and such day cash book was handed over to one Vasibhai at Crystal Archade as per directions of Ashok Sunderdas Vaswani/Venus Group. The signatures on the unaccounted day cash book were stated to be put by Shri Deepak Budharmal Vaswani and / or Ashok Sunderdas Vaswani of Venus Group. The documents seized were eventually linked by AO to the assessee read with the statement of Mr. Gajjar and the impugned additions were carried out. Statement of a witness who has no knowledge of relevant facts towards receipt of cash from assessee is not entitled to any weight and is not pertinent in so far as assessee is concerned. Inexplicably, while implicating a third party with grave charges, no enquiry has been made by AO from key persons i.e. Vaswani brothers to elicit any credible information, despite specific request & suggestion from the assessee as recorded in para 8.3 of the assessment order. In the absence of any examination of the key persons, the contest by way of cross examination thereon by assessee was also stonewalled. Primary onus in the instant case, squarely lied upon the Revenue and that to justify it with direct or circumstantial evidences. The onus rested upon the revenue has not been discharged at all and thus did not shift on to assessee. Consequently, in the absence of any credible proof of receipt of cash from assessee, the apparent has to be taken as real i.e. Sunderdeep Builders have repaid Rs.4 Crore through banking channel in discharge of its existing outstanding liability as a matter of course. CIT(A) has correctly appreciated the facts and circumstances in its entirety and has come to a rightful conclusion in this regard and thus exonerating the assessee from unvouched and unsupported tax liability. CIT(A) has rightly observed that the allegation of accommodation entry is not sustainable by appreciating the fact that during the F.Y. 2008-09 relevant to AY 2009-10, there was opening receivable by the assessee from M/s. Sunderdeep Builders (Prop.-Rajesh Sunderdas Vaswani) pegged at Rs.1 Crore which was given as a loan / advances by the assessee company through regular books of accounts prior to F.Y. 2008-09. To summarise, a loan of Rs.7 Crore was squared off by the borrower by way of repayment in F.Y. 2008-09. When seen in conjunction with the so called unaccounted day cash book wherein unaccounted cash transactions allegedly recorded continuously spanning over Jan. 2007 to March 2015, no reference has been found to be made in respect any underhand dealing of cash in exchange of square off of Rs. 7 crores. This fact also overshadows the allegation of the revenue and casts serious doubt on the tacit involvement of cash as a quid pro quo against banking transactions qua the assessee. Hence, a normal inference that remaining outstanding amount of Rs.4 Crore paid back to assessee by borrower through banking channel without corresponding receipt of cash, has to be given primacy and cannot be disturbed. On holistic appreciation of factual position, we see no error in the conclusion drawn by the CIT(A). The CIT(A), in our view, has rightfully deleted the addition made u/s 68 holding the act of AO to be without any rational basis and thus unsustainable in law. We entirely agree with the conclusion drawn by the CIT(A) on the aspects of the merits and hence, we decline to interfere therewith. - Decided in favour of assessee.
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