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TMI Blog2017 (8) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... accommodation entries by way of unsecured loans and share application money. Hence the AO reopened the assessments of both the years and assessed the above said amounts of Rs. 40.00 lakhs in both the years under section 68 of the Act. The Ld CIT(A) deleted the additions in both the years and hence the revenue has filed these appeals before the Tribunal. 3. The Ld D.R placed strong reliance on the order passed by the assessing officer in both the years. However, the Ld A.R contended that the Ld CIT(A) has deleted the additions by making detailed examination of facts and by applying relevant laws laid down by the Courts. 4. I have heard rival contentions and perused the record. I notice that the Ld CIT(A) has thoroughly examined the facts and also considered various case laws and accordingly arrived at the conclusion that the additions made by the AO in both the years are not sustainable. For the sake of convenience, I extract below the operative portion of the order passed by Ld CIT(A) in both the years under consideration:- (A) ITA No.2979/Mum/2017 - Assessment year 2008-09:- 6.3.1 I have considered the facts of the case as well as assessment order passed by the AO and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as bogus. The AO has not been able bring on record any valid material or evidence to discredit the evidences and explanation given by the appellant other than merely relying on a bald statement by alleged Shri Pravin Kumar Jain as recorded by Investigation Department without himself making any efforts to bring on record any valid or corroborative evidence against the parties. The AO has been unable to demonstrate any relationship between PKJ and the appellant. The other reasons adduced by the AO such as jointly planned retractions by six individuals, alleged control over the thirty-three companies listed by the AO etc have no real connection with the addition under section 68 of the Act made in case of the appellant. The AO has been unable to refute the clear cut and cogent evidence submitted by the appellant and available on the AO's record, testifying to the genuineness of the loans. The source of the said loans thus stands proven. As has been held in several decisions of superior judicial authorities [Murlidhar Lahorimal v CIT [280 ITR 312 (guj)], LabhchandBohra v ITO [219 ITr 571 (Raj)] and CIT v Dwarkadhish Investment Private Limited [299 'TR 268 (Del)], the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Revenue has all the power and were withal to trace the person. AO ought to have issued notice u/s 133(6) or summons u/s 131 to share applicant companies to substantiate his findings in respect of bank account discrepancy at third and fourth level before drawing conclusions. Merely because the AO has not fulfilled his duty to show how the companies are bogus or their relationship with Shri Pravin Kumar Jam, addition u/s 68 cannot be justified in hands of the appellant. Further the appellant has also invited attention to the ruling of Hon'ble Mumbai Tribunal in the case of ACIT vs M/s Cagandeep Infrastructure Pvt Ltd (2014-TIOL-656-ITAT-MUM) wherein it has been held that no addition can be made u/s 68 for huge share premium received by the assessee as it is a prerogative of the Board of Directors of the company to decide the premium amount and it is the wisdom of the shareholders whether they want to subscribe to such a heavy premium and the Revenue Authorities cannot question the charging of such huge premium and the Revenue cannot question the charging of such huge premium without any bar from any legislated law of land. Further once the initial burden of proof has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count was found to be false, the disallowance was not justified. And the fact that Sales Tax was not paid by the party who sold the goods does not affect the genuineness of transaction. (iii) In the case of ACIT v. KishanLal Jewels (P.) Ltd. (2012) 147 TTJ 308 (Del.) (Trib.) it has been held that the assessee while furnishing necessary information regarding the transactions and the aforesaid parties like purchase bills issued against goods purchased, sales-tax registration numbers of the parties, PANs, their confirmations and bank statements showing the debit of the amount paid through Account Payee cheques to them in the account of the assessee and credited in the Bank account of sellers, had discharged its primary onus, thereafter the onus shifted on the department to rebut the same .Addition under section 69C was held to be not justified. (iv) In the case of G. G. Diamond International v Dy. CIT (2006) 104 TTJ 809 (Mum.) (Trib.) it has been held that it is not case of the Revenue that the assessee is not maintaining books of account. The purchases are recorded in the books of account. Payments are made by cheque to the immediate purchasers. They accepted and confirmed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the vendor denied the transaction. The Court held that though the assessee's contention that he had no bank account was found to be false, the disallowance was not justified. And the fact that Sales Tax was not paid by the party who sold the goods does not affect the genuineness of transaction. (iii) In the case of ACIT vs. Kishanlal Jewels (P.) Ltd. (2012) 147 TTJ 308 (Del.) (Trib.), it was held that where the assessee while furnishing necessary information regarding the transactions and the aforesaid parties like purchase bills issued against goods purchased, sales- tax registration numbers of the parties, PANs, their confirmations and Bank statements showing the debit of the amount paid through Account payee Cheques to them in the account of assessee and credited in the Bank Account of sellers, had discharged its primary onus, thereafter the onus shifted on the department to rebut the same. Addition under section 69C was held to be not justified. (iv) In the case of G. G. Diamond International v Dy. CIT (2006) 104 TTJ 809 (Mum.) (Trib.) it was held that it is not case of the Revenue that the assessee is not maintaining books of account. The purchases are recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned that under the Income Tax Act, if an amount is credited into the books of account held by the assessee and no explanation is given or where such explanation given by the assessee for the amount credited is not acceptable or satisfactory in the opinion of the Assessing Officer, the amount is deemed to be an undisclosed income which would form part of the total income chargeable under the Income Tax Act. Applicability of Section 68 of the Act can be made applicable in the following cases:- a) When the assessee fails to prove the genuineness of the transaction that has entered into his book of accounts. b) When there is no satisfactory explanation provided on the part of the assessee to the assessing officer with respect to the amount credited into the accounts. c) When there are documentary evidences required to support the validity of the amount credited but there are no such documents furnished by the assessee. Explanation as to nature and source of transaction. Where any sum is found credited in the book 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the creditworthiness of the creditor is to be seen and once the creditworthiness of the creditor is substantiated by the appellant, no addition can be made unless there is any concrete material to counter the same. a. It has been held by the Hon'ble High court of Madhya Pradesh in the case of CIT vs. Vaibhav Cotton (P) Ltd. as reported in [2013] 36 taxmann.com 429 (Madhya Pradesh) where all the full particulars, inclusive of confirmation with name, address and PAN Number, copy of income tax returns, balance sheet, prof it and loss account and computation of total income in respect of all creditors/lenders were furnished and when it had been found that loans were furnished through cheques and loan account were duly reflected in balance sheet, the Hon'ble court held that Assessing Officer was not justified in making addition. b. The Hon'ble High Court of Rajasthan, in the case of CIT vs JaikumarBakliwal as reported in [2014] 45 taxmann.com 203 (Rajasthan) has held that where "Unsecured loan raised by assessee from relatives was added in income of assessee on ground that none of creditors were able to prove source of amount advanced to assessee and immediately bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegation that he had provided any entry to the appellant company either in form of loan or share application money. In the present case the appellant had produced before AO all the relevant details to justify that share capital as well as loan were received from the existing identifiable parties, the transactions were done through banking channel and the relevant party had own sufficient funds to give loan or share application money to the appellant which was not controverted by the AO by reliable evidences. 6.3.4. Thus, it has to be said that the appellant had done everything in its power to prove the 3 ingredients required to prove the satisfactory nature of the loan transactions. In these circumstances, the onus had shifted to the AO. If the AO was still not satisfied, he had the option of making inquiries from the alleged lenders by summoning them. However, as seen from the assessment order, he did not any such thing. Further, if the AO was not satisfied with what had been given to him by the appellant, he was duty bound to specify what more material he wanted the appellant to furnish. The AO never asked for any further material, though time and again the appellant asked in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee; It has been judicial position that where assessee brought evidence on record establishing that share applicants were not fictitious persons and, moreover; they paid money by cheques, no addition could be made to assessees income in respect of share application money. The AO in this case has primarily placed reliance on the search conducted by the DDIT(Inv)-111(2) Mumbai in the case of Shri Praveen Kumar Jam. Ld AO has made the addition u/s 68 towards loan taken by the appellant from 4 parties of Rs. 40 lakhs on the basis of this information received from Investigation wing from search conducted in the case of third party. However AO has not made any further enquiry to corroborate his findings. A perusal of the documentary evidences brought on record by the Appellant show that the onus of proving the genuineness of transaction, identity and capacity of the lenders has been discharged by the Appellant. The same is evident from the list of documents submitted by the Appellant letter dated 7.12.2015 with respect to the lenders of the unsecured loans. Appellant has placed on the record of the AO copies of Annual audited reports, Directors report PAN Form 16A demo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 133(6) or summons u/s 131 to share applicant companies to substantiate his findings in respect of bank account discrepancy at third and fourth level before drawing conclusions. Merely because the AO has not fulfilled his duty to show how the companies are bogus or their relationship with Shri Pravin Kumar Jam, addition u/s 68 cannot be justified in hands of the appellant. In view of the above and based on the facts in the case on hand, I find that the appellant has indeed proven the genuineness of the loan creditors. Accordingly the addition made by the AO under section 68 of the Act on that count to the tune of Rs. 40,00,000/- cannot be sustained. Similarly the consequential disallowance of Rs. 1,51,694/- also cannot be sustained. 5. I notice that the Ld CIT(A) has passed a detailed order by examining the facts relating to the issues under consideration and also applying the law settled by Hon'ble Courts in this regard. I notice that the revenue could not furnish any material on record to rebut the reasoning given by Ld CIT(A). Under these set of facts, I am of the view that the orders passed by Ld CIT(A) do not call for any interference. Accordingly I uphold the same in b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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