META TILES P.LTD, MUMBAI V. DCIT-3(2)(1), MUMBAI

ITA 1487/MUM/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1714 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 12-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N. R. RAO
• Keywords: Unexplained cash credit; Retrospective amendment; Question of law; Accommodation entries; TDS; Bogus
• Section: 131; 68; 143(3); 115JB; 73; 72; 13; 22; 20

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE SH. SANDEEP GOSAIN, JM & HONBLE SH. G. MANJUNATHA, AM ./ I.T.A. NO . 1487/MUM/2019 ( / ASSESSMENT YEAR: 2015 - 16 ) IN THE MATTER OF: META TILES PVT. LTD. 25, NARIMAN BHAVAN PREMISES CHS LTD. 227, BACKBAY RECLAMATION, NARIMAN POINT , MUMBAI 400 021 / VS. DCIT - 3(2)(1 ), 6 TH FLOOR , AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN NO. A A A CT3954F ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI N. R. RAO , AR / RESPONDENTBY : SHRI D. G. PANSARI , D R / DATE OF HEARING : 30.04 .201 9 / DATE OF PRONOUNCEMENT : 16.05.2019 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS CHALLENGING AGAINST THE ORDER OF LD. CIT (APPEAL) 8 , MUMBAI DATED 25.02.19 F OR AY 2015 - 16. 2 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. 2. THE BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TILES AND CHEMICALS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED DECLARING TOTAL INCOME AT RS. 51,10,240/ - AS PER NORMAL PROVISIONS OF I.T. ACT AND RS. 50,26,301/ - AS BOOK PROFIT U/S 115JB OF I.T. ACT. SUBSEQUENTLY, T HE CASE WAS SELECTED FOR SCRUTINY AND AFTER SERVING STATUTORY NOTICES AND SEEKING REPLY OF THE ASSESSEE, ASSESSMENT ORDER WAS PASSED BY AO U/S 143(3) OF THE ACT, THEREBY MAKING ADDITION AS UNEXPLAINED CASH CREDIT ON ACCOUNT OF SHARE PREMIUM/SHARE APPLICATION MONEY/SHARE CAPITAL. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES , DISMISSED THE APPEAL OF THE ASSESS EE . NOW BEFORE US, THE ASSESSEE HAS PREFERRED THE PRESENT APP EAL BY RAISING THE ABO VE GROUND S . 3 . THE SOLITARY GROUND RAISED BY THE ASSESSEE RELATES TO CHA LLENGING THE ORDER OF LD. CIT(A) IN UPHOLDING ADDITION MADE BY AO AS CASH CREDIT AND AS ASSESSABLE U/S 68 OF THE I.T. ACT. 3 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. 4. LD AR APPEARING ON BEHALF OF THE ASSESSEE REITERATED THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE LD. CIT(A). IT WAS SUBMITTED THAT ASSESSEE HAD FILED WRITTEN SUBMISSIONS BEFORE LD. CIT(A) WHICH MAY ALSO BE READ AS ARGUMENTS ON BEHALF OF ASSESSEE BEFORE US AND THE SAME ARE CONTAINED IN PARA NO. 3.1.2 OF THE ORDER OF LD. CIT(A). IT WAS FURTHER SUBMITTED THAT ASSESSEE IS IN THE BUSINESS OF TRADING TILES, CHEMICALS ETC. THE RETURN OF INCOME WAS FILED AT RS. 51,10,240 AND DURING THE COURSE OF ASSESSMENT, ASS ESSEE HAD FILED (I) A COMPLETE SET OF RETURN OF INCOME E - FILED EARLIER ALONG WITH A COPY OF COMPUTATION OF TOTAL INCOME, (II) AUDITED ACCOUNTS FOR THE FINANCIAL YEAR 2014 - 15, (III).TAX AUDIT REPORT; (IV) CONFIRMATION OF ACCOUNTS OF LOANS AND ADVANCES FROM THE THREE RELATED COMPANIES IN THE GROUP M/S METAOXIDE PRIVATE LTD., M/S ANANDEYA INVESTMENTS PRIVATE LTD. AND M/S SANKEYA CHEMICALS PRIVATE LTD. AND (V) AUDITED ACCOUNTS OF METAOXIDE PRIVATE LTD. IN THIS RESPECT, A LL THE DOCUMENTS HAVE BEEN ENCLOSED IN TH E PAPER BOOK . 4.1 THE ASSESSEE HAD ALSO FILED DETAILS OF RUNNING ACCOUNT OF THREE RELATED PARTIES, THE DETAILS OF WHICH ARE AS UNDER: 4 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. SR. NO. NAME OF THE PARTY OPENING BALANCE CLOSING BALANCE I METAOXIDE PRIVATE LIMITED NIL RS. 1,42,78,442 2 SHREE ANENDEYA INVESTMENT PRIVATE LTD. RS. 4,50,000 NIL 3 SANKEYA CHEMICALS PRIVATE LIMITED RS. 15,18,265 NIL 4.2 IT WAS SUBMITTED THAT A LL THE THREE ACCOUNTS ARE RUNNING ACCOUNTS AND DURING THE YEAR UNDER CONSIDERATION, THERE ARE SEVERAL TRANSACTIONS OF RECEIPT OF AMOUNT AS WELL AS REPAYMENTS. IN THIS RESPECT, C OPIES OF ACCOUNT OF THREE PARTIES HAVE ALREADY BEEN ENCLOSED. 4.3 IT WAS SUBMITTED THAT A LL THE THREE PARTIES FROM WHOM LOANS WERE TAKEN ARE CORPORATE ENTITIES AND THEREFORE ARE REGISTERED WITH THE REGISTRA R OF COMPANIES. THEIR ADDRESS IN DETAIL ALONG WITH PERMANENT ACCOUNT NUMBER ARE MENTIONED IN THE COLUMNS OF TAX AUDIT REPOR T. IN THIS RESPECT, A COPY OF THE TAX AUDIT REPORT HAS ALSO BEEN PLACED ON RECORD. THUS IN THIS WAY, ACCORDING TO LD. AR, THE IDENTITY IS CATEGORICALLY ESTABLISHED. 5 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. 4.4 IT WAS FURTHER SUBMITTED THAT THE AMOUNT RECEIVED OR REPAID WAS THROUGH ACC OUNT PAYEE CHEQUE OR BANK DRAFT, WHICH ESTABLISHED THE GENUINENESS OF THE TRANSACTION. THE CONFIRMATION FROM THREE PARTIES HAD ALSO BEEN FILED BEFORE THE A.O. THUS, IN THIS WAY, THE ASSESSEE HAD DISCHARGED ITS ONUS BY ESTABLISHING THE IDENTITY, THE CREDITWORTHINESS AS WELL AS THE GENUINENESS OF THE TRANSACTION. THE ASSESSEE ALSO RELIED UPON SEVERAL JUDGMENTS WHICH ARE ENUMERATED IN THE SUBSEQUENT PARAS. 5. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. 6. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD, JUDGMENT CITED BY THE PARTIES AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. AS PER THE FACTS OF THE PRESENT CASE, THE ASSESSEE IS IN THE BUSINESS OF TRADING TILES, CHEMICALS ETC. THE ASSESSEE HAD TAKEN UNSECURED LOANS FROM THE RELATED PARTIES AND IN ORDER TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTIONS, THE ASSESSEE HAD PLACED ON RECORD (I) A COMPLETE SET OF RETURN OF 6 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. IN COME E - FILED EARLIER ALONG WITH A COPY OF COMPUTATION OF TOTAL INCOME, (II) AUDITED ACCOUNTS FOR THE FINANCIAL YEAR 2014 - 15, (III).TAX AUDIT REPORT; (IV) CONFIRMATION OF ACCOUNTS OF LOANS AND ADVANCES FROM THE THREE RELATED COMPANIES IN THE GROUP M/S METAO XIDE PRIVATE LTD., M/S ANANDEYA INVESTMENTS PRIVATE LTD. AND M/S SANKEYA CHEMICALS PRIVATE LTD. AND (V) AUDITED ACCOUNTS OF METAOXIDE PRIVATE LTD. 7 THE ASSESSEE WAS HAVING RUNNING ACCOUNT OF THREE RELATED PARTIES, THE DETAILS OF WHICH ARE AS UNDER: SR. NO. NAME OF THE PARTY OPENING BALANCE CLOSING BALANCE I METAOXIDE PRIVATE LIMITED NIL RS. 1,42,78,442 2 SHREE ANENDEYA INVESTMENT PRIVATE LTD. RS. 4,50,000 NIL 3 SANKEYA CHEMICALS PRIVATE LIMITED RS. 15,18,265 NIL A ND AS PER RECORD, DURING THE YEAR UNDER CONSIDERATION, THERE WERE SEVERAL TRANSACTIONS OF RECEIPT OF AMOUNT AS WELL AS REPAYMENTS AND IN THIS RESPECT, C OPIES OF ACCOUNT OF THREE PARTIES HAVE ALREADY BEEN PLACED ON RECORD. HOWEVER, AO MAD E THE 7 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. ADDITION U/S. 68 OF THE ACT OF THE ENTIRE AMOUNT OF CREDIT SIDE OF THE LEDGE R ACCOUNTS OF THE THREE PARTIES. APART FROM THAT ADDITIONS HAVE BEEN MADE ON THE GROUND THAT THE ASSESSEE HAD NOT ESTABLISHED IDENTITY OF THE PERSON FROM WHOM THE MONEY IS RECEIVED, THE GENUINENESS AND CREDITWORTHINESS OF THE TRANSACTION S . THIS FINDING HAS BEEN GIVEN BY A.O. IN PARA 4.6 OF THE ASSESSMENT ORDER AND THE RELEVANT PORTION OF THE ORDER OF ASSESSMENT A RE REPRODUCED HEREUNDER: 'THEREFORE, IT IS CLEAR FROM THE ABOVE PROVISION OF SECTION 68 THAT WHEN ANY SUM IS FOUND TO BE CREDITED IN TIIE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT TLIE NATURE AND SOURCE OF THE SAME OR EXPLANATION OFFERED BY THE ASSESSEE IS NOT SATISFACTORY, THE SUM SO CREDITED IS CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. IT IS WELL SETTLED LAW THAT THE BURDEN OF PROVING THE SOURCE OF THE CREDIT ENTRIES IS ON THE ASSESSEE AND ONCE THE ENTRY IS FOUND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THEN THE ASSESSEE IS UNDER LEGAL OBLIGATION TO EXPLAIN THE NATURE OF SUCH ENTRY. IN THIS CASE, THE ASSESSEE HAS ONLY SUBMITTED THE CONFIRMATION OF LENDE RS, WHO HAS GIVEN THE ADVANCES. IN THE INSTANT CASE, THE ASSESSEE HAS NOT ESTABLISHED THE IDENTITY OF THE PERSON FROM WHOM THE MONEY IS 8 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. RECEIVED, THE GENUINENESS OF THE TRANSACTION AND ALSO TLIE CREDITWORTHINESS. AS SUCH SAID SUM IS TAXABLE AS PER THE PROV ISIONS OF SECTION 68 OF THE I.T. ACT, 1961.' (STRESS PROVIDED) 8. WE NOTICED THAT IN ARRIVING AT THE C ONCLUSION AS ABOVE, THE A.O. HAD NOT APPRECIATED THE CORRECT FACTS OF THE CASE. IN THE TAX AUDIT REPORT AVAILABLE WITH THE A.O. AND SO ADMITTED IN THE OR DER OF THE ASSESSMENT (OPENING SENTENCE OF THE PARA 4 OF THE ASSESSMENT ORDER), THE DETAILS OF LOANS TAKEN AND REPAID WERE MENTIONED IN PARA 31 A & 31B, WHERE THE THREE PARTIES UNDER CONSIDERATION FIND PARTICULAR MENTION. IT IS FROM HERE THAT THE ASSESSING OFFICER HAD INITIATED THE ISSUE. THIS IS APPARENT FROM THE OPENING SENTENCE OF PARA 4 OF THE ORDER OF ASSESSMENT. ALL THE THREE PARTIES ARE CORPORATE ENTITIES AND THEREFORE ARE REGISTERED WITH THE REGISTRA R OF COMPANIES. THEIR ADDRESSES WERE DETAILED ALONG WITH PERMANENT ACCOUNT NUMBER S IN THE COLUMNS OF TAX AUDIT REPORT. A COPY OF THE TAX AUDIT REPORT HAS ALSO BEEN PLACED ON RECORD, WHICH ALSO PROVES THE IDENTITY OF THE LENDERS. IT IS IMPORTANT TO MENTION HERE THAT IN THE COLUMN OF TAX AUDIT REPORT 9 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. ITSELF, IT HAS BEEN CATEGORICALLY SPECIFIED THAT NO AMOUNT WAS EITHER RECEIVED OR REPAID OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR BANK DRAFT. CONSEQUENTLY, THE G ENUINENESS OF THE TRANSACTION WAS ALSO ESTABLISHED. 9. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE CONFIRM ATION FROM THE THREE PARTIES HAD ALSO BEEN FILED , WHICH IS ON THE RECORD AND THIS FAC T HAD ALSO BEEN CATEGORICALLY ACCEPTED BY THE A.O. IN PARA 4.6 OF THE ORDER OF ASSESSMENT WHERE THE A.O. HAD OBSERVED, TOWARDS THE END OF THE PARA AS UNDER: 'IN TH IS CASE, THE ASSESSES HAS ONLY SUBMITTED THE CONFIRMATION OF LENDERS WHO HAVE GIVEN THE ADVAN CES.' 10. IN THE ABOVE CIRCUMSTANCES, THE ASSESSEE HAD DISCHARGED THE ONUS BY ESTABLISHING THE IDENTITY, THE CREDITWORTHINESS AS WELL AS THE GENUINENESS OF THE T RANSACTION. 11. SUBSEQUENT TO THE DISCHARGE OF ITS ONUS BY THE ASSESSEE , A.O. HAS ISSUED SUMMONS TO ALL THE THR EE PARTIES, WHICH APPARENTLY WERE S ERVED. EVIDENTLY, THE SUMMONS WERE ISSUED BY ASSESSING OFFICER 'TO VERIFY THE IDENTITY & CREDIT WORTHINESS OF 10 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. LENDERS AS WELL AS GENUINENESS OF TRANSACTION', TO QUOTE THE ASSESSING OFFICER. THIS IN ITSELF AMOUNT S TO ADMISSION THAT THE ASSESSEE HAD DISCHARGED ITS ONUS OF ESTABLISHING THE IDENTITY & CREDIT WORTHINESS AND GENUINENESS OF TRANSACTION S. BUT MERELY B ECAUSE OF THE NON - COMPLIANCE BY THESE THREE PARTIES TO THE SUMM ONS ISSUED BY A.O., THE A.O. HAD TAKE N AN ADVERSE VIEW AND HAD MADE ADDITION U/S. 68 OF THE ACT. 12. THE ADDITION S THUS MADE ARE CONTRARY TO THE LAW CONTAINED IN SECTION 68 OF THE ACT AS ENUNC IATED BY HON'BLE SUPREME COURT OF INDIA IN THE CASE OF ORISSA CORPN. (P.) LTD. REPORTED IN 159 ITR 78. THE FACTS BEFORE THE APEX COURT IN THIS CASE WERE EXACTLY IDENTICAL TO THE FACTS OF THE PRESENT CASE AND HON'BLE SUPREME COURT AFTER ANALYZING THE PLETHO RA OF JUDGEMENTS HELD AS UNDER: '13. IN THIS CASE THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE THE INCOME - TAX ASSESSEE. THEIR INDEX NUMBER WAS IN THE FILE OF THE REVENUE. THE REVENUE, APART FR OM ISSUING NOTICES UNDER SECTION 131 AT THE INSTANCE OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE 11 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDIT - WORTHY OR WERE SUCH WHO COULD ADVAN CE THE ALLEGED LOANS. THERE WAS NO EFFORT MADE TO PURSUE THE SO - CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANY FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE BURDEN THA T LAY ON HIM THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QU ESTION OF LAW AS SUCH ARISES.' 13. WE HAVE AL SO CATEGORICALLY GONE THROUGH THE WRITTEN SUBMISSION FILED BY THE ASSESSEE BEFORE LD. CIT(A) AND THE OPERATIVE PORTION OF THE SAME IS REPRODUCED BELOW: - 3.4.1 THE ADDITIONS ARE ON ACCOUNT OF CASH CREDIT UNDER SECTION 68 OF THE ACT REPRESENTING CREDITS APPEARING IN THE FOLLOWING PARTIES. SI. NO. , NAME OF LENDER AMOUNT RS. 1 METAOXIDE PVT LTD., 4,33,92,942 2 SHREE ANANDEYA INVESTMENT PVT LTD., 2,12,04,500 3 SANKEYA CHEMICALS P LTD., 1,96,08,494 TOTAL 8,42,05,936 12 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. 3.4.2 IT MAY PLEASE BE NOTED THAT THE THREE PARTIES WITH WHOM TRANSACTIONS WERE ENTERED INTO ARE GROUP COMPANIES AND NO ANY OUTSIDE THIRD PARTY IS INVOLVED. NO TRANSACTION IS ENTERED INTO WITH THESE COMPANIES INVOLVING CASH TRANSACTIONS. AS AND WHEN THE ASSE SSEE COMPANY NEEDED FUNDS, IT WOULD TAKE FROM ONE ENTITY AND LATER ON RETURN THROUGH ANOTHER ENTITY OR THROUGH BANK CHANNEL AND AT TIME TRANSFERRING BALANCES FROM ONE ENTITY TO OTHER TO STAGE MANAGE BANKING FORMALITIES . IT WAS ONLY TO MERELY MANAGE ITS FU ND FLOW IN ORDER TO MAINTAIN ITS BANKING TRANSACTIONS RELATING TO WORKING CAPITAL AND ITS DRAWING POWER FROM THAT ACCOUNT INTACT. 3.4.3 IN CASE OF THESE GROUP COMPANIES, WE ARE REPRODUCING HEREWITH THE ANALYSIS OF {.OPENING BALANCE, CLOSING BALANCE, FUND MOVEMENT AND THE ADDITIONS SUFFERED DURING THE YEAR. S.NO. NAME OF LENDER OPENING BALANCE(ARS CLOSING BALANCE (B) RS. FUND MOVEMNET (A - B) RS. AMOUNT ADDED U/S 68 RS. 1 METAOXIDE PVT LTD., 0 1,42,78,442 1,42,78,442 4,33,92,942 . 2 SHREE ANANDEYA INVEST - MENT PVT LTD., 5,24,124 0 (5,24,124) 2,12,04,500 3 SANKEYA CHEMICALS P LTD., 15,18,266 0 (15,18,266) 1,96,08,494 TOTAL 20,42,390 1,42,78,442 1,22,36,052 8,42,05,936 3.4.4 THESE ARE THE RUNNING ACCOUNT OF THESE GROUP COMPANIES WITH THE ASSESSEE COMPANY. THOUGH NET FUND MOVEMENT DURING THE YEAR BETWEEN THESE RELATED ENTITIES WAS RS. 1,22,36,052/ - , ADDITION SUFFERED BY THE COMPANY IS TO THE TUNE OF RS. 8,42,05,9367 - IN SPITE OF SUBMISSION OF CONFIRMATIONS FROM THEM AT THE TIME OF ASSESSMENT. 3.4.5 LD ASSESSING OFFICER OUGHT TO HAVE CONSIDERED THE NET EFFECT OF CREDITS AND DEBITS INTO THE ACCOUNT AND ARRIVED AT THE NET AMOUNT MENTIONED ABOVE, WHICH HE FAILED TO DO. BY APPLYING TELESCOPING, HE OUGHT TO HAVE MADE THIS ADDITION WITHOUT RESORTING TO ADDING UP WHOLE OF THE CREDIT SIDE OF THE LENDER PARTIES. 3.4.6 THIS FUND MOVEMENT OF RS. 122.36 LACS IS DUE TO BUSINESS EXIGENCY AND BANKING REQUIREMENT TO MAINTAIN THE PARAMETERS SET FOR MAINTAINING THE AVAILED WORKING CAPITAL FINANCE BY MAINTAINING THE DRAWING POWER IN ORDER. IN THE PROCESS, SOME FUND MOVEMENT WITHIN THE GROUP HAS BECOME IMMINENT. HOWE VER, THERE ARE NO UNSECURED LOAN WHICH MAY FALL UNDER UNEXPLAINED CASH CREDIT WHICH YOUR HONOUR WILL PLEASE APPRECIATE. 3.4.7 WE ALSO HAVE MADE EFFORTS TO ANALYSE THE SOURCE OF SOURCE IN THESE ENTITIES FROM WHOM THE UNSECURED LOANS ARE APPEARING IN TH E BOOKS 13 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. OF ACCOUNT OF THE ASSESSEE COMPANY DURING THE YEAR. PLEASE FIND ENCLOSED HEREWITH THE TABULAR ANALYSIS OF THE LEDGER ACCOUNTS OF THE COMPANY IN THE BOOKS OF THE LENDER ENTITIES AND CORRESPONDING LEDGER ACCOUNTS IN THE COMPANY'S BOOKS FOR YOUR KIND RECORDS AND PERUSAL HIGHLIGHTING THE TRANSACTIONS OF CREDIT ENTRIES IN THOSE LEDGERS AS PER ASSESSEE 'S BOOKS. 3.4.8 WE ARE ALSO ENCLOSING THE AUDITED ACCOUNTS OF SHREEANANDEYA INVESTMENT PVT LTD., AND SANKEYA CHEMICALS PVT LTD., FOR YOUR IMMEDIATE REF ERENCE AND PERUSAL. UPON EXAMINATION OF THE SUBMISSIONS MADE BY THE APPELLANT, THE APPELLANT WAS FURTHER REQUESTED TO JUSTIFY THE SOURCES OF SOURCES, FOR WHICH THE APPELLANT FURNISHED THE FOLLOWING DETAILS: 'DETAILS EXPLAINING THE SOURCE OF SOURCE IN CONTI NUATION TO OUR EARLIER SUBMISSION: SR. NO. DESCRIPTION OF DOCUMENT PAGE NO. FROM TO REMARKS 1. BANK STATEMENT OF SHREE ANANDEYA INVESTMENTS PVT LTD., FOR THE WHOLE PERIOD IE., 1.4.2014 TO 31.03.2015 1 - 28 29 - 36 TRANSACTIONS HIGHLIGHTING THE PAYMENTS MADE TO APPELLANT COMPANY - TO ESTABLISH THAT EARLIER TO THIS TRANSACTION, THE LENDER HAD SUFFICIENT FUND AND SOURCE TO MAKE THE PAYMENT RS. 6 LACS WAS RECEIVED FROM M/S. MAMTA ENTERPRISES ON SALE OF SHARES 2. BANK STATEMENT OF SANKEYA CHEMICALS PVT LTD., FOR THE WHOLE PERIOD IE., 1.4.2014 TO 31.03.2015 37 - 51 TRANSACTIONS HIGHLIGHTING THE PAYMENTS MADE TO ASSESSEE COMPANY - TO ESTABLISH THAT EARLIER TO THIS TRANSACTION, THE LENDER HAD SUFFICIENT FUND AND SOURCE TO MAKE THE PAYMENT OUT OF CASH SA LES EFFECTED DURING THE YEAR, THE LENDER HAS LENT THE AMOUNT TO THE APPELLANT COMPANY. 3. BANK STATEMENTS OF MR. ANAND SANJAY SHAH FOR THE PERIOD 1.4.2014 TO 31.3.2015. INVOICES FOR SALE OF PAINTINGS. 52 - 62 63 - 67 RS. 45,0007 - EACH PAID ON 5.12.14 AND 3.1.15 TO META TILES PVT LTD., ON BEHALF OF SHREE ANANDEYA INVESTMENT PVT LTD., ANAND SHAH HAD SOLD PAINTING THE PROCEEDS OF WHICH WERE AVAILABLE WITH HIM AS SOURCE FOR THIS PAYMENT.(RS. 92.40 LACS WORTH PAINTING OVER TWO YEARS) TR ANSACTIONS ARE HIGHLIGHTED. 14 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. 4. BANK ACCOUNT OF MRS. KUNTI SANJAY SHAH FOR THE PERIOD 1.4.2014 TO 31.3.2015. 68 - 70 KUNTI SHAH - DIRECTOR OF THE APPELLANT COMPANY GAVE ADVANCES TO SHREE ANANDEYA INVESTMENTS PVT LTD., AS WELL AS SANKEYA CHEMICALS PVT LTD., (TRANSACTIONS ARE HIGHLIGHTED). THOSE COMPANIES IN TURN GAVE ADVANCES TO THE APPELLANT COMPANY. 5. BANK ACCOUNT OF MRS. MADHU SHAH FOR THE PERIOD 1.4.2014 TO 31.3.2015. 71 - 72 ANAND SHAH RECEIVED LOAN FROM MADHU SHAH AND LENT THAT AMOUNT TO META TILES PVT LTD. ,ON BEHALF OF SHREE ANANDEYA INVESTMENTS PVT LTD., BANK ACCOUNT OF MADHU SHAH HIGHLIGHTING THE PAYMENT MADE BY HER TO MR. ANAND SHAH IS ENCLOSED. 6. LEDGER ACCOUNT OF SHEETAL ENTERPRISES IN THE BOOKS OF S ANKEYA CHEMICALS PVT LTD., 73 LEDGER ACCOUNT HIGHLIGHTING THE PAYMENTS MADE BY SHEETAL ENTERPRISES TO SANKEYA CHEMICALS PVT LTD., WHICH IS UTILIZED FOR MAKING PAYMENT TO THE APPELLANT COMPANY BY M/S SANKEYA CHEMICALS PVT LTD., - A GROUP COMPANY. 7 LEDGER ACCOUNT OF RECARNATION TRADING PVT LTD., IN THE BOOKS OF THE APPELLANT COMPANY 74 JOURNAL ENTRY PASSED DEBITING RECARNATION TRADING PVT LTD., AND CREDITING SANKEYA CHEMICALS PVT LTD. THERE IS NO MONETARY MOVEMENT IN THIS TRANSACTION AND ONLY A JOURNAL ENTRY. IN THE BOOKS OF SANKEYA CHEMICALS PVT LTD., THERE WAS BALANCE WHICH THEY TRANSFERRED TO META TILES TO ACCOMMODATE BANKING TRANSACTIONS. 8 SHATRANJ TRADING PVT LTD., 75 - 91 AUDITED ACCOUNTS OF SHATRANJ TRADING PVT LTD., SANKEYA CHEMICALS PVT LTD., PASSED JOURNAL ENTRY CREDITING SHATRANJ TRADING PVT LTD., DEBITING THE APPELLANT COMPANY . BANK STATEMENT OF 9. BAN STATEMENT OF META OXIDE FOR THE WHOLE PERIOD IE., 1.4.2014 92 - 99 HIGHLIGHTING THE TRANSACTION OF PAYMENTS RECEIVED BY THE APPELLANT COMPANY AND JOURNAL ENTRIES. 15 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. TO 31.03.2015 10. RENT AGREEMENT BETWEEN META OXIDE PVT LTD., AND PRAGATI TIE UP PVT LTD., 100 - 132 META OXIDE RECEIVED ADVANCE RENTALS FROM PRAGATI TIE UP PVT LTD., WHICH WAS LENT TO THE APPELLANT COMPANY. I N ADDITION TO THE ABOVE, ON THE VERY SAME DAY, THE APPELLANT FURNISHED DETAILED ANALYSIS OF THE SOURCE OF SOURCE FOR EACH AND EVERY ENTRY OF ADDITION IN ALL THE THREE LENDERS CASES WHICH ARE REPRODUCED AS UNDER: I N THE BOOK OF META TILES PVT. LTD 1. DETAILS OF AMOUNTS RECEIVED FROM SHREE ANANDEYA INVESTMENTS PVT. LTD. & ITS SOURCE DATE OF RECEIPT AMOUNT RECEIVED AS PER LEDGER A/C SOURCE OF PAYMENT FOR THE LENDER 01/04/2014 450,000 OPENING BALANCE 29/04/2014 550,000 ON 28/04/2014 THE CO., RECEIVED AN UNSECURED LOAN OF RS. 6 LACS FROM MAMTA ENTERPRISES BELONGING TO RELATIVES OF THE DIRECTORS. OUT OF THE SAID AMOUNT, THE CO. GAVE LOAN OF RS. 5.50 LACS TO APPELLANT COMPANY META TILES P. LTD., 15/05/2014 600,000 RECEIVED FROM SANKEYA CHEMICALS PVT. LTD, A GROUP COMPANY. 31/05/2014 250,000 KUNTIBEN SHAH ONE OF THE RELATIVES OF THE DIRECTOR GAVE MONEY RS. 729, 000 TO THE CO., ON 31/5/14. OUT OF THIS, A SUM OF RS.250,000 GIVEN AS LOAN TO THE COMPANY META TILES P .LTD., 04/06/2014 63,000 KUNTIBEN SHAH ONE OF THE RELATIVES OF THE DIRECTOR GAVE MONEY RS.290,000 TO THE CO., ON 04/06/2014. OUT OF THIS, A SUM OF RS.63,000 WAS GIVEN AS LOAN TO THE APPELLANT COMPANY META TILES P .LTD., 16 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. 12/07/2014 139,000 KUNTIBEN SHAH ONE OF THE RELATIVES OF THE DIRECTOR GAVE MONEY RS. 18, 00, 000 TO THE CO., ON 12/07/2014. OUT OF THIS, A SUM OF RS. 139, 000 WAS GIVEN AS LOAN TO THE APPELLANT COMPANY META TILES P .LTD., 05/09/2014 300,000 ON 04/09/14 THE CO. RECEIVED AMOUNT FROM SANKEYA CHEMICALS PVT. LTD., AND THE SAME WAS GIVEN AS LOAN TO THE APPELLANT COMPANY META TILES .P. LTD., 05/09/2014 500,000 JOURNAL ENTRY PASSED CREDITING RECARNATION TRADING & AGENCIES PVT. LTD. * 07/10/2014 900,000 ON 07/10/14 MS.MADHU SHAH RELATIVE OF THE DIRECTOR PAID TO THE COMPANY RS.23.98 LACS OUT OF WHICH RS.9 LACS WAS GIVEN AS LOAN TO THE APPELLANT COMPANY META TILES P. LTD. 21/10/2014 100,000 ON 18/10/14 THE CO. RECEIVED LOAN OF RS. 17.66 LACS FROM META OXIDE P. LTD ., OUT OF WHICH RS. 1 LAC WAS GIVEN AS LOAN TO THE APPELLANT COMPANY META TILES .P. LTD., 23/10/2014 500,000 RECEIVED FROM META OXIDE PVT. LTD., HOLDING COMPANY. 04/12/2014 45,000 PAID BY MR. ANAND SHAH TO THE APPELLANT COMPANY META TILES PVT. LTD. ON BEHALF OF THE COMPANY. SHREE ANANDEYA INVESTMENTS PVT. LTD 03/01/2015 45,000 PAID BY MR. ANAND SHAH TO THE APPELLANT COMPANY ON BEHALF OF SHREE ANANDEYA INVESTMENTS PVT. LTD. 17 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. 04/03/2015 100,000 MR. ANAND SHAH PAID TO MTPL ON BEHALF OF SHREE ANANDEYA INVESTMENTS PVT. LTD. WHICH WAS RECEIVED FROM MRS. MADHU SHAH 13/03/2075 25,000 MR. ANAND SHAH PAID TO MTPL ON BEHALF OF SHREE ANANDEYA INVESTMENTS PVT. LTD. WHICH WAS RECEIVED FROM MRS. MADHU SHAH 23/03/2015 40,000 ON 23.03.2015 THE CO. RECEIVED LOAN OF RS. 84,000 FROM SANKEYA CHEMICALS PVT LTD., ( A GROUP COMPANY ) OUT OF WHICH RS.40,000 WAS GIVEN AS LOAN TO THE APPELLANT COMPANY META TILES. P. LTD., 23/03/2015 150,000 PAID BY MR. ANAND SHAH TO THE APPELLANT COMPANY ON BEHALF OF SHREE ANANDEYA INVESTMENTS PVT. LTD. 27/03/2015 83,000 PAID BY MR. ANAND SHAH TO THE APPELLANT COMPANY ON BEHALF OF SHREE ANANDEYA INVESTMENTS PVT. LTD. 31/03/2015 16,814,500 JOURNAL ENTRY PASSED CREDITING META OXIDE PVT. LTD. * TOTAL (A) 21,204,500 II. DETAILS OF SOURCE DATE OF RECEIPT MOUNTS RECEIVED FRO AMOUNT RECEIVED M SANKEYA CHEMICALS PVT. LTD. & ITS SOURCE OF PAYMENT BY THE LENDER 01/04/2014 OPENING BALANCE 01/04/2014 155,484 JOURNAL - DR CR A/C ADJUSTED * 21/06/2014 192,000 THE COMPANY'S BANK A/C HAD AN OPENING BALANCE OF RS.42,203.73 ON THAT DAY RS. 150,000/ - WAS DEPOSITED TO BANK A/C WHICH FORMS PART OF ITS CASH SALE, OUT OF BALANCE OF RS. 192,203.73 A SUM OF RS. 192,000 WAS GIVEN TO THE APPELLANT COMPANY META TILES P. LTD, BY CHEQUE. THE COMPANY SANKEYA CHEMICALS SHOWS AN ANNUAL SALES TURNOVER OF RS.41Q.82 LACS, MAJOR PORTION OF ITS REVENUE AT RS. 152.04 LACS WAS SHOWN AS CASH EARNINGS 07/07/2074 796,000 SIMILAR AMOUNT WAS DEPOSITED OUT OF CASH SALES WHICH IS GIVEN AS LOAN TO THE APPELLANT 18 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. COMPANY META TILES .P.LTD., 04/08/2014 193,000 ON 31/07/14 THE COMPANY RECEIVED LOAN FROM SHREE ANANDEYA INVESTMENTS P. LTD., A SUM OF RS.750,000/ - . OUT OF THIS, RS.193,000/ - WAS GIVEN AS LOAN TO THE APPELLANT COMPANY META TILES .P.LTD., 04/08/2014 100,000 ON 31/07/14 THE COMPANY RECEIVED LOAN FROM SHREE ANANDEYA INVESTMENTS P. LTD., A SUM OF RS.750,000/ - OUT OF THIS, RS.100,000/ - WAS GIVEN AS LOAN TO META TILES. P. LTD. - 03/09/2014 172,000 JOURNAL - CREDITING MTZ POLYFILMS LTD. BY DEBITING MTPL * 27/07/2075 255,000 ON 27/01/15 THE COMPANY SOLD ONE OF THE PAINTINGS (ART WORK) TO ONE MR. AKSHAY PANDYA FOR A SUM OF RS.30,00,000/ - OUT OF THIS, THE COMPANY GAVE LOAN OF RS.255,000/ - ON TWO DIFFERENT DAYS TO THE APPELLANT COMPANY META TILES P. LTD. 28/01/2015 700,000 ON 27/01/15 THE COMPANY SOLD ONE OF THE PAINTINGS (ART WORK) TO ONE MR. AKSHAY PANDYA FOR A SUM OF RS.30,00,000/ - OUT OF THIS, THE COMPANY GAVE LOAN OF RS.700,000/ - ON TWO DIFFERENT DAYS TO THE APPELLANT COMPANY META TILES P. LTD. 31/01/2015 250,000 OUT OF THE SAME SOURCE THE AMOUNT OF RS.250,000 WAS GIVEN AS LOAN TO THE APPELLANT COMPANY META TILES. P. LTD. 14/03/2015 953,000 ON 13/03/15 THE COMPANY RECEIVED FUNDS FROM TRADE RECEIVABLES A/C OF SHEETAL ENTERPRISES A SUM OF RS.3,114,012 MAKING ITS BANK BALANCE AT RS.3,114,545.39. OUT OF THIS, THE COMPANY GAVE LOAN OF RS.953,000/ - TO THE APPELLANT COMPANY META TILES .P. LTD 20/03/2075 1,367,000 ON THE SAME DAY COMPANY RECEIVED RTGS PAYMENTS OFRS.30,00,000/ - IN TWO BRANCHES FROM THE TRADE RECEIVABLES A/C OF SHEETAL ENTERPRISES. OUT OF THIS, THE COMPANY GAVE LOAN OF 19 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. RS.13,67,000/ - 20/03/20 1 5 LOAN RECEIVED FROM KAPIL VIRA, DIRECTOR OF 5, 000 THE APPELLANT COMPANY. 27/03/2015 1,443,000 A DAY EARLIER I.E. ON 26/03/15 THE COMPANY RECEIVED RTGS PAYMENTS OF RS. 5, 061, 597 MAKING ITS BALANCE RS. 5, 06 1,725. 2 1 OUT OF THIS, THE COMPANY GAVE LOAN OF RS. 1,443, OOO/ - IT MAY PLEASE BE OBSERVED THAT THIS IS A RUNNING A/C WHEREAS THE COMPANY META TILES ALSO RELEASED THE AMOUNTS TO SANKEYA CHEMICALS .P. LTD AS AND WHEN THE NEED AROSE IN THAT COMPANY .IT WAS THE PRACTICE OF META TILES TO RAISE FUNDS FROM GROUP ENTITIES AND ITS DIRECTORS AND ASSOCIATES TO MEET BUSINESS REQUIREMENTS AND TO RETURN WHEN THE OTHER ENTITY IS IN NEED OF FUNDS. META TILES ITSELF HAD AN ANNUAL TURNOVER OF RS. 3,964.21 LACS TO SUBSTANTIATE CASH FLOW MOVEMENTS IN AND OUT OF THE COMPANY. SANKEYA CHEMICALS .P. LTD IS A PRIVATE LIMITED COMPANY WHERE THE DIRECTORS OF 20 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. META TILES .P. LTD ARE THE RELATIVES OF THE DIRECTORS OF SANKEYA CHEMICALS P. LTD., DIRECTOR OF META TILES: MS. MADHU SHAH (WIFE OF MR.ANAND SHAH)DIRECTOR OF SANKEYA: MR. ANAND SHAH (HUSBAND OF MS. MADHU SHAH) 30/03/2015 8,627,010 JOURNAL - CREDITING SHATRANJ TRADING PVT. LTD BY DEBITING MTPL * 31/03/2015 5,000,000 JOURNAL - CREDITING RECARNATION TRADING & AGENCIES PVT. LTD BY DEBITING MTPL * TOTAL (B) 19,608,494 III. DETAILS OF AMOUNTS RECEIVED FROM META OXIDE PVT LTD.& ITS SOURCE DATE OF AMOUNT SOURCE OF PAYMENT BY THE LENDER RECEIPT RECEIVE D 01/04/2014 - 1,487,000 OPENING BALANCE 01/04/2014 1,487,000 CR. SCPUDR. META TILES * 29/04/2014 5,50,000 CR. SAPL/DR. META TILES * 07/05/2014 6, 00,000 CR. MTZ POLYFILMS/DR. META TILES * 09/05/2014 1,000,000 CR. MTZ POLYFILMS/DR. META TILES * 09/05/2014 12/05/2014 15/05/2014 22/05/2014 112,000 600,000 600,000 1,800,000 CR. MTZ POLYFILMS/DR. META TILES CR. ANAND SHAH/DR. META TILES * CR. SAPUDR. META TILES ON 21/05/14 METAOXIDE RECEIVED RENTAL INCOME FROM PRAGATI TIEUP P. LTD., A SUM OF RS. 18,76,500 21 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. (NET OF TDS) OUT OF THIS RS. 18 LACS WAS GIVEN BY THE HOLDING CO. (META OXIDE TO SUBSIDIARY COMPANY (META TILES 23/05/2074 200,000 CR. SAPUDR. META TILES 31/05/2014 250,000 CR. SAPUDR. META TILES 12/07/2014 139,000 CR. SAPUDR. META TILES 04/08/2014 100,000 CR. SCPUDR. META TILES 01/09/2014 250,000 CR. ANAND SHAH/DR. META TILES 05/09/2014 300,000 CR. SAPUDR. META TILES 07/10/2014 900,000 CR. SAPUDR. META TILES * 18.10.2014 100,000 THIS IS OUT OF THE RENTAL INCOME OF RS. 18,76,500 RECEIVED ON 17/10/2014 23/10/2014 500,000 CR. SAPUDR. META TILES * 27/10/2014 400,000 THE COMPANY TOOK LOAN OF RS.90 LACS FROM ONE MRS. VIJAYABEH KANJI ASHRA ON 21/10/14 AND 22/10/14. OUT OF THESE FUNDS A BANKERS CHEQUE WAS TAKEN ON 25/10/14 ON A PARTY WHICH WAS CANCELLED ON 27/10/14 AND OUT OF THAT AVAILABLE FUND, RS 4 LACS WAS GIVEN TO META TILES. 11/11/2014 200,000 CR. ANAND SHAH/DR. META TILES * 12/11/2014 100,000 CR. ANAND SHAH/DR. META TILES 13/11/2014 200,000 CR. ANAND SHAH/DR. META TILES 14/11/2014 25,000 CR. ANAND SHAH/DR. META TILES 17/11/2014 83,000 CR. ANAND SHAH/DR. META TILES 22 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. 19/11/2014 35,000 CR. ANAND SHAH/DR. META TILES 19/11/2014 132,000 CR. ANAND SHAH/DR. META TILES 23/11/2014 550,000 CR. ANAND SHAH/DR. META TILES * 24/11/2014 700,000 ON 22/11/14 THE COMPANY RECEIVED FUNDS FROM SANKEYA CHEMICALS A SUM OF RS.44.50 LACS AND ON 22/11/14 A MANAGER'S CHEQUE (MC) WAS ISSUED FOR RS.7 LACS WHICH WAS CANCELLED AND REDEPOSITED IN ITS BANK A/C ON 24/11/14 .OUT OF THAT BALANCE, A SUM OF RS.7 LACS WAS GIVEN AS LOAN TO META TILES P. LTD 28/11/2014 92,000 ON 22/11/14, THE COMPANY RECEIVED A SUM OF RS.44.50 LACS AND ON 22/11/14 MANAGER'S CHEQUE WAS ISSUED TO ANOTHER PARTY FOR THE SAME SUM OF RS.700,000/ - WHICH HAD TO BE CANCELLED ON 27/11/14. OUT OF THOSE PROCEEDS OF CANCELLED MANAGER'S CHEQUE, THE COMPANY GAVE LOAN OF (RS.92,000) TO ANOTHER COMPANY META TILES. 28/11/2014 90,000 CR. ANAND SHAH/DR. META TILES * 27/01/2015 255,000 CR. SCPL/DR. META TILES * 28/01/2015 700,000 CR. SCPL/DR. META TILES * 31/01/2015 250,000 CR. SCPL/DR. META TILES * 11/02/2015 300,000 CR. ANAND SHAH/DR. META TILES * 20/02/2015 125,000 ON 22/11/14, THE COMPANY RECEIVED A SUM OF RS.44.50 LACS AND ON 22/11/14 MANAGER'S CHEQUE WAS ISSUED TO ANOTHER PARTY FOR THE SAME SUM OF RS.700,000/ - WHICH HAD TO BE CANCELLED ON 2/12/14. OUT OF THOSE PROCEEDS OF CANCELLED MANAGER'S CHEQUE, THE COMPANY GAVE LOAN OF RS. 125, 000 TO META TILES. 23 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. 21/02/2015 150,000 ON 22/11/14, THE COMPANY RECEIVED A SUM OF RS.44.50 LACS AND ON 22/11/14 MANAGER'S CHEQUE WAS ISSUED TO ANOTHER PARTY FOR THE SAME SUM OF RS.700,000 / - WHICH HAD TO BE CANCELLED ON 2/12/14. OUT OF THOSE PROCEEDS OF CANCELLED MANAGER'S CHEQUE, THE COMPANY GAVE LOAN OF RS. 150,000 TO APPELLANT COMPANY META TILES. 31/03/2015 25,495,192 CR. GRENADA MANAGEMENT LTD./DR. META TILES * 31/03/2015 5,509,750 CR. SCPL/DR. META TILES * TOTAL(C) 43,392,942 GRAND TOTAL S (A + B + C) 84,205,936 THE APPELLANT COMPANY ROUTED THESE TRANSACTIONS MARKED (*) THROUGH RELATED PARTIES/ENTITIES IN ORDER TO MAINTAIN ITS BANKING RECORDS INTACT WITH WHOM THE APPELLANT COMPANY ENJOYS WORKING CAPITAL LIMITS. 14. FROM THE ABOVE, DETAILS, THE ASSESSEE HAD ESTABLISHED THE SOURCE OF PAYMENT FOR AND BY THE LENDER. WE ALSO NOTICED THAT THE LOANS, WHICH WERE TAKEN BY THE ASSESSEE HAD ALSO BEEN PARTLY REPAID. IN THE CASE OF PR.CIT VS. PARADISE INLAND SHIPPING PVT. LTD. (TAX APPEAL NO. 66 OF 2016 - BOM ) THE HON'BLE HIGH COURT HAS CATEGORICALLY HELD THAT THE INITIAL ONUS IS UPON THE ASSESSEE TO PLACE ON RECORD ALL THE DOCUMENTARY EVIDE NCES TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE TRANSACTIONS AND WHEN ONCE THE ASSESSEE PRODUCE ALL THE 24 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. DOCUMENTARY EVIDENCES TO ESTABLISH THE EXISTENCE OF THE SAID LENDERS THEN THE BURDEN SHIFTS ON THE REVENUE TO ESTABLISH THE CASE. SIMILAR VIEW WAS ALSO TAKEN BY THE HON'BLE HIGH COURT IN THE CASE OF CIT VS. GREEN INFRA LTD. ( 393 ITR 7 - BOM ) WHEREIN IT WAS HELD AS UNDER: - SECTION 68 OF THE INCOME - TAX ACT, 1961 - CASH CREDIT (SHARE CAPITAL) - ASSESSMENT YEAR 2011 - 12 - ASSESSEE - COMPANY OFFERED TO SELL ITS SHARES - IDENTITY OF SUBSCRIBERS WAS CONFIRMED BY VIRTUE OF ASSESSING OFFICER ISSUING NOTICES TO THEM - GENUINENESS OF ENTIRE TRANSACTION WAS RECORDED IN BOOKS OF ACCOUNT AND REFLECTED IN FINANCIAL STATEMENTS OF AS SESSEE - COMPANY SINCE SUBSCRIPTION WAS DONE THROUGH BANKING CHANNELS AS EVIDENCED BY BANK STATEMENTS - TRIBUNAL EXAMINED CASE OF REVENUE ON PARAMETERS OF SECTION 68 AND FOUND ON FACTS THAT IT WAS NOT HIT BY SAID SECTION WHETHER SINCE REVENUE WAS NOT ABLE TO SHOW THAT FACTUAL FINDING RECORDED BY TRIBUNAL WAS PERVERSE, NO SUBSTANTIAL QUESTION OF LAW AROSE - HELD, YES [PARA 3(C)] [IN FAVOUR OF ASSESSEE]. 15. IN THE CASE OF CIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. (394 ITR 680 - BOM ) THE HON'BLE HIGH COURT HELD AS UNDER: - SECTION 68 OF THE INCOME - TAX ACT, 1961 - CASH CREDIT (SHARE CAPITAL) - ASSESSMENT YEAR 2008 - 09 - WHETHER 25 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. PROVISO TO SECTION 68 INTRODUCED BY FINANCE ACT 2012 WITH EFFECT FROM 1 - 4 - 2013, WOULD NOT HAVE RETROSPECTIVE EFFECT - HELD, YES - WHETHER WHERE ASSESSEE - COMPANY HAD ESTABLISHED IDENTITY, GENUINENESS AND CAPACITY OF SHAREHOLDERS WHO HAD SUBSCRIBED TO ITS SH ARES, ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING AMOUNT OF SHARE CAPITAL SUBSCRIPTION AS UNEXPLAINED CREDIT HELD, YES - WHETHER WHERE REVENUE URGED THAT ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY FROM BOGUS SHAREHOLDERS, IT WAS FOR INCOME - TAX OFFIC ERS TO PROCEED BY REOPENING ASSESSMENT OF SUCH SHAREHOLDERS AND ASSESSING THEM TO TAX IN ACCORDANCE WITH LAW AND IT DID NOT ENTITLE REVENUE TO ADD SAME TO ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT - HELD, YES [PARA 3] [IN FAVOUR OF ASSESSEE]. 16. AS F AR AS THE FACTS O F THE PRESENT CASE, ASSESSEE HAD ALSO PARTLY REPAID THE LOAN WHICH WAS TAKEN TO THE LENDERS THROUGH BANKING CHANNEL AND IN SUCH A SITUATION THE HON'BLE HIGH COURT IN THE CASE OF RAHUL VINEET TRADERS (41 TAXAMANN.COM ALLAHABAD ) HAS HELD AS UNDER: - SECTION 68 OF THE INCOME - TAX ACT, 1961 CASH CREDITS [LOAN] ASSESSMENT YEAR 2000 - 01 ASSESSEE - FIRM HAD TAKEN LOAN FROM 14 FIRMS OUT OF WHICH LOAN FROM FOUR FIRMS WERE NOT FOUND BY ASSESSING OFFICER AS GENUINE BECAUSE 26 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. THOSE FIRMS WERE, ALLE GEDLY, RELATED TO ONE G INVOLVED IN PROVIDING ACCOMMODATION ENTRIES ASSESSING OFFICER THUS INVOKED SECTION 68 AND MADE ADDITION TO ASSESSEES INCOME ON ACCOUNT OF UNEXPLAINED CASH CREDITS COMMISSIONER NOTICED THAT LENDERS WERE REGULAR INCOME - TAX ASSE SSEE AND THEIR PANS WERE ON RECORD IT WAS ALSO UNDISPUTED THAT AMOUNT HAD BEEN ADVANCED THROUGH ACCOUNT PAYEE CHEQUES AND FURTHER BEFORE ISSUING CHEQUES LENDERS HAD GOT SUFFICIENT BALANCE IN THEIR ACCOUNT MOREOVER, AMOUNT HAD ALSO BEEN REPAID THROUGH A CCOUNT PAYEE CHEQUES IN VIEW OF ABOVE, COMMISSIONER (APPEALS), TAKING A VIEW THAT LOAN TRANSACTIONS WERE GENUINE, DELETED ADDITION MADE BY ASSESSING OFFICER TRIBUNAL UPHELD ORDER OF COMMISSIONER (APPEALS) WHETHER ON FACTS, IMPUGNED ADDITION MADE IN H ANDS OF ASSESSEE WAS RIGHTLY DELETED HELD, YES [PAPA 5] [IN FAVOUR OF ASSESSEE]. 17. IN THE CASE OF VARINDER RAWLLEY (51 TAXMAN.COM 524 P & H ) THE HON'BLE HIGH COURT HAS HELD AS UNDER: - SECTION 68 OF THE INCOME - TAX ACT, 1961 CASH CREDIT (SALE OF GOODS) ASSESSMENT YEAR 2002 - 23 WHETHER WHERE ASSESSEE RECEIVED AND RETURNED AMOUNT IN QUESTION BY WAY OF ACCOUNT PAYEE CHEQUES AND TRANSACTIONS WERE REFLECTED IN BANK ACCOUNTS OF ASSESSEE AS WELL AS CREDITOR 27 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. 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 ASS ASSESSEES INCOME WHEN DEPARTMENT FAILED TO PROVE TO CONTRARY HELD, YES [PARAS 9 AND 10] [IN FAVOUR OF ASSESSEE]. 18. IN THE CASE OF APEX THERM PACKAGING (P) LTD. (42 TAXMAN.COM 473 GUJ) THE HON'BLE HIGH COURT HAS CATEGORICALLY HELD THAT WHEN THE ASSESSEE HAD PLACED ON RECORD FULL PARTICULARS, WHICH ARE INCLUSIVE OF CONFIRMATION WITH NAME, ADDRESS AND PAN, COPY OF INCOME TAX RETURNS, BALANCE SH EET, ETC. IN RESPECT OF ALL CREDITORS/LENDERS THEN REVENUE IS NOT JUSTIFIED IN MAKING ADDITIONS. SIMILAR VIEW HAS ALSO BEEN TAKEN BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF VIJAY KUMAR JAIN (41 TAXMAN.COM 433 ALL ) AND THE HON'BLE RAJASTHAN HIGH CO URT IN THE CASE OF JAI KUMAR BAKLIWAL (45 TAXAMAN.COM 203 - RAJ ). 19. APART FROM ABOVE, THE COORDINATE BENCH OF ITAT IN THE CASE OF ITO VRS. IRAISAA HOTELS PVT. LTD. 2018 97 TAXMANN.COM 623 MUM, HAD HELD THAT ASSESSEE WAS REQUIRED TO PROVE SOURCE 28 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. OF FUND AT ITS HANDS AND COULD NOT BE CALLED UPON TO PROVE SOURCE OF SOURCE. 20. FROM THE RECORDS, WE FURTHER NOTICED THAT THE AO HAS NOT LOOKED INTO ALL THE RECORDS FURNISHED BY THE ASSESSEE AND EVEN THE CIT(A) HAS ALSO UPHELD THE ADDITIONS ON THE BASIS OF SUSPI CION. IT IS A SETTLED LAW THAT SUSPICION, HOWSOEVER STRONG, MAY BE BUT IT CANNOT TAKE PLACE OF EVIDENCE. IN THE PRESENT CASE, NO EVIDENCE WAS BROUGHT ON RECORD BY THE AO TO SHOW THAT AT ANY MOMENT CASH DEPOSIT WAS MADE IN THE BANK ACCOUNT OF THE LENDERS B EFORE MAKING PAYMENT TO THE ASSESSEE. THE ASSESSEE HAS ALSO PLACED ON RECORD ALL THE DOCUMENTS PERTAINING TO IDENTITY AND CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE TRANSACTION COUPLED WITH THE DOCUMENT TO SHOW THAT WHATEVER AMOUNT WAS TAKEN BY THE ASSESSEE AS LOAN, THE SAME HAD ALREADY BEEN PARTLY RETURNED BACK. THEREFORE, IN VIEW OF THE MATTER AND THE RATIO OF THE DECISIONS IN THE CASE LAW CITED WE ARE OF THE VIEW THAT THE ASSESSEE HAS DISCHARGED THE ONUS OF PROVING IDENTITY AND CREDITWORTHINE SS OF THE PARTIES AND GENUINENESS OF THE TRANSACTIONS. THEREFORE WE SEE NO REASONS FOR THE AO TO MAKE ADDITIONS TOWARDS LOAN UNDER SECTION 68 OF THE ACT. HENCE, WE 29 I.T.A. NO. 1487 /MUM/201 9 META TILES PVT. LTD. DIRECT THE AO TO DELETE THE ADDITION MADE ON THE BASIS OF LOAN. HENCE THE GROUND OF APPEAL R AISED BY ASSESSEE ARE ALLOWED. 21 . IN THE NET RESULT , THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MAY , 2019. SD/ - SD/ - ( G. MANJUNATHA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 16 . 0 5 .201 9 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI