SHREE SHANKAR SAREES, MUMBAI V. ITO 18 (3)(3), MUMBAI

ITA 2751/MUM/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5357 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Keywords: Unexplained cash credit; Tangible material; Difference of opinion; Accommodation entries; Reason to believe; Change of opinion; TDS; Set aside
• Section: 143(3); 147; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 2750/MUM/2019 ASSESSMENT YEAR: 2008-09 & ITA NO. 2751/MUM/2019 ASSESSMENT YEAR: 2010-11 SHREE SHANKAR SAREES, 133/115, 1 ST FLOOR, SHREEJI MARKET, OLD HANUMAN LANE, KALBADEVI ROAD, OPP. ADARSH PALACE, HOTEL, MUMBAI-400002 VS. ITO-18(3)(3), EARNEST HOUSE, NARIMAN POINT, MUMBAI-400021. PAN NO. AABFS1907P APPELLANT RESPONDENT ASSESSEE BY : MR. BHUPENDRA SHAH, AR REVENUE BY : MS. VIDISHA KALRA, DR DATE OF HEARING : 08/08/2019 DATE OF PRONOUNCEMENT: 31/10/2019 ORDER PER N.K. PRADHAN, AM THE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIR ECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5 3, MUMBAI [IN SHORT CIT(A)] AND ARISE OUT OF THE ASSESSMENT COMPLETED U/S 143 R.W.S 147 OF THE INCOME TAX ACT 1961 (THE ACT). AS COMMON ISSU ES ARE INVOLVED, WE ARE PROCEEDING TO DISPOSE THEM OFF THROUGH A CONSOL IDATED ORDER FOR THE SAKE OF CONVENIENCE. FACTS BEING IDENTICAL, WE BEGI N WITH THE ASSESSMENT YEAR (AY) 2008-09. ITA 2750 & 2751/MUM/2019/A.Y.2008-09 & 2009-10 S HREE SHANKAR SAREES 2 ITA NO. 2750/MUM/2019 ASSESSMENT YEAR: 2008-09 2. THE 1 ST GROUND OF APPEAL: IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO ERRED IN PASSING THE ORDER U/S 143(3) R.W.S. 147 BY MERE CHA NGE OF OPINION WHICH IS BAD IN LAW AS PER THE JUDGEMENT OF SC IN THE CASE O F KELVINATOR OF INDIA LTD (320 ITR 561 SC), THAT TOO AFTER FOUR YEARS AND THE REFORE RENDERING THE WHOLE RE-ASSESSMENT BAD IN LAW, ALSO ON THE BASIS OF BORR OWED SATISFACTION, PRESUMPTION AND SURMISES. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME FOR THE A.Y. 2008-09 ON 27.09.2008 DECLARING TOTAL INCOME OF RS.10,15,730/. THE ASSESSEE TRADES IN SAREES AND SA REE FABRICS. THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT. THEREAF TER, THE ASSESSMENT WAS COMPLETED U/S. 143(3) BY THE ASSESSING OFFICER (AO) ON 03.09.2010 DETERMINING THE TOTAL INCOME AT RS.10,65,910/-. THE REAFTER, THE RETURN WAS REVISED TO RS.10,15,730/- AFTER GIVING EFFECT T O THE ORDER OF THE CIT(A). SUBSEQUENTLY, THE AO RECEIVED INFORMATION FROM THE INVESTIGATION WING OF THE DEPARTMENT THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRY AMOUNTING TO RS.10,00,000/- FROM M/S. KUNAL G EMS, A CONCERN CONTROLLED BY MR. PRAVEEN KUMAR JAIN. ON THE BASIS OF THE ABOVE INFORMATION, THE AO REOPENED THE ASSESSMENT BY ISSU ING NOTICE U/S.148 DATED 30.03.2015 TO THE ASSESSEE. IN RESPONSE TO TH E SAID NOTICE, THE ASSESSEE VIDE LETTER DATED 02.04.2015 REQUESTED THE AO TO TREAT THE ORIGINAL RETURN FILED ON 27.09.2008 AS THE RETURN F ILED IN RESPONSE TO NOTICE U/S. 148. ITA 2750 & 2751/MUM/2019/A.Y.2008-09 & 2009-10 S HREE SHANKAR SAREES 3 4. IN APPEAL, THE LD. CIT(A) HELD THAT THE ASSESSEE WAS A BENEFICIARY IN AS MUCH AS THE UNSECURED LOAN HAS BEEN CLAIMED TO H AVE BEEN TAKEN FROM KUNAL GEMS, WHICH WAS A PRAVEEN KUMAR JAIN GROUP EN TITY AND IT HAD NOT DISCLOSED THAT IT HAD TAKEN ACCOMMODATION ENTRIES O F UNSECURED LOANS FROM PRAVEEN KUMAR JAIN GROUP. FURTHER, IT WAS OBSE RVED BY HIM THAT THERE WAS DEFINITE FAILURE ON THE PART OF THE ASSES SEE TO DISCLOSE TRUE AND FULL MATERIAL PARTICULARS IN RESPECT OF ITS INCOME. WITH THE ABOVE OBSERVATIONS, THE LD. CIT(A) AFFIRM ED THE REOPENING U/S.148 DONE BY THE AO. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITS THAT THE ASSESSMENT COMPLETED U/S.143(3) CANNOT BE REOPENED U/S. 147 AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR, UNLESS THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR FAILURE ON THE PART OF THE TAX PAYER TO DISCLOSE FULLY AND TRULY ALL MA TERIAL FACTS NECESSARY FOR THE ASSESSMENT. IN THIS REGARD, RELIANCE IS PLACED BY HIM ON THE DECISION IN KELVINATOR OF INDIA LTD . (SUPRA). 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) SUBMITS THAT IT IS NOT A CASE OF CHANGE OF OPINION AS THE ASSESSEE FAILED TO DISCLOSE THE FACT IN THE RETURN OF INCOME THAT IT H AD TAKEN ACCOMMODATION ENTRIES OF UNSECURED LOANS FROM PRAVEEN KUMAR JAIN GROUP AND THE INFORMATION CAME TO THE KNOWLEDGE OF THE AO ONLY AF TER THE ORIGINAL ASSESSMENT ORDER WAS PASSED IN THIS CASE. RELIANCE WAS PLACED ON THE DECISION IN ITO V. PURUSHOTTAM DAS BANGUR (1997) 224 ITR 362 (SC) AND M/S. PHOOL CHAND BAJRANG LAL AND ANR. V. INCOME TAX OFFICER AND ANR., (1993) 203 ITR 456 (SC). ITA 2750 & 2751/MUM/2019/A.Y.2008-09 & 2009-10 S HREE SHANKAR SAREES 4 THUS, THE LD. DR SUPPORTS THE ORDER PASSED BY THE L D. CIT(A) ON THE ABOVE GROUND OF APPEAL. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, WE FIND THAT THE AO REOPENED THE ASSESSMENT ON THE BASIS OF THE FINDING S IN THE SEARCH ACTION U/S. 132 OF THE ACT IN THE CASE OF PRAVEEN KUMAR JA IN GROUP, WHEREIN EVIDENCE WAS GATHERED THAT A LARGE NUMBER OF ENTITI TES MANAGED AND CONTROLLED BY THE JAIN GROUP WERE ENGAGED IN PROVID ING ACCOMMODATION ENTRIES AND THE ASSESSEE WAS A BENEFICIARY IN AS MU CH AS UNSECURED LOANS HAVE BEEN CLAIMED TO HAVE BEEN TAKEN FROM KUNAL GEM S, WHICH WAS A PRAVEEN KUMAR JAIN GROUP. FURTHER, THE ASSESSEE HAD NOT DISCLOSED THE FACT THAT IT HAD TAKEN ACCOMMODATION ENTRIES OF UNS ECURED LOANS ON THE ABOVE GROUP. THUS, THERE WAS A DEFINITE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY THE ABOVE INFORMATION B EFORE THE AO IN ORIGINAL ASSESSMENT COMPLETED U/S. 143(3) ON 03.09.2010. IN CIT V. KELVINATOR OF INDIA LTD (2010) 320 ITR 561 (SC), IT IS HELD THAT THE AO HAS POWER TO REOPEN THE ASSESSMENT IF T HERE IS TANGIBLE MATERIAL TO CONCLUDE, PRIMA FACIE THAT THERE HAS BEEN ESCAPEMENT OF INCOME. HOWEVER, THE COURT CAUTIONED THAT THE POWER OF ASSESSMENT IS NOT ONE OF REVIEW AND THAT IT DOES NOT ADMIT OF INF ORMATION OF A SECOND OPINION. THE SCOPE OF THE PHRASE 'REASON TO BELIEVE ' WAS EXAMINED BY THE SUPREME COURT PREVIOUSLY IN M/S. PHOOL CHAND BAJRANG LAL AND ANR. V. INCOME TAX OFFICER AND ANR., (1993) 203 ITR 456 (SC). IN PHOOL CHAND, THE COURT MADE OBSERVATIONS WHICH REMAIN UNDISTURBED IN KELVINATOR: 'THUS, WHERE THE TRANSACTION ITSELF ON THE BASIS OF SUBSEQUENT INFORMATION, IS FOUND TO BE A BOGUS TRANSACTION, THE MERE DISCLOSUR E OF THAT TRANSACTION AT THE ITA 2750 & 2751/MUM/2019/A.Y.2008-09 & 2009-10 S HREE SHANKAR SAREES 5 TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, CANNOT BE SAID TO BE DISCLOSURE OF THE 'TRUE' AND 'FULL' FACTS IN THE CASE AND THE I.T.O. WOULD HAVE THE JURISDICTION TO REOPEN THE CONCLUDED ASSESSMENT IN SUCH A CASE. IT IS CORRECT THAT THE ASSESSING AUTHORITY COULD HAVE DEFERRED THE COMPLETION OF THE ORIGINAL ASSESSMENT PROCEEDINGS FOR FURTHER ENQUIRY AND INVESTIGATION I NTO THE GENUINENESS TO THE LOAN TRANSACTION BUT IN OUR OPINION HIS FAILURE TO DO SO AND COMPLETE THE ORIGINAL ASSESSMENT PROCEEDINGS WOULD NOT TAKE AWAY HIS JURISDICTION TO ACT UNDER SECTION 147 OF THE ACT, ON RECEIPT OF THE INF ORMATION SUBSEQUENTLY'. 7.1 IN VIEW OF THE ABOVE FACTUAL SCENARIO AND ON AN APPLICATION OF THE LAW IN PHOOL CHAND BAJRANG LAL (SUPRA), WE HOLD THAT THE LD. CIT(A) IS JUSTIFIED IN AFFIRMING THE REOPENING DONE BY THE AO BY ISSUING NOTICE U/S.148 OF THE ACT. THUS, THE 1 ST GROUND OF APPEAL IS DISMISSED. 8. THE 2 ND GROUND OF APPEAL : IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE AO ERRED IN MAKING AN ADDITION OFRS.10,00,000/- ON ACCOUNT OF UNSECURE D LOAN RECEIVED FROM M/S KUNAL GEMS BY OVERLOOKING THE RELEVANT LOAN CONFIRM ATION, AN AFFIDAVIT ALONG WITH THE RELEVANT BANK STATEMENTS OF THE APPELLANT AND THOSE OF THE LOAN CREDITOR AND ACKNOWLEDGEMENT OF RETURN FILED BY THE M, DETAILS OF REPAYMENT OF LOAN ALREADY SUBMITTED BY THE APPELLANT. THE 3 RD GROUND OF APPEAL IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED AO ERRED IN MAKING AN ADDITION OF RS.58,849/- ON ACCOUNT OF INT EREST PAYMENT ON UNSECURED LOAN RECEIVED FROM M/S KUNAL GEMS-ALTHOUG H THE TDS WAS DEDUCTED ON SUCH PAYMENT, ALSO THE TDS RETURN IS FI LED AND AMOUNT PAID THROUGH ACCOUNT PAYEE CHEQUE. 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ISSUED A SHOW CAUSE NOTICE DATED 25.01.2016 TO THE ASSESSEE TO EX PLAIN WHY THE AMOUNT ITA 2750 & 2751/MUM/2019/A.Y.2008-09 & 2009-10 S HREE SHANKAR SAREES 6 OF RS.10,00,000/- SHOWN AS UNSECURED LOANS IN THE B OOKS OF ACCOUNTS SHOULD NOT BE TREATED AS ACCOMMODATION ENTRIES AND BROUGHT TO TAX AS UNDISCLOSED CASH CREDIT U/S. 68 OF THE ACT. IN RESP ONSE TO IT, THE ASSESSEE FILED A REPLY DATED 01.02.2016 STATING THAT THEY HA VE TAKEN LOAN OF RS. 10,00,000/- FROM M/S. KUNAL GEMS (PROPRIETARY CONCE RN OF ASHOK RATANLAL VERMA) BY A/C PAYEE CHEQUE AND THE SAME WA S DEPOSITED IN THEIR BANK ACCOUNT. IT IS FURTHER STATED BY THE ASS ESSEE BEFORE THE AO THAT THEY HAD NO BUSINESS DEALINGS WITH PERSON CALLED PR AVEEN KUMAR JAIN. HOWEVER, THE AO WAS NOT CONVINCED WITH THE ABOVE E XPLANATION OF THE ASSESSEE BECAUSE THE JAIN GROUP WAS OPERATED BY DUMMY DIRECTORS /PROPRIETORS/PARTNERS, WHO WERE NOT CARRYING OUT AN Y GENUINE BUSINESS AND IN FACT THEY WERE PROVIDING ACCOMMODATION ENTRI ES. AS PER THE SAID FINDINGS, THE ASSESSEE WAS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES IN THE FORM OF UNSECURED LOANS OF RS. 10,00 ,000/- FROM M/S. KUNAL GEMS OF SHRI PRAVEEN KUMAR JAIN GROUP. THE AO FURTHER NOTED THAT THE ACCOMMODATION ENTRIE S TO VARIOUS BENEFICIARIES HAVE BEEN GIVEN IN CHEQUE/RTGS WHICH HAVE BEEN ROUTED THROUGH THE BANK ACCOUNT OF THE BOGUS CONCERNS OF P RAVEEN KUMAR JAIN GROUP. AGAINST THE CHEQUE/RTGS, EQUIVALENT AMOUNT O F CASH IS RECEIVED FROM THOSE BENEFICIARIES THROUGH THE ANGADIAS AND T HE RECORDED TRANSACTIONS ARE ROUTED THROUGH BANKS AND THE SAME GET REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS OF THE BENAMI CONCERNS OF PRAVEEN KUMAR JAIN GROUP. WITH THE ABOVE OBSERVATIONS, THE AO MADE AN ADDITI ON OF RS.10,00,000/- AS UNEXPLAINED CASH CREDIT U/S. 68 O F THE ACT. FURTHER, HE ITA 2750 & 2751/MUM/2019/A.Y.2008-09 & 2009-10 S HREE SHANKAR SAREES 7 DISALLOWED THE INTEREST OF RS.58,849/- TO M/S. KUNA L GEMS AGAINST THE ABOVE LOANS. 10. IN APPEAL, THE LD. CIT(A), CONFIRMED THE ADDITI ON MADE BY THE AO AFTER EXAMINING (I)THE STATEMENT RECORDED ON OATH U /S.132(4) DATED 01.10.2013 OF SHRI PRAVEEN KUMAR JAIN, (II)THE STAT EMENT OF SHRI NILESH PARMAR, PROPRIETOR OF M/S. MOHIT INTERNATIONAL RECO RDED U/S.131 DATED 02.10.2013, (III) NOTE ON THE FINDINGS OF SEARCH AC TION U/S. 132 BY THE INVESTIGATION WING OF THE DEPARTMENT IN THE CASE OF SHRI PRAVEEN KUMAR JAIN GROUP. 11. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE FIL ES A PAPER BOOK CONTAINING THE DOCUMENTS WHICH WERE FILED BEFORE TH E AO, AS WELL AS CIT(A). SPECIFIC REFERENCE IS MADE TO THE CONFIRMAT ION OF LOAN OF KUNAL GEMS AND BANK STATEMENT OF THE ASSESSEE SHOWING LOA N AND REPAYMENT. ALSO, THE LD. COUNSEL FILES A COPY OF THE ORDER OF THE TRIBUNAL DATED 06.06.2019 IN THE CASE OF ITO V. SMT. PRATIMA ASHAR [ITA NO. 105/MUM/2018 FOR A.Y. 2010-11] AND ORDER DATED 15.0 5.2019 IN THE CASE OF ACIT V. M/S. ABANI SARBESWAR DAS [ITA NO. 193/MUM/2018 FOR A.Y. 2010-11 & ITA NO. 232/MUM/2018 FOR A.Y. 2012-1 3]. REFERRING TO THE ABOVE ORDERS OF THE TRIBUNAL, THE LD. COUNSEL SUBMITS THAT FACTS BEING IDENTICAL, THOSE ORDERS OF THE CO-ORDINATE BENCH MAY BE FOLLOWED AND THE ADDITION MADE BY THE AO BE DELETED. 12. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESE NTATIVE (DR) SUBMITS THAT THE RIGOUR OF SATISFACTION U/S. 68 IS FAR MORE WHEN INVESTMENT IS MADE THROUGH PERSONAL CONTACTS AND PR IVATE INVESTMENTS RATHER THAN PUBLIC. FURTHER, IT IS STATED THAT IN A LMOST ALL DECISIONS OF HIGH ITA 2750 & 2751/MUM/2019/A.Y.2008-09 & 2009-10 S HREE SHANKAR SAREES 8 COURTS INCLUDING LOVELY EXPORTS (DELHI H.C ITA NO. 953/2006 DATED 16.11.2006), COURTS HAVE ACKNOWLEDGED AND DISTINGUI SHED THE DISCHARGE OF ONUS IN CASE OF INVESTMENTS THROUGH PUBLIC ISSUE , WHERE ONCE IDENTITY OF INVESTOR IS ESTABLISHED, THE ONUS OF ASSESSEE IS DISCHARGED AND AO IS FREE TO INVESTIGATE SOURCES OF INVESTOR AND HOWEVER , WHERE INVESTMENT IS NOT FROM PUBLIC BUT FROM PERSONAL CONTACTS, THE ONU S ON ASSESSEE IS MUCH MORE. THE LD. DR FURTHER SUBMITS THAT THE NEWLY INTRODUC ED PROVISO TO SECTION 68 BY FINANCE ACT 2012 LAYS DOWN A MORE STR INGENT TEST FOR THE COMPANIES, WHERE PUBLIC ARE NOT SUBSTANTIALLY INTER ESTED AS IN THE CASE OF THE ASSESSEE. IT IS ARGUED THAT IN THE PRESENT CASE , THE CREDITOR I.E. SHRI PRAVEEN KUMAR JAIN AS DIRECTOR/CONTROLLER OF MOHIT INTERNATIONAL & KUNAL GEMS HAS CLEARLY ADMITTED TO HAVE PROVIDED BO GUS ENTRIES AND EARNED COMMISSION @0.15% OF SUCH ACCOMMODATION ENTR IES AND THEREFORE THE REQUIREMENT OF SECTION 68 IS MORE THA N FULFILLED. THE LD. DR RELIED ON THE DECISION IN MCDOWELL & CO. LTD V. CTO (1985) 154 ITR 148 (SC), CIT V. DIVINE LEASING & FINANCE LTD . (ITA NO. 53/2005, 56/2005, 305/2006) OF DELHI HIGH COURT. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AT THIS MOMENT, WE DI SCUSS THE CASE LAWS RELIED ON BY THE LD. DR. IN THE CASE OF MCDOWELL & CO. LTD (SUPRA), THE ISSUE WAS TAX AVOIDANCE AND THE HONBLE SUPREME COURT HEL D THAT COLOURABLE DEVICES CANNOT BE PART OF TAX PLANNING AND IT IS WRONG TO ENCOURAGE OR ENTERTAIN THE BELIEF THAT IT IS HONOUR ABLE TO AVOID THE PAYMENT OF TAX BY RESTORING TO DUBIOUS METHODS. IT IS THE OBLI GATION OF EVERY CITIZEN TO PAY THE TAXES HONESTLY WITHOUT RESORTING TO SUBTERFUGES . COURTS ARE NOW ITA 2750 & 2751/MUM/2019/A.Y.2008-09 & 2009-10 S HREE SHANKAR SAREES 9 CONCERNING THEMSELVES NOT MERELY WITH THE GENUINENE SS OF A TRANSACTION, BUT WITH THE INTENDED EFFECT OF IT FOR FISCAL PURPOSES. NO ONE CAN NOW GET AWAY WITH A TAX AVOIDANCE PROJECT WITH THE MERE STATEMENT THA T THERE IS NOTHING ILLEGAL ABOUT IT. IN THE CASE OF DIVINE LEASING & FINANCE LTD (SUPRA), IT IS HELD THAT IF THE REVENUE MERELY ISSUES SUMMONS U/S.131 AND DOES NOT PURSUE THE MATTER FURTHER, THE ASSESSEE DOES NOT BECOME RESPON SIBLE FOR THE SAME, EVEN IF THE CREDITORS DO NOT APPEAR AND ADDITION CA NNOT BE MADE U/S.68 OF THE ACT. IN THE INSTANT CASE, THE AO HAS MADE AN ADDITION OF RS.10,00,000/- AS UNEXPLAINED CASH CREDIT U/S. 68 AND SIMULTANEOUS LY DISALLOWED INTEREST OF RS.58,549/- EXCLUSIVELY ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING OF THE DEPARTM ENT THAT THE ASSESSEE, THROUGH M/S. KUNAL GEMS, A CONCERN CONTRO LLED BY SHRI PRAVEEN KUMAR JAIN HAD TAKEN AN ACCOMMODATION ENTRY. ALTHOU GH, THE ASSESSEE HAD FILED BEFORE THE AO CONFIRMATION OF LOAN OF KUN AL GEMS AND BANK STATEMENTS SHOWING LOAN AND REPAYMENT, THE AO DID N OT EXAMINE IT. WE ARE OF THE CONSIDERED VIEW THAT THE AO SHOULD HA VE VERIFIED THE GENUINENESS OF TRANSACTION BY STARTING WITH THE CON FIRMATION OF LOAN FROM KUNAL GEMS FILED BY THE ASSESSEE AND THE BANK STATE MENTS SHOWING LOAN AND REPAYMENT. HE HAS NOT DONE SO. ALSO WE FIND THAT THE LD. CIT(A) CONFIRMED THE ADDI TION MADE BY THE AO AFTER EXAMINING (I)THE STATEMENT RECORDED ON OAT H U/S.132(4) DATED 01.10.2013 OF SHRI PRAVEEN KUMAR JAIN, (II)THE STAT EMENT OF SHRI NILESH PARMAR, PROPRIETOR OF M/S. MOHIT INTERNATIONAL RECO RDED U/S.131 DATED 02.10.2013, (III) NOTE ON THE FINDINGS OF SEARCH AC TION U/S. 132 BY THE ITA 2750 & 2751/MUM/2019/A.Y.2008-09 & 2009-10 S HREE SHANKAR SAREES 10 INVESTIGATION WING OF THE DEPARTMENT IN THE CASE OF SHRI PRAVEEN KUMAR JAIN GROUP. THE LD. CIT(A) COULD HAVE REMANDED THE MATTER TO TH E AO U/S. 250(4) OF THE ACT TO MAKE FURTHER ENQUIRY BEFORE DI SPOSING OF THE APPEAL. TO ARRIVE AT A FINDING WITHOUT ANY VERIFICATION OF THE TRANSACTIONS, WOULD LEAD ANYONE TO THE REALM OF PURE CONJECTURES. THE RELIANCE PLACED BY THE LD. DR ON THE DECISION I N MCDOWELL & CO. LTD (SUPRA) IS MISPLACED AS IN THE INSTANT CASE THE AO HAS NOT DONE ANY ENQUIRY. THE DECISION IN DIVINE LEASING & FINANCE LTD . (SUPRA), RATHER SUPPORTS THE CASE OF THE ASSESSEE. IT IS WELL-SETTLED THAT U/S.68, THE PRIMARY ONUS AS TO THE RECEIPT OF THE AMOUNT IS ON THE ASSESSEE TO SHOW THE IDENTITY OF THE LENDERS, THEIR CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSAC TIONS. ONLY WHERE THE ASSESSEE DISCHARGES THE BURDEN PRIMA FACIE , DOES THE BURDEN SHIFT ON TO THE REVENUE. IN THE INSTANT CASE, THE ASSESSEE HAS DISCHARGED THE BURDEN PRIMA FACIE BY FILING THE CONFIRMATION OF LOAN OF KUNAL GEMS AN D BANK STATEMENTS SHOWING LOAN AND REPAYMENT. AN EXPLANATION, PRIMA FACIE REASONABLE CANNOT BE REJECTED ON CAPRICIOUS OR ARBITRARY GROUNDS OR ON MERE SUSPICIO N OR ON IMAGINARY OR IRRELEVANT GROUNDS. IN THIS REGARD, WE FRUITFULLY R EFER TO THE DECISION IN R.B.N.J. NAIDU V. CIT , [1956] 29 ITR 194 (NAG.), LAJWANTI SIAL V. CIT , [1956] 30 ITR 228 (NAG.). IN VIEW OF THE ABOVE FACTUAL MATRIX AND POSITION OF LAW, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE (I) THE ADDI TION OF RS.10,00,000/- ITA 2750 & 2751/MUM/2019/A.Y.2008-09 & 2009-10 S HREE SHANKAR SAREES 11 MADE BY THE AO U/S. 68 OF THE ACT AND (II) DISALLOW ANCE OF INTEREST OF RS.58,849/-. THUS, THE 2 ND & 3 RD GROUND OF APPEAL ARE ALLOWED. FACTS BEING IDENTICAL OUR DECISION FOR THE A.Y. 200 8-09 APPLIES MUTATIS MUTANDIS TO A.Y. 2010-11. 14. IN THE RESULT, THE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2019 SD/- SD/- (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED: 31/10/2019 S. SAMANTA, P.S. (ON TOUR) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) ITAT, MUMBAI