TMI Blog2019 (2) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... n to establish that the loan was received by account payee cheque and it was returned in the next year by account payee cheque. Hence, genuineness of the transaction in question is also established at least prima facie. AO has come to a different conclusion mainly . Hence, it is seen that except the statement of Shri Bhanwarlal Jain Group, there is no adverse material brought on record by the AO. No shortcoming is pointed out in various documents brought on record by the assessee to establish the identity and credit worthiness of the loan creditor and genuineness of the transaction as noted above. Since, the AO has not provided an opportunity of cross examination of Shri Bhanwarlal Jain Group, the adverse statements of that group cannot be used against the assessee. Case of KISHINCHAND CHELLARAM VERSUS COMMISSIONER OF INCOME-TAX, BOMBAY CITY II [1980 (9) TMI 3 - SUPREME COURT] to be followed. - Decided in favour of assessee. - ITA No. 3017/Mum/2018 - - - Dated:- 1-2-2019 - SHRI A.K. GARODIA, ACCOUNTANT MEMBER For The Appellant : Shri Vimal Punamiya, AR For The Respondent : Shri Vijay Kumar Soni, DR ORDER This appeal is filed by the assessee, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action, Identity of the lender and Creditworthiness of the investor at the time of assessment of the appellant, (please refer the said paper book) - Copy of ITR Acknowledgement of lender M/s. Tanika Commodities Pvt. Ltd. for the A.Y. 2010-11 (Page No.27) - Ledger Copy of Ritu Singhal in the books of M/s. Tanika Commodity (P) Ltd. for the A.Y.2010-11 (Page No.28) - Loan Confirmation received from the lender M/s. Tanika Commodities Pvt., Ltd.(Page No. 29-30) - Copy of Relevant Bank Statement of the lender M/s. Tanika Commodities Pvt. Ltd.(Page No.31-32A) * The Learned Assessing Officer had heavily relied on the statement of Shri Bhanwarlal Jain. These statements were recorded at the back of the appellant. Further the learned assessing officer has not provided the statement of Shri Bhanwarlal Jain this statement has been made the basis of addition. The request to provide full statement of Shri Bhanwarlal Jain was not fulfilled by the Learned Assessing officer. * Only on the basis of alleged statement recorded of the Third party it cannot be inferred that the Unsecured Loan taken by the Appellant was in the form of an accommodation entry. * It was alleged that from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recouped with such cash. * Further it must be noted that the Net worth (as per net asset method) of the lender Company M/s. Tanika Commodities Pvt. Ltd. was about ₹ 83.34 lacs (i.e. 0.83 crore) as per the Audited Balance Sheet for the Financial year ending 31st March 2010. The amount of loan received by the Appellant is ₹ 20 lakhs as against to its net worth of ₹ 83 lakhs (approx). Thus the creditworthiness of the lender is undoubtedly proved by the Appellant. This Appeal is directed against the order of Commissioner (Appeals)- 36, Mumbai dated 08.02.2018 for the A.Y. 2010-11. The following grounds of appear has been raised by the appellant: i. The Teamed Commissioner of Income Tax (Appeal) has erred in adding genuine unsecured loan amounting to ₹ 20,00,000/- as unexplained fund and added in the income of the appellant. ii. The learned Commissioner of Income Tax Appeal erred in impugned addition and framing the impugned order without considering the submission/ documentary evidence provided to prove the genuineness of the transaction. Our submission is as under: Section 68 of the Act reads as under:- Where any sum is found cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held that without allowing cross-examination to the party, adverse inference cannot be drawn though the evidence may be so strong. In that case certain deposits in the account of the assessee were found. Statements of certain persons were recorded that they have deposited the assessee's own money. The addition was made by the AO which was confirmed up to the stage of Hon'ble High Court. However, on further appeal, the Hon'ble Supreme Court has held that without allowing cross-examination to the assessee addition Cannot be made. Similar judgments are as under:- R.B. Shreeram Durga Prasad 176 ITR 169 (SC), Jindal Vegetable (order of Hon'ble Delhi High Court in ITA no. 428 of 2007, 174 Taxmann 440 (Raj.) Third Party i.e. Shri Bhanwarlal Jain was never a DIRECTOR as well as SHAREHOLDER* Laxman Bhai Patel (order of Hon'ble Gujarat High Court dated 22.07.200S in ITR no. 41/1997). Third Party i.e. Shri Bhanwarlal Jain was never a DIRECTOR as well as SHAREHOLDER of M/s. Tanika Commodities Pvt. Ltd. who had advanced loan to the Appellant Amounting ₹ 20,00,000/- during the F.Y. 2009-10 (A.Y. 2010-11). Shri Bhanwarlal Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... H High Court in ITA no. 808 of 2008) Brij Pal Sharma (order dated 17.02.2009 in 1TA no. 685 of 2008 of Hon'ble P to H High Court) iv. CIT v. Orissa Corporation Pvt. Ltd. 158 ITR 78 (SC) and Anis Ahmed 297 ITR 441 (SC) that mere nonproduction of the lender/shareholder cannot be a ground for making addition u/s 68. v. Similarly as held in the case of CIT v. Metachom Industries (2000) 245 ITR 160 [MP] where a credit is shown to have come from a person other than the assessee, there is no further responsibility of the assessee to show that it has come from accounted source of the lender, as long as the fact that he had made the advance and was capable of making the advance are established. vi. It was held by the Hon'ble Madras High Court in Hastimal (S) v. CIT (1963) 49 ITR 273 that after a lapse of decade, the assessee should not be placed upon the rack and called upon to explain not merely the origin and source of a capital contribution, but also the origin of origin and source of the source. vii. Recently in a similar case that of the Assessee, The honorable ITAT Delhi in the case of ITG, Ward 15 (2) vs. M/s. Rakara Money Matters P. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lleged bogus share holders/ Lenders whose names are given to the AO then the department is free to proceed to reopen their individual assessments in accordance with law but it cannot be regarded as undisclosed income of assessee company. x. As held in the case of R.B. Mittal v. CIT 246 ITR 283 (AP) in an enquiry u/s. 68, the rule of audi alteram parterm has to be observed and the Assessee must be given a fair and reasonable hearing to discharge the burden cast on him u/s 68 of the Act. Further, it is settled law that in the matter of cash credit, the initial onus lies on the Assesses to prove the genuineness of the transaction along with the identity of the lender/investor and his creditworthiness. Having done so, the appellant in the instant case has discharged the onus cast upon it. Beyond this, for the charge of unexplained cash credit to stick, the onus lies on the AC to disprove the claim of the Assessee by establishing that the evidence filed by the assessee was false and by bringing new material on record and failure to do so would vitiate the addition made on this count. xi. It was also held in the case of CIT v. Bedi Co. p. Ltd. (1998) 230 ITR 530 (SC) that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Kamal Agrotech Pvt. Ltd. vs. ITO in ITA No. 437/Hyd/2016 vide its order dated 25.11.2016 has held as under: A plain reading of the assessment order demonstrates that the AO merely went by the Investigation done by the office of D.G.I (Investigation), Mumbai. No enquiries or investigation was carried out. No evidence to controvert the claims of the Assessee was brought on the record by the AO. Even the statement of Shri Praveen Kumar was supplied. Nothing is on record about the result if investigations done by DGIT (inv) Mumbai, The papers filed by the assesses do demonstrate the identity, creditworthiness and genuineness of the transaction. The addition is made merely on surmises and conjectures. In view of the above, we hold that the addition made under section 68 of the Act is bad in law. We noted that in the Said case also loan had been received from Javda India. Impex Ltd. 12. Being consistent with the view taken by this co-ordinate Bench in case of Komal Agrotech pvt. Ltd. (supra), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the claims of the assessee was brought on record by the A.O. Even the statement of Mr. Praveen Kumar was supplied. Nothing is on record about the result of investigations done by DGIT (Inv.) Mumbai. The papers filed by the assessee do demonstrate the identity, credit worthiness and genuineness of the transaction. The addition is made merely on surmises and conjectures. The statement recorded at the back of the appellant cannot be utilized ignoring other verifiable evidences. The Id. Assessing officer has made the addition of ₹ 75,00,000/- disregarding the evidences on record and without discharging her onus and without establishing anything contrary to the agreement of the Appellant and without verifying the Bank Account, existence of Investor and without making fruitful investigation, thus the demand was directed to be deleted. xv. Jurisdictional Hon'ble 1TAT, Mumbai for an identical case i.e. Arceli Realty Limited Vs. The Income Tax Officer 15(1) (1), Mumbai pronounced on 21.04.2017 ITA-6492/Mum/2016-17, the summary of the case is outlined as under:- ....... A.O. merely relied upon the information provided by the office of DGIT(Inv), Mumbai and did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition that the assessee has to dischargexvii. Recent Judgment delivered by Jurisdictional Hon'ble ITAT, Mumbai for an identical case i.e. Income Tax Officer, M/s Shree Laxmi Estate Pvt. Ltd. V/s. 15(3)[3| On 29.12-2017 ITA- 5954/Mum/2016, the summary of the case is outlined as under:- We have heard both the parties, perused the material available on record and gone through the orders of authorities below. The AO made addition towards unsecured loans received from Josh Trading Company Pvt. Ltd. and Viraj Mercantile Pvt. Ltd on the basis of information received from Investigation Wing which revealed that the assessee is beneficiary of bogus accommodation entries provided by Shri Praveen kumar Jain through his bogus companies.................. The AO has brought out facts in the light of statement of Shri Pravinkumar Jain deposed before the Investigation Wing to make addition. Except this there is no contrary evidence in the possession of the AO to disprove the loan transaction from Josh Trading Company Pvt. Ltd. and Viraj Mercantile Pvt, Ltd. On the other hand, the assessee has furnished various details including confirmation letters from the parties, their bank statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the department is free to proceed to reopen their individual assessments in accordance with law, but this amount of share application money cannot' be regarded as undisclosed income u/s. 68 of the Income-tax Act, 1961. Further with the similar facts, similar judgments were pronounced and are hereby outlined as under :- ITAT E Bench in M/s. SDB Estate Pvt Ltd vs. ITO-(5)(3)(2) in ITA No, 584/Mum/20l5: AY 2008-09 has decided similar issue by observing as under:- In view of the above stated legal position and in the light of reliable evidences brought on record by asses see to substantiate identity, genuineness and creditworthiness of shareholders/ lenders, which have not been controverter by the Revenue, the additions made solely on the basis of general statement of Shri Mukesh Chokshi cannot be held to be justified and the same are Accordingly ordered to be deleted. In the result, appeal of the assesses is allowed in part, in terms indicated hereinabove. Further ITAT- D Bench has decided the following cases in favour of the assesses on similar issues. a) ITO - 10(2)(1) vs. M/s. Peep Darshan Properties Pvt Ltd in ITA No. 2117/Mum/20l4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . I find that in the present case, the assessee has made a request to the A. O. to provide an opportunity to cross examine the person whose statement is recorded at the back of the assessee and the AO wants to use such statement against the assessee. On page 2 of the assessment order, the AO has stated that during the course of search in the case of Shri Bhanwarlal Jain and group, various incriminating documents were found as per which, this group has formed various dummy companies with dummy directors and business of these dummy companies was operated from the place which were in the name of Shri Bhanwarlal Jain. He further noted that in course of search, statements were recorded u/s 132 (4)/131 of dummy directors who had admitted that they are mere dummy directors. In Para 5 of the assessment order, the AO noted that the assessee has taken unsecured loan in the form of accommodation entries from M/s Tanika Commodities Pvt. Ltd., the company which was formed by Shri Bhanwarlal Jain and group to provide accommodation entries. He further noted that notice u/s 133 (6) was issued to this company for details of transactions made by it with the present assessee in order to examine the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t least prima facie. Regarding genuineness of the transaction in question, the assessee has brought on record bank statement and loan confirmation to establish that the loan was received by account payee cheque and it was returned in the next year by account payee cheque. Hence, genuineness of the transaction in question is also established at least prima facie. The AO has come to a different conclusion mainly on the basis of the statement of Shri Bhanwarlal Jain Group without providing to the assessee an opportunity of cross examination. Hence, it is seen that except the statement of Shri Bhanwarlal Jain Group, there is no adverse material brought on record by the AO. No shortcoming is pointed out in various documents brought on record by the assessee to establish the identity and credit worthiness of the loan creditor and genuineness of the transaction as noted above. Since, the AO has not provided an opportunity of cross examination of Shri Bhanwarlal Jain Group, the adverse statements of that group cannot be used against the assessee. I hold so by respectfully following this Judgment of Hon.ble apex court rendered in the case of Kishan chand Chellaram vs. CIT (Supra). Once, I e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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