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TMI Blog2023 (10) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... PER VIJAY PAL RAO, JM: This appeal by the Revenue is directed against the order dated 14.12.2021 of Ld. Commissioner of Income Tax(Appeals)-3 (in short Ld. CIT(A), for Assessment Year 2013-14. The revenue has raised following grounds of appeal: 1. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition amounting to Rs. 4,50,00,000/- made by AO u/s 68 of IT Act, 1961 on account of unexplained cash credit and interest thereon amounting to Rs. 31,64,774/- 2. Whether on the fact and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the findings of AO in the assessment order especially in light of documentary evidence found and seized during the course of search in case of Sharad Doshi group on 28.02.2014 as these documentary evidence clearly show that the assessee has taken accommodation entries in the form of unsecured loan from companies controlled by Sharad Darak, a known entry provider and invested in the firm M/s Amrit Reality and M/s MSD developers of Doshi group. 3. Whether on the fact and in the circumstances of the case and in law, the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reopening vide notice u/s 148 dated 30th March 2018. These four companies from whom the assessee stated to have taken the loan are nothing but paper companies and providing accommodation entries as it was found during the course of investigation by the department. These companies are managed by one common director Shri Sharad Darak whose statement was also recorded on oath in various cases in which he accepted that these companies are paper companies and provide accommodation entries on commission basis. The AO has reproduced the statement of Shri Sharad Darak and found that Mr. Darak is a common director and admitted the transaction of providing accommodation entries through the bogus concerns. Based on the material available with the AO it was concluded that these loan creditors are nothing but paper companies providing accommodation entries. The AO accordingly made the addition of Rs. 4,50,00,000/- as unexplained credit. The AO has relied upon judgment of Hon ble Supreme Court in case of Pr. CIT vs. NRA Iron Steel Pvt. Ltd. 412 ITR 161(SC). He has relied upon the order of the Assessing Officer. 3. On the other hand, Ld. AR of the assessee has submitted that the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and to prove the claim of the assessee but assessee fails to discharge its onus to prove the identity, creditworthiness of the creditors and genuineness of the transactions. 6. We have considered the rival submission and relevant material on record. The Assessing Officer has made the addition on the basis of the statement recorded by the investigation wing of the department of one Shri Sharad Dharak in some other cases of search. Apart from the statement, the AO has not brought on record any material to show that these loans transactions are nothing but assessee s own undisclosed income routing back through these loan creditors in the garb of unsecured loans. The Ld. CIT(A) has decided this issue in para 3.3.2 to 3.4 as under: 3.3.2 I have duly considered the above and found that the Ld. AO has concluded that the above unsecured loans had been received from the Companies controlled by Shri Sharad Darak who is a well known accommodation entry provider of Indore. The Ld. AO on the basis of findings of past actions of the various officers held that Shri Sharad Darak runs dummy companies through which he provides entries to needy persons. The Ld. AO has also relied upon stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.45.225/ M/s. Jay Jyoti 2012- 13 6,33,50,500/- 159,85,35,646/- 2,34,88,273 M/s Octagon Media Matrix P. Ltd. 2012-13 25,13,000/- 6,85,59,352/- 25,423/- Trimurthi Finvest Ltd 2013-14 12,78,77,500/- 1,61,71,26,058/- 2,10,42,648/- Regarding M/s. Somani Madhusudan Sawalram, HUF. amount of Rs. 5,00,000/- has been given to the appellant out of bank balance. Further, the appellant has repaid the amount of Rs. 7.47.287/- including interest on 26.12.2017. On perusal of the above, it is evident that the lender company/person had substantial funds available with it to advance money to the appellant. The appellant has also filed necessary documents to prove its identity, creditworthiness of these companies and also filed bank statement reflecting the transactions. In my opinion, nothing in form of cogent evidences has been brought on record by the Id. AO in support of his findings. The ld. A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not sustainable in view of following judgments: (i). Divine Leasing Finane Ltd. (2008) 299 ITR 268(Delhi). wherein it was held that: 16. In this analysis, a distillation of the precedents yields the following propositions of law in the context of s. 68 of the IT Act. The assessee has to prima facie prove (1) the identity of the creditor/subscriber: (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber: (4) if relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the shareholders register, share application forms, share transfer register, etc. it would constitute acceptable proof or acceptable explanation by the assessee: (5) the Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers If the enquiries and investigations reveal that the identity of the creditors to be dubious or doubtful, or lack credit-worthiness, then the genuineness of the transaction would not be established. In such a case, the assessee would not have discharged the primary on contemplated by Section 68 of the Act. 12. In the present case, the A.O. had conducted detailed enquiry which revealed that There was no material on record to prove, or even remotely suggest, that the share application money was received from independent legal entities. The survey revealed that some of the Investor companies were non- existent, and had no office at the address mentioned by the assessee. In view of the above judicial pronouncements, the AO is duty bound to investigate the issue once the assessee discharges its onus as per section 68 of the Act. Here, such efforts are absent. Further, the appellant has brought on record the decision of Hon'ble ITAT Indore in the case of Shri Pramod Kumar Sethi (ITA NO. 382 and 383/Ind/2014, dated 06.11.2018) wherein various companies of Sharad Darak Group held as genuine companies In another decision in the case of M/s. Radhishwari Developers Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thi Finvest Ltd. was genuine. Sr. No. Judicial Pronouncements Tribunal Citation 1 Pramod Kumar Sethi ITAT, Indore ITA No. 382 ITA No. 43/Ind/2022 2 Girish Kumar Sharda ITAT, Indore ITA Nos. 30 to 33/Ind/2012 3 Modern Laboratories ITAT, Indore ITA No. 277 CO 16/Ind/2014 3.3.3 In view of the above discussion, the detailed submissions made by the appellant and various binding decisions of jurisdictional ITAT, it is not justified to held the lender companies as dummy entities and the loans given to the appellant by these companies are non-genuine. Therefore, the additions made by the ld. AO are not sustainable. 3.3.4 In view of discussion made in para 3.2 to 3.3.3 above, addition of Rs. 4,50,00,000/- in A.Y. 2013-14 and Rs. 75,00,000/- in A.Y. 2014- 15 on account of unexplained cash credit u/s. 68 of the Act are hereby deleted. Therefore, appeal on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the addition only with regard to loan taken from M/s KCL Infra Projects Private Limited at Rs. 83 lakhs and interest paid thereon at Rs. 5,59,357/- and deleting the remaining addition as observed in the finding given in para 4 to 11 at page no. 13 to 56 of the impugned order. 12.5. As regards the loan taken from Jayant Security and Finance Ltd. Badodara at Rs. 1.25 crores and interest paid thereon at Rs. 8,79,041/-, we find that the alleged cash creditor is a limited company, Permanent Account No. and address has been provided. Loan taken through proper banking channel Confirmation of account is on record. Jayant Security and Finance Ltd. is a non-banking financial company having experience of 26 years. This company is regularly assessed to tax and has also been subjected to scrutiny assessment and the additions made thereon have travelled before Coordinate Bench Ahmedabad in the case of M/s. Jayant Security and Finance Ltd. in ITANo. 753/Ahd/2012. We also find that the loan taken from alleged company has been treated as genuine and the additions made in the hands of other loan receivers have been deleted by this Tribunal in the case of M/s Tirupati Construction ITANo. 533 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken from Chandoomal Govindram Indore we find that it is a partnership firm and book profit for the relevant assessment year is Rs. 14,31,429/-. This firm is regularly assessed to tax and in its own case the issue of addition made by the Ld. AO reached to this Tribunal in ITA No. 862/Ind/1999 dated 24.04.2006 wherein this tribunal dismissed the revenue s appeal. Thus, looking to the fact that this partnership firm regularly assessed to tax, bank statement has been filed, confirmation account duly signed leaves no room for Ld. AO for making addition u/s 68 of the Act and thus rightly deleted by the Ld. CIT(A). 12.9. We also find merit in the finding of Ld. CIT(A) referring to various decisions including decision of this Tribunal in the case of Sumati Kumar Kasliwal OTHERS ITA No. 181, 472/Ind/2017 and others. Judgment of Hon'ble jurisdictional High Court in the case of Pr. CIT vs. M/s Chain House International (P) Ltd. ITA No. 111/2018 dated 07.08.2018 and also decision of this Tribunal in the case of M/s Tirupati Construction (supra) and M/s K.K. Patel Finance Ltd. (supra) wherein similar issue and almost identical facts has been examined and decided in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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