TMI Blog2019 (10) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... sed above, it is well established that the assessee by producing necessary documents viz., ITR Acknowledgements, audited accounts, bank statement copy, PAN Number and confirmations etc has sufficiently established the identity, creditworthiness and genuineness of the loan creditors and interest paid. Therefore, we delete the addition - Decided in favour of assessee. - ITA No.2427/Kol/2017 (Assessment Year:2014-15) - - - Dated:- 6-9-2019 - SHRI A.T. VARKEY, JM AND DR. A.L. SAINI, AM Assessee by: Shri Ravi Tulsiyan, FCA Respondent by: Shri C. J. Singh, Addl. CIT Sr. DR ORDER Per Dr. A. L. Saini: The captioned appeal filed by the assessee, pertaining to assessment year 2014-15, is directed against an order passed by the learned Commissioner of Income Tax (Appeals)-10, Kolkata (in short the ld. CIT(A) ], which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 22/12/2016. 2. However, in this appeal, the assessee has raised multiple grounds of appeal, but at the time of hearing, the main grievance of the assessee has been confined to the issue of addition to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,00,000 12. M/s Ranbhumi Marketing Pvt Ltd 20,00,000 TOTAL 50,00,000 38,59,987 The Ld AO then informed the assessee that information was received from DDlT (Inv), Unit -3(I), Investigation Wing, Kolkata which revealed that the companies mentioned at Serial Nos.1 to 7 of the table given above were run by an alleged entry operator Shri Rajkumar Kothari and those companies were allegedly involved in providing accommodation entries in the form of unsecured loan/share capital to various parties. The statement of Shri Rajkumar Kothari was recorded on 02.03.2016 wherein he had mentioned that he was the director of several companies and used to give accommodation entries to different beneficiaries through jamakharchi / shell companies in lieu of commission. A copy of Statement of Shri Rajkumar Kothari given under oath was provided to the assessee (a copy is being enclosed at pages 1 to 8 of the p/b). It was further mentioned that companies named in Serial no. 8 to 10 and 12 of the table were run by ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mainly refunds of loan from different persons to whom loans were given earlier. However, it was brought to our notice that a copy of the said statement recorded on 25.11.2016 was not provided to the assessee. The Ld AO also relied upon the statement given by another alleged entry operator Shri Biswanath Basak which was also subsequently retracted (copy of the statement and letters of retraction are enclosed at pages 13 to16 of the p/b). The Ld AO noted in his Assessment Order dated on 22.12.2016 that the retractions of these two persons were nothing but an afterthought and therefore Assessing Officer relying upon the original statements, came to the conclusion that the assessee had taken loans from bogus companies and had also given interest on loans taken from alleged bogus companies in previous years. Further in the assessment order, the Ld AO elaborately discussed the modus operandi carried out by paper companies and thereafter alleged and concluded that the assessee had given interest and had taken loans from bogus companies therefore, AO added back u/s 68 of the Act, a total sum of ₹ 88,59,987/-( on account of loans taken amounting to ₹ 50,00,000/- and interest gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this order. 8. Identity : We note that regarding the identity of all the loan creditor companies, it was submitted by the ld Counsel that all the said companies are Private Limited companies duly incorporated under the Companies Act, 1956. Further, all the companies are Income Tax assessee having PAN Nos. as follows: Sr No. Name of loan creditors (company) PAN No. 1 M/s Paritosh Eleetricals Pvt Ltd AABCP50l3E 2 M/s Ranbhumi Marketing Pvt Ltd AAECR5842G 3 M/s vivek Tracom Pvt Ltd AAACY8670J Copies of the ITR Acknowledgment of the creditors for the relevant year are enclosed at Page no. 49, 70 and 91 of the Paper book. In view of the above, the identity of all the parties stands duly proven. 9. Genuineness and Creditworthiness of the Transaction : We note that regarding the genuineness of the transaction, it was stated by the ld Counsel that all the said loans received during the year were duly routed through the regular banking channels of all the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of these documents showing the source of source of funds and the fact that all the transactions took place through proper banking channels, the genuineness, creditworthiness and identity of the transaction stands duly proven. 2. Paritosh Elcctricals Pvt Ltd We note that the assessee had taken a loan of ₹ 10,00,000/- from Paritosh Electricals Pvt Ltd during the relevant year through proper banking channel (being cheque No. 0038128). In this regard a copy of the confirmation of loan given by Paritosh Elcctricals Pvt Ltd to the assessee is enclosed at page 123 of the paper book and a copy of the bank statement of Paritosh Electrical Pvt Ltd evidencing the loan given to the assessee is enclosed at page 124-125 of the p/b. The company is a regular income tax assessee. A copy of the ITR Acknowledgement and Audited accounts of Paritosh Electricals Pvt Ltd is enclosed at pages 49 to 69 of the paper book. As regards the source of ₹ 10,00,000/- it was submitted that Paritosh Electricals Pvt Ltd had received ₹ 20,00,000/- from Machinery Agencies (India) on account of refund of loan as shall be evident from the bank statement of Paritosh Electricals Pvt Ltd. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in completely ignoring all these facts mentioned. Furthermore, the facts as enumerated above clearly show that even otherwise the original statement without taking into account the retraction has no bearing on the present case since all the funds which formed the source of funds for giving the loan to the assessee were existing funds of the loan giving companies and were not new funds introduced to give any alleged accommodation entry. 10. We note that Ld AO had also made addition of ₹ 38,59,987/- on account of interest paid on loans taken in previous years which was confirmed by the Ld CIT(A).We note that assessee had filed the confirmations of loans in the case of parties to whom interest was paid to prove the genuineness of the transaction. Mr. Biswanath Basak, the director of M/s Stardox Vinimay Pvt Ltd and Raina Vyapar Pvt Ltd (being two of the companies to whom interest was paid) also appeared before the Ld AO) and confirmed the loan transaction. It is also pertinent to note that the Ld Assessing Officer had again pressurized the director namely Shri Biswanath Basak to depose that he was a dummy director in the said companies but Mr. Biswanath Basak had later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e their genuineness even otherwise and has simply relied on the retracted statement of Shri Rajkumar Kothari to draw his conclusion. Therefore addition made by Assessing Officer in respect of interest paid is hereby deleted. 11. At the cost of repetition, we state that the assessee had filed with the Ld CIT(A) the bank statements, audited accounts and loan confirmations of the entities concerned. Hence, the assessee has successfully proven the genuineness, identity and creditworthiness of the transactions. In such a scenario, when all the documents have been submitted and the facts of the case clearly explained, there is no room for any doubt with regard to the identity and creditworthiness of the parties and genuineness of the transactions, as noted above, for that we rely on judgment of the Hon'ble Delhi High Court in case of Commissioner of Income-tax v. Lovely Exports P. Ltd reported in [299 ITR 268] wherein it was held as follows: In the case of a company the following are the propositions of law under section 68. The assessee has to prima facie prove (1) the identity of the creditor/subscriber ; (2) the genuineness of the transaction, namely, whether it has been t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owledgment of filing Income-tax returns of the companies, their bank accounts statements for the relevant period but had not produced the directors of the companies. The addition made by the Assessing Officer could not be sustained as the primary onus was discharged by the assessee. The Assessing Officer had not investigated whether the modus operandi by the entry operator discussed by the Investigation Wing existed in the case or not. Even the bank statements as claimed by the Assessing Officer revealed that the assessee had received cheques from the shareholders. 12. We note that the onus of proof is not a static one. Though in section 68 of the Income-tax Act, 1961, the initial burden of proof lies on the assessee yet once he proves the identity of the creditors/share applicants by either furnishing their PAN number or income-tax assessment number and shows the genuineness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the Revenue. Therefore, once the assessee had discharged the primary onus, which was cast upon the assessee, it was incumbent upon the Assessing Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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