ITO-3(2),Indore, Indore V. M/S Ocean Motors Pvt. Ltd, Indore

ITA 444/Ind/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0540 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-12-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 10-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIB JAIN
• Assessee Lawyers: S S SOLANKI
• Keywords: Unexplained cash credit; Source of fund; Accommodation entries; Onus to prove; Bogus loan
• Section: 143(3); 142(1); 143(2); 208; 13; 131; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.444/IND/2018 ASSESSMENT YEAR: 2014-15 ITO 3(2) INDORE / VS. M/S OCEAN MOTORS PVT. LTD. PLOT NO.49, COMMERCIAL MANDI NEAR CAT SQUARE, RING ROAD, INDORE ( APPELLANT ) ( RE VENUE ) PAN: AABC04536F REVENUE BY SHRI RAJIB JAIN , SR. DR RESPONDENT BY SHRI S. S. SOLANKI, CA DATE OF HEARING: 05.12.2019 DATE OF PRONOUNCEMENT: 18 .12.2019 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL AT THE INSTANCE OF REVENUE PERTAINING T O A.Y. 2014-15 IS DIRECTED AGAINST THE ORDER OF COMMISSION ER OF INCOME TAX(APPEALS)-1, INDORE, (IN SHORT CIT), DATED 22. 02.2018 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME T AX ACT 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON 30. 12.2016 BY ITO- 3(2), INDORE. M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 2 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CLT(A):- (I) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. L,94,98,OOO/- MADE ON ACCOUNT OF BOGUS LOANS U/S 68 OF THE I. T. ACT EVEN WHEN ASSESSEE WAS NOT ABLE TO PROVE IDENTITIES AND CREDITWORTHINESS OF CREDITORS AND GENUINENESS OF THE TRANSACTIONS. (II) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE DECISION IN THE CA SE OF KAMAL MOTORS V CIT[20031131 TAXMAN 155(RAJ.), WHERE IT WAS HELD THAT THE RESPONSIBILITY IS ON THE ASSESSEE TO DISCHARGE THE ONUS THAT THE CASH CREDITOR IS A MAN OF MEANS TO ALLOW THE CASH CREDIT. (III) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE CLEAR ROTATION OF CASH WHICH IS EVIDENT FROM THE BANK ACCOUNTS OF LOAN PROVIDERS AND DULY ESTABLISHED BY AO DURING ASSESSMENT PROCEEDINGS. (IV) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE FACT THAT THE LO AN PROVIDERS WERE NOT THE PERSONS OF SUFFICIENT CAPACITY THEREFO RE, CREDITWORTHINESS IS NOT PROVED. (V) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE FACT THAT THE ADD ITIONS WERE MADE BY AO AFTER CONDUCTING DISCREET ENQUIRIES U/S 131 OF THE I. T. ACT. (VI) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE FACT THAT THE FI NANCIAL STRENGTH OF THE CREDITORS DO NOT HAVE ANY MATCH WITH THE SUMS PROVIDED AS LOANS. (VII) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE PROPOSITION LAID DOWN BY HON'BLE SUPREME COURT IN THE CASE OF DURGA PRASAD M ORE 82 ITR 540 AND SUMATI DAYAL 214 ITR 801 THAT 'THE COURTS AND TRIBUNALS HAVE TO JUDGE THE EVIDENCES BEFORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES AFTER CONSIDERING TH E SURROUNDING CIRCUMSTANCES. IN THE PRESENT CASE ALL THE CREDITORS H AVE M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 3 IMMEDIATELY DEPOSITED CASH IN THEIR ACCOUNT BEFORE PROVIDING LOAN TO THE ASSESSEE COMPANY AND ALL OF THEM FAILED TO PROVE THEIR FINANCIAL CAPACITY. (VIII) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE DECISION GIVEN BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF PRO CIT VS. BIKRAM SI NGH ITA 55/2017 THAT THE FINANCIAL STRENGTH OF THE CREDITORS IS NOT SUFFICIENT TO PROVIDE THE SUCH HUGE SUM AND THAT IS ALSO WITHOUT ANY COLLATERAL SECURITY, WITHOUT INTEREST A ND WITHOUT ANY LOAN AGREEMENT. (IX) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE PROPOSITIO N LAID DOWN BY THE HON'BLE HIGH COURT IN THE CASE OF CIT V S. PRECISION FINANCE LTD, 1994 208 ITR 465 CAI., THAT MERE PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT N OR CAN IT MAKE A NON-GENUINE TRANSACTION GENUINE. (X) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN IGNORING THE DECISION L AID DOWN IN CASE OF CIT VS. UNITED COMMERCIAL AND INDUSTRIAL CO. (PVT.) LTD (1991) 187 ITR 596 (CAL.) THAT THE ONUS DOES NOT GET DISCHARGED MERELY BY FILING CONFIRMATORY LE TTERS. 3. THOUGH THE REVENUE HAS RAISED 10 GROUNDS OF APPE AL BUT THE SOLE GRIEVANCE IS WITH REGARD TO DELETION OF ADDITION OF RS.1,94,98,000/- WHICH WAS MADE BY THE LD. AO ON ACCOUNT OF UNEXPLAI NED CASH CREDIT U/S 68 OF THE ACT. 4. BRIEF FACTS AS CULLED OUT FROM THE RECORDS ARE T HAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS O F AUTOMOBILE CARS DEALER AND SERVICE CENTRE. INCOME OF RS.3,42,6 20/- DECLARED IN THE RETURN OF INCOME FILED ON 12.11.2014. CASE P ICKED UP FOR SCRUTINY ASSESSMENT FOLLOWED BY SERVING OF NOTICES U/S 143(2) & 142(1) OF THE ACT. DURING THE COURSE OF EXAMINATION OF FINANCIAL M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 4 STATEMENT, BOOKS OF ACCOUNTS AND TAX AUDITED REPORT , LD. AO OBSERVED THAT THE ASSESSEE HAD TAKEN VARIOUS UNSECU RED LOANS. HE CALLED FOR THE DETAILS FROM THE ASSESSEE TO EXPLAIN CASH CREDIT. ALL THE ALLEGED LOANS TAKEN FROM ACCOUNT PAY CHEQUE. TH E ASSESSEE FILE VARIOUS DETAILS INCLUDING CONFIRMATION, BANK STATEM ENT, PROOF OF LAND HOLDING FOR SOURCE OF FUNDS FROM A FEW OF THE LOAN PROVIDERS AND INCOME TAX RETURN, COPY OF THE LOAN PROVIDERS A SSESSED TO TAX. SUMMONS WERE ALSO ISSUED BY THE LD. AO U/S 131 OF T HE ACT FOR THE PERSONAL PRESENCE OF THE CASH CREDITORS, EXCEPT ONE CREDITOR NAMELY RAGINI, REST ALL THE CASH CREDITORS APPEARED PERSON ALLY BEFORE THE LD. AO STATING ON OATH THAT THEY HAD SUFFICIENT FUNDS I N THEIR ACCOUNT AND HAVE GIVEN THE LOAN TO THE ASSESSEE. HOWEVER, T HE LD. AO WAS NOT SATISFIED AND PROCEEDED TO MAKE THE ADDITION U/ S 68 OF THE ACT AT RS.1,94,98,000/- OBSERVING AS FOLLOWS: 4.8 FROM THE ABOVE, IT IS SEEN THAT THE ASSESSEE HA S FAILED TO PRODUCE INCOME TAX RETURNS, BANK STATEMEN TS OR ANY PROOF WITH REGARD TO THEN CREDITWORTHINESS I N RESPECT OF 4 CASES TOTALING TO RS.29,20,000/- MENTIONED IN TABLE-1 IN THE PRECEDING PART OF THIS ORDER. THE ASSESSEE HAS JUST FILED THE CONFIRMATION IN RESPECT OF THESE PARTIES AND HAS EVEN NOT PRODUCED THEM FOR EXAMINATION. HENCE, THE IDENTITY AND GENUINENESS OF THE TRANSACTION ALSO REMAINS TO BE PROVED. HENCE NONE OF THE INGREDIENTS AS REQUIRED UNDER SECTION 68 IN RESPECT OF CASH CREDITS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IS FULFILLED AND THEREFORE, THE SAME CONSTITUTES UNEXPLAINED CASH CREDIT SX] S 68 OF THE INCOME TAX ACT. 4.9 IN RESPECT OF CREDITORS IN TABLE-2 WHICH ARE 18 IN NUMBER, IT MAY BE SEEN THAT AGAINST THE TOTAL LOAN OF RS 1,79,44,442/- , THERE IS IMMEDIATE CASH DEPOSIT TOTALING TO RS 1,65,78,000/-. SOURCE OF SUCH CASH M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 5 WHICH IS IMMEDIATELY DEPOSITED BEFORE GIVING LOAN CHEQUES TO THE ASSESSEE REMAIN TO BE PROVED. THE SOURCE OF SUCH CASH HAS BEEN STATED TO BE SAVINGS O UT OF AGRICULTURAL INCOME IN MAJORITY OF CASES AND IN REMAINING IT IS OUT OF SAVINGS FROM SALARY OR JOB INCOME. SOME OF THE PERSONS ARE NOT EVEN FILING RET URNS OF INCOME AND IN CASES OF OTHERS WHO ARE FILING RET URNS OF INCOME, THE SOURCE OF CASH DEPOSIT OR LOAN GIVEN DO NOT COMMENSURATE WITH THE DECLARED INCOME. FOR EXAMPLE IN THE CASE OF GULAB SING THERE IS CASH DEPOSIT OF RS 60,25,000/ WHEREAS RETURNED INCOME IS ONLY RS 1,58,600/ AND DECLARED AGRICULTURAL INCOME IS JUST RS 3,78,480/-. HENCE' EVEN AGRICULTURAL INCOME CANNOT JUSTIFY SUCH LARGE CASH DEPOSITS. IT IS NOTEWORTHY THAT THERE IS IMMEDIATE DEPOSIT OF CASH BEFORE GIVING LOANS TO THE ASSESSEE. THERE ARE NO O THER TRANSACTIONS OR DEPOSITS IN THE BANK ACCOUNT BARRIN G FOR THE TRANSACTIONS UNDERTAKEN WITH RESPECT TO THE LOANS GIVEN TO THE ASSESSEE IN MAJORITY OF ABOVE I CASES. THERE IS NO JUSTIFICATION FOR DEPOSITING SUC H HUGE CASH IN BANK ACCOUNT WHICH WAS HITHERTO ALLEGEDLY KEPT AS CASH AS SAVINGS. THERE IS NO EXPLANATION OR DOCUMENTARY EVIDENCE WITH REGARD TO SOURCE OF CASH LYING IN HAND WHICH WAS DEPOSITED IN THE BANK PRIOR TO GIVING LOANS TO THE ASSESSEE. IT IS ALSO NOTEWORTHY THAT ALMOST ALL LOANS AND CASH DEPOSIT HAVE BEEN MADE IN THE MONTH OF MARCH 2014 (THAT TOO IN LAST FEW DAYS OF THE MONTH OF MARCH) W HICH CANNOT JUST BE COINCIDENCE. IT CANNOT BE SAID THAT ALL LENDERS WOULD KEEP THEIR SAVINGS IN CASH AND DEPOSI T IN BANK ACCOUNTS IN THE MONTH OF MARCH 2014 JUST PRIOR TO GIVING LOANS TO THE ASSESSEE. IT IS ALSO N OTABLE THAT IN THE CASE WHEREIN THE LOAN HAS BEEN RETURNED IN SUBSEQUENT ASSESSMENT YEAR, THERE IS IMMEDIATE CASH WITHDRAWAL. IT TO FURTHER TO BE SEEN THAT OUT OF 18 PARTIES WHE REIN THERE IS CASH DEPOSIT AND LOAN TO THE ASSESSEE IN T HE INSTANT YEAR, S NO. 2,3,4,6,8 AND 9 OF TABLE-2 ABOV E HAD CONTRIBUTED AS LOANS TO THE ASSESSEE IN THE IMMEDIA TE M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 6 PRECEDING YEAR ALSO. GIVEN THEIR DECLARED SOURCES, THEY COULD NOT HAVE LENT SO MUCH TO THE ASSESSEE. THEREF ORE, IT CAN BE SAID THE CASH DEPOSITS BEFORE THE LOAN IS NO THING BUT ASSESSEE'S UNACCOUNTED MONEY BROUGHT IN THE BOO KS IN THE GUISE OF UNSECURED' LOANS FROM SUNDRY LENDER S. 4.10 GIVEN THE ABOVE, THE SOURCE OF CASH DEPOSIT TO TALING TO RS 1,65,78,000/- IN THE BANK ACCOUNTS OF THE 18 PERSONS AS PER TABLE-2 ABOVE IMMEDIATELY PRECEDING THE LOANS GIVEN TO THE ASSESSEE REMAINS UNEXPLAINED. TH E CREDITWORTHINESS OF SUCH LENDERS IS NOT PROVED AND HENCE, THE AMOUNT OF RS 1,65,78,000/- IS LIABLE TO BE ADDED TO THE INCOME OF THE ASSESSEE U/ S 68. 4.11 THEREFORE, TOTAL ADDITION OF RS 1,94,98,000/- (29,20,000+1,65,78,000) AS UNEXPLAINED CASH CREDIT U/ S 68 IS MADE TO THE INCOME OF THE ASSESSEE 5. ACCORDINGLY INCOME ASSESSED AT RS.1,98,40,620/-. 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A) CHALLENGING THE ADDITION U/S 68 OF THE ACT AT RS.1, 94,98,000/- AND GAVE DETAILED SUBMISSIONS ALONG WITH DOCUMENTARY EV IDENCES TO PROVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CASH CREDITORS. LD. CIT(A) WAS SATISFIED WITH THE SUBMIS SIONS AND DETAILS AND AFTER GIVING DETAILED FINDING OF FACTS AND FOLL OWING THE JUDICIAL PRONOUNCEMENT RELATED THE ADDITION AND DELETED THE IMPUGNED ADDITIONS. 7. AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE THE TR IBUNAL. 8. LD. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY ARGUED SUPPORTING THE ORDER OF LD. AO AND ALSO POINTED OUT THAT IN MOST OF THE CASES, CASH WAS DEPOSITED JUST A FEW DAYS BEFOR E THE ISSUANCE OF M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 7 CHEQUE TO THE ASSESSEE WHICH CREATES DOUBTS ON THE CREDITWORTHINESS OF THE CASH CREDITORS. 9. PER CONTRA LD. COUNSEL FOR THE ASSESSEE ARGUED A T LENGTH REFERRING TO THE SUBMISSIONS MADE BEFORE LOWER AUTHORITIES AS WELL AS DOCUMENTS FILED IN THE PAPER BOOK IN ORDER TO PROVE IDENTITY, GENUINENESS & CREDITWORTHINESS OF THE CASH CREDITOR S. HE ALSO SUBMITTED THAT CONFIRMATION OF ACCOUNT HAS BEEN FIL ED IN ALL THE CASES. LOAN HAS BEEN TAKEN THROUGH ACCOUNT PAYEE CH EQUE. BANK STATEMENT HAVE BEEN FILED IN ALL THE CASES EXCEPT RUBY JAIN. STATEMENT ON OATH RECORDED BY THE LD. AO IN ALL THE CASES EXCEPT RAGINI, COPY OF INCOME TAX RETURN FILED FOR THE LOA N CREDITORS ASSESSED TO TAX AND LAND OWNERSHIP DOCUMENTS AND PR OOF OF AGRICULTURAL INCOME SUPPLIED BY THE CASH CREDITORS. RELIANCE WAS PLACED ON PLETHORA OF JUDGMENTS MENTIONED IN THE PA PER BOOK FILED ON 03.12.2019. 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THOUGH THE REVENUE HAS RAISED GROUNDS OF APPEAL RUNNING FROM GROUND NO.1 TO 10 BUT THE SOLE GRIEVAN CE RELATES TO THE ADDITION U/S 68 OF THE ACT AT RS.1,94,98,000/- FOR UNEXPLAINED CASH CREDITORS MADE BY THE LD. AO BUT DELETED BY THE LD. CIT(A). 11. WE OBSERVE THAT ARE THE FOLLOWING DISPUTED CASH CREDITORS ARE IN CHALLENGE BEFORE US. TABLE 1 M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 8 S. NO. NAME AMOUNT 1 HITESH GHARGAV 2,00,000 2 PANKAJ NIGOSKAR 320000 3 NIKHIL MAHESHWARI 2250000 4 LAXMINARAYAN RAMSINGH 150000 TOTAL 29,20,000 TABLE 2 S. NO. NAME AMOUNT 1 ANUSUIYA PATEL 700000 2 BENIRAM 625000 3 GULAB SINGH 6025000 4 HARISINGH 700000 5 LAXMI GULAB PATEL 650000 6 MAHENDRA PATEL 1 000000 7 RACHITA PATEL 600000 8 RAMAKANT PATEL 600000 9 BABULAL PATEL & GULAB SINGH 600000 10 RAVI NAGAR 500000 11 VINOD NAGAR 800000 12 KULDEEP JAGESHWAR MUKATI 603000 13 JAYPRAKASH NARESHCHANDRA 625000 14 RUBY JAIN 100000 15 Y.D. TRADING 450000 16 RAGINI 500000 17 PANKAJ LATA GUPTA 900000 18 MAYA PATEL 600000 TOTAL 1,65,78,000 12. LD. AO MADE AN ADDITION FOR ALL THE CASH CREDIT ORS REFERRED IN TABLE 1 OF RS. 29,20,000/- AND WITH REGARD TO TABLE 2 ADDITION WAS RESTRICTED ONLY TO THE AMOUNT OF RS.1,65,78,000/- T OTALLING TO RS.1,94,98,000/-. M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 9 13. WE OBSERVE THAT THE ASSESSEE IN ORDER TO PROVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CASH CREDIT ORS HAS GIVEN DETAILS FOR EACH CASH CREDITOR IN THE FOLLOWING MAN NER. (I) SMT. ANUSUIYA PATEL (RS.7,00,000/-) (A) SHE IS HAVING 21.18 BIGHAS OF AGRICULTURAL LAND . MARKET (GUIDELINE) VALUE OF SAID PROPERTY IS 9.26 CRORES A S ON TODAY. (B) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (C) AFFIDAVIT FILED (D) STATEMENT ON OATH TAKEN BY THE AO IN WHICH SHE CONFIRMED THE TRANSACTION. (II) BENIRAM PATEL (RS.6,25,000/-) (A) HE IS HAVING 21.82 BIGHAS OF AGRICULTURAL LAND. MARKET (GUIDELINE) VALUE OF SAID PROPERTY IS 11.36 CRORES AS ON TODAY. (B) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (C) AFFIDAVIT FILED (D) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION. (E) HE IS AN INCOME TAX ASSESSEE. COPY OF COMPUTATI ON ALONGWITH ACKNOWLEDGEMENT FILED. (F) HE IS A SHARE HOLDER OF THE APPELLATE COMPANY. ( III) GULAB SINGH (RS.60,25,000/-) (A) HE IS HAVING 19.7 BIGHAS OF AGRICULTURAL LAND I N HIS INDIVIDUAL NAME. FURTHER HE IS ALSO HAVING 89.424 B IGHAS OF LAND JOINTLY WITH BABULAL PATEL. MARKET (GUIDELINE) VALUE OF SAID PROPERTY IS 40.78 CRORES AS ON TODAY. (B) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (C) AFFIDAVIT FILED (D) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION. (E) HE IS AN INCOME TAX ASSESSEE. COPY OF COMPUTATI ON ALONGWITH ACKNOWLEDGEMENT FILED. (F) HE IS A SHAREHOLDER OF THE APPELLANT COMPANY HO LDING 30% SHARES. (IV) HARI SINGH (RS.7,00,000/-) M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 10 (A) HE IS HAVING 10.48 BIGHAS OF AGRICULTURAL LAND. MARKET (GUIDELINE) VALUE OF SAID PROPERTY IS 26 LACS AS ON TODAY.. (B) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (C) AFFIDAVIT FILED (D) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION (V) LAXMI GULAB PATEL (RS.6,50,000/-) (A) SHE IS HAVING 6.476 BIGHAS OF AGRICULTURAL LAND . MARKET (GUIDELINE) VALUE OF SAID PROPERTY IS 1.10 CRORES A S ON TODAY. (B) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (C) AFFIDAVIT FILED (D) STATEMENT ON OATH TAKEN BY THE AO IN WHICH SHE CONFIRMED THE TRANSACTION (VI) MAHENDRA PATEL (RS.10,00,000/-) (A) HE IS HAVING 17.6 BIGHAS OF AGRICULTURAL LAND. MARKET (GUIDELINE) VALUE OF SAID PROPERTY IS 3.06 CRORES. (B) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (C) AFFIDAVIT FILED (D) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION (E) HE IS AN INCOME TAX ASSESSEE. COPY OF COMPUTATI ON ALONGWITH ACKNOWLEDGEMENT FILED. (F) HOLDING 51% SHARES (VII) RACHITA PATEL (RS.6,00,000/-) (A) SHE IS HAVING 6.588 BIGHAS OF AGRICULTURAL LAND . MARKET (GUIDELINE) VALUE OF SAID PROPERTY IS 1.12 CRORES A S ON TODAY. (B) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (C) AFFIDAVIT FILED (D) STATEMENT ON OATH TAKEN BY THE AO IN WHICH SHE CONFIRMED THE TRANSACTION (VIII) RAMAKANT PATEL (RS.6,00,000/-) (A) HE IS HAVING 11.88 BIGHAS OF AGRICULTURAL LAND. MARKET (GUIDELINE) VALUE OF SAID PROPERTY IS 4.78 CRORES A S ON TODAY. (B) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 11 (C) AFFIDAVIT FILED (D) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION (E) HE IS AN INCOME TAX ASSESSEE. COPY OF COMPUTATI ON ALONGWITH ACKNOWLEDGEMENT FILED. (IX) BABULAL PATEL (RS.6,00,000/-) (A) HE IS HAVING 89.424 BIGHAS OF AGRICULTURAL LAND JOINTLY WITH GULAB SINGH PATEL. MARKET (GUIDELINE) VALUE OF SAID PROPERTY IS 33.53 CRORES. (B) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (C) AFFIDAVIT FILED (D) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION (X) RAVI NAGAR (RS.5,00,000/-) (A) HE IS HAVING 16.344 BIGHAS OF AGRICULTURAL LAND . MARKET (GUIDELINE) VALUE OF SAID PROPERTY IS 12 CRORES AS ON TODAY (B) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (C) AFFIDAVIT FILED (D) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION (E) HE IS AN INCOME TAX ASSESSEE. COPY OF COMPUTATI ON ALONGWITH ACKNOWLEDGEMENT FILED. (F) HOLDING 9% SHARES (XI) VINOD NAGAR (RS.8,00,000/-) (A) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (B) AFFIDAVIT FILED (C) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION (D) SALARIED EMPLOYEE GETTING SALARY OF 2.1 LACS. (XII) KULDEEP MUKATI (RS.6,03,000/-) (A) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (B) AFFIDAVIT FILED (C) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 12 (D) HE IS AN INCOME TAX ASSESSEE. COPY OF COMPUTATI ON ALONGWITH ACKNOWLEDGEMENT FILED. (E) SALARIED EMPLOYEE GETTING SALARY OF 2.3 LACS. (XIII) JAIPRAKASH NARESH CHANDRA (RS.6,25,000/-) (A) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (B) AFFIDAVIT FILED (C) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION (D) SALARIED EMPLOYEE GETTING SALARY OF RS. 1.93LAC S. (XIV) RUBY JAIN (RS.1,00,000/-) (A) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND RE PAID THROUGH ACCOUNT PAYEE CHEQUE (B) STATEMENT ON OATH TAKEN BY THE AO IN WHICH SHE CONFIRMED THE TRANSACTION (C) SALARIED EMPLOYEE GETTING SALARY OF RS. 2,00,00 0/- (XV) Y.D. TRADING (YASHWANT DHANORE) (RS.5,00,000/- ) (A) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (B) AFFIDAVIT FILED (C) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION (D) DIRECTOR IN OCEAN INFRASOLUTION GETTING SALARY OF RS. 2,00,000/- P.A. (E) ALSO SUPPLIES BUILDING MATERIAL. (XVI) RAGINI (RS.5,00,000/-) (A) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (XVII) PANKAJ LATA GUPTA (RS.20,00,000/-) (A) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (B) STATEMENT ON OATH TAKEN BY THE AO IN WHICH HE C ONFIRMED THE TRANSACTION (C) SHE IS AN INCOME TAX ASSESSEE. COPY OF COMPUTAT ION ALONGWITH ACKNOWLEDGEMENT FILED. (D) GETTING A SALARY OF RS. 2,00,000/- P.A. PLUS RE NT OF RS. 75,000/- P.A. M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 13 (E) SHE HAS SOLD AN APARTMENT AND OUT OF THAT GIVEN LOAN. (F) COPY OF SALE DEED IS FILED. (XVIII) MAYA PATEL (RS.6,00,000/-) (A) LOAN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND REP AID THROUGH ACCOUNT PAYEE CHEQUE (B) AFFIDAVIT FILED (C) STATEMENT ON OATH TAKEN BY THE AO IN WHICH SHE CONFIRMED THE TRANSACTION (D) SHE IS AN INCOME TAX ASSESSEE. COPY OF COMPUTAT ION ALONGWITH ACKNOWLEDGEMENT FILED. 9. NOW COMING TO TABLE -1 GIVEN BY THE AO, THE DE TAILS ARE AS UNDER:- (I) HITESH BHARGAVA (RS.2,00,000/-) (A) HE IS AN INCOME TAX ASSESSEE AND GETTING A SALA RY OF RS.12,00,000/- P.A. (B) HE HAS NOT DEPOSITED CASH WHILE GIVING LOAN (II) PANKAJ NIGOSKAR (RS.3,20,000/-) (A) GETTING A SALARY OF RS.17 LAC P.A. FROM BHARTI AIRTEL LTD. (III) NIKHIL MAHESHWARI (RS.22,50,000/-) (A) INCOME TAX PAYEE HAVING AN INCOME OF RS. 6,00,0 00/- P.A. (B) NO CASH WAS DEPOSITED IN HIS ACCOUNT WHEN LOAN WAS GIVEN. (IV) LAXMI NARAYAN(RS.3,00,000/-) (A) AGRICULTURIST HAVING 18.35 HECTARES OF LAND. 14. WE, FURTHER OBSERVE THAT LD. CIT(A) AFTER APPRE CIATING THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE, DELETED THE ADDITION OF RS.1,94,98,000/- MADE U/S 68 OF THE ACT OBSERVING A S FOLLOWS: ON CAREFUL CONSIDERATION OF THE POINTS IN ISSUE AS BROUGHT OUT IN THE ASSESSMENT ORDER, THE GROUNDS OF APPEAL AND THE SUBMISSION OF APPELLANT THE VARIOUS GROUNDS RAISED BY THE APPELLANT ARE DECIDED HEREUNDER:- GROUND NOS.L & 2: THROUGH THESE GROUNDS OF APPEAL, THE APPELLANT HAS CHALLENGED THE ADDITION RS.L,94,98,00 0/- ON ACCOUNT OF BOGUS LOAN U/S 68 OF THE ACT. 4.1.1 THE APPELLANT FURNISHED THE CORRECT ADDRESSES OF THE LOAN M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 14 PARTIES AND CONFIRMATIONS WERE FILED FROM LOAN PART IES. THE AO RECORDED THE STATEMENT IN MOST OF THE CASES. WHILE RECORDING THE STATEMENT THE LOAN PARTIES HAS CONFIRMED THAT THEY HAD ADVANCED THE LOAN TO THE APPELLANT. BY ISSUING THE SUMMON U/S 13] OF THE 1.T. ACT, THE ABOVE PARTIES BECOMES THE WITN ESSES OF THE DEPARTMENT. IT IS OBLIGATORY ON THE PART OF THE AO TO FORCE THE ATTENDANCE OF THE WITNESSES. THE AO HAS ALL POWER T O FORCE THE ATTENDANCE OF THE LOAN PARTIES. ONCE THE AO HAS ISS UED THE SUMMONS AND THE SAME HAVE BEEN SERVED. HE CANNOT AS K THE APPELLANT TO PRODUCE THE LOAN PARTIES BECAUSE THE L OAN PARTIES ARE THE WITNESSES OF THE DEPARTMENT. THE LOAN PARTI ES FURNISHED THE JOAN CONFIRMATION, COPY OF BANK ACCOUNT AND PRO OF OF FILING OF THE RETURN. THE APPELLANT FURNISHED THE FOLLOWIN G DOCUMENTS IN SUPPORT OF HIS CLAIM 1. LOAN CONFIRMATIONS. 2. COPY OF ITR, WHEREVER RETURN HAS BEEN FILED 3. PROOF OF SOURCE OF INCOME. 4. BANK STATEMENT. 5. THE AO HAS RECORDED THE STATEMENT OF THE LOAN P ARTIES AND THEY HAD CONFIRMED THE TRANSACTIONS. 6. AFFIDAVITS. BY FILING THE ABOVE DOCUMENTS THE APPELLANT IS ABLE TO ESTABLISH THE I. IDENTITY OF THE CREDITORS - MOST OF THE CREDITOR S ARE INCOME TAX PAYERS AND FILED THE LOAN CONFIRMATIONS. II. GENUINENESS OF THE TRANSACTION - THE APPELLANT HAS TAKEN THE LOAN THROUGH BANKING CHANNEL. THE APPELLANT IS IN T HE RECEIPT OF LOAN BY CHEQUE. III. CREDITWORTHINESS OF THE CREDITORS - THE PERSONS NOT ONLY GIVEN THE LOAN TO THE APPELLANT BUT TO OTHER PARTIES ALSO AND CONFIRMED THE SAME. 4.1.2 FROM THE ABOVE IT IS CLEAR THAT THE APPELLAN T HA SATISFIED ALL THE THREE CONDITIONS REQUIRED FOR GEN UINENESS OF THE TRANSACTION. IT IS ALSO TO BE MENTIONED THAT MOST OF THE CREDIT PARTIES ARE ASSESSED TO TAX. THE SAME VIEW HAS BEEN UPHELD BY HONBLE ITA T IN THE FOLLOWING CASES:- I. UMESH ELECTRICALS VS ASST. CIT(201]) 18 JT.1 635 (TRIB- AGRA): (20] 1) 131 LTD 127 : (2011) 141 TTJ M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 15 ESTABLISHMENT OF IDENTITY AND CREDIT-WORTHINESS PRO VED- ASSESSEE PRODUCED THE BANK ACCOUNT OF CREDITOR IN H IS BANK ACCOUNT ON THE SAME DAY ON WHICH LOAN WAS GIVEN- AS SESSEE FURNISHED THE CASH DOW STATEMENT OF CREDITOR-BASED ON INQUIRY, AO NOTED THAT CREDITOR WAS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES-HELD- IN GROUP CASES, IT HAS BEEN HELD THAT THERE WAS NO EVIDENCE AGAINST THE CREDITOR TO PROVE THAT HE WAS PROVIDING ACCOMMODATION ENTRIES- FURTHER, MERE DEPOSIT OF MONEY BY THE CREDITOR ON THE SAME DAY, DOES NOT EST ABLISH THAT THE LOAN IS NOT GENUINE-ASSESSEE HAS PROVED THE SOU RCE OF CREDIT AND ALSO THE SOURCE OF SOURCE -ADDITION CANNOT BE M ADE. 11. ASEEM SINGH VIS ASST. CIT (2012) 19 IT.1 52 CT RIB.-INDORE) IDENTITY AND CREDIT-W0L1HINESS PROVED-ASSESSEE TOOK LOAN OF RS.1,00,000/- CONFIM1ATION OF CREDITOR WAS FILED-LOWER AUTHORITIES MADE ADDITION U/S 68 HOLDING THAT AMOUNT WAS DEPOSITED IN CASH IN THE BANK ACCOUNT OF LENDER IMM EDIATELY PRIOR TO DATE OF LOAN HELD- ASSESSEE HAS ESTABLISHE D THE IDENTITY- THE PARTY HAS CONFIRMED THE TRANSACTION-I F AO DOUBTED THE TRANSACTION, AO SHOULD HAVE CALLED CREDITOR U/S 131- ADDITION CANNOT BE MADE. THEREFORE, THE AO IS NOT J USTIFIED IN MAKING THE ADDITION. THEREFORE. THE ADDITION MADE B Y THE AO AMOUNTING TO RS.L,94,98,0001- IS DELETED. THEREFORE , THE APPEAL ON THIS GROUND IS ALLOWED. 15. THE ABOVE FINDING OF FACT BY THE LD. CIT(A) REM AINS UN-REBUTTED TO THE EXTENT THAT IDENTITY OF THE CASH CREDITOR IS NOT IN DISPUTE, ALMOST IN ALL THE CASES THE LD. AO HAS HIMSELF RECO RDED THE STATEMENT ON OATH WHEREIN THE CASH CREDITORS HAVE C LEARLY STATED THAT THEY HAD SUFFICIENT FUNDS TO PROVIDE LOAN TO T HE ASSESSEE. BANK STATEMENT STANDS FILED EXCEPT IN THE CASE OF RUBY J AIN. PROOF OF OWNING AGRICULTURAL LAND AND EARNING AGRICULTURAL I NCOME HAS BEEN FILED IN THE CASE OF THE CASH CREDITORS TO PROVE TH E SOURCE OF FUNDS AND IN THE REMAINING THE INCOME TAX RETURNS SHOWN T HAT CASH CREDITORS ARE OFFERING SUFFICIENT INCOME TO TAX WHI CH CAN EXPLAIN THE M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 16 SOURCE OF FUNDS USE TO PROVIDED LOANS. CONFIRMATION S OF ACCOUNT HAVE BEEN FILED IN ALL THE CASES. 16. LOOKING TO THE FACT THAT THE EVIDENCE TO THE BE ST POSSIBLE EXTENT HAVE BEEN FILED BY THE ASSESSEE TO EXPLAIN THE CASH CREDITORS AND THE REVENUE AUTHORITIES WERE COMPETENT ENOUGH TO PR OCEED AGAINST THE CASH CREDITORS IF THEY WERE NOT SATISFIED WITH STATEMENT ON OATH GIVEN BY THE CASH CREDITORS. IT IS CLEAR THAT THE A SSESSEE HAS PROVED ALL THE INGREDIENTS OF SECTION 68 OF THE ACT IN ORD ER TO CLEAR THE BURDEN OF PROOF. THE ONUS THUS SHIFTED ON THE REVEN UE TO REBUT WHICH REMAINED UNFULFILLED. THE PERSONS ADVANCED TH E LOAN ARE MAN OF MEANS AND NEARLY 70% OF LOAN CREDITORS ARE ASSES SED TO TAX AND THE REMAINING ARE AGRICULTURISTS HAVING SUFFICIENT AGRICULTURAL LAND TO EARN AGRICULTURAL INCOME. THE AFFIDAVIT HAS BEEN FILED BY ALL THE CASH CREDITORS AND THIS FACT CANNOT BE DISPUTED. IT IS ALSO BROUGHT TO A NOTICE THAT THE ALLEGED LOANS ACCEPTED THROUGH AC COUNT PAYEE CHEQUE WERE REPAID IN A MONTH TIME, HAS NOT BEEN DI SPUTED BY THE REVENUE. THE LD. AO WAS MADE A CASE OF CAPITAL BUIL DING SINCE LOANS WERE REPAID WITHIN A MONTH. 17. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTA NCES OF THE CASE AND DETAILED FINDING OF FACT BY THE LD. CIT(A), SUF FICIENT MATERIAL PLACED ON RECORD BY THE ASSESSEE DURING THE COURSE OF HEARING BEFORE BOTH THE LOWER AUTHORITIES AND BEFORE US INC LUDING THE STATEMENT ON OATH TAKEN BY THE LD. AO AND OTHER DOC UMENTARY EVIDENCES REFERRED HEREINABOVE, ARE OF THE CONSIDER ED VIEW THAT ASSESSEE HAD PROVED IDENTITY, GENUINENESS AND CREDI TWORTHINESS OF M/S OCEAN MOTORS PVT. LTD. ITANO.444/IND/2018 17 ALL THE CASH CREDITORS BEYOND DOUBT FOR WHICH IMPUG NED ADDITION U/S 68 OF THE ACT AT RS.1,94,98,000/- HAS BEEN MADE . NO INTERFERENCE IS THUS, CALLED FOR IN THE FINDING OF THE LD. CIT(A) AND THE SAME STANDS CONFIRMED. THUS, ALL THE GROUNDS RA ISED BY THE REVENUE STANDS DISMISSED. 18. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 19.12.201 9. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 18/12/2019 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR