ARVIND HANJARIMAL JAIN , MUMBAI V. ASST CIT 31 (2) , MUMBAI

ITA 268/MUM/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5851 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 08-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JAIN DIXIT
• Keywords: Reopening of assessment; Bogus purchase; Unexplained cash credit; Source of fund; Question of law; Tangible material; Accommodation entries; Onus to prove; Retraction; Bogus loan; Reason to believe; Reassessment proceedings; Borrowed satisfaction; TDS; Set aside; Capital Gains
• Section: 68; 148; 37; 132; 271(1)(c); 139; 143(3); 142(1); 234B; 133(6); 143(1); 195; 251; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) “A” BENCH, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, HON'BLE JUDICIAL MEMBER ITA NOs. 267, 268, 269 & 270/MUM/2020 (A.Ys: 2009-10, 2010-11, 2011-12 & 2012-13) Aravind Hanjarimal Jain 23/26, Vijay Vills Jawahar Nagar S.V. Road, Goregaon (W) Mumbai - 400062 PAN: AAAPJ9738Q v. ACIT – 31(1) Kautilya Bhavan Bandra Kurla Complex Bandra(E), Mumbai - 400051 (Appellant) (Respondent) Assessee by : Shri Jain Dixit Department by : Shri Mehul Jain Date of Hearing : 13.01.2022 Date of Pronouncement : 29.03.2022 O R D E R PER S. RIFAUR RAHMAN (AM) 1. All these appeals are filed by the assessee against common order of the Learned Commissioner of Income Tax (Appeals)-42, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 29.08.2019 for the A.Ys.2009-10, 2010-11, 2011-12 and 2012-13. 2 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain 2. Since the issues raised in all the appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. We are taking Appeal in ITA.No. 267/MUM/2020 for Assessment Year 2009-10 as a lead case. 3. Brief facts of the case are, assessee filed return of income on 29.09.2009 declaring total income of ₹.73,16,401/-. The assessment was completed u/s. 143(3) of the Act on 29.11.2011. Further, re-assessment u/s. 143 r.w.s. 147 of the Act was completed on 13.03.2014 determining the total income of ₹.1,01,15,791/- which was then rectified by order u/s.154 of the Act dated 27.03.2014 determining revised total income at ₹.2,02,49,317/-. Subsequently, information received from the DGIT (Investigation), Mumbai [in short “the DGIT (Inv.)"] that a search and seizure action u/s. 132 of the Act was carried out in the case of Shri Bhanwarlal Jain and group concerns on 03.10.2013 where it was found that Shri Bhanwarlal Jain and his associates have floated various entities, which are engaged in the business of providing accommodation entries in the form of bogus unsecured loans, bogus purchases, bogus capital gain etc., and the Assessing Officer observed that assessee is one of the beneficiaries of bogus concerns operated and controlled by Shri Bhanwarlal Jain and associates. He observed that during the relevant 3 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain previous year, assessee has taken unsecured loans of ₹.25 Lakhs from M/s. Navkar Diamonds which is one of the concerns controlled by Shri Bhanwarlal Jain. Accordingly, notice u/s. 148 was issued and served on the assessee. In response assessee filed letter dated 21.04.2015 and submitted that return filed original u/s. 139 of the Act may be treated as filed in response to notice u/s. 148 of the Act. Subsequently, Assessing Officer issued notice u/s. 143(2) and 142(1) of the Act and served on the assessee along with the questionnaire. In response Ld. AR of the assessee filed relevant information as called for. 4. After considering the submissions filed by the assessee, Assessing Officer observed that there was a substantial amount of loans appearing in the liability side of the balance sheet accordingly, he asked the assessee to prove the genuineness of the loan taken and furnish the latest address of the party mentioned in the above transaction and produce the party for cross verification. Since assessee has taken loan from M/s.Navkar Diamonds concern which is controlled by Shri Bhanwarlal Jain, in order to verify the same Assessing Officer also issued notice u/s. 133(6) of the Act dated 30.10.2015 to M/s. Navkar Diamonds and Assessing Officer received the reply. After verification of the same Assessing Officer observed as under: - 4 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain “4.1.5 Keeping in view of the above facts, details like copy of acknowledgement of Income Tax Return filed, copy of balance sheet and profit & loss account for the year, Copy of ledger Account, Copy of bank statement/passbook in respect of transactions made during the financial year 2008-09 with Shri Arvind M. Jain was called for, from M/s Navkar Diamonds vide notices U/s 133(6) of I.T.Act dated 30/10/2015 and reply was received. The followings facts emerged from the verification of replies submitted u/s 133(6) in cases of M/s Navkar Daimonds: i) The entity had carried out business of trading & Polishing of diamonds. ii) On verification of financial statements of M/s Navkar Diamonds certain characteristic features were observed in their businesses which are not possible in normal business. The same are as below: a) High Turn Over. — b) Major Portion of assets in the balance sheet comprise of Loan & advances, debtors and investments. These assets almost match the figures of their business creditors. c) The advance tax payment is very nominal despite their turn over running in to several crores. d) The entire TDS deducted on the Interest payable against their Loans & advances (including the loans given to the assessee) are claimed as Refund. e) There is hardly any own capital in the balance sheet. f) A perusal of balance sheet shows that the source of loans and advances is from the funds due to sundry creditors. Advancing loans worth crores of Rupees for years together and that too, without any security, from the source of funds payable to creditors is very unlikely in normal course of business. Thus, from the returns of income and balance sheets of these parties, the creditworthiness of the parties is not proved.” 5. Accordingly, Assessing Officer came to the conclusion that assessee has taken accommodation entries of unsecured loan and assessee has 5 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain failed to establish the identity, genuineness and creditworthiness of the party. Accordingly, he invoked provisions of section 68 of the Act and disallowed ₹.25 Lakhs. Further, Assessing Officer observed that assessee has debited interest expenditure of ₹.64,932/- towards the above unsecured loan and accordingly, he disallowed the same. 6. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and filed detailed submissions wherein assessee has raised grounds of appeal objecting reopening of assessment u/s. 148 of the Act, addition made u/s.68 of the Act and disallowance of interest expenditure. 7. Ld.CIT(A) considered the submissions of grounds of appeal raised by the assessee, Ld.CIT(A) rejected the objections raised by the assessee on reopening of assessment with the following observations: - “6.3.3 However, where the proceedings were originally completed u/s 143(1) of the Act, or where initial proceeding was completed u/s 143(3) of the Act and action u/s 147 / 148 of the Act is taken before the expiry of four years from the end of the relevant assessment year, only the first condition needs to be satisfied, as held by the Honble Apex Court in the case of Asst. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (2007) 291 ITR 500 (SC). In other words, the only condition that is to be satisfied in such cases is that the AG, for whatever reason, should have had a reason to believe that income had escaped assessment. However, where initial proceeding was completed u/s 143(3) of the Act and action u/s 147 /148 of the Act is taken after the expiry of four years from the end of the relevant assessment year, the second condition that such escapement has occurred by reason of omission or failure on the part of the assessee to disclose fully or truly material facts, must also be fulfilled. In the present case the initial proceedings were originally 6 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain completed u/S. 143(1) of the Act for AYs 2010-11. 2011-12 & 2012- 13 and thereafter, u/s 143(3/ 245D(4) of the Act, however action u/s 147/148 of the Act was taken on 20/03/2015 / 25/03/2015 i.e. before the expiry of 4 years from the relevant AY, hence only first condition needs to be satisfied for these AYs. For AY 2009-10, the assessment was completed u/s. 13(3) of the Act vide order dated 29/11/2011 and thereafter, u/s 143(3) r.w.s 147 vide order dt. 13/03/2013, hence, for AY 2009-10, both the conditions must be fulfilled. 6.3.4 The Hon'ble Apex Court in the case of Asst. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd. (Supra) has also held that "The word "reason" in the phrase "reason to believe' would mean cause or, justification. If the AC has cause or, justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot he read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion, 6.3.5 Hence, it is well settled that at the stage when reasons are recorded for reopening the assessment. .AO is not required to build a fool proof or a fort-like case for making addition to the assessee's income; all that he is required at that stage is to form a prima facie opinion or, belief that income has escaped assessment. The word 'reason" in the phrase "reason to believe' would mean cause or justification and the expression cannot be read to mean that the AC should have finally ascertained the fact by legal evidence or conclusion, as held by the Hon'ble jurisdictional High Court of Bombay in the judgement dated 18' June 2014 in the case or Nickunj Eximp Enterprises Pvt. Ltd. \/5. CIT in Writ Petition No. 2860 of 2012. The relevant extract of the decision is as under: As stated earlier that at the time of issuing a notice u/s 148 of the Act, it is not necessary for the Assessing Officer to conclusively arrive at a finding that there has been escapement of income. At the stage of issue of the notice the only requirement is to examine whether on the available material a reasonable person could form a reasonable view to believe that income chargeable to tax has escaped assessment. This satisfaction has necessarily to be the subjective satisfaction of the Assessing Officer and unless it is shown by the petitioner that such a reasonable belief as arrived at by the Assessing Officer in the facts of the case is just not possible, this Cowl will not stall proceedings for reassessment duly initiated.” 7 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain 6.3.6 Therefore, the issue to be examined at this stage is only to ascertain whether there was any material available on the record from which the requisite belief could be formed by him and further whether that material had any rational connection or a live link for the formation of the requisite belief. If there is no rational and intelligible nexus between the reasons and the belief, the conclusion would be inescapable that the AO could not have reason to believe that any part of the income of the assessee had escaped assessment, and the notice issued by him would be liable to be struck down as invalid. Thus, it is open to an assessee to establish that there exists no belief or that the belief is not at all a bona fide one or based on vague, irrelevant and nonspecific information. However, the adequacy or sufficiency of the reasons which weighed with the AO in coming to the belief, cannot be investigated, as held by the Hon'ble Supreme Court in the case of Phool Chand Bajrang Lal & Anr. vs. Income Tax Officer &Anr. (1993) 203 ITR 456: "the sufficiency of reasons for forming the belief is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non- specific information." 6.3.7 Further, every disclosure is not and cannot be treated as true and full disclosure where transaction itself, on the basis of subsequent information, is found out to be a bogus transaction. Under similar circumstances, the Hon'ble jurisdictional High Court of Bombay in the judgement dated 18' June 2014 in the case of Nickunj Eximp Enterprises Pvt. Ltd. vs. CIT in Writ Petition No. 2860 of 2012 has held that in case there is a prima facie doubt about the truthfulness and/or completeness of the disclosure at the time of original assessment in view of information obtained later the provisions cannot aid the petitioner at the stage of notice ti/s148 of the Act and the same is necessarily to be the subject matter of enquiry during the reassessment proceedings. The relevant part of the decision (Para 8) is as under: "In case there is a prima facie doubt about the truthfulness and/or completeness of the disclosure at the time of original assessment in view of information obtained later the provisions cannot aid the petitioner at the stage of notice u/s148 of the Act. It is likely that during the assessment proceedings the assessee may be able to satisfy the Assessing Officer that there was a true and full disclosure. Once the Assessing Officer has received information that invoices issued by A/1/s. Rahul Industries are bogus then the same is necessarily to be the subject matter of engulf)/ during the reassessment proceedings. The information that bills 8 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain produced were not genuine does give rise to a reasonable belief in the Mind of the Assessing Officer that income chargeable to tax has escaped assessment." 6.3.8 Further also, the reopening of assessment has been held to be permissible even when scrutiny u/s 143(3) was concluded earlier, where original assessment order passed is silent in respect of the issue/point on which re-assessment notice is issued, in the case of OPG Metals & Finsec Ltd. vs. CIT & Anr. (2013) 358 ITR 144 (Delhi) by the Hon'ble Delhi High Court and the Hon'ble Bombay High Court in the case of Export Credit Guarantee Corporation Of India Ltd. vs. Additional CIT (2013) 350 ITR 651. In the present case, the AO has not given any finding on the issue of the loans in the original assessment and new facts have emerged subsequent to the assessment u/s 143(3) of the Act. 6.3.9 It has also been held by the Hon'ble High Court of Bombay in the case of Dr. Amin's Pathology Laboratory vs. P.N. Prasad, Joint CIT & Ors. (2001) 252 ITR 673 that mere production of books of accounts, balance-sheet and P&L account will not necessarily amount to disclosure necessary for purpose of Exp.1 to sec.147 "Under Expln. 1 to the proviso, mere production of account books from which material evidence could have been discovered by the AO will not necessarily amount to disclosure within the meaning of the proviso. Therefore, mere production of the balance sheet, P&L a/c or account books will not necessarily amount to disclosure within the meaning of the proviso." 6.3.10 The facts of the present case are now tested in the light of the above background. 6.3.11 It is noticed that the assessment in the present case was reopened on the basis of information received from the office of DGIT(Inv.) that appellant had availed accommodation entry of bogus loan amounting to 25,00,000/- from M/s Navkar Diamonds, a concern controlled and managed by Sh. Bhanwarlal Jain and group, actively engaged in providing accommodation entries of bogus loans through the concerns managed by the group. Information was received from DGIT (Inv), Mumbai that a search & Seizure action u/s 132 of the Act was carried out in the case of Sh. Bhanwarlal Jain and group concerns on 03/10/2013, where it was found that Sh. Bhanwarlal Jain & his son viz. Sh. Rajesh Jain have floated various entities (Approx. 70 Benami concerns), which are engaged in the business of providing accommodation entries in the form of bogus unsecured loans, bogus purchases, bogus capital gains, etc., and the assessee is one of the beneficiaries of the bogus concerns operated 9 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain and controlled by Sh, Bhanwarlal Jain & Sh. Rajesh Jain. On going through the statement of Sh. Bhanwarlal Jain recorded u/s 132(4) in connection with the search action u/s 132 of the Act, the AO found that Sh. Bhanwarlal Jain has admitted that through various dummy director/directors on papers, he had controlled, operated and managed large number of concerns which are not carrying out any genuine business activities but are engaged in providing accommodation entries through all the concerns managed by the group. The Hon'ble High Court of Delhi in the case of Seems Jain vs. Assistant Commissioner of Income Tax (2018) 406 1TR 0411 (Delhi) wherein it was claimed that name of the petitioner is not appearing in the statement of the person who would control and manage several companies which were paper and shell companies. — has upheld the order of the Hon'ble ITAT as quoted below: "28. When a final show cause notice was issued requiring the assessee to explain as to why a sum of Rs.1 crore received from PTU be not added to the income as it was a bogus loan received from a paper company, the assessee required cross- examination of Sh. Rajendra Bubna and stated that name of PTU was not appearing in the statement of Sh. Rajendra Bubna. In our considered opinion. the Assessing Officer has rightly rejected the assessee's contentions on the ground that Sh. Rajendra Bubna was confronted with only a sample of companies and was asked to confirm if he used these companies to provide accommodation entries, which was answered by him in positive. We have noticed above that though name of the assessee company was not appearing in the list of 16 companies given on pages 3 and 4 of the assessment order having Sh. Dipak Singh as a director, but, the fact of his being a director has been proved from his signing the return of income for the year under consideration in the capacity of director. This shows that all the lists referred to in the assessment order are inclusive and the assessee cannot gain any mileage from the fact that name of PTU is not specifically depicted therein." 6.3.12 Thus, in the present case, that the AO had in his possession, information collected by Investigation Wing of the department, specially constituted for the purpose of collecting information. The data concerning the appellant was part of the information received. The information was specific and not vague. Hence, legal course of action available with the AO was to reopen the assessment proceedings following due procedure. 10 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain 6.3.13 Further, the appellant has not brought to my notice any finding of the AO in the original assessment, on the issue of the loans. New facts have emerged subsequent to the assessment u/s. 143(3) on the date of recording of reasons, new material had come on record, new information was received by the AO to initiate the reopening of the assessment. Therefore, AO on the basis of subsequent information which was specific, relevant and reliable, after recording the reasons, has rightly invoked the provisions of ss. 147 and 148. 6.3.14 Under similar circumstances, the Hon`ble Supreme Court of India in the case of Yogendrakumar Gupta v. Income-tax Officer [2014] 51 taxmann.com 383 (SC) has dismissed SLP against the order of the Hon'ble High Court of Gujarat in Yogendrakumar Gupta v. ITO[20141 46 taxmann.com 56 (Guj.) wherein it is held that where subsequent to completion of original assessment, Assessing Officer, on basis of search carried out in case of another person, came to know that loan transactions of assessee with a finance company were bogus as said company was engaged in providing accommodation entries it being a fresh information, he was justified in initiating reassessment proceeding in case of assessee. 6.3.15 Further, the Hon'ble Gujarat High Court in the case of Boghara Polyfab Pvt Ltd Vs DCIT: (Dated: February 26, 2018) [2018-TIOL- 905-HC-AHM-IT ] wherein the AO referred to the materials available with him which prima facie suggested that the assessee company had received share capital and share premium from various companies which were proved to be bogus companies engaged in providing mere accommodation entries and after analysing such materials, he came to the conclusion that share capital/share premium received by the assessee during the financial year was bogus, following the judgement of the Hon'ble Supreme Court in case of Rajesh Jhayeri Stock Brokers P. Ltd. (supra) has held that, the sufficiency of reasons cannot be gone into at this stage Thus, the Hon'ble Court ruled that It cannot be stated that the Assessing Officer did not have tangible materials at his command to form such a belief. It was held in this case as under: 26. His reference to "materials on record" must be understood in the context of facts on record. The Assessing Officer was not writing a statute. His expression therefore, cannot be seen with such rigidity. If therefore, he referred to the returns filed by the assessee and the accompanying documents as also materials received by him post acceptance of return, of course without scrutiny as "materials on record", he did not commit any legal error. He was of course, referring to the materials placed for his consideration which enabled him to form such a belief. 11 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain 27. The contention that this is a case of borrowed satisfaction also cannot be accepted. The Assessing Officer had perused the materials and analysed the same so as to come to the conclusion that prima facie it suggested that the assessee had received large number of share applications/share premiums from the companies which were bogus companies and which engaged in providing accommodation entries.” 6.3.16 Facts of the present case are identical as discussed in the earlier part of this order. Hence, I find that there was no infirmity in the procedure to reopen the assessment proceedings. 6.3.17 Consequently, the ground 1 of all the appeals are dismissed.” 8. Further, Ld.CIT(A) sustained the additions made by the Assessing Officer with regard to section 68 of the Act and disallowance u/s. 37 of the Act. 9. Aggrieved assessee is in appeal before us, raising following grounds in his appeal: - “1. On the facts and in the’ circumstances of the case and in law the Hon’ble CIT(A) erred in upholding the reopening of completed assessment made by; the Ld AO by issuing notice u/s. 148 of the IT Act 1961 and the reasons assigned for doing so are wrong and contrary to the provision of the Income Tax Act and rules made there under. 2. On the facts and in the circumstances of the case and in law the Hon’ble CIT(A) erred in upholding the addition of Rs. 25,00,000/- made by the Ld AO on account of unsecured loan as unexplained cash credit u/s. 68 and the reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under. 3. On the facts and in the’! circumstances of the case and in law the Hon’ble CIT(A) erred in upholding the addition of Rs. 64,932/- made by the Ld AO on account of interest paid on unsecured loan as non-genuine and the reason assigned for doing so are wrong and contrary to the provision of Income Tax Act and rules made there under. 12 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain 4. On the facts and in the circumstances of the case and in law the Hon’ble CIT(A) erred in upholding the penalty u/s. 271(1)(c) levied by the Ld AO and the reasons assigned for doing so are wrong and contrary to the provision of the Income Tax Act and rules made there under. 5. On the facts and in the circumstances of the case and in law the Hon’ble CIT(A) erred in upholding the interest u/s. 234B levied by the Ld AO and the reasons assigned for doing so are wrong and contrary to the provision of the Income Tax Act and rules made there under. 6. Your appellant craves leave to add to, amend alter or delete any of the above grounds of appeal on or before the date of hearing.” 10. At the time of hearing, Ld. AR of the assessee submitted that assessee has filed all the relevant information in the original assessment itself which was completed u/s. 143(3) of the Act and duly accepted by the Assessing Officer. He submitted that the Assessing Officer reopened the assessment u/s. 147 of the Act based on the information received from DGIT (Investigation) and relying on the statement given by the Shri Bhanwarlal Jain. He submitted that in order to verify the transactions Assessing Officer issued notice u/s. 133(6) of the Act and all the informations were submitted by M/s. Navkar Diamonds before the Assessing Officer and he submitted that the transaction of unsecured loans taken by the assessee is genuine. In this regard he submitted that on similar facts and situation, in assessee’s brother case in M/s.Indravadan Hanjarimal Jain v. ACIT in ITA.No. 278 to 282/Mum/2022 dated 08.09.2021 ITAT has passed the order in favour of the assessee. 13 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain He submitted that ITAT has considered the similar facts and decided the issue in favour of the assessee. 11. On the other hand, Ld.DR submitted that Assessing Officer had reason to believe that income has escaped assessment and accordingly he reopened the assessment based on the information that the concerns in which assessee has taken unsecured loans which is controlled by Shri Bhanwarlal Jain. In this regard he brought to our notice Page No. 5 of the Assessment Order and submitted that assessee has not proved creditworthiness of this party which is clearly brought on record by the Assessing Officer. Further, he brought to our notice Page No. 16 of the Ld.CIT(A) order and conclusion of Ld.CIT(A) in Page No. 21 of the order to submit that the transaction is accommodation entry. He objected to the decision relied by the Ld.AR and submitted that the facts in the above case are different and submitted that facts are distinguishable to the present case. 12. Considered the rival submissions and material placed on record, we observed that assessee has taken unsecured loan from M/s. Navkar Diamonds and paid relevant interest to them. The Assessing Officer based on the information from investigation wing, reopened the assessment and 14 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain based on the statement given by Shri Bhanwarlal Jain he made certain enquiries before the assessee as well as unsecured loan creditor by issuing relevant notices and came to the conclusion that this transaction is accommodation entry and assessee has not proved the genuineness and creditworthiness of the transactions. We observed that in the case of M/s. Indravadan Hanjarimal Jain v. ACIT (supra) the Coordinate Bench has considered the similar issue and it has held as under: - “7. After hearing the rival contentions of both the parties and perusing the material on record, we find that in this case the assessee has taken unsecured loans from four parties related to Bhanwarlal Jain group. The AO made the addition by doubting the genuineness of the loan transactions by citing the reason that a search on Bhanwarlal Jain and related parties has revealed that the entire group was engaged in advancing tax accommodation entries without doing any real business which has affirmed by Ld. CIT(A) by observing that retraction of statement recorded during the course under section 132(4) of the Act can not be sole basis to treat the transaction as genuine. Undisputedly, the assessee during the course of assessment proceedings filed copy of ITRs, balance sheet, profit and loss account, confirmations and proof of receipt of payment through banking channel along with the evidence of payment of interest at the rate of 12% after deduction of TDS at source. We observe from the records before us that AO has not carried out any further verification and relied on the report of the DGIT(Inv.), Mumbai that assessee is beneficiary of accommodation entries without carrying on any further investigation. We note that the statement taken during the course of search has been retracted in which it has been admitted that Bhanwarlal Jain and related entities were engaged in accommodation entries in the form of unsecured loans of short term and long term capital gain and share capital etc. We also observe from the facts before us that the assessee has filed various evidences before the lower authorities however no further enquiries have been conducted by the AO or ld CIT(A) to dig out the truth or t disapprove the evidences filed. Both the authorities below have heavily relied on the statements recorded during search of Shri Bhanwar lal Lain and other persons without any corroborating evidences. The case of the assessee find s support from the following decisions: 15 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain a) In the case of M/s. Pabal Housing Pvt. Ltd. & ors vs DCIT (ITA No.2687, 2688 & 2689/M/2018) & ors. the coordinate Bench has held that assessee has discharged the initial burden by filing various documents to prove the identity, creditworthiness of the parties and genuineness of the transactions. Whereas the AO has not made any further investigations or enquiries or brought on record any other evidences which proved otherwise. The operative part of the decision is as under: “11. We have heard both the parties, perused the material available on record and gone ground through the orders of authorities below. The solitary issue that needs to be resolved under given facts and circumstances of this case is whether unsecured loans taken from certain companies controlled and managed by Shri Bhanwarlal Jain is unexplained cash credit, which comes under the provisions of section 68 of the Act or not. The AO has made additions of Rs.10,45,00,000/- towards unsecured loans taken from certain companies controlled and managed by Shri Bhanwarlal Jain u/s 68 of the Act, on the ground that the assessee has failed to file necessary documents in order to prove identity, genuineness of transactions and creditworthiness of the parties. The AO has extensively discussed the issue in his assessment order in light of facts gather during the course of search in case of Bhanwarlal Jain group of cases and survey in the case of assessee’s group concern. Accordingly, the AO, opined that although the assessee has furnished various documents including confirmations from the loan creditors and their ITR acknowledgment, but failed to prove the genuineness of transactions and creditworthiness of the parties in order to come out the provisions of section 68 of the Act. The AO further was of the opinion that mere furnishing certain paper documents is not sufficient enough in light of various facts gathered by the department during the course of search. The AO further was of the opinion that payment through proper banking channel and interest payment to those unsecured loans is not sacrosanct because all these shell companies/hawala operators would keep necessary paper document in order to give colour of genuineness to their transactions. Therefore, he opined that the transactions between 16 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain the parties are failed to pass the test of genuineness and accordingly made additions u/s 68 of the Act. 12. The provisions of section 68 of the Act deals with the cases, where any sum found credited in the books of account of the assessee in any Financial Year, and the assessee offers no explanation about the nature and source thereof or explanation offered by the assessee is not in the opinion of the AO satisfactory, then the sum so credited may be charged to income tax as the income of the assessee of that previous year. A plain reading of section 68 makes it very clear that in order to fix any credit within the ambit of section 68 of the Act, the AO needs to examine three ingredients i.e. identity, genuineness of transactions and creditworthiness of the parties. If the assessee proves all ingredients provided u/s 68 of the Act, then the onus shifts to the AO to prove otherwise. In this legal background, if you examine the identity of the assessee in light of findings recorded by the AO in his assessment order, one has to examine whether the assessee has discharged burden caste upon it u/s 68 of the Act in respect of unsecured loan received from certain companies controlled and managed by Shri Bhanwarlal Jain. The AO never disputed the fact that the assessee furnished various evidences to prove identity of the loan creditors. The AO has categorically admitted that the assessee has filed various details including PAN Card, ITR acknowledgment, financial statements, bank statements, confirmation letters and affidavit from the parties from whom loan has been taken. The AO has disputed the genuineness of transactions and creditworthiness of the parties. The sole basis for the AO to doubt the genuineness of transaction is search conducted in the cases of Bhanwarlal Jain by the DGIT(Inv.), Mumbai unit, where certain incriminating material found and seized as per which Bhanwarlal Jain and his associates were involved in providing accommodation entries and the assessee is one of the beneficiaries of such accommodation entries. The AO has taken note of statement recorded by the department from Shri Bhanwarlal Jain and his associates. The AO has taken note to survey proceedings conducted in the group cases of assessee and statement recorded from directors and employees of the assessee group cases. Except this, no contrary evidences has been brought 17 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain on record by the AO to disprove the claim of the assessee that these are genuine transactions and unsecured loan taken under normal business circumstances. Therefore, under these factual matrix, we have to examine whether the credits found in the books of accounts of the assessee are hit by the provisions of section 68 of the Act or not. The sole basis for the AO to make additions is statement of Shri Bhanwarlal Jain recorded u/s 132(4) of the Act, where he was admitted that he is involved in providing bogus unsecured loans entries to various beneficiaries. The statement given by Shri Bhanwarla Jain has been retracted by himself by filing affidavits before the income tax authorities. Therefore, there is no reason for the AO to go only on the basis of statement of Shri Bhanwarlal Jain so as to treat unsecured loan taken by the assessee from the firm and companies controlled and managed by Shri Bhanwarlal Jain and his associates. 13. Having said so, let us examine what is the basis for the AO to arrive at conclusion that the transactions between the parties are not genuine and which are hit by the provisions of section 68 of the Act. The AO never brought out any further facts to link credits found in the books of accounts of the assessee to the evidences found during the course of search in the case of Shri Bhanwaral Jain except statement of Shri Bhanwaral Jain. Even during the course of survey in group cases of assessee, no incriminating material was found which can be linked to evidences collected during the course of search in case of Shri Bhanwarlal Jain. Further, during the course of survey in assessee’s group cases, the directors and employees have categorically admitted that they have personally visited office of Shri Bhanwarlal Jain Group Companies for arranging loans. The AO did not controvert this fact by bringing any other evidences. On the other hand, the assessee has filed complete details including confirmations from loan creditors, their PAN details, master data, affidavit from the directors/partners/proprietors of those companies, income tax acknowledgments receipts along with financial statements, bank statements of loan creditors in order to prove the identity, genuineness of transaction and creditworthiness of the parties.. We, further, noted that all these loans have been 18 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain taken through proper banking channels. The assessee has paid interest after deducting applicable TDS as per the law. These loans have been repaid during next financial year. All these documents are part of assessment proceedings. The AO has never disputed these factual aspects. Therefore, once the assessee has discharged its initial burden by filing necessary evidences in order to prove identity, genuineness of transactions and creditworthiness of the parties, then there is no reason for AO to suspect the transactions between the parties only on the ground that the person who gave unsecured loan had admitted in his statement u/s 132(4) of the Act that these transactions are accommodation entries, more particularly when the person who gave the statement retracted his statement by filing affidavit. Further, the AO failed to carry out further enquiries in light of evidences gathered during the course of search and survey to establish the fact that in fact these transactions are non-genuine, but merely relied upon the statement of Shri Bhanwarlal Jain to make additions u/s 68 of the Act. No doubt, the AO is having every right to suspect the transactions but, that by itself would not give rise an occasion for the AO to make additions u/s 68 of the Act, when the evidences filed by the assessee clearly proves the facts that these transactions were genuine transactions which are undertaken under normal commercial business circumstances. Therefore, we are of the considered view that the AO was erred in making additions towards unsecured loan taken from companies controlled and managed by Shri Bhanwarlal Jain u/s 68 of the Act. 14. Coming to the cases relied upon by the assessee, the assessee has relied upon various judicial precedence including the decision of the Hon’ble Supreme Court in the case of CIT vs Lovely Export Pvt. Ltd. (2008) 216 CTR 195. The case laws relied upon by the assessee has been dealt as under:- CIT vs. Goa Sponge and Power Ltd (13/02/2012) Tax Appeal No. 16 of 2012 (High Court-Bombay) "Once the authorities have got all the details, including the name and addresses of the shareholders, their PAN/GIR number, so also the name of the Bank from which the alleged investors received money as share 19 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain application, then, it cannot be termed as "bogus". The controversy is covered by the judgements rendered b y the Hon'ble Supreme Court in the case of Lovely Exports Pvt Ltd, vs. CIT, (2008) 216 CTR (SC) 195, as also by this Court in CIT vs. Creative World Tele films Ltd, (2011) 333 ITR 100 (Bom). In such circumstances, we are of the view that the Tribunal's finding that there is no justification in the addition made under Section 68 of the Income Tax Act,, 1961 neither suffers from any perversity nor gives rise to any substantial question of law." CIT vs. Creative World Tele films Ltd (2011) 333 ITR 100 (Born-High Court) "The question sought to be raised in the appeal was also raised before the Tribunal and the Tribunal was pleased to follow the judgment of the apex Court in the case of CIT vs. Lovely Exports (P) Ltd. (2008) 216 CTR (SC) 195. wherein the apex Court observed that if the share application money is received by the assessee-company from alleged bogus shareholders, w hose names are given to the AO, then the Department can always proceed against them and if necessary reopen their individual assessments. In the case in hand, it is not disputed that the assessee had given the details of name and address of the shareholder, their PAN/GIR number and had also given the cheque number, name of the bank. It was expected on the part of the AO to make proper investigation and reach the shareholders. The AO did nothing except issuing summons which were ultimately returned back with an endorsement "not traceable In our considered view, the AO ought to have found out their details through PAN cards, bank account details or from their bankers so as to reach the shareholders since all the relevant material details and particulars were given by the assessee to the AO. In the above circumstances, the view taken by the Tribunal cannot be faulted." CIT vs. Lovely Exports (P) Ltd (2008) 216 CTR 195 (SC) "If the share application money is received by the assessee company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their 20 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain individual assessments in accordance with law, but it cannot be regarded as undisclosed income of assessee company." CIT vs. Steller Investment Ltd (2001) 251 ITR 263 (SC) (civil appeal) "That the increase in subscribed capital of the respondent company could not be a device of converting black money into white with the help of formation of an investment company, on the round that, even if it be assumed that the subscribers to the increased capital were not genuine, tinder no circumstances could the amount of share capital be regarded as un disclosed income, an appeal was taken by the Department to the Supreme Court. The Supreme Court dismissed the appeal holding that the Tribunal had come to a conclusion on facts and no interference was called for." CIT vs. Nav Bharat Duolex Ltd (2013) 35 Taxmann.com289 (All-High Court) "We have considered the arguments of the counsel for the parties. CIT(A) found that five companies subscribing the equity shares amounting to Rs. 25,00.000/- were identified and they had submitted their bank statements, cash extracts and returns filing receipts. As such identity of the share applicant companies and purchase of share had been proved by the assessee. Supreme Court in the cases of CIT v. Steller Investments Ltd. [2001] 251 ITR 263 and Lovely Exports case (supra), has held that the identity of the shareholder alone is required to be proved, in case of the capital contributed by the shareholders. Accordingly CIT(A) and the Tribunal has not committed any illegality in allowing the appeal of the assessee. We do not find any illegality in the judgment of the CIT(A) and the Tribunal." CIT vs. JayDee Securities & Finance Ltd (2013) 32 Taxmann.com91 (AllHigh Court) "The Tribunal recorded findings that the assessee had produced the return of income filed by the relevant shareholders who had paid share application money. The assessee had also produced the confirmation of share holders indicating the details of addresses, PAN 21 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain and particulars of cheques through which the amount was paid towards the share application money. The Tribunal thereafter relied upon the judgment of the Supreme Court in CIT V. Lovely Exports (P.) Ltd wherein it was held that if the assessee produces the names, addresses, PAN details of the share holders then the onus on the assessee to prove the source o f share application money stands discharged. If the Assessing Authority was not satisfied with the creditworthiness of the shareholders, it was open to the Assessing Authority to verify the same in the hands of the shareholders concerned, The Tribunal has relied upon an order of the Supreme Court in case o f CIT v. Divine Leasing & Finance Ltd. In view of the decision 'of the Supreme Court, we dismiss the appeals with observations that the department is free to proceed to reopen their individual assessments of the shareholders whose names and details were given to the Assessing Officer." ACIT vs. Venkateshwarlspat Pvt Ltd (2009) 319 ITR 393 (ChhatisgarhHigh Court) "If the share applications are received by the assessee from alleged bogus shareholders, whose names are given to the Assessing Officer, then the Department is free to proceed to reopen their individual assessments in accordance with law, but it cannot be regarded as the undisclosed income of the assessee." Mod Creations Pvt Ltd vs. /TO (2013) 354 ITR 282 (Del-High Court) "Held, allowing the appeal, (i) that the assessee had discharged the initial onus placed on it. In the event the Revenue still had a doubt with regard to the genuineness of the transactions in issue or as regards the creditworthiness of the creditors, it would have had to discharge the onus which had shifted on to it. A bald assertion by the Assessing Officer that the credits were a circular route adopted by the assessee to plough back its own undisclosed income into its accounts, could be of n o avail. The Revenue was required to prove this allegation. An allegation by itself which is based on assumption will not pass muster in law. The Revenue would be required to bridge the gap between the suspicions and proof in order to bring home this allegation. The Tribunal without adverting 22 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain to the principle laid stress on the fact that despite opportunities, the assessee and/or the creditors had not proved the genuineness of the transaction. Based on this it construed the intentions of the assessee as being mala fide. The Tribunal ought to have analysed the material rather than be burdened by the fact that some of the creditors had chosen not to make a personal appearance before the Assessing Officer. If the Assessing Officer had any doubt about the material placed on record, which was largely bank statements of the creditors and their income-tax returns, it could gather the nece sary information from the sources to which the information was attributable......If it had any doubts with regard to their creditworthiness, the Revenue could always bring the sum in question to tax in the hands of the creditors or sub- creditors." CIT vs. Al Anam Agro Foods (P.) Ltd (2013) 38 Taxmann.corn 375 (AllHigh Court) Tribunal, h o we v e r , h e ld that since identity o f s h a r e h o ld e r s s to o d p r o v e d o n record, amount of share application money could not be added to income of assessee. According to Tribunal, in such a case amount could be taxed in hands of persons who had invested" CIT vs. Dwarkadhish Investment (P) Ltd (2011) 330 ITR 298 (Del-High Court) "Just because the creditors/share applicants could not be found at the address given, it would not give the Revenue the right to invoke s. 68— Revenue has all the power and wherewithal to trace any person— Moreover, it is settled law that the assessee need not to prove the 'source of source'— In the instant case, the Tribunal has confirmed the order of the CIT(A) deleting the impugned addition holding that the assessee has been able to prove the identity of the share applicants and the share application money has been received by way of account payee cheques." CIT vs. Namastey Chemicals Pvt Ltd (2013) 33 Taxmann.com271 (GujHigh Court) "In the present case also, the respondent assessee has received share application money from different 23 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain sub scribers. It was found that large number of subscribers had responded to the letters issued by the Assessing Officer or summons issued by him and submitted their affidavits. In so me cases such replies were not received through posts. Rs. 9 lacs represented those assessees who denied having made any investment altogether. The issue thus would fall squarely within the ambit of the judgment of the Supreme court in the case of Lovely Exports (supra). No error of law can be stated to have been committed by the Tribunal. Tax Appeal is therefore dismissed." CIT vs. Peoples General Hospital Ltd (2013) 356 ITR 65 (MP-High Court) " Held , dismissing the appeals , that it the assessee had received subscriptions to the public or rights issue through banking channels and furnished complete details of the shareholders, no addition could be made tinder section 68 of the Income-tax Act, 1961, in the absence of any positive material or evidence to indicate that the shareholders were benamidars or fictitious persons or that any part o f the share capital represented the company's own income from undisclosed sources. It was nobody's case that the non-resident Indian company was a bogus or non- existent company or that the amount subscribed by the company by way of share subscription was in fact the money of the assessee. The assessee had established the identity of the investor who had provided the share subscription an d that the transaction was genuine. Though the assessee's contention was that the creditworthiness of the creditor was also established, in this case, the establishment of the identity of the investor alone was to be seen. Thus, the addition was rightly deleted." CIT vs. Shree Rama Multi Tech Ltd (2013) 34 Taxmann.com177 (Guj-HC) "It is noted that Commissioner (Appeals) as well as the Tribunal have duly considered issue and having found complete details of the receipts of share application money, alongwith the form names and addresses, PAN and other requisite details, they found complete absence of the grounds noted for invoking the provision of section 68. Moreover, both rightly had applied the decision of CIT vs. Lovely Exports (P) Ltd 24 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain to the case of the assessee. Therefore, no reason was found in absence of any illegality much less any perversity too to interfere with the order of the both these authorities, who had concurrently held the due details having been proved. The assessee company had presented the necessary worth proof before both the authorities and it was not expected by the assessee company to further prove the source of the deceased." CIT vs. Nikunj Eximp Enterprises (P.) Ltd (2013) 35 Taxrnann.com384 (Bom) "Whether merely because suppliers had not appeared before Assessing Officer or Commissioner (Appeals), it cou ld not be concluded that purchases were not made by assessee - Held, Yes.... Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were in fact made. In our view, merely because the suppliers have not appeared before the Assessing Officer or the CIT(A), one cannot conclude that the purchases were not made by the respondent- assessee" CIT vs. Samir Bio- Tech Pvt Ltd (2010) 325 ITR 294 (Del-High Court) "Identities of the subscribers are not in doubt. The transactions have also been undertaken through banking channels inasmuch as the application money for the shares was given through account payee cheques. The creditworthiness has also been established, as indicated by the Tribunal. The subscribers have given their complete details with regard to their tax returns and assessments. In these circumstances, the Department could not draw an adverse inference against the assessee only because the sub scribers did not initially respond to the summons. The subscribers, however, subsequently gave their confirmation letters as would be apparent from the impugned order. The identity of the subscribers stands established and it is also a fact that they have shown the said amounts in their audited balance sheets and have also filed returns before the IT authorities. The decision of the Tribunal deleting the addition cannot befaulted.” 15. The assessee has also relied upon various decision of the Co-ordinate Bench of ITAT, Mumbai. We find that the coordinate Bench of ITAT Mumbai, in number of cases has 25 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain considered an identical issue in light of search and seizure operations as well as survey conducted by the department in light of statement of Shri Bhanwarlal Jain recorded during the course of search u/s 132(4) of the Act. The Tribunal after considering the relevant facts and also considering the retracted statements filed by Shri Bhanwarlal Jain came to the conclusion that one documents filed by the assessee to prove the identity, genuineness of transactions and creditworthiness of the parties are clearly established the fact that the transactions between the parties are genuine which are undertaken under normal commercial business, no reason for the AO to make additions u/s 68 of the Act. 16. We further noted that in most of the cases, the Tribunal has considered the companies controlled and operated by Shri Bhanwarlal Jain in light of observations made by the AO to make addition u/s 68 of the Act. We further noted that the Coordinate Bench of ITAT, Mumbai, in the case of Shri Sumit J. Jain vs ACIT in ITA No.145/Mum/2017 had an occasion to consider identical issue in light of unsecured loans taken from companies controlled and managed by Shri Bhanwarlal Jain. The Coordinate Bench, after considering the relevant facts, has held that when assessee has filed various documents to prove three ingredients provided u/s 68 of the Act, there is no reason for the AO to make additions towards u/s 68 of the Act only on the basis of statement of Shri Bhanwarlal Jain. The relevant findings of the Tribunal are as under:- “3. I have considered the rival submissions and perused the material available on record. The facts in brief are that the assessee an individual engaged in the business of builder and developer declared loss of Rs. 1,29,68,736 in his return on 15.09.2009. The assessment was completed u/s 143(3) of the Act on 30.11.2011 assessing the loss at Rs. 1,13,73,448. The assessee carried the matter in appeal before the learned CIT(A) wherein vide order dated 03.02.2014, part relief was granted to the assessee. Later on, the case of the assessee was reopened u/s 147 on the basis of information that the assessee has received accommodation entry of unsecured loan from M/s. Laxmi Trading Company, M/s. Mouli Gems, M/s. Minal Gems, M/s. Naman Exports and M/s. Prime Star, pertaining to Bhawarlal Jain Group. As per the assessee, during the assessment proceedings, documentary evidences pertaining to loan from aforementioned parties like confirmation, bank 26 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain statement and acknowledgment of return of income of loan, bank statement of the assessee reflecting the amounts and genuineness of transactions were filed. However, the learned Assessing Officer treated the loan as unexplained cash credit on the plea that the assessee could not produce the parties. Thereafter, the learned Assessing Officer computed the peak of unsecure loan amounting to Rs. 1,91,00,000 and made addition of Rs. 40,00,000 u/s 68 of the Act. On appeal, before the learned CIT(A), the addition so made was directed to be deleted. The assessee is in appeal before the Tribunal. 4. If the observations made in the assessment order leading to the addition and the conclusion arrived at in the impugned order, if kept in juxtaposition, and analysed there is a factual finding in Para-5.3 that the assessee discharged the primary onus as the lender had responded to notices issued u/s 133(6) of the Act confirming the transaction. The learned Assessing Officer did not controvert the claim of the assessee. The loans were taken through banking channel and the receipt of taking the loan has been duly examined in Para-5.3 (Page-13) of the impugned order. The loans were duly reflected in the loans and advances column in the Balance Sheet and there is further factual recording that there was neither any cash deposit nor any withdrawal in any bank account castigating the same as accommodation entries. It is further noted that the assessee duly paid the interest on the loan amount and deducted. Copy of Form no.16A was also filed and the learned Assessing Officer has not brought on record any evidence / reason to disbelieve the evidence filed by the assessee. I am satisfied with the reasoning of the learned CIT(A) that the addition was merely made on the basis of presumption that all the five concerns from whom loan was taken were managed and controlled by Shri Bhawarlal Jain. The statement was also recorded wherein there is no mention that any accommodation entry was obtained. Rather, the case of the assessee is fortified by the reply to question no.40 and 41 wherein it has been tendered that the loan was advanced and interest @ 9% p.a. was charged. The name of the assessee is nowhere mentioned in the list of suspicious dealer / person. Thus, I find no infirmity in the conclusion of the 27 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain learned CIT(A), resulting into dismissal of the impugned ground raised by the Revenue. 5. The next ground pertained to deletion of addition of Rs. 5,78,278, made on account of interest expenditure on alleged bogus loans. The learned D.R. defended the addition, whereas, the learned Counsel for the assessee invited my attention to the finding recorded in Para-6.1 of the impugned order. On a perusal of record and the assertions made by the respective Counsels. There is a finding in the impugned order that the assessee duly produced the bank statement from where interests were paid also copies of form no.16A evidencing the TDS made and deposited into the Government account with respect to payment of interest. Since in earlier paras of this order since I have upheld the order of the learned CIT(A), therefore, the issue of interest is consequential in nature, therefore, the conclusion drawn in the impugned order is upheld.” 17. Coming to the cases relied upon by the Ld. DR in light of various case laws discussed by the AO as well as the Ld. CIT(A). We have considered the cases relied upon by the Ld. DR as well as the Ld. CIT(A) in light of facts of present case and we found that the case laws considered by lower authorities were rendered under different set of facts which cannot be applied to the facts of the present case. Accordingly, the cases relied upon by the Ld. DR are rejected. 18. In this view of the matter and considering the ratio of case laws discussed hereinabove, we are of the considered view that the assessee has discharged initial burden by filing various documents to prove identity, genuineness of transactions and creditworthiness of the parties. Therefore, we are of the considered view that the AO was erred in making additions towards unsecured loan u/s 68 of the Act. The Ld. CIT(A) without appreciating these facts simply confirmed the addition made by the AO. Hence, we reverse the findings of the Ld. CIT(A) and direct the AO to delete the additions made towards unsecured loans u/s 68 of the Act.” (b) In the case of ITO vs. Abhay Kumar Daga HUF ITA No.6983/M/2018 the Tribunal has held as under: “4. We have heard the rival contentions and gone through the fact and circumstances of the case. The assessee has complied with the basic conditions of the provision of 68 by 28 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain submitting the confirmations of loan, copies of the Bank Statements and Copies of Income Tax Return of these four loan creditors. We noted from the assessment order that although the Assessing Officer has written a very elaborate order but he has missed the basic three ingredients of the provision of section 68 of the Act. Hence, not carried any enquiry qua these three conditions rather he mainly relied on the search conducted in the case of Bhawarlal Jain Group of cases. It is also not clear from the assessment order whether these loan parties are genuine or non-genuine and the amount received are unexplained but how. It is a fact that the assessee has discharged its primary onus by filing all these documents which the Assessing Officer should have verified and examined these parties. Even now before us, the learned Sr. DR could not controvert the basic facts of the case except relying on the case law of Pawankumer M Sanghvi vs. ITdo in ITA No. 2447/Ahd/2016 and Pr. CIT vs. NRA Iron & Steel (P) Ltd. (2019) 110 taxmann.com 491 (SC). Without pointing out the factual aspect of this case, we cannot take it as legal proposition laid down in the given facts. Hence, we are of the view that there is no infirmity in the order of the CIT(A) and hence, we confirm the same. The appeal of Revenue on this issue is dismissed. (c) In the case of DCIT vs. 4. DCIT vs.M/s. Jainam Investments (ITA No.6099/M/2016)the Tribunal has held as under: “17. There should not be any dispute that the initial burden to prove the cash credits is placed upon the shoulders of the assessee. It has been held by Honourable Courts that the initial burden shall be discharged, if the assessee proves three main ingredients, viz., the identity of the creditor, the creditworthiness of the creditor and genuineness of the transactions. If the assessee has discharged the initial onus, then the onus to disprove the same is shifted to the shoulders of the assessing officer. These legal principles have been reiterated in the cases of Bhan & sons (supra) and M/s Precision Finance P Ltd (supra), which were referred to by Ld CIT-DR. In the instant case, there is no dispute that the assessee has discharged the initial burden of proof placed upon it by furnishing all the materials to prove the three main ingredients, referred above. Hence the burden has shifted to the shoulders of the assessing officer to disprove the evidences furnished by the assessee. We notice that the assessing officer, in the instant case, did not conduct further enquiries or bring any material on record to discharge the burden shifted upon his shoulders. Instead, we notice that the 29 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain assessing officer has simply placed reliance on the alleged incriminating materials found in the course of search conducted in the hands of Shri Bhanwarlal Jain and his group and also upon the sworn statements given by them. 18. The Ld CIT-DR, by placing reliance on the decision rendered by Hon’ble Delhi High Courts in the cases of Jansampark Advertisement and marketing (supra) and Bikram singh (supra), contended that the appellate authorities are duty bound to conduct further enquiries, if there is deficiency in the enquiry conducted by the AO. However, in the instant case, we notice that the addition has been made u/s 68 of the Act and the assessee has discharged the onus placed upon him under that section. On the contrary, the assessing officer did not bring any material on record to show that the various evidences furnished by the assessee are not reliable and instead rested fully upon the Sworn Statements and the alleged incriminating materials. Hence, in our view, the question of deficiency in the enquiry of the AO does not arise in the instant case. 19. The Ld DR also placed reliance on the decision rendered by Hon’ble Supreme Court in the case of Sumati Dayal (supra) and Durgaprasad More (supra) to contend that the surrounding circumstances and human probabilities should also be taken into consideration by the tax authorities. He contended that these loan transactions are deceptive transactions. There should not be any doubt with this proposition of law. In the instant case, the Ld CIT(A), as well as the Tribunal in the case of Vama International (supra) has observed that the sworn statements given by Shri Bhanwarlal Jain and others have been retracted. The question whether the revenue is entitled to place reliance on the retracted statements remains unanswered. Further, the assessing officer has placed reliance on the various observations made by the search officials like, sharing of common address by various concerns, inducting employees as directors etc., to come to the conclusion that these transactions are bogus in nature. We notice that the search officials have only drawn adverse inferences on the basis of information gathered by them and it is the duty of the assessing officer to substantiate those inferences by bringing corroborative materials. The Ld CIT-DR has reiterated these inferences as surrounding circumstances. However the moot point that remains is whether the assessing officer could disprove the material evidences furnished by the assessee to prove the cash credits? The various evidences furnished by the assessee, in 30 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain fact, disprove the inferences drawn by the search officials. When the assessing officer could not disprove the material evidences furnished by the assessee, in our view, he is not entitled to place full reliance on the inferences drawn by the search officials, particularly the assessee could rebut those presumptions drawn by the search officials. Though the sworn statement given by Shri Bhanwarlal Jain may be a relevant piece of evidence, yet it is stated that the said statement has been retracted. Further the AO has not shown that the transactions entered by the assessee with the group of Shri Bhanwarlal Jain were examined by the search officials and he has deposed against the transactions entered between him and the assessee. On the contrary, the Ld CIT(A) has given a finding that the impugned loan transactions have not been specifically stated to be bogus in nature. The key person of the assessee has reiterated in his statement taken from him during the course of survey that the loan transactions are genuine. When it was pointed out that Shri Bhanwarlal Jain has admitted the bogus nature of transactions, the key person has specifically stated that the said admission related to the sale of diamonds and further specifically stated that the loan transactions are not covered in the statement. Hence the Ld CIT(A) was right in observing that the impugned loan transactions have not been specifically covered by the statement given by Shri Bhanwarlal Jain. Hence in our view, the theory of human probabilities and surrounding circumstances need not be applied in this case. 20. It is a fact that the revenue has conducted survey operations in the hands of the assessee and they did not find any incriminating material concerning these loan transactions at the time of survey. There is also no evidence to show that the cash equivalent to the loan transactions has been given by the assessee to various lenders. 21. The Ld A.R placed his reliance on the decision rendered by Hon’ble Supreme Court in the case of Kishinchand Chellaram (supra) in order to contend that the AO could not have used the materials, which were not put to the assessee. In the instant case, we notice that the assessee has specifically requested the AO twice to give the materials that were relied upon by the assessing officer to take adverse view. Despite the request so made, the AO has not furnished copies of materials to the assessee. Hence, as per the decision rendered by Hon’ble Supreme Court in the above said case, the AO could not have placed his reliance on those materials, which were not confronted with the assessee. 31 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain 22. The assessee has also asked for copies of sworn statements given by Shri Bhanwarlal Jain and others. The assessee also asked for an opportunity to cross examine them. However, the AO has failed to furnish copies of sworn statements and also did not afford opportunity to cross examine the deponents. Hence the decision rendered by Hon’ble Supreme Court in the case of Andaman Timer Industries (supra) goes in favour of the assessee and accordingly the Ld CIT(A) was justified in placing reliance on the same and holding that the impugned additions are not justified. 23. We notice that the assessee has specifically asked the AO to issue summons to the loan creditors, but the assessing officer has failed to do the same. It is pertinent to note that the assessee has so requested the AO, even after discharging the initial burden of proof by furnishing all the relevant details available with it. In the case of Orissa Corporation P Ltd (supra), the assessee furnished available details and then requested the AO to issue summons to the creditors, since it could not collect further details from them. The AO failed to do so and hence the Hon’ble Supreme Court held that the addition made u/s 68 is not justified. The assessee herein, in our view, stand on a stronger footing. The assessee has furnished all the relevant details, which has been summarized by the Ld CIT(A) in paragraph 6.3.31 of his order as under:- “6.3.31 In the case before me, the record also shows that to prove the genuineness of the impugned loan entries from the 17 creditors, the appellant has furnished to the Assessing Officer the following details copies of which were also furnished in the present proceedings: I. PAN details of creditors II. Constitution and address of the creditors III. Particulars of income-tax returns filed by the creditors [These show that the creditors are legitimate business entities, having the ability to advance the impugned loans to the appellant.] IV. Confirmatory letters given by the creditors " V. Audited financial accounts (including balance sheets) of the creditors [These show that the loans are duly reflected in the books of account of the creditors.] 32 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain VI. Relevant bank statements of the creditors [These show that the loan amounts were paid through legitimate banking channels. Further these bank statements do not reflect any movement of cash, essential to hawala transactions.] VII. Details of interest paid to the creditors VIII. Details of TDS deducted and paid”. Even though the assessing officer did not find any fault with these documents, still the assessee has requested the AO to issue summons to these parties. As stated earlier, the assessing officer did not issue summons and instead relied upon the inferences drawn by the search officials. Hence, in our view, the decision rendered by Hon’ble Supreme Court in the case of Orissa Corporation (P) Ltd (supra) will also come to the support of the assessee. 24. We notice from the operative portion of the order passed by Ld CIT(A) that the first appellate authority has placed reliance on various other case laws also. In effect, the Ld CIT(A) has examined the documents furnished by the assessee and has held that the assessee has discharged the initial burden of proof placed upon it u/s 68 of the Act. He has also held that the non-furnishing of documents relied upon by the AO and non-providing of opportunity to cross examine the Shri Bhanwarlal Jain and others would make the addition to fail. Even in respect of documents relied upon by the AO, the Ld CIT(A) has found the same to be inadequate to warrant the additions made u/s 68 of the Act. Hence, we are of the view that the Ld CIT(A) has passed a reasoned order by considering the facts of the case, applicable case laws and has taken a justifiable view in this matter. Hence we do not find any infirmity in the order passed by Ld CIT(A). Accordingly we confirm the order passed by Ld CIT(A) in deleting the addition of Rs.24.75 crores made u/s 68 of the Act.” 8. In view of these facts, we are not in concurrence with the finding of the Ld. CIT(A) and accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the addition. Ground no. 2 is allowed. 9. The issue raised in ground No.3 is against the confirmation of disallowance of interest of Rs.6,55,834/- by Ld. CIT(A) as disallowed by the AO on the unsecured loan by treating the same as non genuine. Since we have already allowed the ground No.2 by reversing the order of Ld. CIT(A), therefore this ground being consequential in nature and accordingly ground no. 3 is allowed in favour of the assessee.” 33 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain 13. Respectfully following the above said decision, only distinguishable point is, in the above case, Assessing Officer has not issued any summons to parties, whereas in the given case Assessing Officer has issued notice u/s. 133(6) of the Act and received the response. Therefore, we are inclined to set-aside the order of the Ld.CIT(A) and direct the Assessing Officer to delete the addition. 14. Coming to the appeals relating to A.Ys. 2010-11, 2011-12 and 2012-13, since facts in these cases are mutatis mutandis, therefore the decision taken in A.Y. 2009-10 is applicable to these Assessment Years also. Accordingly, these appeals are allowed. 15. In the result, all the appeals filed by the assessee are allowed. Order pronounced in the open court on 29.03.2022. Sd/- Sd/- (AMARJIT SINGH) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 29.03.2022 Giridhar, Sr.PS 34 ITA NOs. 267, 268, 269 & 270/MUM/2020 Aravind Hanjarimal Jain Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum