AMAR PRATAP STEELS PRIVATE LIMITED,JAIPUR V. ITO, WARD-7(2), JAIPUR, JAIPUR

ITA 108/JPR/2024

AI Insights

The case involves Amar Pratap Steels Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC) confirming the addition of Rs. 1,50,00,000 as unexplained cash credit under Section 68 of the Income Tax Act, 1961. The addition was based on the assessee's receipt of unsecured loans from two companies managed by Shri Praveen Kumar Jain, who was implicated in providing accommodation entries. The Tribunal examined the evidences including confirmations from the lending companies, bank statements, and the assessee's tax returns, and found that the assessee had adequately proved the transactions' genuineness and the creditworthiness of the lenders. The Tribunal also addressed the issue of delayed payment of PF and ESI contributions, which was dismissed based on the Supreme Court's ruling.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 28419 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-08-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 03-02-2024
• Other Referred Cases: Kanhaialal Jangid vs. ACIT, CIT vs. Kamlaben Suresh Chandra Bhatti, Aravali Trading Co v ITO, Labh Chand Bohra v ITO, ACIT, Jaipur v M/S Rajasthan Asbestors Cement Co., Jaipur, Smt. Sumathi Dayal Vs CIT, Ashwani Gupta vs. CIT, Andaman Timber Industries vs. CIT, Daulat Ram Rawatmull vs. CIT, Monga Metals Pvt. Ltd. v. ACIT, Shubh Mines Private Limited vs. CIT, Manoj Kumar Saraf vs. ITO, PCIT vs. M/s Esspal International Pvt Ltd, Rohini Builders vs. ITO, Ojas Tarmake (P.) Ltd. vs. CIT, Swargamrut Dairy Pvt. Ltd. vs. ITO, Chetan R. Shah vs. ITO, Yug Developers Vs. ACIT, Smt. Madhu Solanki vs. CIT, Varinder Rawlley vs. CIT, SAHIBGANJ ELECTRIC CABLES (P) LTD. vs. CIT, Pooja Agarwal vs. CIT, Rajasthan High Court vs. CIT, Shree Ram Durga Prasad and Fateh Chand vs. Settlement Commissioner
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONISHA CHOUDHARY
• Assessee Lawyers: ROHAN SOGANI
• Keywords: Set aside; Question of law; Unexplained cash credit; Document seized; Documents seized; Onus to prove; Principle of natural justice; Search and seizure; Accommodation entries; Block assessment; Opportunity of cross examination; Bogus
• Section: 148; 143(3); 142(1); 143(2); 68

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 108/JPR/2024 fu/kZkj.k o\"kZ@Assessment Year : 2013-14 Amar Partap Steels Pvt. Ltd., A-161, RIICO Industrial Area, Bagroo, Bagroo, Jaipur cuke Vs. ITO, Ward-7(2), Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAECA 9152 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Rohan Sogani, CA jktLo dh vksj ls@ Revenue by : Sh. Monisha Choudhary, Addl. CIT lquokbZ dh rkjh[k@ Date of Hearing : 22/08/2024 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 03/10/2024 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, A.M. This is appeal filed by the assessee aggrieved from the order of the National Faceless Appeal Centre, Delhi [Here in after referred as CIT(A)/(NFAC)] for the assessment year 2013-14 dated 29.12.2023, which in turn arises from the order passed by the ITO, Ward-7(1), Jaipur passed under Section 143(3) of the Income tax Act, 1961 (in short 'the Act') dated 30.03.2016. ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 2 2. In this appeal, the assessee has taken following grounds. “1. In the facts and circumstances of the case and in law, Id. CIT(A)/National Faceless Appeal Center (\"NFAC\") has erred in confirming the action of the Id. AO in not providing opportunity of cross examination of the persons whose statements have been used for making the addition. Therefore, the action of Id. CIT(A)/ NFAC is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the entire assessment order which is passed in gross violation of principles of natural justice. 2. In the facts and circumstances of the case and in law, Id. CIT(A)/ NFAC has erred in confirming the action of the Id AO in making an addition of Rs. 1,50,00,000 by treating the unsecured loans received as alleged unexplained cash credit u/s 68 of the Act. The action of the Id. CIT(A)/ NFAC is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 1,50,00,000. 3. In the facts and circumstances of the case and in law, Id. CIT(A)/ NFAC has erred in confirming the action of the Id. AO in disallowing a sum of Rs. 3,57,521 and Rs. 59,681 u/s 36(i) (va) of the Act paid for employees' contribution to PF and ESI respectively. The action of the Id. CIT(A)/ NFAC is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the said disallowance of Rs. 4,71,202. 4. The assessee company craves its rights to add, amend or alter any of the grounds on or before the hearing.” 3. The brief facts as culled out from the records is that the assessee furnished his return of income on 05.09.2013 declaring total income at Rs. Nil/-. The case was selected for scrutiny through CASS and notice u/s 143(2) dated 05.09.2014 was issued which was served on the assessee fixing the case for hearing on ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 3 17.09.2014. Due to change of incumbent another notice u/s 143(2), 142(1) and query letter was issued on 17.08.2015 and duly served to the assessee fixing the case for hearing on 09.09.2015. As the case of the assessee was assigned to ITO, Ward-7(1), Jaipur vide Pr.CIT-3, Jaipur's order no.948 dated 04.08.2015, and on account of change of incumbent another notice u/s 143(2), 142(1) was issued on 12.01.2016 and duly served to the assessee fixing the case for hearing on 22.01.2016. The assessee attended hearing from time to time furnished computerized books of accounts i.e. sales bills, purchases bill, ledger, cash book, bank book, stock register and voucher of expenses which were examined on test check basis and case was discussed with him. 3.1 As there was information related to assessee which was passed on by office of the Director General of Income tax (investigation, 3rd floor, Sscindia House, Ballard Pier, Mumbai vide its office letter No DGIT (Inv)/ Information/PJ2014-15 dated 03.07.2014 and received form the Income tax Officer (Inv)(Hqrs) O/s the Director General of Income Tax (Inv), Rajasthan, Jaipur the assessee has taken the accommodation entries as unsecured ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 4 loans form the following companies which are managed and controlled by Shri Praveen Kumar Jain Group, Mumbai. S. No. Name of the entry provider PAN No. Financial Year Amount 1 M/s Falak Trading Co. Pvt. AABCF5837A 2012-13 1,00,00,000/- 2 M/s Pragati Gems Pvt. Ltd AAFCP5566J 2012-13 50,00,000/- The assessee is one of the beneficiaries for taking the accommodation entries as unsecured loans from the above companies which were managed and controlled by Shri Praveen Kumar Jain through his relatives, agents and his accountants detected during the search & seizure operation conducted by Investigation Wing, Income Tax Department, Mumbai in the case of Shri Praveen Kumar Jain Group. The same are bogus unsecured loans made by the assessee with above bogus companies. 3.2 Vide letter dated 22.12.2015 assessee objected to the issuance of notice u/s 148 of the Act and requested to drop the proceedings u/s 148 and alternatively also requested to dispose off ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 5 objections through a speaking order before proceeding further. The speaking order regarding objections filed against the issuance of notice u/s 148 of the Income Tax Act, 1961 was passed on 12.02.2016 and rejected the objections filed by assessee. Further notice u/s 142(1), 143(2) along with query letter was issued on 17.08.2015 fixing the case on 09.09.2015. In response of the above the assessee filed submission 09.09.2015 in which he submitted the confirmation of unsecured loan and bank statement. On perusal of details filed by assessee and available record of assessee, show cause notice was issued to assessee vide letter No. 3229 on 11.03.2015 fixing the case on 18.03.2016. In response the show cause notice submissions was filed in which details / confirmation of unsecured loan received from M/s Falak Trading Co. Pvt. of Rs. 1,00,00,000/- and M/s Pragati Gems Pvt. Ltd. of Rs. 50,00,000/- was produce. The ld. AO noted that according to the statement of Shri Praveen Kumar Jain which was recorded during the search operation, in answer of question No. 66, 67 and 70 in which Shri Praveen Kumar Jain accepted that he had provided accommodation entries as unsecured loan / advance. Based on that statement of Shri Praveen Kumar Jain ld. ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 6 AO held that assessee had taken accommodation entry as unsecured loan received from M/s Falak Trading Co. Pvt. Ltd., of Rs. 1,00,00,000/- and M/s Pragati Gems Pvt. of Rs. 50,00,000/-. Accordingly, as per provisions of section 68 invoked and unsecured loan of Rs. 1,50,00,000/- from the aforesaid companies treated as Non-genuine and was added to the total income of the assessee-company. In this proceeding ld. AO also noted that the assessee has made delayed payment of PF & ESI for an amount of Rs. 4,17,202/- comprising of PF & ESI for an amount of Rs. 3,57,521/- and Rs. 59,681/- respectively. The said delayed payment was also added in the hands of the assessee. 4. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: “4. I have gone through the above submissions and I have also considered the facts and circumstances of the case. I have also considered the various case laws relied on by the assessee. During the course of appellate proceedings, the assessee filed various details and supportings justifying the genuineness, identity of the lendors M/s. Falak Trading Pvt Ltd and Mis. Pragati Gems Pvt Ltd. a) In the case of M/s. Falak Trading Pvt Ltd., the assessee has taken a loan of Rs.1 crore during the year. The assessee has ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 7 filed copies of returns of income of the lendor, confirmation letters, copies of bank statements evidencing the payment of loan through banking channels. From the return of income, it is seen that the assessee has shown a loss of Rs. 10,51,92.747/- b) In the case of M/s. Pragati Gems Pvt Ltd., the assessee has taken a loan of Rs.50 lakhs during the year. The assessee has filed copies of returns of income of the lendor, confirmation letters, copy of bank statements evidencing the receipt of loan through banking channels etc. From the return of income it is seen that the lendor has shown a loss of Rs.7,27,39,485/-. 4.1 The above lendors even though they have established their identity and genuineness of the transactions, credit worthiness of the lendors is not conclusively proven. However, from the current assessment year i.e., AY 2013-14, provisions of Sec.68 have been amended which requires even the lendors to explain the nature and source of loans given by them. The relevant provisions of the Act are hereby reproduced for ready reference:- Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. Provided further that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory unless:- 1. The person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and 2. Such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory. 4.2 Thus, the above provisions categorically specifies that companies in which public are not substantially interested receives any money in ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 8 the form of share application money, share capital, share premium or any such amount is only necessitates the creditor to explain his source and creditworthiness. Thus in the instant case, even though the assessee submitted confirmations and bank statements of the lendors, the assessee could not furnish any details explaining the source of the lendors. Moreover, both the lendors are having substantial losses during the year and the assessee failed to establish the credit worthiness of the lendors. Further Sri Praveen Kumar Jain clearly admitted in his statements that he has been providing accommodation entries for various group concerns and charging fee of 1.25% to 2% commission on the transaction value. The case laws as relied on by the assessee mostly are pertaining to the pre-amended provisions of Sec.68 prior to the AY 2013-14. Therefore, the same are not to be relied upon. 4.3 From the facts of the case and as per information provided by the Investigation Wing, Mumbai it is understood that Sri Praveen Kumar Jain has been involved in providing accommodation entries to hundreds of companies and the data of the same has been forwarded to the concerned Assessing Officers. Sri Praveen Kumar Jain is based at Mumbai and involved in transactions of hundreds of companies, whereas the assessee is located at Jaipur, Rajasthan. From the findings of the search, Investigation Wing clearly provided the authentic information to all the Assessing Officers. Since the assessments are spread over the entire country and he has been providing accommodation entries throughout the country, it is not practically feasible to provide an opportunity for cross examination of Sri Praveen Kumar Jain to each assessee. At various occasions, Hon'ble appellate authorities and higher Courts have held that income tax proceedings come under quasi judicial nature and rules of Evidence Act are not strictly applicable to the income tax proceedings. Hon'ble Apex Court in the case of Smt. Sumathi Dayal Vs CIT [214 ITR 801] has given an observation that human probabilities and circumstances are to be considered while coming to conclusions in finalizing the assessments. In view of the above, the ground as raised by the appellant is hereby dismissed. As a result, the appeal of the appellant is hereby dismissed. 5. I have gone through the above submissions and also considered the various case laws relied on by the appellant. From the facts it is ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 9 understood that the assessee collected employees' contribution of ESI and PF and the same was paid beyond due date as specified by the concerned authorities which is not allowable u/s.36(i)(va) r.w.s. 2(24)(X) and 43B. Hon'ble Apex Court brought rest to all these disputes by its recent judgement in the case of Checkmate Services Pvt Ltd Vs CIT-1 [448 ITR 518] and clearly held that any employees contributions of PF & ESI paid beyond due dates of the concerned authorities are not allowable as expenditure. By respectfully following the above judgement, the ground raised by the appellant is hereby dismissed.” 5. As the assessee did not find any favour, from the appeal so filed before the ld. CIT(A), the assessee has preferred the present appeal before this Tribunal on the ground as reproduced hereinabove. To support the various grounds so raised by the ld. AR of the assessee, has filed the written submissions in respect of the various grounds raised by the assessee and the same is reproduced herein below: I. Assessee company is engaged in business of Manufacturing of MS Ingots and TMT Bars in the brand name of “AMCO TMT saria”. Assessee company filed its Return of Income, for the relevant Assessment Year, declaring total income of Rs. Nil. II. During the relevant previous year, assessee company took inter corporate loans from two companies (also referred to as “lending companies”) through banking channel, the details of which are as under (AO Order Page 2) Name of the Company Amount (Rs.) M/s Falak Trading Co. Pvt. Ltd. 1,00,00,000 M/s Pragati Gems Pvt. Ltd. 50,00,000 Total 1,50,00,000 ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 10 III. A search and seizure operation u/s 132(1) of the Income Tax Act, 1961 was carried out by the Investigation Wing, Mumbai in case of Shri Praveen Jain. During the course of search, statements of Shri Praveen Jain were recorded u/s 132(4), in which he accepted the fact that he was involved in the activity of providing accommodation entries. Information was received by the ld. AO, from DGIT (Inv.), that the assessee company had taken accommodation entry from the concerns managed and operated by Shri Praveen Jain. IV. On the basis of such information, received from DGIT (Inv.), and statement recorded of Shri Praveen Jain, ld. AO added the Inter Corporate Loans taken, as mentioned in table above, as unexplained cash credits under Section 68. Accordingly, addition of Rs. 1,50,00,000 was made by the ld. AO, during the course of assessment proceedings. Against such additions, the assessee company preferred appeal before National Faceless Appeal Center (“NFAC”), who vide order dated 29.12.2023, upheld the additions made by the ld. AO. Against the order of NFAC/ld. CIT(A), the present appeal has been preferred by the assessee company before the Hon’ble ITAT, Jaipur Bench, Jaipur. GROUND NO. 1 & 2 ADDITION OF RS. 1,50,00,000 UNDER SECTION 68 1. SUBMISSION 1.1. Before the lower authorities, confirmation of both the lending companies, of having given loan to the assessee company, along with the bank statements evidencing the transaction done through banking channel was made available. Details are as under:- Name of the Company Confirmation of account w.r.t payment and repayment of loan Bank Statement (of Assessee) Computation of income and ITR M/s Falak Trading Co. Pvt. Ltd \u0001 \u0001 \u0001 M/s Pragati Gems Pvt. Ltd. \u0001 \u0001 \u0001 1.2. It is undisputed that both the lending entities were companies (AO Order Page 2), regulated by the stringent provisions of the Companies Act, 2013. Their complete financial details, on yearly basis, were available in public domain. The department also issued them PAN and these companies were regularly assessed to tax. ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 11 Thus, assessee company proved beyond doubt the identity, creditworthiness of the lending companies as well as genuineness of the transactions. Thus the onus, on the part of the assessee company, stood fully discharged. 1.3. Since assessee company established the Identity of both the lending companies beyond doubt. Under such circumstances ld. AO at best could have assessed such amount in the hands of both the lending companies. Reliance is placed on the following judicial pronouncements, the extracts of which have been set out for the sake of convenience:- 1.3.i Kanhaialal Jangid vs. ACIT [2008] 217 CTR 354 (RAJ.) “….We are of the opinion that in rejecting the explanation of the assessee on the undisputed facts is founded on erroneous application of law in the matter. While it was the assessee's burden to furnish explanation relating to such cash credits, the assessee's burden does not extend beyond proving the existence of the creditor and further proving that such creditor owns to have advanced the amount credited in the account of assessee to him. However, the burden does not go beyond to put the assessee under an obligation to further prove that wherefrom the creditor has got or procured the money to be deposited or advanced to the assessee. The fact that the explanation furnished by the creditor about the source from where he procured the money to be deposited or advanced to the assessee, is not relevant for the purposes of rejecting the explanation furnished by the assesseeand make additions of such deposits as income of the assessee from undisclosed sources by invoking section 68 of the IT Act, unless it can be shown by the Department that the source of such money comes from the assessee himself or such source could be traced to the assessee itself. In the present case while existence of Sri DevendraSankhla the creditor is not in doubt, and he has admitted to have advanced the loan to the assessee. The fact that the explanation furnished by Sri DevendraSankhla about his source of such advancement has not been accepted by the Revenue authority cannot lead to any presumption that the source of such advancement by Sri DevendraSankhla emanated from the assessee. Therefore, addition of Rs. 16,000 in the income of assessee as cash credit in the name of Sri DevendraSankhla cannot be sustained. Such addition of income of assessee has to be deleted from the income of assessee…” 1.3.ii CIT vs. Kamlaben Suresh Chandra Bhatti [2014] 44 taxmann.com 459 (Gujarat) ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 12 “…Head Notes - Section 68 of the Income-tax Act, 1961 - Cash credits (Bank deposits) - During assessment proceedings, Assessing Officer made addition to assessee's income in respect of amount deposited in bank account - In appellate proceedings, Commissioner (Appeals) noted that assessee had explained source of a part of amount deposited coming from bank loan and sale of agricultural land - He thus deleted substantial portion of addition made by Assessing Officer - Tribunal confirmed order of Commissioner (Appeals) - Whether since entire issue was based on appreciation of evidence on record, no substantial question of law arose therefrom - Held, yes…” 1.3.iii Aravali Trading Co v ITO (2008) 220 CTR (Raj) 622 “..Head notes: Income- Cash Credit- Burden of proof- once the existence of the creditor is proved and such persons own the credits which are found in the books of the assessee, the assessee’s onus stands discharged and the latter is not further required to prove the source from which the creditors could have acquired the money deposited with him….” 1.3.iv Labh Chand Bohra v ITO (2010)189 Taxman 141 (Raj) Sec. 68: Identity and genuineness of Cash Creditor proved- No need to prove the capacity of Cash Creditor – source of source not to be enquired. 1.3.v ACIT, Jaipur v M/S Rajasthan Asbestors Cement Co., Jaipur (ITA NO.940/JP/2008) “Now tribunal has upheld the decision of CIT(A) after holding that once the existence of the creditor is proved and creditors have confirmed the advancement of loans, onus of the assessee stands discharged and that it is not the duty of the assessee to prove the source from which the creditors have advanced the loans”. 1.4. APPARENT IS REAL: The transaction is absolutely in accordance with the procedure laid down in the law and fully evidenced. No defects have been pointed out in these. Therefore, the transaction must be accepted as genuine. We rely on the ratio laid down by the Hon’ble Supreme Court in the case of Daulat Ram Rawatmull (1973) 87 ITR 349 (SC), wherein it was held that the onus of proving that the apparent was not real was on the party who claimed it to be so. 1.5. Ld. AO framed the entire assessment, which was also upheld by ld. CIT(A), on the basic premise that unaccounted cash was handed over by the assessee company which in-turn got deposited in the ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 13 Bank Account of the assessee company in the form of unsecured loan from the lending companies. However ld AO was absolutely silent about the following questions:- 1.5.i To whom cash was given by the assessee company? 1.5.ii On what date cash was given by the assessee company? 1.5.iii Where the cash was given by the assessee company? 1.5.iv How cash was transferred from Jaipur to Mumbai? 1.5.v Who was the person carrying cash on behalf of the assessee company and how much commission did he charge? 1.6. There is no evidence, to show that the money so received actually belonged to the assessee company. Nowhere the lower authorities suggested that the loan given by lending companies had actually flown from the assessee company. In absence of any such cogent evidence on record, no addition can be made to the income of the assessee merely on suspicion. This ratio is laid down by the Hon’ble Jurisdictional High Court of Rajasthan in the case of Shubh Mines Private Limited (Income Tax Appeal No. 96/15), vide its order dated 03.05.2016, in which it was held that “In absence of any cogent evidence on record establishing that the money shown to have received as share application money, was as a matter of fact, unaccounted money belonging to the assessee company, the finding arrived at by the AO, which is based on suspicion, has rightly been held not sustainable in the eyes of law. Suffice it to say that the finding arrived at by the CIT (A), affirmed by the ITAT, which remains a finding of fact, cannot be said to be capricious or perverse…” 1.7. Ld. AO made addition, under Section 68, of the unsecured received from the Lending Companies, on the basis of the statements made by Shri Praveen Jain during the course of search and survey proceedings and also on the basis of incriminating documents alleged to have been found from the business premises of Shri Praveen Jain. Ld. AO, being a quasi judicial authority, was duty bound to provide opportunity to cross examine Shri Praveen Jain and also for providing copies of the impugned documents before relying on the same for making additions in the hands of the assessee company. Request for the same was made to ld. AO as evident from Page No. 9 of the order of the ld. AO. 1.8. It is submitted that such statements of Shri Praveen Jain were untested and could become evidence only if opportunity of Cross Examination would have been provided to the assessee company. It ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 14 is well settled that statement of third party cannot be unilaterally utilized against the assessee as evidence to frame the assessment for it is a serious violation of the principles of natural justice. This infringement may as well result in legally untenable assessment. 1.9. In the case of Ashwani Gupta [2010] 322 ITR 396 (Delhi), addition was made on the basis of the statement of a third party and seized documents. Neither the seized documents were provided to the assessee nor was any opportunity of cross-examination of the adverse party given. Hon’ble Delhi High Court, following its own judgment in the case of SMC Share Brokers Ltd. [2007] 288 ITR 345 (Delhi) deleted the addition on the premise that there was violation of the principles of natural justice. 1.10. Hon’ble Supreme Court in the case Andaman Timber Industries (CIVIL APPEAL NO. 4228 OF 2006), vide its order dated 02.09.2015, held that “…not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected” 1.11. It was observed by the Apex Court that an order passed in violation of the principles of natural justice is a nullity as held in A.K. Kraipak vs. Union of India A/R – 1970 SC-150 RB. Shree Ram Durga Prasad and Fateh Chand vs. Settlement Commissioner 1989-SC-1038. 1.12. It is submitted that in the statements recorded of Shri Praveen Jain, u/s 132(4), as reproduced by the ld. AO, in his assessment order, nowhere the name of the assessee company has been mentioned. 1.13. Attention is also drawn towards the case of Monga Metals Pvt. Ltd. v. ACIT 67 TT] 247 (All.) where Block Assessment made by placing reliance on evidence of third party, without giving assessee an opportunity to cross-examine the third party was held to be illegal and void. 1.14. Information from Director General of Income Tax (Investigation) is not an evidence in itself. It can, at best, be an indicator for arousing suspicion. That suspicion has to be confirmed further by the ld. AO to make that as admissible evidence. When ld. AO alleged that the ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 15 specific transaction was bogus, heavy onus was on the ld. AO to establish the same considering the fact that assessee company had provided all necessary evidences supporting its claim. Ld. AO failed in discharging the said onus and passed the assessment order without further investigating and producing evidences supporting the rejection of the claim of the assessee company, that the unsecured loans were genuine. 1.15. Even if it is assumed that Shri Praveen Jain was involved in bogus transactions, such fact may be relevant for suspicion but it ipso facto does not lead to conclusion of all transaction of Shri Praveen Kumar Jain would be bogus. Hon’ble Jharkhand High Court in case of CIT, Jamshedpur v/s Arun Kumar Agarwal (HUF) [2012] 26 taxmann.com 113 (Jharkhand) held that “Even in a case where the share broker was found involved in unfair trade practice and was involved in lowering and rising of the share price, and any person, who himself is not involved in that type of transaction, if purchased the share from that broker innocently and bonafidely and if he show his bonafide in transaction by showing relevant material, facts and circumstances and documents, then merely on the basis of the reason that share broker was involved in dealing in the share of a particular company in collusion with others or in the manner of unfair trade practices against the norms of S.E.B.I and Stock Exchange, then merely because of that fact a person who bonafidely entered into share transaction of that company through such broker then only by mere assumption such transactions cannot be held to be a shame (sic - sham) transaction. Fact of tinted broker may be relevant for suspicion but it alone necessarily does lead to conclusion of all transaction of that broker as tinted (sic – tainted). In such circumstances, further enquiry is needed and that is for individual case. Such further enquiry was not conducted in that case.” 1.16. Attention is drawn towards the judgment of Hon’ble Rajasthan High Court in the case of Pooja Agarwal, ITA 385/2011, wherein it was held that no addition can be made if the following conditions are satisfied: 1.16.i The payments and receipts are through banking channel. 1.16.ii There is no trail which could substantiate that the cash has flown back to the assessee. 1.16.iii The transactions is supported by documents appear to be genuine transaction. ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 16 1.16.iv The statements recorded do not have a clear and a distinct remark about the assessee so as to challenge the genuineness of the transaction. 1.17. It is submitted that the assessee company took a short term loan to fulfill short term financial needs. It subsequently repaid the loan taken from the lending companies, through proper banking channel. Details are as under:- Particulars Name of Party Date Amount Receipt of Loan Falak Trading Co. Pvt. Ltd. 30/10/12 18,00,000 31/10/12 15,00,000 01/11/2012 30,00,000 03/11/2012 37,00,000 Subtotal 1,00,00,000 Pragati Gems Private Limited 06/11/2012 30,00,000 22/12/2012 20,00,000 Subtotal 50,00,000 Repayment of Loan Falak Trading Co. Pvt. Ltd 11/12/2013 20,00,000 19/12/2013 30,00,000 19/12/2013 21,00,000 27/12/2013 29,00,000 Subtotal 1,00,00,000 Pragati Gems Private Limited 21/12/2013 25,00,000 27/12/2013 25,00,000 Subtotal 50,00,000 1.18. If the loans have been received and repaid through Account Payee Cheques, the onus on the part of the assessee company stands fully discharged unless the department after reaching the lenders can prove otherwise. Hon’ble Punjab & Haryana High Court in the case of Varinder Rawlley [2014] 51 taxmann.com 524 (Punjab & Haryana) held that “….Head Noted : Section 68 of the Income-tax Act, 1961 - Cash credit (Sale of goods) - ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 17 Assessment year 2002-03 - Whether where assessee received and returned amount in question by way of account payee cheques and transaction was reflected in bank accounts of assessee as well as creditor who was an income-tax assessee, assessee had sufficiently explained nature and source of credit entry and in such case entry could not be treated as assessee's income when department failed to prove to contrary - Held, yes [Paras 9 and 10] [In favour of assessee]…” 1.19. Hon’ble Calcutta High Court in the case of SAHIBGANJ ELECTRIC CABLES (P) LTD. (1978) 115 ITR 408 (Cal-HC) held that where the amounts of loan were received by cheque and repayment was also made by cheque through assessee's bankers; and confirmation of creditors along with their income-tax file numbers were furnished the assessee discharged its initial burden and ITO was not justified, in the absence of any further investigation, to reject the evidence and make addition. 1.20. The aforementioned factual and legal position was put forth before the NFAC through detailed written submissions which also form part of the Paper Book filed before the Hon’ble Bench, from Pages 14-27. However, NFAC, without any cogent basis dismissed the appeal of the assessee company. NFAC did not point out any discrepancy in the evidences submitted before it of the transactions undertaken by the assessee company, neither the same have been found to be non-genuine by the NFAC. 1.21. Ld. CIT(A) did not accept the contention of the assessee company, without any cogent basis. It has also been specified by the ld. CIT(A) in the order that it was not practically feasible to provide an opportunity of cross-examination of Shri Praveen Kumar Jain to each assessee. It is submitted that since the entire basis for making the addition in the present case is the statements made by Shri Praveen Kumar Jain, accordingly, in such a scenario, it was the duty of the Income Tax Authorities to provide adequate opportunity to the assessee company to cross- examine Shri Praveen Kumar Jain, solely on the basis of whose statements additions have been made. Accordingly, the department cannot take shelter of practical feasibility in relation to providing the opportunity of cross-examination to Shri Praveen Kumar Jain, which was vital in this case. ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 18 1.22. Moreover, it is pertinent to note that the loan taken by the assessee company has also been repaid back within a very short duration. When loan stands repaid no addition under Section 68 can be made. Reliance is placed on the judgment of Hon’ble Gujarat High Court in case of Rohini Builders [2002] 256 ITR 360 (Gujarat), in which it was held was under:- \"The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques.\" 1.22.i The above judgment has been followed by Hon’ble ITAT Ahmedabad in the case of RAS Concepts Pvt. Ltd. vs. Income Tax Officer [2022] 95 ITR 46 (Ahmedabad), in which was held as under: - “9.4 In view of the above, we are of the opinion that, though the trans- actions of the loan received by the assessee are not free from any doubt but in either of the case, once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into in isolation after ignoring the debit entries. Thus in view of the above and after considering the facts in totality, we are not inclined to uphold the finding of the learned Commissioner of Income-tax (Appeals). Accordingly, we set aside the finding of the learned Commissioner of Income-tax (Appeals) and direct the Assessing Officer to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. In the result, the appeal of the assessee is allowed. Order pronounced in the court on February 7, 2022 at Ahmedabad.” 1.22.ii Reliance is also placed on the decision of Hon’ble ITAT Bangalore Bench in the case of Smt. Madhu Solanki - ITA No.974 /Bang/2009 wherein it was held as under: “14…AO did not get reply from both the trade creditors and hence he proceeded to assess the outstanding balances, while accepting the purchases made during the year & payments made during the year. The AO has made the addition u/s 68 of the Act and did not invoke provisions of sec. 41(1) of the Act. On the contrary, the assessee has ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 19 shown that the payments have been made in the succeeding year through banking channels. Accordingly, we are of the view that the revenue could not rely upon the decision rendered in the case of Sureshkumar T Jain. Under these set of facts, we are of the view that the AO could not have made addition of trade creditors u/s 68 of the Act..” 1.23. Attention is drawn towards the decision of Gujarat High Court in the case of Ojas Tarmake (P.) Ltd. [2023] 156 taxmann.com 75 (Gujarat), in which it was held that where assessee showed unsecured loans received during relevant assessment year and AO made addition on ground that assessee failed to discharge onus of liability as laid down under section 68, since amount of loan received by assessee was returned to loan party during year itself and all transactions were carried out through banking channels, impugned addition was to be deleted. The fact that the loan had been repaid by the assessee company through banking channel has been completely ignored by the NFAC, while passing the order in the case of the assessee company. 1.24. Furthermore, under identical set of facts, wherein additions were made by the ld. AO and upheld by the ld. CIT(A) on the basis of statements of third persons, were deleted by ITAT Mumbai Bench in the case of Swargamrut Dairy Pvt. Ltd., ITA No. 6839/MUM/2019. 1.25. Below mentioned is the summary of the contentions made herein above, asserting that the additions made by the ld. AO, and upheld by the ld. CIT(A), were illegal and deserved to be deleted. 1.25.i Identity, Creditworthiness of the lending companies and genuineness of the transactions was established beyond doubt. 1.25.ii Once identity was established ld. AO could have at best made additions in the hands of the lending companies. 1.25.iii No evidence that the money received as unsecured loan actually belonged to the assessee company put forth by the ld. AO. 1.25.iv Ld. AO solely relied on the statements of Shri Praveen Jain. ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 20 1.25.v Assessee company was not provided copy of the impugned documents found during the course of search of Shri Praveen Jain 1.25.vi No opportunity of cross examination of Shri Praveen Jain was provided. 1.25.vii Unsecured loan received by the assessee company from the lending companies, through proper banking channel, was subsequently repaid by the assessee company, through proper banking channel. 1.26. It is submitted that under identical set of facts in the below mentioned cases, wherein the assessees had also taken loans from Falak Trading Company Pvt. Ltd. and Pragati Gems Pvt. Ltd., additions were made under Section 68 by the ld. AO. Thereafter, in the appellate proceedings, the additions made by the ld. AO were deleted, considering these two companies having the creditworthiness to extend loans to different parties. 1.26.i Chetan R. Shah, ITA No. 5781/Mum/2017 [ITAT Mumbai Bench] 1.26.ii Yug Developers Vs. ACIT, ITA Nos. 7130 and 7222/Mum/2018 [ITAT Mumbai Bench] In view of the above, additions made by the ld. AO and confirmed by the ld. CIT(A) deserve to be deleted in to-to.” 6. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: S.No. Particulars Page No. 1. Copy of confirmation of accounts of Falak Trading Co. Pvt. Ltd. 1-2 2. Copy of confirmation of accounts of Pragati Gems Pvt. Ltd 3-4 3. Copy of bank statement (State bank of Bikaner and Jaipur) of assessee. 5-9 ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 21 4. Copy of Income Tax Return and computation of A.Y. 2013-14 of Pragati Gems Pvt. Ltd 10-11 5. Copy of Income Tax Return of A.Y. 2013-14 of Falak Trading Co. Pvt. Ltd. 12-13 6. Copy of submission filed before CIT(A) in the appellate proceedings 14-27 Case laws relied upon: S. No. Particulars Page No. 1. Copy of the order of Gujarat High Court in the case of Rohini Builders, [2003] 127 Taxman 523 (Gujarat) 1 2. Copy of the order of ITAT Ahmedabad Bench in the case of RAS Concepts Pvt. Ltd., ITA No. 2352/AHD/2018 2-4 3. Copy of the order of Gujarat High Court in the case of Ojas Tarmake, [2023] 156 taxmann.com 75 (Guj) 5-10 4. Copy of the order of ITAT Mumbai Bench in the case of Swargamrut Dairy Pvt. Ltd., ITA No. 6839/MUM/2019 11-31 5. Copy of the order of ITAT Mumbai Bench in the case of DCIT Vs. Chetan R. Shah, ITA No. 5781/Mum/2017 32-57 6. Copy of the order of ITAT Mumbai Bench in the case of Yug Developers Vs. ACIT, ITA Nos. 7130 and 7222/Mum/2018 58-75 7. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee has taken Inter Corporate Deposit (ICD) which was repaid by the assessee. Thus, identity, creditworthiness and genuineness are proved. The Assessing Officer added the said ICD merely based on statement of Praveen Kumar Jain who has retracted from that ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 22 statement. Thus, the addition was made solely based on that that statement. Ld. AO did not consider confirmations, bank statement ITR and computation of income in case of these ICDs. Thus, the onus casted upon the assessee has been discharged by them. Ld. CIT(A) did not appreciate these aspects of the matter and has confirmed the additions based on the statement of Shri Praveen Kumar Jain. Both the lower authorities have not considered the request of the assessee to provide the contentions of the assessee for cross examination of Shri Praveen Kumar Jain has not been granted by the AO as well as ld. CIT(A). The assessee has already repaid ICD and therefore, no addition can be made as held by the Gujarat High Court in the case of Rohini Builders [2003] 127 Taxman 523 (Gujarat). 8. Per contra, the ld. DR representing the revenue has relied upon the order of ld. CIT(A) based on the evidence placed on record the addition was made as the assessee is beneficiary to the accommodation entry from Shri Praveen Kumar Jain. It is evident that the company from whom the assessee has accepted as ICD were incurring loss, despite that they have given loan to the ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 23 assessee. The ld. DR thus also relied on decision of Gujarat High Court in the case of Manoj Kumar Saraf vs. ITO (45 taxmann.com 63) (Gujarat) and thereby relied on the orders of the lower authorities. 9. We have heard the counsel for both the parties and perused the material placed on record, judgment cited before us and the orders passed by the revenue authorities. In the present appeal the assessee has raised three grounds. Ground no. 3 relates to the addition made on account of delayed payment of ESI & PF for an amount of Rs. 4,71,202/-. Apropos to this ground the ld. AR of the assessee fairly admitted that considering the decision of Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. vs. CIT-01, 2022 (10) TMI 617 (SC) he do not intend to press this ground. Based on these oral submission ground no. 3 raised by the assessee stands dismissed. Apropos to the ground no. 1 & 2 raised by the assessee the relevant facts as emerges from the record is that in this case, information was received related to assessee which was passed on by office of the Director General of Income tax (investigation, 3rd ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 24 floor, Scindia House, Ballard Pier, Mumbai vide its office letter No DGIT (Inv)/ Information/PJ2014-15 dated 03.07.2014 and received form the Income tax Officer (Inv)(Hqrs) O/s the Director General of Income Tax (Inv), Rajasthan, Jaipur the assessee has taken the accommodation entries as unsecured loans form the following companies which are managed and controlled by Shri Praveen Kumar Jain Group, Mumbai: S. No. Name of the entry provider PAN No. Financial Year Amount 1 M/s Falak Trading Co. Pvt. AABCF5837A 2012-13 1,00,00,000/- 2 M/s Pragati Gems Pvt. Ltd AAFCP5566J 2012-13 50,00,000/- As is known from the statement of Shri Praveen Jain that the assessee is one of the beneficiaries for taking the accommodation entries as unsecured loans from the above companies. As these companies were managed and controlled by Shri Praveen Kumar Jain through his relatives, agents and his accountants as known from the search & seizure operation conducted by Investigation Wing, Income Tax Department, Mumbai in the case of Shri Praveen Kumar Jain Group. Therefore, ld. AO merely based on ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 25 that information considered these loans as bogus unsecured loans made by the assessee with above companies. Based on this information addition of Rs. 1,50,00,000/- in the hands of the assessee considering that the assessee has taken the against accommodation entries from the Praveen Kumar Jain and group concerned managed by him. When the matter carried to ld. CIT(A) who has also confirmed the view of the Assessing Officer and dismissed the appeal of the assessee by holding that ground of appeal raised by the assessee considering the information received based on the detailed statement of Shri Praveen Jain the addition is required to be sustained. Whild holding so ld. CIT(A) relied upon the decision of Sumati Dayal Vs. CIT wherein the apex court held that human probabilities and circumstances to be considered while coming to conclusions in finalizing the assessments and thereby he has confirmed the addition. As is evident from the material placed on record that the assessee has accepted the ICDs from these two companies by account payee cheque. These loans have been repaid by account payee cheque. The relevant details showing the receipt and ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 26 payment were placed on record. The assessee also placed on record the confirmation and ITR. All these facts are sufficient to prove the identity, genuineness and creditworthiness. The money so received as is evident that was repaid also. All these records so placed on record were not controverted which proves the identity, genuineness and capacity. On the similar set of fact Hon’ble Gujarat High Court in the case of Rohini Builders 256 ITR 306 held that \"The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques.\" Moreover, our Jurisdictional High Court in the case of PCIT vs. M/s Esspal International Pvt Ltd. 166 taxmann.com 722 (Rajasthan) wherein our High Court vide order dated 03.09.2024 has held that “ Even otherwise, an admission by the assessee cannot be said to be a conclusive piece of evidence. The admission of the assessee in absence of any corroborative evidence to strengthen the case of the revenue cannot be made the basis for any addition.” ITA No.108/JPR/2024 Amar Pratap Steels Pvt. Ltd. vs. ITO 27 Thus, as is evident that except statement of Shri Praveen Jain there was no corroborative evidence was placed on record and therefore, we do not find any reasons to sustain that addition and direct ld. AO to delete the addition of Rs. 1,50,00,000/- made in the hands of the assessee. Based on these observations ground no. 1 & 2 raised by the assessee are allowed. In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 03/10/2024. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 03/10/2024 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Amar Pratap Steels Pvt. Ltd., Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward 7(2), Jaipur 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File {ITA No. 108/JPR/2024} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "