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TMI Blog2024 (1) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... f the loan givers and genuineness of the said loans and therefore the A.O. rightly treated the same as unexplained cash credit u/s. 68 of the Act. ii. The appellant craves to leave, to add, to amend and / or to alter any of the ground of appeal if need be." 03. Brief facts of the case shows that assessee is a individual engaged in the business of Civil Contractor carrying on government and semi government and other private work of road construction, road repairs, etc. Assessee Shri Nitin Rajmal Shah is a proprietor of Speco Infrastructure. He filed his return of income on 30 September 2012, at a total income of Rs.3,02,63,658/-. This return was picked up for scrutiny. 04. The learned Assessing Officer noted that a survey under Section 133A of the Act was conducted in the case of RPS Infra Projects Limited on 26 November 2012, wherein several of the group companies have obtained accommodation entries as well as bogus purchase. Information was also received from the DGIT, Investigation Wing, Mumbai on 12th March, 2015, that assessee has taken a loan from Arihant Exports of Rs.1 crore and Karnavat Impex Pvt. Ltd. of Rs.1.5 crores, wherein Mr. Rajendra Jain has admitted to have giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to give any evidence as stated in the assessment order and therefore the assessment order is invalid. 010. The learned CIT - A held that during the assessment proceedings the assessee has given the details regarding the identity, creditworthiness and genuineness of the entire transaction and the corresponding parties and therefore the assessee has discharged his primary onus by giving the bank statement, income tax returns, permanent account number is, Ledger confirmation and financial statements of the lender. The learned assessing officer has not pointed out any deficiency in the above statement of the appellant without making any independent enquiry or specific discrepancies other than the statements recorded by the investigation wing. He further noted that the transactions have taken place through bank accounts, assessee has paid interest thereon as and has not claimed any benefit of deduction on account of the interest and further entire sum has been repaid in the calendar year 2014 much before the information was received from the office of investigation wing Mumbai. It was further held that proviso to section 68 requiring to prove the source of source was inserted with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and such repayment confirmation is also furnished he further referred to paper book filed by him containing 407 pages wherein up to page number 38 - 141 of the paper book he referred to various evidences submitted by him. He also referred to his written submission placed before the learned CIT - A which is placed at page number 142 - 161 of the paper book and further relied upon the several judicial precedents starting from page number 162 - 407 of the paper book. 016. His main arguments were that the assessee has discharged its onus by furnishing all the evidences placed before the learned assessing officer in the form of confirmation, bank account, return of income, confirmation, even then said of the repayment of loan. The learned assessing officer has not made any inquiries on these evidences supplied by the assessee. These are rejected without verification. The learned assessing officer has made the addition merely based on the statement of third party recorded behind the back of the assessee without even giving copy of the statement of such parties and not adhering to the request of the assessee to grant cross-examination of those entities. It was further stated that the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders of the lower authorities. The allegation against the assessee is that assessee has obtained a loan on 18/file/2011 from Arihant exports of Rs. 1 crore that have been repaid by the assessee on 18/1/2014 of Rs. 35 lakhs and on 21/6/2014 of 65 lakhs. Further from karnavati Impex Private Limited assessee has taken a loan of Rs. 1.5 crores on 9/file/2011 which has been repaid on 19/6/2014 of Rs. 35 lakhs, and 50 lakhs and further repayment of Rs. 65 lakhs was made on 24/6/2014. During the course of assessment proceedings the learned assessing officer found that these are the two entities wherein entry operator is found to be behind these two entities who have confirmed in a statement under section 132 (4) of the act and further confirmed by proprietor of one of the entities that these are merely accommodation entries. This was the information available with the assessing officer and therefore a show cause notice was issued to the assessee. The assessee during the course of assessment proceedings submitted the bank statement, return of income, confirmation and financial statement of the parties from whom the loans have been taken. The assessee also produced before the AO the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in 322 ITR 396 (Delhi) clearly applies to the facts of the case wherein it has been held that once the result violation of the principle of natural justice in as much as seized material is not provided to the assessee nor is cross-examination of the persons on whose statements the assessing officer has relied upon is granted then such deficiencies would amount to denial of opportunity and consequently would be fatal to the proceedings. 019. Honourable Supreme Court in case of Andaman Timber Industries vs. Commissioner of C. Ex., Kolkata-II (02.09.2015 - SC) : MANU/SC/1250/2015 has held that :- "5. According to us, not allowing the Assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the Assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the Assessee disputed the correctness of the statements and wanted to cross-examine, the Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C/0325/2019 has held that :- "8.2. As per settled law, the initial onus is on the Assessee to establish by cogent evidence the genuineness of the transaction, and credit-worthiness of the investors Under Section 68 of the Act. The Assessee is expected to establish to the satisfaction of the Assessing Officer CIT v. Precision Finance Pvt. Ltd. MANU/WB/0087/1993 : (1994) 208 ITR 465 (Cal): * Proof of Identity of the creditors; * Capacity of creditors to advance money; and * Genuineness of transaction This Court in the land mark case of Kale Khan Mohammad Hanif v. CIT MANU/SC/0292/1963 : (1963) 50 ITR 1 (SC) and, Roshan Di Hatti v. CIT MANU/SC/0192/1977 : (1977) 107 ITR (SC) laid down that the onus of proving the source of a sum of money found to have been received by an Assessee, is on the Assessee. Once the Assessee has submitted the documents relating to identity, genuineness of the transaction, and credit-worthiness, then the AO must conduct an inquiry, and call for more details before invoking Section 68. If the Assessee is not able to provide a satisfactory explanation of the nature and source, of the investments made, it is open to the Revenue to hold that it is the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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