KEYNOTE FINCORP LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(3), MUMBAI

ITA 1643/MUM/2018

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5544 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 14-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JAYESH DADIA SHRI H N SINGH
• Keywords: Unexplained cash credit; Unexplained investment; Principle of natural justice; Opportunity of cross examination; Retrospective amendment; Additional evidence; Question of law; Reasonable cause; Tangible material; Accommodation entries; Bogus loan
• Section: 143(3); 133(6); 195; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' C ' BENCH, MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO S . 1643 & 1647 /MUM/ 2018 (ASSESSMENT YEAR S : 2012 - 13 & 2013 - 14 ) M/S. KEYNOTE FINCORP LTD. 9TH FLOOR, THE RUBY SENAPATI BAPAT MARG DADAR (W), MUMBAI 400026 VS. DCIT, CENTRAL CIRCLE - 1(3) ROOM NO. 905, 9TH FLOOR OLD CGO BULDG ANNEX , M.K. ROAD, MUMBAI 400020 PAN AAACA9011A APPELLANT RESPONDENT APPELLANT BY: SHRI JAYESH DADIA RESPONDENT BY: SHRI H.N. SINGH DATE OF HEARING: 26 .09 .2018 DATE OF PRONOUNCEMENT: 05 . 11 .2018 O R D E R PER SANDEEP GOSAIN, JM THESE APPEAL S FILED BY ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - 47 , MUMBAI DATED 29 . 0 2 .201 AND THEY RELATE TO ASSESSMENT YEARS 2013 - 14 AND 2012 - 13 . 2. FIRST WE TAKE UP ITA NO. 1643/MUM/2018 FOR A.Y. 2012 - 13 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF TH E CASE IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN VIOLATING PRINCIPLE OF NATURAL JUSTICE BY NOT PROVIDING EVIDENCES TO YOUR PETITIONERS NOR PROVIDING OPPORTUNITY TO CROSS EXAMINATION OF THE PERSONS ON WHOSE STATEMENTS RELIANCE HAS BEEN PLACED BY HIM. THE ACTION IS ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 2 UNJUSTIFIED, UNWARRANTED AND AGAINST THE SETTLED LAW PRONOUNCED BY APEX COURT AND JURISDICTIONAL HIGH COURT. (2) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN NOT VERIFYING CONFIRMATIONS AND AFFIDAVITS OF LENDERS BY NOT ISSUING NOTICES U/S 133(6) OF THE INCOME TAX ACT. ALL THE LENDERS HAVE CONFIRMED THE GENUINENESS OF LOANS AND ALL ARE ASSESSED TO TAX. (3) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN VIOLATING PRINCIPLE OF NATURAL JUSTIC E BY REFERRING CERTAIN INFORMATION AND PRODUCING CERTAIN DATA IN THE APPELLATE ORDER WITHOUT GIVING AN OPPORTUNITY TO YOUR PETITIONER FOR CROSS EXAMINATION AND REBUTTAL. THE ACTION IS BAD IN LAW. (4) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFI CER IN TAXING RS. 12,20,00,000/ - AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT. THE ACTION IS UNJUSTIFIED, UNWARRANTED AND AGAINST THE PROVISIONS OF THE ACT. WITHOUT PREJUDICE THE ADDIT ION IS EXCESSIVE. (5) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFI CER IN NOT PASSING THE ORDER JUDICIALLY AND IN ACCORDANCE WITH THE PROVISIONS OF THE LAW AS HE HAS FAILED TO GIVE SHOW CAUSE NOTIC E REGARDING PROPOSED ADDITION UNDER SECTION 69 OF THE INCOME TAX ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A RBI REGISTERED NON BANKING FINANCE COMPANY AND IS IN THE BUSINESS OF ACCEPTING LOANS AND ADVANCING THE SAME TO EARN INTEREST INCOM E AND ALSO ENGAGED IN SHARE TRADING ACTIVITY. THE ASSESSEE FILED RETURN OF INCOME ON 28.09.2012 DECLARING TOTAL INCOME OF ` 51,330/ - . THE AO TREATED THE AMOUNT OF UNSECURED LOANS RECEIVED FROM THE CONCERN OF BHANWARLAL JAIN GROUP DURING THE YEAR UNDER CONSIDERATION AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE INCOME TAX ACT, 1961 (HEREINAFTER 'THE ACT') AND ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 3 ACCORDINGLY ADDED BACK THE SAID AMOUNT. THUS, ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 27.03.2015. AGGRIEVED BY THE ORDER OF THE AO ASSESSEE FILED APPEAL BEFORE THE CIT(A) AND THE CIT(A), AFTER CONSIDERING THE CASE OF BOTH THE PARTIES, DISMISSED THE APPEAL FILED BY THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE CIT(A) AS HAS PREFERRED THE PRESENT APPEAL BE FORE US ON THE GROUNDS MENTIONED ABOVE. 4. ALL THE GROUNDS RAISED BY THE ASSESSEE ARE INTERRELATED AND INTERCON NECTED AND ARE CHALLENGING THE ORDER OF THE CIT(A) IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITIONS ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDE R SECTION 68 OF THE ACT. THEREFORE, WE THOUGHT IT FIT TO DISPOSED OFF ALL THE GROUNDS THROUGH THE PRESENT CONSOLIDATED ORDER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL PLACED ON RECORD, JUDGEMENTS CITED BY BOTH PARTIES AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. AS FAR AS THE PRESENT CASE IS CONCERNED THE ASSESSEE IS A RBI REGISTERED NON BANKING FINANCE COMPANY. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF ` 51,330/ - . THE AO TREATED THE UNSECURED LOAN RECEIVE D FROM THE CONCERN OF BHANWARLAL JAIN GROUP AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT AND ACCORDINGLY ADDED AN AMOUNT OF ` 12,20,00,000/ - TO THE INCOME OF THE ASSESSEE. THUS, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON A TOTA L INCOME OR ` 12,20,51,330/ - . THE AO MADE THE ADDITION BY HOLDING THAT THE ASSESSEE HAS TAKEN UNSECURED LOANS FROM VARIOUS PARTIES/ PERSONS THEREFORE THE ONUS IS ON THE ASSESSEE TO PROVE THE SOURCE, CAPACITY AND CREDITWORTHINESS OF THE PARTIES FROM WHOM LOA NS WERE TAKEN. SINCE THE ASSESSEE FAILED TO DISCHARGE ITS ONUS, THE ENTIRE ADDITIONS WERE MADE UNDER SECTION 69 OF THE ACT. ON APPEAL THE LEARNED CIT(A) UPHELD THE ORDER OF THE AO AND HELD THAT SINCE ALL THE IMPUGNED LOANS WERE TAKEN FROM THE CONCERN OF BH ANWARLAL JAIN GROUP, HENCE WHILE DISCLOSING THE MODUS OPERANDI OF THE SAID CREDITOR, CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 4 6. THE LEARNED A.R. REITERATED THE ARGUMENTS AS WERE RAISED BEFORE THE CIT(A), WHICH ARE RECORDED IN PARA 7 OF THE ORDER OF THE CIT(A) AND THE SAME REPRODUCED AS BELOW: - 7.0 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE APPELLANT HAS SUBMITTED AS UNDER: - 'WITH REFERENCE TO THE ABOVE APPEAL PENDING BEFORE YOUR HONOUR AND FIXED FOR HEARING TODAY, WE ARE INSTRUCTED TO SUBMIT THAT CERTAIN DOCUMENTS CONFIRMING THE IDENTITY OF THE LENDERS, CAPACITY AND CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE LOAN TRANSACTIONS, COULD NOT BE FILED BEFORE THE ASSESSING OFFICER BY THE ASSESSEE COMPANY IN ABSENCE OF PROPER COMMUNICATION FROM THE ASSESSING OFFICER. THE ASSESSEE COMPANY NOW DESIRE TO FILE SEVERAL DOCUMENTS AS ADDITIONAL EVIDENCE. THE ADDITIONAL EVIDENCE IN FORM OF AFFIDAVITS OF THE LENDERS, AUDITED ACCOUNTS AND BANK STATEMENTS OF LENDERS ARE RELEVANT AND NECESSARY FOR DECIDING THE ISSUE INVOLVED IN THE APPEAL AS THE ADDITIONAL EVIDENCE WOULD FURTHER ESTABLISH THE CREDITWORTHINESS AND CAPACITY OF THE LENDERS. UNDER THE CIRCUMSTANCES, YOUR HONOUR IS THEREFORE REQUESTED TO KINDLY ADMIT THE ADDITIONAL (PAGE NOS. 1 TO 109) AS OUR CLIENTS WERE PREVENTED FOR A REASONABLE CAUSE IN NOT FILING THE SAME BEFORE THE ASSESSING OFFICER. A COPY OF AFFIDAVIT OF MR. VINEET SUCHANTI, DIRECTOR OF THE ASSESSEE COMPA NY IS ALSO ENCLOSED. WE TRUST YOUR HONOUR WILL KINDLY ACCEDE TO OUR REQUEST AND ADMIT THE ADDITIONAL EVIDENCE.' 7.1 THE AR OF THE APPELLANT VIDE ITS ANOTHER LETTER DATED 18 07 2018 HAS FURTHER SUBMITTED, AS UNDER: - (I) WHETHER THE ASSESSING OFFICER HAS CO RRECTLY INVOKED SECTION 69 OF THE INCOME TAX ACT ? ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 5 DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS NOT MADE ANY INVESTMENTS. SECTION 69 CAN BE INVOKED ONLY WHEN INVESTMENTS MADE BY THE ASSESSEE COMPANY REMAIN UNEXPLAINED. IN TERMS OF THE FACTS OF THE CASE SINCE NO INVESTMENTS HAVE BEEN MADE BY THE ASSESSEE COMPANY, THE QUESTION OF UNEXPLAINED INVESTMENT DOES NOT ARISE. ACCORDINGLY, THE ADDITION MADE UNDER SECTION 69 OF RS. 12,20,00,000 IS WITHOUT APPLICATION OF MIND. (II) WITHOUT PR EJUDICE EVEN PROVISION OF SECTION 68 CANNOT BE INVOKED WHEN INITIAL BURDEN HAS BEEN DISCHARGED BY THE ASSESSEE COMPANY DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAD AVAILED UNSECURED LOANS AS MENTIONED EARLIER. DURING THE COURSE O F ASSESSMENT PROCEEDINGS THE DETAILS OF LENDERS ALONG WITH CONFIRMATION LETTERS HAVE BEEN FILED BEFORE THE ASSESSING OFFICER WHICH CONTAINS PAN OF ALL THE LENDERS. BESIDES, NO OTHER INFORMATION WAS SOUGHT BY THE ASSESSING OFFICER IN THIS REGARD. EVEN SHOW CAUSE NOTICE FOR PROPOSED ADDITION WAS NOT ISSUED BY THE AO. DETAILS OF LOANS IN THE FORM OF CHART SHOWING DETAILS OF LOANS ACCEPTED DURING THE YEAR ALONG WITH THE NAMES, ADDRESSES, PAN IS ATTACHED HEREWITH. ADDITIONAL EVIDENCES THE ASSESSEE COMPANY HAS FI LED ADDITIONAL EVIDENCES IN FORM OF AFFIDAVITS OF LENDERS, AUDITED ACCOUNTS AND BANK STATEMENTS OF LENDERS AND OTHER DOCUMENTS WHICH CLEARLY ESTABLISH IDENTITY OF THE LENDERS, CAPACITY AND CAPABILITY OF LENDERS AND GENUINENESS OF TRANSACTIONS. THE NAMES OF THE LENDERS ARE AS UNDER: AMIT DIAMONDS ASTHA IMPEX LAXMI DIAMONDS . MEGHA GEMS MEHUL GEMS ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 6 NAVKAR INDIA ROSHAN GEMS PVT. LTD. SANKHALA EXPORTS PVT. LTD. MONEY DIAM THE ADDITIONAL EVIDENCES ESTABLISHED IDENTITY, CREDITWORTHINESS OF LENDERS AND GENUINENESS OF TRANSACTIONS BY WAY OF THE FOLLOWING DOCUMENTS 1. IDENTITY OF LENDERS A) CONFIRMATIONS OF PARTIES ARE ENCLOSED. B) COPIES OF ACKNOWLEDGEMENTS OF RETURN OF INCOME FILED BY THE LENDERS FOR ASSESSMENT YEAR 2012 - 13 ARE ENCLOSED. C) COPIES OF BANK STATEMENTS OF LENDERS WHICH ESTABLISH THE PAYMENT TOWARDS LOAN OF RECEIVED DURING THE YEAR ARE ENCLOSED. ALL THESE DOCUMENTS CLEARLY ESTABLISH THE IDENTITY OF LENDERS. 2. GENUINENESS OF TRANSACTIONS A) ALL THE TRANSACTIONS WITH LENDERS ARE GENUINE AS THEY HAVE BEEN DONE THROUGH BANKING CHANNEL. B) FROM THE CONFIRMATIONS WHICH ARE FILED IN THE FORM OF LEDGER ACCOUNT, YOU WILL OBSERVE THAT THE ASSESSEE COMPANY HAS RECEIVED AMOUNTS THROUGH RTGS. C) AFFIDAVITS OF THE LENDERS. ALL THESE DOCUMENTS CLEARLY E STABLISH THE GENUINENESS OF THE TRANSACTIONS. 3. CREDIT WORTHINESS OF LENDERS: FROM THE AUDITED ACCOUNTS, YOU WILL OBSERVE THE CREDIT WORTHINESS OF THE LENDERS TO GRANT LOANS AND ADVANCES. FURTHER, THE LENDERS HAVE GRANTED LOANS AND ADVANCES TO VARIOUS PER SONS INCLUDING THE ASSESSEE COMPANY. THUS CREDIT WORTHINESS OF THE LENDERS IS ESTABLISHED. THUS, WITH THE ABOVE DOCUMENTS AND EXPLANATION THE ASSESSEE COMPANY HAS ESTABLISHED THE GENUINENESS OF LOANS AND ESTABLISHED THAT THE LOANS ARE NOT IN THE NATURE OF ACCOMMODATING ENTRIES. ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 7 4. AFFIDAVITS OF LENDERS TO FURTHER SUBSTANTIATE, AFFIDAVITS OF LENDERS CONFIRMING THE TEMPORARY LOAN TRANSACTIONS WITH THE ASSESSEE COMPANY ARE ALSO ATTACHED HEREWITH AS A PART OF ADDITIONAL EVIDENCE. IN VIEW OF THE ABOVE DOCUMENTS , THE ASSESSEE COMPANY HAS DISCHARGED INITIAL BURDEN OF PROVING THE GENUINENESS OF LOAN AMOUNTING TO RS.11,00,00,000 RECEIVED FROM VARIOUS LENDERS BY ESTABLISHING IDENTITY OF THE LENDERS, CREDITWORTHINESS OF THE LENDERS. ('III) NO TANGIBLE MATERIAL PRODUCE D BY THE AO TO JUSTIFY HIS ACTION YOUR HONOUR WILL OBSERVE FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS DOUBTED THE GENUINENESS OF LOAN TRANSACTIONS ONLY IN VIEW OF THE REPORT OF ADIT INVESTIGATION - UNIT 7 MUMBAI WHICH HAS NOT BEEN SHARED WITH THE ASSESSEE COMPANY. THE COURTS HAVE HELD CONSISTENTLY THAT MAINLY ON THE BASIS OF A MERE STATEMENT, ADDITION CANNOT BE MADE. THE CONFIRMATIONS OF LENDERS FILED HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT. THUS, YOUR HONOUR WILL OBSERVE THAT THE ADDITION IS MADE MAINLY ON SUSPICION, SURMISES AND ASSUMPTION RATHER ON FACTS AND EVIDENCE. THE APEX COURT, IN NUMBER OF CASES, HAS HELD THAT ANY ADDITION MADE ON THE BASIS OF SUSPICION, SURMISES AND ASSUMPTION DESERVE TO BE DELETED P ARTICULARLY WHEN THE ASSESSE HAS FILED DOCUMENTS / MATERIAL AND WHICH HAVE NOT BEEN DOUBTED BY THE ASSESSING OFFICER. (IV) IF AT ALL ADDITION TO BE MADE, THE SAME SHOULD BE MADE IN THE HANDS OF LENDERS SINCE LENDERS ARE ASSESSED TO TAX IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT ALL THE LENDERS ARE ASSESSED TO TAX AND AVAILABLE FOR INVESTIGATION BY THE DEPARTMENT. THEY HAVE FILED THEIR INCOME TAX RETURNS. THEREFORE, IF AT ALL THE ASSESSING OFFICER HAS ANY DOUBT REGARDING CAPABILITY ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 8 OF THE LENDERS, THEN THE ADDITION SHOULD BE MADE IN THE HANDS OF THE LENDERS AND NOT IN THE HANDS OF THE ASSESSEE COMPANY. YOUR HONOUR'S ATTENTION IN INVITED TO THE DECISION OF HON'BLE MUMBAI TRIBUNAL IN THE CASE OF SUPERLINE CONSTRUCTION PVT. LTD (ITA NO. 36451MUM/2014) WHER E ON SIMILAR FACTS THE COURT / TRIBUNAL HAS HELD THAT ONCE THE LENDERS ARE ASSESSED TO TAX AND THEIR IDENTITY HAS BEEN PROVED, THEN INQUIRY CAN BE MADE IN THEIR HANDS AND IF FOUND UNSATISFACTORY, INCOME CAN BE TAXED FROM UNDISCLOSED SOURCES, IN THEIR HANDS . (V) WITHOUT PREJUDICE THE FIGURE OF RS.12,20,00,000 IS WRONGLY MENTIONED AS PER THE AUDITED ACCOUNTS, UNSECURED LOAN AVAILED FROM UNRELATED PARTIES ARE RS.11,00,00,000 AND NOT RS.12,20,00,000. WE DO NOT KNOW FROM WHERE THE FIGURE OF RS.12,20,00,000 HAS B EEN PICKED - UP. THEREFORE THE ASSESSING OFFICER MAY BE DIRECTED TO GIVE THE WORKING OF RS. 12,20,00,000 TO THE ASSESSEE COMPANY. (VI) APPEAL ORDER OF OTHER CIT(A) ON SIMILAR FACTS WE ENCLOSE HEREWITH A COPY OF CIT(A) 44 MUMBAI IN RESPECT OF RELIANCE CORPORA TION WHERE THE CIT(A)ON THE SIMILAR FACTS HAS DELETED THE ADDITION MADE UNDER SECTION 68 OF THE ACT. IN THIS CASE ALSO THE ENTIRE ADDITION WAS MADE ON THE BASIS OF REPORT OF INVESTIGATION WING OF THE DEPARTMENT ON THE SEARCH CARRIED OUT ON THE GROUP COMPAN IES OF BHANWARLAL JAIN GROUP. UNDER THE CIRCUMSTANCES, YOUR HONOUR IS THEREFORE REQUESTED TO KINDLY CONSIDER THE APPELLATE ORDER WHILE DISPOSING THIS APPEAL. (V) CASE LAWS (A) DECISION OF GUJARAT HIGH COURT IN THE CASE OF CIT VS PATEL RAMNIKLAL HIRJI (41 T AXMANN.COM 493) IN THIS CASE THE ASSESSEE HAS RECEIVED LOAN THROUGH ACCOUNT CHEQUE AND IN SUPPORT OF LOAN TRANSACTIONS HE ALSO BROUGHT ON RECORD A COPY OF AUDITED ACCOUNTS, BANK STATEMENTS AND ACKNOWLEDGEMENT OF INCOME TAX RETURNS OF LENDER, THE HON'BLE ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 9 GU JARAT HIGH COURT HAS THEREFORE HELD THAT IN SUCH CASES, TRANSACTION IN QUESTIONS HAS TO BE REGARDED AS GENUINE AND THUS THE LOAN AMOUNT CANNOT BE ADDED TO THE ASSESSEE TAXABLE INCOME UNDER SECTION 68 OF INCOME TAX ACT. YOUR HONOUR WOULD APPRECIATE THAT THE ASSESSEE COMPANY HAS ALSO FILED ALL THE DOCUMENTS SUCH AS COPIES OF AUDITED ACCOUNTS, BANK STATEMENTS AND ACKNOWLEDGEMENT OF INCOME TAX RETURNS OF LENDERS WHICH JUSTIFY THE GENUINENESS OF LOAN TRANSACTIONS. (B) DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS RAHUL VINEET TRADERS (41 TAXMANN.COM 86) IN THIS CASE THE ASSESSEE HAS TAKEN A LOAN THROUGH ACCOUNT PAYEE CHEQUE AND LENDER HAD GOT SUFFICIENT BALANCES IN THEIR BANK ACCOUNT BEFORE ISSUING CHEQUES, THE HON'BLE HIGH COURT HAS HELD THAT SUCH LOAN TRANSACTION NEED TO BE REGARDED AS GENUINE. I T WILL BE OBSERVED BY YOUR HONOUR FROM TH E BANK STATEMENTS OF THE LENDER THAT THE LENDERS HAD SUFFICIENT BANK BALANCE BEFORE LENDING THE AMOUNTS TO THE ASSESSEE COMPANY. (C) DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF CIT VS APEX THERM PACKAGING (P) LTD (42 TAXMANN.CONI 4731) THE HON'BLE GUJARAT HIGH COURT, IN THIS CASE, HAS HELD THAT WHEN FULL PARTICULARS INCLUSIVE OF CONFIRMATIONS WITH NAMES, ADDRESS AND PAN NUMBERS, COPY OF INCOME TAX RETURNS, BALANCE SH EET, PROFIT & LOSS ACCOUNT OF THE LENDERS ARE FURNISHED AND WHEN IT HAD BEEN FOUND THAT LOANS WERE FURNISHED THROUGH ACCOUNT PAYEE CHEQUES, THEN SUCH LOAN TRANSACTIONS CANNOT BE CONSIDERED AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. IN VIEW OF THE ADDITIONAL EVIDENCES FILED BEFORE YOUR HONOUR WHEREIN ALL THE ABOVE MENTIONED DOCUMENTS HAVE BEEN FILED, THE LOAN TRANSACTIONS CANNOT BE CONSIDERED AS UNEXPLAINED. (CI) DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS IVAN SINGH (51 TAXMANN.COM 275 ) ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 10 IN THE CASE THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT ONCE THE CREDITOR FILE CONFIRMATION LETTER ALONG WITH DOCUMENTARY EVIDENCE AND PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES AND BOTH THE CREDITORS ARE ASSESSED TO TAX, THEN IN SUCH CASE, ADDITION UNDER SECTION 68 CANNOT BE MADE IN THE HANDS OF ASSESSEE AS UNEXPLAINED CASH CREDIT. SINCE THE ASSESSEE COMPANY HAS FILED ALL THE DOCUMENTARY EVIDENCES, NO ADDITION IS WARRANTED ON ACCOUNT OF LOAN TRANSACTIONS AS UNEXPLAINED. (E) DECISION OF AILA HABAD HIGH COURT IN THE CASE OF CIT VS VIJAY KUMARJAIN (41 TAXMANN.COM 433) THE HON'BLE ALLAHABAD HIGH COURT, IN THIS CASE, HAS HELD THAT WHEN IT IS APPARENT FROM THE MATERIAL ON RECORD THAT LENDERS WERE REGULAR INCOME - TAX ASSESSEE WITH PAN ON RECORD AND H AD GRANTED LOAN TO THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUE AND THEY HAD GOT SUFFICIENT BALANCE IN THEIR ACCOUNT BEFORE ISSUING CHEQUE, LOAN AMOUNT CANNOT BEJADDED TO THE ASSESSEE TAXABLE INCOME UNDER SECTION 68 OF INCOME TOT ACT MERELY ON THE GROUND THAT LENDERS ARE ENGAGED IN PROVIDING COMMODATION ENTRIES ALSO. IN THE PRESENT CASE, YOUR HONOUR WOULD APPRECIATE THAT THE LENDERS WERE REGULAR INCOME - TAX ASSESSEE WITH PAN ON RECORD AND HAD ENOUGH BANK BALANCE ON THE DATE OF G RANTING LOAN TO THE ASSESEE COMPANY. (/) DECISION OF RAJASTHAN HIGH COURT IN THE CASE CIT VS JAI KUMAR BAKLIWAL (45 TAXMANN.COM 203) WHERE THE IDENTITY, CAPACITY AND GENUINENESS OF TRANSACTION STOOD PROVED BY THE ASSESSEE, THEN HE IS NOT REQUIRED TO PROVE SOURCE OF AMOUNT WHICH HAS BEEN DEPOSITED BY THE LENDERS IN THEIR BANK ACCOUNT. IN THE PRESENT CASE, AS MENTIONED EARLIER, THE ASSESSEE HAS PROVED ALL THE THREE CRITERIA AND THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER IS SOUGHT TO BE DELETED. ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 11 (G) DECISION OF THE DELHI HIGH COURT IN THE CASE OF CIT VS LALIT KUMAR PODDA R (56 TAXMANN 462) - IN THIS CASE THE HON'BLE DELHI HIGH COURT HAS HELD THAT WHERE IDENTITY AND CREDITWORTHINESS OF PARTIES HAVE BEEN ESTABLISHED FROM WHOM ASSESSEE HAS TAKEN LOAN AND ADVANCES, NO ADDITION UNDER SECTION 68 CAN BE MADE. IN THE PRESENT CASE, THE ASSESSEE HAS PROVED IDENTITY AND CREDITWORTHINESS OF THE LENDERS AND THEREFORE NO ADDITION IS WARRANTED. (H) DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS MARK HOSPITALS (P ) LTD (58 TAXMANN.COM 226) IN THIS CASE, THE HON'BLE MADRAS HIGH COURT HAS HELD THAT WHERE ASSESSEE DULY SUBMITTED ALL THE DETAILS OF LENDERS FROM WHOM IT HAD OBTAINED UNSECURED LOAN AND EVIDENCE PRODUCED BY ASSESSEE PROVED CREDITWORTHINESS OF LENDER AND G ENUINENESS OF TRANSACTION, THEN ADDITION UNDER SECTION 68 CANNOT BE MADE IN THE HANDS OF THE ASSESSEE. (I) DECISION OF MUMBAI TRIBUNAL IN THE CASE OF ACIT VS SANJAY M JHAVERI (61 TAXMANN.COM 28) THE HON'BLE MUMBAI TRIBUNAL, IN THIS CASE HAS HELD THAT WHERE THE ASSESSEE HAS TAKEN UNSECURED LOAN AND FILED CONFIRMATION ALONG WITH COPIES OF LENDER BANK ACCOUNT AND ALSO LENDERS AUDITED ACCOUNTS AND ACKNOWLEDGEMENT OF RETURN FILED BY THEM, THEN SUCH LOAN TRANSACTION HAS TO BE HELD AS GENUINE AND CANNOT BE TREATED AS INCOME FROM UNDISCLOSED SOURCE UNDER SECTION 68 OF INCOME TAX ACT. (J) DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS CREATIVE WORLD TELE FILMS LTD (333 ITR 100) THE JURISDICTIONAL HIGH COURT HAS HELD THAT SECTION 68 CANNOT BE INVOKED WHERE THE AS SESSEE HAS DISCHARGED INITIAL BURDEN AND PROVED THE IDENTITY OF THE LENDER, CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF THE TRANSACTIONS. ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 12 IN THE PRESENT CASE SINCE NO OPPORTUNITY WAS GRANTED TO THE ASSESSEE COMPANY, THE OTHER DOCUMENTS COULD NOT BE F ILED. HOWEVER, THE SAME ARE AVAILABLE BEFORE YOUR HONOUR. YOUR HONOUR WOULD APPRECIATE THAT THE ASSESSEE COMPANY HAS FILED ALL THE DOCUMENTS THAT PROVE THE IDENTITY OF THE LENDERS, CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE TRANSACTIONS. (K) D ECISION OF DELHI HIGH COURT IN THE CASE OF MULTIPLEX TRADING & INDUSTRIAL CO. LTD (63 TAXMANN.COM 170) IN THIS CASE THE HON'BLE HIGH COURT HAS HELD THAT INFERENCE THAT ENTRIES PERTAINING TO LOAN ARE ACCOMMODATION ENTRIES MUST BE SUPPORTED BY EVIDENCE AND N OT ON THE BASIS OF SUSPICION AND PRESUMPTION. IN THIS CASE THE ASSESSING OFFICER HAS NOT PRODUCED ANY EVIDENCE WHICH LEADS TO INFERENCE THAT LOAN ENTRIES ARE IN THE NATURE OF ACCOMMODATION ENTRIES. (1) DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE VA RINDER RAWLIEY (51 TAXMANNCOM 524) IN THIS CASE THE HON'BLE HIGH COURT HAS HELD THAT BURDEN IS ALWAYS ON THE ASSESSEE TO PROVE GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE DEPOSITOR AND ONCE IT IS PROVED THEREAFTER THE BURDEN SHIFTS ON THE ASSESS ING OFFICER. 7. IT WAS SUBMITTED BY THE LEARNED A.R. THAT THE ASSESSEE HAD PLACED ON RECORD ALL THE DOCUMENTARY PROOF BEFORE THE AO AND EVEN CERTAIN DOCUMENTS CONFIRMING THE IDENTITY OF THE LENDER, CAPACITY AND CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF LOAN TRANSA CTIONS, WHICH COULD NOT BE FILED BEFORE THE AO, ALSO WERE FILED BY WAY OF ADDITIONAL EVIDENCE BEFORE THE LEARNED CIT(A). IT WAS ALSO SUBMITTED THAT THE AO HAD WRONGLY INVOKED PROVISIONS OF SECTION 69 OF THE ACT AS SECTION 69 CAN ONLY BE INVOKED WHEN INVEST MENTS MADE BY THE ASSESSEE BEING REMAINED ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 13 UNEXPLAINED. IT WAS FURTHER SUBMITTED THAT SINCE NO INVESTMENTS WERE MADE BY THE ASSESSEE COMPANY, THEREFORE, THE QUESTION OF UNEXPLAINED INVESTMENTS DOES NOT ARISE AND ACCORDINGLY THE LEARNED CIT(A), WHILE ADMITTI NG THE FAULT ON THE PART OF THE AO HAD GUIDED BY THE SAID ORDER AND CONFIRMED THE ADDITIONS ONLY UNDER SECTION 68 OF THE ACT. THE LEARNED A.R. ALSO DRAWN OUR ATTENTION TO THE DETAILS OF THE LOAN OBTAINED FROM DIFFERENT PARTIES AND IT WAS ALSO SUBMITTED THA T ALL THOSE LOANS WERE ALSO REPAID DURING THE YEAR UNDER CONSIDERATION. IN ORDER TO SUBSTANTIATE THE STAND, THE LEARNED A.R. DRAWN OUR ATTENTION TO THE DETAILS OF DOCUMENTS SUBMITTED BEFORE THE REVENUE AUTHORITIES WHICH ARE AS UNDER: - 1 AMIT DIAMONDS 1. CONFIRMATION OF M/S AMIT DIAMONDS OF LOAN OF RS. 1,00,00,000 2. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FOR A.Y. 2012 - 13 OF M/S AIJIIT DIAMONDS 3. COPY OF BANK STATEMENT OF M/S AMIT DIAMONDS 4. COPY OF AUDITED ACCOUNTS OF M/S AMIT DIAMONDS 5. AFFIDAVIT OF MR. UMESH S BANSAL PARTNER OF M/S ASTHA IMPEX CONFIRMING THE LOAN 2 ASTHA IMPEX 1. CONFIRMATION OF M/S ASTHA IMPEX OF LOAN OF RS. 2,00,00,000 2. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FOR A.Y. 2012 - 13 OF M/S ASTHA IMPEX 3. COPY OF BANK STATEMENT OF M/S ASTHA IMPEX 4. COPY OF AUDITED ACCOUNTS OF M/S ASTHA IMPEX 5. AFFIDAVIT OF MR. ABHISHEK LODHA, PROPRIETOR OF M/S ASTHA IMPEX CONFIRMING THE LOAN 3 LAXMI DIAMONDS 1. CONFIRMATION OF M/S LAXMI DIAMONDS OF LOAN OF RS. 50,00,000 2. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FOR A.Y. 2012 - 13 OF M/S LAXMI DIAMONDS 3. COPY OF BANK STATEMENT OF M/S LAXMI DIAMONDS ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 14 4. COPY OF AUDITED ACCOUNTS OF M/S LAXMI DIAMONDS 5. AFFIDAVIT OF MR. MANISH AGARWAL, PROPRIETOR OF M/S LAXMI DIAMONDS CONFIRMING THE LOAN 4 MEGHA GEMS 1. CONFIRMATION OF M/S MEGHA GEMS OF LOAN OF RS. 1,50,00,000 2. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FOR A.Y. 2012 - 13 OF M/S MEGHA GEMS 3. COPY OF BANK STATEMENT OF M/S MEGHA GEMS 4. COPY OF AUDITED ACCOUNTS OF M/S MEGHA GEMS 5. AFFIDAVIT OF MR. MITESH PAMECHA, PROPRIETOR OF M/S LAXMI DIAMONDS CONFIRMING THE LOAN 5 MEHUL GEMS PVT. LTD. 1. CONFIRMATION OF MEHUL GEMS PRIVATE LIMITED OF LOAN OF RS. 50,00,000 2. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FOR A.Y. 2012 - 13 OF MEHUL GEMS PRIVATE LIMITED 3. COPY OF BANK STATEMENT OF MEHUL GEMS PRIVATE LIMITED 4. COPY OF AUDITED ACCOUNTS OF METIUL GEMS PRIVATE LIMITED 5. AFFIDAVIT OF MR. MOHIT P. KAWDIYA DIRECTOR OF M/S MEHUL GEMS PRIVATE LJMJTE4 CONFIRMING THE LOAN 6 NAVKAR INDIA 1. CONFIRMATION OF NAVKAR INDIA OF LOAN OF RS. 1,50,00,000 2. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FOR A.Y. 2012 - 13 OF NAVKAR INDIA 3. COPY OF BANK STATEMENT OF NAVKAR INDIA 4. COPY OF AUDITED ACCOUNTS OF NAVKAR INDIA 5. AFFIDAVIT OF MR. ABHISHEK LODHA PARTNER OF M/S NAVKAR INDIA CONFIRMING THE LOAN 7 ROSHAN GEMS PRIVATE LIMITED 1. CONFIRMATION OF ROSHAN GEMS PRIVATE LIMITED OF LOAN OF RS. 1,00,00,000 ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 15 2. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FOR A.Y. 2012 - 13 OF ROSHAN GEMS PRIVATE LIMITED 3. COPY OF BANK STATEMENT OF ROSHAN GEMS PRIVATE LIMITED 4. COPY OF AUDITED ACCOUNTS OF ROSHAN GEMS PRIVATE LIMITED 5. AFFIDAVIT OF MR. MOHIT P. KAWDIYA DIRECTOR OF M/S ROSHAN GEMS PRIVATE LIMITED CONFIRMING THE LOAN 8 SANKHALA EXPORTS PVT. LTD. 1. CONFIRMATION OF SANKHALA EXPORTS PRIVATE LIMITED OF LOAN OF RS. 2,00,00,000 , 2. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FOR A.Y. 2012 - 13 OF SANKHALA EXPORTS PRIVATE LIMITED 3. COPY OF BANK STATEMENT OF SANKHALA EXPORTS PRIVATE LIMITED 4. COPY OF AUDITED ACCOUNTS OF SANKHALA EXPORTS PRIVATE LIMITED 5. AFFIDAVIT OF MR. LUNKARAN PARASMAL KOTHARI DIRECTOR OF M/S SANKHALA EXPORTS PRIVATE LIMITED CONFIRMING THE LOAN 9 MONEY DIAM 1. CONFIRMATION OF M/S MONEY DIAM OF LOAN OF RS. 1,00,00,000 2. COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME FOR A.Y. 2012 - 13 OF M/S MONEY DIAM 3. COPY OF BANK STATEMENT OF M/S MONEY DIAM 4. COPY OF AUDITED ACCOUNTS OF M/S MONEY DIAM 5. AFFIDAVIT OF MR. PAWAN F BIRAWAT PROPRIETOR OF M/S MONEY DIAM CONFIRMING THE LOAN 11 COPY OF LETTER DATED 18/7/2017 REQUESTING THE CIT(A) TO ADMIT THE ADDITIONAL EVIDENCE ALONG WITH AFFIDAVIT OF MR. VINEET SUCHANTI, DIRECTOR OF ASSESSEE COMPANY 12 COPY OF WRITTEN SUBMISSIONS FILED BEFORE CIT(A) VIDE LETTER DATED 18/7/2017 ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 16 13 COPY OF WRITTEN SUBMISSIONS FILED BEFORE CIT(A) VIDE LETTER DATED 19/2/2018 THE LEARNED A.R. ALSO PLACED DETAILS OF LOANS REPAID DURING THE YEAR UNDER CONSIDERATION AND THE SAME IS REPRODUCED BELOW: - SR.NO. NAME & ADDRESS PAN NO. DATE OF LOAN 'XMOTLNT OT LOAN TAKEN/ADDITION DURING THE YEAR CLOSING BAL. AS ON 31.03.2012 AMOUNT REPAID BANK & MODE OF PAYMENT/ REPAYMENT 1 ASTHA IMPEX 228/229, MEJESTIC SHOPPING CENTRE, 144, J.S.S.ROAD, GIRGAUM, MUMBAI 400004 AEOPL0917R 28.03.2012 20,000,000 20,000,000 20,000,000 PAID IN F.Y.2013 - 14 AXIS BANK/ RTGS 2 LAXMI DIAMONDS 316, PANCHRATNA, OPERA HOUSE, MUMBAI 400004 AAEFL4266F 28.03.2012 5,000,000 5,000,000 5,000,000 PAID IN F.Y.2013 - 14 AXIS BANK/ RTGS 3 VIEGHA GEMS 316, PANCHRATNA, OPERA HOUSE, MUMBAI 400004 AJOPP5347M 28.03.2012 15,000,000 15,000,000 15,000,000 PAID IN F.Y.2013 - 14 AXIS BANK/ RTGS 4 VIEHUL GEMS PVT LTD. 228/229, MEJESTIC SHOPPING CENTRE, J.S.S.ROAD, OPERA HOUSE, MUMBAI 400004 AAGCM9256 M 28.03.2012 5,000,000 5,000,000 5,000,000 PAID IN F.Y.2013 - 14 AXIS BANK/ RTGS 5 SLAVKAR INDIA 316, PANCHRATANA, OPERA HOUSE, MUMBAI 400004 AAHFN4207H 28.03.2012 15,000,000 15,000,000 15,000,000 PAID IN F.Y.2013 - 14 AXIS BANK/ RTGS 6 ROSHAN GEMS PVT LTD 228/229, MEJESTIC SHOPPING CENTRE, .S.S.ROAD, OPERA HOUSE, MUMBAI 400004 AAFCR0659G 28.03.2012 10,000,000 10,000,000 10,000,000 PAID IN F.Y.2013 - 14 AXIS BANK/ RTGS 7 AMIT DIAMONDS .05, PANCHRATNA, OPERA HOUSE, MUMBAI 400004 AAPFA0768G 30.03.2012 10,000,000 10,000,000 10,000,000 PAID IN F.Y.2012 - 13 AXIS BANK/ RTGS 8 VLONEY DIAM 206, RATANDEEP, 78, J.S.S.ROAD, OPERA HOUSE, MUMBAI 400004 ANTPB4422F 30.03.2012 10,000,000 10,000,000 10,000,000 PAID IN F.Y.2012 - 13 AXIS BANK/ RTGS 9 SANKHALA EXPORTS LTD 9, NAVYUG SAGAR, TEEN BATI, WALKESHWAR ROAD, MUMBAI - 400006 AAHCS1855M 30.03.2012 20,000,000 20,000,000 20,000,000 PAID IN F.Y.2012 - 13 AXIS BANK/ RTGS ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 17 TOTAL - 110,000,000 110,000,000 FURTHER, THE LEARNED A.R. RELIED ON THE FOLLOWING JUDGEMENTS: - I) PRINCIPAL CIT VS. PAR ADISE INLAND SHIPPING PVT. LTD TAX APPEAL NO.66 OF 2016 (BOM) II) CIT V S . GREEN INFRA LTD. 393 ITR 7 (BOM) III) CIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. 394 ITR 680 (BOM) IV) PR.CIT VS. VEEDHATA TOWER PVT. LTD.ITA NO.819 OF 2015 (BOM) V) PATEL RAMNIKLAL HIRJRI 41 TAXMANN.COM 493 (BOM) VI) CIT VS. RAHUL VINEET TRADERS 41 TAXMANN.COM 86 (ALL) VII) CIT VS. APEX THERM PACKAGING (P) LTD 42 TAXMANN.COM 473 (GUJ) VIII) CIT VS. VIJAY KUMAR JAIN 41 T AXMANN.COM 433 (ALL) IX) CIT VS JAI KUMAR BAKLIWAL 45 TAXMANN.COM 203 (RAJ) X) MULTIPLE X TRADING & INDUSTRIAL CO. LTD. 63 TAXMANN.COM 170 (DEL) XI) VARINDER RAWLLEY 51 TAXMANN.COM 524 (P&H) XII) R W PROMOTIONS 61 TAXMANN.COM 54 (BOM) XIII) ACIT VS SANJAY M JHAVERI 61 TAXMANN.COM 28 (MUM - TRIB) XIV) ANIL CHHAGANLAL JAIN (MUM - TRIB) XV) JAICO TEXTILE PVT LTD . (MUM - TRIB) XVI) SHRI LAXMI ESTATE PVT. LTD. & SHRI LAXMI DEVELOPERS (MUM_TRIB) XVII) SHREEDHAM CONSTRUCTIONS PVT LTD . (MUM - TRIB) XVIII) H RMEHTA (MUM - TRIB) XIX) RAMESH RAMSWARUPDAS JINDAL (MUM - TRIB) ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 18 XX) M/S RELIANCE CORPORATION (MUM - TRIB) XXI) JITENDRA M. KITAVAT (MUM - TRIB) XXII) VIKRAM MUKTILAL VORA (MUM - TRIB) XXIII) M/S KHUSBOO EXPORTS PVT. LTD. (MUM - TRIB) XXIV) VEER GEMS (AHD - TRIB) XXV) VEER GEMS TAX APPEAL NO.338 OF 2017 (GUJ) XXVI) M/S KOMAL AGROTECH (HYD - TRIB) XXVII) BAIRAGRA B UILDERS P. LTD. (MUM - TRIB) IT WAS FURTHER SUBMITTED THAT SINCE THE ASSESSEE HAD ESTABLISHED IDENTITY AND CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE TRANSACTIONS BY WAY OF PLACING ON RECORD DOCUMENTS TO PROVE IDENTITY OF LENDERS. THE ASSESSEE HAS ALSO SUBMITTED CONFIRMATIONS OF ALL THE PARTIES, COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOMES FILED BY THE LENDERS FOR A.Y. 2012 - 13, COPIES OF BANK STATEMENT OF LENDERS, WHICH SHOWS PAYMENT TOWARDS LOANS RECEIVED DURING THE YEAR. 8. IN ORDER TO PROVE THE GENUINENESS OF TRANSACTIONS, THE LEARNED A.R. SUBMITTED THAT ALL THE TRANSACTION WITH THE LENDERS HAVE BEEN ROUTED THROUGH BANKING CHANNELS, FROM THE CONFIRMATIONS WHICH ARE FILED IN THE FORM OF LEDGER ACCOUNTS IT IS PROVED THAT THE ASSESSEE HAS RECEIVED L OANS THROUGH RTGS. IT WAS ALSO SUBMITTED THAT ALL THE ABOVE DOCUMENTS CLEARLY ESTABLISH THE GENUINENESS OF THE TRANSACTIONS. 9. IN ORDER TO PROVE THE CREDITWORTHINESS OF THE LENDER ASSESSEE HAS SUBMITTED THAT THEY HAVE ALREADY PLACED ON RECORD THE AUDITED ACC OUNTS WHICH REFLECT THE CREDITWORTHINESS OF THE LENDERS TO GRANT LOANS AND ADVANCES. IT WAS ALSO SUBMITTED THAT THE LENDERS HAVE ACKNOWLEDGED THE LOANS AND ADVANCES NOT ONLY TO THE ASSESSEE BUT ALSO VARIOUS OTHER PERSONS. THUS, FROM THE AUDITED ACCOUNT THE CREDITWORTHINESS OF THE LENDERS WAS ALSO ESTABLISHED. THE LEARNED A.R. ALSO DRAWN OUR ATTENTION TO THE AFFIDAVITS OF THE LENDERS AND SUBMITTED THAT THE AFFIDAVITS OF THE LENDERS ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 19 CONFIRM THE TEMPORARY LOAN TRANSACTIONS WITH THE ASSESSEE COMPANY. IT WAS ALS O SUBMITTED THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS OF PROVING THE GENUINENESS OF LOANS RECEIVED FROM VARIOUS LENDERS BY ESTABLISHING IDENTITY AND CREDITWORTHINESS OF THE LENDERS. IT WAS ALSO SUBMITTED THAT NO TANGIBLE MATERIALS WERE PRODUCED BY THE AO TO JUSTIFY HIS ACTION AND FROM THE ASSESSMENT ORDER, IT IS CLEAR THAT THE AO HAD DOUBTED THE GENUINENESS OF LOAN TRANSACTIONS ONLY IN VIEW OF THE REPORT OF ADIT, INV WING 7, MUMBAI, WHICH HAS NOT BEEN SHARED WITH THE ASSESSEE COMPANY. AT THIS STAGE IT WAS SUBMITTED BY LEARNED A.R. THAT THE COURTS IN A SERIES OF JUDGMENTS HAD ALREADY HELD THAT MERELY ON THE BASIS OF SOME STATEMENTS ADDITION CANNOT BE MADE. IT WAS ALSO SUBMITTED THAT THE CONFIRMATIONS OF LENDERS FILED BY THE ASSESSEE HAS NOT BEEN DISPU TED BY THE AO IN THE ORDER OF ASSESSMENT. ALTERNATIVELY IT WAS ARGUED THAT IF AT ALL ANY ADDITION WAS TO BE MADE BY THE AO THEN IN THAT EVENT THE SAME SHOULD HAVE BEEN MADE IN THE HANDS OF THE LENDERS SINCE ALL THE LENDERS ARE ASSESSED TO TAX. 10. ON THE OTHER HAND, THE LEARNED D.R. RELIED UPON THE ORDER OF THE CIT(A) AND ALSO UPON THE JUDGEMENTS, WHICH ARE CONTAINED IN THE ORDER PASSED BY THE CIT(A). 11. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AND PERUSAL OF THE DOCUMENTS AND AFTER HEARING BOTH PAR TIES AT LENGTH WE FIND THAT THE ASSESSEE HAD ALREADY PLACED ON RECORD ALL THE DOCUMENTARY EVIDENCES IN ORDER TO SHOW THE IDENTITY AND CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE TRANSACTIONS. WE HAVE PERUSED THE CONFIRMATION FILED BY THE PARTIES , COPIES OF ACKNOWLEDGEMENT OF RETURN OF INCOME FILED BY THE LENDERS FOR THE YEAR UNDER CONSIDERATION, COPIES OF THE BANK STATEMENT OF LENDERS, WHICH ESTABLISH THAT THE PAYMENT TOWARDS LOANS WERE RECEIVED DURING THE YEAR UNDER CONSIDERATION. THEREFORE THE IDENTITY OF THE LENDERS WAS NOT IN DISPUTE. WE HAVE ALSO CONSIDERED ALL THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE IN THE SHAPE OF STATEMENT OF ACCOUNTS AND DOCUMENTS TO SHOW THAT THE TRANSACTIONS WERE CARRIED OUT THROUGH BANKING CHANNELS AND THE CONFI RMATIONS WHICH WERE FILED IN THE FORM OF ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 20 LEDGER ACCOUNTS WHICH REFLECT THAT THE ASSESSEE HAD RECEIVED THE AMOUNT THROUGH RTGS, AFFIDAVITS OF THE LENDERS. ALL THOSE DOCUMENTS PROVE THE GENUINENESS OF THE TRANSACTIONS. NOW AS FAR AS CREDITWORTHINESS OF THE L ENDERS ARE CONCERNED, WE HAVE PERUSED THE AUDITED ACCOUNTS OF THE LENDERS WHICH SHOWS THE CREDITWORTHINESS OF THE LENDERS TO GRANT LOANS AND ADVANCES. FURTHER, WE ALSO NOTICED FROM THE RECORD THAT THE LENDERS HAVE NOT ONLY GRANTED LOANS TO THE ASSESSEE BUT ALSO TO VARIOUS OTHER PERSONS. WE HAVE ALSO CONSIDERED THE AFFIDAVITS OF THE LENDERS AND FROM ALL THOSE DOCUMENTS WE FIND CREDITWORTHINESS OF THE LENDERS TO MAKE P AYMENT OF LOANS TO THE ASSESSEE. 12. WE HAVE ALSO CONSIDERED THAT THE LOANS, WHICH WERE TAKEN BY THE ASSESSEE HAS ALSO BEEN REPAID AND ALL THOSE REPAYMENTS HAVE BEEN MADE BY THE ASSESSEE IN SUBSEQUENT YEARS AND THOSE DETAILS HAVE ALSO BEEN FILED BY THE ASSESSEE IN THE PARA MENTIONED ABOVE. IN THE CASE OF PR.CIT VS. PARADISE INLAND SHIPPING PVT. LTD. (SUPRA) THE HON'BLE HIGH COURT HAS CATEGORICALLY HELD THAT THE INITIAL ONUS IS UPON THE ASSESSEE TO PLACE ON RECORD ALL THE DOCUMENTARY EVIDENCES TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE TRANSACTIONS AND WHEN ONC E THE ASSESSEE PRODUCE ALL THE 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. ( SUPRA) WHEREIN IT WAS HELD AS UNDER: - SECTION 68 OF THE INCOME - TAX ACT, 1961 - CASH CREDIT (SHARE CAPITAL) - ASSESSMENT YEAR 2011 - 12 - A SSESSEE - COMPANY OFFERED TO SELL ITS SHARES - IDENTITY OF SUBSCRIBERS WAS CONFIRMED BY VIRTUE OF ASSESSING OFFICER ISSU ING NOTICES TO THEM - GENUINENESS OF ENTIRE TRANSACTION WAS RECORDED IN BOOKS OF ACCOUNT AND REFLECTED IN FINANCIAL STATEMENTS OF ASSESSEE - 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 ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 21 REVENUE WAS NOT ABLE TO SHOW THAT FACTUAL FINDING REC ORDED BY TRIBUNAL WAS PERVERSE, NO SUBSTANTIAL QUESTION OF LAW AROSE - HELD, YES [PARA 3(C)] [IN FAVOUR OF ASSESSEE] . IN THE CASE OF CIT VS. GAGANDEEP INFRASTRUCTURE PVT. LTD. (SUPRA) THE HON'BLE HIGH COURT HELD AS UNDER: - SE CTION 68 OF THE INCOME - TAX ACT, 1961 - CASH CREDIT (SHARE CAP ITAL) - ASSESSMENT YEAR 2008 - 0 9 - WHETHER PROVISO TO SECTION 68 INTRODUCED BY FINANCE ACT 2012 WITH EFFECT FROM 1 - 4 - 2013, WOULD NOT HAVE RETROSPECTIVE EFF ECT - HELD, YES - WHETHER WHERE ASSESSEE - CO MPANY HAD ESTABLISHED IDENTITY, GENUINENESS AND CAPACITY OF SHAREHO LDERS WHO HAD SUBSCRIBED TO ITS SHARES, ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING AMOUNT OF SHARE CAPITAL SUBSCRIPTION AS UNEXPLAINED C REDIT HELD, YES - WHETHER WHERE REVENUE U RGED THAT ASSESSEE HAD RECEIVED SHARE APPLICATION MONEY FROM BOGUS SHAREHOLDERS, IT WAS FOR INCOME - TAX OFFICERS TO PROCEED BY REOPENING ASSESSMENT OF SU CH SHAREHOLDERS AND ASSESSING TH EM TO TA X IN ACCORDANCE WITH LAW AND IT DID NOT ENTITLE REVENUE TO ADD SAME TO ASSESSEE'S INCOME AS UNE XPLAINED CASH CREDIT - HELD, YES [PARA 3] [IN FAVOUR OF ASSESSEE] . 13. AS FAR AS THE FACTS OF THE PRESENT CASE, ASSESSEE HAS ALSO 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 (SUPRA) 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 THOSE FIRMS WERE, ALLEGEDLY, RELATE D 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 ASSESSEE AND THEI R PANS WERE ON RECORD IT WAS ALSO UNDISPUTED THAT AMOUNT HAD BEEN ADVANCED ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 22 THROUGH ACCOUNT PAYEE CHEQUES AND FURTHER BEFORE ISSUING CHEQUES LENDERS HAD GOT SUFFICIENT BALANCE IN THEIR ACCOUNT MOREOVER, AMOUNT HAD ALSO BEEN REPAID THROUGH ACCOUNT 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 HANDS OF ASSES SEE WAS RIGHTLY DELETED HELD, YES [PAPA 5] [IN FAVOUR OF ASSESSEE]. IN THE CASE OF VARINDER RAWLLEY (SUPRA) 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 WHE THER 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 WHO WAS AN INCOME - TAX ASSESSEE, ASSESSEE HAD SUFFICIENTLY EXPLAINED NATURE AND SOU RCE 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]. IN THE CASE OF APEX THERM PACKAGING (P) LTD. (SUPRA) 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 SHEET, ETC. IN RESPE CT 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 (SUPRA) AND THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF JAI KUMAR BAKLIW AL (SUPRA). 14. IN THE PRESENT CASE THE ADDITIONS WERE MADE ON THE BASIS OF STATEMENT RECORDED DURING THE INVESTIGATION CARRIED OUT BY THE INVESTIGATION WING. SINCE NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN TO THE ASSESSEE IN RESPECT OF THE PERSONS WHOSE S TATEMENTS WERE RELIED UPON BY THE REVENUE, THUS THE SAME WAS CONSIDERED AS BREACH OF PRINCIPLES OF ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 23 NATURAL JUSTICE AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF R.W. PROMOTIONS (P.) LTD. (SUPRA). THE LEARNED A.R. ALSO DRAWN OUR ATTENTION TO THE C ASES WHEREIN UNDER SIMILAR CIRCUMSTANCES ADDITIONS WERE MADE AND THE SAME WERE DELETED BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASES OF ACIT VS. SANJAY M. JHAVERI 61 TAXMANN.COM 28, ANIL CHHAGANLAL JAIN VS. ACIT ITA NOS. 369 & 370/MUM/2017, SHREE LA XMI ESTASTE PVT. LTD. VS. ITO ITA NO. 5954/MUM/2016 & ITA NO. 2562/MUM/ 2017, ACIT VS. RAMESH RAMSWARUPDAS JINDAL ITA NOS. 3091 TO 2096/MUM/2017, ITO VS. KHSHBOO EXPORTS PVT. LTD. ITA NO. 3647/MUM/2017 AND KOMAL AGROTECH P. LTD. VS. ITO ITA NO. 437/HYD/201 6. WE HAVE ALSO NOTICED THAT IN BHANWARLAL JAIN GROUP CASES ALSO THE COORDINATE BENCH OF THE TRIBUNAL IN THE CA S E OF RELIANCE CORPORATION VS. ITO ITA NOS. 1069 TO 1071/MUM/2017 FOR ASSESSMENT YEARS 2008 - 09 TO 2010 - 11 HAS DELETED THE ADDITION. SIMILAR ADDIT ION WAS ALSO DELETED BY THE COORDINATE BENCH IN THE CASE OF JITENDRA M. KITAVAT VS. ITO ITA NOS. 7049 & 7050/MUM/2016 AND IN THE CASE OF ITO VS. VIKRAM MUKTILAL VORHA ITA NO. 842/MUM/2017 FOR A.Y. 2007 - 08. AFTER HAVING GONE THROUGH THE CASE LAW RELIED UPON BY THE ASSESSEE AND IN THE LIGHT OF THE FACTS OF THE PRESENT CASE WE FIND THAT THE HON'BLE HIGH COURT IN THE CASE OF GAGANDEEP INFRASTRUCTURE PVT. LTD. (SUPRA) HAS CATEGORICALLY OBSERVED THAT PROVISO TO SECTION 68 HAS BEEN INSERTED BY FINANCE ACT, 2012 W. E.F. 01.04.2013 AND IS APPLICABLE TO A.Y. 2013 - 14. THE COURT OBSERVED THAT THE PARLIAMENT DID NOT INTRODUCE PROVISO WITH RETROSPECTIVE EFFECT NOT DOES THE PROVISO INTRODUCED TO STATE THAT IT WAS INTRODUCED FOR REMOVAL OF DOUBTS. THEREFORE, IT IS NOT OPEN T O GIVE RETROSPECTIVE EFFECT. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ARCHIES INDUSTRIES PVT. LTD. IN ITA NO. 1433 OF 2014 WHEREIN THE HON'BLE HIGH COURT, AFTER CONSIDERING THE RELEVANT FACTS AND ALSO F OLLOWING THE JUDGEMENT IN THE CASE OF GAGNADEEP INFRASTRUCTURE PVT. LTD. (SUPRA), UPHELD THE ABOVE SAID PROPOSITION. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (2008) 2016 CTR 195 WHERE IN THE HON'BLE SUPREME COURT, WHILE DELETING THE ADDITION MADE UNDER SECTION 68 OF THE ACT, OBSERVED THAT IF THE ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 24 SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE AO, THEN THE DEPARTME NT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW , BUT THIS AMOUNT OF SHARE APPLICATION MONEY CANNOT BE RECORDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE ACT. AS FAR AS THE CASE LAW RELIED UPON BY THE REVENUE IS CONCE RNED, WE HAVE CONSIDERED THOSE CASE LAW , BUT THEY ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT C ASE AS THE PARI MATERIA CONTAINED IN THOSE CASES ARE D IFFERENT FROM THE PARI MATERIAL CONTAINED IN THE PRESENT CASE. 15. 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 SUSPICION. 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 A O TO SHOW THAT AT ANY MOMENT CASH DEPOSIT WAS MADE IN THE BANK ACCOUNT OF THE LENDERS BEFORE MAKING PAYMENT TO THE ASSESSEE. THE ASSESSEE HAS ALSO PLACED ON RECORD ALL THE DOCUME NTS 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 RETURNED BACK. THEREFORE, IN VIEW OF THE M ATTER 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 CREDITWOR THINESS OF THE PARTIES AND GENU INENESS OF THE TRANSACTIONS. THEREFORE WE SEE NO REASONS FOR THE AO TO M AKE ADDITIONS TOWARDS LOAN UNDER SECTION 68 OF THE ACT. HENCE, WE DIRECT THE AO TO DELETE THE ADDITION MADE ON THE BASIS OF LOAN. HENCE THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED. ITA NO. 1647/MUM/2018 (AY 2013 - 14) 1 6 . NOW WE TAKE UP ASSESSEES APPEAL FILED IN ITA NO. 1647/MUM/2018 FOR AY 2013 - 14 ON THE GROUNDS MENTIONED HEREIN BELOW: - ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 25 (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN VIOLATING PRINCIPLE OF NATURAL JUSTICE BY NO T PROVIDING EVIDENCES TO YOUR PETITIONERS NOR PROVIDING OPPORTUNITY TO CROSS EXAMINATION OF THE PERSONS ON WHOSE STATEMENTS RELIANCE HAS BEEN PLACED BY HIM. THE ACTION IS UNJUSTIFIED, UNWARRANTED AND AGAINST THE SETTLED LAW PRONOUNCED BY APEX COURT AND JUR ISDICTIONAL HIGH COURT. (2) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN NOT VERIFYING CONFIRMATIONS AND AFFIDAVITS OF LENDERS BY NOT ISSUING NOTICES U/S 133(6) OF THE INCOME TAX ACT. ALL THE LENDERS HAVE CONFIRMED THE GENUINENESS OF LOANS AND ALL ARE ASSESSED TO TAX. (3) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN VIOLATING PRINCIPLE OF NATURAL JUSTICE BY REFERRING CERTAIN INFORMATION AND PRODUCING CERTAIN DATA IN THE APPE LLATE ORDER WITHOUT GIVING AN OPPORTUNITY TO YOUR PETITIONER FOR CROSS EXAMINATION AND REBUTTAL. THE ACTION IS BAD IN LAW. (4) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN TAXING RS. 1 1,35,0 0,000/ - AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE INCOME TAX ACT. THE ACTION IS UNJUSTIFIED, UNWARRANTED AND AGAINST THE PROVISIONS OF THE ACT. WITHOUT PREJUDICE THE ADDITION IS EXCESSIVE. (5) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN CO NFIRMING THE ACTION OF ASSESSING OFFICER OF DISALLOWING RS. 1,20,27,943 OUT OF INTEREST PAID. WITHOUT PREJUDICE THE DISALLOWANCE IS EXCESSIVE. (6) THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER OF MAKING ADDITION OF RS. 26,57,000 ON ACCOUNT OF ADHOC COMMISSION @ 0.2% PER MONTH ON ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 26 THE ALLEGED BOGUS LOANS. THE ACTION IS ARBITRARY, UNJUSTIFIED AND UNWARRANTED. WITHOUT PREJUDICE THE ADDITION IS EXCESSIVE. (7) YOUR PETITIONERS CRAVES LEAVE TO ADD, ALTER, AMEND AND I OR WITHDRAW ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. GROUND NO. 1 TO 4 17. SINCE THE ISSUE RAISED IN THIS APPEAL ARE SIMILAR TO THE OTHER APPEAL FILED BY THE ASSESSEE IN ITA NO. 1643/MUM/2018 FOR AY 2012 - 13, THEREFORE FOLLOWING OUR DECISION IN ITA NO. 1643/MUM/2018 AS MENTIONED A BOVE, WE ALLOW THESE APPEALS FILED BY THE ASSESSEE. GROUND NO. 5 & 6 18. SINCE WE HAVE ALREADY DECIDED GROUND NO. 1 TO 4 ON MERITS AND THE PRESENT GROUND NO. 5 & 6 ARE CONSEQUENTIAL IN NATURE AND KEEPING IN V IEW OUR DECISION ON GROUND NO. 1 TO 4, WE DISMISS THESE GROUNDS OF APPEAL FILED BY THE ASSESSEE. GROUND NO. 7 19. THIS GROUND RAISED BY THE ASSESSEE IS GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 20. IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE ARE ALLOWED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH NOVEMBER , 2018 . SD/ - SD/ - ( R.C. SHARMA ) ( SANDEEP GOSAIN ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 5 TH NOVEMBER , 2018 COPY TO: 1. THE APPELLANT ITA NO. 1643 & 1647 /MUM/ 2018 M/S. KEYNOTE FINCORP LTD. 27 2. THE RESPONDENT 3. THE CIT(A) - 47 , MUMBAI 4. THE PR. CIT , CENTRAL - 1 , MUMBAI 5. THE DR, C BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.