TMI Blog2023 (3) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer as well as the CIT(A) erred in making/confirming addition in the hands of the Appellant under Section 68 - Decided in favour of assessee. - ITA No. 2526/MUM/2022 ITA No. 2527/MUM/2022 - - - Dated:- 9-3-2023 - SHRI B. R. BASKARAN , ACCOUNTANT MEMBER And SHRI RAHUL CHAUDHARY , JUDICIAL MEMBER For the Appellant / Assessee : Shri Bharat Kumar For the Respondent / Department : Shri Chetan M. Kacha ORDER Per Bench 1. These are 2 appeals pertaining to Assessment Year 2013-14 and 2014-15 preferred by the Assessee against the orders passed by the Ld. Commissioner of Income Tax (Appeals) Mumbai [hereinafter referred to as the CIT(A) ] against the assessment orders for Assessment Year 2013-14 and 2014-15, respectively. Since the appeals involve identical issues the same were heard together and are being disposed by way of a common order. ITA No. 2526/Mum/2022 (Assessment Year 2013-14) 2. We would first take up appeal for the Assessment Year 2013-14 which has been preferred by the Appellant challenging the order, dated 14.09.2022, passed by the CIT(A) for the Assessment Year 2013-14, whereby the Ld. CIT(A) had dismissed the appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izure action was carried out by DGIT (Inv.), Mumbai in the case of Mr. Gautam Jain and his group concerns (hereinafter collectively referred to as Gautam Jain Group ) on 03/10/2013 wherein it was revealed that Gautam Jain Group was engaged in the business of providing accommodation entries through various benami concerns, directly or indirectly, operated and managed by Mr. Gautam Jain. The Assessing Officer noted that the Appellant had also obtained accommodation entries from MGPL which was part of the Gautam Jain Group. Therefore, the Appellant was asked to show cause why loan of INR.40,00,000/- taken by the Appellant from MGPL should not be treated as bogus/non-genuine transaction, and why the amount of INR 40,00,000/- should not be added to the total income of the Appellant. The Appellant filed response with the Assessing Officer. However, the Assessing Officer was not satisfied and taking into the consideration statement given by Mr. Gautam Jain, the Assessing Officer concluded that loan amount of INR 40,00,000/- received by the Appellant from MGPL was unexplained credit in the book of accounts of the Appellant which was liable to tax as income under Section 68 of the Act. Whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings. Even, in the remand report the Assessing Officer had contended that it was not necessary to grant opportunity to the Appellant to cross-examine Mr. Gautam Jain. It was contended by the Appellant that the comments given by the Assessing Officer were general in nature and that the documents submitted proved the genuineness of the loan transactions and the creditworthiness of the lender. The loans were taken during regular course of business 4.6. However, the CIT(A) was not satisfied and relying upon the Remand Report, the CIT(A) dismissed the appeal vide order, dated 14/09/2022. Though, the CIT(A) recorded the objections raised by the Assessing Officer in the Remand Report, the documents furnished by the Appellant were not specifically rejected by the CIT(A) as additional evidence not admissible in appellate proceedings before the CIT(A). 4.7. Being aggrieved, the Appellant is in appeal before us against the order dated 14/09/2022 passed by the CIT(A). 5. The Ld. Authorised Representative for the Appellant appearing before us submitted that the day-to-day operations of the proprietorship concern of the Appellant before us were managed by her husband, Lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance was placed by the Assessing Officer and also sought an opportunity to cross examining Mr. Gautam Jain. However, the Assessing Officer in the remand report submitted that no opportunity for cross examination of Mr. Gautam Jain was sought by the Appellant. The CIT(A), accepted the comments given by the Assessing Officer in the remand report on face value had concluded that the documents furnished by the Appellant failed to prove genuineness of the transaction and creditworthiness of MGPL. The addition made by the Assessing Officer cannot be sustained absent the opportunity of cross-examination of Mr. Gautam Jain having been granted to the Appellant as the Assessing Officer has made the addition solely by relying upon the statement of Mr. Gautam Jain. He further contended that even the statement of Mr. Gautam Jain was not provided to the Appellant despite repeated requests. The Learned Authorized representative placed reliance on the judgments forming part of the paper-book in support of his contentions. 6. Per contra, the Ld. Departmental Representative relied upon the order passed by the authorities below. He submitted that the Appellant had failed to furnish that the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 68 casts obligation on the assessee to provide explanation about the nature and source credit in the books of accounts. Therefore, an assessee must discharge the primary onus to prove identity and creditworthiness of the transacting party and the genuineness of the transaction before the Revenue can be called upon discharge the onus to establish their case/allegation. 7.1. On perusal of the Assessment Order, it can be seen that Gautam Jain Group was engaged in providing accommodation entries to various concerns engaged primarily in the business of trading in diamond, and had indulged in providing accommodation purchase entries and accommodation unsecured loan entries. However, the statement of Mr. Gautam Jain, as reproduced in the Assessment Order, does not make any reference to MGPL or the Appellant. While MGPL could have been engaged in the business of trading in diamond, the Appellant was admittedly engaged in the business of trading in steel as a wholesaler and did not have any nexus with the business of trading in diamond. 7.2. We note that for the Assessment Year 2012-13 the assessment of the Appellant was completed under Section 143(3) of the Act and the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no enquiry or investigation was carried out by the Assessing Officer either during the assessment proceedings or during the remand proceedings regarding MGPL and its business activities. Further, the CIT(A) has while rejecting the Appellant s request to seek cross-examination, observed that Mr. Gautam Jain did not name the Appellant and merely stated that he had provided accommodation entries through MGPL. Thus, admittedly the sole basis of doubting genuineness of the loan transaction was that MGPL had no business as per the statement given by Mr. Gautam Jain. The statement was not provided to the Appellant nor was the Appellant granted any opportunity to cross-examine Mr. Gautam Jain. Thus, the statement of Mr. Gautam Jain cannot be taken as the sole basis to hold that the loan transaction was not genuine. Both, the Assessing Officer and the CIT(A), have essentially concluded the onus was on the Appellant and since the Appellant failed to discharge the onus, there was nothing required to be done at the end of the Assessing Officer or the CIT(A). We are not inclined to accept the approach adopted by the Assessing Officer and CIT(A) in the facts and circumstances of the present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irming addition of INR 40,00,000/- in the hands of the Appellant under Section 68 of the Act. Ground No. 1, to 4 raised by the Appellant are, therefore, allowed and Addition of INR 40,00,000/- is deleted. Ground No. 5 relating to levy of interest under Section 234A/B/CD of the Act is disposed off as being infructuous. While Ground No. 6 relating to initiation of penalty proceedings is disposed off as being premature. 7.5. Before parting we would also like to observe that while the Appellant had contended that all documents filed before CIT(A) were filed during the assessment proceedings. The CIT(A) has, relying upon the Remand Report, observed that the Appellant had failed to provide proof of furnishing the documents in assessment proceedings. We note that the Appellant had contended that the day-to-day operations of the proprietorship concern were managed by her husband who passed away after prolonged illness on 14.01.2017, i.e., few months after passing of the Assessment Order. Even if the documents filed by the Appellant before CIT(A) are considered to be additional evidence as alleged by the Assessing Officer, though the CIT(A) has not held so while disposing off the appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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