2021 (10) TMI 1064 - ITAT LUCKNOW

Assessment u/s 153A - addition u/s 68 - onus to prove - addition was confirmed based on the report of the DDIT (Inv.) Kolkata - incriminating material found in search or not? - summons u/s 131 to lenders issued - as argued by assessee AO made no sufficient efforts to produce its witnesses before the assessee for cross examination - Whether reliance on 'reports of investigation wing' etc. did not constitute 'material' relevant for the purpose of assessment in this case? - HELD THAT:- In the present cases also the opportunity to cross examination has not been given to the assessee - AO at the fag end of time barring dates, had issued the alleged notices u/s 131 of the Act, the fact of which is also not coming out from the records as in the order sheets, the AO has not mentioned about the fact of having issued notices u/s 131 - AO straight forward shifted the onus of producing witnesses to the assessee by observing that assessee were also responsible for producing the witnesses but it is not a valid argument for not giving opportunity to the assessee for cross examination as the Department is all powerful to make sure that these witnesses are present for the cross examination by the assessee. Under similar circumstances, the Hon'ble Delhi High Court in the case of Pr. CIT vs. Best Infrastructure (India) (P.) Ltd. [2017 (8) TMI 250 - DELHI HIGH COURT] has held that Revenue cannot shift the onus of producing its witnesses to the assessee.

AO did not make sufficient efforts to produce its witnesses before the assessee for cross examination therefore, such statements taken behind the back of the assessee and not confronted to the assessee do not have any evidentiary value and therefore, if we ignore such statements, taken behind the back of the assessee and not confronted to the assessee and take into account all other evidences filed by the assessee which are in favour of the assessee and wherein the Assessing Officer has also not found any discrepancy, the additions sustained by learned CIT(A) are liable to be deleted.

Additions have been made on the basis of statements of witness and the witnesses have not been cross examined by assessee. AO though in the assessment order has noted that summons u/s 131 of the Act were issued to the witnesses but no steps, as required by law, have been taken by the AO as the witnesses did not appear and the AO did not enforce their presence by taking further steps. Merely writing in the assessment order that notices u/s 131 has been issued, without recording any order in the order sheet regarding this fact nor having any evidence of service of such notices, does not serve the purpose of giving opportunity to the assessee of cross examination.

On merits also, we find that assessee had fulfilled its part of onus which is required to be fulfilled by the assessee as the identity of the lender companies is not in doubt, creditworthiness of the companies is not in doubt as these companies had sufficient funds to advance the loans which is apparent from the amount of share capital and the reserves they are carrying in their balance sheets. The year-wise amount of share capital, reserves and loans out of which these creditors had advanced loans to the assessee, has been tabulated in a chart, which, for the sake of completeness, has been made part of this order.

Creditworthiness of the lender companies is not in doubt. As regards the genuineness of the transactions, we find that loans were taken through banking channels and interest was also paid after deducting TDS and a part of loans were also returned back with interest even before the date of search and this proves that the transactions were genuine. The authorities, during the search on the assessees, did not find any incriminating material and any money trail to establish that cash had exchanged in lieu of transactions of loans received and repayments thereof. The assessments of these companies, wherein the interest paid by the assessee, has been accepted to be their income, also proves that the transactions were genuine. Therefore, all the three ingredients of section 68 are fulfilled and therefore, also the additions confirmed by learned CIT(A) cannot be sustained.n the present cases, other than the statements recorded by another officer (which we have already held to be of no evidentiary value) there is no material before the Assessing Officer to disapprove the evidences filed by assessee. - Decided in favour of assessee.