TMI Blog2022 (9) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... rated by any independent evidences as to having carried any fictitious trade in diamond as claimed in the statement. After duly verifying the details submitted before him he came to the conclusion that assessee has proved the identity, creditworthiness and genuineness of the transactions and in the similar cases the Coordinate Bench has also deleted the similar additions made in the cases involving PKJ. We are in agreement with the Ld.CIT(A) that assessee has proved the genuineness, identity and creditworthiness in these transactions. It is relevant to note that the assessee has not only taken the loan and also repaid the loan. Therefore, we do not find any reason to disturb the finding of the Ld.CIT(A). Accordingly, ground raised by the revenue is dismissed. - ITA Nos. 3596 And 3597/MUM/2019 - - - Dated:- 27-4-2022 - Shri S. Rifaur Rahman, Hon'ble Accountant Member And Shri Amarjit Singh, Hon'ble Judicial Member For the Assessee : Shri Shankarlal Jain For the Department : Shri T. Shankar ORDER PER S. RIFAUR RAHMAN (AM) 1. These appeals are filed by the revenue against different orders of the Learned Commissioner of Income Tax (Appeals)-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nged addition made u/s 68 towards loan received and subsequently repaid Rs 2,00,00,000. The appellant vide letter dt. 30.12.2015 (Page 10-31) submitted the requisite proof for genuineness of loans, following documents: (a) Copy of loan confirmation of parties from whom loan has been received. (b) Copy of bank statement of the assessee company, duly highlighting the amount of loan received. (c) Copy of bank statement and return of income of concerned 3 parties. It may be seen from the bank statement of the parties that the name of the company is duly reflected in the transaction particulars, with the amount of withdrawal. (d) Loan confirmation for the period ended 31.3.2010, where the loan received by the company has been repaid. (e) Copy of bank statement of the assessee company, duly highlighting the amount of loan repaid and name of the parties in the particulars of the bank statement, in withdrawals. The evidences submitted, it is clear that appellant has received loan from these parties, which has been repaid in subsequent year. The loans were received by cheque, which is duly reflected in the bank statement of the company and the lender parties. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Officer 140 ITR 1010 (Cal.) the court held . 4.2 No evidence to be rejected without verification 4.2.1 CIT v. Genesis Commet (P.) Ltd., 163 Taxman 0482 (Delhi), the court held: . 4.2.2 CIT vs. Gangeshwari Metal Pvt. Ltd 361 ITR 0010 (Delhi) held: 4.2.3 Oriental international co ltd 401 Itr 83(Del) . 4.3. Shri Pravin Jain made a statement during the course of search proceeding in October, 2013 stating that certain transactions carried out by him are of accommodation nature, thereafter he made an affidavit retracting his earlier statement .During the course of appellant's assessment proceedings, transactions are confirmed as genuine under the affidavits filed. They have also filed confirmations, bank statements, showing transactions through banking channel, no cash being deposited in bank accounts as reflected in bank statements as well as copies of acknowledgement of returns of income. Thus the stand taken by Shri Pravin Jain is of a shifting witness and evidence of shifting witness is not a valid evidence. 4.3.1. In the case of C1T vs. Eastern Commercial Enterprises 210 ITR 103 the court stated . 4.3.2. APEEJAY EDUCATION SOCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were relied upon without allowing cross examination. 1TAT, Delhi deleted the addition. The High Court of Delhi held in view of denial of cross examination no substantiate question of law arose from the order of the Tribunal. SLP as filed by the department is being rejected. 4.6.4 High Court of Karnataka in the case of P S Aftab Alam 209 ITR 821 (Karnataka) as well as decision of High Court of MP in case of Prakash Natsha 301 ITR 134 MP and of High Court of Madras in case of M Chinna Swamy 350 ITR 694 (Madras) is relied upon. 4.6.5 High Court of Bombay in case of H. R. Mehta vs. ACIT, Appeal No.58 of 2001 dtd. 30106116. The Hon'ble High Court held in para 16, the court observed: . In para 17, the court concluded: .. 4.6.6 The High Court of Gujarat in case of CIT vs. Ramanbhai B. Patel, Tax Appeal No. 207 of 2008 dtd.20107116 also considered a similar issue. In that case assessee made a confessional statement during the course of search u/s.131 offering additional income.The said 4.7 The Ld. Assessing Officer stated that summons were issued u/s.131 on the registered address of the loan creditors, however, the same could not be served with a remark n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot be said that parties are not available, so merely on the belief that party is not available, it cannot be held that loan creditors are not genuine. Mr Praveen Jain in reply to Q No. 126 stated that office at Panchratna, opera House was vacated three month before(pg 144). The Id AO send notices at Panchratna address in two cases, hence are no notice. Hence, it can not be gain said that parties are non existing. High court of Delhi in case of DWARKADHIS INVESTMENT(DEL)(5.1.7) held that department has all power to enforce presence of loan creditor. 5. Foundation of addition u/s 68, is finding OF INVESTIGATION WING in case of Shri Pravin Kumar Jain, as extensively quoted in order. Appellant supported genuineness and creditworthiness of three creditors by producing all the requisite evidences as enumerated in para 4 above. The creditors further confirmed loan by filling sworn affidavits, all transactions are through banks duly reflected in bank statements. Finding of investigation wing can not be treated as conclusive proof ,not requiring any verification in assessment proceeding by LD AO. Wing is an arm of department and its findings can not be equated with an evidence. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d: 5.1.6 Similarly in the case of CIT VS. GANGESHW14RI METAL PVT. LTD - 361 JTR 10 (Delhi) - The court held.' .. 5.1.7 DWARKADHISH INVESTMENT (P) LTD. 330 ITR 0298(Del) .. 5.1.8 In the case of COMMISSIONER OF INCOME TAX vs. P. MOHANAKALA ORS. Hon' SUPREME COURT OF INDIA observed .. 5.1.9 It is submitted that appellant discharged its burden of proof. in case Ld AO disputes the same, otherwise is to be proved by department. Your honours' kind attention is drawn to NEMI CHAND KOTHARI vs. COMMISSIONER OF INCOME TAX ANR. HIGH COURT OF GAUHATI 264 ITR 0254 .. .. 5.2 The courts, at occasions, considered the applicability of statements recorded under search proceedings on a third party, courts has held that if an assessee disputes correctness of such third party statement the same be not used as evidence unless supplemented by other evidences and subjected to cross examination. The following authorities may be referred: 5.2.1 ITO vs. Superline Construction P. Ltd (ITAT Mumbai) .. 5.2.2 FAIR FIN VEST LTD 357 ITR 0146 (Delhi) .. 5.2.3 BABA SAI FILMS vs. INCOME TAX OFFICER ITAT, BOMBAY TRIBUNAL (D) (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions, Ld.CIT(A) deleted the addition made by the Assessing Officer with the following observations: - I have considered the facts of the case and submission made by the AR. 2. In ground No.3 to 6 the appellant has challenged addition made u/s.68 of Rs.2,00,00,000/-. A 0 states that appellant obtained accommodation entries by way of borrowing from following concern controlled and managed by Praveen Jain. Sr.No Name PAN Amount 1. Easy Mercantile Co. Pvt.Ltd., AAAC07955M 1,00,00,000/- 2. Ryan International AAAPD5172G 50,00,000/- 3. Seven Star Gems AAACPJ5854B 50,00,000/- Total 2,00,00,000/- The assessing officer stated that summons were issued u/s.131 which remained. unserved with the remark. Not found/unattended and appellant was called. upon to produce the lenders fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been repaid. (e) Copy of bank statement of the assessee company, duly highlighting the amount of loan repaid and name of the parties in the particulars of the bank statement, in withdrawals. The AR has drawn my attention towards the loan confirmation of M/s. Easy Mercantile Co. Pvt. Ltd, appellant has received loan Of Rs.50,00,000/- on 13/03/09, Rs.40,00,000/- on 18/03/09 and Rs.10,00,000/- on 21/03/09. Interest of Rs.54,000/- is being credited on which TDS of Rs.11,124/- was deducted. Appellant's bank account with Andhra Bank are being submitted which reflects receipt of all three cheques as borrowed from the said company. An acknowledgement of return of income of the company reflect PAN:AABCE7519A bank statement of the lender company with Development Co-op. Bank are submitted which reflect that all three cheques were issued to the appellant. The loan was repaid on 03/08/09 as per confirmation filed along with interest repayment duly reflected in the bank statement of the appellant with Andhra Bank. In the case of Ryan International loans of Rs.5000,000/- was borrowed by cheque on 04/03/09 on which interest is being credited of Rs.46,667/- TDS deducted of Rs.4,807/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its confirming genuineness of loan are subsequent to date of statement relied. The transactions are being confirmed by Affidavit and there was no reason to reject such Affidavits. The appellant request for cross examination which is not being granted. There is nothing to show that appellant paid any compensatory cash against cheques issued. Even in bank statement of two lenders does not reflect any cash deposit. Transactions being through banking channels, duly confirmed under the freshly filed confirmations and affidavits, there is no reason to reject evidences. Merely statement of having giving accommodation entri.es is not sufficient to make an addition , such statement remain uncorroborated by any independent evidence as to having carried any fictitious trade in diamond as claimed in statement. The AR submitted that the Hon'ble High Court of Delhi in spite of statement given by Mahendra Garg during the course of search having given accommodation entries accepted the genuineness of the transactions in view of documentary evidences Fair Finvest Ltd., 357 ITR 146 (Delhi), Oriental Ind. Co. Ltd., 401 ITR 83 (Delhi), Sanjay M. Jhaveri 168 TTJ 751 (Mumbai) (Tribunal),statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onducted and admitted to be providing accommodation entries. Appellant submitted before ITAT that identity, creditworthiness as well as genuineness is being proved by documentary evidences filed. It was stated that there is no proof of assessee having taken accommodation entries by providing money against the loan. Lender filed confirmation, creditor is on department's PAN, transactions are duly reflected in Balance Sheet. In para 8, the Hon'ble Appellate Tribunal held: From all these details and facts on record, we find that the assessee has discharged its onus cast upon it by filing all the necessary details as called for by the AO to corroborate the transactions of borrowing the money and thereby satisfied all the three main ingredients i.e creditworthiness of the creditors, genuineness of the transactions and identity of the creditors by filing all the details as discussed above which proved that the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors have been established by the assessee. ITAT further held that: The oral statement of a third party recorded by Search authorities which was never paced to be confro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e perused the confirmation filed by the parties, copies of acknowledgement of return of income filed by the lenders for the year under consideration, copies of the bank statement of lenders, which establish that the payment towards loans were received during the year under consideration. Therefore the identity of the lenders was not in dispute. We have also considered all the documents placed on record by the assessee in the shape of statement of accounts and documents to show that the transactions were carried out through banking channels and the confirmations which were filed in the form of ledger accounts which reflect that the assessee had received the amount through RTGS, affidavits of the lenders. All those documents prove the genuineness of the transactions. Now as far as creditworthiness of the lenders are concerned, we have perused the audited accounts of the lenders which shows the creditworthiness of the lenders to grant loans and advances. Further, we also noticed from the record that the lenders have not only granted loans to the assessee but also to various other persons. We have also considered the affidavits of the lenders and from all those documents we find credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not justified in making additions. Similar view has also been taken by the Hon'ble Allahabad High Court in the case of Vijay Kumar Jain (supra) and the Hon'ble Rajasthan High Court in the case of Jai Kumar Bakliwal (supra). 14. In the present case the additions were made on the basis of statement recorded during the investigation carried out by the Investigation Wing. Since no opportunity of cross examination was given to the assessee in respect of the persons whose statements were relied upon by the Revenue, thus the same was considered as breach of principles of natural justice as held by the Hon'ble Bombay High Court in the case of R.W. Promotions (P.) Ltd. (supra). The learned A.R. also drawn our attention to the cases wherein under similar circumstances additions were made and the same were deleted by the Coordinate Bench of the Tribunal in the cases of ACIT vs. Sanjay M. Jhaveri 61 taxmann.com 28, Anil Chhaganlal Jain vs. ACIT ITA Nos. 369 370/Mum/2017, Shree Laxmi Estaste Pvt. Ltd. vs. ITO ITA No. 5954/Mum/2016 ITA No. 2562/Mum/ 2017, ACIT vs. Ramesh Ramswarupdas Jindal ITA Nos. 3091 to 20961Mum/2017, ITO vs. Khushboo Exports Pvt. Ltd. ITA No. 3647/Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that the AO has not looked into all the records furnished by the assessee and even the CIT(A) has also upheld the additions on the basis of suspicion. It is a settled law that suspicion, howsoever strong, may be but it cannot take place of evidence. In the present case, no evidence was brought on record by the AO to show that at any moment cash deposit was made in the bank account of the lenders before making payment to the assessee. The assessee has also placed on record all the documents pertaining to identity and creditworthiness of the lenders and genuineness of the transaction coupled with the document to show that whatever amount was taken by the assessee as loan, the same had already been returned back. Therefore, in view of the matter and the ratio of the decisions in the case law cited we are of the view that the assessee has discharged the onus of proving identity and creditworthiness of the parties and genuineness of the transactions. Therefore we see no reasons for the AO to make additions towards loan under Section 68 of the Act. Hence, we direct the AO to delete the addition made on the basis of loan. Hence the grounds of appeal. raised by assessee are allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer has failed to demonstrate any specific evidence that the assessee in reality obtained accommodation entries, there is no evidence of cash deposit linked to the investor or the assessee having given cash to the investor. Investor has filed its return of income, transactions are through banking channel (Para 21). In para 22, certain decisions has been referred relating to such confessional statement made by others in similar circumstances including Bharti Syntex Ltd IITA Nos. 172 173/Jp/2010 in which the confessional statement of Mr. Mukesh Choksi was dealt with. The findings of Ld. CIT(A) are referred in para 12 wherein after detailed discussion, the Ld. CIT(A) allowed the appeal of the assessee. The Ld. CIT(A) held that assessee has filed audited accounts of the investor, a letter of confirmation along with PAN, address and bank statement and acknowledgement of return of income were submitted. (Pg.198). Ld cit(A) held It can be seen from the observation of the Assessing Officer that he has only referred to the information related to the outcome of search in the case of Shri Pravin Kumar Jain Group who were allegedly providing accommodation entries but the Ld. Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Pvt. Ltd AACCC400M 50,00,000/- Total Rs.1,75,00,000/- The claim of the department was that Shri Pravin Kumar Jain alongwith associate engaged in fraudulent billing activities and giving accommodation entries. In para 5.10 Bombay High Court decision, in this case of Rakesh Ent. in Writ Petition No.167 of 2015 is referred: in that case the assessee took loan from 45 parties out of which 4 parties were belonging to Shri Bhawarla.Jain were considered as non genuine. The loans were taken through account payee cheques, tax was deducted at source department claimed it to be accommodation entries. The Court held that we do not find anything in the said affidavit that establishes there is a reason to believe that income has escaped assessment. The Court also held that they are unable to agree with the department since petitioner has clearly stated that all the payments were made by account payee cheques which were encashed in the bank account of the petitioner in regular course of business. We find that the petitioner has also paid interest on these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary evidence placed on record, the transaction cannot be treated as accommodation entries. The bench further observed: 5.13 As far as the question of validity of the transaction done through M/s.Duke Business P.Ltd. (JPK Trading I Pvt.Ltd., Casper Enterprises P.Ltd. (Ostwal Trading P.Ltd. and Sumukh Commercial Pvt.Ltd. (Capstown Mer.P.Ltd. are concerned, even if some of the transactions entered into by Shri.Pravin kumar Jain Group are found to be not genuine, it does not lead to the conclusion that all the transactions entered into by these brokers were bogus or non-genuine including the transactions related to the appellant. There is no evidence brought in the assessment order to prove the above conclusion, by the AO. The outcome of investigation carried out in the case of Shri.Pravinkumar Jam, the conclusions drawn therein cannot be applied ipso facto to all other cases. Simply relying on the report and statement, the AO cannot conclude that all transactions are accommodation entries. The bench further observed that case of the appellant is covered by the decision of ITAT, T Bench, Mumbai, in the case of Satish N. Doshi HUF Vs. ITO, Ward 21(2)(4), Mumbai i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benches of ITAT having considered the cases on similar facts in favour of assessee, additions made based on similar facts have to be deleted. Therefore, addition made u/s 68 of Rs. 2,00,00,000/- is directed to be deleted. The assessee's ground no. 3 to 6 are allowed. 7. Aggrieved revenue is in appeal before us raising following grounds in its appeal: - 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the disallowance/addition of Rs.2,00,00,000/- on account of bogus loans / unexplained cash credit u/s.68 of the I.T. Act, without appreciating the fact that Pravin Kumar Jain was proved as an entry provider, who provided the entry to the assessee and the same had been accepted by Pravin Kumar Jain. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting the disallowance/addition of Rs.2,00,00,000/- on account of bogus loans / unexplained cash credit u/s.68 of the I.T. Act, without appreciating the fact that the assessee had failed to prove identity, creditworthiness and genuineness of the parties from whom it had claimed to have received the said loans. 3. On the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents relating to the loan transactions which includes loan confirmations of party, bank statement of the assessee, bank statement and return of income of the three parties who has lent the loan to the assessee and loan confirmations. Since assessee has submitted all the relevant information before the Assessing Officer to prove the genuineness of the transactions and he submitted that assessee has no power to bring the parties before the tax authorities. However, assessee filed all the details which is required to prove the genuineness of the transactions. He submitted that it is not the case of the revenue that assessee has deposited any cash or any of the parties who lend the loan to the assessee involved in any kind of cash transactions. 10. Further he submitted that the loans taken by the assessee were refunded, in this regard he brought to our notice Page No. 19 to 21 of the Paper Book. He took us through the various communications filed by the assessee before the Assessing Officer on 13.01.2016 and 12.02.2016 relating to loan transactions. Further he submitted that assessee also filed affidavits from all the parties to prove the genuineness of the transactions, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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