ACIT 30(3), MUMBAI V. SHREEDHAM BUILDERS, MUMBAI

ITA 5589/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7123 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 04-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN DR
• Keywords: Reopening of assessment; Bogus purchase; Unexplained cash credit; Bogus Share capital; Gift; Search and seizure; Share purchase agreement; Principle of natural justice; Opportunity of cross examination; Retrospective amendment; Question of law; Validity of assessment; Accommodation entries; Assessment record; Onus to prove; Retraction; Reassessment proceedings
• Section: 69C; 143(3); 142(1); 133A; 153A; 14A; 260A; 133(6); 131; 68; 69; 37; 132; 139

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.5589/MUM/2017 ASSESSMENT YEAR: 2012-13 ACIT - 30(3), R. NO.510, 5 TH FLOOR, PRATAYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 / VS. SHREEDHAM BUILDERS, 105/106, 1 ST FLOOR, VIJAY INDL. ESTATE, MALAD (W), MUMBAI-400064 ( ' / REVENUE) ( #$ % /ASSESSEE) P.A. NO. ABDFS0133N ' / REVENUE BY SHRI V JUSTIN-DR #$ % / ASSESSEE BY SHRI NEELKANTH KHANDELWAL & ' ' % ( / DATE OF HEARING : 04/06/2018 ' % ( / DATE OF ORDER: 22/06/2018 SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 01/06/2017 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, DELETING THE ADDITION MADE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), WITHOUT APPREC IATING THE STATEMENT OF SHRI AJAY MAHESHWARI, WHO RETRACTED TH E SAME AFTER 23 DAYS. 2. DURING HEARING, SHRI V. JUSTIN, LD. DR, DEFENDE D THE ADDITION MADE BY THE LD. ASSESSING OFFICER BY C ONTENDING THAT SHRI AJAY MAHESHWARI, PARTNER OF THE ASSESSEE FIRM WAS RECORDED ON THIS BASIS OF WHICH ADDITION WAS RIGHTL Y MADE BY THE LD. ASSESSING OFFICER. ON THE OTHER HAND, SHRI NEELKANTH KHANDELWAL, LD. COUNSEL FOR THE ASSESSEE, STRONGLY DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT THE STATEMENT ON THE BASIS OF ADDITION WAS MADE WAS RETRACTED BY SHRI AJ AY MAHESHWARI AT THE EARLIEST AND THERE WAS NO MATERIA L PLACED ON RECORD BY THE REVENUE JUSTIFYING THE ADDITION. I T WAS EXPLAINED THAT INTEREST HAS BEEN PAID BY THE ASSESS EE ON THE LOANS, WHICH WAS ALSO DISALLOWED BY THE ASSESSING O FFICER. IT SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 3 WAS ALSO PLEADED THAT THE LD. COMMISSIONER OF INCOM E TAX (APPEAL) GRANTED RELIEF AFTER CONSIDERING THE FACTU AL MATRIX AND ON THE INTEREST PORTION, NO APPEAL HAS BEEN FIL ED BY THE REVENUE. THE LD. COUNSEL FURTHER EXPLAINED THAT THE ASSESSEE WAS DOING ONLY ONE PROJECT I.E. SHREEDAM SPLENDOR A ND THE STATEMENT OF SHRI ARUN JATELY IS HAVING NO RELEVANT AS IT TALKS ABOUT THE CASE OF SISTER CONCERN. IT WAS FURTHER PL EADED THAT THE LOANS TAKEN BY THE ASSESSEE WERE REPAID ALONG W ITH INTEREST AND NO CASH WAS FOUND DURING THE SURVEY. I T WAS EMPATHETICALLY ARGUED THAT THE LOANS WERE EVEN REPA ID BEFORE THE SURVEY AND ALL THE PARTIES APPEARED BEFORE THE ASSESSING OFFICER DURING REMAND PROCEEDINGS, WHEN THE LD. ASS ESSING OFFICER RECORDED THE STATEMENT AND NOTHING WAS FOUN D AGAINST THE ASSESSEE, THEREFORE, THE LD. COMMISSION ER OF INCOME TAX (APPEAL) RIGHTLY DELETED THE ADDITION. I T WAS EXPLAINED THAT EVEN SHRI PRAVIN JAIN HIMSELF APPEAR ED BEFORE THE ASSESSING OFFICER FOR WHICH OUR ATTENTION WAS I NVITED TO PAGE 38 OF THE PAPER BOOK. LD. COUNSEL FURTHER CONT ENDED THAT THE LD. ASSESSING OFFICER CARRIED OUT THE ENQU IRIES AND NO ADVERSE REMARK WAS MADE. THE CRUX OF THE ARGUMEN T IS SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 4 THAT ALL THE PARTIES NOT ONLY APPEARED BEFORE THE A SSESSING OFFICER BUT ALSO FILED ALL POSSIBLE DOCUMENTS EVIDE NCING THAT THE ALLEGED LOANS ARE NOT BOGUS. IT WAS EMPATHETICA LLY CONTENDED THAT NO CASH WAS DEPOSITED IN THE BANK AC COUNT OF THESE PARTIES AND ALL THE PARTIES ARE ACTIVE ON ROC WEBSITE, THEREFORE, THESE ARE NO BOGUS ENTITIES. IN REPLY, T HE LD. DR INVITED OUR ATTENTION TO PAGE 7 AND 28 OF THE ASSES SMENT ORDER. THE CRUX OF ARGUMENT BY LD. DR IS IN SUPPORT OF THE ADDITION. RELIANCE WAS PLACED UPON THE CASE OF SUMA TI DAYAL VS CIT (214 ITR 801)(SUPREME COURT), CIT VS SHRI DU RGA PRASAD MORE (82 ITR 540)(SUPREME COURT) AND ANOTHER DECISION IN THE CASE OF ACIT VS NAKODA FASHIONS PVT . LTD. (2018) 92 TAXMAN.COM 46(AHMADABAD TRIB.) 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM, ENGAGE D IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL/COMMERCIAL PROJECTS, DECLARED TOTAL INCOME OF RS.3,30,801/- IN ITS RETUR N FILED ON 29/09/2012, WHICH WAS PROCESSED UNDER SECTION 143(1 ) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). THE CASE OF SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 5 THE ASSESSEE WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICE UNDER SECTION 143(2) WAS SERVED UPON THE ASSESSEE THEREAFTER, NOTICES UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ALSO ISSUED ALONG WITH QUESTIONNAIRE AND SERVE D UPON THE ASSESSEE. THE ASSESSEE WAS DEVELOPING A PROJECT KNOWN AS SHREEDHAM SPLENDOUR, LINK ROAD, OSHIWARA, MUMBA I. SHRI SATYANARAYAN MAHESHWARI. THE LD. COUNSEL, BEFO RE THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS WELL AS BEFORE THIS TRIBUNAL EXPLAINED THAT THE REMAINING PROJECTS WERE DEVELOPED/CONSTRUCTED BY SISTER CONCERN AND THE ONL Y PROJECT DEVELOPED/CONSTRUCTED BY THE ASSESSEE IS SHREEDHAM SPLENDOUR, WHICH COMMENCED FROM THE YEAR 2008. 2.2. A SURVEY ACTION 133A OF THE ACT WAS CARRIED O UT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 17/10/2014 OF THE ASSESSEE. AS PER THE REVENUE, THE SURVEY WAS CARRIE D OUT UPON THE ASSESSEE ON THE BASIS OF INFORMATION CLAIM ED TO BE RECEIVED FROM THE DGIT INVESTIGATION THAT THE ASSES SEE HAD OBTAINED ACCOMMODATION ENTRIES IN THE FORM OF UNSEC URED LOANS FROM THE ENTITIES CONTROLLED BY SHRI PRAVIN K UMAR JAIN, WHO WAS ALLEGED TO BE ENGAGED IN PROVIDING ACCOMMOD ATION SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 6 BILLS. THE STATEMENT OF SHRI AJAY MAHESHWARI, ONE O F THE PARTNERS OF M/S SHREEDHAM BUILDERS (SISTER CONCERN) WAS RECORDED ON OATH UNDER SECTION 131 OF THE ACT ON 17/10/2014, WHEREIN, HE MADE A DISCLOSURE OF RS.15. 40 CRORES (RS.4.70 CRORES FOR ASSESSMENT YEAR 2012-13 AND RS.10.70 CRORES FOR ASSESSMENT YEAR 2013-14). ON AC COUNT OF BOGUS UNSECURED LOANS BY FURTHER CLAIMING THAT ALL THESE TRANSACTIONS WERE CARRIED OUT THROUGH ONE BROKER NA MELY SHRI JITU BHAI. THE STATEMENT OF SHRI ANIL JATELY, BROKER WAS ALSO RECORDED. CONSIDERING THE STATEMENT, THE LD. A SSESSING OFFICER MADE ADDITION UNDER SECTION 68 OF THE ACT. FURTHER, THE LD. ASSESSING OFFICER ALSO MADE ADDITION ON ACC OUNT OF INTEREST PAYMENT AND DISALLOWED UNDER SECTION 37 OF THE ACT. 2.3. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEAL), THE FACTUAL MATRIX WAS CONSIDERED AND THE ADDITIONS SO MADE WERE DELETED. THE REVENUE IS IN A PPEAL BEFORE THIS TRIBUNAL WITH RESPECT TO THE ADDITIONS MADE UNDER SECTION 68 OF THE ACT. 2.4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 7 DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, BEFORE ADVERTING FURTHE R, IT IS OUR BOUNDED DUTY TO EXAMINE SECTION 68 OF THE ACT, WHIC H IS REPRODUCED HEREUNDER FOR READY REFERENCE AND ANALYS IS:- 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS 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, I N THE OPINION 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 : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTER ESTED), AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATI ON MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMO UNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFAC TORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFER S AN EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSIN G OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME THE SUM RE FERRED TO THEREIN IS RECORDED, IS A VENTURE CAPITAL FUND OR A VENTURE CAPITAL COMPANY AS REFERRED TO IN CLAUSE (23FB)OF S ECTION 10. SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 8 2.5. AS PER SECTION 68 OF THE ACT, ONUS IS UPON TH E ASSESSEE TO DISCHARGE THE BURDEN SO CAST UPON. FIRS T BURDEN IS UPON THE ASSESSEE TO SATISFACTORILY EXPLAIN THE CREDIT ENTRY CONTAINED IN HIS BOOKS OF ACCOUNTS. THE BURDEN HAS TO BE DISCHARGED WITH POSITIVE MATERIAL (OCEANIC PRODUCTS EXPORTING COMPANY VS CIT 241 ITR 497 (KERALA.). THE LEGISLATURE HAD LAID DOWN THAT IN THE ABSENCE OF SA TISFACTORY EXPLANATION, THE UNEXPLAINED CASH CREDIT MAY BE CHA RGED U/S 68 OF THE ACT. OUR VIEW IS FORTIFIED BY THE RATIO L AID DOWN IN HONBLE APEX COURT IN P. MOHANKALA (2007)(291 ITR 2 78)(SC). A CLOSE READING OF SECTION 68 AND 69 OF THE ACT MAK ES IT CLEAR THAT IN THE CASE OF SECTION 68, THERE SHOULD BE CRE DIT ENTRY IN THE BOOKS OF ACCOUNT WHEREAS IN THE CASE OF 69 THER E MAY NOT BE AN ENTRY IN SUCH BOOKS OF ACCOUNT. THE LAW IS WE LL SETTLED, THE ONUS OF PROVING THE SOURCE OF A SUM, FOUND TO B E RECEIVED/TRANSACTED BY THE ASSESSEE, IS ON HIM AND WHERE IT IS NOT SATISFACTORILY EXPLAINED, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS INCOME OF THE ASSESSEE AND NO FURTH ER BURDEN LIES ON THE REVENUE TO SHOW THAT INCOME IS FROM ANY OTHER PARTICULAR SOURCE. WHERE THE ASSESSEE FAILED TO PRO VE SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 9 SATISFACTORILY THE SOURCE AND NATURE OF SUCH CREDIT , THE REVENUE IS FREE TO MAKE THE ADDITION. THE PRINCIPL E LAID DOWN IN GANPATI MUDALIAR (1964) 53 ITR 623/A. GOVIN DA RAJULU MUDALIAR (34 ITR 807)(SC) AND ALSO CIT VS DU RGA PRASAD MORE (72 ITR 807)(SC) ARE THE LANDMARK DECIS IONS. THE RATIO LAID DOWN THEREIN ARE THAT IF THE EXPLANA TION OF THE ASSESSEE IS UNSATISFACTORY, THE AMOUNT CAN BE TREAT ED AS INCOME OF THE ASSESSEE. THE RATIO LAID DOWN IN DAU LAT RAM RAWATMAL 87 ITR 349 (SC) FURTHER SUPPORTS THE CASE OF THE ASSESSEE. IN THE CASE OF A CASH ENTRY, IT IS NECES SARY FOR THE ASSESSEE TO PROVE NOT ONLY THE IDENTITY OF THE CRED ITOR BUT ALSO THE CAPACITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS. THE ONUS LIES ON THE ASSESSEE, UNDER THE FACTS AVAILABLE ON RECORD. A HARMONIOUS CONSTRUCTION OF SECTION 106 OF THE EVIDENCE ACT AND SECTION 68 OF THE INCOM E TAX ACT WILL BE THAT APART FROM ESTABLISHING THE IDENTITY O F THE CREDITOR, THE ASSESSEE MUST ESTABLISH THE GENUINENE SS OF THE TRANSACTION AS WELL AS THE CREDITWORTHINESS OF THE CREDITORS. IN CIT VS KORLAY TRADING COMPANY LTD. 232 ITR 820 ( CAL.), IT WAS HELD THAT MERE MENTION OF FILE NUMBER OF CREDIT OR WILL NOT SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 10 SUFFICE AND EACH ENTRY HAS TO BE EXPLAINED SEPARATE LY BY THE ASSESSEE (CIT VS R.S. RATHAORE) 212 ITR 390 (RAJ.). THE HONBLE GUWAHATI HIGH COURT IN NEMI CHANDRA KOTHARI VS CIT (264 ITR 254)(GAU) HELD THAT TRANSACTION BY CHE QUES MAY NOT BE ALWAYS SACROSANCT. IN THE PRESENT APPEAL, T HE ASSESSEE DULY FULFILLED THE CONDITIONS ENSHRINED U/ S 68 OF THE ACT AND PRODUCED NECESSARY EVIDENCE FOR ITS CLAIM. 2.6. THE RATIO LAID DOWN IN ACIT VS RAJEEV TANDON 294 ITR (AT) 219 (DEL.), WHICH WAS CONFIRMED BY HONBLE HIGH COURT , IN 294 ITR 488, SUPPORTS THE CASE OF THE RE VENUE. IDENTICAL RATIO WAS LAID DOWN IN CIT VS ANIL KUMAR 392 ITR 552 (DEL.), WHEREIN IT WAS HELD THAT MERE IDENTIFIC ATION OF THE DONOR AND MOVEMENT OF GIFT THROUGH BANKING CHANNEL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF GIFT. 2.7. NOW, WE SHALL ANALYZE CERTAIN CASES WHEREIN E ITHER THE PARTIES ARE SAME OR THE FACTS ARE IDENTICAL. ON E OF SUCH CASE IS FROM THE MUMBAI BENCH OF THE TRIBUNAL LIKE ACIT VS SHRI RAMESH RAMSWARUPDAS JINDAL (ITA NO.3091 TO 3096/MUM/2017), ORDER DATED 15/11/2017, WHEREIN, ON E OF US (ACCOUNTANT MEMBER) IS SIGNATORY TO THE ORDER AN D THE SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 11 TRIBUNAL CONSIDERING VARIOUS DECISIONS DISMISSED TH E APPEALS OF THE REVENUE. THE RELEVANT PORTION FROM THE ORDER IS REPRODUCED HEREUNDER:- 1. ALL THESE APPEALS ARE FILED BY THE REVENUE AGAIN ST THE COMMON ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-36,MUMBAI DATED 23.02.2017 ARISING OUT OF THE ASSESSMENT ORDERS PASSED U/S. 143(3) R.W.S. 147 OF THE ACT FOR THE ASSESSMENT YEARS 2008-09 TO 2011-12 AND ASSESSMENT ORDER PASSED U/S.143(3) FOR THE ASSESSMENT YEARS 2012-13 & 2013-14. 2. THE COMMON GROUNDS OF APPEAL IN ALL THESE REVENU E APPEALS RELATES TO DELETION OF ADDITION MADE BY THE ASSESSING OFFICER TOWARDS UNEXPLAINED UNSECURED LOANS. ITA.NO.3091/MUM/2017 FOR ASSESSMENT YEAR 2008-09 3. FIRST WE TAKE UP THE APPEAL FOR THE ASSESSMENT Y EAR 2008- 09. BRIEFLY STATED THE FACTS ARE THAT, THE ASSESSM ENT FOR THE ASSESSMENT YEAR2008-09 WAS REOPENED BASED ON THE SE ARCH PROCEEDINGS CARRIED OUT IN THE CASE OF PRAVIN KUMAR JAIN GROUP WHEREIN SHRI PRAVIN KUMAR JAIN IS SAID TO HAVE DEPO SED BEFORE THE AUTHORITIES THAT HE IS INDULGED IN PROVIDING ACCOMM ODATION ENTRIES IN THE NATURE OF THE BOGUS BILLS/SALES BILLS AND UNSEC URED LOANS. AS PER THE INFORMATION THE ASSESSEE IS ONE OF THE BENEFICI ARIES OF SUCH ACCOMMODATION ENTRIES. IN THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE WAS REQUIRED TO EXPLAIN UNSECURED LOANS AN D PROVE GENUINENESS OF TRANSACTIONS, IDENTITY AND CREDITWOR THINESS OF THE UNSECURED LOANS, RECORDS AND SUPPORTING DOCUMENTARY EVIDENCES. IN RESPONSE TO THE SAME, ASSESSEE FURNISHED LOAN CONFI RMATIONS, BANK STATEMENTS, I.T. RETURN ACKNOWLEDGEMENTS OF THE LEN DER COMPANIES AND ALSO SUBMITTED THAT MONEY HAS BEEN BORROWED THR OUGH REGULAR BANKING CHANNELS AND IT WAS REPAID IN SUBSEQUENT YE ARS WITH INTEREST. TDS WAS MADE ON SUCH INTEREST. IT WAS A LSO FURTHER SUBMITTED THAT SHRI PRAVIN KUMAR JAIN WAS RETRACTED THE STATEMENT WHICH HE HAS SAID TO HAVE BEEN GIVEN AND THEREFORE IT WAS CONTENDED THAT TRANSACTIONS ARE GENUINE AND THEY CANNOT BE TR EATED AS UNEXPLAINED UNSECURED LOANS. HOWEVER, ASSESSING OF FICER REJECTED THE SUBMISSIONS OF THE ASSESSEE HOLDING THAT SHRI P RAVIN KUMAR JAIN GROUP ONLY ENGAGED IN PROVIDING ACCOMMODATION ENTRI ES OF VARIOUS NATURE AND NO GENUINE BUSINESS WAS BEING CARRIED OU T AND THE ASSESSEE OBTAINED ONLY ACCOMMODATION ENTRIES FROM T HEM AND RELYING ON THE STATEMENT OF SHRI PRAVIN KUMAR JAIN RECORDED U/S. 132(4) OF THE ACT, THE ASSESSING OFFICER CONCLUDED THAT ASSESSEE HAS OBTAINED ONLY ACCOMMODATION ENTRIES FROM VARIOUS PA RTIES REFERRED TO SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 12 IN THE ASSESSMENT ORDER AND ADDED THE AMOUNT SHOWN AS UNSECURED LOANS FROM THESE PARTIES AS UNEXPLAINED U NSECURED LOANS AND ACCORDINGLY BROUGHT TO TAX. ASSESSING OFFICER ALSO BROUGHT TO TAX THE INTEREST PAID ON SUCH UNEXPLAINED UNSECURED LOA NS. 4. ON APPEAL BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITIONS OBSERVING THAT THE ASSESSING OFFICER HAS MERELY DOUBTED THE LOANS TAKEN BY THE ASSESSEE FROM VARIOUS PARTIE S AND THE ASSESSING OFFICER HAS GONE ONLY ON THE STATEMENT OF SHRI PRAVIN KUMAR JAINR ECORDED IN SEARCH PROCEEDINGS IGNORING THE FACT THAT SHRI PRAVIN KUMAR JAIN LATER RETRACTED SUCH STATEME NTS. THE STATEMENTS RECORDED WERE NOT SUPPLIED TO THE ASSESS EE AND NO OPPORTUNITY FOR CROSS EXAMINATION WAS GIVEN VIOLATI NG THE PRINCIPLE OF NATURAL JUSTICE AND SINCE THE STATEMENTS COULD NOT BE UTILIZED AGAINST THE ASSESSEE WITHOUT GIVING FULL AND PROPER OPPORTU NITY OF CROSS EXAMINATION. HE RELIED ON THE DECISION OF THE HON' BLE SUPREME COURT IN THE CASE OF KISHANCHAND CHELLARAM V. CIT [125 ITR 713]. HE ALSO OBSERVED THAT ASSESSEE SUBMITTED THE CONFIRMATIONS FROM THE PARTIES, FILED AUDIT REPORTS OF THE PARTIES ALONG WITH THE C OPY OF ITR AND BANK STATEMENTS AND THEREFORE SINCE THE ASSESSEE HAS DIS CHARGED ITS PRIMARY ONUS, THE ONUS HAD SHIFTED TO THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT MADE ANY INQUIRIES FROM T HE ALLEGED LENDERS BY SUMMONING THEM. FURTHER OBSERVING THAT T HE ASSESSEE HAS TRANSACTED THROUGH PROPER BANKING CHANNELS, INT EREST WAS ALSO PAID BY DEDUCTING TDS, THE LD.CIT(A) CONCLUDED THAT THE ASSESSING OFFICER MADE ADDITION DISREGARDING THE EVIDENCE ON RECORD AND WITHOUT DISCHARGING HIS ONUS AND WITHOUT ESTABLISHI NG ANYTHING CONTRARY TO THE SUBMISSIONS OF THE ASSESSEE AND WIT HOUT VERIFYING THE BANK ACCOUNT, EXISTENCES OF ENTITIES WHO HAVE EXTEN DED LOANS TO THE ASSESSEE AND WITHOUT MAKING ANY FRUITFUL INVESTIGAT ION HE DIRECTED THE ASSESSING OFFICER TO DELETED THE ADDITION MADE TOWARDS UNSECURED LOANS. 5. THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE ASSESSING OFFICER. FURTHER TAKING US THROUGH THE ASSESSMENT ORDER, LD. DR SUBMITS THAT SHRI PRAVIN KUMAR JAIN HAS CATEGORICAL LY SAID IN HIS STATEMENT THAT HE IS PROVIDING ONLY ACCOMMODATION E NTRIES AND NO GENUINE BUSINESS WAS CARRIED ON AND AS PER THE INFO RMATION ASSESSEE IS ONE OF THE BENEFICIARY TO SUCH TRANSACT IONS AND THEREFORE THE ASSESSING OFFICER RIGHTLY CONCLUDED THAT ASSESS EE HAS OBTAINED ONLY ACCOMMODATION ENTRIES IN THE NAME OF UNSECURED LOANS AND THE ENTITIES WERE NOT CARRYING OUT ANY BUSINESS. 6. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSES SEE STRONGLY SUPPORTED THE ORDERS OF THE LD.CIT(A). HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS RELIED ON THE INFORM ATION RECEIVED FROM DGIT(INV), MUMBAI REGARDING THE DETAILS OF ACCOMMOD ATION ENTRIES PROVIDED IN THE NATURE OF BOGUS PURCHASES/ SALE BIL LS AND UNSECURED SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 13 LOANS BY SHRI PRAVIN KUMAR JAIN GROUP. FURTHER THE ASSESSING OFFICER HAS STATED IN THE ORDER THAT DGIT(INV) HAS CARRIED OUT SEARCH AND SEIZURE ACTION ON PRAVIN KUMAR JAIN GROUP. THE REPORT MENTIONS SHRI PRAVIN KUMAR JAIN IS ONE OF THE ENTRY PROVIDER S, OPERATING IN MUMBAI, INDULGED IN PROVIDING ACCOMMODATION ENTRIES IN THE NATURE OF BOGUS PURCHASES/SALE BILLS AND UNSECURED LOANS. THE NAME OF THE ASSESSEE IS IN THE LIST OF THE ALLEGED BENEFICI ARIES TO THE SAID TRANSACTIONS. THE LIST OF PARTIES FROM WHOM THE AS SESSEE HAS AVAILED ACCOMMODATION/FICTIOUS BILLS AS ALLEGED BY THE ASSE SSING OFFICER IS AS FOLLOWS: PARTY NATURE OF TRANSACTION AMOUNT IN RS. M/S MOHIT INTERNATIONAL LOAN 10,00,000/- M/S. NATASHA ENTERPRISES LOAN 10,00,000/- 7. HE SUBMITS THAT DURING THE RE-ASSESSMENT PROCEED INGS THE ASSESSING OFFICER ASKED TO PROVE THE GENUINENESS OF THE TRANSACTIONS, IDENTITY AND CREDIT WORTHINESS OF THE ABOVE COMPANIES. IN RESPECT OF THE SAME THE ASSESSEE SUBMITTED LOAN CONFIRMATION OF UNSECURED LOANS ALONG WITH THEIR ITR-V AND THE AFFI DAVITS FROM THE SAID PARTIES. IT WAS SUBMITTED THAT THE ASSESSEE H AS BORROWED THE MONEY THROUGH PROPER BANKING CHANNELS. THE BANK ST ATEMENTS HIGHLIGHTING THE RECEIPT OF MONEY WERE SUBMITTED BE FORE THE ASSESSING OFFICER. IT WAS FURTHER SUBMITTED THAT T HE ASSESSEE HAS SUBSEQUENTLY REPAID THE LOANS. FURTHER, WITH REFER ENCE TO THE LETTER FROM DGIT(INV) MUMBAI, THE ASSESSEE SUBMITTED THAT THE SAID STATEMENT ALLEGEDLY GIVEN BY SHRI PRAVEEN KUMAR JAI N, HAS NOT CONFIRMED YET BY THE ASSESSING OFFICER. THUS THE A LLEGED STATEMENT CANNOT BE RELIED UPON. FURTHER IT WAS SUBMITTED THA T THE SAID PRAVEEN KUMAR JAIN, HAS RETRACTED HIS STATEMENT OF GIVING ACCOMMODATION LOANS, AS EVIDENT FROM THE COY OF THE AFFIDAVIT, WAS SUBMITTED BEFORE THE ASSESSING OFFICER. THEREFORE, LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE HAS SUBMITTED THE LOAN CONFIRMATIONS, BANK STATEMENTS SHOWING THE RECEIPTS AND ITR-V OF THE LENDERS, THE ASSESSEE HAS DISCHARGED H IS PRIMARY ONUS BY SUBMITTING ALL THE DOCUMENTS ESTABLISHING THE GE NUINENESS OF THE TRANSACTIONS, IDENTITY OF LENDER AND ITS CREDITWORT HINESS. IT IS SUBMITTED THAT ALL THE TRANSACTIONS ARE CARRIED OUT THROUGH PROPER BANKING CHANNELS, THE ASSESSEE HAS PROVIDED SUBSTAN TIAL EVIDENCE OF THE LOANS RECEIVED FROM PARTIES, SUBSEQUENT REPA YMENT OF LOANS PROVES THE GENUINENESS OF THE LOANS. IT IS SUBMITT ED THAT THE ASSESSING OFFICER HAS NOT REBUTTED ANY OF THE EVIDE NCESSUBMITTED BY THE ASSESSEE. FURTHER THE ADDRESS AS AVAILABLE WITH THE ASSESSEE WAS PROVIDED TO THE ASSESSING OFFICER. IT IS SUBMITTED THAT SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 14 THE ALLEGED STATEMENT GIVEN BY SAID SHRI PRAVIN KUM AR JAIN IS RETRACTED BY HIMSELF SUBSEQUENTLY. IT IS SUBMITTED THAT THE ALLEGED STATEMENT GIVEN BY SHRI PRAVIN KUMAR JAIN IS NOT YE T CONFIRMED IN HIS ASSESSMENTS AND THUS IT CANNOT BE CONSIDERED AS EVIDENCE. THEREFORE, IT IS SUBMITTED THAT THE ASSESSING OFFIC ER HAS MADE ADDITIONS MERELY RELYING ON THE REPORT AND NO EVIDE NCE WAS PLACED ON RECORD TO MAKE THE ADDITIONS. 8. LEARNED COUNSEL FOR THE ASSESSEE FURTHER REFERRI NG TO PAGE NOS.24 TO 28 OF THE PAPER BOOK SUBMITS THAT AN IDEN TICAL ISSUE CAME UP BEFORE THIS COORDINATE BENCH IN THE CASE OF DCIT VS. BAIRAGRA BUILDERS P. LTD REPORTED IN [2017] 51 CCHA ND SUBMITS THAT THE HON'BLE BENCH HELD THAT THE PLAIN READING OF TH E ASSESSMENT ORDER DEMONSTRATES THAT THE ASSESSING OFFICER MEREL Y WENT BY THE INVESTIGATION DONE BY THE OFFICE OF DGIT(INV), MUMB AI.NO ENQUIRIES OR INVESTIGATION WAS CARRIED OUT IN THE CASE OF PAR TIES WHO LENT THE MONEY, NO EVIDENCE TO CONTROVERT THE CLAIMS OF THE ASSESSEE WAS BROUGHT ON RECORD BY THE ASSESSING OFFICER, EVEN TH E SUBMISSIONS OF SHRI PRAVIN KUMAR JAIN WAS NOT SUPPLIED, NOTHING IS ON RECORD ABOUT THE RESULT FOR INVESTIGATIONS DONE BY DGIT (I NVESTIGATION), MUMBAI, PAPERS FILED BY THE ASSESSEE DO DEMONSTRATE D IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S, THEREFORE THE ADDITION IS MADE MERELY ON SURMISES AND CONJECTURES . THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE DECISION OF THE COORDINATE BENCH SQUARELY APPLY TO THE FACTS OF THE ASSESSEES CASE. HE ALSO PLACED RELIANCE ON THE FOLLOWING DEC ISIONS FOR VARIOUS PROPOSITIONS AS UNDER: - CASE REFERENCE CITATION PROPOSITION KISHANCHAND CHELLARAM V. CIT[125 ITR 0713 (SC)] BURDEN OF PROOF WAS ON THE DEPARTMENT TO PROVE THAT THE AMOUNT BELONGED TO ASSESSEE. THE AMOUNT CANNOT BE ASSESSED AS UNDISCLOSED INCOME OF ASSESSEE IN THE ABSENCE OF POSITIVE MATERIAL BROUGHT BY REVENUE TO PROVE THAT THE AMOUNT IN FACT BELONGED TO ASSESSEE AS THE BURDEN LAY ON THE REVENUE. DCIT V. ROHINI BUILDERS, [256 ITR 0360 (GUJ)] TRIBUNAL HAVING DELETED THE ADDITION UNDER S.68 ACCEPTING THE GENUINENESS OF LOANS WHICH WERE RECEIVED AND REPAID BY ASSESSEE BY ACCOUNTPAYEE CHEQUES, ASSESSEE HAVING ESTABLISHED THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES, GIT NUMBERS/PAN AS WELL AS CONFIRMATIONS ALONG WITH THE COPIES OF THEIR ASSESSMENT ORDERS WHEREVER READILY AVAILABLE. NO SUBSTANTIAL QUESTION OF LAW ARISES. SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 15 CASE REFERENCE CITATION PROPOSITION H.R. MEHTA V. ACIT [289 ITR 0561 (BOM)] THE LEAST THAT THE REVENUE SHOULD HAVE DONE WAS TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO MEET THE CASE AGAINST HIM BY PROVIDING THE MATERIAL SOUGHT TO BE USED AGAINST ASSESSEE IN ARRIVING BEFORE PASSING THE ORDER OF REASSESSMENT. ASSESSEE WAS BOUND TO BE PROVIDED WITH THE MATERIAL USED AGAINST HIM APART FROM BEING PERMITTING HIM TO CROSS EXAMINE THE DEPONENTS. DESPITE THE REQUEST DATED 15 TH FEBRUARY, 1996 SEEKING AN OPPORTUNITY TO CROSS EXAMINE THE DEPONENT AND FURNISH THE ASSESSEE WITH COPIES OF STATEMENTS AND DISCLOSE MATERIAL, THESE WERE DENIED TO HIM. CIT V. ASHWANI GUPTA [322 ITR 0396 (DEL)] ONCE THERE IS A VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IN AS MUCH AS SEIZED MATERIAL IS NOT PROVIDED TO AN ASSESSEE NOR CROSS-EXAMINATION OF THE PERSON ON GRANTED, THEN, SUCH DEFICIENCIES WOULD AMOUNT TO A DENIAL OF OPPORTUNITY AND THEREFORE, TRIBUNAL WAS RIGHT IN CONFIRMING THECIT(A)S ORDER IN DELETING ADDITIONS MADE BY THE AO AS HE HAD NEITHER PROVIDED COPIES OF THE SEIZED MATERIAL TO THE ASSESSEE NOR HAD HE ALLOWED THE ASSESSEE TO CROSS-EXAMINE CONCERNED PARTY CIT V. K. BHUVANENDRAN & ORS. [303 ITR 0235 (MAD) REVENUE HAVING BROUGHT NO MATERIAL ON RECORD TO ESTABLISH THAT CONSIDERATION SHOWN IN THE SALE DEED WAS UNDERSTATED AND NO MATERIAL HAVING BEEN FOUND DURING SEARCH TO SHOW THAT ASSESSEE PAID A SUM OVER AND ABOVE THE STATED CONSIDERATION, NO ADDITION COULD HAVE BEEN MADE ON THE BASIS OF RETRACTED STATEMENT OF ASSESSEE RECORDED DURING SPEECH. CIT V. SAHIBGANJ ELECTRIC CABLES (P) LTD. [115 ITR 0408 (CAL)] WHERE THE AMOUNTS OF LOAN WERE RECEIVED BY CHEQUE AND REPAYMENT WAS ALSO MADE BY CHEQUE THROUGH ASSESSEES BANKERS; AND CONFIRMATION OF CREDITORS ALONG WITH THEIR INCOME-TAX FILE NUMBERS WERE FURNISHED THE ASSESSEE DISCHARGED ITS INITIAL BURDEN AND ITO WAS NOT JUSTIFIED, IN THE ABSENCE OF ANY FURTHER INVESTIGATION, TO REJECT THE EVIDENCE AND SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 16 CASE REFERENCE CITATION PROPOSITION MAKE ADDITION. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW, THE CASE LAWS RELIED ON AND THE MATERIAL FURNISHED BEFORE US. THE ONLY ISSUE INVOLVED INTHIS APPEAL R ELATES TO THE DELETION OF ADDITION OF .20 LAKHS MADE BY THE ASSESSING OFFICER TOWARDS UNEXPLAINED UNSECURED LOANS AND INTEREST THEREON AM OUNTING TO .2,35,246/.SEARCH AND SEIZURE ACTION U/S. 132 OF TH E ACT HAS BEEN CONDUCTED IN THE CASE OF SHRI PRAVIN KUMAR JAIN AND STATEMENTS WERE RECORDED FROM HIM AND HE IS SAID TO HAVE BEEN DEPOS ED THAT HE IS PROVIDING ONLY ACCOMMODATION ENTRIES THROUGH VARIOU S CONCERNS. ON THE BASIS OF THIS INFORMATION RECEIVED FROM DGIT(IN VESTIGATION), MUMBAI THE ASSESSING OFFICER NOTED THAT ASSESSEE WA S ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES GIVEN BY SHR I PRAVIN KUMAR JAIN. ASSESSEE WAS REQUIRED TO EXPLAIN THE UNSECUR ED LOANS OBTAINED IN THE NAME OF M/S MOHIT INTERNATIONAL AND M/S.NATA SHA ENTERPRISES OF .10 LAKHS EACH AND PROVE THE GENUINENESS OF THE TRA NSACTIONS. ASSESSEE FURNISHED INFORMATION IN RESPECT OF THE AB OVE TRANSACTIONS I.E. COPY OF LOAN CONFIRMATION AND AFFIDAVIT ESTABL ISHING IDENTITY OF THE LENDER, COPY OF LEDGER GIVING DETAIL TOWARDS LOAN T AKEN DURING THE YEAR AND SUBSEQUENT REPAYMENTS AND COPY OF ITR V FILED ESTABLISHING CREDITWORTHINESS OF THE LENDER. HOWEVER, ASSESSING OFFICER DID NOT ACCEPT THE EVIDENCES FURNISHED BY THE ASSESSEE AND ALSO THE RETRACTION STATEMENT OF SHRI PRAVIN KUMAR JAIN, IGN ORING ALL THE EVIDENCESASSESSING OFFICER CONCLUDED THAT THE ASSES SEE HAS NOT EXPLAINED THE TRANSACTIONS AS GENUINE AND THEREFORE HE HAS ADDED THE UNSECURED LOANS AS UNEXPLAINED INCOME OF THE ASSESS EE. CORRESPONDINGLY HE HAS ALSO DISALLOWED THE INTEREST THEREON. BEFORE THE LD.CIT(A) ASSESSEE FURNISHED ALL THE INFORMATIO N REGARDING THE UNSECURED LOANS AS MENTIONED ABOVE. THE LD.CIT(A) CONSIDERING THE SUBMISSIONS AND THE FINDINGS FURNISHED BY THE ASSES SEE DELETED THE ADDITIONS OBSERVING AS UNDER: - 6.2 HELD: - I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER, WRITTEN ARGUMENTS OF THE APPELLANT, COUNTER ARGUMEN TS OF THE LD. AR AND HAVE CONSIDERED THE EVIDENCES ON RECORD AND ASS ESSMENT RECORD CALLED FOR DURING THE APPELLATE PROCEEDINGS. I FIN D THAT EH LD. ASSESSING OFFICER HAS MERELY DOUBTED THE LOANS TAKE N BY THE APPELLANT FROM (1) MOHIT INTERNATIONAL AMOUNT TO .10,00,000/- AND (2) NATSHA ENTERPRISES AMOUNTING TO RS.10,00,000/- AGGREGATING AT RS.20,00,000/- . I FIND FORCE IN THE ARGUMENT OF THE LD. AR. IT IS VERY IMPORTANT TO MENTION HERE THAT THE APPELLANT HAS DISCHARGED HIS ONUS AND THE LD. ASSESSING OFFICES HAS NOT PROVED OTHERWISE THAN DOU BTING THE LOANS. APPARENTLY, LD. ASSESSING OFFICER HAS NOT SUBSTANTI ATED HIS PRESUMPTION, HIS DOUBT WITH ANY VERIFIABLE DOCUMENT S. HE HAS MERELY DESCRIBED THE STATEMENT OF SHRI. PRAVIN KUMAR JAIN AND AS COMMUNICATED BY THE INVESTIGATION WING. THUS, IT IS VERY EVIDENT THAT THE LD. ASSESSING OFFICER HAS NOT MADE ANY INDEPEND ENT ENQUIRY IN SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 17 ORDER TO ESTABLISH THE IN-GENUINENESS OF LOANS IF A NY, WITH CONTRARY EVIDENCE. THE STATEMENTS REFERRED TO AND RELIED UPO N BY THE ASSESSING OFFICER HAVE NEVER BEEN DISCLOSED TO THE APPELLANT OPPORTUNITY FOR CROSS EXAMINATION WAS ALSO NOT GIVEN, HENCE SUCH STATEMEN T COULD NOT BE UTILIZED AGAINST THE APPELLANT WITHOUT GIVING FULL AND PROPER OPPORTUNITY OF CROSS EXAMINATION AS HAS BEEN HELD V IDE MAHESH GULABRAL JOSHI VS. CIT(A) (2005) 95 LTD 300 MUMBAI ITAT AND HONBLE SUPREME COURT DECISION IN THE CASE OF KISHA NCHANDCHELLARAM VS. CIT (125 ITR 713 (SC)). 6.3. FURTHER DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE APPELLANT HAS PRODUCED COPY OF A COMPREHENSIVE AFFI DAVIT OF SHRI. PRAVIN KUMAR JAIN DATED 25.04.2014 RETRACTING, THE STATEMENTS MADE BEFORE THE INVESTIGATION WING. ASSESSING OFFICER HA S NOT GIVEN OPPORTUNITY TO THE APPELLANT FOR CROSS EXAMINATION OF SHRI PRAVIN KUMAR JAIN. GOING BY THE DISCUSSION CONTAINED ABOVE , IT IS OBVIOUS THAT THE INFERENCE DRAWN BY THE ASSESSING OFFICER A GAINST THE APPELLANT IS NOT SUSTAINABLE FOR THE SIMPLE REASON THAT THE P RINCIPLES OF NATURAL JUSTICE HAVE NOT BEEN FOLLOWED. FIRST AND FOREMOST, THE APPELLANT HAS NOT BEEN GIVEN ANY ACCESS TO THE MATERIAL (REPORTS, INTIMATIONS, STATEMENT ETC.) USED AGAINST IT. SECONDLY, BY WITHH OLDING THE SAID MATERIAL THE ASSESSING OFFICER HAS DENIED TO THE AP PELLANT AN OPPORTUNITY TO REFUTE THE EVIDENCE BY CROSS EXAMINI NG THE WITNESSES, STATEMENTS, IF ANY MADE BY WHOM, INCRIMINATED THE A PPELLANT. ON BOTH COUNTS, THE IMPUGNED ASSESSMENT ORDER FAILS SQUAREL Y. 6.4. IT HAS TO BE SAID THAT THE APPELLANT HAD DONE EVERYTHING IN ITS POWER TO PROVE THE THREE INGREDIENTS REQUIRED TO PR OVE THE SATISFACTORY NATURE OF THE LOAN TRANSACTIONS. HE HAS SUBMITTED C ONFIRMATION FROM THE PARTIES. FILED AUDIT REPORTS OF THE PARTIES ALO NGWITH COPY OF THEIR ITR, AND BANK STATEMENTS. IN THESE CIRCUMSTANCES, T HE ONUS HAD SHIFTED TO THE ASSESSING OFFICER. IF THE ASSESSING OFFICER WAS STILL NOT SATISFIED, HE HAD THE OPTION OF MAKING ENQUIRIES FROM THE ALLE GED LENDERS BY SUMMONING THEM. HOWEVER AS SEEN FROM THE ASSESSMENT ORDER, HE DID NOT DO ANY SUCH THING. FURTHER, IF THE ASSESSING OF FICER WAS SATISFIED WITH WHAT HAD BEEN GIVEN TO HIM BY THE APPELLANT, H E WAS DUTY BOUND TO SPECIFY WHAT MORE MATERIAL HE WANTED FROM THE AP PELLANT TO FURNISH. THE ASSESSING OFFICER NEVER ASKED FOR ANY FURTHER M ATERIAL. THIS LEADS TO THE INESCAPABLE CONCLUSION THAT THE ASSESSING OF FICER COULD NOT THINK OF ANY FURTHER MATERIAL TO ASK FOR AND PROCEE DED TO REJECT THE APPELLANTS CLAIMS, RELYING UPON THE INFORMATION/ M ATERIAL, WHICH HE NEVER EVEN BROUGHT TO THE NOTICE OF THE APPELLANT F OR ANY REBUTTAL. THE UNEQUIVOCAL CONCLUSION IS THAT ALL THE THREE INGRED IENTS HAVING BEEN SATISFIED. 6.5. THE AO DID NOT CONSIDER THE EVIDENCES PROVIDED BY THE APPELLANT AS SATISFACTORY. ACCORDING TO HIM, SUBMIS SIONS AND STATEMENTS GIVEN BY SH. PRAVIN KUMAR JAIN CONFIRMED THAT THEY HAD SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 18 ISSUED ONLY BOGUS BILLS/ACCOMMODATION ENTRIES TO TH E INTERESTED PARTIES. HOWEVER, HE DID NOT BRING OUT THE RELEVANT EXTRACT FROM THE STATEMENT WHERE THEY HAVE ADMITTED THAT THEY HAVE G IVEN ACCOMMODATION ENTRIES TO THE APPELLANT. MOREOVER, H E HAD JUST REFERRED TO THE STATEMENT OF SHRI PRAVIN KUMAR JAIN GROUP WITHOUT GIVING SPECIFIC DETAILS AS TO WHO IS THE PERSON WHO IS GIVING THE STATEMENT AND WHAT EXACTLY DID HE ADMIT. INSTEAD OF STATING THAT THE PARTY DID NOT EXIST, HE SHOULD HAVE SUMMONED THE PA RTY AND RECORDED THE STATEMENT. AS THE AO, HAS NOT BROUGHT ANYTHING IN RECORD TO SHOW THAT THE EVIDENCES FILED BY THE APPELLANT ARE FALSE , THE LOAN RECEIVED AND REPAID BY THE APPELLANT CANNOT BE TREATED AS BO GUS. THE ADDITION CANNOT BE MADE MERELY ON THE BASIS OF SUSPICION, SU RMISES AND CONJECTURES. THERE HAS TO BE SOME CONCRETE EVIDENCE WHETHER DIRECT OR CIRCUMSTANTIAL. IN THIS CASE, NO SUCH EVIDENCE IS P RESENT. ON THE CONTRARY, THE APPELLANT IS SHOWING FROM THE RECORD THAT HE HAS RECEIVED LOAN THROUGH ACCOUNT PAYEE CHEQUES FROM ABOVE TWO P ARTIES. HE HAS SHOWN THAT THE LOANS HAVE BEEN REPAID THROUGH A CCOUNT PAYEE CHEQUE AND AS LONG AS HE WAS HOLDING THE LOAN, HE H AS PAID THE INTEREST AFTER DEDUCTING TDS. WITH REGARD TO THE DISALLOWANC E OF INTEREST ON LOANS TAKEN FROM AFORE-MENTIONED PARTIES, THE APPEL LANT SUBMITTED THAT THE AO HAS ALSO IGNORED THE FACT THAT THE SAID INTE REST EXPENSES WERE INCURRED WHOLLY, EXCLUSIVELY & NECESSARILY FOR BUSI NESS OF THE APPELLANT. THE INTEREST PAID ON LOANS WAS SUBJECT T O TDS. DURING THE PRESENT PROCEEDINGS, THE APPELLANT ALSO SUBMITTED T HE DETAILS OF THE TDS MADE ON THE LOANS WHEREVER IT IS APPLICABLE AND THE DETAILS OF AMOUNT OF TDS PAID INTO THE GOVERNMENT ACCOUNT. IN THE APPELLANT CASE THE ADDITION MADE TOWARDS THE SAID LOANS IS DE LETED AFTER DISCUSSING THE ISSUE IN DETAIL IN THE ABOVE PARAGRA PHS. 6.6. THUS, ABOVE DISCUSSION AND VARIOUS EXPLANATION S LEADS TO THE CONCLUSIONS THAT THE LD. ASSESSING OFFICER HAS MADE ADDITION OF .20,00,000/- AND INTEREST GIVEN TO THE PARTIES, DIS REGARDING THE EVIDENCE ON RECORD AND WITHOUT DISCHARGING HIS ONUS AND WITHOUT ESTABLISHING ANYTHING TO THE CONTRARY TO THE SUBMIS SIONS OF THE APPELLANT AND WITHOUT VERIFYING THE BANK ACCOUNT, E XISTENCE OF ENTITIES WHO HAVE EXTENDED LOANS TO THE APPELLANT AND WITHOU T MAKING FRUITFUL INVESTIGATION. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION MADE OF RS.20,00,000/- ON ACCOUNT OF UNEXP LAINED UNSECURED LOANS AND .2,35,246/- MADE ON ACCOUNT INTEREST ON THE SAME. THE GROUNDS OF APPEAL ARE ALLOWED. 10. ON A PLAIN READING OF THE ASSESSMENT ORDER, WE FIND THAT THE ASSESSING OFFICER HAS GONE ONLY BY THE STATEMENT RE CORDED FROM SHRI PRAVIN KUMAR JAIN WHO SAID TO HAVE BEEN DEPOSED THA T HE IS ONLY PROVIDING ACCOMMODATION ENTRIES AND NO REAL BUSINES S IS CARRIED ONBY THE ENTITIES. THE ASSESSING OFFICER HAS NOT MADE A NY EFFORTS TO MAKE INDEPENDENT ENQUIRIES WITH THE LENDER COMPANIES.WE ALSO OBSERVE FROMTHE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS NOT PROVIDED SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 19 THE STATEMENTS OF SHRI PRAVIN KUMAR JAIN TO THE ASS ESSEE FOR ITS REBUTTAL. NOTHING IS PLACED ON RECORD TO SUGGEST T HAT THE INFORMATION FURNISHED BY THE ASSESSEE IN THE FORM OF COPY OF AF FIDAVIT, ESTABLISHING IDENTIFY OF THE LENDER, COPY OF THE LEDGER GIVING D ETAILS OF LOANS CONFIRMATION TAKEN AND ALSO REPAYMENT IN SUBSEQUENT YEARS, COPY OF BANK STATEMENT HIGHLIGHTING THE NATURES OF LOAN TAK EN AND REPAYMENT IN SUBSEQUENT YEARS TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS COPY OF ITR V FILED ESTABLISHING CREDITWORTHINESS OF THELENDER ARE NON-GENUINE. IT WAS ALSO NOTED BYTHE LD.CIT(A) THA T THE ASSESSEE HAS PROVIDED THE IDENTITY CREDITWORTHINESS AS WELL AS T HE GENUINENESS OF THE TRANSACTIONS. THE LD.CIT(A) ALSO ELABORATELY C ONSIDERED THE SUBMISSIONS AND THE AVERMENTS MADE BYTHE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE EVIDENCE FURNISHED BY THE ASSESSEE AND CONCLUDED THAT THE ASSESSEE HAS DISCHARGED ITS PRIM ARY ONUS ON PROVIDING COMPLETE DETAILS IN RESPECT OF THE LOAN T RANSACTIONS AND THE ASSESSING OFFICER FAILED TO CARRY OUT ANY FRUITFUL INVESTIGATION. THEREFORE, NO ADDITION CAN BE MADE TOWARDS UNEXPLAI NED UNSECURED LOANS, THIS FINDING IN OUR VIEW IS COMPLETELY JUSTI FIED IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE. 11. AN IDENTICAL ISSUE CAME UP IN THE CASE OF DCIT VS. BAIRAGRA BUILDERS P. LTD REPORTED IN [2017] 51 CCH 0107 IN I TA.NO. 4691 AND 4692/MUM/2015 DATED 14.09.2017 WHEREIN THE COORDINA TE BENCH HELD AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT DURING THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAD TAKEN UNSECURED L OANS FROM THE FOLLOWING TWO PARTIES: SR. NO NAME OF THE PARTY AND ADDRESS PAN LOAN TAKEN(RS.) RATE OF INTEREST 1. JAVDA INDIA IMPEX LIMITED CS-1, SILVER ANKLET, YARI ROAD, VERSOVA, MUMBAL 400 061 AAACA7065L 20,00,000 9% 2. LEXUS INFOTECH LTD. 626, PANCHRATNA, OPERAHOUSE, MUMBAI 400 002 AAACL4646G 20,00,000 9% WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO PR OVE THE GENUINENESS OF THESE LOANS, THE ASSESSEE SUBMITTED THE FOLLOWING DOCUMENTS: A. COPY OF ACKNOWLEDGMENT OF INCOME TAX RETURN FILE D FOR A.Y. 2007-08. SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 20 B. COPY OF PAN OF THE PARTIES C. COPY OF BANK STATEMENT OF THE PARTIES FROM WHERE THE CHEQUE IS ISSUED. D. LIST OF DIRECTORS OF THE PARTIES E. COPY OF ANNUAL REPORT OF THE PARTIES FOR FINANCI AL YEAR 2006-07. F. COPY OF LOAN CONFIRMATION FROM THE PARTIES. THE ASSESSING OFFICER TREATED THESE LOANS TO BE NON -GENUINE AND MADE ADDITION U/S 68 OF THE I.T ACT ON THE BASIS OF THE STATEMENT OF SHRI NILESH PARMAR, ONE OF THE ASSOCIATE OF SHRI PR AVEEN KUMAR JAM, DIRECTOR OF MOHIT INTERNATIONAL AND ONE OF THE DUMMY DIRECTOR OF SOME OF THE COMPANIES OF SHRI PRAVEEN KUMAR JAM. ALTHOUGH SAID STATEMENT HAS BEEN IMMEDIATELY RETRACTED BY HIM BY FILING AN AFFIDAVIT WITH THE CBDT, THE CIT(A) HAS DELETED THE SAID ADDITION AS IN HIS OPINION THE ASSESSEE HAS DULY DISCHARGED HIS ONUS AS LAID DOWN ON IT U/S. 68 OF THE I.T.ACT. IT WAS ALSO NOTE D BY THE CIT(A) THAT THE ASSESSEE HAS PROVED THE IDENTITY, CREDIT WORTHI NESS AS WELL AS GENUINENESS OF THE TRANSACTIONS AND, THEREFORE, NO ADDITION U/S. 68 CAN BE MADE. 7. THE LEARNED AR BEFORE US RELIED ON THE ORDER OF THE CIT(A) AND HAS ALSO POINTED OUT THAT THE LOAN RECEIVED BY THE ASSESSEE HAS BEEN RETURNED TO THE RESPECTIVE PARTIES THROUGH CHEQUES AND IN NONE OF THE CASE THE RESPECTIVE PARTY HAS DEPOSITED ANY CASH. H E RELIED ON THE FOLLOWING TRIBUNAL DECISIONS: ARCELI REALTY LTD VS. ITO [ITA NO.6492/MUM/2016 DATED 21.04.2017 (MUMBAI)] M/S KOMAL AGROTECH PVT. LTD. VS. ITO [ITA NO.437/HYD/2016 DATED 25.11.2016 (HYDERABAD)] SUDHANSHU SURESH PANDHARE VS. ITO [ITA NO.5185/MUM/2012 DATED 05.10.2016 (MUMBAI)] DILSA DISTRIBUTORS COMBINES VS. ITO [ITA NO.5849/MUM/2011 DATED 06.09.2013 (MUMBAI)] AIM PROPERTIES & INVESTMENTS PVT. LTD VS. ITO [IT A NO.7426/MUM/2012 DATED 04.12.2013 (MUMBAI] HE FURTHER PLACED RELIANCE ON THE FOLLOWING JUDGMEN TS: NEMI CHAND KOTHARI VS. CIT [2004] 136 TAXMAN 213 (G AU) VIJAY KUMAR TALWAR VS. CIT [2011]330 ITR 1 (SC) SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 21 8. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE DECISIONS OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF PRINCIP AL CIT VS. BIKRAM SINGH ITA.NO. 55/2017 & CIT VS. JANSAMPARK A DVERTISING & MARKETING PVT. LTD. IN ITA.NO.525/2014. 9. WE HAVE GONE THROUGH THE ORDERS RELIED UPON BY T HE LEARNED DR. WE NOTED THAT THE DECISION OF THE DELHI HIGH CO URT IN THE CASE OF BIKRAM SINGH, THE ASSESSEE COULD NOT DISCHARGE THE ONUS AS LAID DOWN BY SECTION 68 OF THE ACT. SIMILARLY, IN THE CA SE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. (SUPRA ), THE ADDITIONS HAVE BEEN MADE U/S. 68 IN RESPECT OF THE SHARE CAPI TAL RECEIVED BY THE ASSESSEE FROM VARIOUS COMPANIES AND DURING THE COURSE OF INVESTIGATION, IT WAS FOUND THAT THE SHARE CAPITAL HAS BEEN RECEIVED FROM THREE ENTRY OPERATORS, WHO ARE ALLEGEDLY IN TH E BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. NOTICES ISSUED U/S . 131 TO THESE PARTIES WERE RETURNED UNDELIVERED BY THE POSTAL AUT HORITIES WITH THE REMARK 'LEFT'/ 'NO SUCH PERSON'. UNDER THESE CIRCUM STANCES, THE HON'BLE HIGH COURT TOOK A VIEW THAT THE ASSESSEE FA ILED TO DISCHARGE THE BURDEN TO PROVE THE CREDIT WORTHINESS AS WELL A S THE GENUINENESS OF THE TRANSACTIONS. 10. BUT IN THE IMPUGNED CASE, WE NOTED THAT THE ASS ESSEE HAS SUBMITTED ALL THE EVIDENCES INCLUDING THE CONFIRMAT ION OF THE CREDITORS. THIS IS NOT A CASE WHERE THE CREDITORS H AVE NOT GIVEN CONFIRMATIONS RATHER THEY HAVE DULY CONFIRMED TO GI VING LOAN TO THE ASSESSEE, THE LOANS WERE RECEIVED AND RETURNED THRO UGH BANKING CHANNELS. THE ASSESSEE HAS ALSO SUBMITTED COPIES OF BANK ACCOUNTS. THE LENDER HAS NOT DEPOSITED CASH INTO BANK ACCOUNT . THE ASSESSEE HAS DULY DISCHARGED THE ONUS WITH REGARD TO IDENTIT Y OF THE LENDER, CREDIT WORTHINESS OF THE PARTY AND ALL SUPPORTING E VIDENCES AS REQUIRED U/S. 68 OF THE I.T.ACT. THEREFORE, IN OUR OPINION THE DECISIONS RELIED UPON BY THE DR DOES NOT ASSIST THE REVENUE TO THE FACTS OF THE PRESENT CASE. 11. WE HAVE ALSO GONE THROUGH THE DECISIONS RELIED UPON BY THE LEARNED AR. WE NOTED THAT THIS TRIBUNAL IN SIMILAR CIRCUMSTANCES IN THE CASE OF KOMAL AGROTECH PVT. LTD. VS. ITO IN ITA NO. 437/HYD/2016 VIDE ITS ORDER DATED 25.11.2016 HAS HE LD AS UNDER: A PLAIN READING OF THE ASSESSMENT ORDER DEMONSTRATE S THAT THE AO MERELY WENT BY THE INVESTIGATION DONE B Y THE OFFICE OF D G. I T (INVESTIGATION), MUMBAI. NO SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 22 ENQUIRIES OR INVESTIGATION WAS CARRIED OUT. NO EVIDENCE TO CONTROVERT THE CLAIMS OF THE ASSESSEE W AS BROUGHT ON THE RECORD BY THE AO. EVEN THE STATEMENT OF SHRI PRAVEEN KUMAR WAS SUPPLIED. NOTHING IS ON RECORD ABOUT THE RESULT IF INVESTIGATIONS DONE BY DGIT (INV), MUMBAI. THE PAPERS FILED BY THE ASSESSE E DO DEMONSTRATE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ADDITION IS MAD E MERELY ON SURMISES AND CONJECTURES. IN VIEW OF THE ABOVE, WE HOLD THAT THE ADDITION MAD E UNDER SECTION 68 OF THE ACT IS BAD IN LAW. WE NOTED THAT IN THE SAID CASE ALSO LOAN HAD BEEN R ECEIVED FROM JAVDA INDIA IMPEX LTD. 12. BEING CONSISTENT WITH THE VIEW TAKEN BY THIS CO -ORDINATE BENCH IN THE CASE OF KOMAL AGROTECH PVT. LTD. (SUPR A), AND IN VIEW OF THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDERS OF THE CIT(A). IT IS ACCORD INGLY, CONFIRMED FOR BOTH THE YEARS UNDER APPEAL. 13. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. 12. IN VIEW OF THE ABOVE DISCUSSION WE DO NOT FIND ANY ILLEGALITY AND INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) IN DELETING THE ADDITION MADE TOWARDS UNPROVED UNSECURED LOANS AND THEREFORE WE AFFIRM THE ORDER OF THE LD.CIT(A). ITA.NOS.3902 TO 3096/MUM/2017 FOR ASSESSMENT YEARS 2009-10 TO 2013-14 :- 13. THE FACTS BEING IDENTICAL IN THE APPEALS FOR T HE ASSESSMENT YEARS 2009-10 TO 2013-14, THE DECISION TAKEN BY US IN THE APPEAL FOR THE ASSESSMENT YEAR 2008-09 SHALL APPLY MUTATIS-MUTANDIS TO THE APPEALS FOR THE ASSESSMENT YEARS 2009-10 TO 2013-14 . 14. IN THE RESULT ALL THE APPEALS OF THE REVENUE AR E DISMISSED. 2.8. IN THE AFORESAID CASE, SEARCH PROCEEDINGS WER E CARRIED OUT IN THE CASE OF PRAVIN KUMAR JAIN GROUP, WHEREIN, SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 23 SHRI PRAVIN KUMAR JAIN SAID TO HAVE DEPOSED BEFORE THE AUTHORITIES THAT HE WAS INDULGED IN PROVIDING ACCOM MODATION ENTRIES IN THE FORM OF BOGUS BILLS/SALE BILLS AND U NSECURED LOANS. AS PER THE INFORMATION, THE ASSESSEE INVOLVE D IN THE CASE WAS BENEFICIARY OF SUCH ACCOMMODATION ENTRIES. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE GENUINENESS OF UNSECURED LOANS AND IDENTITY AND CREDITWORTHINESS. THE ASSESSEE FURNISHED LOAN CONFIRMATION, BANK STATEMEN T, IT RETURNS ACKNOWLEDGMENT OF LENDER COMPANIES AND THE PROOF OF BORROWABLE THROUGH REGULAR BANKING CHANNEL. THE BENCH CONSIDERED THE FACTUAL MATRIX AND HELD THAT NO ADDI TION CAN BE MADE TOWARDS ALLEGED UNSECURED LOANS. IDENTICAL ARE THE FACTS IN THE PRESENT APPEAL BEFORE US. THUS, THIS C ASE CLEARLY SUPPORTS THE CASE OF THE ASSESSEE. IDENTICAL RATIO WAS LAID DOWN IN THE CASE OF DCIT VS BAIRAGRA BUILDERS PVT. LTD. (ITA NO.4691 AND 4692/MUM/2015), ORDER DATED 14/09/2017 FROM THE MUMBAI BENCH OF THE TRIBUNAL. 2.9. THE HON'BLE DELHI HIGH COURT IN CIT VS LAXMAN INDUSTRIAL RESOURCES LTD. (ITA NO.169 OF 2017)(DEL) , HELD AS UNDER:- SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 24 THE INCOME TAX APPELLATE TRIBUNAL'S (ITAT) ORDER UPHOLDING THE APPELLATE COMMISSIONER'S OPINION THAT THE ADDITIONS MADE IN THE COURSE OF REASSESSMENTS WERE UNSUSTAINABLE, WERE CHALLENGED BY THE REVENUE. THE REASSESSMENT NOTICE WAS ISSUED TO THE ASSESSEE FOR AY 2002- 03 ON THE GROUND THAT INFORMATION RECEIVED FROM THE INVESTIGATION WING POINTED TO ITS BEING THE BENEFICIARY OF THE ACCOMMODATION ENTRIES THAT WERE SUBJECTED TO ADDITION UNDER SECTION 68. THE ASSESSI NG OFFICER (AO), IN THE REASSESSMENT PROCEEDINGS, ADDED A SUM OF 70,77,290/- . UPON APPEAL, THE CIT(A) TOOK N OTE OF THE MATERIALS FILED BY THE ASSESSEE AND PROVIDED AN OPPORTUNITY TO THE AO TO REMAND PROCEEDINGS. THE AO MERELY OBJECTED TO THE MATERIALS FURNISHED BUT DID NOT UNDERTAKE ANY VERIFICATION. THE CIT(A), FOUND FAVOU R WITH THE ASSESSEE, AND DIRECTED THAT THE AMOUNTS BROUGHT TO TAX SHOULD BE DELETED INTER ALIA OBSERVING AS FOLLOWS: .........RELIANCE IS PLACED ON THE FOLLOWING DECISI ONS OF THE APEX COURT AND THE JURISDICTIONAL HIGH COURT OF DEL HI:- (I) CIT V. LOVELY EXPORTS (P) LTD. 2008 (216) CTR (SC) 195: (II) CIT V. DIVINE LEASING & FINANCE LTD. 2007 (299) ITR 268 (DEL). HON 'BLE DELHI HIGH COURT IN PARAS 1 3 & 16 HAS HELD AS UNDER:- '13. THERE CANNOT BE TWO OPINIONS ON THE ASPECT THA T THE PERNICIOUS PRACTICE OF CONVERSION OF UNACCOUNTED MO NEY THROUGH THE MASQUERADE OR CHANNEL OF INVESTMENT IN THE SHARE CAPITAL OF A COMPANY MUST BE FIRMLY EXCORIATE D BY THE REVENUE. EQUALLY, WHERE THE PREPONDERANCE OF EVIDENCE INDICATES ABSENCE OF CULPABILITY AND COMPL EXITY OF THE ASSESSEE IT SHOULD NOT BE HARASSED BY THE REVEN UE'S SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 25 INSISTENCE THAT IT SHOULD PROVE THE NEGATIVE. IN TH E CASE OF A PUBLIC ISSUE. THE COMPANY CONCERNED CANNOT BE EXPECTED TO KNOW EVERY DETAIL PERTAINING TO THE IDE NTITY AS WELL AS FINANCIAL WORTH OF EACH OF ITS SUBSCRIBERS. THE COMPANY MUST, HOWEVER, MAINTAIN AND MAKE AVAILABLE TO THE ASSESSING OFFICER FOR HIS PERUSAL, ALL THE INFORMAT ION CONTAINED IN THE STATUTORY SHARE APPLICATION DOCUME NTS. IN THE CASE OF PRIVATE PLACEMENT THE LEGAL REGIME WOUL D NOT BE THE SAME. A DELICATE BALANCE MUST BE MAINTAINED WHI LE WALKING THE TIGHTROPE OF SECTIONS 68 AND 69 OF THE IT ACT. THE BURDEN OF PROOF CAN SELDOM BE DISCHARGED TO THE HILT BY THE ASSESSEE: IF THE ASSESSING OFFICER HARBOURS DOU BTS OF THE LEGITIMACY OF ANY SUBSCRIPTION HE IS EMPOWERED, NAY DUTY-BOUND, TO CARRY OUT THOROUGH INVESTIGATION S. BUT IF THE ASSESSING OFFICER FAILS TO UNEARTH ANY WRONG OR ILLEGAL DEALINGS, HE CANNOT OBDURATELY ADHERE TO HI S SUSPICIONS AND TREAT THE SUBSCRIBED CAPITAL AS THE UNDISCLOSED INCOME OF THE COMPANY. 16. IN THIS ANALYSIS, A DISTILLATION OF THE PRECEDE NTS YIELDS THE FOLLOWING PROPOSITIONS OF LAW IN THE CON TEXT OF SECTION 68 OF THE INCOME TAX ACT. THE ASSESSEE HAS TO PRIMA FACIE PROVE (1) THE IDENTITY OF THE CREDITOR/SUBSCRIBER; (2) THE GENUINENESS OF THE TRANSACTION, NAMELY: WHETHER IT HAS BEEN TRANSMITTE D THROUGH BANKING OR OTHER INDISPUTABLE CHANNELS: (3) THE CREDITWORTHINESS OR FINANCIAL STRENGTH OF THE CREDITOR/SUBSCRIBER: (4) IF RELEVANT DETAILS OF THE ADDRESS OR PAN IDENTITY OF THE CREDITOR/SUBSCRIBER ARE FURNISH ED TO THE DEPARTMENT ALONG WITH COPIES OF THE SHAREHOLDERS RE GISTER, SHARE APPLICATION FORMS, SHARE TRANSFER REGISTER ET C. IT WOULD CONSTITUTE ACCEPTABLE PROOF OR ACCEPTABLE EXPLANATION BY THE ASSESSEE. (5) THE DEPARTMENT WOULD NOT BE JUSTIFIED IN DRAWING AN ADVERSE INFERE NCE ONLY BECAUSE THE CREDITOR/SUBSCRIBER FAILS OR NEGLECTS T O RESPOND TO ITS NOTICES: (6) THE ONUS WOULD NOT STAND DISCHA RGED IF THE SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 26 CREDITOR/SUBSCRIBER DENIES OR REPUDIATES THE TRANSA CTION SET UP BY THE ASSESS CC NOR SHOULD THE ASSESSING OFFICE R TAKE SUCH REPUDIATION AT FACE VALUE AND CONSTRUE IT, WIT HOUT MORE, AGAINST THE ASSESS CC. (7) THE ASSESSING OFFI CER IS DUTY-BOUND TO INVESTIGATE THE CREDITWORTHINESS OF THE CREDITOR/SUBSCRIBER THE GENUINENESS OF THE TRANSACTION AND THE VERACITY OF THE REPUDIATION. II() CIT VS. VALUE CAPITAL SERVICES LTD. (2008) 307 ITR 334 (DD.) HON'BLE DELHI HIGH COURT HAS HELD AS UNDER: - '5. WHILE SETTING ASIDE THE ORDER OF THE COMMISSION ER OF INCOME-TAX (APPEALS), THE TRIBUNAL RELIED UPON TWO DECISIONS OF THIS COURT, NAMELY CIT V. STELLAR INVE STMENT LTD. [1991J 192 ITR 287 AND A FULL BENCH DECISION IN CIT V. SOPHIA FINANCE LTD [1994] 205 ITR 98. SEVERAL OTHER DECISIONS HAVE BEEN RENDERED BY THIS COURT FOLLOWIN G THE ABOVE TWO DECISIONS. THE PRINCIPLE THAT HAS BEE N LAID DOWN BY THE VARIOUS DECISIONS RENDERED BY THIS COUR T FROM TIME TO TI/NE IS THAT IF THE EXISTENCE OF THE APPLI CANT IS PROVED, NORMALLY NO FURTHER INQUIRY IS NECESSARY. 6. LEARNED COUNSEL FOR THE REVENUE SUBMITS THAT THE CREDITWORTHINESS OF THE APPLICANTS CAN NEVERTHELESS BE EXAMINED BY THE ASSESSING OFFICER. IT IS QUITE OBVI OUS THAT IS VERY DIFFICULT FOR THE ASSESSEE TO SHOW THE CRED IT-WORTHINESS OF STRANGERS. IF THE REVENUE HAS ANY DOUBT WITH REG ARD TO THEIR ABILITY TO MAKE THE INVESTMENT. THEIR RETURNS MAY BE REOPENED BY THE DEPARTMENT. 7. IN ANY CASE WHAT IS CLINCHING IS THE ADDITIONAL BUR DEN ON THE REVENUE. IT MUST SHOW THAT EVEN IF THE APPLI CANT DOES NOT HAVE THE MEANS TO MAKE THE INVESTMENT, THE INVE STMENT MADE BY THE APPLICANT ACTUALLY EMANATED FROM THE CO FFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS TH E UNDISCLOSED INCOME OF THE ASSESS CC. THIS HAS NOT BEEN DONE IN SO FAR AS SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 27 THE PRESENT CASE IS CONCERNED AND THAT HAS BEEN NOT ED BY THE TRIBUNAL ALSO. 8. UNDER THE CIRCUMSTANCES, WE ARE OF THE THE VIEW THA T THE TRIBUNAL HAS NOT COMMITTED ANY ERROR IN DELETIN G THE ADDITION. 9. NO SUBSTANTIAL QUESTION OF LAW ARISES ' IV) CIT VS. TDI MARKETING PVT. LTD. (2009) 26 DTR (DEL. ) 358, AND V) BHAV SHAKTI STEEL MINES (P) LTD. V. CIT (2009) 179 TAXMNAN 25. WHEREIN THE HON 'BIE DELHI HIGH COURT H AS OBSERVED AS UNDER: - 'IN ANY EVENT WE ALSO NOTE THAT THE SUPREME COURT I N THE CASE OF CIT V. LOVELY EXPORTS (F) LTD. [2008] 216 CTR 19 5 CONSIDERED THE QUESTION AS TO WHETHER THE SHARE APP LICATION MONEY CAN BE REGARDED AS UNDISCLOSED INCOME UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. THE SUPREME COURT DISMISSING THE SLP OBSERVED THAT IF THE SHARE MONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BO GUS SHAREHOLDERS WHOSE NAMES ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO ASSESS TH EM INDIVIDUALLY IN ACCORDANCE WITH LAW. THE SUPREME CO URT DID NOT FIND ANY INFIRMITY WITH THE IMPUGNED JUDGMENT O F THE HIGH COURT WHICH WAS A COMMON ORDER ALONG WITH THE DECISION IN CIT V. DIVINE LEASING & FINANCE LTD. [2 008) 299 ITR 268 (DELHI). SINCE THE COMMISSIONER OF INCO ME-TAX (A) HAS NOT ONLY FOUND THAT THE IDENTITY OF EACH OF THE SHAREHOLDERS STOOD ESTABLISHED, BUT HAS ALSO EXAMIN ED THE FACT THAT EACH OF THEM WERE INCOME-LAX ASS ESSEES A ND HAD DISCLOSED THE SHARE APPLICATION MONEY IN THEIR ACCO UNTS WHICH WERE DULY REFLECTED IN THEIR INCOME-TAX RETUR N AS WELL AS IN THEIR BALANCE SHEETS. IN THESE CIRCUMSTA NCES WE SEE MERIT IN WHAT THE LEARNED COUNSEL FOR THE APPELLANT HAS SUBMITTED AND WE FEEL THAT THE TRIBUN AL WAS SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 28 UNJUSTIFIED INCOMING TO THE CONCLUSION THAT THE C'I T(A) HAD NOT CONSIDERED THE MATTER IN THE RIGHT PERSPECTIVE. CONSEQUENTLY, WE DECIDE THE QUESTION IN FAVOR OF TH E ASSESSEE AND SET ASIDE THE ORDER PASSED BY THE TRIBUNAL.' 5.4 IN THE PRESENT CASE THE ASSESSEE CAN BE SAID TO HAVE DISCHARGED ITS ONUS UNDER SECTION 68 OF THE AC T. THE APPELLANT HAS GIVEN ALL THE NECESSARY DETAILS IN OR DER TO ESTABLISH THE IDENTITY OF THE SHARE APPLICANTS. AFT ER CONSIDERING THE ENTIRE MATERIAL PLACED ON RECORD, I T IS FAIR TO CONCLUDE THAT THESHARE APPLICANTS WERE EXISTING PARTIES AND THE PAYMENTS WERE MADE THROUGH BANKING CHANNELS , IT IS ALSO OBSERVED THAT THE ASSESSING OFFICER COULD NOT POINT OUT ANY DISCREPANCY IN THE EVIDENCES RELIED UPON BY THE ASSESSEE, HE HAS NEITHER BROUGHT OUT ANY DIRECT OR INFERENTIAL EVIDENCE TO CONTRADICT THE CONTENTION OF THE ASSESS EE. IT IS FURTHER OBSERVED THAT EVEN THOUGH A. 0. HAS VAST PO WERS U/S 131 AND 133(6) OF THE ACT, HE HAS NOT USED ANY OF H IS POWERS TO VERIFY THE GENUINENESS OF THE CLAIIN OF THE ASSE SSEE BY VERIFYING THE DOCUMENTS FURNISHED BY IT. IF A. 0. H AD DOUBTED THE IMPUGNED TRANSACTION AFTER RECEIVING TH E EVIDENCES (IN THE REMAND PROCEEDINGS IN TERMS OF RU LE 46A(3) OF THE INCOME-TAX RULES, 1962) WHICH HAD BEE N PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM IT WAS VERY MUCH OPEN TO THE A. 0. TO DO HIS INDEPENDENT ENQUIR Y AND VERIFICATION, THIS HAS NOT BEEN DONE BY THE A.0. TH OUGH, THE SHARE-APPLICANTS COULD NOT BE EXAMINED BY THE A 0, SINCE THEY WERE EXISTING ON THE FILE OF THE INCOME TAX DEPARTMENT AND THEIR INCOME-TAX DETAILS WERE MADE AVAILABLE TO THE AO, IT WAS EQUALLY THE DUTY OF THE AO TO HAVE TAKEN STEPS TO VERIFY THEIR ASSESSMENT RECORDS AND IF NECESSARY TO ALSO HAVE THEM EXAMINED BY THE RESPECT IVE A OS HAVING JURISDICTION OVER THEM (SHARE-APPLICANTS) , WHICH SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 29 HAS NOT BEEN DONE BY HIM. 5.5 THE A 0 HAS ALSO GIVEN A FINDING THAT ALL THE S HARE- APPLICANTS WERE ENTRY OPERATORS AS PER THE INFORMATION AVAILABLE ON THE BASIS OF THE INVESTIGA TION CONDUCTED BY THE INVESTIGATION WING OF THE INCOME T AX DEPARTMENT. AS CONTENDED ON BEHALF OF THE APPELLANT , THE I. D. ASSESSING OFFICER DID NOT PROVIDE ANY SUCH INFORMATION TO THE ASSESS CC TO REBUT THE ADVERSE M ATERIAL IF ANY AND HE DID NOT AFFORD ANY OPPORTUNITY OF CROSS EXAMINATION OF ALL THE ADVERSE MATERIAL ON THE BASI S OF WHICH IMPUGNED ADDITION HAS BEEN MADE IN THE ASSESSMENT ORDER. IT IS SETTLED PROPOSITION OF LAW THAT THE INFORMATION GATHERED BEHIND THE BACK OF THE ASSESSE E CANNOT BC USED AGAINST HIM UNLESS UNTIL AN OPPORTUN ITY OF REBUTTING THE SAME IS GIVEN TO THE ASSESSEE, IT IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. RELIANCE IS PLACED ON THE DECISION OF HON 'BLE SUPREME COURT IN CASE OF PRAKA SH CHAND NAHTA V. UNION OF INDIA 12001J 247 ITR 274 IN SUPPORT OF THE PROPOSITION THAT CROSS-EXAMINATION OF THE WITNESS IS MUST, BEFORE THE AO RELIES ON THE ON THE STATEMENT OF THE WITNESS FOR MAKING ADDITION. RELIA NCE IS ALSO PLACED ON THE DECISION OF ALLAHABAD HIGH COURT IN T HE CASE OF NATHU RAIN PRCMCHAND V. CIT [1963] 49 ITR 561, WHER EIN THE HON'BLE COURT EXPLAINED THAT IT WAS THE DUTY OF THE ASSESSING OFFICER TO ENFORCE THE ATTENDANCE OF A WI TNESS. IF HIS WITNESS IS MATERIAL IN EXERCISE OF HIS POWERS U NDER ORDER 16. RULE 10 OF CPC AND WHERE THE O FF ICER DOES NOT DO SO, NO INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE. REL IANCE IS ALSO PLACED ON THE DECISION OF THE JURISDICTIONAL H IGH COURT, I.E. DELHI HIGH COURT IN CIT V. PRADEEP' KUM AR GUPTA AND- VIJAY GUPTA (2008) 303 ITR 95 (DEL) WHER EIN IT WAS HELD THAT REOPENING OF ASSESSMENT IS NOT PERMIS SIBLE ON SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 30 MERE ADVERSE STATEMENTS FROM OTHERS. SUCH STATEMENT BY ITSELF DOES NOT CONSTITUTE INFORMATION, UNLESS THE ASSESSI NG OF HAS MADE ENQUIRIES THEREON AND INFERRED UNDERSTATEMENT OR INCOME. LAIN THEREFORE INCLINED T O AGREE WITH THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT TO THE EFFECT THAT THE INFORMATION ,IF ANY, GATHERED BEHIND THE BACK OF THE ASSESSEE WITHOUT BEING SUBJE CTED TO CROSS EXAMINATION CANNOT BE FULLY ADMITTED AS EVIDENCE AGAINST THE ASSESSEE. 5.6 UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE STATED ABOVE, IT IS HELD THAT THE ADDITION OF RS. 70,00,0001- CAN NOT BE SUSTAINED AND ACCORDINGLY, T HE SAME IS DIRECTED TO BE DELETED. THE CONSEQUENTIAL ADDITI ON ON ACCOUNT OF COMMISSION OF RS. 70,000/- FOR OBTAIN ING THE SAID ACCOMMODATION ENTRIES IS ALSO DIRECTED TO BE DELETED. AS A RESULT, GROUNDS NO.5,6, 7,8 AND 9 ARE ALLOWED.' THE ITAT CONFIRMED THE OPINION OF THE CIT(A). IT IS ARGUED BY THE REVENUE THAT THE HAT SHOULD HAV E TAKEN APPROPRIATE STEPS AND REMITTED THE MATTER, NOT MERE LY CONFIRMING THE CIT(A)'S OPINION SINCE THE INVESTIGA TION WING'S REPORT CONFIRMED UNEQUIVOCALLY THAT THE ASSE SSEE WAS BENEFICIARY TO BOGUS TRANSACTIONS WHEREBY THE GENUINENESS OF IDENTITY OF THE SHAREHOLDERS, THE GENUINENESS AND IDENTITY OF THE SHARE APPLICANTS AN D THE GENUINENESS OF TRANSACTIONS WAS SUSPECT. THIS COURT NOTICES THAT THE ASSESSEE HAD PROVIDED SEVERAL DOCUMENTS THAT COULD HAVE SHOWED LIGHT INTO WHETHER TRULY THE TRANSACTIONS WERE GENUINE. IT WAS NOT A CASE WHERE THE SHARE APPLICANTS ARE MERELY SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 31 PROVIDED CONFIRMATION LETTERS. THEY HAD PROVIDED THEIR PARTICULARS, PAN DETAILS, ASSESSMENT PARTICUL ARS, MODE OF PAYMENT FOR SHARE APPLICATION MONEY, I.E. THROUGH BANKS, BANK STATEMENTS, CHEQUE NUMBERS IN QUESTION, COPIES OF MINUTES OF RESOLUTIONS AUTHORIZ ING THE APPLICATIONS, COPIES OF BALANCE SHEETS, PROFIT AND LOSS ACCOUNTS FOR THE YEAR UNDER CONSIDERATION AND EVEN BANK STATEMENTS SHOWING THE SOURCE OF PAYMENTS MADE BY THE COMPANIES TO THE ASSESSEE AS WELL AS TH EIR MASTER DEBT WITH ROC PARTICULARS. THE AO STRANGELY FAILED TO CONDUCT ANY SCRUTINY OF DOCUMENTS AND RES TED CONTENT BY PLACING RELIANCE MERELY ON A REPORT OF T HE INVESTIGATION WING. THIS REVEALS SPECTACULAR DISREG ARD TO AN AO'S DUTIES IN THE REMAND PROCEEDINGS WHICH T HE REVENUE SEEKS TO INFLICT UPON THE ASSESSEE IN THIS CASE. NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEAL I S DISMISSED. 2.10. HON'BLE RAJASTHAN HIGH COURT IN SUPERTECH DIAMOND TOOLS (P) LTD. (44 TAXMAN.COM 460)(RAJASTHA N) OBSERVED/HELD AS UNDER:- BY WAY OF THIS APPEAL UNDER SECTION 260A OF THE IN COME-TAX ACT, 1961 ('THE ACT'), THE REVENUE SEEKS TO QUESTION THE ORDE R DATED 19.01.2012 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH , JODHPUR ('ITAT') IN ITA NO.211/JODH/2009 FOR THE ASSESSMENT YEAR 2004-0 5 WHEREBY, THE ITAT HAS AFFIRMED THE ORDER DATED 09.02.2009 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL, JAIPUR ['CIT(A)'] PARTLY ALLOWING THE APPEAL PREFERRED BY THE ASSESSEE AND DELETING THE A DDITIONS MADE BY THE ASSESSING OFFICER ('AO') IN THE ASSESSMENT ORDER DA TED 28.12.2007 TO THE TUNE OF RS. 79,80,000/- ON ACCOUNT OF UNEXPLAINED S HARE CAPITAL CONTRIBUTION SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 32 AND RS. 19,950/- ON ACCOUNT OF UNEXPLAINED EXPENDIT URE ON COMMISSION FOR GETTING ACCOMMODATION ENTRIES. 2. PUT IN BRIEF, THE RELEVANT BACKGROUND ASPECTS OF T HE MATTER ARE AS FOLLOWS : THE RESPONDENT COMPANY IS ENGAGED IN MANUFACTURING OF THE SEGMENTS USED IN THE MARBLE SAWING. THE COMPANY CAME INTO EXISTEN CE ON 16.06.2003. THUS, THE PREVIOUS YEAR RELATED WITH THE ASSESSMENT YEAR 2004-05 HAD BEEN THE FIRST YEAR OF THE BUSINESS OF THE ASSESSEE COMP ANY. IN THE ORIGINAL RETURN FILED ON 01.11.2004 UNDER SECTION 139 OF THE ACT, T HE ASSESSEE COMPANY DECLARED A LOSS OF RS.3,88,740/- . IT APPEARS THAT SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WERE CARRIED OUT ON 23 .01.2006 AT THE BUSINESS PREMISES OF THE ASSESSEE ALONG WITH THE RESIDENTIAL AS WELL AS OTHER BUSINESS PREMISES OF CHOUDHARY GROUP OF CASES; AND PURSUANT THERETO, NOTICES UNDER SECTION 153A WERE ISSUED. IN THE RETURN FILED ON 06 .12.2006 IN RESPONSE TO THE NOTICE UNDER SECTION 153A, THE ASSESSEE COMPANY DECLARED A LOSS OF RS.3,38,740/- 3. ON THE RETURN SO FILED, THE ASSESSMENT WAS COMPLET ED ON 28.12.2007 AT THE TOTAL INCOME OF RS. 76,61,210/- WHEREIN, THE ASSESS ING OFFICER PROCEEDED TO MAKE AN ADDITION OF RS. 79,80,000/- ON ACCOUNT OF S HARE CAPITAL AND SHARE PREMIUM ALLEGED TO HAVE BEEN RECEIVED FROM FIVE DEL HI BASED COMPANIES. ANOTHER AMOUNT OF RS. 19,950/- WAS ALSO ADDED AS BE ING THE COMMISSION PAID FOR ARRANGING ENTRIES FOR SHARE CAPITAL AND SH ARE PREMIUM. IN THIS REGARD, THE AO RELIED UPON THE STATEMENTS MADE BY T HE PERSONS RELATED WITH THE SAID DELHI BASED COMPANIES, INCLUDING ONE SHRI PRADEEP KUMAR JINDAL. THE AO OBSERVED THAT THOUGH THEY HAD CONFIRMED ABOU T THE COMPANIES HAVING PURCHASED THE SHARES OF THE ASSESSEE COMPANY AND SUCH COMPANIES BEING ASSESSED TO TAX BUT IT WAS ADMITTED IN THEIR STATEMENTS THAT THEY WERE ENGAGED IN THE BUSINESS OF SALE AND PURCHASE OF SHA RES AND PROVIDING ACCOMMODATION ENTRIES IN LIEU OF COMMISSION. THE AO CONCLUDED THAT THE ASSESSEE HAD ROUTED ITS UNDISCLOSED FUNDS THROUGH T HE BANKING CHANNELS OF THE ACCOMMODATION ENTRY PROVIDERS AND HENCE PROCEED ED TO MAKE THE ADDITION. 4. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 28.12 .2007, THE RESPONDENT ASSESSEE FILED AN APPEAL WHICH WAS PARTLY ALLOWED B Y THE CIT(A) IN THE ORDER DATED 09.02.2009. IT IS NOTICED THAT THE CIT( A) CONSIDERED THE MATTER IN THOROUGH DETAIL AND EVEN DISCUSSED THE MATTER WI TH THE LEARNED ASSESSING OFFICER THREADBARE. THE CIT(A) FOUND THAT THE STATE MENT MADE BY A THIRD PARTY AT THE BACK OF ASSESSEE COULD NOT HAVE BEEN U TILIZED AGAINST THE ASSESSEE WITHOUT PROVIDING AN OPPORTUNITY OF CROSS- EXAMINATION, WHICH WAS NOT AFFORDED BY THE AO. THE CIT (A) ALSO FOUND THAT THE AO COULD NOT BRING ANY MATERIAL TO DISAPPROVE THE GENUINENESS OF CONFI RMATIONS AND AFFIDAVITS; AND FOLLOWING THE DECISION OF THE HON'BLE SUPREME C OURT IN THE CASE OF CIT V. LOVELY EXPORTS (P.) LTD. [2008] 216 CTR 195 , FOUND THE ADDITIONS UNSUSTAINABLE; AND PROCEEDED TO DELETE THE SAME. TH E CIT(A), INTER ALIA, OBSERVED AND HELD AS UNDER: 'HOWEVER, THE ASSESSEE FILED CONFIRMATIONS ALONG WI TH THE AFFIDAVIT OF THE DIRECTORS OF THE 5 PURCHASING COMPANIES WHO HAD CON FIRMED THAT THEY HAVE SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 33 PURCHASED THE REGULAR SHARE AND PREMIUM SHARES TOTA L AT RS.79,80,000/- FROM THE ASSESSEE-COMPANY AND MADE THE PAYMENT THROUGH A CCOUNT PAYEE DRAFT. IT IS ALSO FACT THAT THE LD. A.O. MADE DIRECT INDEPEND ENT INQUIRY FROM THE DIRECTORS OF THE PURCHASER COMPANY BY ISSUING A LET TER U/S 133(6) OF THE I.T. ACT 1961. THE LD. A.O. SH. V.K. CHAKARVARTY WAS HEA RD AND THE CASE WAS DISCUSSED WITH HIM. ON PERUSAL OF LETTER U/S 133(6) I FIND THAT NO CONFIRMATIONS OR COMMENT WAS ASKED FROM THE DIRECTO RS OF THE PURCHASER COMPANY ABOUT THEIR STATEMENT IN THE SEARCH AND SEI ZURE OPERATION IN THEIR CASE. THE LD. A.O'S ONLY REASON FOR REJECTING THE C ONFIRMATIONS AND AFFIDAVITS FILED BY AFORESAID DIRECTORS OF THE PURCHASER COMPA NIES WAS THAT THE DIRECTORS DID NOT RETRACTED THEIR STATEMENT IN SUCH CONFIRMATIONS OR AFFIDAVITS. THE LD. A/R'S CONTENTION IS THAT THE DI RECTORS OF THE PURCHASER COMPANIES HAVE FULLY REPLIED AGAINST THE LD. A.O'S LETTER U/S 133(6). THERE IS NO QUESTION TO RETRACT AGAINST ANYTHING WHICH IS NO T MENTIONED IN THE LETTER U/S 133(6). THEREFORE, THE REJECTION OF CONFIRMATIO NS AND AFFIDAVITS FILED BY THE DIRECTORS OF THE PURCHASING COMPANIES WAS NOT J USTIFIED AND THE VARIOUS CASE LAWS RELIED BY HIM IS STILL APPLICABLE IN THIS CASE AND BINDING ON THE DEPARTMENT. MOREOVER THE LD. A/R ALSO SUBMITS THAT THE STATEMENT MADE BY THIRD PARTY ON THE BACK OF THE ASSESSEE CAN NOT BE UTILIZED AGAINST HIM WITHOUT GIVING HIM OPPORTUNITY OF CONFRONTATION OR CROSS-EXAMINATION OF SUCH PERSONS MAKING SUCH STATEMENT. THIS OPPORTUNIT Y WAS NOT PROVIDED BY THE LD. A.O. UNDER SUCH CIRCUMSTANCES THE ADDITION ON ACCOUNT OF RECEIPT OF MONEY FOR REGULAR AND PREMIUM SALES OF SHARES CAN N OT BE SUSTAINED. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , PARTICULARLY THAT THE LD. A.O COULD NOT BRING ANY MATERIAL TO DISPROVE THE GE NUINENESS OF THE CONFIRMATIONS AND AFFIDAVITS AND FOLLOWING THE CASE LAWS MENTIONED SUPRA, PARTICULARLY THE RECENT DECISION OF SUPREME COURT I N THE CASE OF CIT V/S LOVELY EXPORTS PVT. LTD (2008) 6 DJR SC 308 AND OTH ER DECISIONS OF JURISDICTIONAL HIGH COURT AND JURISDICTIONAL ITAT, I HOLD THAT ADDITION OF RS.79,80,000/- ON ACCOUNT OF RECEIPT FOR SALES OF R EGULAR SHARES AND PREMIUM SHARES OF THE COMPANY AS UNEXPLAINED SHARE CAPITAL IS NOT JUSTIFIED AND THE SAME IS DELETED. THE A.O. IS DIRECTED TO TAKE NECES SARY ACTION AGAINST THE PURCHASER COMPANIES FOR SUCH INVESTMENT IN PURCHASE OF SHARES. CONSEQUENTLY THE A.O'S ADDITION ON ACCOUNT OF COMMI SSION PAYMENT FOR SUCH TRANSACTION TO THE PURCHASER COMPANIES AT A RA TE OF 0.25% AMOUNTING TO RS 19,950/- ALSO CAN NOT SUSTAIN AND THE SAME IS DE LETED.' 5. AGGRIEVED BY THE ORDER DATED 09.02.2009 SO PASSED BY THE CIT(A), THE REVENUE PREFERRED AN APPEAL BEFORE THE ITAT. THE IT AT DISMISSED THE REVENUE'S APPEAL BY THE IMPUGNED ORDER DATED 19.01. 2012 FINDING NO JUSTIFICATION FOR THE ADDITIONS TOWARDS THE SHARE C APITAL, SHARE PREMIUM AND ALLEGED COMMISSION IN THE HANDS OF THE ASSESSEE COM PANY. THE ITAT HAS, INTER ALIA , HELD AND OBSERVED AS UNDER: 'WE HAVE GONE THROUGH WRITTEN SUBMISSIONS OF LD. CI T D/R AND ALSO GONE THROUGH VARIOUS CASE LAWS RELIED UPON AND FOUND THA T THERE IS NO EVIDENCE THAT ASSESSEE HAD PAID ANY COMMISSION AND HAS REFUN DED THE AMOUNT RECEIVED UNDER THE GARB OF SHARE APPLICATION MONEY. VARIOUS CASE LAWS SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 34 RELIED UPON BY LD. D/R ARE IN RESPECT OF CASH CREDI TS ADDED UNDER SECTION 68. AFTER CONSIDERING THE SUBMISSIONS AND VARIOUS CASE LAWS, IT IS SEEN THAT THE SUBMISSION OF LD. CIT D/R IS NOT HELPFUL TO THE CAS E OF REVENUE. THE HON'BLE SUPREME COURT IN CASE OF LOVELY EXPORTS PVT. LTD. H AD CLEARLY HELD THAT EVEN IF THE SHAREHOLDERS ARE BOGUS IN THAT CASE NO ADDITION CAN BE MADE IN THE HANDS OF THE COMPANY BUT AO CAN REOPEN THE CASE S OF SHAREHOLDERS. THE CONTENTION OF LD. CIT D/R THAT IN CASE OF LOVELY EX PORTS PVT. LTD. ONLY BOGUS SHARE APPLICATION WAS FOUND BUT THE INVESTORS WERE GENUINE. HOWEVER, IN THE PRESENT CASE EVEN THERE ARE NO GENU INE INVESTORS AS ALL THE COMPANIES ARE FABRICATED JUST TO PROVIDE ACCOMMODAT ION ENTRIES ONLY AS ADMITTED BY ONE OF THE DIRECTORS I.E. SHRI PRADEEP JINDAL. WHETHER THOSE COMPANIES WERE FICTITIOUS OR BOGUS, THE MOOT QUESTI ON HERE IS THAT WHETHER THE ASSESSEE COMPANY HAD RECEIVED SHARE APPLICATION MONEY OR NOT. IT IS SEEN THAT SHARE CAPITAL WAS RECEIVED THROUGH ACCOUN T PAYEE CHEQUES ALONG WITH PREMIUM AMOUNT TOTALLING TO RS.79,80,000/- FRO M FIVE PRIVATE LIMITED COMPANIES I.E. M/S. SANRAJ ASSOCIATES PVT LTD., M/S . FORTRESS IMPEX PVT. LTD., M/S. SUMIT OVERSEAS PVT. LTD., M/S. PUSHPANJA LI CAPS PVT. LTD. AND M/S. B.P. BUILTECH PVT. LTD. ALL THESE COMPANIES AR E SITUATED AT DELHI. ALL THESE COMPANIES ARE ASSESSED TO TAX AND THEY ARE RE GISTERED UNDER THE COMPANIES ACT. RETURN OF ALLOTMENT OF SHARES IN PRE SCRIBED FORM NO.2 TO THE REGISTRAR OF COMPANIES WAS ALSO FILED BEFORE AS SESSING OFFICER AS WELL AS BEFORE LD. CIT (A). IT IS FURTHER SEEN THAT THE ADDITION IS BASED ON ALLEGED STATEMENT OF SHRI PRADEEP JINDAL RECORDED UNDER SEC TION 131 BEHIND THE BACK OF THE ASSESSEE ON 15.4.2004. THE ASSESSEE WAS NOT EVEN AFFORDED ANY OPPORTUNITY OF CROSS EXAMINATION NOR SHRI PRADEEP J INDAL WAS EXAMINED IN THE COURSE OF ASSESSMENT PROCEEDINGS IN CASE OF ASS ESSEE NOR HE WAS EXAMINED IN PRESENCE OF ASSESSEE COMPANY NOR HE WAS CONFRONTED WITH THE DOCUMENTS OF CONTEMPORARY PERIOD SHOWING INVESTMENT IN SHARES MADE BY THOSE FIVE COMPANIES THROUGH REGULAR BANKING CHANNE L. THEREFORE, IN OUR VIEW, THE INFERENCE DRAWN BY ASSESSING OFFICER WAS NOT CORRECT. EVEN AND OTHERWISE, THE ISSUE IS SQUARELY COVERED BY THE DEC ISION OF HON'BLE SUPREME COURT IN CASE OF M/S. LOVELY EXPORTS PVT. LTD., 6 D TR 308 WHEREIN IT HAS BEEN HELD THAT 'IF THE SHARE APPLICATION MONEY IS RECEIVED BY THE ASSESSEE-COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAMES ARE GIVEN T O THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE WITH LAW, BUT IT CANNOT B E REGARDED AS UNDISCLOSED INCOME OF ASSESSEE-COMPANY.' SIMILAR VIEW HAS BEEN EXPRESSED BY HON'BLE DELHI HI GH COURT IN CASE OF CIT V. DIVINE LEASING AND FINANCE LTD., [2008] 299 ITR 268 (DELHI) . THE HON'BLE RAJASTHAN HIGH COURT HAS TAKEN SIMILAR VIEW IN CASE OF CIT V. SHREE BARKHA SYNTHETICS LTD. [2003] 182 CTR 175 AND AGAIN REPORTED IN 197 CTR 432. EARLIER, THE HON'BLE DELHI HIGH COURT IN CASE OF CIT V. STELLER INVESTMENT LTD. [1991] 192 ITR 287 HAS TAKEN SIMILAR VIEW AND THIS DECISION OF HON'BLE DELHI HIGH COURT HAS B EEN AFFIRMED BY HON'BLE SUPREME COURT IN CIT V. STELLER INVESTMENT LTD. [2001] 251 ITR 263 WHEREIN IT IS HELD THAT SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 35 'IT IS EVIDENT THAT EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASE SHARE CAPITAL WERE NOT GENUINE, NEVERTHELESS, UNDER NO CIRCUMSTANCES CAN THE AMOUNT OF SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE ASSESSEE. IT MAY BE THAT THERE ARE SOME BOGUS SHAREHOLDERS IN WHOSE NAMES THE SHARES HAD BEEN ISSUED AND MONEY MAY HAVE BEEN PROVIDED BY SOME OTHER PERSONS. IF THE ASSESSMENT OF THE PERSONS WHO WERE ALLEGED T O HAVE REALLY ADVANCED THE MONEY IS SOUGHT TO BE REOPENED, THAT WOULD HAVE MADE SOME SENSE BUT WE FAIL TO UNDERSTAND AS TO HOW THIS AMOUNT OF INCR EASED SHARE CAPITAL COULD BE ASSESSED IN THE HANDS OF THE COMPANY ITSELF.' THE FINDINGS IN THESE CASES ARE SQUARELY APPLICABLE ON THE FACTS OF THE PRESENT CASE AND WE NOTED THAT LD. CIT (A) HAS ALRE ADY TAKEN A RECOURSE FOR TAKING ACTION AGAINST THE RESPECTIVE SHAREHOLDERS A S THE ASSESSING OFFICER WAS DIRECTED TO TAKE NECESSARY ACTION AGAINST THE P URCHASER COMPANY FOR SUCH INVESTMENT IN PURCHASE OF SHARES. 10. WE HAVE ALSO CONSIDERED THE CONTENTION OF LD. D /R THAT THE SHARE APPLICATION MONEY WHICH REMAINED UNPROVED CAN BE AD DED UNDER SECTION 68. WE WOULD LIKE TO OBSERVE HERE THAT THERE IS A DIFFE RENCE BETWEEN CASH CREDITOR AND SHAREHOLDER. IN CASE OF CASH CREDITOR, THE CASH CREDITOR HAS RIGHT TO DEMAND THE MONEY BACK FROM THE ASSESSEE. HOWEVER , IN CASE OF SHAREHOLDER, THERE IS NO LIABILITY OF THE COMPANY T O REFUND THE AMOUNT AS THE SHARES CAN BE SOLD IN THE MARKET. THEREFORE, IN CAS E OF CASH CREDITOR, HEAVY ONUS LIES ON THE ASSESSEE TO PROVE WHETHER CASH CRE DITOR WAS GENUINE OR NOT. HOWEVER, IN CASE OF SHAREHOLDER, IT IS HELD BY VARI OUS HIGH COURTS AND HON'BLE SUPREME COURT THAT IF SHAREHOLDERS ARE NOT GENUINE, THEN IN THAT CASE NO ADDITION CAN BE MADE IN THE HANDS OF THE CO MPANY BUT THE CASE CAN BE REOPENED OF THE SHAREHOLDERS FOR ENQUIRING ABOUT THEIR SOURCE OF BUYING THE SHARES IN THE COMPANY. 10.1 THE CONTENTION OF LD. CIT D/R THAT CASH WAS DE POSITED IN THE ACCOUNT OF THE RESPECTIVE FIVE COMPANIES BEFORE ISSUING CHE QUE TO THE ASSESSEE COMPANY FOR ALLOTTING THE SHARES. THEREFORE, THERE IS EVERY LIKELIHOOD THAT CASH DEPOSITED IN THE ACCOUNT OF THOSE COMPANIES WA S BELONGING TO ASSESSEE COMPANY FOR ISSUING CHEQUE UNDER THE GARB OF ISSUIN G SHARES. IN OUR VIEW, THIS CONTENTION IS WITHOUT ANY EVIDENCE AND IF THE CASH DEPOSITED IN THE ACCOUNT OF THOSE COMPANIES THEN ONUS LIES ON THOSE COMPANIES TO PROVE THAT FROM WHICH SOURCE THE CASH HAS BEEN DEPOSITED IN TH EIR ACCOUNT. THEREFORE, THE AO SHOULD EXAMINE THE CASE OF THOSE FIVE COMPAN IES INSTEAD OF MAKING ADDITION IN THE HANDS OF THE ASSESSEE-COMPANY. THE LD. CIT (A) HAS ALREADY DIRECTED, AS STATED ABOVE, TO TAKE ACTION AGAINST T HE RESPECTIVE SHAREHOLDERS AND, THEREFORE, IN OUR VIEW, THE LD. CIT(A) WAS JUS TIFIED IN ALLOWING THE ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WITHOUT GOI NG INTO DETAIL FURTHER, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) WAS JUS TIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE AS THE ISSUE IS SQUARELY COVE RED BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT AS WELL AS BY THE DECISIONS OF HON'BLE SUPREME COURT MENTIONED ABOVE. ACCORDINGLY, WE CONF IRM THE FINDINGS OF LD. CIT (A) ON THIS ISSUE. 12. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISM ISSED.' SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 36 6. SEEKING TO QUESTION THE ORDER SO PASSED BY THE ITA T, IT IS SUBMITTED THAT THE APPROACH OF THE ITAT HAS BEEN FROM AN ALTOGETHE R WRONG ANGLE WHERE IT HAS FAILED TO CONSIDER THAT THE COMPANIES IN WHOSE NAMES INVESTMENTS WERE SHOWN, HAD NO EXPLAINABLE SOURCE OF THE FUNDS FOR I NVESTMENT IN THE ASSESSEE COMPANY; AND THE SOURCE OF THE FUNDS WAS THE CASH D EPOSITS. IT IS SUBMITTED THAT ALL THE REFERRED COMPANIES WERE BEING MANAGED BY SHRI PRADEEP JINDAL, WHO WAS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMM ODATION ENTRIES TO VARIOUS COMPANIES IN LIEU OF COMMISSION; AND WHO HA D ADMITTED THE FACTS IN HIS STATEMENTS RECORDED UNDER SECTION 131 OF THE AC T. IT IS ALSO SUBMITTED THAT IN THE GIVEN STATUS OF RECORD AND THE STATEMEN T OF THE PERSONS RELATED WITH THE ASSESSEE-COMPANY, THE ADDITIONS MADE BY TH E AO HAD BEEN JUSTIFIED AND THERE WAS NO REASON FOR THE CIT(A) IN DELETING THE SAME. 7. HAVING GIVEN THOUGHTFUL CONSIDERATION TO THE SUBMI SSIONS MADE AND HAVING PERUSED THE MATERIAL ON THE RECORD, WE ARE U NABLE TO FIND ANY REASON TO CONSIDER INTERFERENCE; AND ARE CLEARLY OF THE OP INION THAT NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. 8. THE REFERENCE TO THE STATEMENTS MADE BY SOME OF TH E PERSONS RELATED WITH THE SAID INVESTING COMPANIES IS OF NO EFFECT BECAUS E SUCH STATEMENTS COULD NOT HAVE BEEN UTILIZED AGAINST THE ASSESSEE COMPANY WHEN THE ASSESSEE- COMPANY HAD NOT BEEN AFFORDED AN OPPORTUNITY OF CON FRONTING AND CROSS- EXAMINING THE PERSONS CONCERNED. THERE DOES NOT APP EAR ANYTHING OCCURRING IN THE STATEMENTS OF THE PERSONS RELATING WITH THE ASSESSEE-COMPANY SO AS TO PROVIDE A BASIS FOR THE FINDINGS RECORDED BY THE AO . 9. IN ANY CASE, THE POINTS AS SOUGHT TO BE RAISED BY THE APPELLANT IN THE PRESENT CASE ARE ALL THE MATTERS RELATING TO APPREC IATION OF EVIDENCE. THE RELEVANT FACTORS HAVE BEEN TAKEN INTO ACCOUNT AND C ONSIDERED BY THE APPELLATE AUTHORITIES BEFORE RETURNING THE FINDINGS IN FAVOUR OF THE ASSESSEE. AS REGARDS THE REFERRED SHARE CAPITAL CONTRIBUTORS, IT IS NOTICED THAT THEY ARE EXISTING ASSESSEES HAVING PA NUMBERS; AND ARE BEING REGULARLY ASSESSED TO TAX. THE APPELLATE AUTHORITIES CANNOT BE SAID TO HA VE ERRED IN DELETING THE ADDITIONS IN THEIR REGARD AT THE HANDS OF ASSESSEE- COMPANY. 10. ULTIMATELY, THE QUESTION AS TO WHETHER THE SOURCE OF INVESTMENT OR OF CREDIT HAS BEEN SATISFACTORILY EXPLAINED OR NOT REM AINS WITHIN THE REALM OF APPRECIATION OF EVIDENCE; AND THE COURTS HAVE CONSI STENTLY HELD THAT SUCH A MATTER DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTI ON OF LAW. IN THE CASE OF CIT V. ORISSA CORPN. (P) LTD. [1986] 159 ITR 78/25 TAXMAN 80F (SC) , THE HON'BLE SUPREME COURT HELD AS UNDER: '13. IN THIS CASE, THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE R EVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASSESSEES. THEIR INDEX NU MBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICE S UNDER S. 131 AT THE INSTANCE OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGE D CREDITORS TO FIND OUT WHETHER THEY WERE CREDIT-WORTHY OR WERE SUCH WHO CO ULD ADVANCE THE ALLEGED LOANS. THERE WAS NO EFFORT MADE TO PURSUE T HE SO-CALLED ALLEGED SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 37 CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COU LD NOT DO ANY THING FURTHER. IN THE PREMISES, IF THE TRIBUNAL CAME TO T HE CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM, THEN IT COULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDEN CE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES.' 11. IN CIT V. SHREE BARKHA SYNTHETICS LTD. [2004] 270 ITR 477/[2003] 131 TAXMAN 114 (RAJ.) , IN A SIMILAR NATURE OF MATTER, THIS COURT OBSERVE D THAT THE TRIBUNAL HAVING FOUND THAT THE COMPANIES FROM W HICH THE SHARE APPLICATION MONEY HAD BEEN RECEIVED BY THE ASSESSEE -COMPANY WERE GENUINELY EXISTING AND THE IDENTITY OF THE INDIVIDU AL INVESTORS WERE ALSO ESTABLISHED AND THEY HAD CONFIRMED THE FACT OF MAKI NG INVESTMENT, THE FINDING THAT ASSESSEE HAD DISCHARGED INITIAL BURDEN AND ADDITION UNDER SECTION 68 COULD NOT BE SUSTAINED, WAS ESSENTIALLY A FINDING OF FACT. THIS COURT SAID, '19. A PERUSAL OF THE AFORESAID FINDING GOES TO SHO W THAT DELETION HAS BEEN MADE ON APPRECIATION OF EVIDENCE, WHICH WAS ON RECO RD FINDING THAT THERE WAS EXISTENCE OF INVESTORS AND THEIR CONFIRMATION H AS BEEN OBTAINED, WERE FOUND TO BE SATISFACTORY. ALL THESE CONCLUSIONS ARE CONCLUSIONS OF FACT BASED ON MATERIAL ON RECORD AND, THEREFORE, CANNOT BE SAI D TO BE PERVERSE SO AS TO GIVE RISE TO QUESTION OF LAW, WHICH MAY BE REQUIRED TO BE CONSIDERED IN THIS APPEAL UNDER S.260A OF THE IT ACT.' 12. THE RATIO OF THE DECISIONS AFORESAID DIRECTLY APPL IES TO THE PRESENT CASE TOO. HEREIN, AS NOTICED, THE APPELLATE AUTHORITIES HAVE RETURNED THE FINDINGS OF FACT IN FAVOUR OF THE ASSESSEE AFTER DUE APPRECI ATION OF THE EVIDENCE ON RECORD, ON RELEVANT CONSIDERATIONS, AND ON SOUND RE ASONINGS. THESE FINDINGS HAVE NEITHER BEEN SHOWN SUFFERING FROM ANY PERVERSI TY NOR APPEAR ABSURD NOR ARE OF SUCH NATURE THAT CANNOT BE REACHED AT AL L. 13. NEEDLESS TO REITERATE THE LAW LAID DOWN BY THE COU RTS CONSISTENTLY THAT THE DEPARTMENT IS FREE TO PROCEED IN RELATION TO TH E INDIVIDUAL INVESTOR IN ACCORDANCE WITH LAW BUT THE AMOUNT OF INCREASED SHA RE CAPITAL CANNOT BE ASSESSED AT THE HANDS OF THE ASSESSEE COMPANY ITSEL F. 14. IN THE RESULT, THE APPEAL FAILS AND IS, THEREFORE, DISMISSED. 2.11. IN THE CASE OF CIT VS ORCHID INDUSTRIES PVT. LTD. (ITA NO.1433 OF 2014)(BOM.), HON'BLE JURISDICTIONAL HIGH COURT HELD AS UNDER: THE REVENUE HAS FILED THE APPEAL ON FOLLOWING QUES TIONS; '6.3 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, ORDERS OF THE TRIBUNAL WAS PERVERSE IN DELETING THE ADDITION OF RS. SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 38 95,00,000/- MADE U/S. 68 OF THE ACT, RELYING ONLY O N THE DOCUMENTARY EVIDENCE PRODUCED BY THE RESPONDENT COMPANY WHILE I GNORING THE KEY FACTOR THAT THESE ENTITIES WERE NOT TRACEABLE AT TH EIR GIVEN ADDRESSES. 6.4 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE TRIBUNAL ERRED IN NOT APPRECIATING THE OBSERVAT IONS MADE BY THE DELHI HIGH COURT IN NOVA PROMOTERS AND FINLEASE PVT. LTD. 18 TAXMAN.COM 217 WHEREIN THE COURT HAS OBSERVED THAT CASES OF THIS T YPE CANNOT BE DECIDED ONLY ON THE BASIS OF DOCUMENTARY EVIDENCES ABOVE AN D THERE IS NEED TO TAKE INTO ACCOUNT THE SURROUNDING CIRCUMSTANCES. 6.5 THE TRIBUNAL OUGHT TO HAVE TAKEN NOTE OF THE FA CT THAT THE ASSESSEE WAS NOT ABLE TO PRODUCE EVEN A SINGLE PARTY BEFORE THE AO DESPITE AGREEING BEFORE THE CIT(A) THAT IT WILL PRODUCE ALL PARTIES BEFORE THE AO DURING REMAND PROCEEDINGS.' 2. MR. PINTO, THE LEARNED COUNSEL FOR THE ASSESSEE SU BMITS THAT THE ASSESSING OFFICER UPON CONSIDERING ALL THE FACTS HA D ADDED RS. 95 LAKHS AS INCOME UNDER SECTION 68 OF THE INCOME TAX ACT. IT N EEDS TO BE CONSIDERED THAT THE ASSESSEE HAD NOT DISCHARGED ITS ONUS TO ES TABLISH THAT THE AMOUNT WAS RECEIVED BY THE ASSESSEE FROM THE SHARE HOLDERS AS SHARE APPLICATION MONEY. THE ASSESSEE COULD NOT PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDIT WORTHINESS AND THE GENUINENESS OF THE TRANSA CTIONS. THE PARTY FROM WHOM THE ASSESSEE HAD RECEIVED THE SHARE AMOUNT NEV ER RESPONDED TO THE SUMMONS ISSUED BY THE ASSESSING OFFICER. THE ASSESS ING OFFICER HAS CONSIDERED THE SAID ASPECT AND THEREAFTER HAS ADDED THE AMOUNT UNDER SECTION 68 OF THE INCOME TAX ACT. ACCORDING TO THE LEARNED COUNSEL, THE TRIBUNAL ONLY ON THE BASIS THAT DOCUMENTS ARE AVAIL ABLE HAS ACCEPTED THE CASE OF THE ASSESSEE. THE TRIBUNAL HAS FAILED TO CO NSIDER THE CIRCUMSTANCES AND THE FACTS WHICH ARE RELEVANT. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTS THE ORDER AND SUBMITS THAT THE ASSESSEE HAD DISCHARGED ITS ONUS. THE ASSESSEE HAD PRODUCED THE PAN OF ALL THE CREDITORS ALONG WITH THE CONFIRMATION, B ANK STATEMENT SHOWING PAYMENT OF SHARE APPLICATION MONEY AND RELEVANT REC ORD IS PRODUCED WITH REGARD TO THE ALLOTMENT OF SHARES TO THOSE PARTIES. THE SHARE APPLICATION FORM, ALLOTMENT LETTER, SHARE CERTIFICATE ARE ALSO PRODUCED. EVEN THE BALANCE-SHEET, PROFIT AND LOSS ACCOUNT, THE BOOKS O F ACCOUNT OF THESE CREDITORS WERE PRODUCED ON RECORD SHOWING THAT THEY HAD SUFFICIENT FUNDS FOR INVESTING IN THE SHARES OF THE ASSESSEE. THE LE ARNED COUNSEL RELIES ON THE JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN CASE OF CIT V. GAGANDEEP INFRASTRUCTURE (P.) LTD . [2017] 80 TAXMANN.COM 272/247 TAXMAN 245/394 ITR 680 (BOM.) AND THE ORDER OF THE APEX COURT IN CASE OF CIT V. LOVELY EXPORTS (P.) LTD . [2008] 216 CTR 195 . 4. WE HAVE CONSIDERED THE SUBMISSIONS. 5. THE ASSESSING OFFICER ADDED RS. 95 LAKHS AS INCOME UNDER SECTION 68 OF THE INCOME TAX ACT ONLY ON THE GROUND THAT THE P ARTIES TO WHOM THE SHARE CERTIFICATES WERE ISSUED AND WHO HAD PAID THE SHARE MONEY HAD NOT APPEARED BEFORE THE ASSESSING OFFICER AND THE SUMMO NS COULD NOT BE SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 39 SERVED ON THE ADDRESSES GIVEN AS THEY WERE NOT TRAC ED AND IN RESPECT OF SOME OF THE PARTIES WHO HAD APPEARED, IT WAS OBSERV ED THAT JUST BEFORE ISSUANCE OF CHEQUES, THE AMOUNT WAS DEPOSITED IN TH EIR ACCOUNT. 6. THE TRIBUNAL HAS CONSIDERED THAT THE ASSESSEE HAS PRODUCED ON RECORD THE DOCUMENTS TO ESTABLISH THE GENUINENESS OF THE P ARTY SUCH AS PAN OF ALL THE CREDITORS ALONG WITH THE CONFIRMATION, THEIR BA NK STATEMENTS SHOWING PAYMENT OF SHARE APPLICATION MONEY. IT WAS ALSO OBS ERVED BY THE TRIBUNAL THAT THE ASSESSEE HAS ALSO PRODUCED THE ENTIRE RECO RD REGARDING ISSUANCE OF SHARES I.E. ALLOTMENT OF SHARES TO THESE PARTIES, T HEIR SHARE APPLICATION FORMS, ALLOTMENT LETTERS AND SHARE CERTIFICATES, SO ALSO THE BOOKS OF ACCOUNT. THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF TH ESE PERSONS DISCLOSES THAT THESE PERSONS HAD SUFFICIENT FUNDS IN THEIR AC COUNTS FOR INVESTING IN THE SHARES OF THE ASSESSEE. IN VIEW OF THESE VOLUMINOUS DOCUMENTARY EVIDENCE, ONLY BECAUSE THOSE PERSONS HAD NOT APPEAR ED BEFORE THE ASSESSING OFFICER WOULD NOT NEGATE THE CASE OF THE ASSESSEE. THE JUDGMENT IN CASE OF GAGANDEEP INFRASTRUCTURE (P.) LTD . ( SUPRA ) WOULD BE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE. 7. CONSIDERING THE ABOVE, NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEAL STANDS DISMISSED. HOWEVER, THERE IS NO ORDER AS TO COSTS. 2.12. HON'BLE BOMBAY HIGH COURT IN CIT VS GANGANDE EP INFRASTRUCTURE (P) LTD. (349 ITR 680)(BOM) OBSERVED /HELD AS UNDER:- THIS APPEAL UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961 (THE ACT) CHALLENGES THE ORDER DATED 23RD APRIL, 2014 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (THE TRIBUNAL). THE IMPUGNED ORD ER IS IN RESPECT OF ASSESSMENT YEAR 2008-09. 2. MR. SURESH KUMAR, THE LEARNED COUNSEL APPEARING FO R THE REVENUE URGES THE FOLLOWING RE-FRAMED QUESTIONS OF LAW FOR OUR CONSID ERATION: '( I ) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION OF RS.7,53,50,000/- UNDER SECTION 68 OF THE ACT BEING SHARE CAPITAL/SHARE PRE MIUM RECEIVED DURING THE YEAR WHEN THE ASSESSING OFFICER HELD THE SAME A S UNEXPLAINED CASH CREDIT? ( II ) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN L AW, THE TRIBUNAL WAS JUSTIFIED IN RESTRICTING THE DISALLOWA NCE UNDER SECTION 14A OF THE ACT ONLY TO THE AMOUNT OF EXPENDITURE CLAIME D BY THE ASSESSEE IN THE ABSENCE OF ANY SUCH RESTRICTION UNDER SECTION 1 4A AND/OR RULE 8D?' 3. REGARDING QUESTION NO.( I ): SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 40 ( A ) DURING THE PREVIOUS RELEVANT TO THE SUBJECT ASSESSM ENT YEAR THE RESPONDENT- ASSESSEE HAD INCREASED ITS SHARE CAPITAL FROM RS.2,50,000/- TO RS.83.75 LAKHS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE RESPONDENT HAD COLLECT ED SHARE PREMIUM TO THE EXTENT OF RS.6.69 CRORES. CONSEQUENTLY HE CALLED UPON THE RESPONDENT TO JUSTI FY THE CHARGING OF SHARE PREMIUM AT RS.190/- PER SHARE. THE RESPONDENT FURNISHED THE LIST OF ITS SHAREHOLDERS, COPY OF THE SHARE APP LICATION FORM, COPY OF SHARE CERTIFICATE AND FORM NO.2 FILED WITH THE REGI STRAR OF COMPANIES. THE JUSTIFICATION FOR CHARGING SHARE PRE MIUM WAS ON THE BASIS OF THE FUTURE PROSPECTS OF THE BUSINESS O F THE RESPONDENT- ASSESSEE. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION/JU STIFICATION OF THE RESPONDENT AND INVOKED SECTION 6 8 OF THE ACT TO TREAT THE AMOUNT OF RS.7.53 CRORES I. E. THE AGGREGATE OF THE ISSUE PRICE AND THE PREMIUM ON THE SHARES ISSUE D AS UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE ACT. ( B ) BEING AGGRIEVED, THE RESPONDENT CARRIED THE ISSUE I N APPEAL. BY AN ORDER DATED 24TH MAY, 2011 THE COMMISSIONER OF INCO ME TAX (APPEALS) (CIT(A)) DELETED THE ADDITION OF RS.7.53 CRORES MADE BY THE ASSESSING OFFICER BY HOLDING THAT THE ASSESSING OFFICER HAD G IVEN NO REASON TO CONCLUDE THAT THE INVESTMENT MADE (INCLUSIVE OF PREMIUM) WAS NOT GENUINE. THIS INSPITE OF EVIDENCE BEING FURNISHED BY THE RESPONDENT IN SUPPORT OF THE GENUINENESS OF THE TRANSACTIONS. FURTHER HE HELD THAT THE APPROPRIATE VALUATION OF T HE SHARES IS FOR THE SUBSCRIBER/INVESTOR TO DECIDE AND NOT A SUBJECT OF ENQUIRY BY THE REVENUE. FINALLY HE RELIED UPON THE DECISION OF THE APEX COURT IN CIT V. LOVELY EXPORTS (P.) LTD. [2008] 216 CTR 195 TO HOLD THAT IF THE AMOUNTS HAVE BEEN SUBSCRIBED BY BOGUS SHAREH OLDERS IT IS FOR THE REVENUE TO PROCEED AGAINST SUCH SHAREHOLDERS. T HEREFORE IT HELD THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING T HE AMOUNT OF SHARE CAPI TAL SUBSCRIPTION INCLUDING THE SHARE PREMIUM AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT. ( C ) BEING AGGRIEVED, THE REVENUE CARRIED THE ISSUE IN T HE APPEAL TO THE TRIBUNAL. THE IMPUGNED ORDER OF THE TRIBUNAL HOLDS THAT THE RESPONDENT-ASSESSEE HAD E STABLISHED THE IDENTITY, GENUINENESS AND CAPACITY OF THE SHAREHOLDERS WHO HAD SUBSCRIBED TO ITS SHARES. THE IDENTITY WAS ESTABLISHED BY THE VERY FACT THAT THE DETAILED NAMES, ADDRESSES OF THE SHAREHOLDERS, PAN NUMBERS, BANK DE TAILS AND CONFIRMATORY LETTERS WERE FILED. THE GENUINENESS OF THE TRANSACTION WAS ESTABLISHED BY FILING A COPY OF SHARE APPLICATI ON FORM, THE FORM FILED WITH THE REGISTRAR OF COMPANIES AND AS ALSO B ANK DETAILS OF THE SHAREHOLDERS AND THEIR CONFIRMATIONS WHICH WOULD IN DICATE BOTH THE GE NUINENESS AS ALSO THE CAPACITY OF THE SHAREHOLDERS TO SUBSCRIBE TO THE SHARES. FURTHER THE TRIBUNAL WHILE UPHOLDING TH E FINDING OF CIT(A) ALSO THAT THE AMOUNT RECEIVED ON ISSUE OF SH ARE CAPITAL ALONGWITH THE PREMIUM RECEIVED THEREON, WOULD BE ON CAPITAL SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 41 RE CEIPT AND NOT IN THE REVENUE FIELD. FURTHER RELIANC E WAS ALSO PLACED UPON THE DECISION OF APEX COURT IN LOVELY EXPORTS (P.) LTD. ( SUPRA ) TO UPHOLD THE FINDING OF THE CIT(A) AND DISMISSING THE REVENUE'S APPEAL. ( D ) MR. SURESH KUMAR, THE LEARNED COUNSEL A PPEARING FOR THE REVENUE CONTENDS THAT PROVISO TO SECTION 68 OF THE ACT WHIC H WAS INTRODUCED WITH EFFECT FROM 1ST APRIL, 2013 WOULD APPLY IN THE FACTS OF THE PRESENT CASE EVEN FOR A.Y. 2008- 09. THE BASIS OF THE ABOVE SUBMISSION IS THAT THE DE HORS THE PROV ISO ALSO THE REQUIREMENTS AS SET OUT THEREIN WOULD HAVE TO BE SATISFIED. ( E ) WE FIND THAT THE PROVISO TO SECTION 68 OF THE ACT H AS BEEN INTRODUCED BY THE FINANCE ACT 2012 WITH EFFECT FROM 1ST APRIL, 2013. THUS IT WOULD BE EFFECTIVE ONLY FROM THE ASSE SSM ENT YEAR 2013- 14 ONWARDS AND NOT FOR THE SUBJECT ASSESSMENT YEAR. IN FACT, BEFORE THE TRIBUNAL, IT WAS NOT EVEN THE CASE OF TH E REVENUE THAT SECTION 68 OF THE ACT AS IN FORCE DURING THE SUBJEC T YEARS HAS TO BE READ/UNDERSTOOD AS THOUGH THE PROVISO ADDED SU BSEQUENTLY EFFECTIVE ONLY FROM 1ST APRIL, 2013 WAS ITS NORMAL MEANING. T HE PARLIAMENT DID NOT INTRODUCE TO PROVISO TO SECTION 68 OF THE A CT WITH RETROSPECTIVE EFFECT NOR DOES THE PROVISO SO INTROD UCED STATES THAT IT WAS INTRODUCED 'FOR REMOVAL OF DOUBTS' O R THAT IT IS 'DECLARATORY'. THEREFORE IT IS NOT OPEN TO GIVE IT RETROSPECTIVE E FFECT, BY PROCEEDING ON THE BASIS THAT THE ADDITION OF THE PROVISO TO SE CTION 68 OF THE ACT IS IMMATERIAL AND DOES NOT CHANGE THE INTERPRETATIO N OF SECTION 68 OF THE ACT BOTH BE FORE AND AFTER THE ADDING OF THE PROVISO. IN ANY VI EW OF THE MATTER THE THREE ESSENTIAL TESTS WHILE CONFI RMING THE PRE- PROVISO SECTION 68 OF THE ACT LAID DOWN BY THE COUR TS NAMELY THE GENUINENESS OF THE TRANSACTION, IDENTITY AND THE CA PACITY OF THE INVESTO R HAVE ALL BEEN EXAMINED BY THE IMPUGNED ORDER OF T HE TRIBUNAL AND ON FACTS IT WAS FOUND SATISFIED. FURTH ER IT WAS A SUBMISSION ON BEHALF OF THE REVENUE THAT SUCH LARGE AMOUNT OF SHARE PREMIUM GIVES RISE TO SUSPICION ON THE GENUIN ENESS (IDENTITY) OF THE SHAREHOLDERS I.E. THEY ARE BOGUS. THE APEX C OURT IN LOVELY EXPORTS (P.) LTD. ( SUPRA ) IN THE CONTEXT TO THE PRE- AMENDED SECTION 68 OF THE ACT HAS HELD THAT WHERE THE REVENUE URGES THAT THE AMOUNT OF SHARE APPLICATION MONEY HAS BEEN RECEIVED FROM B OGUS SHAREHO LDERS THEN IT IS FOR THE INCOME TAX OFFICER TO PROC EED BY REOPENING THE ASSESSMENT OF SUCH SHAREHOLDERS AND A SSESSING THEM TO TAX IN ACCORDANCE WITH LAW. IT DOES NOT ENTITLE THE REVENUE TO ADD THE SAME TO THE ASSESSEE'S INCOME AS UNEXPLAINED CA SH CREDIT. ( F ) IN THE ABOVE CIRCUMSTANCES AND PARTICULARLY IN VIEW OF THE CONCURRENT FINDING OF FACT ARRIVED AT BY THE CIT(A) AND THE TRIBUNAL, THE PROPOSED QUESTION OF LAW DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS NOT ENTERTAINED. 4. ( A ) ADMIT THE SUBSTANTIAL QUESTION OF LAW AT (II) ABO VE. SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 42 ( B ) THE ISSUE ARISING IN QUESTION NO. (II) IS ESSENTI ALLY WHETHER APPLICATION OF RULE 8D(2)(III) OF THE INCOME TAX ACT RULES WOULD P ERMIT THE REVENUE TO DISALLOW EXPENDITURE NOT CLAIMED I.E. MUCH LARGER T HAN THE EXPENDITURE / DEBITED IN EARNING ITS TOTAL INCOME. THE COUNSEL IN FORM US THAT THERE IS NO DECISION ON THIS ISSUE OF ANY COURT AVAILABLE AND I T WOULD AFFECT A LARGE NUMBER OF CASES WHERE SIMILAR ISSUES ARISE. THEREFO RE, THIS ISSUE WOULD REQUIRE AN EARLY DETERMINATION. IN THE ABOVE VIEW, AT THE REQUEST OF THE COUNSEL, THE APPEAL IS KEPT FOR HEARING ON 17TH APR IL, 2017 AT 3.00 P.M., SUBJECT TO OVERNIGHT PART-HEARD. 5. REGISTRY IS DIRECTED TO COMMUNICATE A COPY OF THIS ORDER TO THE TRIBUNAL. THIS WOULD ENABLE THE TRIBUNAL TO KEEP THE PAPERS A ND PROCEEDINGS RELATING TO THE PRESENT APPEAL AVAILABLE, TO BE PRODUCED WHE N SOUGHT FOR BY THE COURT. 6. STAND OVER TO 17TH APRIL, 2017. 2.13. IN THE AFORESAID CASES, THE HON'BLE HIGH COU RTS INCLUDING HON'BLE JURISDICTIONAL HIGH COURT CONSIDE RED THE FACTUAL MATRIX INCLUDING THE DECISION FROM HON'BLE APEX COURT IN CIT VS LOVELY EXPORT PVT. LTD. (2008) 216 CTR 195 (SUPREME COURT) AND HELD THAT THE PROVISO TO SECTIO N 68 OF THE ACT WAS INTRODUCED BY THE FINANCE ACT, 2012 W.E .F. 01/04/2013, THUS, IT WOULD BE EFFECTIVE ONLY FROM ASSESSMENT YEAR 2013-14 ONWARDS AND NOT TO THE EARL IER YEARS. THE LEGISLATURE DID NOT INTRODUCE THE PROVIS O TO SECTION 68 OF THE ACT WITH RETROSPECTIVE EFFECT NOR DOES TH E PROVISO SO INTRODUCE STATES THAT IT WAS INTRODUCE FOR REMOVAL OF DOUBTS OR THAT IT IS DECLARATORY, THEREFORE, IT IS NOT O PEN TO GIVE IT TO RETROSPECTIVE EFFECT BY PROCEEDING ON THE BASES THA T THE ADDITION OF PROVISO TO SECTION 68 OF THE ACT IS IMM ATERIAL. SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 43 THUS, WE FIND MERIT IN THE ARGUMENT OF THE LD. COUN SEL FOR THE ASSESSEE. 2.14. NOW, WE SHALL DEAL WITH THE CASES RELIED UP ON BY LD. DR. ONE SUCH CASE IS FROM HON'BLE APEX COURT IN SUMATI DAYAL VS CIT (1995) 80 TAXMAN 89(SUPREME COU RT) ORDER DATED 23/03/1995 THAT IS ALSO WITH RESPECT TO CASH CREDIT AND ADDITION UNDER SECTION 68 OF THE ACT. IN THAT CASE, THE FACTS ARE ALTOGETHER DIFFERENT, THEREFORE, CANN OT BE APPLIED TO THE CASE BEFORE US. EVEN OTHERWISE, THERE ARE LA TER DECISIONS FROM HON'BLE APEX COURT/HON'BLE HIGH COUR TS AND ALSO FROM THE TRIBUNAL WHICH ON IDENTICAL FACTS SUP PORTS THE CASE OF THE ASSESSEE. IDENTICAL IS THE SITUATION IN THE CASE OF CIT VS DURGA PRASAD MORE (1971) 82 ITR 540 (SUPREME COURT). THE ANOTHER DECISION RELIED UPON BY LD. DR IS FROM HON'BLE GUJARAT HIGH COURT IN PAVANKUMAR SANGHVI VS INCOME TAX OFFICER (2018) 90 TAXMAN.COM 386 (GUJ.), WHEREIN, THE ASSESSEE COULD NOT SUBSTANTIATE ITS CL AIM AND THE TRIBUNAL CONCLUDED THAT THE ENTIRE LOAN TRANSAC TIONS WERE NOT GENUINE, IN THAT SITUATION, IT WAS DECIDED IN F OVOUR OF THE REVENUE, WHEREAS, IN THE FACTS BEFORE US, THE ASSES SEE HAS SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 44 DULY DISCHARGED ITS ONUS AS PROVIDED UNDER SECTION 68 OF THE ACT. EVEN OTHERWISE, WE ARE EXPECTED TO CONSIDER T HE CASE OF EACH CASE INDEPENDENTLY OR THE CASES WHICH ARE ON S IMILAR FACTS CAN BE APPLIED. 2.15. NOW, IN THE LIGHT OF THE FOREGOING DISCUSSIO N, WE SHALL EXAMINE THE FACTS OF THE PRESENT APPEAL. ADM ITTEDLY, THE ASSESSEE ALLEGED TO HAVE OBTAINED ACCOMMODATION ENTRIES IN THE FORM OF UNSECURED LOANS FROM ENTITIES CONTRO LLED BY SHRI PRAVIN KUMAR JAIN. DURING THE COURSE OF SURVE Y, STATEMENT OF SHRI AJAY MAHESHWARI, ONE OF THE PARTN ERS WAS RECORDED ON 17/10/2014, ON OATH UNDER SECTION 131 O F THE ACT. THE DETAILS OF UNSECURED LOANS TAKEN DURING TH E FINANCIAL YEAR 2011-12 ARE SUMMARIZED HEREUNDER:- SL. NO. NAME OF THE PARTIES AMOUNT IN RS. 1. ATHARV BUSINESS PVT. LTD. 85,00,000/ - 2. CASPER ENTERPRISES PVT. LTD. 65,00,000/ - 3. DUKE BUSINESS PARK (JPK TRADING PVT. LTD.) 50,00,000/ - 4. OLIVE OVERSEAS PVT. LTD. (REALGOLD TRADING PVT. LTD.) 90,00,000/ - 5. VIRAJ MERCANTILE PVT. LTD. 75,00,000/ - 6. NAKSHATRA BUSINESS PVT. LTD. 1,05,00,000/ - SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 45 TOTAL 4,70,00,000/ - 2.16. THE STATEMENT OF SHRI ANIL JETELY, BROKER, FOR THE SALE OF FLATS/SHOPS WAS RECORDED ON 17/10/2014, WHE REIN, HE ADMITTED THAT THE ASSESSEE RECEIVED ON MONEY OF RS. 44,00,000/- IN CASH FROM MRS. NITU PUGALIA FOR PURC HASE OF FLAT AT SHREEDHAM CLASSIC, DEVELOPED BY M/S SHREEDH AM CONSTRUCTION PVT. LTD., A SISTER CONCERN OF THE ASS ESSEE. 2.17. STATEMENT OF SHRI ATUL RUPAPARA, SALESMAN WA S ALSO RECORDED. THE STATEMENT OF SHRI AJAY MAHESHWAR I, PARTNER OF THE FIRM WAS ALSO RECORDED, WHEREIN, HE TENDERED THAT THEY RECEIVED ACCOMMODATION ENTRIES IN THE FOR M OF UNSECURED LOANS IN LIEU OF CASH FROM SHRI PRAVIN KU MAR JAIN. THE STATEMENT OF SHRI AJAY MAHESHWARI HAS BEEN REPR ODUCED IN THE ASSESSMENT ORDER WHICH WAS HEAVILY RELIED UP ON BY THE ASSESSING OFFICER FOR MAKING THE ADDITION. IT IS NO TED THAT ON 11/11/2014, SHRI AJAY MAHESHWARI FILED AN AFFIDAVIT RETRACTING THE STATEMENT RECORDED DURING SURVEY AFT ER 23 DAYS, WHEREIN, HE SWORN (IN THE AFFIDAVIT) THAT THE LOANS WERE GENUINE AND THERE WERE NO CORROBORATIVE EVIDENCE WA S FOUND AT THE BUSINESS PREMISES DURING SURVEY AND THE ENTI RE SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 46 TRANSACTIONS WERE CONDUCTED THROUGH BANKING CHANNEL/ACCOUNT PAYEE CHEQUE. AS PER THIS RETRACTIO N, THE SURVEY PARTY PUT MENTAL PRESSURE AND THE STATEMENT WAS RECORDED UNDER HIGH BP/HYPER DIABETIC CONDITIONS. I T IS NOTED THAT THE LOAN CONFIRMATIONS AND COPY OF ITRS OF THE CONCERNED PARTIES WERE FILED ALONG WITH THE ADDRESS OF THE BR OKER SHRI JITU BHAI. SUMMONS WERE ALSO ISSUED TO SHRI AJAY MAHESHWARI. THE ADDRESSES OF THE CONCERNED PERSONS WERE ALSO FILED BY THE ASSESSEE. THE LD. ASSESSING OFFIC ER ISSUED SUMMONS UNDER SECTION 131 OF THE ACT TO ALL THE LEN DERS AND OTHER NECESSARY DETAILS WERE COLLECTED FROM THE BAN K. IN RESPONSE TO THE SUMMONS ALL THE LENDERS FILED THEIR REPLIES ON 03/02/2005. THE LD. ASSESSING OFFICER OBSERVED THAT MOST OF THE LENDER COMPANIES OPENED THEIR NEW BANK ACCOUNTS IN INDUSLND BANK, OPERA HOUSE BRANCH ON THE SAME DATE/MONTH, THEREFORE, IT WAS PRESUMED THAT THESE A RE COMPANIES FLOATED BY SHRI PRAVIN JAIN. UNDISPUTEDLY , EVEN THE LD. ASSESSING OFFICER MENTIONED THAT THE ASSESS EE REPAID THE LOANS TAKEN FROM THESE COMPANIES IN FINANCIAL Y EAR 2014-15 OUT OF THE FUNDS INTRODUCED BY PARTNERS AS CAPITAL. SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 47 THE STATEMENT OF BROKERS HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER. THE LD. COMMISSIONER OF INCOME TA X (APPEAL) HAS MENTIONED THE OBSERVATIONS MADE BY LD. ASSESSING OFFICER IN THE ASSESSMENT ORDER WITH RESP ECT TO VARIOUS PARTIES/BROKERS. THE LD. ASSESSING OFFICER TREATED RS.4.70 CRORES, INTRODUCED BY THE ASSESSEE IN ITS B OOKS AS UNSECURED LOANS/UNEXPLAINED CREDIT AND ADDED UNDER SECTION 68 OF THE ACT AND SOME UNEXPLAINED EXPENDIT URE UNDER SECTION 69C OF THE ACT AND ALSO DISALLOWED IN TEREST OF RS.5,73,193/-, PAID ON UNSECURED LOAN AND DISALLOWE D THE SAME UNDER SECTION 37 OF THE ACT. IT IS NOTED THAT AT THE CONCLUSION OF THE SURVEY, THE ASSESSEE VIDE LETTER DATED 28/10/2014 REQUESTED FOR COPY OF STATEMENT. AS PER THE ASSESSEE, THE ASSESSING OFFICER DID NOT PROVIDE THE COPY. AS PER THE ASSESSEE, THE CROSS EXAMINATION OF SHRI PRA VIN JAIN WAS ALSO NOT PROVIDED. THE ASSESSEE FILED LOAN CONF IRMATION, ACKNOWLEDGMENTS OF ITRS, RELEVANT BANK STATEMENT OF LENDERS, PROOF OF RE-PAYMENT OF SUCH LOANS AND ON T HE SUMMONS ISSUED TO ALL THE CREDITORS AND THE BROKERS ALL OF THEM FURNISHED REQUISITE DETAILS. IT IS NOTED THAT THE FINANCIAL SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 48 STATEMENTS AND OTHER LOAN CREDITORS WERE NEVER DISC LOSED BY THE LD. ASSESSING OFFICER AND BY IMPLICATION ACCEPT ED THAT THE ASSESSEE IN FACT RECEIVED LOANS. THIS HAS BEEN OBSERVED EVEN BY THE FIRST APPELLATE AUTHORITY AT PAGE-10(PA RA-4.13 OF THE IMPUGNED ORDER). IT IS FURTHER NOTED THAT ON 21 /10/2014, THE ASSESSEE REQUESTED THE ASSESSING OFFICER TO PRO VIDE THE COPY OF STATEMENT RECORDED DURING SURVEY, EVIDENCE OF FILING RETRACTION ON 11/11/2014, EVIDENCE OF FILING OF LOA N CONFIRMATIONS, ACKNOWLEDGMENT OF ITRS AND BANK STAT EMENT OF PARTIES VIDE LETTER DATED 28/12/2014, COPY OF IT S SUBMISSION ON UNSECURED LOANS DATED 16/02/2015, RETRACTION AFFIDAVIT OF SHRI PRAVIN KUMAR JAIN, DAT ED 15/05/2014, REPAYMENT DETAILS OF UNSECURED LOANS AN D ITS SUBMISSIONS DATED 16/02/2015, WHEREIN, PRESENT ADDR ESS, DETAILS OF DIRECTORS AND SHAREHOLDING PATTERNS OF L ENDERS COMPANIES WERE FILED BY THE ASSESSEE BEFORE THE LD. ASSESSING OFFICER. IT IS NOTED THAT BEFORE THE FIRST APPELLAT E AUTHORITY, THE ASSESSEE CHALLENGED THE VALIDITY OF ASSESSMENT BY RAISING AN ADDITIONAL GROUND AS THE ASSESSEE WAS NOT ALLOWE D OPPORTUNITY TO CROSS EXAMINE SHRI PRAVIN KUMAR JAIN AND SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 49 OTHER MATERIAL USED AGAINST THE ASSESSEE, WHICH WAS NOT CONFRONTED TO IT. THE LD. COMMISSIONER OF INCOME T AX (APPEAL) VIDE LETTER DATED 05/07/2016 ASKED THE LD. ASSESSING OFFICER TO HANDOVER THE STATEMENTS PERTAI NING TO SHRI PRAVIN KUMAR JAIN OR ITS STAFF MEMBERS OR DUMM Y DIRECTORS TO ALLOW THE ASSESSEE AN OPPORTUNITY TO C ROSS EXAMINE SHRI PRAVIN KUMAR JAIN. THE LD. ASSESSING O FFICER WAS ALSO ASKED TO PROVIDE THE EVIDENCES FOUND DURIN G THE COURSE OF SURVEY ACTION OR ANY EVIDENCE THAT PAYMEN T WAS MADE FOR OBTAINING UNSECURED LOANS AND ALSO EFFORTS SO MADE TO EXAMINE THE LOAN CREDITORS. THE ASSESSING OFFICE R WAS ASKED TO CONDUCT NECESSARY ENQUIRIES WITH RESPECT T O GENUINENESS OF THE UNSECURED LOANS. THE LD. ASSESSI NG OFFICER VIDE LETTER DATED 07/01/2017, SUBMITTED THE REMAND REPORT AS HAS BEEN REPRODUCED AT PAGE-10 ONWARDS OF THE IMPUGNED ORDER. IT HAS BEEN MENTIONED IN PARA 6.3 O F THE IMPUGNED ORDER THAT SHRI PRAVIN JAIN PRODUCED THE L EDGER ACCOUNTS OF SHREEDHAM BUILDERS IN THE BOOKS OF HIS COMPANIES ALONGWITH BANK STATEMENT REFLECTING ALL T HE TRANSACTIONS AND ALSO AUDITED BALANCE SHEET OF LAST FOUR YEAR SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 50 ALONG WITH THE COPY OF THE RETRACTION OF STATEMENT FILED BEFORE CBDT. NOTHING OBJECTIONABLE WAS FOUND IN THE DOCUME NTS OR STATEMENTS. ALL THE LOAN CREDITORS WERE SUMMONED AN D THE STATEMENTS OF THE DIRECTORS WERE RECORDED, WHEREIN, THEY HAVE ACCEPTED OF GIVING LOAN TO THE ASSESSEE. THE LEDGER COPIES OF THOSE COMPANIES REFLECTING LOANS GIVEN TO THE ASSES SEE WERE ALSO PRODUCED. THE LD. ASSESSING OFFICER ALSO PROVI DED THE COPY OF STATEMENT RECORDED FROM SHRI PRAVIN KUMAR J AIN UNDER SECTION 131 OF THE ACT ON 21/11/2006. IN PARA 6.6 OF THE IMPUGNED ORDER, THERE IS AN OBSERVATION THAT TH E NATURE AND SOURCE OF BUSINESS/AMOUNT WAS EXPLAINED AND THE DETAILS OF LOAN WERE ALSO CONFIRMED. ALL CORROBORAT IVE DETAILS WERE DULY FILED. FROM THE RECORD, WE ALSO NOTE THAT THE ASSESSEE ALSO FILED ACKNOWLEDGMENT OF FILING OF IT RETURNS TOGETHER WITH COMPUTATION OF TOTAL INCOME (PAGES 1 & 2 OF THE PAPER BOOK), AUDITED ANNUAL ACCOUNTS ALONG WITH TAX AUDIT REPORT FOR THE YEAR ENDING 31/03/2012 (PAGES 3 TO 3 1 OF THE PAPER BOOK), RETRACTION OF STATEMENT BY SHRI AJAY MAHESHWARI, PARTNER, DATED 10/11/2014 FOR THE STATE MENT ON OATH RECORDED ON 17/ & 18 TH OCTOBER, 2014 (PAGES 32 TO SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 51 37 OF THE PAPER BOOK), REMAND REPORT OF THE ASSESSI NG OFFICER DATED 17/12/2016 FILED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL) (PAGES 38 TO 56 OF THE PAPER BO OK), REMAND REPORT OF THE ASSESSING OFFICER 04/01/2017 B EFORE THE CIT(A) (PAGES 57 OF THE PAPER BOOK), ACKNOWLEDG MENT EVIDENCING FOR FILING OF RETURN FOR ASSESSMENT YEAR 2012-13, AUDITED ANNUAL ACCOUNT FOR THE YEAR ENDING 31/03/20 12, LEDGER CONFIRMATION, LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THE LENDER AND BANK STATEMENT OF THE LENDE R (IN THE CASE OF ATHRAV BUSINESS PVT. LTD. (PAGE 58 TO 72 OF THE PAPER BOOK). IDENTICALLY SIMILAR DOCUMENTS AS A PROOF OF EVIDENCE WERE FILED FROM CASPER ENTERPRISES LTD. (PAGES 71 T O 83 OF THE PAPER BOOK), DUKE BUSINESS PVT. LTD. (J.P. K. TRADI NG I. PVT. LTD.) (PAGES 84 TO 96 OF THE PAPER BOOK), OLIVE OVE RSEAS PVT. LTD. (PAGES 97 TO 110 OF THE PAPER BOOK), VIRAJ MER CANTILE PVT. LTD. (PAGES 111 TO 119 OF THE PAPER BOOK) AND NAKSH ATRA BUSINESS PVT. LTD. (PAGES 120 TO 131 OF THE PAPER B OOK). ALL THESE DOCUMENTS NEITHER DISPROVED BY THE LD. ASSESS ING OFFICER NOR ANY EVIDENCE WAS BROUGHT ON RECORD TO F ALSIFY THE CLAIM OF THE ASSESSEE OR THE AUTHENTICITY OF THESE DOCUMENTS. SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 52 THUS, IT CAN BE SAID THAT THE ASSESSEE DISCHARGED I TS ONUS AS PROVIDED UNDER SECTION 68 OF THE ACT. THE INTEREST WAS PAID THROUGH BANKING CHANNEL BY THE ASSESSEE ON SUCH LOA NS. IT IS ALSO NOTED THAT SO FAR AS THE DISALLOWANCE OF INTER EST PORTION IS CONCERNED, THE SAME WAS DELETED BY THE LD. FAA A ND HAS NOT BEEN CHALLENGED BEFORE THIS TRIBUNAL BY THE REV ENUE FURTHER FORTIFIES THE CASE OF THE ASSESSEE. THE LOA NS WERE REPAID ALONG WITH INTEREST BEFORE THE DATE OF SURVE Y I.E. 17/10/2014 AND NO CASH WAS FOUND DURING SURVEY FURT HER FORTIFIES THE CLAIM OF THE ASSESSEE. ALL THE CONCER NED PARTIES APPEARED BEFORE THE LD. ASSESSING OFFICER DURING RE MAND PROCEEDINGS, THE LD. ASSESSING OFFICER RECORDED THE IR STATEMENT AND NOTHING ADVERSE WAS POINTED OUT EVEN SHRI PRAVIN JAIN HIMSELF APPEARED BEFORE THE LD. ASSESSI NG OFFICER AND EVEN DURING REMAND PROCEEDINGS ENQUIRIES WERE C ARRIED OUT AND NO ADVERSE REMARK WAS MADE BY THE LD. ASSES SING OFFICER. THE ASSESSEE AS WELL AS THE OTHER PARTIES FURNISHED ALL POSSIBLE DOCUMENTS EVIDENCING THAT THE LOANS ARE NO T BOGUS. NO CASH WAS FOUND DEPOSITED IN THE ACCOUNTS OF ALLE GED SIX PARTIES, THUS, KEEPING IN VIEW, THE TOTALITY OF FAC TS, ATTENDANT SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 53 CIRCUMSTANCES, HUMAN PROBABILITIES, AND IN THE PRES ENCE OF PLAUSIBLE EXPLANATION BY THE ASSESSEE, RELEVANT MAT ERIAL, AND REQUIREMENT OF FULFILLMENT OF INGREDIENTS, ENSHRINE D IN SECTION 68 OF THE ACT, WE FIND THAT ONUS CAST UPON THE ASSE SSEE HAS BEEN DULY DISCHARGED, THEREFORE, THE ADDITION MADE U/S 68 OF THE ACT, WHICH IS PURELY BASED UPON PRESUMPTION OR THE STATEMENT RECORDED AND LATER ON RETRACTED BY THE CO NCERNED PARTIES, THEREFORE, WE FIND INFIRMITY IN THE CONCLU SION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), RESULTANTL Y, THE APPEAL OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 04/06/2018. SD/- SD/- ( N.K. PRADHAN ) (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; * DATED : 22/06/2018 F{X~{T? P.S / +' SHREEDHAM BUILDERS ITA NO.5589/MUM/2017 54 !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 0./ / THE RESPONDENT. 3. 1 1 & 2% ( ,- ) / THE CIT, MUMBAI. 4. 1 1 & 2% / CIT(A)- , MUMBAI 5. 4'5% , 1 ,-(, 6 , & / DR, ITAT, MUMBAI 6. 7#8 / GUARD FILE. ! / BY ORDER, / (DY./ASSTT. REGISTRAR) , & / ITAT, MUMBAI,