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2025 (4) TMI 28 - AT - Income TaxValidity of reopening assessments u/s 147 - information received from the Investigation Wing about bogus accommodation entries - onus to prove - as alleged assessee has taken bogus share application / premium from shell / dummy / paper companies and introduced his own unaccounted cash by routing it through a web of dubious companies and suspicious transactions - CIT(A) quashed reopening proceedings - HELD THAT - Reasons reveals that the ld. AO based on the information received from the DDIT who searched the Banka Group noted that the assessee is one of the beneficiary who has taken accommodation entry in the form of bogus unsecure loans or in other form from the following dummy or shell companies which are controlled or managed by Shri Mukesh Banka. Against those reasons the assessee objected before the ld. AO that they have not obtained any unsecured loans as alleged in the reasons recorded but in fact companies referred subscribed to its share capital for which the necessary verification has been done and accordingly assessment has already been completed on 27.03.2014 and therefore the said issue again cannot be taken up as settled by the legal precedent. The fact that ld. AO mentioned unsecured loan in the reasons for reopening shows that he mechanically issued notice under section 148 of the Act based on information allegedly received by him from the Directorate of Income Tax (Investigation) without proper application of mind and independent analysis and investigation even though all the information was available on record. The assessee contended that in the scrutiny assessment which was completed u/s 143(3) on 27.03.2014 in the case of the appellant for the A.Y 2012-13 wherein all the information related to the share capital had been provided by the appellant and after due application of mind the assessment order was passed. Even though ld. AR of the assessee contended before the ld. CIT(A) that the reasons were recorded for unsecured loans and additions were made for share capital and therefore ld. CIT(A) following our jurisdictional High Court s order in the case of Ram Singh 2008 (5) TMI 200 - RAJASTHAN HIGH COURT quashed the assessment. While doing so ld. CIT(A) has also followed the other judgments on the same issue. Before us since there was no contrary judgment serviced by the revenue we do not find infirmity in that finding of the ld. CIT(A). Addition u/s 68 - As regards the share application money / share capital the apex court in the case of Lovely Exports 2008 (1) TMI 575 - SC ORDER come at the rescue of the assessee on the merits because to prove the identity creditworthiness and genuineness of the transaction the assessee has placed on record copy of Form of application for equity shares copy of board resolution by the company for investment in the assessee-appellant copy of bank statement copy of ITR for the year under consideration and earlier year copy of financial statement of the investor company. Copies of bank statements evidencing the investment of share application money through banking channels. Thus the assessee discharged its onus as per provision of section 68 of the IT Act. Now onus is on AO to disprove the genuineness of the investments on that aspect except statement of Shri Mukesh Banka no contrary material placed on record. Further the AO did not point out any specific instance or any information in the statements recorded by the Investigation Wing in the case of Shri Mukesh Banka which reveals the alleged involvement of assessee in taking accommodation entries. In the absence of any specific information about the assessee against the evidence on record it is not correct to make addition merely on the basis surmises and presumptions on a statement of the third party. The evidence placed on record clearly proves the identity capacity and genuineness of the transactions were proved and thus the criteria as prescribed in section 68 has been fulfilled and it does not warrant the source of source to be proved. The decision cited by the ld. AO does not match with the facts of the case. Decided in favour of assessee. Addition of unsecured loan amount u/s 68 - CIT(A) deleted addition - A.Ys. 2014-15 to 2016-17 - HELD THAT - Here it is a matter of fact that the assessee appellant has repaid back within a very short duration all the questioned loan. When loan stands repaid no addition under Section 68 can be made and is held by the judgment of Hon ble Gujarat High Court in case of Rohini Builders 2000 (9) TMI 204 - ITAT AHMEDABAD-B wherein held genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. Importantly we note that the revenue challenges the only deletion of loan amount but not the deletion of so-called Commission Paid by the assessee Interest paid by the ld. CIT(A). Thus the appeal of the revenue itself is contradictory accepted that the fact interest paid by the assessee is genuine than how can the loan cannot. As regards the enquiry with third parties made by the ld. AO by issuing notices u/s 133(6) and by making field inquiries (by sending Inspector) in the name of such companies however as no reply was received from such parties adverse inference was drawn. Also it is mentioned that summons was issued to directors of above entities u/s 131 131(d). We note that on this issue the assessee - appellant was not confronted with regard to non-service or non-compliance of summon nor the Inspector s report as mentioned in Assessment order was ever supplied to the assessee- appellant. As is clear from the judicial precedent cited that noncompliance to notices u/s 133(6) or 131 of the Act by itself is not sufficient to draw an adverse inference. The bench also take into consideration that the whole basis is of the search in Bank group and the information in the form of statement received from the statement of Shri Mukesh Banka who stated in a statement about the accommodation entry business. That statement of Shri Mukesh Banka was retracted and the copy of the retraction statement was also filed before us. Thus the very basis upon which the addition was called for has been retracted no adverse inference be drawn. Thus even on this aspect of the matter we get support of our jurisdictional High Court decision in the case of PCIT Vs. M/s. Esspal International P. Ltd. 2024 (9) TMI 652 - RAJASTHAN HIGH COURT wherein held that the merely based on the retracted statement no addition can be made. Thus no infirmity in the order of the ld. CIT(A) while deleting the addition of unsecured loan which is under challenge by the revenue. With this discussion the appeal of revenue stands dismissed.
1. ISSUES PRESENTED and CONSIDERED
The primary issues considered in this judgment revolve around the validity of the reopening of assessments under Section 147 of the Income Tax Act, 1961, and the subsequent additions made by the Assessing Officer (AO) under Section 68 for unexplained cash credits. The core questions include:
2. ISSUE-WISE DETAILED ANALYSIS Reopening of Assessments under Section 147:
Additions under Section 68 for Unsecured Loans:
Reliance on Third-Party Statements:
Procedural Aspects:
3. SIGNIFICANT HOLDINGS Core Principles Established:
Final Determinations:
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