SHRI NARESHBHAI V PATEL, MUMBAI V. ACIT-33(2), MUMBAI

ITA 4912/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 5938 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 21-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIK
• Keywords: Unexplained cash credit; Accommodation entries; Onus to prove; TDS
• Section: 142(1); 133(6); 143(1); 205; 195; 143(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.4912/M/2018 ASSESSMENT YEAR: 2012-13 SHRI NARESHBHAI V. PATEL, 1404, SHREE NAMAN TOWER, S.V. ROAD, KANDIVALI (WEST), MUMBAI 400 067 PAN: AFYPP 6459B VS. ACIT - 33(2), MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAKESH JOSHI, A.R. REVENUE BY : MS. KAVITA P. KAUSHIK, D.R. DATE OF HEARING : 19.09.2019 DATE OF PRONOUNCEMENT : 21.11.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 16.07.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IS AGAINST THE CONFIRMATION OF ADDITION OF RS.4,27,00,000/- AS MAD E BY THE AO UNDER SECTION 68 OF THE ACT TREATING THE UNSECURED LOANS AS UNEXPLAINED CASH CREDIT. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 23.09.2012 DECLARING INCOME OF RS.58,08,6 30/- ITA NO.4912/M/2018 SHRI NARESHBHAI V. PATEL 2 WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . THEREAFTER, THE CASE OF THE ASSESSEE WAS SELECTED F OR SCRUTINY UNDER CASS AND THE NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE DULY ISSUED AND SERVED UPON THE ASSESS EE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED UPON THE ASSESSEE TO EXPLAIN THE ACCEPTANCE OF LOANS/DEPOSIT S IN RESPECT OF 10 PARTIES THE DETAILS WHEREOF IS AS UNDER: NAME OF THE PARTY WHOSE ACCOUNT IS CREDITED AMOUNT SHANKESHWAR EXPORTS 50,00,000/- DEZIRE EXPORTS 55,00,000/- KARTIK DIAMOND PVT. LTD. 35,00,000/- KUSHAL EXPORTS SURAT 70,00,000/- MANMOHAN EXPORTS PVT. 55,00,000/- MADHAV GEMS INDIA 27,00,000/- YASHIKA JEWELS PVT. LTD. 30,00,000/- RASHMI DIAMOND PVT. LTD. 50,00,000/- DEV DIAMONDS SURAT 55,00,000/- TOTAL 4,27,00,000/- SMT. BHARTI N. PATEL DATE RECEIPT AMOUNT 19.05.2011 25,00,000/- 20.06.2011 40,00,000/- 20.06.2011 11,00,000/- 23.08.2011 7,00,000/- 25.08.2011 10,00,000/- TOTAL 93,00,000/- GRAND TOTAL 5,20,00,000/- 4. IT IS PERTINENT TO NOTE THAT THE SAID LOANS WERE DULY REPORTED IN THE TAX AUDIT REPORT BY THE ASSESSEE. THE ASSESSEE FILED THE CONFIRMATIONS OF THESE LOANS DURING THE A SSESSMENT PROCEEDINGS. THE AO, FINDING VARIOUS DEFECTS IN TH E LOAN CONFIRMATIONS AS FILED BY THE ASSESSEE, CAME TO TH E CONCLUSION ITA NO.4912/M/2018 SHRI NARESHBHAI V. PATEL 3 THAT DESPITE VARIOUS OPPORTUNITIES GIVEN , THE ASSE SSEE HAS FAILED TO PROVE THE CREDITWORTHINESS AND IDENTITY OF THE P ARTIES AND GENUINENESS OF THE TRANSACTIONS AND ADDED THE SAID LOANS AGGREGATING TO RS.5,20,00,000/- UNDER SECTION 68 OF THE ACT. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE ADDITI ON TO THE EXTENT OF RS.4,27,00,000/- WHILE DELETING THE RS.93 ,00,000/- RELATING TO LOAN FROM SMT. BHARTI N. PATEL AFTER CA LLING FOR THE REMAND REPORT FROM THE AO AND TAKING INTO ACCOUNT T HE CONTENTIONS AND SUBMISSIONS OF THE ASSESSEE. THE LD . CIT(A) DELETED THE ADDITION IN RESPECT OF LOAN OF RS.93,00 ,000/- FROM SMT. BHARTI N. PATEL ON THE GROUND THAT AO HAS ACCE PTED THE CORRECTNESS OF THE LOAN IN THE REMAND REPORT WHEREA S IN RESPECT OF THE REMAINING, AO DOUBTED THE CREDITWORTHINESS O F THE CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS. THE LD. CIT(A) NOTED THAT MERELY FILING OF COPY OF ITR AND PARTICULAR PAGE OF THE BANK STATEMENT, THE IDENTITY, CREDITWORTHINE SS AND GENUINENESS OF THE TRANSACTIONS COULD NOT BE PROVED . THE LD. CIT(A) OBSERVED THAT IN THE CASE OF SHANKESHWAR EXP ORTS, A LOAN OF RS.50 LAKHS WAS RECEIVED THROUGH BANKING CHANNEL AND INTEREST WAS ALSO PAID ON THE SAID LOAN AFTER DEDUC TION OF TDS BUT DOUBTED THE SAID LOAN BECAUSE SUCH A HUGE LOAN WAS GIVEN WITHOUT ANY SUFFICIENT SECURITY AND ALSO HELD THAT SIMILAR WAS THE POSITION IN THE CASE OF OTHER LOAN CREDITORS AN D FINALLY DISMISS THE APPEAL BY OBSERVING AND HOLDING AS UNDE R: APPELLANT HAS RELIED ON CTT V LOVELY EXPORTS P LTD . 216 CTR 195 (SC),CITV. DWARKADHISH INVESTMENT (P.) LTD. [2010] 330 ITR 298 /194 TAXMAN 43 (DELHI) AND OTHER SUCH CASES. I HAVE GONE THROUGH THE CASES CIT ED BY THE APPELLANT. IN THE OF CASES RELIED BY THE APPELLANT THE COURTS HAVE HELD THAT ONCE DOCUMENTS LIKE PAN CARD, BANK ACCOUNT DETAILS OR DETAILS FROM THE BANK ERS WERE GIVEN BY THE ASSESSEE, ONUS SHIFTS UPON THE ASSESSING OFFICER AND IT IS ON HIM TO REACH THE ITA NO.4912/M/2018 SHRI NARESHBHAI V. PATEL 4 CREDITORS/SHAREHOLDERS TO ASCERTAIN THE TRUE FACTS. IT IS FOR THE ASSESSING OFFICER TO MAKE FURTHER INQUIRIES WITH REGARD TO THE STATUS OF THESE PARTIES TO BRING ON RECORD ANY ADVERSE FINDINGS REGARDING THEIR CREDITWORTHINE SS. THIS IS EXACTLY WHAT THE AO HAS DONE IN THIS CASE. APPELLANT FILED BASIC DETAIL S OF PAN AND ITR-V AND CONFIRMATIONS. AO ASKED THE APPELLANT TO FILE MORE DETAILS LIKE COMPLETE SET OF IT RETURNS P&L, BALANCE SHEETS AND BANK STATEMENTS TO PROVE THE GENUINENESS AND CREDIT WORTHINESS. APPELLANT FAILED TO FILE COMPLET E DETAILS AND ALSO FAILED TO PRODUCE THE PARTIES. AO TOOK THE ONUS ON HIMSELF AN D COLLECTED THE DETAILS, ISSUED 133(6) NOTICES TO LOAN CREDITORS. AO ANALYZED AND P ROVED THAT THE LOAN CREDITORS OF THE APPELLANT HAVE NO CAPACITY TO EXTEND SUCH HUGE AMOUNTS BASED ON THE BUSINESSES AND ALSO GAVE A FINDING BASED ON OBSERVA TIONS FROM THE DOCUMENTS THAT THESE COMPANIES ARE PAPER COMPANIES ROTATING THE EN TRIES. THE LOAN CREDITOR COMPANIES GENERALLY HAVE NO PLACE OF BUSINESS FOR W HICH THEY PAY RENT, NO ELECTRICITY EXPENSES ARE CLAIMED, NO SALARY, NO OPE NING STOCK, NO OTHER ADMINISTRATIVE EXPENSES ARE SEEN IN THE ACCOUNTS. R ELIANCE IS PLACED ON THE FOLLOWING CASE LAWS IN THIS REGARD. CIT V NAVODAYA CASTLES (P) LTD. 56 TAXMANN.COM 18(5 0), WHICH HAS CONFIRMED THE ORDER OF THE HON'BLE HIGH COURT OF DELHI IN NAVODAY A CASTLES (P) LTD. 367ITR306 (DELHI) CIT V. NOVA PROMOTERS AND FINKASE (P) LTD. [2012] 3 42 ITR 169/206 TAXMAN 207/18 TAXMANN.COM 217, CIT V. N.R. PORTFOLIO (P.) LTD. [2014] 222 TAXMAN 1 57/42 TAXMANN.COM 339 (DELHI) AND CIT V. MAF ACADEMY (P.) LTD. [2014] 361 ITR 258 /42 TAXMANN.COM 377 (DELHI) THE ABOVE DECISIONS REFER TO THE EARLIER DECISIONS OF DELHI HIGH COURT IN CIT V. SOPHIA FINANCE LTD. [1994] 205 ITR 98/[1993] 70 TAX MAN 69 (FB), CIT V. DIVINE LEASING AND FINANCE LTD. [2008] 299 ITR 268/[2007] 158 TAXMAN 440 (DELHI) AND OBSERVATIONS OF THE HONBLE SUPREME COURT COURT IN CIT V. LOVELY EXPORTS (P.) LTD. [2008] 319 ITR (ST.) 5 (SC). 5.5 IN THE CASE OF N.R. PORTFOLIO (P.) LTD. (SUPRA) , IT HAS BEEN HELD AS UNDER: '18. IN THE REMAND REPORT, THE ASSESSING OFFICER RE FERRED TO THE PROVISIONS OF SECTION 68 OF THE ACT AND THEIR APPLICABILITY. THE WORD 'IDENTITY' AS DEFINED, IT WAS OBSERVED MEANT THE CONDITION OR FACT OF A PE RSON OR THING BEING THAT SPECIFIED UNIQUE PERSON OR THING. THE IDENTIFICATIO N OF THE PERSON WOULD INCLUDE THE PLACE OF WORK, THE STAFF, THE FACT THAT IT WAS ACTUALLY CARRYING ON BUSINESS AND RECOGNITION OF THE SAID COMPANY IN THE EYES OF PUBLIC. MERELY PRODUCING PAN NUMBER OR ASSESSMENT PARTICULARS DID NOT ESTABLISH THE IDENTITY OF THE PERSON. THE ACTUAL AND TRUE IDENTIT Y OF THE PERSON OR A COMPANY WAS THE BUSINESS UNDERTAKEN BY THEM. THIS A CCORDING TO US IS THE CORRECT AND TRUE LEGAL POSITION, AS IDENTITY, CREDI TWORTHINESS AND GENUINENESS HAVE TO BE ESTABLISHED. PAN NUMBERS ARE ALLOTTED ON THE BASIS OF APPLICATIONS WITHOUT ACTUAL DE FACTO VERIFICATIO N OF THE IDENTITY OR ASCERTAINING ACTIVE NATURE OF BUSINESS ACTIVITY. PA N IS A NUMBER WHICH IS ALLOTTED AND HELPS THE REVENUE KEEP TRACK OF THE TR ANSACTIONS. PAN NUMBER IS RELEVANT BUT CANNOT BE BLINDLY AND WITHOUT CONSI DERING SURROUNDING ITA NO.4912/M/2018 SHRI NARESHBHAI V. PATEL 5 CIRCUMSTANCES TREATED AS SUFFICIENT TO DISCHARGE TH E ONUS, EVEN WHEN PAYMENT IS THROUGH BANK ACCOUNT. 19. ON THE QUESTION OF CREDITWORTHINESS AND GENUINE NESS, IT WAS HIGHLIGHTED THAT THE MONEY NO DOUBT WAS RECEIVED THROUGH BANKIN G CHANNELS, BUT DID NOT REFLECT ACTUAL GENUINE BUSINESS ACTIVITY. THE S HARE SUBSCRIBERS DID NOT HAVE THEIR OWN PROFIT MAKING APPARATUS AND WERE NOT INVOLVED IN BUSINESS ACTIVITY. THEY MERELY ROTATED MONEY, WHICH WAS COMI NG THROUGH THE BANK ACCOUNTS, WHICH MEANS DEPOSITS BY WAY OF CASH AND I SSUE OF CHEQUES. THE BANK ACCOUNTS, THEREFORE, DID NOT REFLECT THEIR CRE DITWORTHINESS OR EVEN GENUINENESS OF THE TRANSACTION... 30. WHAT WE PERCEIVE AND REGARD AS CORRECT POSITION OF LAW IS THAT THE COURT OR TRIBUNAL SHOULD BE CONVINCED ABOUT THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ONUS TO PROVE T HE THREE FACTUM IS ON THE ASSESSEE AS THE FACTS ARE WITHIN THE ASSESSEE'S KNOWLEDGE. MERE PRODUCTION OF INCORPORATION DETAILS, PAN NOS. OR TH E FACT THAT THIRD PERSONS OR COMPANY HAD FILED INCOME TAX DETAILS IN CASE OF A PRIVATE LIMITED COMPANY MAY NOT BE SUFFICIENT WHEN SURROUNDING AND ATTENDIN G FACTS PREDICATE A COVER UP. THESE FACTS INDICATE AND REFLECT PROPER P APER WORK OR DOCUMENTATION BUT GENUINENESS, CREDITWORTHINESS, ID ENTITY ARE DEEPER AND OBTRUSIVE. COMPANIES NO DOUBT ARE ARTIFICIAL OR JUR ISTIC PERSONS BUT THEY ARE SOULLESS AND ARE DEPENDENT UPON THE INDIVIDUALS BEH IND THEM WHO RUN AND MANAGE THE SAID COMPANIES. IT IS THE PERSONS BEHIND THE COMPANY WHO TAKE THE DECISIONS, CONTROLS AND MANAGE THEM. 5.6 HON'BLE APEX COURT IN THE CASE OF NAVODAYA CAST LES (P) LTD 56 TAXMANN.COM 18(SC), HAS DISMISSED THE APPEAL OF THE ASSESSEE CO MPANY AGAINST THE ORDER OF DELHI HIGH COURT IN THE CASE 367 ITR 306 (DELHI). H ON'BLE HIGH COURT HELD THAT CERTIFICATE OF INCORPORATION, PAN, ETC., ARE RELEVA NT FOR PURPOSE OF IDENTIFICATION, BUT HAVE THEIR LIMITATION WHEN THERE IS EVIDENCE AND MA TERIAL TO SHOW THAT SUBSCRIBER WAS A PAPER COMPANY AND NOT A GENUINE INVESTOR. ALS O HELD THAT ASSESSEE CANNOT SIMPLY FURNISH SOME DETAILS AND REMAIN QUIET WHEN S UMMONS ISSUED TO SHAREHOLDERS REMAIN UN-SERVED AND UNCOMPLIED; THEIR RELUCTANCE AND HIDING MAY REFLECT ON GENUINENESS OF TRANSACTION AND CREDITWOR THINESS OF CREDITORS ARE RELUCTANT. THE COURT HELD THAT CREDITWORTHINESS IS NOT PROVED BY SHOWING ISSUE AND RECEIPT OF A CHEQUE OR BY FURNISHING A COPY OF STAT EMENT OF BANK ACCOUNT, WHEN CIRCUMSTANCES REQUIRE THAT THERE SHOULD BE SOME MOR E EVIDENCE OF POSITIVE NATURE. 6. AS ALREADY DISCUSSED ABOVE, NON-FILING OF THE RE QUIRED DETAILS ASKED FOR BY THE AO, NONPRODUCTION OF CREDITORS BY THE APPELLANT CONCLUSIVELY PROVES THAT THE LOAN ENTRIES APPEARING IN THE BOOKS OF THE APPELLAN T ARE NOT GENUINE. THESE LOANS WERE ARRANGED ACCOMMODATION ENTRIES. ON ANALYSIS OF FINANCIAL DOCUMENTS PROVES THAT THE LOAN CREDITORS OF THE APPELLANT WERE ROTAT ING THE LOANS RECEIVED ON RECORD SHOWING ONLY CREDITORS/ LOANS ON LEFT SIDE AND ALMO ST EQUAL DEBTORS OR LOAN ADVANCES ON THE RIGHT SIDE WITHOUT ANY FIXED ASSETS . THESE ASSESSEES DO NOT HAVE THEIR OWN CAPACITY TO ADVANCE LOANS OUT OF THEIR AC CUMULATED PROFITS OR CAPITAL. THE LOAN CREDITOR COMPANIES HAVE NO PLACE OF BUSINESS, NOT PAYING RENT FOR ANY PREMISES, NO ELECTRICITY EXPENSES ARE CLAIMED. NO O PENING STOCK, NO CLOSING STOCK ITA NO.4912/M/2018 SHRI NARESHBHAI V. PATEL 6 AND NO OTHER ADMINISTRATIVE EXPENSES ARE SEEN IN TH E ACCOUNTS. THIS SHOWS THAT THESE COMPANIES ARE PAPER COMPANIES. IN VIEW OF THE FACTS OF THE CASE AND THE JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE, I AGREE WI TH THE AO THAT THESE ARE UNEXPLAINED CASH CREDITS IN THE BOOKS OF THE APPELL ANT AND THE ADDITION OF RS.4,27,00,000U/S 68 OF THE ACT IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 6. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE THE BEN CH THAT LD. CIT(A) HAS NOT APPRECIATED THE FACTS ON RECORD AND THE VARIOUS EVIDENCES FILED BY THE ASSESSEE AND ALSO BY THE LOAN CREDITORS. THE LD. A.R. SUBMITTED THAT THERE IS NO ALLEGATION THAT THESE LOANS WERE TAKEN FROM THE VARIOUS ENTITIES OR CONCERNS RELATED TO SHRI PRAVIN KUMAR JAIN OR SHRI BHANWARLA L JAIN. EVEN THE AO ADMITTED IN THE REMAND REPORT THAT THE ASSES SEE HAS FILED VARIOUS EVIDENCES IN THE FORM OF PAN, CONFIRMATIONS OF LOANS, BANK STATEMENTS, BALANCE SHEETS, NAMES AND ADDRESSE S OF THE LENDERS ETC. THE LD. A.R. SUBMITTED THAT EVEN THE NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT TO THESE PARTIES IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTIONS WERE DULY RESP ONDED BY THESE PARTIES BY FILING NECESSARY EVIDENCES IN SUPP ORT OF THE ADVANCING OF LOANS TO THE ASSESSEE. THE LD. A.R. S UBMITTED THAT THE LOAN CREDITORS IN RESPONSE TO NOTICE UNDER SECT ION 133(6) FILED THE FOLLOWING INFORMATION: ASSESSES LEDGER ACCOUNT IN HIS BOOKS FOR THE A.Y 2012-13 AND SUBSEQUENT YEAR TILL THE LOAN REPAID. J. LOAN CONFIRMATION. K. BANK STATEMENT REFLECTING LOAN GIVEN AND RECEIVE D BACK. I. MODE OF RECEIPT AND PAYMENT OF LOAN. M. WHETHER ANY INTEREST CHARGED BY YOU? IF YES, T HAN THE RATE OF INTEREST CHARGED. ALSO STATE WHETHER TD5 WAS MADE FROM THE INTEREST R ECEIVED ON LOAN GIVEN TO NARESH PATEL. N. EXPLAIN THE NATURE, OF LOAN THAT IS WHETHER IT I S BUSINESS LOAN OR OTHERWISE. IF IT IS BUSINESS LOAN, THAN EXPLAIN THE NATURE OF BUSINESS LOAN WITH NARESH PATEL WITH APPROPRIATE DOCUMENTARY EVIDENCES. O. COPY OF YOUR ROI FILED FOR A.Y. 2012-13 ALONGWI TH BALANCE SHEET, AUDIT REPORT AND ITS ENCLOSURES P. YOUR PAN NO. WITH DETAILS OF AO AND PROOF OF FILING OF ROI FOR A.Y.2012-13. ITA NO.4912/M/2018 SHRI NARESHBHAI V. PATEL 7 THE LD AO HAS CANDIDLY ADMITTED IN THE REMAND REPO RT ON PAGE NO.9 THESE EVIDENS HAVING BEEN FILED. THE LD. A.R . CONTENDED THAT DESPITE HAVING ALL THE FACTS/EVIDENCES ON RECO RD AND EVEN THE EVIDENCES IN THE FORM OF CONFIRMATIONS AND OTHE R VARIOUS EVIDENCES AS SUBMITTED HEREINABOVE, THE AO HAS MADE THE ADDITION ON THE BASIS OF PRESUMPTIONS AND CONJUNCTU RES WHICH IS NOT PERMISSIBLE UNDER THE ACT. THE LD. A.R. ALS O SUBMITTED THAT THE ASSESSEE HAS DULY PAID THE INTEREST ON THE SE LOANS AND THE AMOUNTS WERE REMITTED TO THE LOAN CREDITORS AF TER DEDUCTION OF TAX AT SOURCE WHICH HAS BEEN ACCEPTED BY THE REV ENUE. LD. A.R. SUBMITTED THAT THE AO HAS ACCEPTED THE INTERES T EXPENSES CLAIMED IN THE PROFIT & LOSS ACCOUNT WHILE THE LOAN S WERE TREATED AS NON GENUINE. THE LD. A.R. FINALLY SUBMITTED THA T THE ASSESSEE HAS ADEQUATELY PROVED THE IDENTITIES OF TH E PARTIES OR THE LOAN CREDITORS AND ALSO THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE LOAN CREDITORS, THEREFO RE, THE ORDER OF LD. CIT(A) IS WRONG AND AGAINST THE FACTS AND EVIDE NCES ON RECORDS AND MAY KINDLY BE REVERSED. THE LD. A.R. R ELIED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F H.R. MEHTA VS. ACIT (2016) 72 TAXMANN.COM 110 (BOM) AND PR. CIT VS. VEEDHATA TOWER PVT. LTD. 819 OF 2015 DATED 17.0 4.2018. THE LD. A.R. SUBMITTED WHILE REFERRING TO THE APPELLAT E ORDER PASSED IN THE CASE OF SMT. BHARATI N. PATEL FOR THE A.Y. 2 012-13 SPECIFICALLY THE PAGE NO.6 OF THE SAID ORDER THAT L OAN FROM DEV DIAMOND, SURAT OF RS.50 LAKHS HAVE BEEN HELD TO BE GENUINE AND ADDITION WAS ACCORDINGLY DELETED WHEN THE ASSES SEE FURNISHED DETAILS, LOAN CONFIRMATION IN RESPONSE TO NOTICE UNDER SECTION 133(6) OF THE ACT. THE LD. A.R. SUBMITTED THAT FROM THE SAME LENDER THE ASSESSEE HAS TAKEN MONEY AND FILED THE ITA NO.4912/M/2018 SHRI NARESHBHAI V. PATEL 8 NECESSARY EVIDENCES INCLUDING LOAN CONFIRMATION. BE SIDES THE SAID PARTY HAS ALSO FILED LOAN CONFIRMATION IN RESP ONSE TO NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT WHICH WAS N OT ACCEPTED BY THE LD. CIT(A) WITHOUT ANY APPLICATION OF MIND. THE LD. A.R. ALSO SUBMITTED THAT IF AO HAS USED ANY MATERIAL AGA INST THE ASSESSEE WHICH WAS IN HIS POSSESSION OF THE REVENUE , THE SAME WAS NOT CONFRONTED TO THE ASSESSEE AT ALL AND ON TH IS COUNT ALSO THE ORDER PASSED BY THE AO IS BAD IN LAW. 7. THE LD. D.R. WHILE RELYING ON THE ORDER OF LD. C IT(A) SUBMITTED THAT THE ORDER OF AO HAS RIGHTLY BEEN UPH ELD BY THE LD. CIT(A) AS THE ASSESSEE HAS FAILED TO SATISFY TH E THREE INGREDIENTS AS ENVISAGED IN SECTION 68 OF THE ACT I.E. IDENTITY OF THE PARTIES AND , CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THE LD. D.R. SUBMITTED THAT THOUGH T HE ASSESSEE HAS FILED THE EVIDENCES IN THE FORM OF COPIES OF CO NFIRMATIONS OF THE LENDERS, BANK STATEMENTS, ITRS, PAN CARDS, COPI ES OF BALANCE SHEET ETC. HOWEVER, THE DOCUMENTS FURNISHED BY THE ASSESSEE WERE INCOMPLETE AND THEREFORE COULD NOT BE RELIED U PON. THE LD. D.R. SUBMITTED THAT EVEN THE NOTICES ISSUED TO THE LENDERS UNDER SECTION 133(6) OF THE ACT TO VERIFY THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE LENDERS DI D NOT YIELD ANY RESULT AS THE INFORMATION WERE PROVIDED INCOMPL ETE AND THEREFORE , THE ORDER OF LD. CIT(A) MAY KINDLY BE A FFIRMED. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE HAS TAKEN LOAN S FROM 10 PARTIES AGGREGATING TO RS.5,20,00,000/-. THE PARTI CULARS OF THE SAID LOANS WERE DULY REPORTED IN THE TAX AUDIT REPO RT FORM 3CD UNDER THE HEADS ACCEPTANCE OF LOANS/DEPOSITS. TH E AO TREATED ITA NO.4912/M/2018 SHRI NARESHBHAI V. PATEL 9 THE SAID LOANS AS NON GENUINE IN WHICH THE IDENTITI ES AND CREDITWORTHINESS OF THE LENDERS WERE NOT PROVED AND ACCORDINGLY ADDED THE ENTIRE AMOUNT OF RS.5,20,00,000/- UNDER S ECTION 68 OF THE ACT TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY DELETING THE ADDITION OF RS.93 LAKHS IN RESPECT OF SMT. BHARTI N. PATEL AFTE R CALLING A REMAND REPORT FROM THE AO WHEREAS THE ADDITION OF RS.4,27,00,000/- WERE SUSTAINED FOR NON FILING OF DETAILS/INCOMPLETE DETAILS, NON PRODUCTION OF CREDI TORS AND ULTIMATELY HOLDING THAT THESE WERE ACCOMMODATION EN TRIES. THE LD. CIT(A) ALSO HELD THAT THE SAID COMPANIES WERE P APER COMPANIES AND WERE NOT HAVING ANY REGULAR PLACE OF BUSINESS AS THEY WERE NOT PAYING ANY RENT OF THE PREMISES AND N O ELECTRICITY EXPENSES WERE CLAIMED. IT IS UNDISPUTED THAT THE SAID COMPANIES WERE NEITHER RELATED TO SHRI PRAVIN KUMAR JAIN NOR SHRI BHANWARLAL. WE FURTHER NOTE THAT IN THE REMAN D REPORT CALLED FOR BY THE LD. CIT(A), THE ASSESSEE HAS FILE D THE NECESSARY EVIDENCES IN THE FORM OF CONFIRMATIONS OF THE LENDE RS, BANK STATEMENTS, COPIES OF BALANCE SHEETS, PAN NUMBERS, ITRS ETC. OF THE LENDERS. EVEN THE LENDERS HAVE REPLIED IN RES PONSE TO NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT. THE COPIES OF LEDGER ACCOUNTS AND SUBSEQUENTLY REPAYMENT OF LOANS, LOAN CONFIRMATIONS, BANK STATEMENTS REFLECTING THE LOAN GIVEN AND RECEIVED BACK, MODE OF RECEIPT / PAYMENT OF LOANS, DETAILS OF INTEREST CHARGED AND TDS DEDUCTED, NATURE OF LOAN A DVANCED, RETURNS OF INCOME FILED ALONG WITH BALANCE SHEETS, AUDITED REPORTS AND PAN NUMBERS WITH THE AO. WE FURTHER NO TICE THAT IN RESPECT OF DEV DIAMOND SURAT FROM WHOM RS.55 LAK HS WERE RECEIVED WAS SUSTAINED BY LD. CIT(A) WHEREAS THE LO AN FROM THE ITA NO.4912/M/2018 SHRI NARESHBHAI V. PATEL 10 SAME PARTY IN THE HANDS OF SMT. BHARTI N. PATEL WAS ACCEPTED BY THE AO IN THE REMAND REPORT, A COPY OF WHICH IS FIL ED AT PAGE NO.35 TO 39 AND THE RELEVANT PARA IS 3.1. WE HAVE ALSO EXAMINED THE APPELLATE ORDER PASSED BY THE LD. CIT( A) IN THE CASE OF SMT. BHARTI N. PATEL DATED 14.02.2018 WHERE IN ADDITION MADE BY THE AO QUA DEV DIAMOND SURAT OF RS.50 LAKHS WAS DELETED. WE ALSO NOTE THAT EVEN THE INTEREST PAID ON THESE LOANS BY THE ASSESSEE AFTER DEDUCTION OF TAX AT SOURCE WE RE DULY ALLOWED AS EXPENSE BY THE AO. UNDER THESE CIRCUMST ANCES, WE ARE NOT IN A POSITION TO SUBSCRIBE AND CONCUR WITH THE CONCLUSION OF LD. CIT(A) THAT THESE ARE PAPER COMPA NIES AND IDENTITIES OF THE CREDITORS AND GENUINENESS AND CRE DITWORTHINESS OF THE LENDERS WERE NOT PROVED ESPECIALLY WHEN THE INFORMATION/EVIDENCES HAVING BEEN FILED BY THE ASSE SSEE IN THE ASSESSMENT PROCEEDINGS AND REMAND PROCEEDINGS AND EVEN THE LENDERS HAVE FILED ALL THE EVIDENCES BEFORE THE AO WHICH HAS BEEN ADMITTED BY THE AO IN THE REMAND REPORT. UNDE R THESE CIRCUMSTANCES, IT IS NOTHING BUT AN ADDITION MADE B Y THE AO AND ALSO CONFIRMED BY THE LD. CIT(A) ON PRESUMPTION BASIS. FURTHER, WE FIND THAT ASSESSEE HAS NOT BEEN CONFRON TED WITH ANY INFORMATION THAT THE SAID COMPANIES WERE NON GENUIN E AND PAPER COMPANIES. THE CASE OF THE ASSESSEE IS SUPPO RTED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF H.R. MEHTA VS. ACIT (SUPRA) WHEREIN THE HONBLE BOMBAY HIGH COURT HAS H ELD THAT AO SHOULD HAVE PROVIDED THE ASSESSEE THE MATERIAL U SED AGAINST HIM APART FROM PROVIDING HIM AN OPPORTUNITY TO CROS S EXAMINE THE DEPONENTS WHOSE STATEMENTS WERE RELIED UPON. I N THE CASE OF PR. CIT VS. VEEDHATA TOWER PVT. LTD. (SUPRA) WHER EIN THE HONBLE BOMBAY HIGH COURT HAS HELD THAT ASSESSEE HA S ITA NO.4912/M/2018 SHRI NARESHBHAI V. PATEL 11 DISCHARGED HIS ONUS WHICH HAS CAST UPON HIM IN TERM S OF PRE- AMENDED SECTION 68 OF THE ACT BY FILING THE NECESSA RY CONFIRMATION LETTERS FROM THE CREDITORS, THEIR AFFI DAVITS, THEIR FULL ADDRESSES AND THEIR PANS AND IT WAS NOT NECESSARY T O PROVE THE SOURCE OF SOURCE PRIOR TO 01.04.2013 AS HAS BEEN HE LD IN THE CASE OF CIT VS. GAGAN DEEP INFRASTRUCTURE PVT. LTD. 294 ITR 680 WHEREIN IT HAS BEEN HELD THAT PROVISO TO SECTION 68 HAS BEEN INSERTED TO FINANCE ACT, 2012 W.E.F. 01.04.2013 AND THEREFORE IT WOULD BE EFFECTIVE FROM A.Y. 2013-14 ONWARDS AND NO T EARLIER ASSESSMENT YEARS. KEEPING IN VIEW OF THE FACTS OF THE ABOVE CASE IN THE LIGHT OF RATIO LAID DOWN BY THE HONBLE BOMB AY HIGH COURT IN ABOVE TWO DECISIONS, WE ARE INCLINED TO SET ASID E THE ORDER OF LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELET E THE ADDITION OF RS.4,27,00,000/-. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.11.2019. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 21.11.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.