INCOME TAX OFFICER 20(3)(1), MUMBAI V. M/S.RIKKIE RONIE RESIDENCY, MUMBAI

ITA 5579/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7843 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 04-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Assessee Lawyers: B V JHAVERI
• Keywords: Unexplained cash credit; Opportunity of being heard; TDS; Set aside
• Section: 69C; 143(3); 133(6); 208; 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI RAVISH SOOD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5579/MUM/2017 ASSESSMENT YEAR: 2013 - 14 ITO 20(3)(1), 6 TH FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL , MUMBAI. VS. M/S RIKKIE RONIE RESIDENCY, 9A/, CHUNAWALA COMPOUND, PAREL TANK ROAD, KALACHOWKI, MUMBAI - 400033. PAN NO. AAIFR9828D APPELLANT RESPONDENT REVENUE BY : MR. D.G. PANSARI, DR ASSESSEE BY : MR. B.V. JHAVERI , AR DATE OF HEARING : 1 7 /07/2019 DATE OF PRONOUNCEMENT : 14/10/2019 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2013 - 14. THE APPEAL IS DIRECTED AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME TAX - 32 , MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 2 2. THE GROUND OF APPEAL FILED BY THE R EVENUE READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF OF RS.3,80,00,000/ - BY DELETING THE ADDITION MADE U/S68 OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN GRANTING RELIEF OF RS. 30, 04,000 / - BY DELETING THE ADDITION MADE U/S 69C OF THE INCOME TAX ACT, 1961' 3. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT( A) HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF T HE TRANSACTIONS AND ALSO TO PROVE THE IDENTITY OF THE LENDER FROM WHOM THE ASSESSEE HAS TAKEN LOANS . 4. ON THE FACTS AND IN THE CIRCUMS TANCE S OF THE CASE AND IN LAW, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAS FAILED TO PRODUCE THE PARTIES BEFORE THE A.O. WHEN THERE WAS A QUESTION O F PROVING IDENTITY CREDITWORTHI NESS AND GENUINENESS OF TRANSACTIONS . 5. THE APPELLANT PRAYS T HAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUND BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2013 - 14 ON 28.09.2013 DECL ARING TOTAL INCOME OF RS. NIL. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) OBSERVED FROM THE TAX AUDIT R EPORT THAT THE ASSESSEE HAS BORROWED FRESH LOANS FROM THE FOLLOWING LENDERS : SR. NO. NAME OF THE LENDER LOAN TAKEN (RS.) 1. KAUSHALI IMPEX PVT. LTD. 90,00,000 2. RA DHEKRISHNA GEMS 1,20,00,000 M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 3 3. SHANKESHWAR DIAMOND PVT. LTD. 10,00,000 4. SHREE CHARBUJA DIAMOND PVT. LTD. 1,60,00,000 TOTAL 3,80,00,000 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED CONFIRMATION OF THE ABOVE LOAN PARTIES ALONG WITH COPY OF ITR AND RELEVANT PAGES OF BANK STATEMENT. THE AO, IN ORDER TO VERIFY THE TRANSACTIONS ISSUED NOTICE U/S 133(6) DATED 06.08.2015 TO THE SAID PARTIES, WHICH WERE DULY SERVED. OUT OF THE ABOVE FOUR PARTIES, ONLY ONE PARTY NAMELY M/S RADHEY KRISHNA GEMS PVT. LTD. FILED COPY OF CONFIRMATION ALONG WITH COPY OF ITR AND RELEVANT PAGES OF THE BANK STATEMENT. SINCE THE LOAN CREDITORS WERE BASED AT SURAT, A COMMISSION U/S 131(1)(D) WAS ISSUED BY THE AO TO THE DEPUTY DIRECTOR OF INCOME TAX (INV), SURAT [IN SHORT DDIT (INV)] VIDE LETTER DATED 28.12.2015 TO VERIFY THE IDENTITY, CAPACITY AND GENUINENESS OF LOAN CREDITORS. IN RESPONSE TO IT THE DDIT (I NV) VIDE LETTER DATED 23.02.2016 INFORM ED THE AO THAT SUMMONS U/S 131 OF THE ACT WERE ISSUED TO THE SAID PARTIES BUT THOSE COULD NOT BE SERVED AS THE PREMISES WERE FOUND CLOSED AND THEREFORE, THE SUMMONS WERE SERVED BY AFFIXTURE ON THE SAID PREMISES. THE D DIT (INV) INFORMED THE AO THAT THE LOAN CREDITORS HAVE NOT RESPONDED TO THE SUMMONS U/S 131 ON THE APPOINTED DATE. IN VIEW OF THE ABOVE FINDINGS OF THE DDIT (INV.), THE AO VIDE SHOW CAUSE NOTICE DATED 26.02.2016 INFORMED THE ASSESSEE THAT THE LOAN CREDITO RS WERE NOT GENUINE. IN RESPONSE TO IT THE ASSESSEE VIDE LETTER DATED 0 7.03.2016 INFORMED THE AO THAT THE ASSESSEE HAS BEEN INFORMED M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 4 BY THE PARTIES THAT THEY HAVE ALREADY SENT THE DETAILS. ALL THE LOANS ARE TAKEN BY A/C PAYEE CHEQUES, RTGS AND TDS ON INTE REST HAS BEEN DULY DEDUCTED AND PAID. THE BANK STATEMENT, COPIES OF ITR AND CONFIRMATION FROM THE SAID PARTIES ARE ALREADY SUBMITTED EARLIER AND THE SAID PARTIES ARE ASSESSED TO TAX AS IS EVIDENT FROM THE PAN NUMBER. THE FUNDS ARE DULY DEPLOYED IN THE COUR SE OF BUSINESS. IN RESPONSE TO IT, THE AO VIDE OFFICE LETTER DATED 11.03.2016 GAVE A FINAL SHOW CAUSE NOTICE TO THE ASSESSEE TO PRODUCE THE PARTIES FOR EXAMINATION ON 22.03.2016 AT 11.30 AM, STATING THAT IT IS NOT POSSIBLE TO AGAIN ISSUE COMMISSION DUE TO PAUCITY OF TIME AS THE CASE WAS GETTING TIME BARRED ON 31.03.2016. IN RESPONSE TO IT THE ASSESSEE FILED A REPLY DATED 22.03.2016 STATING THAT AS PER THE INFORMATION , THE PARTIES HAVE COMPLIED TO THE NOTICES ISSUED. THE AO HAS MENTIONED AT PARA 3.12 OF T HE ASSESSMENT ORDER DATED 30.03.2016 THAT COMPLIANCE HAVE BEEN MADE BY ALL THE FOUR LENDERS BY SPEED POST FROM THE NEW BUSINESS ADDRESS. HOWEVER, THE AO OBSERVED THAT ALL THE FOUR LENDERS WERE HAVING PAID UP CAPITAL OF NEGLIGIBLE AMOUNT OF RS.1,00,000/ - ONLY AS COMPARED TO THE VOLUME OF PURCHASES AND SALES EFFECTED BY THEM ; ALL THE FOUR LENDERS WERE HAVING HUGE AMOUNT OF TRADE PAYABLES AND TRADE RECEIVABLES REMAINING OUTSTANDING AT THE YEAR END ; ALL THE FOUR LENDERS WERE OPERATING FROM MAHIDAPURA, SURAT - 395003; ALL THE FOUR LENDERS GOT THEIR RETURN OF INCOME FOR THE AY 2013 - 14 FILED ON 13 TH AND 14 TH OCTOBER 2013 ; NONE OF THE LENDERS HAVE PROVED THEIR IDENTITY BY FILING PHOTOCOPY OF PAN CARD, MEMORANDUM & ARTICLE OF ASSOCIATION AND R ESOLUTION AUTHORIZING CHANGE IN BUSINESS ADDRESS ; NONE OF THE LENDERS HAVE FILED M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 5 PHOTOCOPY OF THE DOCUMENTS FILED WITH THE REGISTRAR OF COMPANIES, AMENDING THE BUSINESS ADDRESS. WITH THE ABOVE OBSERVATIONS, THE AO CAME TO A FINDING THAT ALL THE FOUR LEN DERS HAVE FAILED IN PROVING THEIR IDENTITY AND CREDITWORTHINESS. THEREFORE, HE MADE AN ADDITION OF RS. 3,80,00,000/ - AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND A DISALLOWANCE OF RS.30,04,000/ - OF INTEREST PAID THEREON. 4. AGGRIEVED BY THE ORDER OF TH E AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE FILED PROOF OF CHANGE OF ADDRESS IN FORM NO. 18 WHICH IS THE NOTICE OF SITUATION OR CHANGE OF SITUATION OF REGISTERED OFFICE PURSUANCE TO SEC TION 146 OF THE COMPANIES ACT, 1956. AND VIDE ORDER DATED 20.06.2017 , THE LD. CIT(A) OBSERVED THAT ALL THE LENDERS ARE PRIVATE LIMITED COMPANY REGISTERED UNDER THE COMPANIES ACT AND ALL THE DETAILS OF THE COMPANIES ARE AVAILABLE ON PUBLIC DOMAIN. THUS IT I S OBSERVED BY HER THAT THE DDIT (INV), SURAT ISSUED/SERVED NOTICE ON THE OLD ADDRESS WHICH HAVE BEEN CHANGED AND THEREFORE, COMPLIANCE TO SUMMONS ISSUED BY HIM COULD NOT BE MADE. FINALLY, ALL THE CONFIRMATIONS AND DETAILS CALLED FOR WERE PROVIDED DURING TH E ASSESSMENT PROCEEDINGS AS WELL AS PROCEEDINGS BEFORE THE CIT(A). IT IS FURTHER OBSERVED BY HER THAT AS THE CHANGE OF ADDRESS OF THE PARTIES WERE PROVIDED DURING THE ASSESSMENT PROCEEDINGS, THE AO SHOULD HAVE MADE INQUIRY IN THIS REGARD BUT HE FAILED TO D O SO. M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 6 THE LD. CIT(A) FURTHER OBSERVED THAT (I) THE APPELLANT HAS FILED BEFORE THE AO THE DOCUMENTS TO PROVE THE GENUINENESS OF THE TRANSACTION WHICH INTER ALIA INCLUDED THE CONFIRMATIONS, BANK STATEMENTS OF THE LENDERS, ACKNOWLEDGEMENTS, ROI FROM THE PART IES, THEIR BALANCE SHEETS, PROFIT AND LOSS ACCOUNTS, STATEMENT OF ADVANCES WHICH INCLUDED NAME OF THE APPELLANT AS BORROWER IN TWO CASES AND DETAILS OF INTEREST AND PRINCIPAL REPAID WHICH WERE BY ACCOUNT PAYEE CHEQUES/RTGS, (II) THE APPELLANT HAS FILED BEF ORE THE AO DETAILS FROM THE RECORDS OF MINISTRY OF CORPORATE AFFAIRS WHICH ALSO SHOWS THAT THE LENDER COMPANIES ARE ALIVE, (III) THE APPELLANT HAS NOT COMMENCED THE CONSTRUCTION OR DONE ANY BOOKING TO GENERATE ANY FUNDS, (IV) THESE PARTIES HAVE NOT BORROWE D ANY FUNDS AND THUS THEY HAVE UTILIZED THEIR OWN FUNDS FOR GIVING LOANS TO THE ASSESSEE ON WHICH THEY HAVE EARNED INTEREST. WITH ABOVE OBSERVATIONS, THE LD. CIT(A) CAME TO A FINDING THAT THE AO HAS NO OTHER CORROBORATIVE EVIDENCE TO SHOW THAT CASH HA D BEEN PAID BY THE APPELLANT TO THESE PARTIES FOR AVAILING THE LOANS. FURTHER, IT IS OBSERVED BY HER THAT AN ACCOMMODATION ENTRY OF THIS NATURE WOULD PERFORCE REQUIRE THE APPELLANT TO PART WITH CASH IN HIS HANDS AND OBTAIN A CHEQUE IN LIEU OF THE SAME AND T HE AO HAS NOT BEEN ABLE TO ESTABLISH THE CASH TRAIL AT ALL. FINALLY, OBSERVING THAT AS THE LOANS HAVE BEEN SUBSEQUENTLY REPAID BY THE APPELLANT THROUGH BANKING CHANNELS, THE APPELLANT IS ABLE TO PROVE THAT NOT ONLY DID HE TAKE GENUINE LOANS, BUT THE SAME HAS BEEN REPAID AND IF THE LOANS WERE NOT GENUINE, THEN THERE WOULD NOT HAVE BEEN A QUESTION OF REPAYMENT. THUS HOLDING THAT THE WEIGHT OF EVIDENCE M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 7 IS IN FAVOUR OF THE APPELLANT AS HE HAS BEEN ABLE TO SATISFY ALL THE INGREDIENTS OF CASH CREDIT I.E. IDENTI TY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION, THE LD. CIT(A) DELETED THE ADDITION OF RS.3,80,00,000/ - U/S 68 AND INTEREST THEREON OF RS.30,04,000/ - TOTALLING TO RS.4,10,04,000/ - MADE BY THE AO. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE FILES A PAPER BOOK CONTAINING THE CASE LAWS IN SUPPORT OF HIS CONTENTIONS THAT MERELY BECAUSE THE PARTIES HAVE NOT BEEN PRODUCED BEFORE THE AO, ADDITION CANNOT BE MADE U/S 68 OF THE ACT I.E. (I) ITO VS. SHRI DHANSUKH D. MEHTA IN ITA NO. 1725/MUM/2018 DATED 12TH JU LY, 2019, (II) M/S. JALARAM ENTERPRISES CO. PVT. LTD. VS. DCIT IN ITA NO. 4289/MUM/2014 DATED 29TH APRIL, 2016, (III) DCIT VS. M/S. JALARAM ENTERPRISES CO. PVT. LTD. IN ITA NO. 671 OF 2017 DATED 7TH JUNE, 2019, (IV ) CIT VS. NIKUNJ EXIM ENTERPRISES PVT. L TD . (372 ITR 619,BOM.), (V) CIT VS. ORBITAL COMMUNICATION PVT. LTD . (327 ITR 560, DEL.) , (VI) CIT VS. ORISSA CORPORATION PVT. LTD . (159 ITR 78, SC) , AND (VII) CIT VS. VARINDER RAWLLEY (366 ITR 232, P&H) . FURTHER, RELIANCE IS PLACED BY HIM ON THE DECISION IN (I) ITO VS. OM SHANTI REALTORS IN ITA NO. 5616/MUM/ 2017 FOR A.Y. 2013 - 14, DATED 1ST MARCH, 2019, (II) ACIT VS. SHRI DHANPAL B. SHAH IN ITA NO. 4000/MUM/2017 FOR A.Y. 2013 - 14 DATED 12TH FEBRUARY, 2019 , (III) ACIT VS. SHRI GOPALJI K. DWIVEDI IN ITA NO. 4544/MUM/20 17 DATED 20TH FEBRUARY, 2019, (IV) ITO VS. VIJAY DWELLERS PVT. LTD. IN ITA NO. 1 41/MUM/2018 FOR A.Y. 2009 - 10 DATED 30TH JANUARY, 2019 , (V) ITO VS. LOTUS GRIH NIRMAN PVT. LTD .I N ITA NO.3998/MUM/2014 FOR A.Y. 2010 - 11 DATED 18TH OCTOBER, 2018, (VI) ITO VS. SHRINEMICHAND M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 8 LALCHAND JAIN IN ITA NO. 1 59/MUM/2017 FOR A.Y. 2007 - 08 DATED 17TH DECEMBER, 2018 , (VII) SHRI VASANT RAMJI SAVLA VS.ACIT IN ITA NO.6123/MUM/2017FOR A.Y. 2011 - 1 2 DATED 27TH DECEMBER, 2018, (VIII) ACIT VS.RAJESH M. SHAH (HUF) IN ITA NO.7105/MUM/2016FORA.Y. 2012 - 13 DATED 30TH AUGUST, 2018 AND (IX) M/S. KEYNOTE FINCORP LIMITED VS. DCIT IN ITA NOS. 1643 & 1647/MUM/2018 FOR A.YS. 2012 - 13 AND 2013 - 14 DATED 5TH NO V. , 2018. FURTHER THE LD. COUNSEL FILES A PAPER BOOK CONTAINING THE DOCUMENTS FILED BEFORE THE AO AND CIT(A). RELYING ON THE ABOVE CASE LAWS AND THE DOCUMENTS FILED BEFORE THE AO AS WELL AS CIT(A), THE LD. COUNSEL SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) BE AFFIRMED. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELIES ON THE DECISION IN CIT V. JANSAMPARK ADVERTISING & MARKETING (P.) LTD. (2015) 56 TAXMANN.COM 286 (DELHI), PR . CIT V. NDR PROMOTERS PVT. LTD. 410 ITR 379 (DELHI) AND PR. CIT V. NRA IRON & STEEL PVT. LTD . [ARISING OUT OF SLP (CIVIL) NO. 29855 OF 2018] DECIDED BY SUPREME COURT ON 05.03.2019. RELYING ON THE ABOVE DECISIONS, THE LD. DR SUBMITS THAT THE ORDER PASSED BY THE CIT(A) BE SET ASIDE AND THE ONE PASSED BY THE AO BE RESTORED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 9 AS MENTIONED EARLIER, THE NOTICES U/S 133(6) ISSUED BY THE AO TO THE CONCERNE D FOUR PARTIES WERE DULY SERVED.OUT OF THE ABOVE FOUR PARTIES, ONLY ONE PARTY NAMELY M/S RADHEY KRISHNA GEMS PVT. LTD. FILED COPY OF CONFIRMATION ALONG WITH COPY OF ITR AND RELEVANT PAGES OF THE BANK STATEMENT. SUBSEQUENTLY, THE AO ISSUED COMMISSION U/S 131(1)(D) DATED 28.12.2015 TO DDIT (INV), SURAT TO VERIFY THE IDENTITY, CAPACITY AND GENUINENESS OF THE LOAN CREDITORS. IN REPLY, THE DDIT (INV) VIDE LETTER DATED 23.02.2016 INFORMED THE AO THAT SUMMONS U/S 131 WERE ISSUED TO THE SAID PARTIES BUT THOSE COULD NOT BE SERVED AS THE PREMISES WERE FOUND CLOSED. THEREFORE, THE SUMMONS WERE SERVED ON THEM BY AFFIXTURE ON THE SAID ADDRESSES. AS INFORMED BY THE DDIT (INV), THE LOAN CREDITORS HAVE NOT RESPONDED TO THE SUMMONS ISSUED. THEREAFTER, THE AO INFORMED THE ASSESSEE THE ABOVE FACTS VIDE LETTER DATED 26.02.2016. IN RESPONSE TO IT , THE ASSESSEE FILED A REPLY DATED 07.03.2016 BEFORE THE AO STATING THAT THE C ONCERNED PARTIES HAVE ALREADY SENT THE DETAILS. FOR MORE CLARIFICATION, THE AO ISSUED FINAL SHOW CAUSE NOTICE DATED 11.03.2016 TO THE ASSESSEE TO PROVE THE GENUINENESS AND CREDITWORTHINESS OF LOAN CREDITORS ON 22.03.2016. IN RESPONSE TO IT THE ASSESSEE FIL ED A REPLY DATED 22.03.2016. THE AO HAS RECORDED THAT FINALLY THE COMPLIANCE HAVE BEEN MADE BY ALL THE FOUR LENDERS BY SPEED POST FROM THE NEW BUSINESS ADDRESS. THUS AS EVIDENT FROM THE ABOVE, THE NEW ADDRESS ALONG WITH FULL COMPLIANCE WAS MADE BY THE AS SESSEE BEFORE THE AO VIDE LETTER DATED 22.03.2016. THE AO COMPLETED THE ASSESSMENT U/S 143(3) ON 30.03.2016 AS IT WAS GETTING TIME - BARRED . M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 10 WE SHOULD NOT FORGET THE FACT THAT OUT OF THE SAID FOUR PARTIES, ONE PARTY NAMELY M/S RADHEY KRISHNA GEMS PVT. LTD. FILED COPY OF CONFIRMATION ALONG WITH COPY OF ITR AND RELEVANT PAGES OF THE BANK STATEMENT, IN RESPONSE TO THE NOTICE U/S 133(6) ISSUED BY THE AO. WE REFER HERE TO PARA 3.1 OF THE ASSESSMENT ORDER. AS IS CRYSTAL CLEAR FROM THE ABOVE, THERE WAS NO SUFFICIE NT TIME BEFORE THE AO TO ESTABLISH THE INGREDIENTS CONTAINED IN SECTION 68 OF THE ACT IN RESPECT OF THE REMAINING THREE PARTIES . IT IS WELL SETTLED THAT IN ORDER TO DISCHARGE THE ONUS, THE ASSESSEE MUST PROVE THE FOLLOWING : (I) THE IDENTITY OF THE CREDI TOR, (II) THE CAPACITY OF THE CREDITOR TO ADVANCE MONEY ; AND (III) THE GENUINENESS OF THE TRANSACTION. AFTER THE ASSESSEE HAS ADDUCED EVIDENCE TO ESTABLISH PRIMA FACIE THE AFORESAID, THE ONUS SHIFTS TO THE DEPARTMENT AS HELD IN SHANKAR IND V. CIT 11 4 ITR 689; PRAKASH TEXTILE V. CIT 121 ITR 890; CIT V. UNITED 187 ITR 596; RAJSHREE V. CIT 256 ITR 331; ASHOKPAL V. CIT 220 ITR 452, 454; CIT V. METACHEM 245 ITR 160; CIT V. SHREE GOPAL 204 ITR 285. THE MERE FURNISHING OF PARTICULARS AS HELD IN CIT V. PRECISION 208 ITR 465 ; ITO V. DIZA HOLDINGS 255 ITR 573 ; RAJSHREE V. CIT 256 ITR 331 OR THE MERE FACT OF PAYMENT BY AN ACCOUNT PAYEE CHEQUE AS HELD IN CIT V. UNITED 187 ITR 596 ; CIT V. PRECISION 208 ITR 465 ; ITO V. DIZA HOLDINGS 255 ITR 573, OR THE MER E SUBMISSION OF A CONFIRMATORY LETTER BY THE CREDITOR AS HELD IN CIT V. UNITED 187 ITR 596 ; CIT V. MAHIM 213 ITR 820 ; M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 11 RAJSHREE V. CIT 256 ITR 331 IS, BY ITSELF, NOT ENOUGH TO SHIFT THE ONUS ON TO THE DEPARTMENT, ALTHOUGH THESE FACTS MAY, ALONG WITH OTHER FACTS, BE RELEVANT IN ESTABLISHING THE GENUINENESS OF THE TRANSACTION. 7.1 IN NRA IRON & STEEL PVT. LTD . (SUPRA), THE HONBLE SUPREME COURT HELD AS UNDER : 8. WE HAVE HEARD THE LD. COUNSEL FOR THE REVENUE, AND EXAMINED THE MATERIAL ON RECORD. 8.1. THE ISSUE WHICH ARISES FOR DETERMINATION IS WHETHER THE RESPONDENT / ASSESSEE HAD DISCHARGED THE PRIMARY ONUS TO ESTABLISH THE GENUINENESS OF THE TRANSACTION REQUIRED UNDER SECTION 68 OF THE SAID ACT. SECTION 68 OF THE I.T. ACT (PRIOR TO THE FINANCE ACT, 2012) READ AS FOLLOWS: 68. CASH CREDITS - WHERE ANY SUM IS FOUND CREDITED IN THE BOOK OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OP INION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME - TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR THE USE OF THE WORDS ANY SUM FOUND CREDITED IN THE BOOKS IN SECTION 68 OF THE ACT INDICATES THAT THE SECTI ON IS WIDELY WORDED, AND INCLUDES INVESTMENTS MADE BY THE INTRODUCTION OF SHARE CAPITAL OR SHARE PREMIUM. 8.2. AS PER SETTLED LAW, THE INITIAL ONUS IS ON THE ASSESSEE TO ESTABLISH BY COGENT EVIDENCE THE GENUINENESS OF THE TRANSACTION, AND CREDIT - WORTHINESS OF THE INVESTORS UNDER SECTION 68 OF THE ACT. THE ASSESSEE IS EXPECTED TO ESTABLISH TO THE SATISFACTION OF THE ASSESSING OFFICER, CIT V. PRECISION FINANCE PVT. LTD. (1994) 208 ITR 465 (CAL) 15 : M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 12 PROOF OF IDENTITY OF THE CREDITORS; CAPACITY OF CREDITOR S TO ADVANCE MONEY; AND GENUINENESS OF TRANSACTION THIS COURT IN THE LAND MARK CASE OF KALE KHAN MOHAMMAD HANIF V. CIT, [1963] 50 ITR 1 (SC), AND, ROSHAN DI HATTI V. CIT, [1977] 107 ITR (SC), LAID DOWN THAT THE ONUS OF PROVING THE SOURCE OF A SUM OF MONE Y FOUND TO HAVE BEEN RECEIVED BY AN ASSESSEE, IS ON THE ASSESSEE. ONCE THE ASSESSEE HAS SUBMITTED THE DOCUMENTS RELATING TO IDENTITY, GENUINENESS OF THE TRANSACTION, AND CREDIT - WORTHINESS, THEN THE AO MUST CONDUCT AN INQUIRY, AND CALL FOR MORE DETAILS BEFO RE INVOKING SECTION 68. IF THE ASSESSEE IS NOT ABLE TO PROVIDE A SATISFACTORY EXPLANATION OF THE NATURE AND SOURCE, OF THE INVESTMENTS MADE, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS THE INCOME OF THE ASSESSE, AND THERE WOULD BE NO FURTHER BURDEN ON THE REVENUE TO SHOW THAT THE INCOME IS FROM ANY PARTICULAR SOURCE. 8.3. WITH RESPECT TO THE ISSUE OF GENUINENESS OF TRANSACTION, IT IS FOR THE ASSESSEE TO PROVE BY COGENT AND CREDIBLE EVIDENCE, THAT THE INVESTMENTS MADE IN SHARE CAPITAL ARE GENUINE BORROWINGS , SINCE THE FACTS ARE EXCLUSIVELY WITHIN THE ASSESSEE'S KNOWLEDGE. THE DELHI HIGH COURT IN CIT V. OASIS HOSPITALITIES PVT. LTD., 333 ITR 119 (DELHI)(2011), HELD THAT : THE INITIAL ONUS IS UPON THE ASSESSEE TO ESTABLISH THREE THINGS NECESSARY TO OBVIATE TH E MISCHIEF OF SECTION 68. THOSE ARE: (I) IDENTITY OF THE INVESTORS; (II) THEIR CREDITWORTHINESS/INVESTMENTS; AND (III) GENUINENESS OF THE TRANSACTION. ONLY WHEN THESE THREE INGREDIENTS ARE ESTABLISHED PRIMA FACIE, THE DEPARTMENT IS REQUIRED TO UNDERTAKE FU RTHER EXERCISE. M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 13 IT HAS BEEN HELD THAT MERELY PROVING THE IDENTITY OF THE INVESTORS DOES NOT DISCHARGE THE ONUS OF THE ASSESSEE, IF THE CAPACITY OR CREDIT - WORTHINESS HAS NOT BEEN ESTABLISHED. IN SHANKAR GHOSH V. ITO, [1985] 23 TTJ (CAL.), THE ASSESSEE FAIL ED TO PROVE THE FINANCIAL CAPACITY OF THE PERSON FROM WHOM HE HAD ALLEGEDLY TAKEN THE LOAN. THE LOAN AMOUNT WAS RIGHTLY HELD TO BE THE ASSESSEE'S OWN UNDISCLOSED INCOME. 7.2 AS MENTIONED HEREINABOVE, THE NEW ADDRESS ALONG WITH FULL COMPLIANCE WAS MADE BY THE ASSESSEE BEFORE THE AO VIDE LETTER DATED 22.03.2016. THE AO COMPLETED THE ASSESSMENT U/S 143(3) ON 30.03.2016 AS IT WAS GETTING TIME - BARRED . THE LD. CIT(A) SHOULD HAVE APPRECIATED THE PAUCITY OF TIME BEFORE THE AO TO CONDUCT FURTHER INQUIRIES. IN THE CASE OF CIT V. JANSAMPARK ADVERTISING & MARKETING (P.) LTD. (2015) 56 TAXMANN.COM 286 (DEL.), THE HONBLE DELHI HIGH COURT, DEALING WITH SECTION 68 OF THE ACT, HAS OBSERVED THAT IN CASE OF UNACCOUNTED ENTRIES FOUND IN BOOKS OF ACCOUNTS OF ASSESSEE , THOUGH IT IS OBLIGATION OF ASSESSING OFFICER TO CONDUCT PROPER SCRUTINY OF MATERIAL, IN EVENT OF ASSESSING OFFICER FAILING TO DISCHARGE HIS FUNCTIONS PROPERLY, OBLIGATION TO CONDUCT PROPER INQUIRY SHIFTS TO THE COMMISSIONER (APPEALS) AND TRIBUNAL AND THE Y CANNOT SIMPLY DELETE ADDITION MADE BY THE ASSESSING OFFICER ON GROUND OF LACK OF INQUIRY. 7.3 AS MENTIONED EARLIER, OUT OF THE SAID FOUR PARTIES, ONE PARTY NAMELY M/S RADHEY KRISHNA GEMS PVT. LTD. FILED COPY OF CONFIRMATION M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 14 ALONG WITH COPY OF ITR AND RE LEVANT PAGES OF THE BANK STATEMENT, IN RESPONSE TO THE NOTICE U/S 133(6) ISSUED BY THE AO. THE ONUS SHIFTED TO THE AO. THE AO FAILED TO CONDUCT ANY ENQUIRY TO VERIFY THE GENUINE NE SS OF THE TRANSACTIONS WITH THE ABOVE PARTY. THE ADDITION MADE BY THE AO IN RESPECT OF M/S RADHEY KRISHNA GEMS PVT. LTD IS HEREBY DELETED. 7.4 HOWEVER, FOLLOWING THE RATIO LAID DOWN IN NRA IRON & STEEL (P.) LTD. (SUPRA) & JANSAMPARK ADVERTISING & MARKETING (P.) LTD. (SUPRA), WE SET ASIDE THE ORDER OF THE LD. CIT(A) IN PART AND RESTORE THE MATTER TO THE FILE OF THE AO TO MAKE AN ORDER AFRESH IN RESPECT OF THE REMAINING THREE PARTIES , AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSE. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. A S THE MATTER HAS BEEN RESTORED TO THE FILE OF THE AO WE ARE NOT ADVERTING THE CASE LAWS RELIED ON BOTH SIDES. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14/10/2019. SD/ - SD/ - ( RAVISH SOOD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 14/10/2019 RAHUL SHARMA, SR. P.S. M/S RIKKIE RONIE RESIDENCY ITA NO. 5579/MUM/2017 15 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) ITAT, MUMBAI