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TMI Blog2017 (9) TMI 1944X X X X Extracts X X X X X X X X Extracts X X X X ..... or also appeared before the AO and confirmed the transactions. The AO, however, made the addition by placing reliance on the statement given by Shri Bhanwarlal Jain. When the matter reached the Tribunal, the division bench deleted the addition. Since the facts of the present case are identical, hold that the Ld CIT(A) was not justified in confirming the addition made in AY 2008-09. - Decided in favour of assessee. - I.T.A. No. 3018/Mum/2017, I.T.A. No. 3019/Mum/2017 And I.T.A. No. 3020/Mum/2017 - - - Dated:- 12-9-2017 - Shri B.R. Baskaran (AM) For The Assessee : Dr. P. Daniel For The Department : Ms. N. Hemalatha ORDER All the three appeals have been filed by the assessee challenging the orders passed by Ld CIT(A)-10, Mumbai and they relate to the assessment years 2008-09, 2010-11 and 2011-12. All the three appeals were heard together and are being disposed of by this common order, for the sake of convenience. 2. In assessment year 2008-09, the assessee is challenging the addition of ₹ 25.00 lakhs made u/s 68 of the Act and also the disallowance of interest expenditure of ₹ 6.31 lakhs relating to the loans added u/s 68 of the Act during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamination to the assessee. He submitted that the AO did not discharge the burden shifted to his shoulders and hence the Ld CIT(A) was not justified in confirming the addition made by the AO u/s 68 of the Act. He submitted that identical addition was made by the AO in the case of M/s Reliance Corporation and the Division bench of Tribunal has deleted the addition in its order dated 12-04-2017 passed in ITA No.1069 to 1071/Mum/2017. 7. The Ld A.R further submitted the assessee challenged the addition of ₹ 50.00 lakhs made in AY 2007-08 by filing appeal before Ld CIT(A). The assessee, inter alia, raised a legal issue on validity of assessment proceedings, as the AO did not issue notice u/s 143(2) of the Act. The Ld CIT(A) was convinced with the legal issue and accordingly quashed the assessment order passed for AY 2007-08. He submitted that the revenue appears to have accepted the order passed by Ld CIT(A). Accordingly he submitted that the addition of ₹ 50.00 lakhs made in AY 2007-08 no longer survives and hence the disallowance of interest relating thereto needs to be deleted. 8. On the contrary, the Ld D.R strongly supported the order passed by Ld CIT(A) and subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e filed during the course of assessment proceedings all the details like loan confirmation letters from the creditors, PAN of the creditors, bank statements of the creditors and the assessee, form no.16 qua TDS on interest, profit and loss account and balance sheet including the ledger account of the creditors, and ITR etc. Moreover, the loan creditors also appeared before the AO in compliance to the notice issued under section 133(6) of the Act and filed confirmations before the AO that loans were actually given to the assessee. From all these details and facts on record, we find that the assessee has discharged its onus cast upon it by filing all the necessary details as called for by the AO to corroborate the transactions of borrowing the money and thereby satisfied all the three main ingredients i.e. creditworthiness of the creditors, genuineness of the transactions and identity of the creditors by filing all the details as discussed above which proved that the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors have been established by the assessee. So much so that the loan creditors in response to the notice issued under section 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 147(a) that one creditors had confessed that he was doing only name lending and that other creditors were only name lenders There was no material to show that confession made by said creditor related to loan to assessee and not to someone else and also that said confession related to period which was subject matter of assessment There was also no material to show that other creditors were name lenders Whether live link or close nexus which should be there between material before Income-tax Officer and belief which he was to form regarding escapement of income of assessee from assessment because of latter s failure or omission to disclose fully and truly all material facts was missing in case Held, yes Whether, thus, High court was not in error in holding that said material could not have led to formation of belief that income of assessee had assessment because of his failure or omission to disclose fully and truly all material facts Held, yes In the case of Smt. Sangmitra Bharali (upra) the Hon ble Gauhati High Court held as under : I. Section 68, read with sections 45 and 54F, of the Income tax Act, 1961 - Cash credits (Undisclosed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the assessee shows that the entries regarding credit in a third party s account were in fact received from third party and are genuine, he discharges the onus. In that case, the sum cannot be charged as the assessee s income in the absence of any material to indicate that it belongs to the assessee , particularly in a case where no summons u/s 131 is issued against the third party In the case of Sachitel Communications P.Ltd (supra), the hon ble Gujarat High Court has held as under : II. Section 68 of the Income-tax Act, 1961 - Cash credit (Loans) - Assessment year 2006-07- Commissioner (Appeals) and Tribunal concurrently found that assessee proved identity of creditor and capacity to pay and that payment was made through banking channel - Whether no addition could be made on account of unsecured loan - Held, yes [Para 3] [In favour of assessee] In the case of Patel Ramniklal Hirji, the Hon ble Gujrat High Court has held as under : The addition on the basis that four depositors furnished requisite details to prove their identity and showed the place of their residence. The loan was received through account payee cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he creditor has accumulated the amount, which he advances, as loan, to the assessee is that so far as an assessee is concerned, he has to prove the genuineness of the transaction and the creditworthiness of the creditor vis-a-vis the transactions, which had taken place between the assessee and the creditor and not between the creditor and the sub-creditors, for, it is not even required under the law for the assessee to try to find out as to what source or sources from where the creditor had received the amount, his special knowledge under section 106 of the Evidence Act may very well remain confined only to the transactions, which he had with the creditor and he may not know what transaction(s) had taken place between his creditor and the sub-creditor. No such additional burden can be placed on an assessee, which is not envisaged by section 106 of the Evidence Act. The Revenue/Assessing Officer, however, remains free to show that the amount, which has come to the hands of the assessee by way of loan from the creditor actually belonged to the assessee, but this conclusion cannot be reached by mere failure on the part of the subcreditor to show his creditworthiness and/or the genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use it went to the very root of the assessment made. The aforesaid view has been also considered and fortified and favourably referred to by the Allahabad High Court in the case of C.I.T. v. Shalimar Buildwell Pvt. Ltd. (2014) 220 Taxman 138 (All.) In the case of Lalpuria Construction P. Ltd (supra) the Hon. Rajasthan High Court has held that that in the case of Accommodation entry - without giving an opportunity of cross examination merely on the basis of oral statement additions cannot be made u/s. 68. It is further held that: The oral statement of a third party recorded by Search authorities which was never placed to be confronted by assessee and no documentary evidence was supplied to assessee, could not be considered in making addition u/s. 68 on account of alleged accommodation entries. Besides, it is further submitted that the Hon'ble Bombay High Court in the case of M/s. Rushabh Enterprise v. ACIT had occasion to go through the identical issue and two of the Creditors in that case, i.e. M/s. Laxmi Trading Co. and M/s. Rose Impex were also parties in the case of the assessee. In the case of Andaman Timber Industries (supra), the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X
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