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TMI Blog2019 (7) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... d by him. 2. On the facts and in the circumstances in law, the Ld. CIT(A) failed to appreciate the fact that the onus is on the assessee to explain and substantiate the genuineness and true nature of the unsecured loan transaction . 3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has failed to appreciate the fact that the Shri Praveen Kumar Jain has admitted on oath before the DDIT (lnv.)-II, Mumbai that they have not carrying out any genuine business activity and indulge only in providing accommodation entries. 4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in concluding that treated the loans receipt as genuine since they are receive by cheque. Further, though the assessee had established identity of creditors by filling their affidavit, but in those affidavits they had not mentioned any specific source of money which was advance by them, it was to be held that assessee had failed to prove capacity of its creditors to advance money and genuineness of transaction. If such evidence of genuineness of transaction was given the same should have been remanded to the AO for his examination and comments. 5. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h proceedings that he had provided any accommodation entry to the assessee, no adverse inferences were liable to be drawn; (ii) that, even otherwise Mr. Praveen Kumar Jain had retracted from his statement that was recorded during the course of the search proceedings; (iii) that, the confirmations of the lender companies along with their financial statements substantiating the genuineness of the loan transactions were placed on record in order to substantiate the veracity of the loan transactions; (iv) that, the copy of the bank statement evidencing the raising of the loans and the repayment of the same duly substantiated the genuineness of the loan transactions; (v) that, it was neither the case of the department nor a fact borne from the records that unaccounted cash in any manner was paid by the assessee to facilitate the aforesaid loan transactions; and (vi) that, the fact that the assessee had paid interest on the loans raised from the aforementioned parties, which was offered by the latter as income in their respective income tax returns further fortified the authenticity of the loan transactions. Accordingly, in the backdrop of the aforesaid facts, it was the claim of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Jain group, various persons who were shown to be the directors/proprietors were non-existent at the given addresses; (iv) that, in certain cases the name sake directors/proprietors had in their statements recorded under Sec.132(4)/131 of the I-T Act admitted that they were merely dummy directors/proprietors and used to sign the papers for a nominal consideration given by Shri Praveen Kumar Jain; (v) that, a perusal of the information gathered in the course of the search proceedings revealed that Shri Praveen Kumar Jain was controlling, operating and managing a large number of dummy concerns which were not carrying on any genuine business; (vi) that, the nature of the transactions carried out by Mr. Praveen Kumar Jain revealed that basically he was into providing accommodation entries through a web of paper companies which were either owned by him or directly/indirectly under his control; and (vii) that, the payment made to the assessee by the aforementioned companies through account payee cheques did not conclusively prove the genuineness of the transactions. Accordingly, the A.O on the basis of his aforesaid deliberations being of the view that the assessee had only taken accom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the genuineness of the specific loan transactions which were carried out by them with the assessee. Apart there from, the CIT(A) observed that the A.O had not brought on record any documentary evidence which would controvert the claim of the assessee that he had raised genuine loans from the aforementioned companies. Further, the A.O had also not recorded any such observations, which would reveal that the documentary evidence placed on record by the assessee were untrustworthy or lacked credibility. In sum and substance, it was observed by the CIT(A) that the A.O had not made any attempt to discharge the burden that was cast upon her to rebut the documentary evidence which was produced by the assessee. Accordingly, the CIT(A) was of the view that as the assessee had discharged the 'onus' that was cast upon him for establishing the identity and creditworthiness of the lender companies, and also the genuineness of the transactions, with the help of relevant supporting documentary evidence which could not be disproved by the A.O, therefore, the addition of Rs. 1,05,00,000/- made by him under Sec. 68 could not be sustained and was liable to be vacated. 6. The revenue being aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon to substantiate the genuineness and veracity of the loan transactions that was entered into by him with the aforementioned companies, had placed on record substantial documentary evidence in support of the same viz. (i) confirmations of the lender companies; (ii) copies of the financial statements of the lender companies; and (iii) copies of the bank statements evidencing the advancing of loans by the lender companies to the assessee through normal banking channel. Apart there from, the assessee had submitted before the A.O that the interest paid on the loans advanced by the lender companies was subjected to deduction of tax at source as per the mandate of law. We further find that the assessee in order to buttress his claim as regards the genuineness of the loan transactions had also drawn support from the fact that the respective loans were repaid by him to the aforementioned companies. Further, the notices issued by the A.O under Sec. 133(6) to the principal officers of the aforesaid companies, therein calling upon them to furnish the requisite information as regards the exact nature of the activity carried out by the respective companies, along with the source from which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ummy directors and used to sign different papers for nominal consideration given by Shri Jain. 4. In view of the above, it is seen that through various dummy directors/proprietor, he controls, operates and manages a large number of concerns. All such concerns are not carrying out any genuine business. They do not have any physical stock of goods, which they claimed to be dealing in, all such concerns have no employed persons except the few common accountants who mange accounts and banking transactions of all such concerns. All such concerns are indulged in the activity of providing accommodation entries only. 5. Further it is seen that Mr. Jain basically gives accommodation entries which are routed through the companies under his control. All the companies are either owned by him or directly/indirectly under his control are paper companies with no real business transactions. In most of the cases various, brokers who operate in the field of providing accommodation entry like bogus unsecured loan, bogus LTCG, etc. however, in very few cases the end beneficiaries also approach him when they what an accommodation entry. Based on the specific type of accommodation entry required, Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... immediate cash deposits in their respective bank accounts in order to facilitate advancing of the loans to the assessee. In nutshell it is neither the case of the revenue, nor a fact borne from the records, that the assessee had routed his own money in the garb of the unsecured loans raised from the aforementioned parties. As observed by the CIT(A), the assessee had also deducted tax at source at the time of payment/crediting of the interest on the loans raised from the aforementioned companies. Accordingly, in the backdrop of the aforesaid facts, we are of a strong conviction that the assessee had sufficiently discharged the 'onus' that was cast upon him as regards proving the authenticity of the loan transactions under consideration. As per the settled position of law, once the assessee had proved the genuineness of the transactions, identity of the creditors and the creditworthiness, the 'onus' was thereafter shifted on the A.O to prove otherwise. In fact, in the case before us, as the loans had been raised by the assessee from certain companies which on the basis of information received by the A.O from the office of the DDIT(Inv)-II, Mumbai, were stated by the A.O to be the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions, therefore, in the absence of any 'material' placed on record by the A.O to dislodge the said duly substantiated claim of the assessee, there was no occasion for him to have to re-characterised the loans raised by the assessee as accommodation entries. The CIT(A) while so concluding had observed as under: "4.1.2 I have considered the submissions of the appellant and perused the material available on record including the judicial decisions relied upon by him. The point for adjudication is whether the AO was justified in treating the unsecured loans of Rs. 1,0,500,000/- shown to have been taken by the appellant from aforesaid six parties owned, controlled and managed by Mr. Praveen Kumar Jain as bogus or non-genuine u/s 68 of the Act adding the same to the total income of the appellant. In this connection, it is well-established that the onus lies on the assessee to adduce necessary documentary evidence so as to prove all the three ingredients of section 68 viz. identity of the creditor, creditworthiness of the creditor and the genuineness of the transaction as the relevant facts are within the exclusive knowledge of the assessee. It has also been held that the evidences add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these circumstances, it can by no means be said that the appellant had not discharged the initial onus cast upon him to establish the identity and creditworthiness of the creditors as well as genuineness of the transactions. Therefore, the onus shifted to the AO. If the AO was not satisfied, she had the option of making inquiries from the lenders by summoning them. However, it is noticed that no independent verification was carried out by the AO with the lender companies. No summons u/s 131 was issued to the lender companies and no statements were recorded in regards to the genuineness of specific transactions with the appellant. No evidence was brought on record in order to controvert the claims of the appellant. There is no finding by the AO that the evidences produced by the appellant were untrustworthy or lacked credibility. In other words, the AO did not make any attempt to discharged his burden of proof to rebut the evidences produced 'by the appellant or to bring any contrary material on record. Thus, is found that the appellant had discharged onus of establishing- the identity and creditworthiness of the lender companies and genuineness of the transactions with help ..... X X X X Extracts X X X X X X X X Extracts X X X X
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