TMI Blog2017 (5) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... val contentions have been heard and record perused. 4. Brief facts of the case are that the AO received information from the DIT(Investigation), Mumbai that a search and seizure operation was carried out in Bhanwarlal Jain Group of cases where in it was found that Shri.Bhanwarlal Jain along with his associates have provided that accommodation entries in form of unsecured loans/deposits/purchases entries to a large number of parties through various benami concerns controlled by the assessee. The assessee was one of the beneficiary of accommodation entries of loan CC ₹ 40,00,000/- from M/s.Daksh Diamond and M/s.Laxmi Trading Co., operated bv Shri.Bhanwarlal Jain and Group. Based on the said information the AO reopened the assessment by way of issue of notice u/s.148 dt.28-03-2014. The A.O. has not accepted the transactions as genuine and considered income of ₹ 40,00,000/- from undisclosed receipt. Further, the A.O. has disallowed interest expenditure of ₹ 1,88,273/- on account of bogus accommodation entry and added back to the total income of the assessee. 5. By the impugned order, CIT(A) deleted the addition after observing as under:- 6. Ground No.2, 3 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59 ITR 78 (Se). In tl-e case of CIT v. Varinder Rawley (2014) 366 ITR 232 (P H) the court held that where the assessee shows that the entries regarding credit in a third party's account were in fact received from the third party and are genuine, he discharges the onus. In that case, the sum cannot be charged as the assessee's income in the absence of any material to indicate that it belongs to assessee , particularly in a case where no summons u/s 131 is issued against the third party. 6.3 The expression nature and source has to be understood together as a requirement of identification of the source and the nature of the source, so that the genuineness or otherwise could be inferred. The Hon.ble Supreme Court, in Kale Khan Mohd.Hanif vs. CIT, pointed out that the onus on the assessee has to be understood with reference to the facts of each case and proper inference drawn from the facts. If the prima facie inference on the fact is that the assessee's explanation is probable, the onus will shift to the Revenue. As far as the creditworthiness or financial strength of the creditor/subscriber is concerned, that can be proved by producing the bank statement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of accounts but not the source of the source. 6.6 Further, in the case of Namichand Kothari vs CIT - [264 ITR 254] [Gau], the Hon'ble High Court had held that: A harmonious construction of section 1 06 of the Evidence Act and section 68 of the Income-tax Act will be that though apart from establishing the identity of the creditor, the assessment establish the genuineness of the transaction as well as the creditworthiness of his creditor, the burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. What follows, as a corollary, is that it is not the burden of the assessee to prove the genuineness of the transactions between his creditor and sub-creditor nor is it the burden of the assessee to prove that the sub-creditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been, eventually, received by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nus shifts on him to prove these as non-genuine or accommodation. The A.O. has not discharged the onus casted on him. In my opinion, merely based on the statement of a third person without any corroborative evidence will not make the transactions in question, as non-genuine or bogus transaction. As such, in the absence of any contrary evidence placed on record, the transaction cannot be treated as bogus or paper transaction. 6.9 As far as the question of validity of tile transaction, even if some of the transactions entered into by the above parties are found to be not genuine, it does not lead to the conclusion that all the transactions entered into by these parties were bogus or non-genuine including the transactions related to the appellant. There is no evidence brought in the assessment order to prove the above conclusion, by the AO. The reassessment proceedings were wide open and the AO could have carried out independent investigation to prove his argument regarding the bogus or non-genuine transactions. No such investigation has been carried out by the AO. The outcome of investigation carried out in the case of Bhanwarilal Jain, the conclusions drawn therein cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be doubted. Therefore, the decision of the A.O. treating the same as bogus or non-genuine transactions is not in order and cannot be justified. The AO is accordingly directed to delete the addition of ₹ 40,00,000/-. 7. Ground No.4 relates to disallowance of interest expenditure of ₹ 1,88,273/on account of bogus accommodation entry. It is already discussed in the above grounds that the loan transactions are genuine. Therefore, the disallowance made by the A.O. on account of accommodation expenses is not sustainable. The A.O. is directed to delete the addition of ₹ 1,88,273/- 8. Ground No.5 and 6 are general in nature and hence do not require any adjudication, hence dismissed. 6. I have considered rival contentions and gone through the orders of the authorities below, It is clear from the finding recorded by CIT(A) that assessee has satisfied all the three conditions of cash credit. As per the finding of CIT(A), assessee has not only established the identity of the loan creditors but also genuineness of the loan transaction as well as the credit worthiness of loan creditors. The detailed finding recorded by CIT(A) has not been controverted by departm ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
