TMI Blog2019 (7) TMI 1598X X X X Extracts X X X X X X X X Extracts X X X X ..... n order afresh, after allowing the assessee to cross-examine the aforesaid parties. We direct the assessee to file the relevant documents/evidence before the AO. Needless to say, the AO would give reasonable opportunity of being heard to the assessee before finalizing the order. - Revenue appeal is allowed for statistical purposes. - ITA No. 5516/MUM/2017 - - - Dated:- 10-7-2019 - Shri Sandeep Gosain (Judicial Member) And Shri N.K. Pradhan (Accountant Member) For the Assessee : Mr. Bhupendra Shah, AR For the Revenue : Mr. Rajeev K. Gubgotra, DR ORDER PER N.K. PRADHAN, AM This is an appeal filed by the Revenue. The relevant assessment year is 2014-15. The appeal is directed against the order of the Commissioner of Income Tax-9, Mumbai [in short CIT(A) ] and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the Act ). 2. The ground of appeal filed by the revenue reads as under: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing relief to the assessee on account of bogus unsecured loans even though there was a conclusive finding that the loan creditors have not been found at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AADCS4721L 80,00,000/- 1,05,041/- 11. TrishalaVyaparPvt .Ltd. 167/4, LenineSarini Kolkata AABCT2465Q 0/- 3,24,000/- Total 4,05,00,000/- 49,62,081/- The DDIT has given a report to the AO stating that out of 11 companies, 9 are not found at the given address and the rest two companies i.e. M/s Onkarmal Consultancy Pvt. Ltd. (Director-Mr. Rajkumar Bajaj) and Cyndrella Tie-Up Pvt. Ltd. (Director-Mr. Amit Khemka) are just the entry provider as per the statement on oath given by Mr. Amit Khemka during the search. Thereafter, the AO provided to the assessee a copy of the commission report along with the show-cause notice dated 23.12.2016. In response to it, the assessee submitted a reply on 26.12.2016. The AO was not convinced with the said reply of the assessee for the reason that the loan parties could not be traced at the giving address and the assessee failed prove the primary onus i.e. is the existence of the parties. Further observing that 2 companies out of the said l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,364/- 2,79,80,000/- (-)1,98,801/- 20,300/- 11. Trishala Vyapar Pvt. Ltd. 46,90,99,264/- 46,97,18,400/- (-) 7,35,487/- 1,50,450/- During the course of assessment proceedings, the assessee had submitted banks statements along with confirmation of the above companies. The AO observed that the mere receipt of loan through electronic means is not enough to prove the genuineness of transaction. Thus taking into account the above facts and the findings of the commission sent u/s 131, the AO made an addition of ₹ 4,54,62,081/- which includes interest of ₹ 49,62,081/- u/s 68 of the Act. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). In the order dated 27.06.2017, the Ld. CIT(A) observed that (i) it is settled position that the source of source cannot be questioned and the AO has not verified the amount of paid-up capital of the company and the net worth, (ii) the AO has also not verified the amount of investments of loan creditors in shares of the company held as stock-in-trade or investment, loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued by the AO incorporating therein (i) letter of loan creditor, (ii) proof of filing of Income Tax Return by the loan creditor, (iii) audited accounts of loan creditor and bank statement of the loan creditor. The AO passed the assessment order u/s 143(3) on 30.12.2016. It is submitted by him that as per the investigation report given by the DDIT, 9 out of 11 companies are not found at the given address and the balance 2 companies are just entry providers. Referring to the income of the said 11 companies, the Ld. DR submits that those companies were having very low income in their profit and loss account so as to justify having given such huge loans to the assessee. Referring to the judgment of the Hon ble Supreme Court in Pr. CIT v. NRA Iron Steel (P.) Ltd. (2019) 103 taxmann.com 48 (SC), the Ld. DR submits that where assessee received share capital/premium, however, there was failure of assessee to establish creditworthiness of investor companies, the AO was justified in passing assessment order making additions u/s 68 for share capital/premium received by the assessee-company. It is stated by him that in the above case, several investor companies were found to be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, and (iii) the CIT(A) also further stated that no addition can be made by the AO on the basis of statement of third parties and hence no addition is called for. In respect of the above two parties, the Ld. counsel submits that the observation made by the AO is erroneous because although Mr. Raj Kumar Bajaj and Prabhat Goyl (Onkarmal) and Mr. Amit Khemka and Mr. Anurag Lakkar (Cyndrella) are directors in these companies, the statement recorded was of Mr. Arun Kumar Khemka who is a third party, having no concern with the company and moreover para no. 3.5 is contradicting para 3.1 so far as payment of interest to these two companies is concerned. Regarding the observation of the AO in respect of analysis of ITR of loan creditors and that the net worth of the loan creditors were very high due to share premium, the Ld. counsel submits that (i) the CIT(A) has stated that the AO relied upon the commission sent to the ADIT the copy of which was not provided to the assessee and (ii) the CIT(A) has stated that the assessee cannot be called upon to explain the source of source of the said income in its hands. Further, the Ld. counsel submits that (i) there is no bar of ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, the assessee must prove the following: (i) the identity of the creditor, (ii) the capacity of the creditor to advance money; and (iii) the genuineness of transaction. After the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts to the Department as held in Shankar Ind v. CIT 114 ITR 689; Prakash Textile v. CIT 121 ITR 890; CIT v. United 187 ITR 596; Rajshree v. CIT 256 ITR 331; Ashokpal v. CIT 220 ITR 452, 454; CIT v. Metachem 245 ITR 160; CIT v. Shree Gopal 204 ITR 285; MOD Creations P. Ltd. v. ITO 354 ITR 282. In the instant case, in response to the show cause notice dated 23.12.2016, the AR of the assessee filed a written submission dated 26.12.2016 before the AO stating the following : With reference to the Report of DDIT (Inv.) Unit 1(2), Kolkata we have been directed by the assessee to inform you that the accountant of the assessee while preparing loan confirmation had not stated PIN Code no. of the loan creditors and in some case the name of building of the loan creditors were not stated and therefore the summons u/s 131 may not have been served on the assessee but to our surprise in many ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correcting or contradicting anything prejudicial to their view. Cross-examination is allowed by procedural rules and evidently also by the rules of natural justice. Any witness who has been sworn on behalf of any party is liable to be cross-examined on behalf of the other party to the proceedings. The Hon'ble Supreme Court in State of Kerala vs. K.T. Shaduli Grocery Dealer AIR 1977 SC 1627, recognised the importance of oral evidence by holding that the opportunity to prove the correctness or completeness of the return necessarily carry with it the right to examine witnesses and that includes equally the right to cross-examine witnesses. In ITO vs. M. Pirai Choodi (2012) 20 taxmann.com 733 (SC), the Hon'ble Supreme Court has held that Order of assessment passed without granting an opportunity to assessee to cross-examine, should not have been set aside by High Court; at most, High Court should have directed Assessing Officer to grant an opportunity to assessee to cross-examine concerned witness. 7.3 In the case of CIT v. Jansampark Advertising Marketing (P.) Ltd. (2015) 56 taxmann.com 286 (Del.), the Hon ble Delhi High Court, dealing with section 68 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
