TMI Blog2019 (12) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) in the case of Smt. Bharti N. Patel dated 14.02.2018 wherein addition made by the AO qua Dev Diamond Surat of ₹ 50 lakhs was deleted. Even the interest paid on these loans by the assessee after deduction of tax at source were duly allowed as expense by the AO. Under these circumstances, we are not in a position to subscribe and concur with the conclusion of Ld. CIT(A) that these are paper companies and identities of the creditors and genuineness and creditworthiness of the lenders were not proved especially when the information/evidences having been filed by the assessee in the assessment proceedings and remand proceedings and even the lenders have filed all the evidences before the AO which has been admitted by the AO in the remand report. It is nothing but an addition made by the AO and also confirmed by the Ld. CIT(A) on presumption basis. Further, we find that assessee has not been confronted with any information that the said companies were non genuine and paper companies. In the case of Pr. CIT vs. Veedhata Tower Pvt. Ltd. [ 2018 (4) TMI 1004 - BOMBAY HIGH COURT] held that assessee has discharged his onus which has cast upon him in terms of preamended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- Manmohan Exports Pvt. 55,00,000/- Madhav Gems India 27,00,000/- Yashika Jewels Pvt. Ltd. 30,00,000/- Rashmi Diamond Pvt. Ltd. 50,00,000/- Dev Diamonds Surat 55,00,000/- TOTAL 4,27,00,000/- Smt. Bharti N. Patel Date Receipt Amount 19.05.2011 25,00,000/- 20.06.2011 40,00,000/- 20.06.2011 11,00,000/- 23.08.2011 7,00,000/- 25.08.2011 10,00,000/- Total 93,00,000/- Grand To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on him to reach the creditors/shareholders to ascertain the true facts. It is for the Assessing Officer to make further inquiries with regard to the status of these parties to bring on record any adverse findings regarding their creditworthiness. This is exactly what the AO has done in this case. Appellant filed basic details of PAN and ITR-V and confirmations. AO asked the appellant to file more details like complete set of IT returns P L, Balance Sheets and Bank statements to prove the genuineness and credit worthiness. Appellant failed to file complete details and also failed to produce the parties. AO took the onus on himself and collected the details, issued 133(6) notices to loan creditors. AO analyzed and proved that the loan creditors of the appellant have no capacity to extend such huge amounts based on the businesses and also gave a finding based on observations from the documents that these companies are paper companies rotating the entries. The loan creditor companies generally have no place of business for which they pay rent, no electricity expenses are claimed, no salary, no opening stock, no other administrative expenses are seen in the accounts. Reliance is placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business activity. The share subscribers did not have their own profit making apparatus and were not involved in business activity. They merely rotated money, which was coming through the bank accounts, which means deposits by way of cash and issue of cheques. The bank accounts, therefore, did not reflect their creditworthiness or even genuineness of the transaction... 30. What we perceive and regard as correct position of law is that the court or tribunal should be convinced about the identity, creditworthiness and genuineness of the transaction. The onus to prove the three factum is on the assessee as the facts are within the assessee's knowledge. Mere production of incorporation details, PAN Nos. or the fact that third persons or company had filed income tax details in case of a private limited company may not be sufficient when surrounding and attending facts predicate a cover up. These facts indicate and reflect proper paper work or documentation but genuineness, creditworthiness, identity are deeper and obtrusive. Companies no doubt are artificial or juristic persons but they are soulless and are dependent upon the individuals behind them who run and mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciated the facts on record and the various evidences filed by the assessee and also by the loan creditors. The Ld. A.R. submitted that there is no allegation that these loans were taken from the various entities or concerns related to Shri Pravin Kumar Jain or Shri Bhanwarlal Jain. Even the AO admitted in the remand report that the assessee has filed various evidences in the form of PAN, confirmations of loans, bank statements, balance sheets, names and addresses of the lenders etc. The Ld. A.R. submitted that even the notice issued under section 133(6) of the Act to these parties in order to verify the genuineness of the transactions were duly responded by these parties by filing necessary evidences in support of the advancing of loans to the assessee. The Ld. A.R. submitted that the loan creditors in response to notice under section 133(6) filed the following information: Assesses ledger account in his books for the A.Y 2012-13 and subsequent year till the loan repaid. j. Loan confirmation. k. Bank statement reflecting loan given and received back. I. Mode of receipt and payment of loan. m. Whether a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary evidences including loan confirmation. Besides the said party has also filed loan confirmation in response to notice issued under section 133(6) of the Act which was not accepted by the Ld. CIT(A) without any application of mind. The Ld. A.R. also submitted that if AO has used any material against the assessee which was in his possession of the revenue, the same was not confronted to the assessee at all and on this count also the order passed by the AO is bad in law. 7. The Ld. D.R. while relying on the order of Ld. CIT(A) submitted that the order of AO has rightly been upheld by the Ld. CIT(A) as the assessee has failed to satisfy the three ingredients as envisaged in section 68 of the Act i.e. identity of the parties and , creditworthiness and genuineness of the transactions. The Ld. D.R. submitted that though the assessee has filed the evidences in the form of copies of confirmations of the lenders, bank statements, ITRs, PAN cards, copies of balance sheet etc. However, the documents furnished by the assessee were incomplete and therefore could not be relied upon. The Ld. D.R. submitted that even the notices issued to the lenders under section 133(6) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and report, a copy of which is filed at page No.35 to 39 and the relevant para is 3.1. We have also examined the appellate order passed by the Ld. CIT(A) in the case of Smt. Bharti N. Patel dated 14.02.2018 wherein addition made by the AO qua Dev Diamond Surat of ₹ 50 lakhs was deleted. We also note that even the interest paid on these loans by the assessee after deduction of tax at source were duly allowed as expense by the AO. Under these circumstances, we are not in a position to subscribe and concur with the conclusion of Ld. CIT(A) that these are paper companies and identities of the creditors and genuineness and creditworthiness of the lenders were not proved especially when the information/evidences having been filed by the assessee in the assessment proceedings and remand proceedings and even the lenders have filed all the evidences before the AO which has been admitted by the AO in the remand report. Under these circumstances, it is nothing but an addition made by the AO and also confirmed by the Ld. CIT(A) on presumption basis. Further, we find that assessee has not been confronted with any information that the said companies were non genuine and paper companies. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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