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2019 (11) TMI 334 - AT - Income TaxReopening of assessment u/s 147 - addition u/s 68 - borrowed satisfaction - change of opinion after four years - reopening on the basis of the findings in the search action u/s. 132 in the case of Praveen Kumar Jain group, wherein evidence was gathered that a large number of entitites managed and controlled by the Jain Group were engaged in providing accommodation entries and the assessee was a beneficiary in as much as unsecured loans - HELD THAT:- AO has made an addition as unexplained cash credit u/s. 68 and simultaneously disallowed interest exclusively on the basis of the information received from the Investigation Wing of the Department that the assessee, through M/s. Kunal Gems, a concern controlled by Shri Praveen Kumar Jain had taken an accommodation entry. Although, the assessee had filed before the AO confirmation of loan of Kunal Gems and bank statements showing loan and repayment, the AO did not examine it. We are of the considered view that the AO should have verified the genuineness of transaction by starting with the confirmation of loan 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 where the assessee discharges the burden prima facie, does the burden shift on to the Revenue. In the instant case, the assessee has discharged the burden prima facie by filing the confirmation of loan of Kunal Gems and bank statements showing loan and repayment. An explanation, prima facie reasonable cannot be rejected on capricious or arbitrary grounds or on mere suspicion or on imaginary or irrelevant grounds. We set aside the order of the ld. CIT(A) and delete the addition made by the AO u/s. 68 of the Act and disallowance of interest - Decided in favour of assessee.
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