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TMI Blog2019 (12) TMI 1157X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue against the order of the Ld. CIT(A) for the A.Y 2014-15 in the matter of order passed u/s 143(3) of the Act. 2. The only grievance of the revenue relate to deleting addition made on account of unsecured loan and interest paid thereon amounting to ₹ 16,14,410/-. As many as 5 grounds of appeal has been taken, but the crux of the issue revolves around addition made by A.O on account of unsecured loans from six parties. 3. Rival contentions have been head and record perused. Facts in brief are that the assessee is a company engaged in the business of property developers. The return of income for the year under appeal was filed on 28.11.2014 declaring NIL total income. Assessment u/s 143(3) of the act was completed by the A.O on 27.12.2016 determining income at ₹ 1,75,00,000/-. During the course of assessment proceedings, the Ld. AO observed that as per the information received from investigation wing of the IT department a search action u/s 132 of the Act was conducted in the case of Mr. Pravin Kumar Jain & Group on 03.10.2013. As per the said information, the assessee company reported to have received unsecured loans amounting to ₹ 1,75,00,000/- as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in corroborative evidences. The AO, in this case, has merely relied upon the statement of Mr Vipul Bhatt (which was already been retracted) and did not make any inquiries with the lender companies to establish the genuineness of the transaction. The LAR also submitted a copy of the affidavit dated 15th May, 2014 made by Shri Praveen Jam, wherein he has retracted his earlier statements recorded by the Income Tax Depar tment between 1st October , 2013 to 9th October, 2013. He has categorically affirmed that his statement recorded during the course of search were under duress and coercion. He further stated that his entire business has been completely legal and nothing incriminating has been found in the course of search to establish the fact that he was in the business of providing the accommodation entries. The LAR has also contended that an opportunity of cross examination was not granted to the assessee In case of CIT v Ashish International High Court of Bombay (ITA NO 4299 of 2009) the Jurisdictional the Hon'ble Bombay High Court has held that the Tribunal has recorded a finding of fact that the assessee had disputed the correctness of the statement of the Director of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO. It is noted that the A.O has not taken any steps to identify the creditworthiness of the lender companies as well as genuineness of the loan given. The AO has merely relied on the statements of Shri Praveen Kumar Jam Shri Gautam Jain and Shri Vipul Bhatt ignoring the fact that these statements were later retracted by them. The AO observed that the assessee company might have exchanged cash with the lender companies for the account payee cheques is totally based on conjectures and surmises. No material has been brought on record to prove that the cash credit in the books of the assessee company represent its income from undisclosed sources. Therefore, it cannot be charged as the assessee's income in the absence of any material to indicate that they belong to the assessee. The AO has to take cognizance of the evidence filed by the assessee company like, income tax details, PAN, bank account, mode of payment (by account payee cheques), loan confirmation, etc unless provided otherwise. The Hon'ble Gujarat High Court in the case of Murlidhar Lahorimal v. CIT 280 ITR 512 has held that 'an assessee can be asked to prove the source of credit in the books, but he cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has not considered these evidences filed by the assessee and simply relied on the statements of Shri Praveen Kumar Jam, Shri Gautam Jain and Mr. Vipul Bhatt of which the statements of Shri Praveen Kumar jain and Mr. Vipul were retracted by them later without independently verifying any facts of the matter. The facts in the case of M/s. Komal Agrotech Pvt, Ltd. Vs ITO Ward 2(1), ITA No. 437 / HYD /2016, (Hyd) were as under- The assesse company is engaged in the business of trading in pulses and grains.-On 28.07.2008 it initially filed its return of income for the assessment year 2007-08 admitting a total income of ₹ 7,89,900. The assessment was reopened and was completed under section, 143(3) r.w.s. 147 on 30.03.2015 determining total income at ₹ 82,89,890. The addition made and agitated in this appeal is the addition made u/s 68 of the Act to the tune of ₹ 75,00,000. The Assessing Officer has observed that during f inancial year 2006- 07, the appellant company had received a sum of ₹ 75,00,000 as share capital including premium. As per the Assessing Officer the entire sum was received from certain companies managed by one Mr. Praveen Kumar Jain who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims of the assessee was brought on record by the A. 0. Even the statement of Mr. Praveen Kumar was not supplied. Nothing is on record about the result of investigations done by DGIT (Inv.), Mumbai. The papers filed by the assessee do demonstrate, the identity, credit worthiness and genuineness of the transaction. The addition is made merely on surmises and conjectures. 9.2. In view of the above discussion, we hold that the addition made under scion 68 of the Act is in bad in law. In the result, reopening of the assessment is4shed and the addition is also deleted on merits." The Hon'ble Mumbai ITAT in case of MIs. Enrich Enterprises Pvt. Ltd. v. ITO Ward 4(1)(4) ITA No. 4930 / MUM / 2015 quashed the reopening of the assessment where the facts were similar like in the case of the assessee. Having considered all of the above, I am of the view that the assessee has discharged his onus of establishing the genuineness of the transaction and the onus was on the department. The AO has not discharged his duties and proved otherwise except for relying on the statements of Shri Praveen Kumar Jam, Shri Gautam Jain and Mr. Vipul Bhatt of which the statements of Shri Praveen Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and gone through the orders of the authorities below and found from record that the assessee company is engaged in the business of property development. A.O has incorporated the fact of loan taken from three companies in para 4.1 and 4.2 of the order according to which, assessee company has taken loan from 3 companies amounting to ₹ 1,10,00,000/- on the basis of information received from the DDIT (Inv)-I, Mumbai in respect of search and seizure action taken placed in the group of Shri Pravin Kumar Jain and Shri Gautam Jain and other (surat Diamond Concerns) and further loan taken from three other companies of ₹ 65,00,000/- as per the information received from DDIT (Inv), Unit-7(4). The A.O has incorporated the fact of various documents filed by the assessee in respect of loans taken in part 4.5 of the assessment order i.e loan confirmations, Bank statement of Lender parties, ledger copy etc. AO rejected assessee's contention and made the addition. 6.1 From the record, we found that in respect of show cause notice as mentioned in para 7.4 of the assessment order, assessee has relied on all the documents and evidences filed in respect of these loan parties and also su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by that person. 7. From the record, we also found that on page No. 10 onwards, Ld. CIT(A) has incorporated various documents filed by assessee in respect of each party from whom loan is taken. The Ld. CIT(A) has also incorporated from the balance sheet of these loan parties that they have the creditworthiness as their share capital and reserves are much more out of which loans are given to assessee company. 7.1 It is also clear from the record that all the loans taken during the year were repaid in next financial year. Therefore no addition can be made. For this purpose we rely on the decision of Hon'ble Bombay High Court in the case of M/s. Skylark Build in ITA No. 616 of 2016 dated 24.10.2018, 2018-TIOL-2323-HC-Mum-IT. 7.3 Further more Ld. CIT(A) has incorporated various judgments on page No. 18 of the order according to which by filing various documents the creditworthiness of lender parties is established. Ld. CIT(A) has incorporated the submission given by assessee in response to show cause notice issued by A.O on page No. 19 of his order. Ld. CIT(A) has given findings starting from page No. 20 of his order and relied on various judgments. The final findings are at page ..... 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