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TMI Blog2019 (3) TMI 1835X X X X Extracts X X X X X X X X Extracts X X X X ..... editworthiness and genuineness of the transactions. Another allegation of the AO is that assessee has failed to produce the parties and hence question of providing cross examination does not arise which is without merit as the assessee has discharged its onus by providing all the basic documentary evidences before the AO who just relying on the statement of Shri Pravin Kumar Jain treated the loan transactions as unexplained credit in the books of the assessee. On the issue that these lenders are showing low income or losses in the return of income filed, we observe that in the balance sheets the said loan advanced by the lender were duly reflected and thus there is no income in the particular year has no relevance and there were sufficient sources. Order passed by the Ld. CIT(A) is well reasoned and there is no reasons to deviate from the his findings - Decided against revenue. - ITA Nos. 5886 & 5887/Mum/2017, CO No.250/Mum/2018 (ITA Nos.5886/Mum/2017) - - - Dated:- 14-3-2019 - SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER For the Assessee : Shri Rakesh Joshi, A.R. For the Revenue : Shri Vikash KR Agarwal, D.R. ORDER Per Raj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the survey , he was informed about various unsecured loans take by the assessee from various entities operated and controlled by Shri Praveen Kumar Jain who is engaged in providing accommodation entries in the form of unsecured loans , share application and sale and purchase of shares only without doing any business. The investigation wing received information that Shri Pravin Kumar Jain Associates was a group of companies were engaged in the bogus transaction of giving accommodation entries in the form of unsecured loans which were long term capital gain etc as he admitted during the course of search on him and his controlled entities in the statement recorded u/s 132(4) of the Act. Shri Dinesh Kumar Jain admitted in the statement recorded u/s 131 after considering the statement of Shri Praveen Kumar Jain about taking bogus unsecured loans from Praveen Kumar Jain group entities but later on when he found that Shri Praveen Kumar Jain has retracted his statement , he also retracted his statement on 29.3.2013 just three days after recording thereof citing the reasons that the same was taken under pressure. Thereafter, the case of the assessee was reopened under section 147 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Associates gives a general statement and never specifically mentioned the name of the assessee, therefore, the same can not be the basis for making addition in the hands of the assessee. Finally, the AO, not finding the reply of the assessee as convincing and tenable, added ₹ 3,69,00,000/- as unexplained cash credit under section 68 of the Act on account of non proving the three ingredients such as identity, genuineness and creditworthiness, in the assessment framed under section 143(3) of the Act read with section 147 of the Act dated 31.03.2016. The AO also added the interest paid by the assessee to the lenders to the tune of ₹ 19,53,222/- being interest payment against bogus unexplained loans and added back as unexplained cash credit under section 68 of the Act. 5. In the appellate proceedings, the Ld. CIT(A) partly upheld the order passed by the AO by upholding the re-assessment /reopening proceedings by the AO while on the merits the additions were deleted by observing and holding as under: 6.3 I have carefully perused the facts of the case, appellants submission and the assessment order. It is noted that the A.O. has held that the appellant has introduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by it on the income so earned. In the light of observations of the Hon'ble Supreme Court in the case of CIT Vs. Lovely Exports (P) Ltd. reported in 216 CTR 295, the onus on the appellant has been duly discharged. The peculiar facts of the case may have caused suspicion in the mind of the A.O. but there is no evidence or other material to hold that the appellant had routed its own money. 6.4. On an analysis of the facts on records, it is seen that the loans of ₹ 3,69,00,0007- have come from different companies. It is noted that the loan creditors are existing companies and have confirmed that they had given the loans to the assessee company. The next aspect is creditworthiness. The assessee has filed copy of PAN card, bank statement, Balance sheet and P L account etc. of loan creditors. It emerges out from the record that the loan creditors have duly recorded the investments in their books of accounts. Thus, the loan creditors had demonstrated these balance in their balance sheets in the shape of investment as well loan and advances. The next issue is about the genuineness of the transaction. The assessee has produced the details of bank account. The unsecured loan mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... October 12, 2009) [2011] 333 ITR 100 has held that :- The relevant portion of this order is reproduced below: In the case in hand, it is not disputed that the assessee had given the details of name and address of the shareholder, their PA/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the Assessing Officer to make proper investigation and reach the shareholders. The Assessing Officer did nothing except issuing summons which were ultimately returned back with an endorsement not traceable . In our considered view, the Assessing Officer ought to have found out their details through PAN cards, bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the Assessing Officer. In the above circumstances, the view taken by the Tribunal cannot be faulted. No substantial question of law is involved in the appeal. In the result, the appeal is dismissed in limine with no order as to costs. The Hon'ble Bombay High court thus clearly held that once documents card, bank account details or details from the bankers were given by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income-tax (Appeals) and the Tribunal were based on the material on record and not on any conjectures and surmises. That the money came by way of bank cheques and was paid through the process of banking transaction as not by itself of any consequence. The High Court misdirected itself and erred in disturbing the concurrent findings of fact. While doing so, the legal position contained in section 68 of the Act was explained by the Supreme Court by assessing that a bare reading of section 68 of the Act suggests that (i) there has to be credit of amounts in the books Ltd. maintained by the assessee; (ii) such credit has to be a sum of money during the previous year ; and (iii) either (a) the assessee offers no explanation about the nature and source of such credits found in the books, or (b) the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory. It is only then that the sum so credited may be charged to income-tax as the Income of the assessee of that previous year. The expression the assessee offers no explanation means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived by the assessee in the form of loans. During the course of assessment proceedings, following details were filed by the assessee before the Ld. A.O.:- i) Bank statement of the lender companies ii) ITR, acknowledgement of the lender companies iii) Ledger Confirmation iv) PAN number of the lender companies v) Bank statement of the assessee company vi) Form 16A being the TDS certificate 6.8 In view of the legal position emanating from legal precedents as discussed above and having regard to the facts of the case, it is noted that when requisite documents such as PAN, Bank accounts, Balance Sheet etc. were available with the A.O., to establish that no cash transactions were involved in the bank accounts of the investing companies then without further probe to prove the contrary the addition u/s 68 in the hand of the assessee cannot be made. There is no adverse finding given by the AO for any other lenders. Thus, in my opinion, the AO has not done anything to controvert the evidences filed by the assessee in this regard, whereas the appellant had discharged the primary onus of proving the genuineness of the loan transactions by providing the various documentar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. CIT(A) that AO has not conducted any enquiry despite assessee having filed various documents such as PANs, confirmation letters, copies of bank statements, copy of ITRs etc is not of any legal significance as Praveen Kumar Jain group was a hawala operator. The ld DR also tried to rebut the observation of the ld CIT(A) that AO has not made any enquiry during the course of assessment regarding identity of the lenders, genuineness of the transactions and creditworthiness of the parties and also that no cash has been deposited in the bank accounts of the assessee. Once the parties assessee as well as the persons who gave bogus unsecured loans admitted on oath in their respective statements that the entries were bogus, no further enquiry or investigation are required. The Ld. D.R. also argued that the retraction can not be merely accepted without assessee giving any reasons for retraction. The Ld. D.R. submitted that it is the duty of assessee to prove that statement recorded was by force or coercive whereas such facts were put forward by the assessee in the retraction filed. The Ld. D.R. relied in defence of his argument on Param Anand Builders Pvt. Ltd. vs Income Tax Officer ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has filed all the necessary evidences before the AO during the course of re-assessment proceedings but AO has not made attempt to make any further enquiry/investigation and had just acted on the basis of suspicion and conjectures that Shri Pravin Kumar Jain and associates were providing bogus entries whereas in the statement of Shri Pravin Kumar Jain nowhere assessee s name has been mentioned. Moreover, the evidences filed in the form of bank statements, ITRs, loan confirmations, PAN numbers and form No.16A all collectively proved that all these loan transactions were genuine and duly reflected by the lenders companies in their books of accounts. The Ld. A.R. submitted that AO has merely relied on the suspicion of Shri Pravin Kumar Jain and associated companies were engaged in the accommodation entries and assessee is a beneficiary of that. The AO s conclusion is without any verification or establishing that cash amount has changed hand between the assessee and the lender companies. The Ld. A.R. heavily relied on the order of Ld. CIT(A) and the following decisions in defense of his arguments : 1. PCIT vs. Vidhata Tower LTd. 819 ITR 2015 (Bom.- HC) 2. Reliance Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee has filed copies of bank statement, ITRs, confirmations, PAN numbers of the lenders etc. and thus the assessee has fully discharged the onus cast upon it and thus the addition under section 68 can not be made in the said circumstances qua the unsecured loans raised by the assessee. The AO has merely relied on the statement of Shri Dinesh Jain who is director in the assessee company by ignoring the fact that the statement given by the said director stands retracted after three days from the recording of the same. After perusing the order of Ld. CIT(A) who has dealt with the facts in great detail and also discussed the various decisions wherein it has been held that no such addition can be made under section 68 where the assessee has filed all the necessary evidences before the AO when AO has not made any further enquiry to to prove otherwise. The allegation of the AO that assessee has not proved identity and creditworthiness of the lenders and genuineness of the transactions is without any basis as stated above. The assessee filed the necessary evidences in the form of loan confirmations, balance sheets and profit and loss accounts, ITRs, bank statements and PAN cards of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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