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TMI Blog2024 (12) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... ding paras of this order, which itself disproved the allegation of the AO. So far as identity of the lender is concerned, the complete address and their PAN No. besides Income Tax Return etc. have been submitted, therefore, the same does not remain in doubt. With regard to the genuineness of the unsecured loans, the lender companies have provided their bank account statements highlighting the withdrawals towards the account payee cheque given as a loan to the company. Therefore, the same cannot be doubted. The immediate sources of the lending to the assessee company have been duly explained by the lender companies. Therefore, in view of the aforesaid discussion, the identity, creditworthiness and genuineness of the borrowings have been proved from the details and evidences submitted in the assessment proceedings and does not call for any adverse inference. Denial of cross examination - It is also an admitted fact that no cross-examination was granted to the assessee though materials were considered adversely in its case. As decided in Andaman Timber Industries [ 2015 (10) TMI 442 - SUPREME COURT] held that when statements of witnesses are made basis of demand, not allowing assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act as it is a not a case of reasons to believe, rather reasons to suspect. He merely received certain information on which no preliminary enquiries were conducted enabling him to form an opinion that income had escaped assessment. Therefore, reopening is bad in law. 4. The Ld.CIT(A) has deliberated on this aspect on page 10/11, paras 5.2 to 5.4 and has concluded that that AO has taken due approval. Reasons were also supplied to the assessee and the objections were duly disposed of by him. In this case, return was merely processed u/s 143(1) of the Act without any scrutiny and verification. The information with the AO was a new information and not verified. Therefore, reopening was rightly done as per law. 5. The ld.AR has not disputed the observations of the ld.CIT(A) (supra). Considering the above findings and materials on record, we do not find any reason for interference in the matter. The facts that previously no assessment was made in terms of section 143(3) which is undisputed and reopening has been done subsequently based on information received from the Investigation wing of the department are enough reasons for assuming jurisdiction u/s 147 of the Act. The reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus or sham transaction some fresh evidence or confirmation of the creditor before the AO is required to prove the genuineness of transaction. The AO has given enough opportunities to the appellant to do this but it seems that the appellant is not able to obtain fresh evidence and has relied on the existing evidence and claiming that I have done my part and that now it is the duty of the AO to disprove it. The AO has correctly arrived at the finding that the appellant has not produced or filed any fresh evidence to prove the genuineness of transaction and the creditor is avoiding appearance. Grounds were accordingly dismissed by him. 7. Before us, the Ld. AR has vehemently argued against the orders passed by the above authorities which the Ld. Sr. DR has placed reliance on them. 8. The ld.AR has submitted that following documents were submitted to the Learned Assessing Officer proving the genuineness of the transaction, identity of the lender and creditworthiness of the lender: Copy of PAN card of Lender Companies, Details of Unsecured loan along with all the confirmation of the lender Companies, Copy of Relevant Bank Statement of the lenders, Copy of ITR Acknowledgement of lende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has proved the transaction of loan as genuine loan with evidence on records. The AO has made the disallowance u/s 68 in spite of all the conditions satisfied by the appellant. 8.2 It is further stated that as far as the question of validity of the transaction done through are concerned, even if some of the transactions entered into by Shri Gautam Jain others are found to be not genuine, it does not lead to the conclusion that all the transactions were non-genuine including the transactions related to the our assessee. There is no evidence brought in the assessment order to prove the above conclusion, by the AO. The outcome of investigation carried out in the case of Shri Gautam Jain and the conclusions drawn therein cannot be applied ipso facto to all other cases. Simply relying on the report and statement, the AO cannot conclude that all transactions are accommodation entries. 8.3 During the assessment proceedings, the appellant has submitted Loan Confirmations, Copies of the Bank Statements of the loan creditors, photocopies of bank statement of the assessee wherein loan repayment and Interest payment entries through cheques were reflected. The genuineness of the transaction is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es relied upon. On going through the detailed submissions, it is found that the main reason for making the addition by the AO was the source of the loan taken by the assessee from certain company alleged to having links with an accommodation entry provider who admitted such act on his part during search and seizure. The AO based on such admission, treated the impugned loan as bogus and added u/s 68 of the Act to the income of the assessee. However, we find that all the ingredients of a genuine loan transaction are quite evident here. Identity of the lender, genuineness of the transaction as also credit worthiness of the lender have not been disproved in any manner by the AO. Transaction involving loan taken and even its repayment are thought banking channels. The lender company is carrying on fully disclosed income is also active on ROC site. There is nothing brought on record to suggest that the impugned loan is assessee s unaccounted money channelized through the alleged lender. 10.1 It is worthwhile to examine following case laws which appear to be directly applicable to the facts of the case. In the case of H.R.Mehta vs. ACIT(2016) 72 Taxmann.com 110(Bom) where also the loan ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act wherein it was confirmed that these companies have advanced loan to the assessee. This reply of the loan parties cannot be brushed aside merely on the ground that the directors were not produced by the assessee during the assessment proceedings. It was the revenue which wanted to verify the directors of the loan companies. For this purpose, lot of powers were available with the revenue such as issuing notice under Section 131 of the Act for inviting the personal attendance of the directors. But the AO has not exercised such power in the given facts and circumstances. We also feel pertinent to refer the judgment of the Hon'ble Gujarat high court in case CIT vs. Ayachi Chandrashekhar Narsangji reported in 42 taxmann.com 251 where it was held as under: It is required to note that as such an amount of Rs. 1,00,00,000 vide cheque No. 102110 and an amount of Rs. 60 lakhs vide cheque No. 102111 was given to the assessee and out of the total loan of Rs. 1.60 crores, Rs. 15 lakhs vide cheque no. 196107 was repaid and therefore, an amount of Rs. 1,45,00,000 remained outstanding to be paid to IA. It has also come on record that the said loan amount has been repaid by the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n entries to the company or the same have been channelized out of the undisclosed income of the appellant company. Nowhere it has been proved that the lender company was in chain in the accommodation entry cycle and the final beneficiary was the assessee company. As per the allegation of the AO, had the assessee been the final beneficiary of the accommodation entries, then no repayment of the said loans would have been made by it to the lender. On the contrary, their accounts have been settled and squared up in the subsequent year as discussed in the preceding paras of this order, which itself disproved the allegation of the Assessing Officer. So far as identity of the lender is concerned, the complete address and their PAN No. besides Income Tax Return etc. have been submitted, therefore, the same does not remain in doubt. With regard to the genuineness of the unsecured loans, the lender companies have provided their bank account statements highlighting the withdrawals towards the account payee cheque given as a loan to the company. Therefore, the same cannot be doubted. Further, with regard to the creditworthiness, the lender company have submitted the details with regard to sour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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