TANAYA GEMS & JEWELLERY EXPORTS LTD, MUMBAI V. DCIT 5(3)(2), MUMBAI

ITA 3196/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9686 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D G
• Keywords: Reopening of assessment; Bogus purchase; Unexplained cash credit; Gift; Search and seizure; Deemed to accrue or arise in india; Difference of opinion; Accommodation entries; Bogus loan; Change of opinion; Reassessment proceedings; Borrowed satisfaction
• Section: 143(3); 143(1); 68; 132

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE HONBLE SH. SANDEEP GOSAIN, JM & HONBLE SH. G. MANJUNATHA , AM ./ I.T.A. NO . 3196 /MUM/2017 ( / ASSESSMENT YEAR: 20 07 - 08 ) M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. 5 TH FLOOR, 52 MARBLE ARCH, DR. G. D. DESHMUKH MARG, PEDDAR ROAD, MUMBAI - 400 026 / VS. DCIT - 5(3)(2), MUMBAI, PIN - ./ ./ PAN NO. A A CCT5863H ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENTBY : SHRI D. G. PANSARI, D R / DATE OF HEARING : 02 .0 4 .201 9 / DATE OF PRONOUNCEMENT : 24.06.2019 / O R D E R SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 10 , MUMBAI DATED 20.01 .2017 F OR AY 20 07 - 08 ON THE GROUNDS MENTIONED HEREIN BELOW: - 1) IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER HAS PASSING THE 2 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. ORDER U/S 143(3) R.W.S 147 AFTER A GAP OF 4 YEARS AND ALSO ONLY ON THE BASIS OF BORROWED SATISFACTION, PRESUMPTION AND SURMISES AND WITHOUT FURNISHING REASONS RECORDED FOR REOPENING. 2) IN THE FACTS AND THE CIRCUMSTA NCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOM E TAX(A) ERRED IN CONFIRMING THE DISALLOWANCE AMOUNTING TO RS 1,99,00,000 / - BY TREATING THE SAME AS ACCOMMODATION ENTRY OF BOGUS LOAN FROM THE CONCERN M/S SANKHALA EXPORTS P. LTD AS UNEXPLAINED CASH CREDIT U/S 68 EVEN THOUGH SIMILAR DISALLOWANCES WERE ALLO WED IN THE CASE OF RELIANCE CORPORATION [ I.T.A. NO.1069 TO 1071/MUM/2017] AND IN THE CASE OF KOMAL AGROTECH PVT LTD [HA.NO.437/HYD/20 16]. 3) IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER WRONGLY INITIATED PENALTY U/S 271(L)(C) AND ALSO WRONGLY CHARGED INTEREST U/S 234A, B, C&D. 4) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX [A] ERRED CONFIRMING ALL THE ABOVE GROUNDS. [B] RELIEF PRAYED: THE APPELLANT THEREFORE PRAYS AS FOLLOWS, 3 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. 1. TO QUASH THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) R.W.S 147. 2. TO QUASH THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WITHOUT FURNISHING REASONS RECORDED FOR REOPENING. 3. TO DELETE THE ADDITION OF RS. L,9 9,00,000/ - BY TREATING THE SAME AS ACCOMMODATION ENTRY OF BOGUS LOAN FROM THE CONCERN M/S SANKHALA EXPORTS P. LTD AS UNEXPLAINED CASH CREDIT U/S 68. 4. TO DELETE INTEREST CHARGED U/S 234 AND INITIATION OF PENALTY U/S 271(1) (C). [C1 GENERAL: THE APPELLANT RESERVE RIGHTS TO ADD ALTER OR DELETE ANY PORTION OF THIS APPEAL BEFORE ITS CONCLUSION. THIS APPEAL IS FILED IN TIME AND MAY PLEASE BE ALLOWED IN FULL. A DETAILED PAPER BOOK ALONG WITH CASE LAWS WILL BE SUBMITTED AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS IN THE BUSINESS OF EXPORT AND IMPORT OF DIAMONDS. THE RETURN OF INCOME WAS 4 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. FURNISHED THE TOTAL INCOME OF RS. 35,01,820/ - . SUBSEQUENTLY, ON THE BASIS OF INFORMATION THAT ASSESSEE HAD RECEIVED LOAN FROM BOGUS PARTIES FLOATED BY BHAWARLAL JAIN, AN ENTRY OPERATOR, CASE WAS REOPENED AND ORDER U/S 143(3) R.W.S 147 OF THE ACT WAS PASSED ON 27.03.15, THEREBY MAKING ADDITIONS /DISALLOWANCE AND THE SAID ORDER WAS ALSO UPHELD BY LD. CIT(A). WE NOTICED THAT NONE HAS APP EARED ON BEHALF OF ASSESSEE IN SPITE OF CALLS AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED. FROM THE RE CORD, WE OBSERVED THAT NOTICE THROUGH RPAD WAS SENT UPON THE ADDRESS SUPPLIED BY THE ASSESSEE AND ACKNOWLEDGMENT IN THIS RESPECT HAS BEEN PLACED ON RECORD. T HEREFORE WE HAVE NO OTHER OPTION EXCEPT TO PROCEED THE ASSESSEE EX - PARTE. ON THE OTHER HAND L D. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. HENCE, WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PA RTE WITH THE ASSISTANCE OF THE L D. DR AND THE MATERIAL PLACED ON RECORD. GROUND NO. 1. 3 . THIS GROUND RAISED BY THE ASSESSEE RELATES TO CHA LLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE ACTION OF AO IN 5 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. PASSING THE ORDER U/S 143(3) R.W.S 147 AFTER A GAP OF 4 YEARS AND ALSO ONLY ON THE BASIS OF BORROWED SATISFACTION, PRESUMPTION AND SURMISES AND WITHOUT FURNISHING REASONS RECORDED FOR REOPENING. 4 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUND RAISED BY THE ASSESSEE IN PARA NO. 4.2 TO 4.2.1 OF ITS ORDER AND TH E SAME IS REPRODUCED BELOW: - 4.2. I HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSIONS MADE BY THE ID.AR. FROM THE FACTS OF THE CASE IT IS NOTICED THAT THE ASSESSMENT WAS ORIGINALLY CONCLUDED U/S 143(3) ON 30/12/2009. SUBSEQUENTLY, W HEN THE AO HAS RECEIVED INFORMATION FROM DIT(LNV), MUMBAI CONSEQUENT TO SEARCH AND SEIZURE IN THE CASE OF BHANWARLAL JAIN GROUP WHO HAVE ADMITTED THAT THEY HAVE GIVEN ONLY ACCOMMODATION ENTRIES FOR PURCHASES, LOANS AND INVESTMENTS IN SHARES, THE AO HAS REO PENED THE ASSESSMENT AND CONCLUDED IT 6 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. U/S 143(3) R.W.S 147 ON 27/3/2015. THE ASSESSMENT WAS REOPENED BEYOND FOUR YEARS BUT WITHIN SIX YEARS . BHANWARLAL JAIN GROUP HAS CONFESSED BEFORE THE INVESTIGATION WING OF THE DEPARTMENT IN THE STATEMENTS TAKEN UNDER OATH U/S 132(4) OF THE ACT WHICH WAS RECONFIRMED LATER THAT THEY HAVE NOT SUPPLIED ANY MATERIAL OR ADVANCED ANY LOAN OR MADE AN INVESTMENT IN SHARES EXCEPT GIVING ACCOMMODATION ENTRIES. SINCE THE ASSESSMENT IS REOPENED BASED ON SUCH INDEPENDENT EXTERNAL IN FORMATION, I HOLD THAT THE REASSESSMENT PROCEEDINGS ARE VALID. FURTHER, THE REOPENING BEYOND FOUR YEARS FROM THE END OF THE RELEVANT A.Y EVEN THOUGH ASSESSMENT IS CONCLUDED U/S 143(3) ALSO HELD VALID IN VIEW OF THE LATEST DECISION OF THE HON'BLE BOMBAY HIG H COURT IN THE CASE OF HITESH R. SHAH (2013) 35 TAXMANN.COM 474 WHEN THE REOPENING IS DONE BASED ON EXTERNAL INFORMATION. THIS DECISION WAS RENDERED IN THE CASE OF PRAVEEN JAIN CASE, ANOTHER ENTRY OPERATOR WHO HAS GIVEN SIMILAR ACCOMMODATION ENTRIES OF PUR CHASES. THE REASSESSMENT IS ALSO HELD VALID IN VIEW OF OF THE FOLLOWING DECISIONS - (I) HON'BLE DELHI HIGH COURT IN THE CASE OF OPG METALS AND FINSEC LTD V. CIT, 358 ITR 144 HAS HELD THAT RE - ASSESSMENT IS VALID IF THE ISSUE IS NOT A SUBJECT MATTER OF EARLIE R ASSESSMENT. SAME VIEW WAS ALSO TAKEN BY HIGH COURT OF BOMBAY IN THE CASE OF EXPORT CREDIT 7 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. GUARANTEE CORPORATION OF INDIA LTD V. ADDL.CIT (30 TAXMANN.COM 211) (2013) THAT REOPENING OF AN ASSESSMENT IS PERMISSIBLE WHEN THE ORIGINAL ASSESSMENT ORDER PASSED UNDER S. 143(3) IS SILENT IN RESPECT OF THE ISSUE/POINT ON WHICH RE - ASSESMENT NOTICE IS ISSUED. FURTHER, NO QUERY WITH REGARD TO THE ABOVE ISSUE HAVING BEEN MADE DURING THE ASSESSMENT PROCEEDINGS WOULD ALSO INDICATE ABSENCE OF APPLICATION OF MIND TO THE TA NGIBLE MATERIAL. (II) IT WAS HELD IN THE FOLLOWING CASES THAT WHEN THERE IS NO DISCUSSION ON THIS ISSUE AND NO DETAILS ARE CALLED FOR BY THE AO OR FILED BY THE APPELLANT AND NO FINDINGS EITHER POSITIVE OR NEGATIVE IN THE ORIGINAL ASSESSMENT PROCEEDINGS, RE OPENING CANNOT BE CONSTRUED AS CHANGE OF OPINION. 1. ALA FIRM VS. CIT (102 ITR 622) (MAD HC) 2. ESS KAY ENGINEERING COMPANY PVT. LTD VS. CIT (247 ITR 818)(SC) 3. REVATHI CP EQUIPMENTS LTD VS. DCIT &ORS (241 ITR 856)(MAD HC) 4. EMA INDIA LTD VS. ACIT (30 DT R 82) (ALL. HC) (III) SUPREME COURT IN THE CASE OF KALYARIJI MAVJI & COMPANY V. CIT (102 ITR 287) (SC) (1976) HAS HELD THAT THERE IS NO CHANGE OF OPINION IF THE ASSESSMENT IS REOPENED ON NEW FACTS WHICH CAME TO NOTICE SUBSEQUENTLY, EVEN THOUGH THEY ARE ALR EADY ON RECORD. 8 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. (IV) GUJARAT HIGH COURT IN THE CASE OF PRAFUL CHUNILAL PATEL AND VASANTH CHUNILAL PATE/ V. ACIT (236 ITR 832) (1999) HAS HELD THAT WHERE THE AO HAD OVERLOOKED SOME THING AT THE FIRST ASSESSMENT, THERE CAN BE NO QUESTION OF ANY CHANGE OF OPI NION, WHEN THE INCOME WHICH WAS CHARGEABLE TO TAX IS ACTUALLY TAXED AS IT OUGHT TO HAVE BEEN UNDER THE LAW BUT WAS NOT TAXED DUE TO AN ERROR COMMITTED AT THE FIRST ASSESSMENT, THE REOPENING WAS HELD VALID. (V) ITAT, CHENNAI IN THE CASE OF CHENNAI PETROLEUM CORPN. LTD A.Y. 2006 - 07 (ITA NO.66/11 - 12/LTU(A) DATED 08.01.2013 RELYING ON THE HIGH COURT OF DELHI IN THE CASE OF CONSOLIDATED PHOTO AND FINVEST LTD V. ACIT (281 ITR 394) (2006) AND HIGH COURT OF MUMBAI IN THE CASE OF DR.AMIR'S PATHOLOGICAL LABORATORY V. JCIT (252 ITR 673) HAS HELD THAT MERE PRODUCTION OF BOOKS OF ACCOUNT, BALANCE - SHEET AND PROFIT AND LOSS ACCOUNT WILL NOT NECESSARILY AMOUNT TO DISCLOSURE NECESSARY FOR EXPLANATION 1 OF SEC 147. (VI) HIGH COURT OF DELHI IN THE CASE OF HONDA SIEL POWER PRODUCTS LTD V. DCIT (197 TAXMAN 15) (2011) HAS HELD THAT MERELY BECAUSE THE MATERIAL LIES EMBEDDED IN THE MATERIAL EVIDENCE WHICH AO COULD HAVE UNCOVERED BUT DID NOT UNCOVER, IS NOT A GOOD REASON FOR STRIKING DOWN REOPENING. 9 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. (VII) HIGH COURT OF MUM BAI IN THE CASE OF EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD V. F ADDL.CIT (30 TAXMANN.COM 211) (2013) HAS HELD THAT THERE IS NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE MATERIAL FACTS BUT THERE IS COMPLETE FAILURE ON THE PART OF THE AO TO APPLY H IS MIND DURING C R INAL ASSESSMENT TO POINTS ON WHICH ASSESSMENT IS REOPENED, REOPENING WAS TREATED AS VALID. IT IS FURTHER TO BE UNDERSTOOD THAT WHEN IT IS THE QUESTION OF NON APPLICATION OF MIND WHETHER IT IS FOR FOUR YEARS OR MORE MAKES NO DIFFERENCE. (VIII) NOTWITHSTANDING ANYTHING STATED ABOVE, IT IS THE PREROGATIVE OF THE AO / REVENUE TO REOPEN THE ASSESSMENT IF THE AO HAS FOUND IN THE COURSE OF TIME THAT CERTAIN AMOUNTS WHICH SHOULD HAVE BEEN BROUGHT TO TAX HAVE ESCAPED ASSESSMENT. THE POWERS WERE C LEARLY ENACTED U/S 149 R.W.S. 151 OF THE ACT. AS PER THESE PROVISIONS WHAT THE AO IS SUPPOSED TO SEE IS WHETHER THERE IS AN ESCAPEMENT OF INCOME AND WHETHER IT IS WITHIN FOUR YEARS OR BEYOND FOUR YEARS AND WHETHER IT IS A CASE OF 143(1) OR 143(3) SO AS TO TAKE APPROVAL FROM HIS APPROPRIATE SENIOR OFFICERS AS PER THE PROVISIONS. ONCE THE AO FULFILLS THESE REQUIREMENTS THEN HE CAN REOPEN THE ASSESSMENT BY RECORDING THE REASONS. THE AO WILL BE WITHIN HIS JURISDICTION TO REOPEN THE ASSESSMENT AND HIS JURISDICTI ON CANNOT BE 10 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. CHALLENGED PER SE. FURTHER IT IS TO BE UNDERSTOOD THAT MERE REOPENING DOES NOT MEAN THAT THE AO HAS COME TO THE CONCLUSION THAT INCOME HAS ESCAPED. (IX)HIGH COURT OF MUMBAI IN THE CASE OF ELEGANZA JEWELLERY LTD.(2014) 52 TAXMANN.COM 46 HAS HEL D THAT IT IS A TRITE LAW THAT AT THIS STAGE ONLY A PRIMA FACIE VIEW OF THE AO IS NECESSARY TO ISSUE NOTICES AND NOT A CAST IRON CASE OF ESCAPEMENT OF INCOME. SIMILAR VIEWS WERE TAKEN BY THE FOLLOWING COURTS, I.HIIGH COURT OF DELHI IN THE CASE OF MAHANAGAR TELEPHONE NIGAM LTD.(2000)112 TAXMAN 337 2.SC IN THE CASE OF CENTRAL PROVINCES MANGANESE ORE CO LTD (1991) 191 ITR 662 3.SC IN THE CASE OF SELECTED DALURBAND COAL CO P LTD (1996) 217 ITR 597 (X) THE HON'BLE HIGH COURT OF BOMBAY IN THE RECENT DECISIONS IN T HE FOLLOWING CASES WHILE DEALING WITH BOGUS PURCHASE/LOANS ISSUES IN THE CASE OF PRAVEEN JAIN GROUP AND OTHERS HAS RULED THAT THE INITIATION OF REASSESSMENT PROCEEDINGS ON THE BASIS OF SURVEY OPERATIONS IS HELD VALID EVEN THOUGH THERE WAS SCRUTINY U/S 143( 3). THEY OPINED THAT IT WILL NOT TANTAMOUNT TO CHANGE OF OPINION: - NIKUNJ EXIM ENTERPRISES PVT.LTD. (2014) 49 TAXMANN.COM 10. 11 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. 2.BRIGHT STAR SYNTEX(P.) LTD.(2016) 71 TAXMANN.COM 64. S.NARESH K. PAHUJA. (2015) 54 TAXMANN.COM 258 - HELD THAT MERE PAYMENTS ROUT ING THROUGH BANK CHANNELS WOULD NOT BY ITSELF ESTABLISH THE GENUINENESS OF THE GIFTS. 4.HITESH R. SHAH (2013) 35 TAXMANN.COM 474 - HELD THAT REOPENING BEYOND 4 YEARS IS JUSTIFIED IN SUCH CASES OF ACCOMMODATION ENTRIES WHICH THE AO IS IN POSSESSION OF BASED ON THE INVESTIGATION CARRIED OUT. 4.2.1 IN VIEW OF THE ABOVE DISCUSSION THE REOPENING OF ASSESSMENT IS HELD VALID. THE GROUND RAISED IS, THEREFORE, DISMISSED. 5 . AFTER HAVING GONE THROUGH THE ORDERS PASSED BY REVENUE AUTHORITIES AND CONSIDERING THE FACTS AS DISCUSSED ABOVE, WE FIND THAT INITIATION OF REASSESSMENT PROCEEDINGS ON THE BASIS OF SURVEY OPERATION WAS HELD VALID EVEN THOUGH, THERE WAS SCRUITINY U/S 143(3) BY THE HONBLE JURISIDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ EXIM ENTERPRISES PVT. LTD. (2014) 49 TAXMAN.COM. 12 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. MOREOVER , N O NEW FACTS O R CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS SO RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO . 2 6 . THE SE GROUNDS RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWA NCE AMOUNTING TO RS 1,99,00,000/ - BY TREATING THE SAME AS ACCOMMODATION ENTRY OF BOGUS LOAN FROM THE CONCERN M/S SANKHALA EXPORTS P. LTD AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 7 . WE HAVE HEARD LD. DR AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. 13 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUND RAISED BY THE A SSESSEE IN PARA NO. 5.2 TO 5.2.2 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 5.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISS IONS OF THE ID.AR. I HAVE ALSO GONE THROUGH THE DECISIONS RELIED ON BY THE AO. AS PER THE DEEMED PROVISIONS U/S 68, IF THERE IS A CREDIT IN THE BOOKS OF ACCOUNT AND THE SAME IS NOT EXPLAINED BY THE ASSESSEE TO THE SATISFACTION OF THE AO WITH REFERENCE TO I DENTITY AND CREDITWORTHINESS OF THE PERSON WHO PAID THE MONEY OR MADE INVESTMENT AND GENUINENESS OF THE TRANSACTION, THE SAME NEEDS TO BE DISALLOWED. THE PROVISIONS OF SEC.68 ARE REPRODUCED AS UNDER: - CASH CREDITS. SA 68. AAWHERE ANY SUM IS FOUND CREDITED IN THE BOOKSSIOF 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 SA[ASSESSING] OFFICER, SATISFACTORY, THE SUM SO CRED ITED MAYAI BE CHARGED TO 14 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR : 93[PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED), AND THE SUM SO CREDITED CONSISTS OF SHARE APP LICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESSEE - COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSING OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: PROVIDED FURTHER THAT NOTHING CONTAI NED IN THE FIRST PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME THE SUM REFERRED TO THEREIN IS RECORDED, IS A VENTURE CAPITAL FUND OR A VENTURE CAPITAL COMPANY AS REFERRED TO IN CLAUSE TEGFE) OF SECTION 10.] 5.2.1 IT IS EVIDENT FROM THE ABOVE THAT IF ANY SUM IS CREDITED IN THE ACCOUNT OF THE ASSESSEE BUT NOT EXPLAINED TO THE SATISFACTION OF THE AO, THEY NEED TO BE TREATED AS UNEXPLAINED CREDITS AND ARE TO BE BROUGHT TO 15 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. TAX AS DEEMED INCOME. IN THE LIGHT OF THE ABOVE PROVISION LET US EXAMINED THE CASE OF T HE APPELLANT WITH REGARD TO PROVING OF IDENTITY AND CREDITWORTHINESS OF THE INVESTORS AND GENUINENESS OF THE TRANSACTION. FIRSTLY, THE APPELLANT HAS RECEIVED THE LOAN FROM SANKHALA EXPORTS P.LTD. A CONCERN WHICH IS RUN BY THE ENTRY OPERATORS SHRI BHANWARLAL JAIN AND HIS GROUP WHO HAVE ADMITTED CATEGORICALLY AND UNEQUIVOCALLY BEFORE THE INVESTIGATION AUTHORITIES OF THE DEPARTMENT DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS CONDUCTED UNDER SECTION 132 OF THE ACT BY GIVING SWORN STATEMENTS U/S 132(4) THAT THEY HAVE GIVEN ONLY ACCOMMODATION ENTRIES THROUGH THEIR BOGUS CONCERNS BUT NOT MADE ANY REAL ADVANCED ANY LOAN TO ANYBODY. EVEN THOUGH, THEY HAVE RETRACTED THEIR STATEMENTS LATER BUT THE SAME WAS NOT ACCEPTED BY REVENUE FOR WANT OF EVIDENCE TH AT THE STATEMENTS WERE TAKEN BY APPLYING FORCE, THREAT OR COERCION. SINCE, THERE IS A MATERIAL EVIDENCE TO SHOW THAT THE LOAN TAKEN IS ONLY A BOOK ENTRY, THE SAME CANNOT BE ACCEPTED AS REAL LOAN IN THE BOOKS OF THE APPELLANT COMPANY. SECONDLY, SINCE IT IS A SYSTEMATIC PLANNING BY THE ENTRY OPERATORS TO GIVE SUCH ACCOMMODATION ENTRIES, ALL THE REQUIRED DOCUMENTS LIKE PAN NO. CONFIRMATIONS, BANK 16 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. TRANSACTION ETC. WERE PROPERLY PLANNED AND ENGINEERED TO SUIT THE OCCASION. THEREFORE, SUCH EVIDENCES NEED NOT BE G IVEN DUE COGNIZANCE OF TO PROVE THE GENUINENESS OF THE TRANSACTION. THIRDLY, THE ARGUMENTS OF THE ID.AR THAT LOAN WAS REPAID WITH INTEREST IN SUBSEQUENT YEARS WILL NOT HELP HIM SINCE THE INGENUINE LOAN TAKEN IN ONE YEAR WILL NOT BECOME GENUINE IN THE SUBSE QUENT YEAR BY SHEER DINT OF ITS REPAYMENT. FOURTHLY, THE TRANSACTION THROUGH BANKING CHANNEL CANNOT BE TAKEN AS SANCTUM SANCTARIUM SINCE IT IS PLANNED IN SUCH A WAY THAT CASH DEPOSITS ARE NOT REFLECTED IN THE BANK ACCOUNT OF THE APPELLANT BUT ONLY THE CHEQ UES. THE CASH DEPOSITS HAVE TAKEN PLACE ELSEWHERE AND ONLY THE RTGS OR CHEQUES ARE REFLECTED IN THE ACCOUNTS OF THE APPELLANT. FIFTHLY, THE APPELLANT HAS NOT PRODUCED ANY INDEPENDENT EVIDENCE LIKE PRESENTING THE LENDER FOR GIVING EVIDENCE, EXCEPT THE DETAI LS IN THE FORM OF PAPER EVIDENCES. SIXTHLY, THE APPELLANT HAS NOT FILED ANY DETAILS OF ASSESSMENT OF THE LENDER AND ITS P & L A/C TO ASCERTAIN THE CREDITWORTHINESS OF THE PARTY. 17 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. LASTLY, WHEN THE PARTIES WHICH WERE IDENTIFIED AS BOGUS BY THE VERY AUTHORS OF SUCH COMPANIES I.E. PERSONS IN CHARGE OF BHANWARLAL JAIN GROUP AND THE SAID PARTIES RE APPEARING IN THE BOOKS OF THE APPELLANT COMPANY AS LENDERS, IT SHOULD BE UNDERSTOOD THAT A LIVE LINK HAS BEEN ESTABLISHED BETWEEN THE BOGUS LENDERS AND THE - APPELLANT COMPANY. IN THE INSTANT CASE M/S. SANKHALA EXPORTS IS ONE OF THE 70 CONCERNS FLOATED BY THE GROUP AND IS APPEARING IN THE BOOKS OF THE APPELLANT COMPANY. FURTHERMORE, ONE S HOULD NOT BE CARRIED AWAY BY THE MYTH THAT ANY AMOUNT ROUTING THROUGH BANK CHANNELS WOULD ESTABLISH THE GENUINENESS OF THE TRANSACTION AS HELD BY THE HONORABLE BOMBAY HIGH COURT IN THE CASE OF NARESH K PAHUJA (2015) 54 TAXMANN.COM 258. IT WAS HELD IN THIS CASE THAT 'MERE ROUTING OF A GIN THROUGH A BANKING CHANNEL WOULD NOT BY ITSELF ESTABLISH THAT GIFT WAS GENUINE'. SIMILAR VIEWS WERE ALSO EXPRESSED BY ITAT JAIPUR IN THE CASE OF KACHWALA GEMS, IN ITA NO. 134/JP/2002 DATED 10/12/2003 WHICH WAS CONFIRMED BY T HE HONORABLE SUPREME COURT IN THE SAME CASE REPORTED IN 288 ITR 10 (SC). 5.2.2 IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT EVEN THOUGH THE APPELLANT HAS FILED THE DETAILS LIKE PAN, ACCOUNT COPY ETC. TO PROVE THE IDENTITY OF THE CREDITOR, IT COULD NOT PROV E CREDITWORTHINESS OF THE PARTIES AND 18 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. GENUINENESS OF THE TRANSACTION SATISFACTORILY IN VIEW OF THE ABOVE DISCUSSION. FURTHER, THE ARGUMENT THAT THE ADDITION WAS MADE WITHOUT AFFORDING AN OPPORTUNITY OF CROSS EXAMINING THE SAID LOAN CREDITOR IS NOTHING BUT A MOCKERY. THE APPELLANT MUST HAVE APPROACH THE PARTY, IF NOT BHANWARLAL JAIN, FOR LOAN AND RECEIVED THE AMOUNT. THEREFORE, IT IS THE DUTY OF THE APPELLANT TO PRODUCE THE PARTY BEFORE THE AO FOR GIVING EVIDENCE. INSTEAD DEMANDING THE AO FOR PRODUCING THE P ARTY BEFORE HIM FOR CROSS EXAMINATION COULD AMOUNT TO MISLEADING THE DEPARTMENT BY PUTTING THE CART BEFORE THE HORSE INSTEAD OF PUTTING THE HORSE BEFORE THE CART. I, THEREFORE, AGREE WITH THE AO THAT THE TRANSACTION OF LOAN FROM SANKHALA EXPORTS IS BOGUS A ND ACCORDINGLY CONFIRM THE ADDITION. THE GROUND IS DISMISSED. 8 . AFTER HAVING GONE THROUGH THE ORDERS PASSED BY REVENUE AUTHORITIES AND CONSIDERING THE FACTS AS DISCUSSED ABOVE, WE FIND FROM THE RECORDS THAT ALTHOUGH THE ASSESSEE HAD FILED DETAILS LIKE PA N, ACCOUNT COPY, ETC, BUT HAS FAILED TO PROVE THE CREDITWORTHINESS OF THE PARTIES AND GENUINENESS OF THE TRANSACTIONS AS HAS BEEN DETAILED IN PARA NO. 5.2.1 OF THE ORDER OF LD. CIT(A). 19 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. MOREOVER , N O NEW FACTS O R CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS SO RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THIS GROUND RAISED BY THE ASSESSEE STANDS DISMISSED . GROUND NO. 3 & 4 9. THESE GROUNDS RAISED BY THE ASSESSEE ARE GENERAL IN NAT URE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 10 . IN THE NET RESULT , THE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JUNE , 2019. SD/ - SD/ - ( G. MANJUNATHA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 24 . 06 .201 9 SR.PS . DHANANJAY 20 I.T.A. NO. 3196 /MUM/201 7 M/S TANAYA GEMS & JEWELLERY EXPORTS LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI