TMI Blog2018 (6) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of interest portion is concerned, the same was deleted by the ld. FAA and has not been challenged before this Tribunal by the Revenue further fortifies the case of the assessee. The loans were repaid along with interest before the date of survey i.e. 17/10/2014 and no cash was found during survey further fortifies the claim of the assessee. All the concerned parties appeared before AO during remand proceedings, AO recorded their statement and nothing adverse was pointed out even Shri Pravin Jain himself appeared before the Ld. Assessing Officer and even during remand proceedings enquiries were carried out and no adverse remark was made by the ld. Assessing Officer. The assessee as well as the other parties furnished all possible documents evidencing that the loans are not bogus. No cash was found deposited in the accounts of alleged six parties, thus in the presence of plausible explanation by the assessee, relevant material, and requirement of fulfillment of ingredients, enshrined in section 68 of the Act, we find that onus cast upon the assessee has been duly discharged - decided in favour of assessee - ITA NO.5589/Mum/2017 - - - Dated:- 22-6-2018 - Shri Joginder Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument is that all the parties not only appeared before the Assessing Officer but also filed all possible documents evidencing that the alleged loans are not bogus. It was empathetically contended that no cash was deposited in the bank account of these parties and all the parties are active on ROC website, therefore, these are no bogus entities. In reply, the Ld. DR invited our attention to page 7 and 28 of the assessment order. The crux of argument by Ld. DR is in support of the addition. Reliance was placed upon the case of Sumati Dayal vs CIT (214 ITR 801)(Supreme Court), CIT vs Shri Durga Prasad More (82 ITR 540)(Supreme Court) and another decision in the case of ACIT vs Nakoda Fashions Pvt. Ltd. (2018) 92 taxman.com 46(Ahmadabad Trib.) 2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is a partnership firm, engaged in the business of construction of residential/commercial projects, declared total income of ₹ 3,30,801/- in its return filed on 29/09/2012, which was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter the Act). The case of the assessee was selected for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther, it is our bounded duty to examine section 68 of the Act, which is reproduced hereunder for ready reference and analysis:- 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- ( a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and ( b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the transaction as well as the creditworthiness of the creditors. In CIT vs Korlay Trading Company Ltd. 232 ITR 820 (Cal.), it was held that mere mention of file number of creditor will not suffice and each entry has to be explained separately by the assessee (CIT vs R.S. Rathaore) 212 ITR 390 (Raj.). The Hon ble Guwahati High Court in Nemi Chandra Kothari vs CIT (264 ITR 254)(Gau) held that transaction by cheques may not be always sacrosanct. In the present appeal, the assessee duly fulfilled the conditions enshrined u/s 68 of the Act and produced necessary evidence for its claim. 2.6. The ratio laid down in ACIT vs Rajeev Tandon 294 ITR (AT) 219 (Del.), which was confirmed by Hon ble High Court , in 294 ITR 488, supports the case of the Revenue. Identical ratio was laid down in CIT vs Anil Kumar 392 ITR 552 (Del.), wherein it was held that mere identification of the donor and movement of gift through banking channel is not sufficient to prove the genuineness of gift. 2.7. Now, we shall analyze certain cases wherein either the parties are same or the facts are identical. One of such case is from the Mumbai Bench of the Tribunal like ACIT vs Shri Ramesh Ramswarupdas Jindal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtained only accommodation entries from them and relying on the statement of Shri Pravin Kumar Jain recorded u/s. 132(4) of the Act, the Assessing Officer concluded that assessee has obtained only accommodation entries from various parties referred to in the Assessment Order and added the amount shown as unsecured loans from these parties as unexplained unsecured loans and accordingly brought to tax. Assessing Officer also brought to tax the interest paid on such unexplained unsecured loans. 4. On appeal by the assessee the Ld.CIT(A) deleted the additions observing that the Assessing Officer has merely doubted the loans taken by the assessee from various parties and the Assessing Officer has gone only on the statement of Shri Pravin Kumar Jainr ecorded in search proceedings ignoring the fact that Shri Pravin Kumar Jain later retracted such statements. The statements recorded were not supplied to the assessee and no opportunity for cross examination was given violating the principle of natural justice and since the statements could not be utilized against the assessee without giving full and proper opportunity of cross examination. He relied on the decision of the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list of parties from whom the assessee has availed accommodation/fictious bills as alleged by the Assessing Officer is as follows: Party Nature of transaction Amount in Rs. M/s Mohit International Loan 10,00,000/- M/s. Natasha enterprises Loan 10,00,000/- 7. He submits that during the re-assessment proceedings the Assessing Officer asked to prove the genuineness of the transactions, identity and credit worthiness of the above companies. In respect of the same the assessee submitted Loan confirmation of unsecured loans along with their ITR-V and the affidavits from the said parties. It was submitted that the assessee has borrowed the money through proper banking channels. The bank statements highlighting the receipt of money were submitted before the Assessing Officer. It was further submitted that the assessee has subsequently repaid the loans. Further, with reference to the letter from DGIT(Inv) Mumbai, the assessee submitted that the said statement allegedly given by Shri Praveen Kumar Jain, has not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transactions, therefore the addition is made merely on surmises and conjectures. The Learned Counsel for the assessee submits that the decision of the Coordinate Bench squarely apply to the facts of the assessee s case. He also placed reliance on the following decisions for various propositions as under: - Case reference citation Proposition Kishanchand Chellaram v. CIT[125 ITR 0713 (SC)] Burden of proof was on the Department to prove that the amount belonged to assessee. The amount cannot be assessed as undisclosed income of assessee in the absence of positive material brought by Revenue to prove that the amount in fact belonged to assessee as the burden lay on the Revenue. DCIT v. Rohini Builders, [256 ITR 0360 (Guj)] Tribunal having deleted the addition under S.68 accepting the genuineness of loans which were received and repaid by assessee by accountpayee cheques, assessee having established the identity of the creditors by giving their complete addresses, GIT Numbers/PAN as well as confirmations along with the copies of their assessment orders wherever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, perused the orders of the authorities below, the case laws relied on and the material furnished before us. The only issue involved inthis appeal relates to the deletion of addition of ₹.20 lakhs made by the Assessing Officer towards unexplained unsecured loans and interest thereon amounting to ₹.2,35,246/.Search and seizure action u/s. 132 of the Act has been conducted in the case of Shri Pravin Kumar Jain and statements were recorded from him and he is said to have been deposed that he is providing only accommodation entries through various concerns. On the basis of this information received from DGIT(investigation), Mumbai the Assessing Officer noted that assessee was one of the beneficiaries of accommodation entries given by Shri Pravin Kumar Jain. Assessee was required to explain the unsecured loans obtained in the name of M/s Mohit International and M/s.Natasha enterprises of ₹.10 lakhs each and prove the genuineness of the transactions. Assessee furnished information in respect of the above transactions i.e. copy of Loan confirmation and Affidavit establishing identity of the lender, copy of ledger giving detail towards loan taken during the year and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced copy of a comprehensive Affidavit of Shri. Pravin Kumar Jain dated 25.04.2014 retracting, the statements made before the Investigation Wing. Assessing officer has not given opportunity to the appellant for cross examination of Shri Pravin Kumar Jain. Going by the discussion contained above, it is obvious that the inference drawn by the Assessing officer against the appellant is not sustainable for the simple reason that the principles of natural justice have not been followed. First and foremost, the appellant has not been given any access to the material (reports, intimations, statement etc.) used against it. Secondly, by withholding the said material the assessing officer has denied to the appellant an opportunity to refute the evidence by cross examining the witnesses, statements, if any made by whom, incriminated the appellant. On both counts, the impugned assessment order fails squarely. 6.4. It has to be said that the appellant had done everything in its power to prove the three ingredients required to prove the satisfactory nature of the loan transactions. He has submitted confirmation from the parties. filed Audit Reports of the parties alongwith copy of their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned parties, the appellant submitted that the AO has also ignored the fact that the said interest expenses were incurred wholly, exclusively necessarily for business of the Appellant. The interest paid on loans was subject to TDS. During the present proceedings, the appellant also submitted the details of the TDS made on the loans wherever it is applicable and the details of amount of TDS paid into the Government account. In the appellant case the addition made towards the said loans is deleted after discussing the issue in detail in the above paragraphs. 6.6. Thus, above discussion and various explanations leads to the conclusions that the Ld. Assessing officer has made addition of ₹ .20,00,000/- and interest given to the parties, disregarding the evidence on record and without discharging his onus and without establishing anything to the contrary to the submissions of the appellant and without verifying the bank account, existence of entities who have extended loans to the appellant and without making fruitful investigation. Therefore, the Assessing officer is directed to delete the addition made of ₹ 20,00,000/- on account of unexplained unsecured loans a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Rate of Interest 1. Javda India Impex Limited CS-1, Silver Anklet, Yari Road, Versova, Mumbal 400 061 AAACA7065L 20,00,000 9% 2. Lexus Infotech Ltd. 626, Panchratna, OperaHouse, Mumbai 400 002 AAACL4646G 20,00,000 9% When the Assessing Officer asked the assessee to prove the genuineness of these loans, the assessee submitted the following documents: a. Copy of acknowledgment of income tax return filed for A.Y. 2007-08. b. Copy of PAN of the parties c. Copy of bank statement of the parties from where the cheque is issued. d. List of directors of the parties e. Copy of annual report of the parties for financial year 2006-07. f. Copy of loan confirmation from the parties. The Assessing Officer treated these loans to be non-genuine and made addition u/s 68 of the I.T Act on the basis of the statement of Shri Nilesh Parmar, one of the associate of Shri Praveen Kumar Jam, Director of Mohit International and one of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e postal authorities with the remark left / no such person . Under these circumstances, the Hon'ble High Court took a view that the assessee failed to discharge the burden to prove the credit worthiness as well as the genuineness of the transactions. 10. But in the impugned case, we noted that the assessee has submitted all the evidences including the confirmation of the creditors. This is not a case where the creditors have not given confirmations rather they have duly confirmed to giving loan to the assessee, the loans were received and returned through banking channels. The assessee has also submitted copies of bank accounts. The lender has not deposited cash into bank account. The assessee has duly discharged the onus with regard to identity of the lender, credit worthiness of the party and all supporting evidences as required u/s. 68 of the I.T.Act. Therefore, in our opinion the decisions relied upon by the DR does not assist the Revenue to the facts of the present case. 11. We have also gone through the decisions relied upon by the learned AR. We noted that this Tribunal in similar circumstances in the case of Komal Agrotech Pvt. Ltd. vs. ITO in ITA No. 437/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished loan confirmation, bank statement, IT returns acknowledgment of lender companies and the proof of borrowable through regular banking channel. The Bench considered the factual matrix and held that no addition can be made towards alleged unsecured loans. Identical are the facts in the present appeal before us. Thus, this case clearly supports the case of the assessee. Identical ratio was laid down in the case of DCIT vs Bairagra Builders Pvt. Ltd. (ITA No.4691 and 4692/Mum/2015), order dated 14/09/2017 from the Mumbai Bench of the Tribunal. 2.9. The Hon'ble Delhi High court in CIT vs Laxman Industrial Resources Ltd. (ITA No.169 of 2017)(Del), held as under:- The Income Tax Appellate Tribunal's (ITAT) order upholding the Appellate Commissioner's opinion that the additions made in the course of reassessments were unsustainable, were challenged by the Revenue. The reassessment notice was issued to the assessee for AY 2002- 03 on the ground that informat ion received f rom the Investigation Wing pointed to its being the beneficiary of the accommodation entries that were subjected to addition under Section 68. The Assessing Officer (AO), in the reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r ; (2) the genuineness of the transaction, namely: whether it has been transmitted through banking or other indisputable channels: (3) the c r edi twor thines s or f inanc ial s t r ength of the creditor/subscriber: (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanat ion by the assessee. (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices: (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assess cc nor should the Assessing Officer take such repudiation at face value and construe it, without more, against the assess cc. (7) The Assessing Officer is duty-bound to investigate the creditworthiness o f t h e creditor/subscriber the genuineness of the transaction and the veracity of the repudiation. ii() CIT vs. Value Capital Services Ltd. (2008) 307 ITR 334 (Dd.) - Hon'ble Delhi High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the impugned judgment of the High Court which was a common order along with the decision in CIT v. Divine Leasing Finance Ltd. [2008) 299 ITR 268 (Delhi). Since the Commissioner of Income-tax (A) has not only found that the identity of each of the shareholders stood established, but has also examined the fact that each of them were income-lax ass essees and had disclosed the share application money in their accounts which were duly reflected in their Income-tax return as well as in their balance sheets. In these circumstances we see merit in what the learned counsel for the appellant has submitted and we feel that the Tribunal was unjustified incoming to the conclusion that the C'IT(A) had not considered the mat ter in the right perspect ive. Consequently, we decide the question in favor of the assessee and set aside the order passed by the Tribunal. 5.4 In the present case the assessee can be said to have discharged its onus under section 68 of the Act. The appellant has given all the necessary details in order to establish the identity of the share applicants. After considering the entire material placed on record, it is fair to conclude that theshare applicants w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Reliance is also placed on the decision of Allahabad High Court in the case of nathu Rain Prcmchand v. CIT [1963] 49 ITR 561, wherein the Hon'ble Court explained that it was the duty of the Assessing Officer to enforce the attendance of a witness. if his witness is material in exercise of his powers under order 16. Rule 10 of CPC and where the Officer does not do so, no inference can be drawn against the assessee. Reliance is also placed on the decision of the jurisdictional High Court, i.e. Delhi High Court in CIT v. Pradeep' Kumar Gupta and- Vijay Gupta (2008) 303 ITR 95 (Del) wherein it was held that reopening of assessment is not permissible on mere adverse statements from others. Such statement by itself does not constitute informat ion, unless the As ses sing Of has made enquiries thereon and inferred understatement or Income. lain therefore inclined to agree with the submissions made on behalf of the appellant to the effect that the information ,if any, gathered behind the back of the assessee without being subjected to cross examination cannot be fully admitted as evidence against the assessee. 5.6 Under the facts and circumstances of the case stated above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax (Appeals), Central, Jaipur ['CIT(A)'] partly allowing the appeal preferred by the assessee and deleting the additions made by the Assessing Officer ('AO') in the assessment order dated 28.12.2007 to the tune of ₹ 79,80,000/- on account of unexplained share capital contribution and ₹ 19,950/- on account of unexplained expenditure on commission for getting accommodation entries. 2. Put in brief, the relevant background aspects of the matter are as follows : The respondent Company is engaged in manufacturing of the segments used in the marble sawing. The Company came into existence on 16.06.2003. Thus, the previous year related with the Assessment Year 2004-05 had been the first year of the business of the assessee company. In the original return filed on 01.11.2004 under Section 139 of the Act, the assessee Company declared a loss of ₹ 3,88,740/- . It appears that search and seizure operation under Section 132 of the Act were carried out on 23.01.2006 at the business premises of the assessee along with the residential as well as other business premises of Choudhary Group of Cases; and pursuant thereto, notices un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emium shares total at ₹ 79,80,000/- from the assessee-company and made the payment through account payee draft. It is also fact that the ld. A.O. made direct independent inquiry from the directors of the purchaser company by issuing a letter u/s 133(6) of the I.T. Act 1961. The ld. A.O. Sh. V.K. Chakarvarty was heard and the case was discussed with him. On perusal of letter u/s 133(6) I find that no confirmations or comment was asked from the directors of the purchaser company about their statement in the search and seizure operation in their case. The ld. A.O's only reason for rejecting the confirmations and affidavits filed by aforesaid directors of the purchaser companies was that the directors did not retracted their statement in such confirmations or affidavits. The ld. A/R's contention is that the directors of the purchaser companies have fully replied against the ld. A.O's letter u/s 133(6). There is no question to retract against anything which is not mentioned in the letter u/s 133(6). Therefore, the rejection of confirmations and affidavits filed by the directors of the purchasing companies was not justified and the various case laws relied by him is sti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exports Pvt. Ltd. had clearly held that even if the shareholders are bogus in that case no addition can be made in the hands of the company but AO can reopen the cases of shareholders. The contention of ld. CIT D/R that in case of Lovely Exports Pvt. Ltd. only bogus share application was found but the investors were genuine. However, in the present case even there are no genuine investors as all the companies are fabricated just to provide accommodation entries only as admitted by one of the Directors i.e. Shri Pradeep Jindal. Whether those companies were fictitious or bogus, the moot question here is that whether the assessee company had received share application money or not. It is seen that share capital was received through account payee cheques along with premium amount totalling to ₹ 79,80,000/- from five private limited companies i.e. M/s. Sanraj Associates Pvt Ltd., M/s. Fortress Impex Pvt. Ltd., M/s. Sumit Overseas Pvt. Ltd., M/s. Pushpanjali Caps Pvt. Ltd. and M/s. B.P. Builtech Pvt. Ltd. all these companies are situated at Delhi. All these companies are assessed to tax and they are registered under the Companies Act. Return of allotment of shares in prescribed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to how this amount of increased share capital could be assessed in the hands of the company itself. The findings in these cases are squarely applicable on the facts of the present case and we noted that ld. CIT (A) has already taken a recourse for taking action against the respective shareholders as the Assessing Officer was directed to take necessary action against the purchaser company for such investment in purchase of shares. 10. We have also considered the contention of ld. D/R that the share application money which remained unproved can be added under section 68. We would like to observe here that there is a difference between cash creditor and shareholder. In case of cash creditor, the cash creditor has right to demand the money back from the assessee. However, in case of shareholder, there is no liability of the company to refund the amount as the shares can be sold in the market. Therefore, in case of cash creditor, heavy onus lies on the assessee to prove whether cash creditor was genuine or not. However, in case of shareholder, it is held by various High Courts and Hon'ble Supreme Court that if shareholders are not genuine, then in that case no additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the CIT(A) in deleting the same. 7. Having given thoughtful consideration to the submissions made and having perused the material on the record, we are unable to find any reason to consider interference; and are clearly of the opinion that no substantial question of law is involved in this appeal. 8. The reference to the statements made by some of the persons related with the said investing companies is of no effect because such statements could not have been utilized against the assessee Company when the assesseecompany had not been afforded an opportunity of confronting and crossexamining the persons concerned. There does not appear anything occurring in the statements of the persons relating with the assessee-company so as to provide a basis for the findings recorded by the AO. 9. In any case, the points as sought to be raised by the appellant in the present case are all the matters relating to appreciation of evidence. The relevant factors have been taken into account and considered by the appellate authorities before returning the findings in favour of the assessee. As regards the referred share capital contributors, it is noticed that they are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was existence of investors and their confirmation has been obtained, were found to be satisfactory. All these conclusions are conclusions of fact based on material on record and, therefore, cannot be said to be perverse so as to give rise to question of law, which may be required to be considered in this appeal under s.260A of the IT Act. 12. The ratio of the decisions aforesaid directly applies to the present case too. Herein, as noticed, the appellate authorities have returned the findings of fact in favour of the assessee after due appreciation of the evidence on record, on relevant considerations, and on sound reasonings. These findings have neither been shown suffering from any perversity nor appear absurd nor are of such nature that cannot be reached at all. 13. Needless to reiterate the law laid down by the Courts consistently that the department is free to proceed in relation to the individual investor in accordance with law but the amount of increased share capital cannot be assessed at the hands of the assessee company itself. 14. In the result, the appeal fails and is, therefore, dismissed. 2.11. In the case of CIT vs Orchid Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing payment of share application money and relevant record is produced with regard to the allotment of shares to those parties. The share application form, allotment letter, share certificate are also produced. Even the balance-sheet, profit and loss account, the books of account of these creditors were produced on record showing that they had sufficient funds for investing in the shares of the Assessee. The learned counsel relies on the judgment of the Division Bench of this Court in case of CIT v. Gagandeep Infrastructure (P.) Ltd. [2017] 80 taxmann.com 272/247 Taxman 245/394 ITR 680 (Bom.) and the order of the Apex Court in case of CIT v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195. 4. We have considered the submissions. 5. The Assessing Officer added ₹ 95 lakhs as income under Section 68 of the Income Tax Act only on the ground that the parties to whom the share certificates were issued and who had paid the share money had not appeared before the Assessing Officer and the summons could not be served on the addresses given as they were not traced and in respect of some of the parties who had appeared, it was observed that just before issuance of cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the previous relevant to the subject Assessment Year the respondent-assessee had increased its share capital from ₹ 2,50,000/- to ₹ 83.75 lakhs. During the assessment proceedings, the Assessing Officer noticed that the respondent had collected share premium to the extent of ₹ 6.69 crores. Consequently he called upon the respondent to justify the charging of share premium at ₹ 190/- per share. The respondent furnished the list of its shareholders, copy of the share application form, copy of share certificate and Form no.2 filed with the Registrar of Companies. The justification for charging share premium was on the basis of the future prospects of the business of the respondentassessee. The Assessing Officer did not accept the explanation/justification of the respondent and invoked Section 68 of the Act to treat the amount of ₹ 7.53 crores i.e. the aggregate of the issue price and the premium on the shares issued as unexplained cash credit within the meaning of Section 68 of the Act. ( b) Being aggrieved, the respondent carried the issue in appeal. By an order dated 24th May, 2011 the Commissioner of Income Tax (Appeals) (CIT(A)) deleted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied. ( e) We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced for removal of doubts or that it is declaratory . Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso. In any view of the matter the three essential tests while confirming the preproviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it would be effective only from Assessment Year 2013-14 onwards and not to the earlier years. The legislature did not introduce the proviso to section 68 of the Act with retrospective effect nor does the proviso so introduce states that it was introduce for removal of doubts or that it is declaratory , therefore, it is not open to give it to retrospective effect by proceeding on the bases that the addition of proviso to section 68 of the Act is immaterial. Thus, we find merit in the argument of the ld. counsel for the assessee. 2.14. Now, we shall deal with the cases relied upon by ld. DR. One such case is from Hon'ble Apex Court in Sumati Dayal vs CIT (1995) 80 taxman 89(Supreme Court) order dated 23/03/1995 that is also with respect to cash credit and addition under section 68 of the Act. In that case, the facts are altogether different, therefore, cannot be applied to the case before us. Even otherwise, there are later decisions from Hon'ble Apex Court/Hon'ble High Courts and also from the Tribunal which on identical facts supports the case of the assessee. Identical is the situation in the case of CIT vs Durga Prasad More (1971) 82 ITR 540 (Supreme Court). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtner of the firm was also recorded, wherein, he tendered that they received accommodation entries in the form of unsecured loans in lieu of cash from Shri Pravin Kumar Jain. The statement of Shri Ajay Maheshwari has been reproduced in the assessment order which was heavily relied upon by the Assessing Officer for making the addition. It is noted that on 11/11/2014, Shri Ajay Maheshwari filed an affidavit retracting the statement recorded during survey after 23 days, wherein, he sworn (in the affidavit) that the loans were genuine and there were no corroborative evidence was found at the business premises during survey and the entire transactions were conducted through banking channel/account payee cheque. As per this retraction, the survey party put mental pressure and the statement was recorded under high BP/hyper diabetic conditions. It is noted that the loan confirmations and copy of ITRs of the concerned parties were filed along with the address of the broker Shri Jitu Bhai. Summons were also issued to Shri Ajay Maheshwari. The addresses of the concerned persons were also filed by the assessee. The Ld. Assessing Officer issued summons under section 131 of the Act to all the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Jain, dated 15/05/2014, repayment details of unsecured loans and its submissions dated 16/02/2015, wherein, present address, details of directors and shareholding patterns of lenders companies were filed by the assessee before the Ld. Assessing Officer. It is noted that before the First Appellate Authority, the assessee challenged the validity of assessment by raising an additional ground as the assessee was not allowed opportunity to cross examine Shri Pravin Kumar Jain and other material used against the assessee, which was not confronted to it. The Ld. Commissioner of Income Tax (Appeal) vide letter dated 05/07/2016 asked the Ld. Assessing Officer to handover the statements pertaining to Shri Pravin Kumar Jain or its staff members or dummy directors to allow the assessee an opportunity to cross examine Shri Pravin Kumar Jain. The Ld. Assessing Officer was also asked to provide the evidences found during the course of survey action or any evidence that payment was made for obtaining unsecured loans and also efforts so made to examine the loan creditors. The Assessing Officer was asked to conduct necessary enquiries with respect to genuineness of the unsecured loans. The Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. (pages 97 to 110 of the paper book), Viraj Mercantile Pvt. Ltd. (pages 111 to 119 of the paper book) and Nakshatra Business Pvt. Ltd. (Pages 120 to 131 of the paper book). All these documents neither disproved by the Ld. Assessing Officer nor any evidence was brought on record to falsify the claim of the assessee or the authenticity of these documents. Thus, it can be said that the assessee discharged its onus as provided under section 68 of the Act. The interest was paid through banking channel by the assessee on such loans. It is also noted that so far as the disallowance of interest portion is concerned, the same was deleted by the ld. FAA and has not been challenged before this Tribunal by the Revenue further fortifies the case of the assessee. The loans were repaid along with interest before the date of survey i.e. 17/10/2014 and no cash was found during survey further fortifies the claim of the assessee. All the concerned parties appeared before the Ld. Assessing Officer during remand proceedings, the Ld. Assessing Officer recorded their statement and nothing adverse was pointed out even Shri Pravin Jain himself appeared before the Ld. Assessing Officer and even dur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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