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TMI Blog2021 (4) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - Dated:- 17-3-2021 - Shri Shamim Yahya, AM And Shri Amarjit Singh, JM For the Assessee : Shri Suchek Anchaliya For the Revenue : Shri T. S. Khalsa (Sr. AR) ORDER PER AMARJIT SINGH, JM: The revenue has filed the present appeal against the order dated 05.10.2018 passed by the Commissioner of Income Tax (Appeals) -24 Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y.2013- 14. 2 . The revenue has raised the following grounds: - 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the entire disallowance on account of bogus loan, without considering the findings of the DGIT(Inv.) during the search that the assessee had deliberately made accommodation entry in the Profit Loss account and balance sheet. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in presuming that loans have been received from unknown sources by the assessee and taking it into consideration for computing profit and gains of the business for the purpose of section 28 of the Act? 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividend income and claimed the same as exempt u/s 10 of the I. T. Act. Thereafter, the total income of the assessee was assessed in sum of ₹ 2,24,95,760/-. Feeling aggrieved, the assessee filed an appeal before the CIT(Appeals) who allowed the appeal of the assessee, therefore, the Revenue has filed the present appeal before us. 4. We have heard the arguments advanced by the Ld. Representative of the parties and perused the record. Before going further, we deem it necessary to advert the finding of the CIT(A) on record.: - 5. I have given my careful consideration to the rival submissions, material on record and duly considered the factual matrix of the case as also the applicable legal position. Ground No. 1 is raised against the addition made of ₹ 2,07,15,630/- unexplained cash credit u/s 68 of I T Act, 1961. During the course of assessment proceedings, the appellant has filed several details required the prove the identity and creditworthiness of the persons, and the genuineness of the transaction in the: form of PAN cards, IT return copies, bank statements, confirmations, affidavits, audited accounts etc. as is evident from the records and clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the transaction related to the appellant. The information received by the Ld. AO could be said to be sufficient to raise a doubt about genuineness of the transactions. However, further enquiry was required to be conducted to form an opinion or belief as to the transactions being non-genuine. A transaction which is supported by documentary evidences could not be treated as bogus or non-genuine merely on the basis of doubts raised regarding the same. The Ld. AO did issue notices u/s 133(6) of the Act to the loan parties, all of whom duly replied and confirmed the genuineness of the transactions with the appellant, there is no further evidence brought in the assessment order to prove the above conclusion drawn by the Ld. AO. The assessment proceedings were wide open and the Ld.AO could have carried out independent investigation to prove his argument regarding the transactions being non-genuine. No such investigation has been carried out by the Ld.AO. The outcome of investigation carried out in the case of Bhanwarial Jain and the conclusions drawn therein cannot be applied ipso facto and in a sweeping manner to all other cases who have entered into transactions during that period wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee. The opinion of the AO for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on the record. The opinion of the AO ls required to be formed objectively with reference to the material on record file, Once the explanation of the assessee is found unbelievable or false the 40 is not required to bring positive evidence on record to treat amount in Weston as income of the assessee, While considering the explanation of the assessee, the AO has to act reasonably application of mind, application of mind is sine qua non for forming the opinion. (iii) Phrase appearing in the section - nature and sources of such credits - should be understood in right perspective, so that genuineness of the transaction can be decided on merits and not on prejudices. Courts are of the firm view that the evidence produced by the assessee cannot be brushed aside in a causal manner. Assessee cannot be asked to prove impossible. Explanation about source of source or origins of the origin cannot and should not be called for while making inquiry under section. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) Copy of Financials Statements for A.Y. 2013-14 v) Copy ef Bank Statement vi) Copy of PAN vi) Copy of Affidavit Further, the Honourable Income Tax Appellate Tribunal, Mumbai, has in numerous cases decided on the issue at hand, bearing identical facts, as in the present case. I find the issue has been adjudicated, as under: DCIT 25(1) vs. Ms. YRV International ITA. No.1414/Mum/2017 12. We have heard rival contentions and perused the record. We notice that the AO has made the impugned addition u/s 68 of the Act. It is a well settled Principle of law that the initial onus to prove the genuineness of the cash credit is placed upon the assessee and in order to discharge the initial onus, the assessee is required to prove three main ingredients, viz., the identity of the creditor, the creditworthiness of the creditor and the genuineness of transactions, Once the assessee discharges the Initial anus, then the onus to disprove the same Is shifted upon the shoulders of the assessing officer. 13. In the instant case, the assessee has taken loans from M/s A2 Jewels and M/s Daksh Diamonds, All the loan transactions have taken place through the banking channels and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documentary evidences furnished by the assessee. Thus the assessee has discharged the initial onus placed upon u/s 68 of the Act. On the contrary, it is seen that the AO has failed to discharge the onus shifted upon its shoulders. 15. We notice that the Ld CIT(A) has followed the principles laid down in various case laws extracted above. Before us, none of the case laws wag controverted. The foregoing discussions also show that the AO has brushed aside various documents furnished by the assessee and proceeding, to make the addition only on the basis of information received from the investigation wing and the statement given by Shri Ritesh Siroya. The Ld CIT(A) has rightly pointed out these facts end acoordingly concluded that the addition mace by the AO was not justified. In view of the foregoing discussions, we are of the view that the decision rendered by Ld CIT(A) does not call for any interference, since the first appellate authority has rendered his decision by considering the legal principles enunciated in various case laws relied upon by him and further applying the same to the facts of the present case. Thus we notice that the Ld CIT(A) has reached his decision in @ s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecording that there was neither any cash deposit nor any withdrawal in any bank account castigating the same as accommodation entries. It is further noted that the assessee duly paid the interest on the loan amount and deducted. Copy of Form no.16A was also filed and the learned Assessing Officer has not brought on record any evidence / reason to disbelieve the evidence filed by the assessee. | am satisfied with the reasoning of the learned CIT(A) that the addition was merely made on the basis of presumption that all the five concerns from whom loan was taken were managed and controlled by Shri Bhawarlal Jain. The statement was also recorded wherein there is no mention that any accommodation entry was obtained. Rather, the case of the assessee is fortified by the reply to question no.40 and 41 wherein it has been tendered that the loan was advanced and interest @ 9% p.a. was charged. The name of the assessee is nowhere mentioned in the list of suspicious dealer / person. Thus, | find no infirmity in the conclusion of the learned CIT(A), resulting into dismissal of the impugned ground raised by the Revenue. 5. The next ground pertained to deletion of addition of ₹ 5,78,27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. we find that it is settled law that while making any disallowance/addition, the Assessing Officer needs to make due enquiry. In this case, the Assessing Officer has not made any enquiry whatsoever. As noted hereinabove, the assessee has given all the documentary evidences including confirmatory letters, bank statements and financial statement of the creditors. The Assessing Officer has not found any error therein. It has been held in number of cases that when the assessee has given all the loan creditors, including the Identity, necessary details of the creditworthiness and genuineness of the transaction, the onus upon the assessee is discharged. In these circumstances, in our considered opinion, the assessee has discharged its onus. The Assessing Officer has not rebutted any of the submission of the assessee and the documentary evidence in this regard. Hence, in our considered opinion, there is no infirmity in the order of the Id. Commissioner of Income Tax (Appeals). The various case laws referred by the Id. Commissioner of Income Tax (Appeals) are germane and duly supports the case of the assessee. In the background of the aforesaid discussion and precedent, we uphold th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editworthiness of the creditor also stands proved. Hence, there is merit in the contention of the learned AR that the assessee has discharged primary onus placed upon it u/s, 68 of the Act. The Hon'ble Gujarat High Court has held in the case of Sachital Communications (2014) 227 Taxman 219, that if identity of creditor and capacity of the creditor is proved and the transactions have been carried out through banking channel, then no addition could be made on account of unsecured loan. Identical view was expressed by Hon'ble Gujarat High Court in the case of Patel Ramniklalhirji (2004) 222 Taxamn 15. 8. We noticed that the Assessing Officer did not examine various documents furnished by the assessee and did not show that the said documents are not reliable. Instead the Assessing Officer has totally placed reliance on the statement given by Mr. Bhanwarlel Jain, which is claimed to have been retracted. Since the addition has been made u/s, 68 of the Act and since we have noticed that the assessee has discharged burden of proof placed upon shoulders u/s. 68 of the Act, we are of the view that the learned CIT(A) hot justified in confirming the addition by simply placing reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed end paid . Even though the assessing officer did not find any fault with these documents, still the assessee has requested the AO to issue summons to these parties. As stated earlier, the assessing officer did not issue summons and instead relied upon the inferences drawn by the search officials. Hence, in our view, the decision rendered by Hon'ble Supreme Court in the case of Orissa Corporation (P) Lid (supra) will also come to the support of the assessee. 24. We notice from the operative portion of the order passed by Ld CIT(A) that the first appellate authority has placed reliance on various other case laws also. in effect, the Ld CIT(A) has examined the documents furnished by the assessee and has held that the assessee has discharged the initial burden of proof placed upon it u/s 68 of the Act. He has also held that the non-furnishing of documents relied upon by the AO and non-providing of opportunity to cross examine the Shri Bhanwarlal Jain and others would make the addition to fail. Even in respect of documents relied upon by the AO, the Ld CIT(A) has found the same to be inadequate to warrant the additions made u/s 68 of the Act. Hence, we are of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid through the banking channel regarding this, a duly notorised affidavit was filed by the assessee and the details of which are already contained in para no. 6.3.12 of the order of Ld. CIT(A). Even otherwise, it is a settled law that once the assessee discharges its onus by proving the satisfactory nature of the loan transactions, then the onus shift upon the AO and in his wisdom, the AO has option of making inquiries from the alleged lenders. 10. Even the Coordinate Benches of ITAT in series of decisions have deleted the additions under the similar circumstances. In this respect, we refer case tiled ITO Vrs. M/s Vikram Muktilal Vora in ITA Nos. 842/Mum/2017, ITO Vrs. Gujrat Construction in ITA No. 7040/Mum/2016, ACIT Vrs. Shri Dilip Chimanlal Gandhi in ITA No. 7079/Mum/2016, Maraeh Hiran Vrs. ITO in ITA No. 1236/Mum/2017, ACIT Vrs. Bhagneni in ITA No. 5648/Mum/201 6 and ACIT Vrs. Shri Sumit J. Jain in ITA No. 145/Mum/2017, 17. Moreover, ho new facts or contrary Judgments have been brought on record before us in order to controvert or rebut the findings $0 recorded by ' Ld. CIT(A). Therefore, we see no reasons to interfere into or deviate from the findings recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the above parties were treated as genuine, in this order in earlier paragraphs, the interest paid to those parties is also treated as genuine. Accordingly, the interest paid is allowed as expenditure and AO is directed to withdraw the addition made u/s 68 of the Act. I therefore, direct the AO to withdraw the addition. Therefore, Ground No. 1 is allowed. In the result, the appeal for the AY 2013-14 is allowed. 5. On appraisal of the above mentioned finding, we find that the CIT(Appeals) has decided the matter of controversy on the basis of the decision of Hon ble Supreme Court in the case of Lovely Exports Pvt. Ltd. (2008) 216 CTR 195 (SC), Anant Shelters Pvt. Ltd. (2012) 20 taxmann.com 153 and various decision of the Hon ble Courts mentioned above. Moreover, no law contrary to the law relied by the CIT(A) has been produced before us. The facts are not distinguishable at this stage. CIT(A) has considered the each and every aspects of the facts of the case.Taking into account, all the facts and circumstances, we are of the view that the finding of the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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