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TMI Blog2019 (8) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... as Investigation Wing, Mumbai, the alleged parties are mere accommodation entry providers who provide accommodation entry in the form of purchase and loans as per the requirements of the beneficiary. (ii) "Whether on the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition made u/s 68 of the Income-tax Act, 1961 without appreciating the facts that the alleged parties have no real worth/capability/credit from where they can lend such huge loan to the assessee? (iii) "Whether on the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition made u/s 68 of the Income-tax Act, 1961 without appreciating the facts that the assessee failed to dischargne his onus to prove identity, creditworthiness and genuineness of the transactions" (iv) "The appellant prays that the order of the Ld. CIT(A) on the above grounds be set aside and that of the A.O. be restored." (v) "The Appellant craves leave to add, delete, alter, amend and modify any or all grounds of appeal" 4. As per the facts of the present case, the assessee is a partnership firm engaged in the business of development / re-developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of Income Tax Department and the reopening was done within four years from the end of the relevant A.Y. The reopening of assessment on the basis of bogus purchases is held valid by the Hon'ble Bombay Court in the case of Hitesh R. Shah (2013) 35 taxmann.com 474 even though the original assessment was concluded u/s 143(3) and even beyond four years. The AO also followed due procedure of recording of reasons and supplying such reasons to the appellant on request. In view of the above the reassessment made is held invalid. The reassessment is also held valid in view of the following decisions- (i) Hon'ble Gujarat High Court in the case of Rhythm Chemicals P Ltd v. ACIT, 33 taxman.com 426 has held that since intimation u/s 143(1) is not an assessment order there is no change of opinion and reopening is valid beyond four years. (ii) The Hon'ble Delhi High Court in the case of OPG Metals and Finsec Ltd v. CIT, 358 ITR 144 has held that re-assessment is valid if the issue, is not a subject matter of earlier assessment. Same view was also taken by High Court of Bombay in the case of Export Credit Guarantee Corporation of India Ltd v. Addl.CIT (30 taxmann.com 211) (201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overed but did not uncover, is not a good reason for striking down reopening. (viii) The Hon'ble High Court of Mumbai in the case of Export Credit Guarantee Corporation of India Lid v. Addl.CIT (30 laxrnann.com 211) (2013) has held that there is no failure on the part of assessee to disclose material facts but there is complete failure on the part of the AO to apply his mind during original assessment to points on which assessment is reopened, reopening was treated as valid. It is further to be understood that when it is the question of non application of mind whether it is for four years or more makes no difference. (ix) Notwithstanding anything stated above, it is the prerogative of the AO / Revenue to reopen the assessment if the AO has round in the course of time that certain amounts which should have been brought to tax have escaped assessment. The powers were clearly enacted u/s 149 r.w.s. 151 of the Act. As per these provisions what the AO is supposed to see is whether there is an escapement of income and whether it is within four years or beyond four years and whether it is a case of 1-43(1) or 143(3) so as to take approval from competent authorities as per tnu prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.1 is raised against the addition made of Rs. 1,50,00,0007- as unexplained cash credit u/s 68 of I T Act, 1961. The Ld AO has noticed that the appellant has during the year under consideration received unsecured loans of aggregated amount of Rs. 1,50,00,000/- as under Sr. No. Name PAN Amount of sales to assessee inF.Y.2010-11 (in Rs.) 1. Casper Enterprises (Oswal Trading P Ltd.) : AAACO7955M 20,00,000 2. Duke Business P. Ltd (JPK Trad.ng I Pvl : AABCJ6245N 30,00,000 3. Nakshatra Business P. Ltd. (Hema Trading P. Ltd). AABCH4279G 1,00,00,000 Total 1,50,00,000/- During the appellate proceedings, the Id AR has filed detailed submissions and other relevant documents in a paper book. He has also referred to several case laws on which they rely in support of the ground of appeal. I have carefully considered the facts of the case and submissions of the Id AR. I have also gone through the decisions relied on by the AO and Id AR It is observed that during the assessment proceedings the appellant has filed relevant details required to prove the identity and creditworthiness of the investing companies and the genuineness of the transactions i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in several cases that, whatever may be the strength of presumption it cannot substitute the evidence. Even though the transaction is from a tainted group, the AO has not made any efforts to show that the transaction with the appellant firm was sham, fictitious or artificial except believing the statements given by the accommodation entry providers. He has failed to gather any evidence to show that the unaccounted cash of the appellant hap, changed hands consequently replacing the cheque payments. Further he has not provided the corroborative evidence or document which he relied on to the appellant and also failed to prove how the details like PAN, IT returns, audited financials, incorporation certificates, bank statements etc can not be taken note of in this regard. The Hon'ble Mumbai ITAT in the case of Anant shelters P ltd 20 Taxmann corn 153(2012}.has laid down certain principles with regard to section 68 which the AO is bound to follow. It has observed as under: "(i) section 68 can be invoked when following three conditions are satisfied - (a) when there is credit of amounts in the books maintained by the assessee (b) such credit has to be a sum of money during the previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion,, it is also true that money received through foreign remittance with RBl approval is a strong indicator of bona fide of the cash credit that has to be disapproved o/;/y vv-m positive evidence. (vi) In matters regarding cash credits, the onus of proof is not a static one. As per the provisions of the section the initial burden of proof lies on the assessee. Amount appearing in the books of account of the assessee is considered a proof against him. He can prove the identity of the creditors by either furnishing their PANs or assessment orders. Similarly, genuineness of the transaction can be proved by showing that the money WOK received by an account payee cheque or by draft. "Creditworthiness of [lie lender can be established by attending circumstances. Once the assessee produces evidences about identity, genuineness and creditworthiness of the tender onus of proof shifts to the revenue." 2.4.8 The Honble Apex Court in the case of Lovely Exports Pvt Ltd. 216 CTR 195(SC) 2008 held that the AO is at liberty to bring to tax the amounts in their respective hands of the investors if their identity, genuineness and creditworthiness is not proved. The AO should have made effor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the additions. 10. On the other hand, Ld. AR relied upon the orders passed by Ld. CIT(A) and reiterated the same arguments as were raised by him before Ld. CIT(A). Ld. AR also drawn our attention to the written submissions mentioned at Para no. 2.3.1 of the order of Ld. CIT(A). It was submitted that the assessee had taken and /or repaid unsecured loans to the parties during the normal course of business or furtherance of business. In this regard, Ld. AR had also drawn our attention to para no. 2.1 of the order of Ld. CIT(A), wherein the detail in the shape of chart has been submitted. It was submitted that the AO had made an erroneous observation that the creditworthiness of the parties was not established whereas during the assessment proceedings, the assessee had submitted the confirmation alongwith all supportive documents in respect of receiving and repaying unsecured loans from the parties. Assessee had also submitted documents in respect of confirmation in respect of unsecured loans from the lending parties. It was submitted that the parties had responded to the notices issued u/s 133(6) of the Act to the lending parties and had submitted the requisite details. The said loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch adverse statements. Even the corroborative evidence with regard to payment of cash as against the receipt of cheques has also not been proved. The AO had only believed the solitary statement of the key-persons of Pravin Kumar Jain group by holding that they were involved only in bogus transactions by giving accommodation entries by giving cheques in exchange of cash through their group entities. At the same time, it was ignored that all the statements were retracted by Pravin Kumar Jain and all his associates. In the present scenario, the AO had failed to disprove the genuineness of the transactions of unsecured loans received. We have gone through the paper book filed by the assessee and noticed that the transactions were routed through the banking channels and thus the source cannot be doubted. It is a settled law that suspicious howsoever strong may be, but cannot take place of prove. The AO had not made any efforts to show that the transaction with the assessee were sham, fictitious or artificial. Simultaneously, the AO failed to gather any evidence to show that the unaccounted cash of the assessee had changed hands consequently replacing the cheque payments. We have gone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derance of probabilities. Credibility of the explanation, not the materiality of evidences, is the basis for deciding the cases falling under section 68. (v) Though confirmatory letters or account payee cheques do not prove that the amount in question -s properly explained for the purpose of section 68 and assessee has to establish identity and creditworthiness of the creditor as well as the genuineness of the transaction,, it is also true that money received through foreign remittance with RBl approval is a strong indicator of bona fide of the cash credit that has to be disapproved o/;/y vv-m positive evidence. (vi) In matters regarding cash credits, the onus of proof is not a static one. As per the provisions of the section the initial burden of proof lies on the assessee. Amount appearing in the books of account of the assessee is considered a proof against him. He can prove the identity of the creditors by either furnishing their PANs or assessment orders. Similarly, genuineness of the transaction can be proved by showing that the money WOK received by an account payee cheque or by draft. "Creditworthiness of [lie lender can be established by attending circumstances. Once t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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