TMI Blog2019 (12) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... SHARMA (AM): This is an appeal by the revenue against the order of the Ld. CIT(A) for the A.Y 2014-15 in the matter of order passed u/s 143(3) of the Act. 2. The only grievance of the revenue relate to deleting addition made on account of unsecured loan and interest paid thereon amounting to ₹ 16,14,410/-. As many as 5 grounds of appeal has been taken, but the crux of the issue revolves around addition made by A.O on account of unsecured loans from six parties. 3. Rival contentions have been head and record perused. Facts in brief are that the assessee is a company engaged in the business of property developers. The return of income for the year under appeal was filed on 28.11.2014 declaring NIL total income. Assessment u/s 143(3) of the act was completed by the A.O on 27.12.2016 determining income at ₹ 1,75,00,000/-. During the course of assessment proceedings, the Ld. AO observed that as per the information received from investigation wing of the IT department a search action u/s 132 of the Act was conducted in the case of Mr. Pravin Kumar Jain Group on 03.10.2013. As per the said information, the assessee comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dur Bhatt, recorded by the Department u/s 132 of the Income Tax Act, 1961 on 09 February, 2016. The Appellant pointed out that through Serial No 5, 6 7 of the reply to 0 No. 15 posed to Vipul Bhatt, he has categorically stated that the above lender companies have given Bogus Unsecured Loan entries only to one M/s Moraj Building Concepts Private Limited. it was never an averment of Mr Vipul Bhatt that he had provided accommodation loan entries to the assessee through the above lender companies. Moreover, Mr Vipul Bhatt has retracted his statement by an affidavit made on 02nd September, 2016. It is settled law that when there are two contradictory statement of a person, the retracting statement is to be accepted unless it is provided otherwise by bringing in corroborative evidences. The AO, in this case, has merely relied upon the statement of Mr Vipul Bhatt (which was already been retracted) and did not make any inquiries with the lender companies to establish the genuineness of the transaction. The LAR also submitted a copy of the affidavit dated 15th May, 2014 made by Shri Praveen Jam, wherein he has retracted his earlier statements record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement has been relied upon during the course of assessment, which could have held the assessee to rebut the statements, the addition made basis the statement is not correct as there is a violation of the principle of natural justice. This principle has been settled time and again by the Higher Courts. Section 68 of the Act casts the responsibility upon the assessee to prove the identity of the creditors, capacity of the creditors and genuineness of the loan. The assessee has been able to establish the identity of the cash creditors, their credit worthiness and the genuineness of transaction by furnishing evidence like their IT. details, mode of payment, etc. Once the assessee has discharged the obligation of establishing the identity, creditworthiness of those parties as well as genuineness of the transaction, the onus now shifts on the AO. It is noted that the A.O has not taken any steps to identify the creditworthiness of the lender companies as well as genuineness of the loan given. The AO has merely relied on the statements of Shri Praveen Kumar Jam Shri Gautam Jain and Shri Vipul Bhatt ignoring the fact that these statements were later retracted by them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while granting the loans. I have also perused the decisions cited by the assessee in its submissions. The AO has not discharged his onus of rebutting the documents submitted by the assessee by recoursing to the means of initiating inquires with the lender parties or issuing summons and producing the party for cross examination or proving that the transaction was an adjustment entry and that the cash had exchanged hands. The assessee also submitted the details of confirmation of loans of all the parties with their income tax acknowledgements of the return filed and financial statements and bank statements. On a perusal of the bank statement, it is noted that no cash have been deposited prior or subsequent to the amounts lent to the assessee. There was sufficient creditworthiness of the lending companies and bank balance before lending the monies to the assessee. The AO has not considered these evidences filed by the assessee and simply relied on the statements of Shri Praveen Kumar Jam, Shri Gautam Jain and Mr. Vipul Bhatt of which the statements of Shri Praveen Kumar jain and Mr. Vipul were retracted by them later without independently verifying any facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the claim of the department and therefore the addition of ₹ 75 lakhs is to be deleted. The Ld. CIT('A) failed to note while confirming the addition or Ps. 75 lakhs that the entire enquiry by DGIT (Inv.), Mumbai and the information received by the Assessing Officer about Mr. Praveeen Kumar Jain was used against the appellant without giving a copy of the evidence/statement received from the DGIT (Inv.), Mumbai, thus violating the principles of natural justice and on this ground alone, the entire assessment most be quashed and more so that addition of ₹ 75 lakhs by the CIT(A). The Honorable Tribunal considered various judgments and finally came to the following conclusion: 9. 1. A plain reading of the assessment order demonstrate that the A. 0. merely went by the investigation done by the Office of D.G.l (Investigation), Mumbai. No enquiries or investigation was carried out. No evidence to controvert the claims of the assessee was brought on record by the A. 0. Even the statement of Mr. Praveen Kumar was not supplied. Nothing is on record about the result of investigations done by DGIT (Inv.), Mumbai. The papers filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the said lender parties and delete the addition made by the A.O. This ground of appeal is allowed . 5. Against the above order of the CIT(A) the revenue is in further appeal before us. 5.1. At the outset, ld. AR placed on record order of the Tribunal in the case of group concerns M/s. Manba Finance Ltd in ITA No.1448, 1449 1461/Mum/2017 dated 15/10/2018 for the A.Yrs.2013-14, 2010-11 and 2011-12 wherein under similar facts and circumstances, the Tribunal have confirmed the order of CIT(A) for deleting similar additions made by the AO during the course of very same search. 5.2. Ld. AR also relied on the findings recorded by CIT(A) to the effect that loan was genuine and was repaid in next financial year. He also invited our attention to the observation of CIT(A) to the effect that the parties from whom loan was taken had sufficient creditworthy 5.3. On the other hand, ld. DR relied on the order passed by the AO and contended that CIT(A) was not justified in deleting addition so made. 6. We have considered the rival contentions and gone through the orders of the authorities below and foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009. 5. CIT Vs. Ashwani Gupta, 322 ITR 396 (Bom) 6.3 It was contented by Ld. AR that in the statement of Shri Vipul Vidur Bhatt, he has replied regarding unsecured loans to only one party M/s Moraj Building concepts Pvt Ltd., and he has nowhere mentioned the name of the assessee company. Shri Vipul Vidur Bhatt has retracted the statement on 02.09.2016 by making an affidavit before notary public. Similarly, Shri Pravin Kumar Jain has retracted his statement on 15.05.2014 by making an affidavit before notary public. On page No. 8, Ld. CIT(A) has relied on submission made by assessee that the AO should not have relied on the three original statements made by Shri Vipul Vidur Bhatt and Shri Pravin Kumar Jain recorded during the course of search when they retracted their statements and in substance two contradictory statements made by these persons are available. Then the A.O should rely on the retraction statement. 6.4 Ld. AR relied on the decision of Hon ble Supreme Court in the case of M/s. Mehta Parikh Co., reported in 30 ITR 181, wherein it was held that once a statement given on oath is retracted, AO has to examine that pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 366 ITR 232 (P H), Hon'ble Gujarat High Court decision in the case of CIT v. Sachitel Communications P. Ltd. (2014) 227 Taxman 219 (Mag) and others. 42. In our considered opinion, these case laws duly support the proposition canvassed by the assessee. In our considered opinion, the A.O. has not brought on record any cogent, adverse material to rebut the credibility of the corporate entity from whom loan has been taken. As already pointed out by us as above, that these corporate entities were found by the A.O. to have acquired funds by borrowals and acceptance of share capital and share premium. This by itself cannot lead to presumption that these sources are bogus without any enquiry. In these circumstances, in our considered opinion, the Id. DR's request that this issue be again remitted to the file of the A.O. to make further necessary enquiries cannot be entertained. The decision of the Hon'ble Karnataka High Court referred by the Id. DR was on a different set of facts, wherein, the Hon'ble Karnataka High Court on the facts and circumstances of the case had upheld the certain direction of the ITAT, In the present case, as pointed out hereinabo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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