RITU KAMAL SINGHAL, MUMBAI V. ITO 24(3)(4), MUMBAI

ITA 3017/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5790 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 10-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SONI
• Keywords: Unexplained cash credit; Opportunity of cross examination; Accommodation entries; Onus to prove
• Section: 131; 68; 148; 132; 133(6); 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 3017/MUM/2018 ASSESSMENT YEAR : 2010-11 SMT. RITU KAMAL SINGHAL, 203A, A-WING, MITHILA APARTMENT, J.B. NAGAR, ANDHERI-WEST, MUMBAI [PAN : AAKPB1532A] VS. INCOME TAX OFFICER-24(3)(4), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIMAL PUNAMIYA, AR RESPONDENT BY : SHRI VIJAY KUMAR SONI, DR DATE OF HEARING : 28-01-2019 DATE OF PRONOUNCEMENT : 01-02-2019 O R D E R THIS APPEAL IS FILED BY THE ASSESSEE, WHICH IS DIREC TED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TA X (APPEALS)-36, MUMBAI, DATED 08-02-2018 FOR THE A.Y.2 010-11. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN ADDING GENUINE UNSECURED LOAN AMOUNTING TO RS. 20,0 0,000/- AS UNEXPLAINED FUND AND ADDED IN THE INCOME OF THE APP ELLANT. 2. THE LEARNED COMMISSIONER OF INCOME TAX APPEAL ER RED IN IMPUGNED ADDITION AND FRAMING THE IMPUGNED ORDER WI THOUT ITA NO. 3017/MUM/2018 : 2 : CONSIDERING THE SUBMISSION/DOCUMENTARY EVIDENCE PRO VIDED TO PROVE THE GENUINENESS OF THE TRANSACTION. 3. THE APPELLANT CRAVES TO ADD, AMEND OR ALTER THE GROUNDS OF APPEAL AT THE TIME OF OR BEFORE THE HEARING OF APPEAL. 3. LEARNED AR OF THE ASSESSEE SUBMITTED THAT ON PAGES 10 TO 13 OF THE PAPER BOOK IS THE COPY OF REPLY OF THE AS SESSEE DATED 02.02.2016 FILED WITH THE A.O. BEING REPLY TO THE SHOW CAUSE NOTICE DATED 02.02.2016. IN PARTICULAR, MY ATTEN TION WAS DRAWN TO PARA 9 OF THE SAME AND IT WAS POINTED OUT TH AT THE ASSESSEE MADE A REQUEST TO PROVIDE AN OPPORTUNITY O F CROSS EXAMINATION OF ANY PARTY WHOSE STATEMENT WAS RE CORDED AT THE BACK OF THE ASSESSEE. HE PLACED RELIANCE ON THE JUDGMENT OF HON.BLE APEX COURT RENDERED IN THE CASE OF KISHAN CHAND CHELLARAM VS. CIT [125 ITR 713] IN SUP PORT OF THIS CONTENTION THAT IF AN OPPORTUNITY OF CROSS EXAMINATI ON OF ANY PARTY WHOSE STATEMENT WAS RECORDED AT THE BACK OF THE ASSESSEE IS NOT PROVIDED TO THE ASSESSEE, SUCH STATEMEN T CANNOT BE USED AGAINST THE ASSESSEE. HE SUBMITTED A COPY OF WRITTEN SUBMISSIONS AND MADE A REQUEST THAT THE PRESENT APPEAL BE DECIDED AFTER CONSIDERING THE ARGUMENTS MAD E BY HIM AND THE WRITTEN SUBMISSIONS. LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF THE LD. CIT (A). ITA NO. 3017/MUM/2018 : 3 : 4. FIRST I REPRODUCE THE WRITTEN SUBMISSIONS FILED BY THE LEARNED AR OF THE ASSESSEE. THE SAME ARE AS UNDER:- > THE APPELLANT HAS TAKEN A UNSECURED LOAN FROM M/S . TANIKA COMMODITIES PVT. LTD. AMOUNTING TO RS, 20,00,000/- DURING THE ASSESSMENT YEAR 2010-11, TINE SAID UNSECURED LOAN W AS REPAID IN SUBSEQUENT YEAR. > AT THE OUTSET IT IS SUBMITTED THAT LEARNED ASSESSING OFFICER HAS IGNORED FOLLOWING VITAL FACTS WHICH ARE OUTLINED AS UNDER: O THE UNSECURED LOAN WAS RECEIVED BY THE APPELLAN T THROUGH NORMAL BANKING CHANNELS / ACCOUNT PAYEE CHEQUE'S ON LY. FOLLOWING DOCUMENTS WERE SUBMITTED PROVING THE GENUINENESS OF THE TRANSACTION, IDENTITY OF THE LENDER AND CREDITWORTH INESS OF THE INVESTOR AT THE TIME OF ASSESSMENT OF THE APPELLANT , (PLEASE REFER THE SAID PAPER BOOK) - COPY OF ITR ACKNOWLEDGEMENT OF LENDER M /S. TANIKA COMMODITIES PVT. LTD. FOR THE A.Y. 2010-11 (PAGE NO .27) - LEDGER COPY OF RITU SINGHAL IN THE BOOKS OF M/S. TA NIKA COMMODITY (P) LTD. FOR THE A.Y.2010-11 (PAGE NO.28) - LOAN CONFIRMATION RECEIVED FROM THE LENDER M /S. TANIKA COMMODITIES PVT., LTD.(PAGE NO. 29-30) - COPY OF RELEVANT BANK STATEMENT OF THE LENDER M/S. TANIKA COMMODITIES PVT. LTD.(PAGE NO.31-32A) THE LEARNED ASSESSING OFFICER HAD HEAVILY RELIED ON THE STATEMENT OF SHRI BHANWARLAL JAIN. THESE STATEMENTS WERE RECORDED AT THE BACK OF THE APPELLANT. FURTHER THE LEARNED ASSESSING OFFICER HAS NOT PROVIDED THE STATEMENT OF SHRI BHANWARLAL JAIN THIS STATEMENT HAS BEEN MADE THE BA SIS OF ADDITION. THE REQUEST TO PROVIDE FULL STATEMENT OF SHRI BHANWARLAL JAIN WAS NOT FULFILLED BY THE LEARNED AS SESSING OFFICER. ONLY ON THE BASIS OF ALLEGED STATEMENT RECORDED OF THE THIRD PARTY IT CANNOT BE INFERRED THAT THE UNSECURED LOAN TAKEN BY THE APPELLANT WAS IN THE FORM OF AN ACCOMMODATION E NTRY. ITA NO. 3017/MUM/2018 : 4 : IT WAS ALLEGED THAT FROM VARIOUS DOCUMENTS FOUND DU RING THE SEARCH PROCEEDING U/S. 132 IN THE CASE OF SHRI BHAN WARLAL JAIN OR HIS SO ALLEGED ASSOCIATE COMPANIES. THUS ON THE BASIS OF SUCH ALLEGATION THE ASSESSING OFFICER HAS MADE A DDITION OF UNSECURED LOAN AMOUNTING TO RS. 20,00,000/- WITHOUT VERIFYING WHETHER M/S. TANIKA COMMODITIES PVT. LTD. AS ASSOCIATED WITH SHRI BHANWARLAL JAIN OR HIS GROUP A ND VERIFYING THE VITAL FACTS AND THE DOCUMENTS SUBMITT ED BEFORE HIM AND ALSO WITHOUT CONSIDERING THE JUDICIAL PRONO UNCEMENT SUBMITTED BEFORE HIM. THE LEARNED ASSESSING OFFICER COULD NOT CONTROVERT THE FACTUAL MATERIAL AND DOCUMENTARY EVIDENCES PLACED BY THE AP PELLANT DURING THE ASSESSMENT PROCEEDING AND HE COULD NOT B RING ANYTHING CONTRARY ON RECORD TO NEGATE THE DOCUMENTA RY EVIDENCES FURNISHED BY THE APPELLANT. FURTHER THE UNSECURED LOAN WAS CONFIRMED BY LENDER M/S. TANIKA COMMODITIES PVT. LTD U/S. 133(6) TO THE LEAR NED ASSESSING OFFICER. THE APPELLANT HAD RECEIVED LOAN FROM THE SAID LENDE R WHICH IS A COMPANY MANAGED BY ITS DIRECTORS. THE LENDER IS A COMPANY WHICH IS DULY REGISTERED UNDER THE COMPANIES ACT, 2 013 AND IS REGULAR IN FILING OF RETURNS.(PAGE NO.27) THE APPELLANT HAD RECEIVED A SHORT TERM LOAN FROM T ANIKA COMMODITIES PVT LTD AND HAD REPAID THE SAME IN THE SUBSEQUENT YEAR, THE ENTIRE TRANSACTIONS OF RECEIPT S AND PAYMENT WERE MADE BY ACCOUNT PAYEE CHEQUE OR THROUG H OTHER BANKING CHANNELS. THE APPELLANT HAD ALSO FILED CERTIFIED BALANCE C ONFIRMATION OF ACCOUNTS OF THE SAID LENDER COMPANY AND ALSO SUBMIT TED THE COPY OF THE LENDER COMPANY'S BALANCE SHEET THE LEARNED ASSESSING OFFICER HAS FAILED TO APPRECI ATE THE FACTS THAT APPELLANT HAD OBTAINED ONLY TEMPORARY LOAN WHI CH HAS BEEN REPAID IN SUBSEQUENT YEAR (PAGE NO 31-32A). TH US WHAT IS REQUIRED TO BE SEEN IS AS TO WHETHER THE SAID CO MPANY HAD SUFFICIENT FUNDS TO ADVANCE APPELLANT. IF FOR THE S AKE OF ARGUMENT IT IS UNDERSTOOD THAT THE SAID COMPANY WAS A COMPANY OF MR. BHANWARLAL JAIN AND THEN IN THAT CAS E WHETHER THE SAID MR. BHANWARLAL JAIN WAS CAPABLE OF ADVANCING SUCH AMOUNT EVEN WITHOUT RECEIVING CASH I S A VITAL ITA NO. 3017/MUM/2018 : 5 : QUESTION WHICH SHOULD HAVE BEEN ASKED AND VERIFIED. ON APPRECIATION OF THE FACT AND AS PER STATEMENT OF VA RIOUS PERSONS RECORDED IT IS QUITE DEAR THAT EVEN WITHOUT RECEIVING CASH BEFOREHAND THE SAID LENDER COMPANIES WERE ALWA YS CAPABLE OF ADVANCING SUCH AMOUNT WHICH AT A LATER C OULD BE RECOUPED WITH SUCH CASH. FURTHER IT MUST BE NOTED THAT THE NET WORTH (AS PER NET ASSET METHOD) OF THE LENDER COMPANY M/S. TANIKA COMMODITI ES PVT. LTD. WAS ABOUT RS. 83.34 LACS (I.E. 0.83 CRORE) AS PER THE AUDITED BALANCE SHEET FOR THE FINANCIAL YEAR ENDING 31 ST MARCH 2010. THE AMOUNT OF LOAN RECEIVED BY THE APP ELLANT IS RS. 20 LAKHS AS AGAINST TO ITS NET WORTH OF RS. 83 LAKHS (APPROX). THUS THE CREDITWORTHINESS OF THE LENDER I S UNDOUBTEDLY PROVED BY THE APPELLANT. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF COMMIS SIONER (APPEALS)- 36, MUMBAI DATED 08.02.2018 FOR THE A.Y. 2010-11. T HE FOLLOWING GROUNDS OF APPEAR HAS BEEN RAISED BY THE APPELLANT: I. THE TEAMED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN ADDING GENUINE UNSECURED LOAN AMOUNTING TO RS. 20,00,000/- AS UNEXPLAINED FUND AND ADDED IN THE IN COME OF THE APPELLANT. II. THE LEARNED COMMISSIONER OF INCOME TAX APPEAL ERRED IN IMPUGNED ADDITION AND FRAMING THE IMPUGNED ORDER WI THOUT CONSIDERING THE SUBMISSION/ DOCUMENTARY EVIDENCE PROVIDED TO PROVE THE GENUINENESS OF THE TRANSACTIO N. OUR SUBMISSION IS AS UNDER: SECTION 68 OF THE ACT READS AS UNDER:- 'WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESS ING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR :' IT IS SETTLED POSITION THAT TO PROVE THE GENUINENES S OF THE TRANSACTION, THE BURDEN LIES ON THE ASSESSEE AND TO DISCHARGE TH E ONUS, THE ASSESSEE MUST PROVE THE FOLLOWING ITA NO. 3017/MUM/2018 : 6 : A. IDENTITY OF THE CREDITOR B. CAPACITY OF THE CREDITOR C. GENUINENESS OF THE TRANSACTION ONCE THE ABOVE CONDITIONS ARE PROVED PRIMA FACIE BY THE ASSESSEE AND THE ASSESSEE HAS ADDUCED EVIDENCE TO ESTABLISHE D PRIMA FACIE THE AFORESAID, THE ONUS SHIFTS ON THE DEPARTMENT. THREE CONDITION ENSHRINED IN SECTION 68 ARE DEARLY PROVED BY THE DOCUMENTS SUBMITTED DURING THE ASSESSMENT PROCEEDIN G AS UNDER :- A. IDENTITY I. PERMANENT ACCOUNT NUMBER (PAN) II. CIN NO III. INCOME TAX RETURN ACKNOWLEDGMENT THE ABOVE DOCUMENTS CLEARLY PROVE THE IDENTITY OF T HE LENDERS B. CREDITWORTHINESS I. COPY OF AUDITED BALANCE SHEET OF THE LENDER COMPANY II. RELEVANT BANK STATEMENT III. COPY OF LEDGER ACCOUNT THE ABOVE DOCUMENTS CLEARLY PROVE THE CREDITW ORTHINESS OF THE LENDERS C. GENUINENESS I. TRANSACTION THROUGH ACCOUNT PAYEE CHQ II. BANK STATEMENT OF THE APPELLANT AND LENDER COMPANIE S III. LOAN CONFIRMATION THE ABOVE DOCUMENTS CLEARLY PROVE THE GENUINENESS O F THE LENDERS THUS ALL THE INGREDIENTS OF S.68 OF THE ACT WERE FU LLY PROVED AND ESTABLISHED BEFORE THE LEARNED ASSESSING OFFICER. IT IS A SETTLED LAW THAT ! IT IS MANDATORY FOR THE ASSESSING OFFICER TO CONFRONT THE ASSESSEE WITH ANY MATERIAL COLLECTED B Y THE ASSESSING OFFICER AT THE BACK OF THE ASSESSEE, AND IN CASE OF STATEMENT OF SHRI BHAWARLAL JAIN RECORDED AT THE BACK OF THE ASSESSES , OPPORTUNITY OF CROSS EXAMINATION HAS TO BE OFFERED TO THE ASSESSEE , FAILING WHICH THE SAID MATERIAL/STATEMENT ETC. WILL BE RENDERED UNREL IABLE AND ADDITIONS MADE ON THE BASIS OF SUCH MATERIAL/STATEM ENT ETC. SHALL BE ITA NO. 3017/MUM/2018 : 7 : RENDERED ILLEGAL. REFERENCE IN THIS REGARD CAN BE M ADE FROM THE DECISIONS MADE IN THE FOLLOWING JUDICIARY RULING:- THE HON'BLE SUPREME COURT IN THE CASE OF KISHI NCHAND CHELLARAM V. CIT [1930] 19 CTR (SC) 360/[1980] 125 ITR 713 (S C) HAS HELD THAT WITHOUT ALLOWING CROSS-EXAMINATION TO THE PARTY, AD VERSE INFERENCE CANNOT BE DRAWN THOUGH THE EVIDENCE MAY BE SO STRON G. IN THAT CASE CERTAIN DEPOSITS IN THE ACCOUNT OF THE ASSESSEE WER E FOUND. STATEMENTS OF CERTAIN PERSONS WERE RECORDED THAT TH EY HAVE DEPOSITED THE ASSESSEE'S OWN MONEY. THE ADDITION WA S MADE BY THE AO WHICH WAS CONFIRMED UP TO THE STAGE OF HON'BLE H IGH COURT. HOWEVER, ON FURTHER APPEAL, THE HON'BLE SUPREME COU RT HAS HELD THAT WITHOUT ALLOWING CROSS-EXAMINATION TO THE ASSESSEE ADDITION CANNOT BE MADE. SIMILAR JUDGMENTS ARE AS UNDER:- R.B. SHREERAM DURGA PRASAD 176 ITR 169 (SC), JINDAL VEGETABLE (ORDER OF HON'BLE DELHI HIGH COU RT IN ITA NO. 428 OF 2007, 174 TAXMANN 440 (RAJ.) * LAXMAN BHAI PATEL (ORDER OF HON'BLE GUJARAT HIGH COURT DATED 22.07.200S IN ITR NO. 41/1997). THIRD PARTY I.E. SHRI BHANWARLAL JAIN WAS NEVER A D IRECTOR AS WELL AS SHAREHOLDER OF M/S. TANIKA COMMODITIES PVT. LTD. WHO HAD ADVANCED LOAN TO THE APPELLANT AMOUNTING RS. 20,00, 000/- DURING THE F.Y. 2009-10 (A.Y. 2010-11). SHRI BHANWARLAL JAIN, WHO IS NEITHER HOLDING MANAGE RIAL BERTH IN THE COMPANY M/S. TANIKA COMMODITIES PVT. LTD. NOR HOLDI NG ANY OWNERSHIP RIGHT, CANNOT CONTROL THE AFFAIRS OF THE COMPANY. FURTHER M/S. TANIKA COMMODITIES PVT. LTD. HAVE NO L INK WITH BHANWARLAL JAIN GROUP AS ALLEGED BY THE LEARNED ASS ESSING OFFICER. FURTHER, FOLLOWING LEGAL POSITION/ JUDICIAL RULINGS ON THE SUBJECT UNDER CONSIDERATION MUST BE CONSIDERED BEFORE ARRIVING AT ANY CONCLUSION:- , I. AS HELD BY ANDHRA PRADESH HIGH COURT IN THE CASE OF R.B. MITTAL V/S. CIT 246 1TR 283 (AF) IN AN ENQUIRY U/S 68, THE RULE OF AUDI ALTERAM PARTERM HAS TO BE OBSERVED AND THE ASSESSEE MUST BE GIVEN A FAIR AND REASONABLE HEARING TO DISCHARGE THE BURD EN CAST ON HIM ITA NO. 3017/MUM/2018 : 8 : U/S 68 OF THE ACT. FURTHER, IT IS SETTLED LAW THAT IN THE MATTER OF CASH CREDIT, THE INITIAL ONUS LIES ON THE ASSESSEE TO PR OVE THE GENUINENESS OF THE TRANSACTION ALONG WITH THE IDENTITY OF THE L ENDER/INVESTOR AND HIS CREDIT WORTHINESS. HAVING DONE SO, THE APPELLAN T IN THE INSTANT CASE HAS DISCHARGED THE ONUS CAST UPON IT. BEYOND T HIS, FOR THE CHARGE OF UNEXPLAINED CASH CREDIT TO STICK, THE ONU S LIES ON THE ASSESSING OFFICER TO DISPROVE THE CLAIM OF THE ASSE SSES BY ESTABLISHING THAT THE EVIDENCE FILED BY THE ASSESSE E WAS FALSE AND BY BRINGING NEW MATERIAL ON RECORD AND FAILURE TO D O SO WOULD VITIATE THE ADDITION MADE ON THIS COUNT. II. IT WAS ALSO HELD BY THE APEX COURT IN THE CASE OF CIT V. BEDI & CO. P. LTD. (1998) 230 ITR 580 (SC) THAT WHERE PRIMA-FA CIE THE INFERENCE ON FACTS IS THAT THE ASSESSEE'S EXPLANATION IS PROB ABLE, THE ONUS WILL SHIFT TO THE REVENUE TO DISPROVE IT AND THE ASSESSE E'S EXPLANATION IN SUCH CASE CANNOT BE REJECTED ON MERE UNDER :- KHANDELWAL CONSTRUCTIONS V. CIT (1997) 227 ITR 90 O (GAU.) CIT V. ORISSA CORPORATION PVT. LTD, 158 ITR 78 (S C) CIT V. ROHINI BUILDERS 256 ITR 360 (GUJ.). III. IT IS ALSO SETTLED LAW THAT WHERE THE ASSESS ES PROVIDES IDENTITY AND DETAILS PERTAINING TO THE LENDERS/CREDITORS INV ESTOR OF SHARE APPLICATION MONEY AND IS UNABLE TO PRODUCE THEM AND REQUESTS THE AO TO ISSUE SUMMONS U/S 331 FOR THEIR ATTENDANCE, I T IS THE DUTY OF THE AO TO ISSUE SUCH SUMMONS, FAILING WHICH THE ADD ITION WOULD GET DELETED. REFERENCE IN THIS REGARD CAN BE MADE FROM [HE DECISIONS MADE IN THE FOLIO WING JUDICIARY RULING- N.P. GARODIA (ORDER DATED 13.01.2009 OF HON'BLE P & H HIGH COURT IN ITA NO. 808 OF 2008) BRIJ PAL SHARMA (ORDER DATED 17.02.2009 IN 1TA NO . 685 OF 2008 OF HON'BLE P TO H HIGH COURT) IV. CIT V. ORISSA CORPORATION PVT. LTD. 158 ITR 78 (SC) AND ANIS AHMED 297 ITR 441 (SC) THAT MERE NONPRODUCTION OF T HE LENDER/SHAREHOLDER CANNOT BE A GROUND FOR MAKING AD DITION U/S 68. V. SIMILARLY AS HELD IN THE CASE OF CIT V. MET ACHOM INDUSTRIES (2000) 245 ITR 160 [MP] WHERE A CREDIT IS SHOWN TO HAVE COME FROM A PERSON OTHER THAN THE ASSESSEE, THERE IS NO FURTHER RESPONSIBILITY OF THE ASSESSEE TO SHOW THAT IT HAS COME FROM ACCOUNTE D SOURCE OF THE LENDER, AS LONG AS THE FACT THAT HE HAD MADE THE AD VANCE AND WAS CAPABLE OF MAKING THE ADVANCE ARE ESTABLISHED. ITA NO. 3017/MUM/2018 : 9 : VI. IT WAS HELD BY THE HON'BLE MADRAS HIGH COURT IN HASTIMAL (S) V. CIT (1963) 49 ITR 273 THAT AFTER A LAPSE OF DECA DE, THE ASSESSEE SHOULD NOT BE PLACED UPON THE RACK AND CALLED UPON TO EXPLAIN NOT MERELY THE ORIGIN AND SOURCE OF A CAPITAL CONTRIBUT ION, BUT ALSO THE ORIGIN OF ORIGIN AND SOURCE OF THE SOURCE. VII. RECENTLY IN A SIMILAR CASE THAT OF THE ASSE SSEE, THE HONORABLE ITAT DELHI IN THE CASE OF ITG, WARD 15 (2) VS. M/S. RAKARA MONEY MATTERS P. LTD. HAS HELD THAT 'AO HAS TO BRING ON R ECORD ANY VALID MATERIAL OR EVIDENCE TO DISCREDIT THE EVIDENCES AND THE EXPLANATION GIVEN BY THE ASSESSES COMPANY AND CANNOT RELY ONLY ON STATEMENT OF THIRD PARTIES RECORDED BY THE INVESTIGATION WING. THUS IT IS SETTLED LAW THAT IN THE MATTER OF CASH C REDIT, ASSESSES NEEDS TO PROVE THE GENUINENESS OF THE TRANSACTION A LONG WITH THE IDENTITY OF THE LENDER/ INVESTOR AND HIS CREDIT WOR THINESS. BY SUBMITTING THE FOLLOWING DOCUMENTS, IDENTITY AS WEL L AS THE CREDIT WORTHINESS HAVE BEEN PROVED AND HENCE THE ADDITION WOULD NOT BE JUSTIFIABLE AND WOULD BE AGAINST THE LAW. VIII. IN ANOTHER LANDMARK JUDGMENT OF HON'BLE GUJAR AT HIGH COURT IN THE CASE OF VARSHABEN S PATEL VS. ITO, [2015] 64 TA XMANN.COM 179 (GUJARAT) HAS ALSO HELD IN NOTICE U/S 148 THAT THE ISSUE OF NOTICE U/S 148 PURSUANT] TO DIRECTION BY DG INVESTIGATION IS B AD IN LAW AS THE SATISFACTION HAS TO BE ON YOUR OWN AND NOT A BORROW ED SATISFACTION. IX. SIMILAR TO ABOVE REFERRED JUDGMENT, THE APPE LLANT WOULD LIKE TO HUMBLY SUBMIT TO LEARNED ASSESSING OFFICER A RECENT LANDMARK DECISION GIVEN BY JURISDICTIONAL HON'BLE ITAT MUMBA I IN AN IDENTICAL CASE OF ITO -10 (2) (4) VS. M/S. SUPERLINE CONSTRUC TION P. LTD. (AND MANY OTHERS IN THIS CONSOLIDATED ORDER) PRONOUNCED ON 30.11.2015 ITA NO. 3645/MUM/2014 THE SUMMARY OF THE CASE IS OU TLINED AS UNDER:- 'THE REVENUE AUTHORITY FAILED TO APPRECIATE THAT TH ERE IS NO DOCUMENTARY EVIDENCE AGAINST THE ASSESSEE-COMPANY T O SUPPORT IMPUGNED ADDITIONS MADE SOLELY ON THE BASIS OF STAT EMENT OF SHRI MUKESH CHOKSHI. THE ASSESSING OFFICER FAILED TO APP RECIATE THAT AS AGAINST THE STATEMENTS OF ANY PERSON RECORDED U/S 1 43(3). R.W.S. 147, THE ASSES SEE-COMPANY HAS FULLY DISCHARGED THE BURDEN OF PROOF, ONUS OF PROOF AND EXPLAINED THE SOURCE OF SH ARE CAPITAL AND ADVANCES (SHORT TERM/ LONG TERM LOANS) RECEIVED BY ESTABLISHED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANS ACTION BY BANKING INSTRUMENTS WITH DOCUMENTARY EVIDENCES. THE FURTHER STAND OF THE ASSESSEE HAS BEEN THAT THE ASSESSEE SUBSTANTIATED T HE DETAILS WITH THE DOCUMENTARY EVIDENCES AS EXTRACTED FROM THE WEB SITE OF MINISTRY ITA NO. 3017/MUM/2018 : 10 : OF CORPORATE AFFAIRS, GOVERNMENT OF INDIA BEFORE TH E ASSESSING OFFICER. THESE FACTS HAVE NOT BEEN REBUTTED ON BEHA LF OF THE REVENUE. IF THE SHARE APPLICATION MONEY / SHORT/ LONG TERM L OANS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHARE HOLDE RS/ LENDERS WHOSE NAMES ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN A CCORDANCE WITH LAW BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF ASSESSEE COMPANY. X. AS HELD IN THE CASE OF R.B. MITTAL V. CIT 246 IT R 283 (AP) IN AN ENQUIRY U/S. 68, THE RULE OF AUDI ALTERAM PARTERM H AS TO BE OBSERVED AND THE ASSESSEE MUST BE GIVEN A FAIR AND REASONABL E HEARING TO DISCHARGE THE BURDEN CAST ON HIM U/S 68 OF THE ACT. FURTHER, IT IS SETTLED LAW THAT IN THE MATTER OF CASH CREDIT, THE INITIAL ONUS LIES ON THE ASSESSES TO PROVE THE GENUINENESS OF THE TRANSA CTION ALONG WITH THE IDENTITY OF THE LENDER/INVESTOR AND HIS CREDITW ORTHINESS. HAVING DONE SO, THE APPELLANT IN THE INSTANT CASE HAS DISC HARGED THE ONUS CAST UPON IT. BEYOND THIS, FOR THE CHARGE OF UNEXPL AINED CASH CREDIT TO STICK, THE ONUS LIES ON THE AC TO DISPROVE THE CLAI M OF THE ASSESSEE BY ESTABLISHING THAT THE EVIDENCE FILED BY THE ASSE SSEE WAS FALSE AND BY BRINGING NEW MATERIAL ON RECORD AND FAILURE TO DO SO WOULD VITIATE THE ADDITION MADE ON THIS COUNT. XI. IT WAS ALSO HELD IN THE CASE OF CIT V. B EDI & CO. P. LTD. (1998) 230 ITR 530 (SC) THAT WHERE PRIMA-FACIE THE INFEREN CE ON FACTS IS THAT THE ASSESSEE'S EXPLANATION IS PROBABLE, THE ONUS WI LL SHIFT TO THE REVENUE TO DISPROVE IT AND THE ASSESSEE'S EXPLANATI ON IN SUCH CASE CANNOT BE REJECTED ON MERE SURMISES. OTHER SIMILAR JUDICIARY RULING ARE AS UNDER- KHANDELWAL CONSTRUCTIONS V. CIT (1997) 2 27 ITR 900 (GAU.) CIT V. ORISAA CORPORATION PVT, LTD. 158 ITR 78 ( SC) CIT V. ROHINI BUILDERS 256 ITR 360 [GUJ.). XII. THE SUPREME COURT HELD IN THE EASE OF CBI V/ S. V.C. SHUKLA THAT THERE MUST BE AT LEAST AN IOTA OF INDEPENDENT EVIDE NCE IN SUPPORT OF ACCUSATION LEVELLED AGAINST THE PARTY. A. IT WAS HELD IN CASE OF DCIT 12(1)(2) VS. BAIRA GRA BUILDERS P LTD. [ITA NO- 4691 & 4692/MUM/2015]- A. WE HAVE GONE THROUGH THE ORDERS RELIED UPON BY T HE LEARNED DR. WE NOTED THAT THE DECISION] OF THE DELHI HIGH COURT IN THE CASE OF ITA NO. 3017/MUM/2018 : 11 : BIKRARA SINGH, THE ASSESSEE COULD NOT DISCHARGE THE ONUS AS LAID DOWN BY SECTION 6S OF THE ACT. SIMILARLY, IN THE CA SE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. (SUPRA ), THE ADDITIONS HAVE BEEN MADE U/S. 68 IN RESPECT OF THE SHARE CAPI TAL RECEIVED BY THE ASSESSEE FROM VARIOUS COMPANIES AND DURING THE COURSE OF INVESTIGATION, IT WAS FOUND THAT THE SHARE CAPITAL HAS BEEN RECEIVED FROM THREE ENTRY OPERATORS, WHO ARE ALLEGEDLY IN TH E BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. NOTICES ISSUED U/S . 131 TO THESE PARTIES WERE RETURNED UNDELIVERED FRY THE POSTAL AU THORITIES WITH THE REMARK 'LEFT'/ 'NO SUCH PERSON'. UNDER THESE CIRCUM STANCES, THE HON'BLE HIGH COURT TOOK A VIEW THAT THE ASSESSEE FA ILED TO DISCHARGE THE BURDEN TO PROVE THE CREDIT WORTHINESS AS WELL A S THE GENUINENESS OF THE TRANSACTIONS. 10. BUT IN THE IMPUGNED CASE, WE NOTED THAT THE ASS ESSEE HAS SUBMITTED ALL THE EVIDENCES INCLUDING THE CONFIRMAT ION OF THE CREDITORS. THIS IS NOT A CASE WHERE THE CREDITORS HAVE NOT GIVEN CONFIRMATIONS RATHER THEY HAVE DULY CONFIRMED TO GI VING LOAN TO THE ASSESSEE, THE LOANS WERE RECEIVED AND RETURNED THRO UGH BANKING CHANNELS. THE ASSESSEE HAS ALSO SUBMITTED COPIES OF BANK ACCOUNTS. THE LENDER HAS NOT DEPOSITED CASH INTO BANK ACCOUNT . THE ASSESSEE HAS DULY DISCHARGED THE ONUS WITH REGARD TO IDENTIT Y OF THE LENDER, CREDITWORTHINESS OF THE PARTY AND ALL SUPPORTING EV IDENCES AS REQUIRED U/S. 68 OF THE IT. ACT. THEREFORE, IN OUR OPINION THE DECISIONS RELIED UPON BY THE DR DOES NOT ASSIST THE REVENUE T O THE FACTS OF THE PRESENT CASE. 11. WE HAVE ALSO GONE THROUGH THE DECISIONS RELIED UPON BY THE LEARNED AR, WE NOTED THAT THIS TRIBUNAL IN SIMILAR CIRCUMSTANCES IN THE CASE OF KAMAL AGROTECH PVT. LTD. VS. ITO IN ITA NO. 437/HYD/2016 VIDE ITS ORDER DATED 25.11.2016 HAS HE LD AS UNDER: A PLAIN READING OF THE ASSESSMENT ORDER DEMONSTRATE S THAT THE AO MERELY WENT BY THE INVESTIGATION DONE BY THE OFFICE OF D.G.I (INVESTIGATION), MUMBAI. NO ENQUIRIES OR INVESTIGAT ION WAS CARRIED OUT. NO EVIDENCE TO CONTROVERT THE CLAIMS OF THE AS SESSEE WAS BROUGHT ON THE RECORD BY THE AO. EVEN THE STATEMENT OF SHRI PRAVEEN KUMAR WAS SUPPLIED. NOTHING IS ON RECORD ABOUT THE RESULT IF INVESTIGATIONS DONE BY DGIT (INV) MUMBAI, THE PAPER S FILED BY THE ASSESSES DO DEMONSTRATE THE IDENTITY, CREDITWORTHIN ESS AND GENUINENESS OF THE TRANSACTION. THE ADDITION IS MAD E MERELY ON SURMISES AND CONJECTURES. IN VIEW OF THE ABOVE, WE HOLD THAT THE ADDITION MADE UNDER SECTION 68 OF THE ACT IS BAD IN LAW. ITA NO. 3017/MUM/2018 : 12 : WE NOTED THAT IN THE SAID CASE ALSO LOAN HAD BEEN R ECEIVED FROM JAVDA INDIA. IMPEX LTD. 12. BEING CONSISTENT WITH THE VIEW TAKEN BY THIS CO -ORDINATE BENCH IN CASE OF KOMAL AGROTECH PVT. LTD. (SUPRA), AND IN VI EW OF THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY ILLEGALITY OR INF IRMITY IN THE ORDERS OF THE CIT(A). IT IS ACCORDINGLY, CONFIRMED FOR BOT H THE YEARS UNDER APPEAL. XII. HON'BLE ITAT MUMBAI IN AN IDENTICAL CASE OF AS STT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 18 AND 39, MUMBAI VS. NITIN FIRE PROTECTION IND. LTD. PRONOUNCED ON 09,02,2016 ITA N O, 757/MUM/2015, HAS HELD THAT :- '.......WHERE THE ASSESSEE HAS DISCHARGED THE INITIAL BURDEN OF PROOF. APPARENTLY THE ASSESSEE IN THE INSTANT CASE HAS DISCHARGED THE SAID PRIMARY RESPONSIBILITY. NOW, IT IS THE TUR N OF THE AO TO DISPROVE THE CLAIM OF THE ASSESSEE. IN THIS REGARD, THE AO HAS PLACED RELIANCE ON THE GENERAL STATEMENT GIVEN BY MR. MUKE SHCHOKSI. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE SAID STATEMENT OF MR. MUKESHCHOKSI DOES NOT CONTAIN ANYTHING AGAINST THE LOANS TAKEN BY THE ASSESSEE. FURTHER, THE HON'BLE RAJASTHAN HIGH C OURT HAS HELD IN THE CASE OF A.L. LALPURIA CONSTRUCTION PVT LTD (SUP RA) THAT THE ADDITION U/S 68 OF THE ACT CANNOT BE MADE MERELY ON THE BASIS OF STATEMENT GIVEN BY SOMEBODY, WHETHER ASSESSEE HAS O THERWISE DISCHARGED THE INITIAL BURDEN OF PROOF PLACED UPON HIM U/S. 68 OF THE ACT. ACCORDINGLY, WE ARE OF THE VIEW THAT THE ASSE SSING OFFICER HAS FAILED TO DISCHARGE THE BURDEN SHIFTED TO HIS SHOUL DERS, IN WHICH CASE, THE ADDITION MADE BY HIM U/S. 68 OF THE ACT I S LIABLE TO BE DELETED IN VIEW OF THE FOREGOING DISCUSSIONS, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE IMPUGNED ADD ITION OF RS. 30.00 LAKHS. IN THE RESULT, THE APPEAL FILED BY THE ASSE SSEE IS ALLOWED. HENCE AS PER THE ABOVE MENTIONED JUDICIAL RULING, I TS CRYSTAL CLEAR THAT APPELLANT HAS DISCHARGED THE INITIAL BURDEN OF PROOF AND THUS THE BURDEN WAS SHIFTED TO THE LEARNED ASSESSING OFF ICER TO DISAPPROVE THE DOCUMENTS/SUBMISSIONS SUBMITTED. XIV. THE APPELLANT WOULD LIKE TO HUMBLY SUBMIT TO Y OUR HONOUR A RECENT LANDMARK DECISION BY HON'BLE ITAT, HYDERABAD IN AN IDENTICAL CASE AND HAVING THE SAME ISSUE OF KOMAL AGROTECH PV T. LTD, VS. THE INCOME TAX OFFICER 2(1), HYDERABAD PRONOUNCED ON 25 .11.2016 IT- 66/2014-15, THE SUMMARY OF THE CASE IS OUTLINED AS UNDER :- ITA NO. 3017/MUM/2018 : 13 : '.... ....A.O. MERELY WENT 'BY THE INVESTIGATION D ONE BY THE OFFICE OF D.G.I. (INVESTIGATION), MUMBAI. NO ENQUIRES OR INVE STIGATION WAS CARRIED OUT. NO EVIDENCE TO CONTROVERT THE CLAIMS O F THE ASSESSEE WAS BROUGHT ON RECORD BY THE A.O. EVEN THE STATEMENT OF MR. PRAVEEN KUMAR WAS SUPPLIED. NOTHING IS ON RECORD ABOUT THE RESULT OF INVESTIGATIONS DONE BY DGIT (INV.) MUMBAI. THE PAPE RS FILED BY THE ASSESSEE DO DEMONSTRATE THE IDENTITY, CREDIT WORTHI NESS AND GENUINENESS OF THE TRANSACTION. THE ADDITION IS MAD E MERELY ON SURMISES AND CONJECTURES. THE STATEMENT RECORDED AT THE BACK OF THE APPELLANT CANNOT BE UTILIZED IGNORING OTHER VERIFIA BLE EVIDENCES. THE ID. ASSESSING OFFICER HAS MADE THE ADDITION OF RS. 75,00,000/- DISREGARDING THE EVIDENCES ON RECORD AND WITHOUT DI SCHARGING HER ONUS AND WITHOUT ESTABLISHING ANYTHING CONTRARY TO THE AGREEMENT OF THE APPELLANT AND WITHOUT VERIFYING THE BANK ACCOUN T, EXISTENCE OF INVESTOR AND WITHOUT MAKING FRUITFUL INVESTIGATION, THUS THE DEMAND WAS DIRECTED TO BE DELETED. XV. JURISDICTIONAL HON'BLE 1TAT, MUMBAI FOR AN IDE NTICAL CASE I.E. ARCELI REALTY LIMITED VS. THE INCOME TAX OFFICER 15 (1) (1), MUMBAI PRONOUNCED ON 21.04.2017 ITA-6492/MUM/2016-17, THE SUMMARY OF THE CASE IS OUTLINED AS UNDER:- .......A.O. MERELY RELIED UPON THE INFORMATION PRO VIDED BY THE OFFICE OF DGIT(INV), MUMBAI AND DID NOT MADE ANY INDEPENDENT ENQUIRY. THE PAPERS FILED BY THE ASSESSEE DO DEMONSTRATE THE IDE NTITY, CREDIT WORTHINESS, GENUINENESS, SOURCE OF SOURCE OF THE TR ANSACTION, AO DID NOT PROVIDE OPPORTUNITY TO CROSS EXAMINE THE CONCER NED PERSON AND ALSO THE DEPARTMENT HAS NOT PROVIDED AUTHENTICITY O F THE INFORMATION TO THE PERSON AGAINST WHOM SUCH INFORMATION IS USED . THE ADDITION IS MADE MERELY ON SURMISES AND CONJECTURES. THE STATEM ENT RECORDED AT THE BACK OF THE APPELLANT CANNOT BE UTILIZED IGN ORING OTHER VERIFIABLE EVIDENCES. THE LD. ASSESSING OFFICER HAS MADE THE ADDITION OF RS. 20,00,000/- DISREGARDING THE EVIDENCES ON RE CORD AND WITHOUT DISCHARGING HER ONUS AND WITHOUT ESTABLISHING ANYTH ING CONTRARY TO THE AGREEMENT OF THE APPELLANT AND WITHOUT VERIFYIN G THE BANK ACCOUNT EXISTENCE OF INVESTOR AND WITHOUT MAKING FR UITFUL INVESTIGATION, THUS THE DEMAND WAS DIRECTED TO BE D ELETED.' XVI. HON'BLE ITAT, MUMBAI FOR AN IDENTICAL CASE I.E. INCOME TAX OFFICER, 12(2)(3) VS. M/S. SHREEDHAM CONSTRUCTION P VT. LTD. ON 14.11.2017 ITA-3754/3755/3756/MUM/2017, THE SUMMARY OF THE CASE IS OUTLINED AS UNDER:- WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PA RTIES AND HAVE GONE THROUGH THE MATERIAL AND THE ORDER OF THE AUTH ORITIES BELOW. WE HAVE NOTED THAT THE ASSESSING OFFICER PASSED THE AS SESSMENT ORDER ITA NO. 3017/MUM/2018 : 14 : ON THE SIMILAR LINES AS MADE FOR EARLIER YEAR. THE ASSESSING OFFICER HAS NOT GIVEN SPECIFIC FINDING ON THE DOCUMENTARY E VIDENCES FURNISHED BY THE ASSESSEE. THE ASSESSING OFFICER W HILE PASSING THE ASSESSMENT ORDER HAS NOT GIVEN DIFFERENT FINDING TH OUGH THE FACTS FOR THE YEAR UNDER CONSIDERATION WERE AT VARIANCE. THE ASSESSEE SPECIFICALLY CONTENTED THAT THEY HAVE PAID INTEREST ON THE LOAN AVAILED AND DEDUCTED TDS. THE ID COMMISSIO NER (APPEALS) WHILE CONSIDERING THE FACTS NOTED THAT THE ASSESSIN G OFFICER HAS NOT CORRECTLY APPRECIATED THE LOAN AMOUNT FROM RAGHUVEE R SALES NOR ITS SHARE CAPITAL AND RESERVE FUNDS. SIMILAR, OTHER DIS CREPANCIES WERE POINTED OUT ABOUT VIRAJ MERCHANTILE P. LTD PROP ERTIES LTD. PARK TOOLS LTD AND (UTAKANTHA TRADING & PROPERTIES LTD IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY INFIRMITY AND ILLEGALITY AND WE HAVE ALREADY CONFIRMED THE ORDER PASSED BY ID CIT(A) FOR AY 2008-09 AND 2009-10, HENCE, THE APPEA L FOR THE YEAR CONSIDERATION IS ALSO DISMISSED WITH SIMILAR OBSERV ATION.' XVII. RECENT JUDGMENT DELIVERED BY JURISDICTIONAL HON'BLE ITAT, MUMBAI FOR AN IDENTICAL CASE I.E. INCOME TAX OFFICE R, M/S SHREE LAXMI ESTATE PVT. LTD. V/S. 15(3)[3| ON 29.12-2017 ITA- 5954/MUM/2016, THE SUMMARY OF THE CASE IS OUTLINED AS UNDER:- 'WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERI AL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE AO MADE ADDITION TOWARDS UNSECURED LOANS RECEIVED FROM JOSH TRADING COMPANY PVT. LTD. AND VIRAJ MERCANTILE PVT. LTD ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING WHICH REVEALED THAT THE ASSESSEE IS BENEFICIARY OF BOGUS ACCOMMODATION ENTRIES PROVIDED BY SHRI PRAVEEN KUMAR JAIN THROUGH HIS BOGUS COMPANIES.................. THE AO HAS BROUGHT OUT FACTS IN THE LIGHT OF STATEMENT OF SHRI PRAVINKUMAR JAIN DEPOSED BEFORE T HE INVESTIGATION WING TO MAKE ADDITION. EXCEPT THIS THERE IS NO CONT RARY EVIDENCE IN THE POSSESSION OF THE AO TO DISPROVE THE LOAN TRANS ACTION FROM JOSH TRADING COMPANY PVT. LTD. AND VIRAJ MERCANTILE PVT, LTD. ON THE OTHER HAND, THE ASSESSEE HAS FURNISHED VARIO US DETAILS INCLUDING CONFIRMATION LETTERS FROM THE PARTIES, TH EIR BANK STATEMENTS ALONG WITH THEIR FINANCIAL STATEMENTS TO PROVE IDEN TITY, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES . THE ASSESSEE ALSO FURNISHED EVIDENCES TO PROVE THAT THE PARTIES HAVE RESPONDED TO THE NOTICES ISSUED U/S 133(6) BY AO BY FILING VARIO US DETAILS' '............ IT IS WELL SETTLED LEGAL POSITION THA T THE ASSESSEE HAS TO DISCHARGE 3 MAIN INGREDIENTS IN ORDER TO DISCHARGE THE INITIAL BURDEN OF PROOF, I.E. THE IDENTITY OF THE CREDITOR, THE GE NUINENESS OF ITA NO. 3017/MUM/2018 : 15 : TRANSACTION AND CREDIT WORTHINESS OF THE CREDITORS. ONCE (HE ASSESSEE DISCHARGES INITIAL BURDEN PLACED UPON HIM, THEN THE BURDEN TO DISPROVE THE SAID CLAIM SHIFTS UPON THE AO COMING TO THE CASE LAWS RELIED UPON THE ASSESSEE, THE ASSESSEE HAS RELIED UPON THE DECISION OF HON'BLE BOMBAY HIGH COU RT IN THE CASE OF CIT VS GAGANDEEP INFRASTRUCTURE PVT. LTD (2017) 394 ITR 680 (BOM). WE HAVE GONE THROUGH THE CASE LAWS RELIED UPON BY T HE ASSESSEE M THE FIGHT OF FACTS OF THE PRESENT CASE AND FIND THA T THE HON'BLE HIGH COURT CATEGORICALLY OBSERVED THAT ......THE THREE ESSENTIAL TESTS WHILE CONFIRMING THE PRE PROVISO SECTION 68 OF THE ACT LAID DOWN BY THE COURTS NAMEL Y THE GENUINENESS OF THE TRANSACTION, IDENTITY AND THE CA PACITY OF THE INVESTOR HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORD ER OF THE TRIBUNAL AND ON FACTS IT WAS FOUND SATISFIED. FURTH ER IT WAS A SUBMISSION ON BEHALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE . PREMIUM GIVES RISE TO SUSPICION ON THE GENUINENES S (IDENTITY) OF THE SHAREHOLDERS I.E. THEY ARE BOGUS. THE APEX COURT IN LOVELY EXPORTS (P) LTD. (SUPRA) IN THE CONTEXT TO THE PRE-AMENDED SECTION 68 OF THE ACT HAS HELD THAT WHERE THE REVENUE URGES THAT THE AMOUNT OF SHARE APPLICATION MONEY HAS BEEN RECEIVED FROM BOGUS SHAR EHOLDERS THEN IT IS FOR ,THE INCOME TAX OFFICER TO PROCEED BY REOPEN ING THE ASSESSMENT OF SUCH SHAREHOLDERS AND ASSESSING THEM TO LAX IN A CCORDANCE WITH LAW. IT DOES NOT ENTITLE THE REVENUE TO ADD THE SAM E TO THE ASSESSEE'S INCOME AS UNEXPLAINED CASH CREDIT.' 'THE ASSESSEE HAS ALSO RELIED UP TO THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS LOVELY EXPORTS PVT LTD (2008) 216 CTR 195 (SC). THE HON'BLE APEX COURT WHILE DELETING THE ADDITION MADE U/S. 68 OBSERVED THAT IF THE SHARE APPLICATION MONE Y IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDER S WHOSE NAMES ARE GIVEN TO THE AO THEN THE DEPARTMENT IS FR EE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE W ITH LAW, BUT THIS AMOUNT OF SHARE APPLICATION MONEY CANNOT' BE REGARD ED AS UNDISCLOSED INCOME U/S. 68 OF THE INCOME-TAX ACT, 1 961.' FURTHER WITH THE SIMILAR FACTS, SIMILAR JUDGMENTS W ERE PRONOUNCED AND ARE HEREBY OUTLINED AS UNDER :- ITAT E BENCH IN M/S. SDB ESTATE PVT LTD VS. ITO-(5) (3)(2) IN ITA NO, 584/MUM/20L5: AY 2008-09 HAS DECIDED SIMILAR ISSUE BY OBSERVING AS UNDER:- 'IN VIEW OF THE ABOVE STATED LEGAL POSITION AND IN THE LIGHT OF RELIABLE EVIDENCES BROUGHT ON RECORD BY ASSES SEE TO SUBSTAN TIATE IDENTITY, ITA NO. 3017/MUM/2018 : 16 : GENUINENESS AND CREDITWORTHINESS OF SHAREHOLDERS/ L ENDERS, WHICH HAVE NOT BEEN CONTROVERTER BY THE REVENUE, THE ADDI TIONS MADE SOLELY ON THE BASIS OF GENERAL STATEMENT OF SHRI MU KESH CHOKSHI CANNOT BE HELD TO BE JUSTIFIED AND THE SAME ARE ACC ORDINGLY ORDERED TO BE DELETED. IN THE RESULT, APPEAL OF THE ASSESSES IS AL LOWED IN PART, IN TERMS INDICATED HEREINABOVE. > FURTHER ITAT-D BENCH HAS DECIDED THE FO LLOWING CASES IN FAVOUR OF THE ASSESSES ON SIMILAR ISSUES. A) ITO - 10(2)(1) VS. M/S. PEEP DARSHAN PROPERTIES PVT LTD IN ITA NO. 2117/MUM/20L4 ; AY 2006-07 AND ITA NO.2118/MUM/2014 ; AY 2007-08 B) ITO - 10(2)(3) VS. AAJIVAN COMPUTES PVT LTD IN ITA NO. 2160/MUM/2014: AY 2006-07 C) ITO - 10(2)(3) VS. DIGNITY SECURITIES TRADING PVT L TD IN ITA NO. 2157/MUM/2014: AY 2006-07 D) ITO - 10(2)(1) VS. M/S. BLUE HILL PROPERTIES PVT LT D IN ITA NO. 2119/MUM/2014 : AY 2006-07 WITH THE FACTS AND VARIOUS JUDICIAL RULINGS AS DISC USSED ABOVE, IT IS CRYSTAL CLEAR THAT THE UNSECURED LOAN RECEIVED BY T HE APPELLANT WAS GENUINE AND CANNOT BE TREATED AS ACCOMMODATION ENTR Y. JURISDICTIONAL HON'BLE ITAT, MUMBAI FOR AN IDENTICA L CASE I.E., ARCELI REALTY LIMITED VS. THE INCOME TAX OFFICER 15(1)(1), MUMBAI PRONOUNCED ON 21.04.2017 ITA-6492/MUM/2016&17, THE SUMMARY OF THE CASE IS OUTLINED AS UNDER- ...,.A.O. MERELY RELIED UPON THE INFORMATION PROVI DED BY THE OFFICE OF DGIT(INV.), MUMBAI AND DID NOT MADE ANY INDEPENDENT ENQUIRY. THE PAPERS FILED BY THE ASSESS DO DEMONSTRATE THE IDEN TITY, CREDIT WORTHINESS, GENUINENESS, SOURCE OF SOURCE OF THE TR ANSACTION- AO DID NOT PROVIDE OPPORTUNITY TO CROSS EXAMINE THE CONCER NED PERSON AND ALSO THE DEPARTMENT HAS NOT PROVIDED AUTHENTICITY O F THE INFORMATION TO THE PERSON AGAINST WHOM SUCH INFORMATION IS USED . THE ADDITION IS MADE MERELY ON SURMISES AND CONJECTURES. THE STATEM ENT RECORDED AT THE BACK OF THE APPELLANT CANNOT BE UTILIZED IGN ORING OTHER VERIFIABLE EVIDENCES. THE LD. ASSESSING OFFICER HAS MADE THE ADDITION OF RS. 20,00,000/- DISREGARDING THE EVIDENCES ON RE CORD AND WITHOUT DISCHARGING HER ONUS AND WITHOUT ESTABLISHING ANYTH ING CONTRARY TO THE AGREEMENT OF THE APPELLANT AND WITHOUT VERIFYIN G THE BANK ITA NO. 3017/MUM/2018 : 17 : ACCOUNT, EXISTENCE OF INVESTOR AND WITHOUT MAKING F RUITFUL INVESTIGATION- THUS THE DEMAND WAS DIRECTED TO BE D ELETED. > IT IS NOT OUT OF PLACE TO BRING UNDER YOU R HONOUR KIND NOTICE, THAT THE RESPONDENT HAS DISCHARGED THE ONUS CAST UP ON IT U/S 68 OF THE AC(. BY SUBMITTING THE NUMBER OF DOCUMENTARY EV IDENCES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. AO HA S FAILED TO DEMONSTRATE AND ESTABLISH THAT HAW THE IMPUGNED ADD ITION OF RS. 20,00,000/- WAS TREATED AS UNEXPLAINED CASH CREDIT. HENCE, STATEMENT OF A THIRD PARTY CANNOT BE RELIED UPON WI THOUT ANY CORROBORATIVE DOCUMENTARY EVIDENCE ON RECORD. IN VIEW OF THE ABOVE, THE APPEAL OF THE REVENUE DES ERVES TO BE REJECTED. 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND T HAT IN THE PRESENT CASE, THE ASSESSEE HAS MADE A REQUEST TO TH E A. O. TO PROVIDE AN OPPORTUNITY TO CROSS EXAMINE THE PERSON W HOSE STATEMENT IS RECORDED AT THE BACK OF THE ASSESSEE AND TH E AO WANTS TO USE SUCH STATEMENT AGAINST THE ASSESSEE. ON P AGE 2 OF THE ASSESSMENT ORDER, THE AO HAS STATED THAT DURING THE COURSE OF SEARCH IN THE CASE OF SHRI BHANWARLAL JAI N AND GROUP, VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AS PER WHICH, THIS GROUP HAS FORMED VARIOUS DUMMY COMPANIES WITH DUMMY DIRECTORS AND BUSINESS OF THESE DUMMY COMPANIES WAS OPERATED FROM THE PLACE WHICH WERE IN THE NAME OF SHRI BHANWARLAL JAIN. HE FURTHER NOTED THAT IN COURSE OF SE ARCH, STATEMENTS WERE RECORDED U/S 132 (4)/131 OF DUMMY DIRE CTORS WHO HAD ADMITTED THAT THEY ARE MERE DUMMY DIRECTORS. IN ITA NO. 3017/MUM/2018 : 18 : PARA 5 OF THE ASSESSMENT ORDER, THE AO NOTED THAT THE ASSESSEE HAS TAKEN UNSECURED LOAN IN THE FORM OF ACCOMMODATION ENTRIES FROM M/S TANIKA COMMODITIES PVT. LTD., THE COMPANY WHICH WAS FORMED BY SHRI BHANWARLAL JAIN AND GROUP TO PROVIDE ACCOMMODATION ENTRIES. HE FURTHE R NOTED THAT NOTICE U/S 133 (6) WAS ISSUED TO THIS COMPANY FOR D ETAILS OF TRANSACTIONS MADE BY IT WITH THE PRESENT ASSESSEE IN O RDER TO EXAMINE THE GENUINENESS OF THE LOANS. HE ALSO NOTED THAT REPLY FROM THE SAID PARTY HAS BEEN RECEIVED. THEREAF TER, HE NOTED ABOUT THE STATEMENT OF SHRI BHANWARLAL JAIN RECORDE D DURING SEARCH PROCEEDINGS AND OBSERVED THAT IN THIS STATEMENT, HE HAS EXPLAINED THE MODUS OPERANDI OF THE ACCOMMODATION ENTRIES. BASED ON THESE OBSERVATIONS, THE AO CAME TO THE CONCLUSION THAT THE CLAIM OF THE ASSESSEE ABO UT TAKING OF LOAN OF RS. 20 LACS FROM M/S TANIKA COMMOD ITIES PVT. LTD. IS MERELY AN ACCOMMODATION ENTRY UNDER THE GUI SE OF UNSECURED LOAN AND MADE ADDITION. THERE IS NO WHISPE R ABOUT THE ASSESSEES REQUEST FOR PROVIDING THE OPPORTUNITY OF CROSS EXAMINATION. IN THE LIGHT OF THESE FACTS, I EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HONBLE APEX COURT RE NDERED IN THE CASE OF KISHAN CHAND CHELLARAM VS. CIT (SUPR A). IN THIS CASE, THE ADDITION WAS MADE ON THE BASIS OF THE STATEME NT OF ITA NO. 3017/MUM/2018 : 19 : THE MANAGER OF PNB, THROUGH WHICH, MONEY WAS SENT BY O NE BRANCH OF THE ASSESSEE BY WAY OF TT TO ANOTHER BRANCH OF THE ASSESSEE. THE COPY OF THIS LETTER WAS NOT GIVEN TO THE A SSESSEE. IT IS OBSERVED ON PAGE 720 OF 125 ITR THAT BEFORE THE I . T. AUTHORITIES COULD RELY UPON THE LETTERS OF THE BANK MA NAGER, THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO TH AT THE ASSESSEE COULD COTROVERT THE STATEMENT CONTAINED IN IT BY ASKING TO CROSS EXAMINE THE MANAGER OF THE BANK WITH REFERENCE TO THE STATEMENT MADE BY HIM. IN MY CONSIDERED OPINION, THIS IS THE RATIO DECIDENDI OF THIS JUDGMENT THA T NO STATEMENT OBTAINED BEHIND THE BACK OF THE ASSESSEE CAN B E USED AGAINST THE ASSESSEE WITHOUT PROVIDING TO THE ASSE SSEE AN OPPORTUNITY OF CROSS EXAMINATION. 6. IN THE PRESENT CASE, THE ASSESSEE HAS BROUGHT ON REC ORD, PAN OF THE LOAN CREDITOR AND EVIDENCE OF FILING OF IN COME TAX RETURN. THE AO HAS ALSO NOTED THAT NOTICE U/S 133(6) WA S ISSUED TO THE LENDER COMPANY AND REPLY IS ALSO RECEIV ED. HENCE, IN MY CONSIDERED OPINION, THE ASSESSEE HAS ES TABLISHED THE IDENTITY OF THE LOAN CREDITOR IN QUESTION. IN RESPEC T OF CREDITWORTHINESS OF THE SAID LOAN CREDITOR, THE ASSESS EE HAS BROUGHT ON RECORD, THE AUDITED BALANCE SHEET OF THE SAI D ITA NO. 3017/MUM/2018 : 20 : COMPANY, RELEVANT BANK STATEMENT AND AS PER THIS BALANC E SHEET, THE NET WORTH OF THIS COMPANY IS RS. 83.34 LACS AND THE LOAN AMOUNT IN QUESTION IS ONLY RS.20 LACS. IN THE LIG HT OF THE SAME, IT HAS TO BE ACCEPTED THAT THE CREDITWORTHINESS OF THE SAID LOAN CREDITOR IS ALSO ESTABLISHED AT LEAST PRIMA FACIE. REGARDING GENUINENESS OF THE TRANSACTION IN QUESTION, TH E ASSESSEE HAS BROUGHT ON RECORD BANK STATEMENT AND LOAN CONFIRMATION TO ESTABLISH THAT THE LOAN WAS RECEIVED BY ACCOUNT PAYEE CHEQUE AND IT WAS RETURNED IN THE NEXT YE AR BY ACCOUNT PAYEE CHEQUE. HENCE, GENUINENESS OF THE TRANSA CTION IN QUESTION IS ALSO ESTABLISHED AT LEAST PRIMA FACIE. THE AO HAS COME TO A DIFFERENT CONCLUSION MAINLY ON THE BASIS OF THE STATEMENT OF SHRI BHANWARLAL JAIN GROUP WITHOUT PROVIDI NG TO THE ASSESSEE AN OPPORTUNITY OF CROSS EXAMINATION. HENC E, IT IS SEEN THAT EXCEPT THE STATEMENT OF SHRI BHANWARLAL JAIN GROUP, THERE IS NO ADVERSE MATERIAL BROUGHT ON RECORD BY THE AO. NO SHORTCOMING IS POINTED OUT IN VARIOUS DOCUMENTS BROUGHT ON RECORD BY THE ASSESSEE TO ESTABLISH THE IDENTI TY AND CREDIT WORTHINESS OF THE LOAN CREDITOR AND GENUINE NESS OF THE TRANSACTION AS NOTED ABOVE. SINCE, THE AO HAS NOT PROVIDED AN OPPORTUNITY OF CROSS EXAMINATION OF SHRI BHANWARLAL JAIN GROUP, THE ADVERSE STATEMENTS OF THAT G ROUP ITA NO. 3017/MUM/2018 : 21 : CANNOT BE USED AGAINST THE ASSESSEE. I HOLD SO BY RES PECTFULLY FOLLOWING THIS JUDGMENT OF HON.BLE APEX COURT RENDERED IN THE CASE OF KISHAN CHAND CHELLARAM VS. CIT (SUPRA). ONC E, I EXCLUDE THE SAME, THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED IN THE FACTS OF THE PRESENT CASE AS DISCUSSED ABOVE. HENCE, I DELETE THE SAME. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST DAY OF FEBRUARY, 2019 SD/- (A.K. GARODIA) /ACCOUNTANT MEMBER /MUMBAI; /DATED : 1 ST FEBRUARY, 2019 TNMM ITA NO. 3017/MUM/2018 : 22 : / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. ' ! / THE RESPONDENT 3. # $ ( ) / THE CIT(A), MUMBAI 4. # $ / CIT, MUMBAI 5. '()*+ , #-*+#. , / DR, ITAT, MUMBAI 6. )/01 / GUARD FILE # / BY ORDER, ' //TRUE COPY// /# (DY./ASST. REGISTRAR) #-*+#., / ITAT, MUMBAI