INCOME TAX OFFICER WARD-2(2), MUMBAI V. SPAN VENTURE, MUMBAI

ITA 4446/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7328 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 16-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KUMAR SINGH
• Keywords: Reopening of assessment; Unexplained cash credit; Accommodation entries; Retraction; Bogus loan; TDS
• Section: 143(3); 133(6); 143(1); 195; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.4446/M/2017 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER, WARD-2(2), ROOM NO.B/26, 6 TH FLOOR, ASHAR IT PARK, B-WING, WAGLE INDL. ESTATE, THANE (W) 400 604 VS. M/S. SPAN VENTURE, 1 ST FLOOR, SPAN DUPLEX, OPP. MAXUS MALL, BHAYANDER WEST, PAN: ABVFS 7153A (APPELLANT) (RE SPONDENT) ITA NO.4447/M/2017 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER, WARD-2(2), ROOM NO.B/26, 6 TH FLOOR, ASHAR IT PARK, B-WING, WAGLE INDL. ESTATE, THANE (W) 400 604 VS. M/S. SPAN REALTORS, B-001-002, GOPAL DARSHAN INDRALOK PHASE-II, BHAYANDER EAST, PAN: ABRFS 7795J (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RASHMIKANAT C. MODI, A.R. MS. KETKI RASHIRKE, A.R. REVENUE BY : SHRI ARUN KUMAR SINGH, D.R. DATE OF HEARING : 15.04.2019 DATE OF PRONOUNCEMENT : 26.04.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE ABOVE TITLED TWO APPEALS HAVE BEEN PREFERRED B Y THE REVENUE AGAINST THE ORDERS EVEN DATED 14.03.2017 O F THE ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 2 COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. ITA NO.4446/M/2017 2. THE ISSUE RAISED IN FIRST GROUND OF APPEAL IS AG AINST THE DELETION OF ADDITION OF RS.2,25,00,000/- BY LD. CIT (A) AS MADE BY THE AO UNDER SECTION 68 OF THE ACT TOWARDS UNSEC URED LOAN RECEIVED FROM THE GROUP ENTITIES OF MR. PRAVEEN KU MAR JAIN AND TWO OTHER PARTIES AND ALSO AGAINST THE DELETION OF DISALLOWANCE ON INTEREST PAID TO THE SAID PARTIES TO THE EXTENT OF RS.13,57,807/-. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 28.09.2012 DECLARING INCOME AT NIL WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THEREAF TER, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CAS S AND STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE A SSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. DURING THE ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT ASSESSEE HAS SHOWN UNSECURED LOANS OF RS.5,48,59,386/- FROM 31 PARTIES WHICH IS INCLUSIVE OF FRESH LOANS RAISED DURING THE CURRENT FINANCIAL YEAR. AC CORDINGLY, THE AO CALLED UPON THE ASSESSEE TO JUSTIFY THE FRESH UN SECURED LOANS RAISED DURING THE YEAR ALONG WITH COPIES OF CONFIR MATIONS OF LOAN AND OTHER SUPPORTING DOCUMENTS SUCH AS IT RETURN, P & L ACCOUNT, BALANCE SHEET AND BANK STATEMENT ETC. WHIC H WERE DULY SUBMITTED BY THE ASSESSEE BEFORE THE AO. THE AO AL SO, IN ORDER TO VERIFY THESE LOANS, ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT. HOWEVER, NO RESPONSE WAS RECEIVED FROM 5 PARTI ES NAMELY M/S. ALKA DIAMONDS, M/S. NAKSHATARA BUSINESS PVT. L TD., M/S. ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 3 DUKE BUSINESS PVT. LTD., SHRI DARSHIKA R. MORE AND M/S. SARUP DEVELOPERS PVT. LTD. FROM WHOM THE ASSESSEE RAISED RS.2,25,00,000/- AND INTEREST ON THE SAID LOANS WAS PAID TO THE TUNE OF RS.13,57,807/-. THE AO FURTHER NOTICED THA T THREE PARTIES NAMELY M/S. ALKA DIAMONDS, M/S. NAKSHATARA BUSINESS PVT. LTD. AND M/S. DUKE BUSINESS PVT. LTD. WERE REL ATED TO MR. PRAVEEN KUMAR JAIN. THE AO OBSERVED ON THE BASIS O F INFORMATION RECEIVED FROM DGIT (INV.), MUMBAI THAT A SEARCH WAS CONDUCTED ON SHRI PRAVEEN KUMAR JAIN UNDER SECT ION 132 OF THE ACT ON 01.01.2013 AND DURING THE COURSE OF S EARCH PROCEEDINGS SHRI PRAVEEN KUMAR JAIN STATED ON OATH ON 06.10.2013 THAT THESE THREE ENTITIES BELONGED TO HI M AND WERE ENGAGED IN THE ACTIVITIES OF PROVIDING ACCOMMODATIO N ENTRIES IN THE FORM OF UNSECURED LOANS AND SHARE APPLICATION E TC . THE AO ACCORDINGLY ISSUED SHOW CAUSE NOTICE TO THE ASSESSE E AS TO WHY THE UNSECURED LOANS RAISED FROM THE FIVE PARTIES IN CLUDING THE ONES RELATED TO SHRI PRAVEEN KUMAR JAIN SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE ALONG WITH THE INTEREST PAID THEREON WHICH WAS REPLIED BY THE ASSESSEE VIDE LETTER DATED 30.03.2015 SUBMITTING THEREIN THAT ASSESSEE HAS NOT RECEIVED A NY BOGUS UNSECURED LOANS FROM ENTITIES RELATED TO SHRI PRAVE EN KUMAR JAIN AND OTHER TWO PARTIES. THE LD. A.R. SUBMITTED THAT ALL THESE PARTIES HAVE CONFIRMED THE FACT OF LOANS HAVI NG BEEN ADVANCED TO THE ASSESSEE BY RESPONDING TO THE NOTIC E ISSUED UNDER SECTION 133(6) THOUGH IN THE INITIAL STAGE WH EN THE NOTICES UNDER SECTION 133(6) WERE ISSUED SOME PARTIES DID N OT RESPOND WHEREAS IN SOME CASES THE NOTICES WERE NOT SERVED. THE ASSESSEE ALSO SUBMITTED THAT ALL THE NECESSARY EVIDENCES TO PROVE THE GENUINENESS, CREDITWORTHINESS AND IDENTIFIES OF THE PARTIES, THEIR ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 4 BANK STATEMENTS ETC WERE FILED BEFORE THE AO. HOWE VER, THE REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO AND HE ,AFTER REJECTING THE CONTENTIONS RAISED BY THE ASSE SSEE, ADDED THE AGGREGATE AMOUNT OF LOANS OF RS.2,25,00,000/- AS U NEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT AND ALSO DI SALLOWED THE INTEREST ON THE SAID UNEXPLAINED LOANS TO THE TUNE OF RS.13,57,807/- BY FRAMING ASSESSMENT UNDER SECTION 143(3) OF THE ACT. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A), AF TER TAKING ACCOUNT THE CONTENTIONS AND SUBMISSIONS OF THE ASSE SSEE ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 17. I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SU BMISSIONS, OBSERVATIONS OF THE AO IN ASSESSMENT ORDER AND THE FACTS OF THE CASE. THE APPELLANT HAD SHOWN UNSECURED LOANS AMOUNTING TO RS. 5,48,59,386/- RAISED FROM 31 PARTIES. SOME OF THESE LOANS WERE RAISED DURING THE F.Y. 2011-12 RELEVANT TO ASS ESSMENT YEAR UNDER CONSIDERATION. THE AO ASKED THE APPELLANT TO FILE E XPLANATION TO ESTABLISH THE GENUINENESS OF THE UNSECURED LOANS RAISED DURING TH E YEAR LIKE CONFIRMATION FROM THE LOAN CREDITORS ALONGWITH SUPPORTING DOCUMENTARY EVIDENCE IN THE FORM OF COPY OF I.T. RETURN, BANK STATEMENT OF THE CREDITORS FOR THE RELEVANT PERIOD. THE APPELLANT SUBMITTED REQUISITE INFORMATION BEFORE THE AO TO ES TABLISH THE GENUINENESS OF THE LOANS. HOWEVER, THE AO DID NOT ACCEPT THE APPELLANT 'S EXPLANATION PRIMARILY FOR THE FOLLOWING TWO REASONS (1) THE NOTICES U/S. 133(6) OF THE I.T. ACT SENT TO THE LOAN CREDITORS HAD BEEN RECEIVED BACK UNSERVED IN THE CASE OF TWO PARTIES I .E. M/S. NAKSHATRA BUSINESS PVT. LTD. & SMT. DARSHIKA R. MORE AND THE OTHER THREE PA RTIES HAD NOT FILED ANY REPLY IN RESPONSE TO THE NOTICE U/S. 133(6) OF THE I.T. ACT. (2) IN HIS STATEMENT RECORDED U/S. 132(4) OF THE I. T. ACT SHRI PRAVEEN KUMAR JAIN HAD ADMITTED THAT OUT OF THE ABOVE LISTED PARTIES THREE PARTIES NAMELY M/S. ALKA DIAMONDS, NAKSHATRA BUSINESS PVT. LTD. & DUKE BUSIN ESS PVT. LTD. WERE BEING CONTROLLED BY HIM AND WERE ENGAGED IN THE ACTIVITY OF PROVIDING ACCOMMODATION ENTRIES. THE APPELLANT WAS ONE OF THE BENEFICIARIES OF RECEIVING SUCH ENTRIES FROM THE THREE PARTIES CONTROLLED BY SHRI PRAVEEN KUMAR JAIN. 18. WITH REGARD TO FIRST POINT, THE APPELLANT HAS S UBMITTED THAT AFTER RECEIVING THE SHOW CAUSE NOTICE FROM THE AO AND COMING TO KNOW TH AT THESE PARTIES HAD NOT RESPONDED TO THE AO'S NOTICE U/S. 133(6) OF THE LT. ACT, THE APPELLANT CONTACTED THESE PARTIES AND THE PARTIES FILED CONFIRMATION OF THE LOAN ALONGWITH, REQUISITE ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 5 DOCUMENTARY EVIDENCE BEFORE THE AO DIRECTLY. THIS F ACT HAS NOT BEEN DENIED BY THE AO. HE HAS SIMPLY OBSERVED THAT FILING OF THE REPLY DIRECTLY BY THE CREDITORS HAD BEEN MANAGED BY THE APPELLANT WITH AN INTENTION TO PROJECT THE TRANSACTIONS AS GENUINE. WITH REGARD TO THE STATEMENT OF SHRI PRAVE EN KUMAR JAIN THE APPELLANT SUBMITTED THAT THE SAME WAS RETRACTED BY HIM AFTER FILING AFFIDAVITS OF RETRACTION AND THEREFORE NO COGNIZANCE SHOULD HAVE BEEN TAKEN OF THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN. IT WAS FURTHER STATED THAT IN H IS STATEMENT SHRI PRAVEEN KUMAR JAIN HAD RIEVER MENTIONED THE NAME OF THE APPELLANT AS A PARTY WHO HAD RECEIVED ACCOMMODATION ENTRIES FROM HIM OR THE BUSINESS CONC ERNS CONTROLLED BY HIM. 19. IT HAS BEEN HELD BY VARIOUS JUDICIAL AUTHORITIE S INCLUDING THE HON'BLE JURISDICTIONAL MUMBAI HIGH COURT THAT IN THE CASE O F A CASH CREDIT, THE ASSESSEE HAS TO ESTABLISH THE FOLLOWING THREE POINTS (1) IDENTITY OF THE CREDITOR; (2) CAPACITY OF THE CREDITOR TO ADVANCE MONEY; AND (3) GENUINENESS OF THE TRANSACTION. 20. IN THE CASE OF THE APPELLANT ON THE BASIS OF DO CUMENTARY EVIDENCE FILED BEFORE THE AO, A COPY OF WHICH HAS AGAIN BEEN PLACED ON RE CORD AS LISTED ABOVE, IT IS SEEN THAT IDENTITY OF THE CREDITORS STOOD ESTABLISHED ON THE BASIS OF COPIES OF CONFIRMATIONS/ COPY OF THEIR PAN/ COPIES OF ITRS FI LED. THE CREDITWORTHINESS OF THE CREDITORS STOOD ESTABLISHED ON THE BASIS OF THE COP IES OF THEIR BANK ACCOUNTS FROM WHERE THE LOANS WERE ADVANCED TO THE APPELLANT IN F ACT THE AO HAS ANALYZED THE BANK ACCOUNTS OF SOME OF THE CREDITORS WHEREIN HE H AS OBSERVED THAT IMMEDIATELY BEFORE THE AMOUNTS WERE ADVANCED TO THE APPELLANT T HERE WERE CREDITS IN THOSE BANK ACCOUNTS THROUGH ACCOUNT PAYEE CHEQUES. THEREF ORE, IT IS NOT A CASE WHERE THERE WERE ANY CASH DEPOSITS IN THE BANK ACCOUNT OF THE CREDITORS BEFORE THE LOANS WERE ADVANCED. THE GENUINENESS OF THE TRANSACTIONS IS NOT IN DOUBT AS ALL THE LOAN TRANSACTIONS ARE THROUGH ACCOUNT PAYEE CHEQUES. THE REFORE, IN TERMS OF VARIOUS CASE LAWS ON THE ISSUE, AS LISTED ABOVE IN THE APPE LLANT'S SUBMISSIONS, THE APPELLANT HAD DISCHARGED ITS BURDEN OF FILING THE REQUISITE D OCUMENTARY EVIDENCE. FURTHER IT IS SEEN THAT NO DEFECT OR DEFICIENCY HAS BEEN POINTED OUT BY THE AO IN THE DOCUMENTARY EVIDENCE FILED BY THE APPELLANT. THE AO HAS MERELY RELIED ON THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN RECORDED U/S 1 32(4) OF THE ACT WHICH WAS RETRACTED LATER ON BY FILING AFFIDAVIT OF RETRACTIO N. THEREFORE, ADDITION U/S 68 COULD NOT HAVE BEEN MADE MERELY ON THE BASIS OF A THIRD P ARTY'S STATEMENT WITHOUT THERE BEING ANY CORROBORATIVE DOCUMENTARY EVIDENCE. 21. ON SIMILAR FACTS THE CIT(A) - 44, MUMBAI IN THE CASE OF S.K. DEVELOPERS IN APPEAL BEARING ITA NO. 309/2015-16 FOR A.Y. 2007-08 VIDE H IS ORDER DATED 08.09.2016 HAS ALLOWED THE ASSESSEE'S APPEAL. THE FACTS OF THIS CA SE WERE AS UNDER 'A SEARCH & SEIZURE ACTION WAS CONDUCTED IN THE BHA NWARLAL JAIN GROUP OF CASES BY INVESTIGATION WING, MUMBAI. AS A RESULT OF SEARCH IT WAS FOUND BY THE INVESTIGATION WING THAT THIS GROUP IS A LEADING ENTRY PROVIDER OF MUMBAI. THERE ARE MANY CONCERNS FLOATED BY THE GROU P WHO PROVIDE ACCOMMODATION ENTRIES OF BOGUS LOAN. THE AO RECEIVE D AN INFORMATION THAT THE APPELLANT HAS ALSO TAKEN LOAN FROM TWO CONCERNS FOUND IN THE LIST OF ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 6 ENTRY PROVIDERS RELATED WITH BHANWARLAL JAIN GROUP OF CASES NAMELY M/S. JEWEL DIAM AND M/S. AMIT DIAMONDS.' THE CIT(A) - 44, MUMBAI ALLOWED THE APPELLANT'S APP EAL BY HOLDING AS UNDER- '3.3 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT O RDER AS WELL AS THE WRITTEN SUBMISSION OF THE AR, I HAVE ALSO PERUSED T HE DETAILS FILED BY THE AR. THE AO HAS MADE ADDITION U/S. 68 OF THE IT ACT 1961 . IT IS THEREFORE IMPORTANT TO UNDERSTAND THE POSITION OF LAW WHICH H AS EVOLVED FROM A CATENA OF JUDGMENTS DELIVERED BY HIGH COURTS AND TR IBUNALS ON THIS ISSUE. THE HON 'BLE ITATMUMBAI IN THE CASE OF JTO VS ANANT SHELTERS PVT. LTD. (2012) 20 TAXMANN.COM 153 HAS ENUMERATED CERTAIN PR INCIPLES WHICH WOULD BE EXTREMELY USEFUL IN UNDERSTANDING THE ISSUE IN H AND. IT HAS BEEN STATED IN THE SAID JUDGMENT THAT OVER THE YEARS, LAW REGARDIN G CASH CREDITS HAVE EVOLVED AND HAS TAKEN A DEFINITE SHAPE. A FEW ASPEC TS OF LAW U/S. 68 CAN BE ENUMERATED. 1. SEC. 68 CAN BE INVOKED WHEN THERE IS A CREDIT OF AMOUNTS IN THE BOOKS MAINTAINED BY THE ASSESSEE, SUCH CREDIT IS A SUM OF MONEY DURING THE PREVIOUS YEAR AND EITHER THE ASSESSEE OF FERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CRE DITS OR THE EXPLANATION BY THE ASSESSEE IN THE OPINION OF THE A O IS NOT SATISFACTORY. 2. THE OPINION OF THE AO FOR NOT ACCEPTING THE EXPL ANATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY IS REQUIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ON RECORD. 3. COURTS ARE OF THE FIRM VIEW THAT THE EVI DENCE PRODUCED BY THE ASSESSEE CANNOT BE BRUSHED ASIDE IN A CASUAL MANNER . 4. THE ONUS OF PROOF IS NOT STATIC. THE INITIAL BUR DEN LIES ON THE ASSESSEE TO ESTABLISH THE IDENTITY AND THE CREDIT W ORTHINESS OF THE CREDITOR AS WELL AS THE GENUINENESS OF TRANSACTION. 5. THE IDENTITY OF CREDITORS CAN BE ESTABLISHED BY EITHER FURNISHING THEIR PANS OR ASSESSMENT ORDERS. THE GENUINENESS OF THE TRANSACTION CAN BE PROVED IF IT WAS SHOWN THAT THE MONEY WAS RE CEIVED BY A/C PAYEE CHEQUE. CREDITWORTHINESS OF THE LENDER CAN BE ESTABLISHED BY ATTENDING CIRCUMSTANCES. 3.4 DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE FOLLOWING DETAILS WERE FILED BEFORE THE AO. 1. LOAN CONFIRMATION FROM THE LENDERS. 2. PAN NO. OF THE LENDERS. 3. LEDGER EXTRACT 4. COPY OF THE RETURN OF INCOME OF THE FIRM / COMPA NY WHICH ADVANCED THE LOAN. 5. COPY OF BANK ACCOUNT OF THE LENDER. ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 7 6. COPY OF BANK A/C OF THE ASSESSEE. 7. QUARTERLY RETURNS FOR T. D. S. FILED WITH THE DE PARTMENT. 3.5 IF THE ABOVE REFERRED PRINCIPLES ARE APPLIED TO THE FACTS OF THE CASE UNDER CONSIDERATION IT CAN BE SEEN THAT THE IDENTITY OF T HE CREDITORS HAS BEEN ESTABLISHED AS THEY ARE HAVING PAN AND THEY ARE FIL ING RETURN OF INCOME. THE GENUINENESS OF THE TRANSACTION IS ESTABLISHED FROM THE FACT THAT BOTH THE ACCEPTANCE AND REPAYMENT OF LOAN HAS BEEN THROUGH B ANKING CHANNELS. FURTHER THE INTEREST PAID AGAINST SUCH LOANS HAVE B EEN SUBJECT TO TDS, THE DETAILS OF WHICH HAVE BEEN FILED BEFORE THE AO. THE CREDITWORTHINESS OF THE LENDERS CAN BE ESTABLISHED FROM THE LEDGER A/C, BAN K STATEMENTS AND BALANCE SHEET OF THE LENDERS WHICH WERE FILED BEFOR E THE AO. 3.6 IN THE ASSESSMENT ORDER, THE AO DID NOT AT ALL DISCUSS THE MERITS OF SUBMISSIONS MADE BY THE APPELLANT AND CASUALLY BRUS HED ASIDE THE DETAILS FILED BY THE APPELLANT. FURTHER, FROM A CAREFUL PER USAL OF ASSESSMENT ORDER IT IS SEEN THAT NO ENQUIRY WHATSOEVER HAS BEEN CONDUCT ED BY THE AO. AO DID NOT MAKE ANY INDEPENDENT VERIFICATION WHICH WOULD B RING IN EVIDENCES AGAINST THE IDENTITY AND CREDITWORTHINESS OF THE CR EDITORS AND GENUINENESS OF THE LOAN TRANSACTIONS. INSTEAD THE ENTIRE FOCUS OF THE AO WAS TO DISCUSS THE MODUS OPERANDI ADOPTED BY BHANWARLAL JAIN TO PR OVIDE BOGUS ACCOMMODATION ENTRY OF LOAN. HOWEVER, THE MOOT POIN T BEFORE THE AO WAS TO EXAMINE THE APPLICATION OF SECTION 68 IN THE CAS E OF THE APPELLANT. INSTEAD OF ESTABLISHING THAT THE EXPLANATION OFFERED REGARD ING THE NATURE AND SOURCE OF CREDIT IN THE BOOKS OF THE APPELLANT IS NOT SATI SFACTORY THE AO WENT TO DISCUSS IN DETAIL THE FACTS RELATED WITH BHANWARLAL JAIN GROUP OF CASES. THE AO HAS NOT APPRECIATED THE FACT THAT HE WAS NOT MAK ING ASSESSMENT OF BHANWARLAL JAIN GROUP OF CASES. ON THE OTHER HAND , THE APPELLANT WAS ABLE TO ESTABLISH THE IDENTITY AND THE CREDITWORTHINESS OF THE CREDITORS AS WELL AS THE GENUINENESS OF TRANSACTIONS. 3.7 RECENTLY THE HON 'BLE BOMBAY HIGH COURT HAS PASSED AN ORDER IN WP NO. 167 OF 2015 DATED 15.04.2015 IN THE CASE OF M/S . RUSHABH ENTERPRISE VS ACIT 24(3) AND ORS. IN THIS CASE ALSO THE ASSESSEE HAD TAKEN LOAN FROM CONCERNS RELATED WITH BHANWARLAL JAIN GROUP OF CASE S. IN FACT, ONE SUCH CONCERN NAMELY M/S. JEWEL DIAM ALSO FEATURES IN THE CASE OF THE APPELLANT. IN ITS ORDER THE HON'BLE BOMBAY HIGH COURT IN ADDIT ION TO DECIDING THE LEGAL VALIDITY OF REOPENING OF ASSESSMENT ALSO DISCUSSED THE FACTS OF THE CASE. THE HON'BLE BOMBAY HIGH COURT IN PARA 8 OF ITS ORDE R STATED ' ........ ACCORDING TO HER (AO) THE REVENUE HAS RECEIVED INFO RMATION FROM THE DGIT (INV.) THAT THE ASSESSEE HAS TAKEN UNSECURED LOANS FROM THE ABOVE PARTIES BY WAY OF UNACCOUNTED CASH / ACCOMMODATION ENTRIES. WE ARE UNABLE TO AGREE SINCE THE PETITIONER HAS CLEARLY STATED THAT ALL TH E PAYMENTS WERE MADE BY A/C PAYEE CHEQUES WHICH WERE ENCASHED IN THE BANK A CCOUNT OF THE PETITIONER IN THE REGULAR COURSE OF BUSINESS. WE FI ND THAT THE PETITIONER HAS ALSO PAID INTEREST ON THESE LOANS AFTER DEDUCTION O F TAX AT SOURCE AND TDS RETURNS ARE ALSO ACCORDINGLY FILED. THERE IS NO DIS PUTE IN REGARD TO THE ABOVE. WE FIND NOTHING TO SUPPORT THE SAID CONTENTIONS OF THE REVENUE. THE ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 8 REVENUE'S CONTENTION IN THE AFFIDAVIT IN REPLY HAS NO MERIT. ON THE OTHER HAND, THE LOANS APPEAR TO BE TAKEN IN THE REGULAR C OURSE OF BUSINESS ...........: 3.8 AFTER CONSIDERING THE TOTALITY OF FACTS, THE RI VAL SUBMISSIONS, APPLICABLE LAW AND ON THE BASIS OF DISCUSSIONS MENTIONED ABOVE I HAVE COME TO THE CONCLUSION THAT NATURE AND SOURCE OF CREDIT IN THE BOOKS OF ACCOUNTS OF THE APPELLANT STANDS EXPLAINED. CONSEQUENTLY, ADDITION U/S. 68 CANNOT BE SUSTAINED. THE GROUNDS OF APPEAL NO. 1 IS ACCORDING LY ALLOWED AND ADDITION OF RS. 39,51J38/- IS DELETED. ' 22. SIMILARLY, THE CIT(A)-2, THANE IN THE CASE OF S.S. SYNTHETICS IN ITA NO. 71/15- 16 VIDE HIS ORDER DATED 27.02.2017 HAS ALLOWED THE ASSESSEE'S APPEAL BY HOLDING AS UNDER - 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, FINDINGS OF THE AO, SUBMISSION OF THE LDAR AND MATERIAL PLACED ON RECOR D. FROM THE FACTS OF THE CASE IT IS NOTICED THAT DURING THE YEAR THE APPELLA NT CLAIMED TO HAD OBTAINED UNSECURED LOAN OFRS 25 LAKHS FROM JPK TRADING (I) P VT LTD, THROUGH ACCOUNT PAYEE CHEQUES, VIDE CHEQUE NO 315948 DRAWN ON PUNJA B NATIONAL BANK (RS 20 LAKHS) AND CHEQUE NO 315960, DRAWN ON PUNJAB NA TIONAL BANK (RS 5 LAKHS). IN VIEW OF THE INFORMATION RECEIVED FROM THE INVESTIGATION WING, MUMBAI, VIDE LETTER DATED 07.03.2014, THE CASE OF THE APPELLANT WAS REOPENED IT/S 147 OF THE ACT. AS PER THE TDETAILS S TATED IN THE SAID LETTER, A SEARCH ACTION WAS CARRIED OUT ON 01.10.2013, ON THE BUSINESS PREMISES OF THE ENTITIES OF MR PRAVEEN KUMAR JAIN, WHO WAS INDU LGING IN PROVIDING ACCOMMODATION ENTRIES. IN THE SAID LETTER, IT WAS S TATED THAT AS PER THE STATEMENT GIVEN BY MR PRAVEEN KUMAR JAIN, THE APPEL LANT, M/S S S SYNTHETICS, HAD OBTAINED ACCOMMODATION ENTRIES OF U NSECURED LOAN OF RS 20 LAKHS ON 13.3.2007 AND RS 5 LAKHS ON 23.03.2007, TH ROUGH PUNJAB NATIONAL BANK. IN VIEW OF THESE FACTS, THE AO RESORTED TO IS SUE A NOTICE U/S 133(6) OF THE ACT, TO VERIFY THE GENUINENESS OF LOAN. HOWEVER , THE SAID LETTER WAS RETURNED BACK UN-SERVED WITH THE REMARKS 'UNCLAIMED '. ACCORDINGLY, THE AO HAD ASKED THE APPELLANT TO PRODUCE THIS PARTY FOR V ERIFICATION, ALONG WITH SUPPORTING DOCUMENTARY EVIDENCES. IN COMPLIANCE, TH E APPELLANT STATED THAT IT HAD NO LEGAL AUTHORITY TO COMPEL HIS PRESENCE AN D REQUESTED THE AO TO ENFORCE HIS PRESENCE BY TAKING NECESSARY COURSE, AS PER PROVISIONS OF THE ACT, ON THE ADDRESS SUPPLIED BY THE APPELLANT. IT I S FURTHER STATED THAT THE APPELLANT HAS FILED ALL NECESSARY DOCUMENTS SUCH AS CONFIRMATION LETTER, BANK STATEMENT AND OTHER DOCUMENTS TO ESTABLISH THE CREDIT WORTHINESS OF THE CREDITORS. HOWEVER, THE AO REJECTED THE CLAIM W ITH THE PLEA THAT THE APPELLANT HAS FAILED TO FURNISH CREDIBLE DOCUMENTS IN SUPPORT OF HIS CLAIM OF ABOVE LOAN AND THE INVESTIGATION WING, MUMBAI, HAS ESTABLISHED THE FACT THAT MR PRAVEEN KUMAR JAIN HAS PROVIDED ACCOMMODATI ON ENTRIES OF ABOVE LOAN, HENCE NOT GENUINE TRANSACTION. 5.1 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD AR SUBMITTED THAT THE APPELLANT HAD FURNISHED ALL CREDIBLE DOCUMENTS SUCH AS CONFIRMATION, LATEST ADDRESS OF THE CREDITOR, COPIES OF THE LEDGE R ACCOUNT, BANK STATEMENT OF CREDITOR HIGHLIGHTING DEBIT OF UNSECURED LOAN OF RS 20 LAKHS AND RS 5 LAKHS ON 15.3.2007 AND 24.3.2007, BANK STATEMENT OF THE A PPELLANT, HIGHLIGHTING ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 9 THE CORRESPONDING AMOUNT CREDITED ON THE RESPECTIVE DATES, COPIES OF BANK STATEMENT OF APPELLANT HIGHLIGHTING THE REPAYMENT O F UNSECURED LOAN OF RS 10 LAKHS ON 08.01.2008, RS 10 LAKHS ON 01.03.2008, RS 2 LAKHS ON 05.03.2008 AND RS 5 LAKHS ON 22.01.2008, ALONG WITH BANK STATE MENT OF CREDITOR, HIGHLIGHTING CORRESPONDING RECEIPT / CREDIT OF UNSE CURED LOAN FROM THE APPELLANT OFRS 10 LAKHS ON 08.01.2008, RS 5 LAKHS O N 22.01.2008, RS 10 LAKHS ON 28.01.2008, AND RS 2 LAKHS ON 04.03.2008. AGAINS T THE SAID LOAN IT IS CONTENDED THAT THE INTEREST WAS PAID AFTER NECESSAR Y TDS AND THE SAID INTEREST PAYMENT WAS DECLARED AS INTEREST INCOME BY THE CREDITOR. IN ADDITION TO ABOVE, THE APPELLANT HAS ALSO RAISED AD DITIONAL GROUNDS /PLEA BY CHALLENGING REOPENING ON THE GROUND THAT THE COPIES OF STATEMENT OF MR PRAVEEN KUMAR JAIN ALONG WITH OTHER DOCUMENTS WERE NOT PROVIDED TO THE APPELLANT AND ACCORDINGLY CHALLENGED THE REOPENING AS WELL AS RE- ASSESSMENT PROCEEDINGS. IT IS FURTHER CONTENDED THAT NO ADVERSE VIEW CAN BE TAKEN AGAINST THE APPELLANT, UNTIL AND UNLESS CR EDIBLE DOCUMENTS, FOR TAKING THE ABOVE COURSE, ARE MADE AVAILABLE TO THE APPELLANT. IT IS FURTHER CONTENDED THAT THE NAME OF THE CREDITOR M/S JPK TRA DING(I) PVT. LTD. HAD CHANGED TO M/S DUKE BUSINESS PVT. LTD. AND THE A.O. HAD NOT MADE ANY ENQUIRY WITH CHANGED NAME. ACCORDINGLY, IT IS PRA YED THAT THE APPELLANT HAS DISCHARGED ITS PRIMARY ONUS BY FURNISHING COMPLETE MAILING ADDRESS, COPY OF CONFIRMATION, COPY OF LEDGER ACCOUNTS, COPIES OF BA NK STATEMENT OF CREDITOR AS WELL AS APPELLANT, HIGHLIGHTING THE RECEIPT OF L OAN FOR THE YEAR AND ALSO COPIES OF BANK STATEMENT OF THE APPELLANT AS WELL A S CREDITOR, FOR THE SUBSEQUENT PERIOD, HIGHLIGHTING THE ENTRIES OF REPA YMENT OF LOAN IN BANK ACCOUNT OF BOTH PARTIES, THEREFORE, REQUESTED FOR D ELETION OF ABOVE ADDITION. 5.2 THE ABOVE FACTS WERE VERIFIED AND NOTICED THAT COPY OF LEDGER ACCOUNTS, COPY OF BANK STATEMENTS FOR THE YEAR IN WHICH LOAN WAS TAKEN AND THE YEAR IN WHICH LOAN WAS REPAID ALONG WITH INTEREST, ETC., ARE DULY REFLECTED IN THE ACCOUNTS OF BOTH PARTIES. IT IS FURTHER NOTICED THA T IN-SPITE OF SPECIFIC REQUEST OF THE APPELLANT THE AO HAS NOT SUMMONED THE CREDIT OR AT NEW ADDRESS, GIVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS FURTHER NOTICED THAT IT WAS THE DEPARTMENT WHICH HAS RECORDED THE STATEM ENT OF CREDITORS AND ACCORDINGLY WOULD HAVE SUMMONED HIM, IN THE PRESENC E OF THE APPELLANT FOR CROSS VERIFICATION AND REBUTTAL OF THE ABOVE LOANS. THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD, TO DISLODGE THE ABOVE DEBIT AND CREDIT ENTRIES ABOUT THE RECEIPT AND REPAYMENT OF LOAN, IN THE BANK ACCO UNT OF BOTH THE PARTIES, I. E. CREDITOR AS WELL AS APPELLANT. THE A O HAS AL SO NOT PROVIDED COPIES OF THE STATEMENT ABOUT EXACT WORDING ABOUT THE NATURE OF ENTRIES PROVIDED TO THE APPELLANT, IN RESPECT OF THE ABOVE TRANSACTIONS . AS PER THE DETAILS SUBMITTED BY THE APPELLANT, IT IS CRYSTAL CLEAR THA T THE APPELLANT HAS DISCHARGED. ITS ONUS BY FURNISHING THE REQUIRED INF ORMATION AS PER PROVISIONS OF SEC 68 OF THE ACT. IT IS FURTHER NOTICED THAT TH E CREDITOR IS ASSESSED TO TAX AND THE ROI, WHEREIN THE ABOVE TRANSACTION, ALONG W ITH INTEREST INCOME SHOWN, HAS DULY BEEN ACCEPTED BY THE DEPARTMENT. MO REOVER, ON PERUSAL OF THE BANK STATEMENT OF THE CREDITOR, IT IS NOTICED T HAT THERE WAS SUFFICIENT BALANCE BEFORE THE ISSUE OF CHEQUES OF RS 20 LAK AN D RS 5 LAKHS IN FAVOUR OF THE APPELLANT AND THERE WAS NO CASH DEPOSIT, PRIOR TO THE ISSUE OF CHEQUES, IN THE ACCOUNT OF THE CREDITOR. IN THE CASE OF NEMI CHAND KOTHARI VS CIT, 264 ITR 254, GULSHAN VERMA VS DCIT (CENTRAL) KOLKATTA, 155 ITD 140 AND SO ON, ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 10 RELIED BY THE APPELLANT, ON ACCOUNT OF SIMILAR SET OF CIRCUMSTANCES, THE LOANS WERE ACCEPTED AS GENUINE. CONSIDERING THE FACTS IN ENTIRETY, IN MY CONSIDERED OPINION, THE APPELLANT HAS DISCHARGED TH E ONUS, CASTED UPON HIM, TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF CREDITORS. KEEPING IN VIEW THE ABOVE FACTS, IN MY CONSIDERED OPINION, THE ADDITION OF RS 25 LAKHS, MADE U/S 68 OF THE ACT, IS NOT JUSTIFIED, AND ACCOR DINGLY DELETED. BOTH THE GROUNDS OF APPEAL, RAISED AS ABOVE, ARE ALLOWED . 23. IN THIS CASE THE 'ENTRY PROVIDER' WAS THE SAME I.E. SHRI PRAVEEN KUMAR JAIN, IN WHOSE CASE SEARCH ACTION ON 01.10.2013 HAD BEEN CAR RIED OUT AND THE CREDITOR PARTY IS ALSO ONE OF THE SAME PARTIES AS IN THE CAS E OF THE APPELLANT I.E. M/S. DUKE BUSINESS PVT. LTD. (EARLIER NAME M/S. J.P.K. TRADIN G PVT. LTD.). 24. THEREFORE, IN VIEW OF THE FACT THE APPELLANT HA D DISCHARGED ITS BURDEN OF FILING THE REQUISITE DOCUMENTARY EVIDENCE, RELYING ON VARIOUS JUDGMENTS OF THE HIGHER JUDICIAL AUTHORITIES AS LISTED ABOVE IN THE APPELLANT'S SUBMISSIONS, DECISION OF THE HON'BLE MUMBAI HC IN THE CASE OF M/S RUSHABH EN TERPRISES VS ACIT 24(3) AND ORS. IN WP NO. 167 OF 2015 DATED 15.04.2015 (SUPRA) AND APPELLATE ORDERS OF MY COLLEAGUES CIT(A)-44 MUMBAI AND CIT(A)-II, THANE AS REPRODUCED ABOVE, IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITIO N U/S, 68 ON ACCOUNT OF UNEXPLAINED CASH CREDITS IN RESPECT OF AMOUNTS RECE IVED FROM THE ABOVE LISTED FIVE PARTIES. THE AO IS THEREFORE, DIRECTED TO DELETE TH E ADDITION OF RS.2,25,00,000/- MADE IN THE APPELLANT'S CASE U/S. 68 OF THE I.T. AC T. 5. THE LD. D.R. SUBMITTED BEFORE THE BENCH THAT ASS ESSEE DURING THE YEAR RAISED MONEY FROM FIVE PARTIES TO T HE EXTENT OF RS.2,25,00,000/- ON WHICH INTEREST WAS PAID TO THE EXTENT OF RS.13,57,807/-. OUT OF THE SAID PARTIES THREE WER E RELATED TO SHRI PRAVEEN KUMAR JAIN A LEADING HAWALA OPERATOR W HO DURING COURSE OF SEARCH ADMITTED IN THE STATEMENT UNDER SE CTION 132(4) OF THE ACT THAT ALL THE THREE ENTITIES FROM WHOM TH E ASSESSEE HAVE BORROWED MONEY NAMELY M/S. ALKA DIAMONDS, M/S . NAKSHATARA BUSINESS PVT. LTD. AND M/S. DUKE BUSINES S PVT. LTD. WERE ENGAGED IN THE BUSINESS OF PROVIDING ACCO MMODATION ENTRIES ONLY AND THEREFORE THE ORDER PASSED BY LD. CIT(A) DELETING THE ADDITIONS IS TOTALLY WRONG AND DESERVE S TO BE REVERSED. SO FAR AS THE REMAINING TWO PARTIES NAME LY SHRI DARSHIKA R. MORE AND M/S. SARUP DEVELOPERS PVT. LTD . ARE CONCERNED, THE LD. A.R. SUBMITTED THAT EVEN IN THOS E CASES THE ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 11 NOTICE WAS RETURNED UNSERVED WHEREAS IN THE CASE OF M/S. SARUP DEVELOPERS PVT. LTD. NO RESPONSE WAS RECEIVED. 6. THE LD. D.R. SUBMITTED THAT MERE FILING OF CONFI RMATIONS FROM THE LENDERS, THEIR PROFIT & LOSS ACCOUNT, IT R ETURNS AND BALANCE SHEET ALONG WITH COPIES OF BANK STATEMENTS WOULD NOT AUTOMATICALLY PROVE THE GENUINENESS AND CREDITWORTH INESS OF THESE TRANSACTIONS AND THEREFORE THE SAME WERE WRON GLY DELETED BY THE LD. CIT(A). THE LD. D.R. SUBMITTED THAT THE AO EVEN ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT WHIC H WERE EITHER RETURNED UNSERVED IN CASE OF TWO PARTIES NAMELY SHR I DARSHIKA R. MORE AND M/S. NAKSHATARA BUSINESS PVT. LTD. AND IN THE CASE OF REMAINING THREE PARTIES NAMELY M/S. ALKA DIAMOND S, M/S. DUKE BUSINESS PVT. LTD. AND M/S. SARUP DEVELOPERS P VT. LTD. NO RESPONSES WERE RECEIVED. HOWEVER, WHEN THE SAME WA S CONFRONTED TO THE ASSESSEE AND THE ASSESSEE TOOK UP THE MATTER WITH THESE THESE PARTIES, THEY RESPONDED TO THE NO TICES ISSUED UNDER SECTION 133(6) BY FILING THE NECESSARY DETAIL S. THE LD DR SUBMITTED THAT THE CASE OF THE ASSESSEE IS CLEARLY BY THE PROVISO TO SECTION 68 OF THE ACT WHICH WAS INTRODUCED FROM 1 ST APRIL, 2013 BUT APPLICATION TO THE CURRENT ASSESSMENT YEA R. THE LD. D.R. POINTED OUT THAT DESPITE ALL THESE FACTS THE T RANSACTIONS REMAINED UNVERIFIED AND DOUBTFUL AND THEREFORE THE ORDER OF LD. CIT(A) MAY KINDLY BE REVERSED. THE LD. D.R. RELIED ON THE FOLLOWING DECISIONS: 1. PR, C.I.T.FCENTRAL)-1 VS NRA IRON & STEEL PVT.LT D. CIVIL APPEAL NO OF 2019 (ARISING OUT OF SLP (CIVIL NO.29855 OF 2018 ) SUPRE ME COURT RECENT DECISION DATED 05 TH MARCH 2019 2. PR.CIT -6 .NEW DELHI VS NDR PROMPTERS PVT LTD IT A 49/2018 OF HON'BLE DELHI HIGH COURT DATED 17.01 .2019 3. CIT VS NAVODAYA CASTLE PVT LTD F20141 367 ITR 30 6 (DEL) 4. NAVODAVA CASTLE PVT LTD VS CIT (2015-TIOL-314-S C-IT) ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 12 5. CIT VS MAP ACADEMY (P.) LTD (361 ITR 258) 6. RICK LUNSFORD TRADE & INVESTMENT LTD VS CIT (201 6] 385 ITR 399 (CAL) 7. RICK LUNSFORD TRADE & INVESTMENT LTD VS CIT (201 6-TIOL-207-SC-IT (SUPREME COURT) 8. CIT VS NIPUN BUILDERS & DEVELOPERS (P.) LTD (30 TAXMANN.COM 292, 214 TAXMAN 429, 350 ITR 407, 256 CTR 34) 9. CIT VS NOVA PROMOTERS & FINLEASE (P) LTD (18 TA XMANN.COM 217, 206 TAXMAN 207, 342 ITR 169. 252 CTR 187) 10. CIT VS. ULTRA MODERN EXPORTS (P.) LTD (40 TAXM ANN.COM 458, 220 TAXMAN 165) 11. CIT VS. FROSTAIR (P.) LTD. (26 TAXMANN.COM 11, 210 TAXMAN 221) 12. CIT VS. N.R. PORTFOLIO PVT. LTD. (2013) 29 TAX MANN.COM 291 (DELHI)/(2013) 214 TAXMAN 408 (DELHI/(2013) 263 CTR 456 (DELHI) 13. CIT VS EMPIRE BUILTECH (P.) LTD (366 ITR 110) 14. CIT VS FOCUS EXPORTS (P.) LTD (51 TAXMANN.COM 4 6 (DELHI)/F2015] 228 TAXMAN 15. N K PROTEINS LTD VS CIT (2017-TIOL-23-SC-IT) 16. NK PROTEINS LTD VS CIT (2016-TIOL-3165-HC-AHM- IT) 7. THE LD. A.R., ON THE OTHER HAND, RELIED HEAVILY ON THE ORDER OF LD. CIT(A) BY SUBMITTING THAT THE ASSESSEE HAS D ULY PROVED THE THREE INGREDIENTS AS ENVISAGED BY THE PROVISION S OF SECTION 68 OF THE ACT NAMELY GENUINENESS, CREDITWORTHINESS OF THE TRANSACTIONS AND IDENTITIES OF THESE PARTIES BY F ILING THE NECESSARY EVIDENCES AND PROOFS IN THE FORM OF CONF IRMATIONS FROM THE LENDERS, THEIR BANK STATEMENTS, ITRS, PROF IT & LOSS ACCOUNTS AND BALANCE SHEETS. THE LD. A.R. SUBMITTE D THAT EVEN THE NOTICES ISSUED UNDER SECTION 133(6) WHICH WERE NOT RESPONDED IN THE CASE OF THREE PARTIES NAMELY M/S. ALKA DIAMONDS, M/S. DUKE BUSINESS PVT. LTD. AND M/S. SAR UP DEVELOPERS PVT. LTD. AND WERE RETURNED UNSERVED BY THE POSTAL AUTHORITY WITH THE REMARK NON KNOWN NOTICES TO THE REMAINING TWO PARTIES NAMELY SHRI DARSHIKA R. MORE AND M/S. N AKSHATARA BUSINESS PVT. LTD WERE DULY RESPONDED BY THESE PART IES LATER ON. THE LD. A.R. SUBMITTED THAT WHEN THE AO CONFRONTED THE ASSESSEE WITH THE SAID FACTS THE ASSESSEE GOT IN TO UCH WITH THOSE PARTIES AND THOSE PARTIES FILED THEIR REPLIES ALONG WITH ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 13 CONFIRMATIONS AND OTHER REQUISITE DOCUMENTS BEFORE THE AO. SO FAR AS THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN IS CONCERNED, THE LD. A.R. SUBMITTED THAT THE SAID STATEMENT WAS RETRACTED BY SHRI PRAVEEN KUMAR JAIN BY FILING THE AFFIDAVIT BEF ORE THE REVENUE AUTHORITIES AND THEREFORE NO COGNIZANCE CO ULD BE TAKEN OF THE STATEMENT RECORDED UNDER SECTION 132(4 ) WHICH IS NO MORE IN EXISTENCE. LASTLY THE LD AR BROUGHT TO T HE NOTICE OF THE BENCH THAT IN THE SUBSEQUENT YEARS THESE LOANS WERE EVEN REPAID BY ACCOUNT PAYEE CHEQUES. THE LD. A.R. SUBMI TTED THAT SINCE ALL THE REQUIREMENTS OF SECTION 68 WERE SATIS FIED, THEREFORE THE ORDER OF LD. CIT(A) MAY TO BE AFFIRMED. IN DEF ENSE OF HIS ARGUMENTS THE LD AR RELIED ON A SERIES OF DECISIONS : 1. ITO-4(3)(1), MUMBAI VS. NITYANAND INDUSTRIES PVT . LTD, ITA NOS.4277 & 4278/M/2017. 2. ACIT 32(1), MUMBAI VS. M/S. GUJARAT ESTATE, ITA NO .3 1 84/M/2017. 3. D.C.I.T CIRCLE - 5(2)(2) VS. M/S. MANISH FLOUR MIL LS PVT. LTD, ITA NO.6729/MUM/2016. 4. COMMISSIONER OF INCOME TAX - 1 VS. M/S. GAGANDEEP INFRASTRUCTURE PVT. LTD, BOM HC (ITA -1613 OF 2014). 5. COMMISSIONER OF INCOME TAX VS. LOVELY EXPORTS 20 16 CTR 195 (SC). 6. DY. COMMISSIONER OF INCOME TAX VS. ROHINI BUI LDERS (2002) 256 ITR 360 GUJARAT HC 7. ROHINI BUILDERS VS. DY. COMMISSIONER OF INCOME T AX ITAT AHMEDABAD (2001) 117 TAXMANN 25. 8. PR. COMMISSIONER OF INCOME TAX - 13, MUMBAI VS. VEEDHATA TOWER PVT LTD. BOMBAY 8. HC, ITA -819 OF 2015. 9. INCOME TAX OFFICER 9 (1) - 1 VS. ANANT SHELTERS (P.) LTD, (2012) 20 TAXMANN 153 MUMBAI ITAT 10. SHRI NARESH HIRAN VS. INCOME TAX OFFICER 30 (2) (4), MUMBAI, ITA: 1236 / MUM / 201 7, ITAT MUMBAI 12. ASSISTANT COMMISSIONER OF INCOME TAX 25 (2), MU MBAI VS. H K PUJARA BUILDERS, ITA , 1056/MUM/2016,ITATMUMBAI 13. INCOME TAX OFFICER 25 (3) (5), MUMBAI VS M/S VI KRAM MUKTLLAL VORA, ITA: 842 / MUM 2017 ITAT MUMBAI. 14. M/S. RELIANCE CORPORATION, MUMBAI VS. INCOME TA X OFFICER, ITA NO. 1 069 TO 1071/MUM/2017 15. SANGHVI REALTY PVT. LTD. , MUMBAI VS. DCIT CIRC LE 5(3)(1), ITA NO.30L8/MUM/2017 ITA NO.3019/MUM/201 7, ITA NO.3020 /MUM/2017 16. INCOME TAX OFFICER 32 { 1 )(5), MUMBAI VS. GUJA RAT CONSTRUCTION, 1TAT MUMBAI ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 14 17. RUSHABH ENTERPRISES VS. ACIT 24(3), MUMBAI, 60 TAXMANN.COM 134 (BOM) (2015) 18. DY. COMMISSIONER OF INCOME TAX, SURAT VS. M/S. ROHINI BUILDERS, SLP, SUPREME COURT. 19. ACIT MUMBAI VS. M/S. GUJARAT ESTATE, (ITA: 6990 /MUM/2016) G BENCH, ORDER DATED 18.05.2018. 20. ITO - 32 (2) (5), MUMBAI VS. PAYAL NITESH HEDPA RA, (ITA: 4668 / MUM / 2017) SMC BENCH, ORDER DATED 17.05.2018. 21. ITO - 32 (2)(3), MUMBAI VS. MANJULA B HEDPARA, (ITA: 4669 / MUM / 2017) SMC BENCH, ORDER DATED 17.05.2018. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE IM PUGNED ORDER OF THE LD. CIT(A). THE UNDISPUTED FACTS ARE THAT DURING THE YEAR THE ASSESSEE TOOK UNSECURED LOANS FROM FIVE PA RTIES OUT OF WHICH THREE PARTIES WERE RELATED TO SHRI PRAVEEN KU MAR JAIN GROUP WHEREAS THE OTHER TWO PARTIES WERE UNRELATED PARTIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE FILED THE COPIES OF CONFIRMATIONS FROM THE LENDERS, THEIR BANK STATEMENTS, ITRS, AUDITED ANNUAL ACCOUNTS ETC. TO P ROVE THE GENUINENESS, CREDITWORTHINESS OF THE TRANSACTIONS A ND IDENTITIES OF THE PARTIES AND EVEN THE NOTICES ISSUED UNDER SE CTION 133(6) WERE NOT RESPONDED BY THREE PARTIES NAMELY M/S. ALK A DIAMONDS, M/S. DUKE BUSINESS PVT. LTD. AND M/S. SAR UP DEVELOPERS PVT. LTD. WHEREAS THE NOTICES WERE NOT S ERVED TO TWO PARTIES NAMELY SHRI DARSHIKA R. MORE AND M/S. NAKSH ATARA BUSINESS PVT. LTD. THE AO HAS REJECTED THE CONTENT IONS OF THE ASSESSEE IN RESPECT OF THREE PARTIES RELATED TO SHR I PRAVEEN KUMAR JAIN ON THE GROUND THAT SHRI PRAVEEN KUMAR JA IN ADMITTED IN THE STATEMENT RECORDED UNDER SECTION 13 2(4) OF THE ACT THAT THESE WERE ENTITIES WERE ENGAGED IN ISSUI NG ACCOMMODATION ENTRIES ONLY WITHOUT DOING ANY REAL B USINESS. WHEREAS IN RESPECT OF OTHER TWO, THE AO TREATED THE M AS NON GENUINE ON THE GROUND THAT NOTICES UNDER SECTION 13 3(6) WERE ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 15 NOT REPLIED OR SERVED. WHEREAS ON THE OTHER HAND W E OBSERVE FROM THE RECORDS BEFORE US THAT LD. CIT(A) HAS GIVE N A FINDING OF FACT TO THIS EFFECT THAT THE RESPONSES TO THE NOTIC ES ISSUED UNDER SECTION 133(6) WERE DULY FILED BY THESE PARTIES WHE N THE FACT OF NON SERVICES/NON REPLY WAS CONFRONTED TO THE ASSESS EE THOUGH THE SAME WERE RESPONDED BY THESE PARTIES WHEN ASSES SEE PERUSED THE MATTER WITH THEM. WE ALSO NOTE THAT THE THE UNSECURED LOANS WERE REPAID IN THE SUBSEQUENT YEARS . HOWEVER, THE AO HAS NOT CONDUCTED ANY FURTHER ENQUIRY ON THE INFORMATION FILED BY THE ASSESSEE AND THESE LENDERS IN ORDER TO VERIFY THESE TRANSACTIONS VIS--VIS INFORMATIONS F URNISHED BY THE ASSESSEE OR AS RECEIVED FROM THE LENDER OF THE ASSE SSEE. MOREOVER, IN THE STATEMENT RECORDED UNDER SECTION 1 32(4) OF SHRI PRAVEEN KUMAR JAIN THE SAID PERSON NOWHERE NAMED TH E ASSESSEE OR CLAIMED THAT THE ASSESSEE IS A BENEFICI ARY OF THESE ACCOMMODATION ENTRIES. MOREOVER THE AO HAS RELIED ON THE STATEMENT OF SHRI PRAVEEN KUMAR SOLELY TO MAKE THE ADDITION WHICH STOOD RETRACTED BY HIM. THE DECISIONS RELIED UPON BY THE LD. D.R. ARE CAREFULLY PERUSED AND WE OBSERVE THAT THE SAME ARE DISTINGUISHABLE FACTS AND NOT APPLICABLE TO THE PRE SENT CASE. WE ALSO FIND THAT THAT THE HONBLE BOMBAY HIGH IN THE CASE OF CIT VS GAGANDEEP INFRASTRUCTURE PVT LTD. (SUPRA) HAS HEL D THAT THE PROVISO IS APPLICABLE FROM AY 2013-14. MOREOVER THE CASE OF THE ASSESSEE IS CLEARLY COVERED BY THE VARIOUS DECISION S REFERRED TO BY THE LD AR. UNDER THESE FACTS AND CIRCUMSTANCES , WE ARE OF THE VIEW THAT THE ORDER PASSED BY LD. CIT(A) IS VER Y REASONED AND SPEAKING ORDER AND DEPARTMENT HAS FAILED TO BRI NG ON RECORD ANYTHING CONTRARY TO FINDINGS OF THE LD CIT(A) . T HUS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OR LD CIT(A) TO DEV IATE FROM THE ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 16 CONCLUSION REACHED BY THE APPELLATE AUTHORITY. ACCO RDINGLY, WE ARE INCLINED TO UPHOLD THE ORDER OF LD. CIT(A) BY D ISMISSING THE APPEAL OF THE REVENUE ON THIS ISSUE. 9. SINCE WE HAVE UPHELD THE ORDER OF LD. CIT(A) WHE REIN THE LD. CIT(A) HAS DELETED THE ADDITION OF RS.2,25,00,0 00/- IN RESPECT OF UNSECURED LOANS, CONSEQUENTLY THE DELETI ON OF DISALLOWANCE OF INTEREST PAID ON THESE UNSECURED LO ANS OF RS. 13,57,807/- IS ALSO UPHELD AND THE GROUND OF THE RE VENUE IS ALSO DISMISSED. ITA NO.4447/M/2017 10. THE ISSUE INVOLVED IN THE PRESENT APPEAL IS IDE NTICAL TO THE ONE AS STATED ABOVE IN ITA NO.4446/M/2017 FOR A.Y. 2012-13. THEREFORE, OUR FINDING IN ITA NO.4446/M/2017 FOR A. Y. 2012-13 WOULD, MUTATIS MUTANDIS, APPLY TO THIS APPEAL AS WE LL. ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED. 11. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.04.2019. SD/- SD/- (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 26.04.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI ITA NO.4446/M/2017 & ITA NO.4447/M/2017 M/S. SPAN VENTURE 17 THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.