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TMI Blog2019 (8) TMI 1695X X X X Extracts X X X X X X X X Extracts X X X X ..... al issue and held that proviso to section 68 inserted by the Finance Act, 2012 with effect from 01/04/2013 is applicable from AY 2013-14 onwards, as per which before insertion of provision to 68 of the Act, the assessee need not to prove source of source of an investment. Once, he proved credit worthiness of the parties, it is sufficient enough to come out of provision of section 68. We are of the considered view that the Ld. CIT(A) has rightly deleted additions made by the AO towards share capital received from three companies, on the basis of various evidences filed by the assessee, including confirmation letter from the shareholders. We do not find any error or informative in the findings of Ld. CIT(A) and hence, we are inclined to uphold order of the Ld.CIT(A) and dismissed appeal filed by the revenue. - ITA No.2969/Mum/2017 - - - Dated:- 23-8-2019 - SHRI G. MANJUNATHA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER For the Assessee : Vishnu Agarwal Ankush Agarwal For the Revenue : N.Padmanaban ORDER PER G.MANJUNATHA (A.M): This appeal filed by the revenue is directed against the order of the Commissioner of Income Tax (Appeals) 9, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of share capital received from three companies, more particularly in the backdrop of information received from DGIT(Inv.). In response , the assessee has filed confirmation from the parties along with ledger account, bank statement and copy of the return of income filed by above companies. 4. The Ld. AO after considering relevant submissions of the assessee and also taken note of information received from DGIT(inv.), came to the conclusion that although, assesee has filed confirmation along with other details, in order to, prove the identity of the parties, but failed to prove genuineness of transactions and credit worthiness of parties, more particularly in the backdrop of clear finding by the DDIT(Inv.) Unit 3(2), Mumbai, during the course of search in the case of Shri Praveen Kumar Jain that he and his associates were involved in providing accommodation entries to various beneficiaries through a web of companies. The AO, further observed that no doubt, the assesee has filed confirmation and other details, but when a shadow is cost on genuineness of transactions, it is for the assesse to discharge, the shadow by filing conclusive evidences to prove genuineness of transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dditions towards share capital received from three companies u/s 68 of the I.T. Act, 1961,and accordingly, deleted additions made by the AO towards unexplained cash credit u/s 68 of the I.T.Act,1961. The relevant findings of the Ld.CIT(A) are as under:- 5.3.23. Thus, it has to be said that the appellant had done everything in its power to prove the 3 ingredients required to prove the satisfactory nature of the loan transactions. In these circumstances, the onus had shifted to the AO. If the AO was still not satisfied, he had the option of making inquiries from the alleged share applicants by summoning them. However, as seen from the assessment order, he did not any such thing, Further, if the AO was not satisfied with what had been given to him by the appellant, he was duty bound to specify what more material he wanted the appellant to furnish. The AO never asked for any further material, though time and again the appellant asked in their submissions. This leads to the inescapable conclusion that the AO could not think of any further material to ask for and proceeded to reject the appellant's claims, relying upon the information/ material, which he never even brought to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be any doubt , in respect of genuineness of transactions. In this case although, the AO has brought out clear facts in light of statement of Shri Praveen Kumar Jain, the Ld. CIT(A) disregarded all evidences and deleted additions only on the basis of evidences filed by the assessee. In this regard, he relied upon the decision of Hon ble Gujarat High Court in the case of Pavan Kumar M Sanghvi vs ITO (2018 90 taxmann.com 386). The Ld. DR has relied upon the decision of Hon ble Delhi High Court in the case of CIT vs Bikram Singh (2017) 399 ITR 407. 7. The Ld. AR for the assessee, on the other hand, strongly supporting order of the Ld.CIT(A) submitted that the assessee has discharged its onus by filing enormous documents, which is evident from the fact that the Ld. CIT(A) has thoroughly discussed, the issue in light of various judicial precedents to come to the conclusion that when, initial onus has been discharged by the assessee, then onus shifts to the AO to prove otherwise. The Ld.AR, further submitted that the AO has made additions only on the basis of information received from DGIT(Inv.) without carrying out any further enquiries in light of evidences filed by the assesee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Jain, along with letter of retractions filed before the department from his statements recorded, during course of search proceedings. These documents are part of assessment proceedings. The AO never disputed the fact that the assesee has discharged its onus by filing various documents. The AO has also never disputed the fact that the assesee has filed various documents to prove identity of the parties, but doubted genuineness of transactions and credit worthiness of the parties, on the basis of information received from DGIT(Inv.), as per which, Shri Praveen Kumar Jain, during search proceedings in his case admitted the fact that he was involved in providing accommodation entries of share capital to various beneficiaries. We further noted that when, the AO has not doubted identity of the shareholders, then it is the duty of the AO to carryout ,further enquiries, in order to ascertain genuineness of transactions and creditworthiness of the parties. In this case, the AO has not carried out any further enquiry in light of evidences filed by the assessee to reach to a conclusion that transactions between the parties are not genuine and the parties does not have capacity to subsc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion money is received by the assesse company from alleged bogus shareholders, whose name are given to the AO, then the department is free to proceed to reopen their individual assessments, in accordance with law, but it cannot be regarded as undisclosed income of the assessee . The Hon ble Bombay High Court in the case of CIT vs. Gagandeep Infrastructure Pvt.Ltd. (2017) 394 ITR 680, had considered an identical issue and held that proviso to section 68 inserted by the Finance Act, 2012 with effect from 01/04/2013 is applicable from AY 2013-14 onwards, as per which before insertion of provision to 68 of the Act, the assesee need not to prove source of source of an investment. Once, he proved credit worthiness of the parties, it is sufficient enough to come out of provision of section 68 of the I.T. Act, 1961. 10. The assessee has relied upon the decision of ITAT, Mumbai in the case of ACIT vs Sridham Builders in ITA No. 5589/Mum/2017, where the Tribunal has considered an identical issue of additions made u/s 68, in respect of share capital received from companies controlled and operated by shri Praveen Kumar Jain, and after considering relevant facts and also by relied upon vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the observations made by Ld. Assessing Officer in the assessment order with respect to various parties/brokers. The Ld. Assessing Officer treated ₹ 4.70 crores, introduced by the assessee in its books as unsecured loans/unexplained credit and added under section 68 of the Act and some unexplained expenditure under section 69C of the Act and also disallowed interest of ₹ 5,73,193/-, paid on unsecured loan and disallowed the same under section 37 of the Act. It is noted that at the conclusion of the survey, the assessee vide letter dated 28/10/2014 requested for copy of statement. As per the assessee, the Assessing Officer did not provide the copy. As per the assessee, the cross examination of Shri Pravin Jain was also not provided. The assessee filed loan confirmation, acknowledgments of ITRs, relevant bank statement of lenders, proof of re-payment of such loans and on the summons issued to all the creditors and the brokers all of them furnished requisite details. It is noted that the financial statements and other loan creditors were never disclosed by the Ld. Assessing Officer and by implication accepted that the assessee in fact received loans. This has been observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of those companies reflecting loans given to the assessee were also produced. The Ld. Assessing Officer also provided the copy of statement recorded from Shri Pravin Kumar Jain under section 131 of the Act on 21/11/2006. In para 6.6 of the impugned order, there is an observation that the nature and source of business/amount was explained and the details of loan were also confirmed. All corroborative details were duly filed. From the record, we also note that the assessee also filed acknowledgment of filing of IT returns together with computation of total income (pages 1 2 of the paper book), audited annual accounts along with tax audit report for the year ending 31/03/2012 (pages 3 to 31 of the paper book), retraction of statement by Shri Ajay Maheshwari, partner, dated 10/11/2014 for the statement on oath recorded on 17/ 18th October, 2014 (pages 32 to 37 of the paper book), remand report of the Assessing Officer dated 17/12/2016 filed before the Ld. Commissioner of Income Tax (Appeal) (pages 38 to 56 of the paper book), remand report of the Assessing Officer 04/01/2017 before the CIT(A) (pages 57 of the paper book), acknowledgment evidencing for filing of return for Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the statement recorded and later on retracted by the concerned parties, therefore, we find infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal), resultantly, the appeal of the Revenue is dismissed. 11. Coming to the case laws relied upon by the Ld. DR. The Ld. DR has relied upon the decision of Hon ble Gujarat High Court in the case of Pawan Kumar M.Sanghvi vs ITO (supra). We find that the Hon ble Gujarat high Court, while affirming, the findings of the ITAT, came to the conclusion that when, the AO was specifically asked the assessee to produce the parties for verification, the assessee has failed to produce said parties for verification. Therefore, impugned amount was rightly brought to tax u/s 68 of the Act. We further noted that the Ld. DR has relied upon the decision of Hon ble Delhi High Court in the case of DCIT vs Bikaram singh (supra), where the High Court has held that when, the assessee has failed to prove that those creditors had financial strength to lend such huge sums of money to assessee, that to without any security without interest and without a loan agreement, impugned additions deserves to be confirmed. We find that in both the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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