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TMI Blog2024 (2) TMI 274X X X X Extracts X X X X X X X X Extracts X X X X ..... her supplied to the assessee for rebuttal nor the opportunity of cross examination of Shri Mukesh Banka has been provided. It is settled position of law that not providing the material used against the assessee for rebuttable and opportunity of cross examination of the statement relied upon by the AO will vitiate the validity of the assessment. See Andaman Timber Industries vs. CCE [ 2015 (10) TMI 442 - SUPREME COURT] Onus to prove - Assessee in support of genuineness of loan have furnished all the necessary documents such as ledger of parties, contra ledger from the parties and confirmation, ITRs, bank statements and annual reports. However, the AO without pointing out any infirmity and application of mind on those documentary evidence, treated the loan amount as unexplained cash credit by relying upon the statement recorded and material collected during the search at third party premises and that too without providing the opportunity of rebuttal and cross examination. Hon ble Supreme Court in the case of CIT vs. Odeon Builders Pvt Ltd [ 2019 (8) TMI 1072 - SUPREME COURT] has confirmed the concurrent finding of learned CIT(A), the ITAT and the High court in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 2018-19. 2. The only issue raised by the revenue is that the learned CIT(A) erred in deleting the addition of unsecured loan taken from shell/paper companies managed by Shri Mukesh Banka for Rs. 6,74,81,741/- only. 3. The facts in brief are that the assessee, a private limited company, is engaged in the business of real estate development. The assessee company during the year has accepted unsecured loans from certain parties. It was alleged by the AO that the parties from whom unsecured loans were accepted by the assessee are paper/shell companies and managed by the entry provider Shri Mukesh Banka. The basis of such an allegation was the search proceedings carried out in the case of Shri Mukesh Banka group where certain evidence were found and statement of Shri Mukesh Banka was recorded under section 132(4) of the Act. Accordingly, it was unearthed that Shri Mukesh Banka is engaged in the activity of providing bogus accommodation entry in the form of unsecured loan, share capital or other forms through various paper/shell companies controlled and managed by him. As such, Shri Mukesh Banka has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is not acceptable and case laws relied on were also not commensurate to the fact of the present case. The assessee has taken unsecured loans of Rs. 6,74,81,741/- from paper/shell companies of Banka group, therefore the same was treated as unexplained cash credit under section 68 of the Act and added to the total income. 4. The aggrieved assessee preferred an appeal before the learned CIT(A). The assessee before the learned CIT(A) besides reiterating the submission made during the assessment, filed copy of affidavit of Shri Mukesh Banka for retraction of his statement, copies of affidavit by the loans parties that they have no connection of whatsoever with Mukesh Banka. 5. The learned CIT(A) after considering the facts in totality deleted the addition made by the AO. The relevant finding of the Ld. CIT(A) is available on pages 22 to 36 of his order. 6. Being aggrieved by the order of the learned CIT(A) the revenue is in appeal before us. 7. The learned DR before us submitted that the loan companies were formed same day, at the same address and having same email ids. All the affidavits furnished by assessee were similarly worded and notarized from one person on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper/shell companies and other relevant information forming the basis of show cause notice, despite written request of the appellant, neither the information/ material collected at the time of search on Shri Mukesh Banka nor the copies of his statements which were being relied upon to draw adverse inference against the appellant were furnished by the AO to the appellant. Further, the written request of the appellant for cross-examination of Shri Mukesh Banka was also brushed aside. There is clear violation of principles of natural justice on the facts of the present case. 9.1 It is settled position of law that not providing the material used against the assessee for rebuttable and opportunity of cross examination of the statement relied upon by the AO will vitiate the validity of the assessment. In holding so, we draw support and guidance from the judgment of Hon ble Supreme Court in the case of Andaman Timber Industries vs. CCE reported in 62 taxamann.com 3. On the other hand, we note that the assessee in support of genuineness of loan have furnished all the necessary documents such as ledger of parties, contra ledger from the parties and confirmation, ITRs, bank statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act suggests that if there is any sum credited in books of account maintained for the any previous year, then the assessee is required to offer proper and reasonable explanation regarding nature and sources of such credit to the satisfaction of the AO. Thus, the primary onus lies with the assessee to explain the source of credit in the books. Over the period, the Hon ble Courts have laid down that the assessee to discharge its onus is required to furnish evidence with respect to identity of the creditor, genuineness of transaction and credit worthiness of the creditor. If the assessee fails to discharge the primary onus cast or the explanation and evidence submitted by the assessee was not found satisfactory by the AO, then the sum credited in the books shall be deemed as income of the assessee. The Hon ble Supreme court in case of CIT vs. P. Mohanakala reported in 291 ITR 278 while dealing with scope of provision of the section 68 of the Act held that the opinion of the AO that the explanation furnished by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the loan party during the year itself and all transactions were carried out through banking channel. The Tribunal on the decision of Dy. CIT v. Rohini Builders [2003] 127 Taxman 523/[2002] 256 ITR 360 (Guj.), held in favour of the assessee. [Para 3] 9.4 In view of the above detailed discussion, we hereby confirm the finding of the learned CIT(A) and direct the AO to delete the addition made by him. At this juncture, it is important to note that the ld. DR at the time of hearing has referred several judgements of the Hon ble Courts, the citation of them has already been reproduced somewhere in the preceding paragraph but in our humble understanding, principles laid down in such case laws are distinguishable from the facts of the present case and therefore we are reluctant to make any reference to such case laws in the case on hand as long as the interest on the loan taken by the assessee has not been disputed by the revenue. Thus, to our understanding, the Revenue has grossly erred by treating the element of interest on the alleged bogus loan as genuine and treating the same loan as bogus in nature. Hence, the ground of appeal of the revenue is hereby dismissed. 10. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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