TMI Blog2023 (3) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... l not have application to the present case. CIT(A) was justified in deleting the addition - Accordingly, we confirm the order passed by him on this issue. Decided in favour of assessee. - I.T.A. No. 1410/Mum/2022, C.O. No. 100/Mum/2022 - - - Dated:- 27-12-2022 - B.R. Baskaran (AM) And Shri Rahul Chaudhary (JM) For the Assessee : Shri Rakesh Joshi For the Department : Shri Manoj Kumar Sinha ORDER PER B.R.BASKARAN (AM) :- The appeal filed by the Revenue and cross objection filed by the assessee are directed against the order dated 30.3.2022 passed by the learned CIT(A), National Faceless Appeal Centre, Delhi and it relate to A.Y. 2012-13. 2. The Revenue is aggrieved by the decision of the learned CIT(A) in deleting the addition of Rs. 7.20 crore made by the Assessing Officer under section 68 of the I.T. Act. In the cross objection the assessee is challenging the validity of reopening of the assessment. 3. Facts relating to the case are stated in brief. The assessment in the hands of the assessee for the year under consideration was completed under section 143(3) of the Act on 31.12.2014. The Revenue carried out search and seizure action in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an, copy of approval/sanction letter received from the Municipal authority. The AO also asked the assessee to furnish documentary evidences to prove identity, credit worthiness and genuineness of the parties from whom advance was received. 6. The assessee submitted that it had received booking advances from the above said three concerns. Subsequently, these concerns cancelled the booking and hence the advances were returned back. The assessee submitted following evidences in support of above said explanations:- 1) Copy of letter of provisional allotment of residential unit 102 105 given to M/s Karishma Diamond Pvt Ltd dt. 07/12/2011. 2) letter of cancellation of allotment of residential unit 102 105 given to M/s Karishma Diamond P Ltd dt 07-12-2011. 3) copy of letter of provisional allotment of Unit no. ABC-201 given to M/s Marine Gems P Ltd dt. 08/06/2011. 4) letter of cancellation of allotment of Unit no. ABC-201 given to M/s Marine Gems Pvt Ltd dt. 04/02/2013. 5) copy of letter of provisional allotment of Unit No. ABC-202 205 given to M/s Maniratnam Exim P Ltd dt 08-06-2011. 6) letter of cancellation agreement of Unit no. ABC 202 205 given to M/s M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not by itself establish that gift was genuine. (b) Jaipur bench of ITAT in the case of M/s Kachwala Gems vs. JCIT (ITA No.134/JP/2002 dated 10-12-2003 approved by Hon ble Supreme Court in the case of M/s Kachwala Gems vs. JCIT (2006)(206 CTR (SC) 585, 288 ITR 10 (SC), wherein it was held that even payment by account payee cheque is not sufficient to establish the genuineness of purchases. 8. Before Ld CIT(A), the assessee reiterated its stand that it has received only booking advances from the above said three concerns. It was also submitted that the assessee has also proved the identity of the parties, credit worthiness of the parties and genuineness of transactions by furnishing following documents:- - Copy of PAN and address of the parties. - ITR Acknowledgement - Financials of the said parties. - Bank Statements of the respective parties highlighting payments made to appellant company. - Ledger confirmations from the respective parties. - Assessee s bank statement highlighting the amount received from the respective parties. It was submitted that the assessee has discharged its burden placed upon its shoulders u/s 68 of the Act, but the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d evidences furnished by the assessee. The Ld D.R submitted that the Mumbai bench of Tribunal, in the case of ITO vs. M/s Pravir Polymers Pvt Ltd (ITA No.2595/Mum/2019 dated 29-04-2022) has confirmed addition of accommodation loans taken by the assessee from entry provider. 12. The Ld A.R, on the contrary, strongly supported the order passed by Ld CIT(A). He submitted that it is a prevalent trade practice in Mumbai in the real estate industry to receive booking advances prior to launching of projects. It is primarily in the nature of seed capital for the builders. He submitted that this kind of practice was prevalent till the introduction of Real Estate Regulation Act (RERA). He submitted that the assessee had received booking advances from the above said three parties in the normal course of it business activities before RERA, which has been originally accepted in the assessment proceedings completed u/s 143(3) of the Act. However, the assessment has been reopened on the basis of statement given by the main person of the above said three companies, viz., Shri Gautam Jain. He submitted that the AO has extracted only certain portion of the statement given by Shri Gautam Jain and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the facts of the present case. 15. In the rejoinder, the Ld D.R submitted that the booking advances claimed to have been received by the assessee would also fall within the scope of sec.68 of the Act. With regard to the financial statements of the three creditors, the Ld D.R submitted that these companies did not have capital and their profitability was also very low. They have borrowed loans from some other companies and used the same to give loans to the assessee company. Accordingly, he submitted that it cannot be said that the credit worthiness of these three parties are proved. He further submitted that the repayment of loan or booking advance is not relevant for examining cash credits u/s 68 of the Act. He submitted that, in the case of Pravir Polymers P Ltd also, the addition was made on the basis of information received from Investigation wing of the department and the same was confirmed by the Tribunal. 16. We heard rival contentions and perused the record. In the instant case, the addition has been made u/s 68 of the Act, wherein cash credits, which are essentially capital receipts, are deemed to be revenue receipts by legal fiction, if the assessee fails to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A):- 7.1 Notice u/s 148 was issued on the basis of information received from DGIT(Inv.), Mumbai. A search and seizure action was carried out in the case of Gautam Jain Group. The beneficiaries of the accommodation entries taken were identified at the time of search. The accommodation entries so taken are in the nature of unsecured loans. The above group provide accommodation entries of unsecured loans against cash. As per the information, the above assessee company is one of the beneficiaries of the accommodation entries taken in F.Y. 2011-12 relevant to A.Y. 2012-13 and has taken accommodation entry amounting to Rs.7,20,00,000/-(unsecured loan) from the following parties:- Sr. No. Name of the party Amount (In Rs.) (i) Karishma Diamond Pvt. Ltd. 75,00,000/- (ii) Maniratnam Exim Pvt. Ltd. 3,23,39,000/- (iii) Marine Gems Pvt. Ltd. 2,15,00,000/- Total 7,20,00, 000/- The AO noted that the revenue is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential unit and copies of cancellation of allotment of residential units, confirmation from parties from whom advances were received their PAN No., are all on record. In my view the AO should have given a finding in respect of each person who had given the deposit/advance/credit. To add up all without making proper inquiries is not the correct may to proceed. It is well-settled that under section 68 of the Act, the assessee has to prove three conditions, viz., (1) the identity of the creditor, (2) the capacity of such creditor to advance the amount, and (3) the genuineness of the transaction. If the above referred principles are applied to the facts of the case under consideration it can be seen that the appellant had discharged its onus of proving the identity of the persons, their credit worthiness and the genuineness of the transaction. The appellant had given all alongwith details of payments made and identity of the persons making the payments and had explained the amount invested by each person in r/o advances received alongwith the details of the PAN No., the copies of bank accounts. Further, it was also brought to the notice of the AO, that owing to cancellation of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 7,20,00,000/- u/s 68 is hereby directed to be deleted. The ground No. 2 and 3 of appeal is allowed. 20. We notice that the Ld CIT(A) has taken support of decisions rendered by High Courts in the case of Dwarakadish (supra), Gangeshwari Metals (supra) and Oasis Hospitalities (supra). There is no dispute that the assessee has discharged its burden placed upon it u/s 68 of the Act by furnishing all relevant documents. As pointed out by Ld CIT(A), the AO has not found fault with those documents. We also noticed that two creditors have responded to the notices issued by the AO u/s 133(6) of the Act, but the AO has refused to consider them at all. Hence, it appears to us that the AO was swayed by the generalised findings given by the investigation wing and hence did not proceed the matter on the merits of each case. Hence, in the facts and circumstances of the present case, we have to hold that the AO has made the impugned addition on suspicions, surmises and conjectures only. We have also gone through the decision rendered by the co-ordinate bench in the case of M/s Pravir Polymers p Ltd (supra) and notice that the decision has been rendered in that case on the basis of peculiar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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