DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-6(3), MUMBAI V. M/S.CHETAN R. SHAH (HUF), MUMBAI

ITA 5781/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8009 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 11-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR PADMAPANI BORA
• Keywords: Unexplained cash credit; Gift; Search and seizure; Principle of natural justice; Corroborative evidences; Accommodation entries; Retraction; Revised return; TDS
• Section: 133A; 133(6); 201; 13; 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENCH MUM BAI BEFORE SHRI C.N.PRASAD, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NO.5781/MUM/2017 ( ASSESSMENT YEAR: 2013-14 ) DCIT,CC-6(3) ROOM NO.1926, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI-400 021 VS. M/S CHETAN R.SHAH (HUF) 702, MARATHON MAX, KAILASH BUNGLOW LALA DEVIDAYAL ROAD MULUND(WEST) MUMBAI-400 080 PAN/GIR NO. AAAHC9579E APPELLANT ) .. ( RESPONDENT ) REVENUE BY SHRI KUMAR PADMAPANI BORA, DR ASSESSEE BY SHRI. J.P.BAIRAGRA, AR DATE OF HEARING 28/11 /2019 DATE OF PRONOUNCEME NT 10 / 01 /20 20 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)54, MUMBAI, DATED 28/06/2017 AND IT PERTAINS TO ASSESSMENT YEAR 2013-14 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- (I) 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CLT(A) HAS ERRED IN TREATING THE LOAN OF RS. 1,4 0,00,000/-AS GENUINE, WHEN SUCH LOAN WAS RECEIVED FROM DUMMY COMPANY/ENTI TIES MANAGED AND CONTROLLED BY PRAVEEN KUMAR JAIN, AND ADMITTED BY SHRI CHETAN C SHAH, THE DIRECTOR OF THE ASSESSEE COMPANY, AS TO B E IN THE NATURE OF THE ACCOMMODATION ENTRY. (II) 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TREATING THE LOAN OF RS . 1,40,00,000/- AS GENUINE, IGNORING THE DECISION OF THE HONBLE ITAT IN THE CASE OF PAVANKUMAR M SANGHVI VS ITO I.T,A, NO.2447/AHD/2016 , WHEREIN THE HONBLE ITAT HAS HELD THAT GENUINENESS OF THE TRANS ACTIONS CANNOT BE ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 2 ESTABLISHED MERELY ON THE BASIS OF DOCUMENTATION FI LED BY THE ASSESSEE AND FURTHER PROBE IS REQUIRED TO ASCERTAIN WHETHER WHAT WAS APPARENT WAS REAL'. (III) 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A] HAS ERRED IN ALLOWING THE INTEREST EX PENSES OF RS. 26,45,096/- ON THE LOAN OF RS. 1,40,00,000/- WHICH HAS BEEN HELD TO BE IN THE NATURE OF THE ACCOMMODATION ENTRY AND SHAM IN T HE ASSESSMENT ORDER.' 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED ITS RETURN OF INCOME FOR AY 2013-14 ON 28/09/2013, DECL ARING TOTAL INCOME AT RS.57,12,110/-. IN THIS CASE, A SURVEY U/ S 133A OF THE INCOME TAX ACT, 1961 WAS CONDUCTED BY DDIT(INV.),UN IT-III(2), MUMBAI ON 25/03/2014 BASED ON THE INFORMATION THAT THE ASSESSEE HAD TAKEN ACCOMMODATION ENTRIES OF BOGUS UNSECURED LOANS FROM VARIOUS DUMMY CONCERNS, WHO ARE ENGAGED IN THE BUS INESS OF PROVIDING ACCOMMODATION ENTRIES. DURING THE COURSE OF SURVEY ACTION, THE BOOKS OF ACCOUNTS OF THE ASSESSE WERE E XAMINED AND ALSO, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF UNSECURED LOANS TAKEN FROM VARIOUS PARTIES. ON PERUSAL OF DET AILS FILED BY THE ASSESSEE, IT WAS NOTED THAT THE ASSESSEE HAS RECEIV ED UNSECURED LOANS FROM THE CONCERNS/COMPANIES OPERATED AND CONT ROLLED BY PRAVEEN KUMAR JAIN, WHO WAS ONE OF THE LEADING ENTR Y PROVIDER THROUGH WEB OF COMPANIES. 4. THE CASE WAS SELECTED FOR SCRUTINY AND DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE LD. AO CALLED UPON THE ASSESSEE TO FILE NECESSARY EVIDENCES, INCLUDING CONFIRMATION LE TTERS FROM THE PERSONS FROM WHOM UNSECURED LOANS WAS TAKEN. IN RES PONSE, THE ASSESEE HAS FILED VARIOUS DETAILS, INCLUDING CONFIR MATION LETTERS FROM THE PERSONS ALONG WITH THEIR FINANCIAL STATEMENTS A ND STATED THAT LOANS TAKEN FROM ABOVE PARTIES ARE GENUINE, WHICH A RE SUPPORTED BY NECESSARY EVIDENCES. THE ASSESSEE, HAS ALSO FILED B ANK STATEMENTS ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 3 TO PROVE THAT LOANS HAVE BEEN TAKEN THROUGH PROPER BANKING CHANNELS EITHER IN FORM OF CHEQUES OR RTGS FORMS. T HE LD. AO AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESEE AND ALSO TAKEN NOTE OF MATERIAL GATHERED DURING THE COURSE OF SURV EY U/S 133A COUPLED WITH INFORMATION COLLECTED DURING THE COURS E OF SEARCH IN THE CASE OF PRAVEEN KUMAR JAIN AND HIS ASSOCIATES, CAME TO THE CONCLUSION THAT ALTHOUGH, THE ASSESEE HAS FILED VAR IOUS DETAILS INCLUDING CONFIRMATION LETTERS FROM THE PERSON FROM WHOM HE HAD TAKEN LOAN, BUT, ON PERUSAL OF DETAILS FILED BY THE ASSESEE, INCLUDING FINANCIAL STATEMENTS OF THE LENDERS, IT WAS NOTICED THAT ALL THOSE COMPANIES ARE PAPER COMPANIES WHICH DOES NOT HAVE E NOUGH FINANCIAL CAPACITY TO EXPLAIN LOANS GIVEN TO ASSES SEE COMPANY. THE LD. AO, FURTHER OBSERVED THAT ON PERUSAL OF RETURNS FILED BY THOSE COMPANIES IT WAS NOTICED THAT ALTHOUGH, THE COMPANI ES ARE REPORTING HIGH TURNOVER, BUT WHEN IT COMES TO PROFIT, THEY HA VE DECLARED MEAGRE PROFIT, WHICH DOES NOT SUPPORT THE FINANCIAL STRENGTH TO EXPLAIN UNSECURED LOANS GIVEN TO THE ASSESSEE. FURT HER, ALL THOSE COMPANIES HAVE REPORTED HIGH SUNDRY CREDITORS ON TH E LIABILITIES SIDE OF THE BALANCE SHEET AND ON THE ASSETS SIDE, THE M AJOR POTION HAS BEEN DEPLOYED UNDER THE HEAD LOANS AND ADVANCES. FU RTHER, ALTHOUGH THEY HAVE RECEIVED INTEREST ON LOANS AND A DVANCES GIVEN TO VARIOUS PARTIES, BUT TOTAL TDS DEDUCTED ON SAID INT EREST INCOME HAS BEEN CLAIMED AS REFUND. THEREFORE, HE CAME TO THE C ONCLUSION THAT ALL THOSE ENTITIES ARE PAPER COMPANIES CONTROLLED A ND OPERATED BY PRAVEEN KUMAR JAIN TO GIVE ACCOMMODATION ENTRIES OF UNSECURED LOANS TO VARIOUS PERSONS. THEREFORE, HE FINALLY CAM E TO THE CONCLUSION THAT UNSECURED LOANS TAKEN FROM THE COMP ANIES OPERATED AND CONTROLLED BY THE PRAVEEN KUMAR JAIN ARE NOT EX PLAINED AND ACCORDINGLY, MADE ADDITIONS U/S 68 OF THE I.T.ACT, 1961. SIMILARLY, THE ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 4 LD. AO HAS MADE ADDITIONS TOWARDS INTEREST PAID ON SAID LOANS AMOUNTING TO RS.26,45,096/-, ON THE GROUND THAT WHE N LOAN BORROWED FROM THOSE PARTIES ITSELF IS NOT PROVED, C ONSEQUENT INTEREST PAYMENT ON SAID LOANS CANNOT BE ACCEPTED AS GENUINE TRANSACTIONS. 5. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A ), THE ASSESEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE LD.A O. THE ASSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS ON THIS ISSUE, WHICH HAS BEEN REPRODUCED AT PARA 6.3 ON PAGES 8 TO 13 OF LD. CIT(A) ORDER. THE SUM AND SUBSTANCE OF ARGUMENTS OF THE ASSESSEE BEFORE THE LD.CIT(A) ARE THAT THE LD. AO HAS NEVER DISPUTED THE IDENTITY OF THE CREDITORS, WHICH IS EVIDENT FROM TH E FACT THAT THE ASSESSEE HAS FILED COMPLETE DETAILS, INCLUDING NAM E AND ADDRESS OF THE LENDERS ALONG WITH THEIR PAN NUMBERS. THE ASSES EE, FURTHER, SUBMITTED THAT IT HAS FILED COMPLETE FINANCIAL STAT EMENTS OF THE LENDERS ALONG WITH ITR FILED FOR THE RELEVANT YEARS . THE LD. AO HAS NOT MADE ANY OBSERVATIONS WITH REGARD TO CASH DEPOS ITS IN BANK ACCOUNTS OF THE LENDERS BEFORE THE CHEQUES WERE ISS UED TO THE ASSESSE. THE ASSESEE HAS ALSO FILED RETRACTIONS STA TEMENTS OF THE PRAVEEN KUMAR JAIN MADE BEFORE THE INVESTIGATION WI NG. IN SPITE OF ALL THESE EVIDENCES ARE FILED BEFORE THE LD. AO, TH E LD. AO HAS IGNORED ALL THE EVIDENCES FILED BY THE ASSESEE AND MADE ADDITIONS ONLY ON THE BASIS OF STATEMENT OF PRAVEEN KUMAR JAI N, WITHOUT APPRECIATING THE FACT THAT SAID STATEMENT HAS BEEN RETRACTED BY THE PERSON, WHO GAVE THE STATEMENT. THE ASSESEE HAS ALS O RELIED UPON PLETHORA OF JUDICIAL PRECEDENTS IN SUPPORT OF HIS A RGUMENTS. ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 5 6. THE LD.CIT(A) AFTER CONSIDERING RELEVANT SUBMISS ION OF THE ASSESSEE AND ALSO BY RELIED UPON VARIOUS JUDICIAL P RECEDENTS OBSERVED THAT THE ASSESSEE HAS DISCHARGED INITIAL BURDEN CAST UPON U/S 68 OF THE ACT, 1961 BY FILING ENORMOUS DETAILS, INCLUDING CONFIRMATION LETTERS FROM THE EACH LENDER. THE ASSE SSEE HAS ALSO PROVED THE GENUINENESS OF TRANSACTIONS BY FILING BA NK STATEMENTS OF THE LENDERS, AS WELL AS THE ASSESSEE TO PROVE THAT THE LOANS HAVE BEEN TAKEN THROUGH PROPER BANKING CHANNEL. THE ASSE SSEE HAS FILED FURTHER EVIDENCES IN FORM OF TDS CERTIFICATE ISSUED TO THE PARTIES TO PROVE THAT INTEREST HAS BEEN PAID ON SAID LOANS AFT ER DEDUCTING NECESSARY TDS APPLICABLE AS PER LAW. THE LD.CIT(A), FURTHER OBSERVED THAT IT WAS NOT A CASE OF THE LD. AO THAT THE ASSESSEE HAS NOT PROVED CAPACITY OF THE LENDERS, BECAUSE THE LD. AO HIMSELF IN HIS ASSESSMENT ORDER ACCEPTED THE FACT THAT IN THE BANK ACCOUNTS OF THE CREDITOR, THERE IS ONLY RTGS/TRANSFER ENTRIES, WHICH ITSELF PROVES THAT NO CASH WAS INTRODUCED PRIOR TO ADVANCING LOAN S TO THE ASSESSEE. HE, FURTHER, OBSERVED THAT THE LD. AO HA S NOT BROUGHT ON RECORD ANY EVIDENCE TO SUGGEST THAT THE ASSESSEE HA D PAID CASH TO THE LOAN CREDITORS IN LIEU OF LOANS RECEIVED FROM T HEM. IT IS ALSO ADMITTED FACT THAT THE UNSECURED LOANS UNDER CONSID ERATION HAVE BEEN REPAID OVER A PERIOD OF A TIME AND ALSO, THE A SSESSEE HAS PAID INTEREST AFTER DEDUCTING NECESSARY TDS APPLICABLE A S PER LAW. THEREFORE, HE CAME TO THE CONCLUSION THAT THE ASSES EE HAS DISCHARGED THE BURDEN CAST UPON IT, BUT THE LD. AO HAS NOT BROUGHT ON RECORDS ANY EVIDENCE TO PROVE THAT THE LOANS TAK EN FROM CREDITORS ARE NON GENUINE TRANSACTIONS. ACCORDINGLY, HE HAS D ELETED ADDITIONS MADE BY THE LD. AO TOWARDS UNSECURED LOANS TAKEN FR OM THOSE PARTIES. SIMILARLY, THE LD.CIT(A) HAS DELETED CONSE QUENT INTEREST DISALLOWANCES MADE BY THE LD. AO ON THE SAID LOANS, ON THE GROUND ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 6 THAT ONCE LOANS HAVE BEEN ACCEPTED AS GENUINE TRANS ACTIONS, CONSEQUENT INTEREST PAID ON SAID LOANS CANNOT BE DI SALLOWED. THE RELEVANT FINDINGS OF THE LD.CIT(A) ARE AS UNDER;- 6 .4.9 FROM THE ASSESSMENT ORDER IT IS OBSERVED THAT THE LD. AO HAS GIVEN A FACTUAL HE BANK ACCOUNTS OF THE CREDITORS T HERE IS ONLY RTGS/TRF ENTRIES WHICH NO CASH WAS INTRODUCED PRIOR TO ADVAN CING THE LOANS LO THE LD. AO HAD NOT BROUGHT ON RECORD ANY EVIDENCE SUGGE STING THAT THE APPELLANT HAD PAID CASH TO THE LOAN CREDITORS IN L IEU OF LOANS RECEIVED FROM THEM. IT IS ALSO ADMITTED FACT THAT THE UNSEC URED LOANS UNDER CONSIDERATION HAVE BEEN REPAID OVER A PERIOD OF T IME AND ON SAME THE APPELLANT HAS PAID INTEREST AND TDS THEREUPON, AS P ER PROVISIONS OF THE ACT, THE LD, AO HAS RELIED ION OF HON'BLE SUPREME C OURT IN THE CASE OF NAVODAYA CASTLE P LTD AND THAT OF 'WE CALCUTTA HIGH COURT IN THE CASE OF PRECISION P LTD. HOWEVER, AS THE EXPLAINED BY THE APPELLANT THE FACTS ADJUDICATED THEREIN WERE DIFFERENT AS COMPARED TO THE FACTS OF THE PRESENT CASE, HENCE THE RATIO LAID DOWN THEREIN IS NOT APPLICABLE IN THE PRESENT CASE. 6.4.10. IN RESPECT OF UNSECURED LOON CREDITOR UNDER CONSIDERATIONS THE APPELLANT HAS SUBMITTED THE DETAILS/EVIDENCES AS UN DER. A. M/S VICTORY SALES P LTD- THE APPELLANT HAS SUBMI TTED THE COPY OF CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR, COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME OF RELEVANT ASS ESSMENT YEAR, COPY OF RELEVANT PAGES OF BANK STATEMENT OF THEM AN D ITSELF TO ESTABLISH THAT THE TRANSACTIONS WERE CARRIED OUT TH ROUGH PROPER BANKING CHANNEL. B. JIGNESH BHATT HUF- THE APPELLANT HAS SUBMITTED T HE COPY OF CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR, COPY OF ACKNOWLEDGEMENT OF RETURN 'OF INCOME OF RELEVANT AS SESSMENT YEAR, COPY OF RELEVANT PAGES OF BANK STATEMENT OF THEM AN D ITSELF TO ESTABLISH THAT THE TRANSACTIONS WERE CARRIED OUT TH ROUGH PROPER BANKING CHANNEL. C. M/S. P.SAJI TEXTILES LTD. THE APPELLANT HAS SUB MITTED THE COPY OF CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR, C OPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME OF RELEVANT ASS ESSMENT YEAR, COPY OF FORM 23AC FILED WITH ROC, COPY OF RELEVANT PAGES OF BANK STATEMENT OF THEM AND ITSELF TO ESTABLISH THAT THE TRANSACTIONS WERE CARRIED OUT THROUGH PROPER BANKING CHANNEL, D. SAGAR GIRISH BHATT- THE APPELLANT HAS SUBMITTED THE COPY OF CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR, COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME OF RELEVANT ASSESSMENT YEAR, COPY OF RELEVANT PAGES OF BANK STATEM ENT OF HIM AND ITSELF TO ESTABLISH THAT THE TRANSACTIONS WERE CARRIED OUT THROUGH PROPER BANKING CHANNEL. E. SHIRISH BHAT HUF-THE APPELLANT HAS SUBMITTED THE COPY OF CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR C OPY OF ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 7 ACKNOWLEDGEMENT OF RETURN OF INCOME OF RELEVANT ASS ESSMENT YEAR, COPY OF RELEVANT PAGES OF BANK STATEMENT OF THEM AND ITSELF ESTABLISH THAT THE TRANSACTIONS WERE CARRIED OUT TH ROUGH PROPER BONKING CHANNEL. THE VARIOUS COURTS HAVE HELD THAT IF THE IDENTITY O F THE CREDITORS PROVED AND THE TRANSACTION IS THROUGH CHEQUE AND THE INCOM E TAX ASSESSMENT PARTICULARS ARE PROVIDED THEN IT CAN BE HELD THAT T HE ASSESEE HAS DISCHARGED ITS ONUS U/S 68 OF THE ACT. IN VIEW OF T HE DETAILS AND EVIDENCES SUBMITTED BY THE APPELLANT IN RESPECT OF ABOVE REFE RRED CREDITORS, I AM OF THE CONSIDERED OPINION THAT THE LD. AO WAS NOT JUST IFY IN TREATING THE LOAN RECEIVED FROM ABOVE REFERRED FIVE CREDITORS AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. HENCE, THE IMPUGNED ADDIT ION OF RS.1,40,00,000/- IS DELETED. ACCORDINGLY GROUND NO.2 IS ALLOWED. 6.4.11. THE APPELLANT HAS ALSO CHALLENGED DISALLOWA NCE OF INTEREST EXPENSE OF RS.26,45,096/-. THE LD. AO HAS DISALLOWE D THE SAID INTEREST EXPENSE IN VIEW OF HIS ACTION OF TREATING UNSECURED LOAN OF RS.1,40,00,000/- AS UNEXPLAINED CREDIT U/S 68 OF TH E ACT. AS DISCUSSED ABOVE, SAID ADDITION OF RS.1,40,00,000/- HAS BEEN D ELETED AND HENCE THE CONSEQUENTIAL DISALLOWANCE OF INTEREST PERTAINING T O THE SAME AT RS.26,45,096/- IS ALSO DELETED. ACCORDINGLY, THE GR OUND NO. 3 RAISED IN APPEAL IS ALLOWED. 7. THE LD. DR SUBMITTED THAT THE LD.CIT(A) WAS ERRE D IN DELETING ADDITIONS MADE BY THE LD. AO TOWARDS UNSECURED LOAN S OF RS.1,40,00,000/- TAKEN FROM COMPANIES/ASSOCIATES CO NTROLLED AND OPERATED BY PRAVEEN KUMAR JAIN, WHO IS A ENTRY PROV IDER WITHOUT APPRECIATING THE FACT THAT THE ASSESEE HAD ADMITTED DURING THE COURSE OF SURVEY PROCEEDINGS THAT LOANS TAKEN FROM THOSE PARTIES ARE ACCOMMODATION ENTRIES. THE LD. DR, FURTHER SUBMITTE D THAT THE LD.CIT(A) HAS ERRED IN NOT CONSIDERING THE DECISION OF ITAT, IN THE CASE OF PAWAN KUMAR M.SANGVI VS ITO IN ITA NO. 2447 /AHD/2016, WHERE THE ITAT HAS DISCUSSED THE MODUS OPERANDI OF PRAVEEN KUMAR JAIN, AND ALSO HELD THAT THE LOANS TAKEN FROM THOSE COMPANIES ARE ACCOMMODATION ENTRIES. THE LD. DR FUR THER SUBMITTED THAT THE LD.CIT(A) HAS ERRED IN NOT APPRE CIATING THE FACT BROUGHT OUT BY THE LD. AO, IN LIGHT OF EVIDENCES CO LLECTED DURING THE COURSE OF SURVEY OPERATIONS IN THE CASE OF THE ASSE SEE AND ALSO ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 8 SEARCH CONDUCTED IN THE CASE OF PRAVEEN KUMAR JAIN AND HIS ASSOCIATES BEFORE HE REACHING TO THE CONCLUSION THA T TRANSACTIONS BETWEEN THE PARTIES ARE GENUINE AND THE ASSESSEE HA S DISCHARGED THE ONUS CAST UPON HIM U/S 68 OF THE I.T.ACT, 1961. 8. THE LD. AR FOR THE ASSESEE STRONGLY SUPPORTING ORDER OF THE LD.CIT(A) SUBMITTED THAT THE ASSESSEE HAS FILED COM PLETE DETAILS, INCLUDING CONFIRMATION LETTERS FROM LOAN CREDITORS TO DISCHARGE THE ONUS CAST UPON HIM U/S 68 OF THE I.T.ACT, 1961. THE LD. AR FURTHER SUBMITTED THAT THE LD. AO HAS NEVER DISPUTED THE FA CT THAT THE ASSESSEE HAS DISCHARGED IDENTITY OF THE PARTIES. IN SOFAR AS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES ALTHOUGH, THE ASSESSEE HAS FILED ENORMOUS DETAILS I NCLUDING COPIES OF THE RETURN OF INCOME FILED BY THE PARTIES ALONG WITH THEIR FINANCIAL STATEMENTS AND BANK STATEMENTS, BUT THE LD. AO HAS DISBELIEVED ALL EVIDENCES FILED BY THE ASSESSEE ONLY FOR THE REASON S THAT PRAVEEN KUMAR JAIN HAD ADMITTED IN HIS STATEMENT RECORDED D URING THE COURSE OF SEARCH THAT HE IS INVOLVED IN PROVIDING A CCOMMODATION ENTRIES OF UNSECURED LOANS TO VARIOUS BENEFICIARIES . BUT, FACT REMAINS THAT STATEMENT OF PRAVEEN KUMAR JAIN HAS BEEN SUBSE QUENTLY RETRACTED BY FILING AN AFFIDAVIT BEFORE THE INVESTI GATION WING AND THIS FACT HAS BEEN BROUGHT TO THE NOTICE OF THE LD. AO. ONCE, STATEMENT RELIED UPON BY THE LD. AO WAS NO LONGER WAS IN EXI STENCE, THEN THE SAME CANNOT BE CONSIDERED AS AN EVIDENCE TO DRAW A N ADVERSE INFERENCE, MORE PARTICULARLY, WHEN THE ASSESSEE HAS FILED ALL DETAILS TO PROVE THE TRANSACTIONS BETWEEN THE PARTIES ARE G ENUINE. IN THIS REGARD, HE RELIED UPON PLETHORA OF JUDICIAL PRECED ENTS, INCLUDING THE DECISION OF ITAT, MUMBAI, IN THE CASE OF THE DCIT V S MARATHON ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 9 FISCAL PVT LTD. IN ITA NO.5783/MUM/2017 DATED 28/08 /2019. THE ASSESSEE HAS ALSO RELIED UPON THE FOLLOWING CASE LA WS. 1. DECISION OF HON. MUMBAI ITAT IN THE CASE OF DY. CITVS. M/S. MARATHON FISCAL PVT LTD., 1TA NO. 5783/MUM/2017, DATED 28,08 ,2019 2 DECISION OF HON. MUMBAI ITAT IN THE CASE OF D Y. CIT VS. M/S. MANBA FINANCE LTD,, ITA NOS. 1448, 1449 & 1467 / MUM/ 201 7, DATED 05.10.2018 3. DECISION OF HON. MUMBAI ITAT IN THE CASE OF ACIT V. SHREEDHAM BUILDERS, ITA NO, 5589/MUM/20L7 DATED 22.06.2018, ? 53 CCH 0212 4. DECISION OF HONBLE MUMBAI ITAT IN THE CASE OF D CIT V. M/S JAINAM INVESTMENTS, ITA NO.S.6099/MUM/20L6 DATED 10.08,201 8, 2019-TIOL- 213-ITAT-MUM 5. DECISION OF HON. MUMBAI ITAT IN THE CASE OF DCIT V. BAIRAGRA BUILDERS P LTD., ITA NOS. 4691 & 4692/MUM/2015 DATED 14.09.2 017 6. DECISION OF HON. MUMBAI ITAT IN THE CASE OF ACLT V A. S MOTIWALA DATED 22.02. 2019, 2019-TIOL-676-1TAT-MUM 7 DECISION OF HON, MUMBAI ITAT IN THE CASE OF ITO V. ANANT SHELTERS (R) LTD., 51 SOT 234(MUMBAI) 8. DECISION OF HONBLE MUMBAI ITAT IN THE CASE OF I TO VS. M/S AYURESH LOGISTICS PVT LTD. DATED 24/06/2019, 2019-TIOL-1421 -ITAT-MUM 9. DECISION OF HON.MUMBAI ITAT IN THE CASE OF DCIT V. M/S GLADIOLUS PROPERTY & INV. PVT. LTD., ITA NOS2924/MUM/2017, DA TED 16.05.2019 10. DECISION OF HON. BOMBAY HIGH COURT IN THE CA SE OF PCTT V. J M/S SKYLARK BUILD, 1TA NOS. 616 OF 2016 DAIED 24. 10.2018, 2018-TIOL- 2323-HC-MUM-1T 11 DECISION OF HON. BOMBAY HIGH COURT IN THE C ASE OF CIT V. ORCHID INDUSTRIES (P.) LTD., 397 ITR 136 12 DECISION OF HON. MUMBAI ITAT IN THE CASE OF M/ S.. BLA POWER HOLDING PVT. LID. VS. ITO DATED 10.06.2019, 2019- TIOL-1434-ITAT-MUM 13.DECISION OF HON. KOLKATA ITAT IN THE CASE OF ITO VS. M/S. AXISLINE INVESTMENT CONSULTANT PVT LTD DATED 01.06,2019, 2Q1 9-TIOL-1396-ITAT- KOL 14. DECISION OF HON. AHMEDABAD ITAT I N THE CASE OF PAVANKUMAR M SANGHVI V. ITO, 59 ITR (T) 389 /165 IT D 260\198-201 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW, ALONG WITH CASE LAWS CITED BY BOTH THE PARTIES. THE LD. A O HAS MADE ADDITIONS TOWARDS UNSECURED LOANS TAKEN FROM CERTAI N COMPANIES/ASSOCIATES OF PRAVEEN KUMAR JAIN, ON THE GROUND THAT THOSE COMPANIES ARE PAPER ENTRIES OPERATED AND CONT ROLLED BY PRAVEEN KUMAR JAIN AND HIS ASSOCIATES TO GIVE ACCOM MODATION ENTRIES OF UNSECURED LOANS TO VARIOUS BENEFICIARIES . THE LD. AO HAS ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 10 ARRIVED AT SUCH CONCLUSION ON THE BASIS OF SEARCH C ONDUCTED IN THE CASE OF PRAVEEN KUMAR JAIN AND HIS ASSOCIATES AND A LSO, SURVEY OPERATION U/S 133A OF THE ACT, CONDUCTED IN THE CAS E OF THE ASSESSEE, WHERE THE ASSESSEE HAD GIVEN A CONFESSION STATEMENT AND ADMITTED THAT LOANS RECEIVED FROM PRAVEEN KUMAR JAIN GROUP OF COMPANIES ARE ACCOMADATION ENTRIES. THE LD. AO HAS ALSO TAKEN SUPPORT FROM THE STATEMENT RECORDED FROM PRAVEEN KU MAR JAIN DURING THE COURSE OF SEARCH IN HIS CASE U/S 132(4) OF THE I.T.ACT, 1961. THE LD. AO HAD ALSO TAKEN SUPPORT FROM THE ST ATEMENT OF SHRI CHETAN R.SHAH, RECORDED DURING THE COURSE OF SURVEY IN THE CASE OF THE ASSESSEE AND HIS ASSOCIATES TO COME TO THE CONC LUSION THAT TRANSACTIONS BETWEEN THE PARTIES ARE NOT PASSED THE TEST LAID DOWN U/S 68 OF THE I.T.ACT, 1961. IT IS THE CONTENTION O F THE ASSESSEE BEFORE THE LOWER AUTHORITIES THAT TRANSACTIONS BETW EEN THE PARTIES ARE GENUINE, WHICH ARE SUPPORT BY NECESSARY EVIDENCES. THE ASSESSEE HAS DISCHARGED THE ONUS CAST UPON IT U/S 68 OF I.T. ACT, 1961 BY FILING ENORMOUS DETAILS, INCLUDING NAME AND ADDRESS ALONG WITH PAN NUMBER OF THE LENDERS, THEIR INCOME TAX RETURNS WIT H FINANCIAL STATEMENTS FOR RELEVANT FINANCIAL YEAR, COPIES OF BANK STATEMENT OF LENDERS AND ALSO CONFIRMATIONS LETTERS FROM THE PAR TIES. THE ASSESSEE FURTHER CONTENDED THAT IT HAS PAID INTERES T ON SAID LOANS AFTER DEDUCTING NECESSARY TDS APPLICABLE AS PER LAW . FURTHER, THESE LOANS HAVE BEEN SUBSEQUENTLY REPAID OVER A PERIOD O F TIME THROUGH PROPER BANKING CHANNELS. THE ASSESSEE HAS ALSO PLAC ED ON RECORD THE RETRACTION STATEMENT FILED BY PRAVEEN KUMAR JAI N BEFORE THE INVESTIGATION WING AND ARGUED THAT ONCE, THE STATEM ENT ON WHICH THE ADDITIONS WAS MADE WAS NO LONGER IN EXISTENCE OR RE TRACTED, THEN THE SAME CANNOT BE CONSIDERED AS RELIABLE EVIDENCE TO D RAW AN ADVERSE ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 11 INFERENCE AGAINST THE ASSESSEE, MORE PARTICULARLY, WHEN THE ASSESEE HAS DISCHARGED ITS ONUS BY FILING NECESSARY EVIDENC ES. 10. IN THIS FACTUAL BACKGROUND, IF YOU EXAMINE THE CASE OF THE ASSESEE, IN LIGHT OF PROVISION OF SECTION 68 OF THE I.T.ACT, 1961, WE HAVE TO DECIDE, WHETHER THE TRANSACTIONS BETWEEN TH E ASSESSE HAVE PASSED THE TEST LAID DOWN U/S 68 OF THE ACT OR NOT. THE PROVISIONS OF SECTION 68 DEALS WITH A CASES, WHERE ANY SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN ANY FINA NCIAL YEAR FOR WHICH THE ASSESSEE, OFFERS NO EXPLANATION OR EXPLA NATION OFFERED BY THE ASSESSEE, IN THE OPINION OF THE AO IS NOT SATIS FACTORY, THEN SUM FOUND CREDITED MAY BE TREATED AS INCOME OF THE ASSE SSEE OF THAT PREVIOUS YEAR. A PLAIN READING OF SECTION 68, MAKES IT VERY CLEAR THAT TO FIX ANY CREDIT WITHIN THE AMBIT OF SECTION 68 OF THE ACT, THE AO HAS TO EXAMINE 3 INGREDIENTS, I.E., IDENTITY, GENUINENE SS OF TRANSACTION AND CREDITWORTHINESS OF THE PARTIES. IF THE ASSESSE E PROVES THREE INGREDIENTS, THEN THE ONUS SHIFTS TO THE AO TO PROV E OTHERWISE. IN THIS CASE ON PERUSAL OF ORDER OF THE LD. CIT(A), IT WAS CATAGORICALLY OBSERVED THAT THE ASSESSEE HAS DISCHARGED ITS ONUS BY FILING ALL NECESSARY EVIDENCES TO PROVE LOAN TRANSACTIONS BETW EEN THE PARTIES. 11. HAVING SAID SO, LET US EXAMINE WHETHER THE AS SESSEE HAS DISCHARGED THE BURDEN CAST UPON IT UNDER SECTION 68 OF THE INCOME- TAX ACT, 1961 IN RESPECT OF LOAN RECEIVED FROM CRED ITORS. THE AO HAS NOT DISPUTED THE FACT THAT THE ASSESSEE HAS FURN ISHED VARIOUS EVIDENCES TO PROVE IDENTITY OF THE CREDITORS. THE AO CATEGORICALLY ADMITTED IN HIS ASSESSMENT ORDER THAT THE ASSESSEE HAS FILED VARIOUS DETAILS INCLUDING PAN AND IT ACKNOWLEDGEMENT RECEIP T OF LOAN CREDITORS TO PROVE THE IDENTITY. THE AO HAS DISPUT ED GENUINENESS OF ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 12 TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. A CCORDING TO THE AO, THE LOAN CREDITORS ARE NOT HAVING CAPACITY TO PROVE CREDITWORTHINESS AND ALSO TRANSACTION WITH THE A SSESSEE ARE NOT GENUINE. THE AO HAS VARIOUS REASONS TO COME TO THE CONCLUSION THAT THE ASSESSEE HAS FAILED TO DISCHARGE GENU INENESS OF TRANSACTION AND CREDITWORTHINESS OF THE PARTIES. A CCORDING TO THE AO, MERE FURNISHING OF INCOME-TAX RETURNS AND BALANCE-SHEETS OF CREDITORS WOULD NOT BE SUFFICIENT COMPLIANCE OF DISCHARGING GENUINENESS OF TRANSACTIONS, THAT TOO, IN A CA SE WHERE NOTICE ISSUED U/S 133(6) TO THE CREDITORS TO THEIR G IVEN ADDRESSES WERE REMAIN UNSERVED. BUT, FACT REMAINS THAT THE ASSESS EE HAS PROVED THE GENUINENESS OF TRANSACTIONS BY FILING BANK STAT EMENTS OF THE LENDERS TO PROVE THAT THE LOANS HAVE BEEN TAKEN THR OUGH PROPER BANKING CHANNEL. THE ASSESSEE HAS FILED FURTHER EVI DENCES IN FORM OF TDS CERTIFICATE ISSUED TO THE PARTIES TO PROVE THAT INTEREST HAS BEEN PAID ON SAID LOANS AFTER DEDUCTING NECESSARY TDS AP PLICABLE AS PER LAW. WE, FURTHER, OBSERVED THAT IT WAS NOT A CASE O F THE LD. AO THAT THE ASSESSEE HAS NOT PROVED CAPACITY OF THE LENDERS , BECAUSE THE LD. AO HIMSELF IN HIS ASSESSMENT ORDER ACCEPTED THE FACT THAT IN THE BANK ACCOUNTS OF THE CREDITOR, THERE IS ONLY RTGS/T RANSFER ENTRIES, WHICH ITSELF PROVES THAT NO CASH WAS INTRODUCED PRI OR TO ADVANCING LOANS TO THE ASSESSEE. WE, FURTHER, OBSERVED THAT THE LD. AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SUGGEST THAT THE ASSESSEE HAD PAID CASH TO THE LOAN CREDITORS IN LIEU OF LOAN S RECEIVED FROM THEM. IT IS ALSO ADMITTED FACT THAT THE UNSECURED L OANS UNDER CONSIDERATION HAVE BEEN REPAID OVER A PERIOD OF A T IME AND ALSO, THE ASSESSEE HAS PAID INTEREST AFTER DEDUCTING NECESSAR Y TDS APPLICABLE AS PER LAW. ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 13 12. WE, FURTHER, NOTED THAT THE ASSESSEE HAS FILE D ENORMOUS DETAILS IN RESPECT OF COMPANIES INCLUDING THE IR PAN DETAILS, CIN MASTER DATA AND OTHER DETAILS TO PROVE EXISTENCE OF THOSE COMPANIES. THE ASSESSEE ALSO FILED DETAILS OF ACTIV E STATUS OF THE COMPANY IN THE WEBSITE OF MINISTRY OF CORPORATE AFF AIRS. ON GOING THROUGH VARIOUS DETAILED FILED BY THE ASSESSEE, WE FIND THAT THERE IS NO REASON FOR THE AO TO DOUBT THE GENUINENE SS OF TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES. WE FURTHER NOTICE THAT THE ASSESSEE HAS FILED BALANCE-SHEET OF ALL CREDITORS W HEREIN THEY HAVE HUGE SHARE CAPITAL AND RESERVES AND SURPLUS TO ESTA BLISH CREDITWORTHINESS OF THE PARTIES. WE FURTHER NOTICE THAT ALL COMPANIES ARE HAVING REGULAR BUSINESS. ALL THESE EVIDENCES GO TO PROVE AN UNDOUBTED FACT THAT THESE COMPANIES ARE NOT PAPER C OMPANIES AND HAD RECOGNIZED BUSINESS ACTIVITY. THEREFORE, WE ARE OF THE VIEW THAT THE AO WAS INCORRECT IN TREATING LOANS AS UNEXPLAIN ED CASH CREDIT U/S 68 OF THE INCOME-TAX ACT, 1961. 13. COMING TO THE CASE LAWS RELIED UPON BY THE ASSE SSE. THE ASSESSEE RELIED UPON THE DECISION OF CO-ORDINATE BE NCH OF ITAT, MUMBAI, IN LIGHT OF SEARCH CONDUCTED IN THE CASE OF PRAVEEN KUMAR JAIN AND HIS ASSOCIATES AND ALSO, SURVEY CONDUCTED IN THE CASE OF THE ASSESSEE, AND ALSO ON THE BASIS OF INPUTS OF SE ARCH CONDUCTED IN THE CASE OF PRAVEEN KUMAR JAIN AND HIS ASSOCIATES. THE CO-ORDINATE BENCH OF ITA, MUMBAI, D BENCH, IN THE CASE OF MAR ATHON FISCAL PVT LTD. IN ITA NO.5783/MUM/2017 HAD CONSIDERED AN IDEN TICAL ISSUE AND AFTER CONSIDERING RELEVANT FACTS, INCLUDING SEA RCH OPERATIONS CONDUCTED IN THE CASE OF PRAVEEN KUMAR JAIN AND HIS ASSOCIATES AND SURVEY OPERATIONS CONDUCTED IN THE CASE OF THE ASSESSEE U/S 133A, CAME TO THE CONCLUSION THAT MERELY ON THE BAS IS OF ADMISSION ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 14 DURING THE COURSE OF SURVEY ADDITIONS CANNOT BE MAD E TOWARDS LOAN TAKEN FROM THE PARTIES, MORE PARTICULARLY, WHEN THE ASSESEE HAS DISCHARGED ITS ONUS BY FILING ENORMOUS DETAILS, INC LUDING CONFIRMATION LETTERS FROM THE LOAN CREDITORS. THE RELEVANT FINDI NGS OF THE TRIBUNAL ARE AS UNDER:- 7. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, AS WELL AS THE JUDICIAL PRONOUNCEMENTS RELI ED UPON BY THEM. OUR INDULGENCE IN THE PRESENT APPEAL HAS BEEN SOUGHT BY THE REVENUE FOR ADJUDICATING TWO ISSUES, VIZ. (I) THAT, AS TO WHETH ER THE CIT(A) IS RIGHT IN LAW AND FACTS OF THE CASE IN CONCLUDING THAT THE UN SECURED LOANS OF RS.10,91,50,000/- RECEIVED BY THE ASSESSEE DURING T HE YEAR COULD NOT BE TREATED AS UNEXPLAINED CASH CREDITS UNDER SEC.68 OF THE ACT; AND (II) THAT, AS TO WHETHER THE CIT(A) IS JUSTIFIED IN VACATING T HE DISALLOWANCE OF INTEREST PAID ON LOANS AMOUNTING TO RS.70,49,112/-. AS OBSERVED BY US HEREINABOVE, THE A.O HELD A CONVICTION THAT THE ASS ESSEE IN THE GARB OF UNSECURED LOANS HAD RECEIVED ACCOMMODATION ENTRIES FROM THE FOLLOWING 9 CONCERNS: SR. NO. PARTICULARS AMOUNT O F LOAN 1. ATHARVA BUSINESS P. LTD. 1,00,0 0,000 2. JOSH TRADING P. LTD. 1,00,0 0,000 3. CASPER ENTERPRISES P. LTD. 1,07,5 0,000 4. OLIVE OVERSEAS P. LTD. 1,77,0 0,000 5. PRAGATI GEMS P. LTD. 2,25,0 0,000 6. SUMUKH COMMERCIAL P. LTD. 1,15,0 0,000 7. VIRAJ MERCANTILE P. LTD. 2,00,0 0,000 8. LUNKAD TEXTILE P. LTD. 50, 00,000 9. FALAK TRADING CO. P. LTD. 17, 00,000 TOTAL 10,91,5 0,000 ON A PERUSAL OF THE ASSESSMENT ORDERS, WE FIND, THA T THE A.O HAD DRAWN ADVERSE INFERENCES AS REGARDS THE AUTHENTICITY OF T HE LOANS RAISED BY THE ASSESSEE FROM THE AFOREMENTIONED PARTIES, FOR THE R EASON, THAT THE SAID PARTIES WERE ALLEGEDLY OPERATED AND CONTROLLED BY S HRI. PRAVEEN K. JAIN, AN INFAMOUS ACCOMMODATION ENTRY PROVIDER. APART THE RE FROM, IT WAS OBSERVED BY HIM, THAT IN THE COURSE OF THE SURVEY A CTION CONDUCTED ON THE ASSESSEE COMPANY, ITS DIRECTOR VIZ. SHRI CHETAN R. SHAH WAS UNABLE TO DIVULGE THE DETAILS ABOUT THE LENDERS FROM WHOM THE AFORESAID LOANS HAD BEEN RAISED AND HAD ADMITTED THAT THE SAME WERE IN THE NATURE OF ACCOMMODATION ENTRIES. IN SUM AND SUBSTANCE, THE AU THENTICITY OF THE LOAN TRANSACTIONS UNDER CONSIDERATION WAS NOT ACCEP TED BY THE A.O FOR TWO REASONS, VIZ. THAT, THE AFORESAID CONCERNS WERE CONTROLLED AND OPERATED BY SHRI PRAVEEN K. JAIN, AN INFAMOUS ACCOM MODATION ENTRY PROVIDER, WHO IN THE COURSE OF SEARCH PROCEEDINGS C ONDUCTED AGAINST HIM ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 15 HAD IN HIS STATEMENT RECORDED UNDER SEC.132(4) ADMI TTED THAT HE ALONG WITH HIS GROUP ENTITIES WERE ENGAGED IN THE BUSINES S OF PROVIDING ACCOMMODATION ENTRIES ; AND (II) THAT, SHRI CHETAN R. SHAH, DIRECTOR OF THE ASSESSEE COMPANY IN THE COURSE OF THE SURVEY PROCEE DINGS WAS UNAWARE ABOUT THE BASIC DETAILS OF THE LENDERS WHO HAD ADVA NCED UNSECURED LOANS TO 'MARATHAN GROUP', AND HAD ADMITTED THAT THE UNSE CURED LOANS RAISED FROM SHRI PRAVEEN K. JAIN WERE IN THE NATURE OF ACC OMMODATION ENTRIES. HOWEVER, AS THE ASSESSEE HAD NOT OFFERED THE AFORES AID UNSECURED LOANS DISCLOSED DURING THE COURSE OF THE SURVEY PROCEEDIN GS AMOUNTING TO RS.10,91,50,000/- AS ITS INCOME IN ITS RETURN OF IN COME FOR THE YEAR UNDER CONSIDERATION, THEREFORE, THE A.O HAD CALLED FOR AN EXPLANATION AS REGARDS THE SAME. IN REPLY, IT WAS SUBMITTED BY THE ASSESSE E THAT SHRI CHETAN R. SHAH, DIRECTOR OF THE ASSESSEE COMPANY, HAD DUE TO LACK OF INFORMATION AVAILABLE WITH HIM AT THE TIME OF SURVEY PROCEEDING S STATED THAT THE VARIOUS UNSECURED LOANS RAISED BY 'MARATHAN GROUP' WERE IN THE NATURE OF ACCOMMODATION ENTRIES. IT WAS THE CLAIM OF THE A SSESSEE BEFORE THE CIT(A) THAT SHRI CHETAN R. SHAH HAD THERAFTER RETRA CTED FROM HIS AFORESAID STATEMENT WHICH IN ITSELF WAS RECORDED IN THE ABSENCE OF THE REQUISITE DETAILS BEFORE HIM. ACCORDINGLY, IT WAS T HE CLAIM OF THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THAT IT HAD RAISED GENUINE LOANS FROM THE AFOREMENTIONED PARTIES. IN ORDER TO FORTIFY ITS AFORESAID CLAIM THE ASSESSEE HAD PLACED ON RECORD SUPPORTING DOCUMENTARY EVIDENCE, VIZ. (I) CONFIRMATIONS OF THE LENDERS; (II) COPIES OF THE RETURNS OF INCOME FOR A.Y. 2013- 14 OF THE LENDER PARTIES; (III) COPIES OF THE ANNUAL AUDITED ACCOUNTS FOR A.Y . 2013-14 OF THE LENDER PARTIES; AND (IV) COPY OF THE BANK STATEMENTS OF TH E LENDER PARTIES FROM WHERE THE LOANS WERE ADVANCED TO THE ASSESSEE COMPA NY. ACCORDINGLY, THE ASSESSEE IN DISCHARGE OF THE PRIMARY ONUS THAT WAS CAST UPON IT TO SUBSTANTIATE THE AUTHENTICITY OF THE LOAN TRANSACTI ONS HAD PLACED ON RECORD THE AFORESAID DOCUMENTARY EVIDENCE. IT HAS B EEN THE CLAIM OF THE ASSESSEE BEFORE THE CIT(A) THAT AS ALL THE NECESSAR Y REQUISITE DETAILS IN ORDER TO ESTABLISH THE IDENTITY AND CREDITWORTHINES S OF THE LENDERS AND ALSO THE GENUINENESS OF THE LOAN TRANSACTIONS WERE PLACED ON RECORD, THEREFORE, THE A.O WITHOUT REBUTTING THE SAID DOCUM ENTARY EVIDENCE AND PLACING ON RECORD ANY MATERIAL PROVING TO THE CONTR ARY WAS NOT JUSTIFIED IN SUMMARILY DISLODGING THE CLAIM OF THE ASSESSEE AS R EGARDS THE AUTHENTICITY OF THE LOANS THAT WERE RAISED BY IT FR OM THE AFOREMENTIONED PARTIES. 8. WE SHALL IN THE BACKDROP OF THE AFORESAID FACTS DELIBERATE ON THE OBSERVATIONS OF THE LOWER AUTHORITIES. WE SHALL FIR ST ADVERT TO THE STATEMENT OF SHRI CHETAN R. SHAH, DIRECTOR OF THE A SSESSEE COMPANY, WHICH HAD BEEN HEAVILY RELIED UPON BY THE A.O FOR D RIVING HOME HIS CLAIM THAT NO GENUINE LOANS WERE RAISED BY THE ASSESSEE C OMPANY FROM THE AFOREMENTIONED LENDERS. AS IS DISCERNIBLE FROM THE ORDER OF THE CIT(A), SHRI CHETAN R. SHAH HAD DURING THE COURSE OF THE SU RVEY PROCEEDINGS CONDUCTED ON THE ASSESSEE COMPANY UNDER SEC.133A, V IDE HIS STATEMENT DATED 25.03.2014, HAD IN HIS REPLY TO QUESTION NO.2 9 SUBMITTED THAT UNSECURED LOANS FROM PARTIES LISTED IN TABLE NO. 1 AND TABLE NO. 2 IN THE SAID STATEMENTS WERE UNSECURED LOANS ROUTED IN THE BOOKS OF MARATHAN ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 16 FISCAL PVT. LTD., MARATHAN REALTY PVT. LTD. AND CHE TAN SHAH, HUF DURING THE FINANCIAL YEARS 2011-12, 2012-13 AND 2013-14 WE RE IN NATURE OF ACCOMMODATION ENTRIES, AND HAD OFFERED THE SAME FOR TAX IN THE SAID RESPECTIVE YEARS. AS OBSERVED BY THE CIT(A), SHRI C HETAN R. SHAH HAD IN HIS REPLY TO QUESTION NO. 22 WHEREIN HE WAS CALLED UPON TO FURNISH THE NAME OF THE DIRECTORS, ADDRESS, PAN AND CREDITWORTH INESS OF THE LENDER COMPANIES FROM WHOM UNSECURED LOANS WERE TAKEN, HAD SUBMITTED, THAT HE WAS READILY NOT IN A POSITION TO GIVE THE DETAIL S SOUGHT FOR. ACCORDINGLY, WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT( A) THAT THE AFORESAID ADMISSION OF SHRI CHETAN R. SHAH HAS TO BE READ ALO NG WITH THE FACT THAT HE HAD CATEGORICALLY STATED THAT HE WAS NOT IN A PO SITION TO FURNISH THE DETAILS THAT WERE SOUGHT BY THE SURVEY OFFICIALS IN RESPECT OF THE LENDER PARTIES. HOWEVER, WE FIND THAT THE ASSESSEE HAD NOT OFFERED THE AFORESAID AMOUNT FOR TAX IN ITS RETURN OF INCOME AND HAD IN T HE COURSE OF THE ASSESSMENT PROCEEDINGS FURNISHED WITH THE A.O THE R EQUISITE DETAILS SUPPORTING THE AUTHENTICITY OF THE LOAN TRANSACTION S VIZ. COPY OF CONFIRMATIONS FROM LENDERS, COPIES OF THE RETURNS O F INCOME FILED BY THE LENDER PARTIES, COPIES OF THE ANNUAL AUDITED ACCOUN TS OF THE LENDER PARTIES, AND ALSO THE COPIES OF THE BANK ACCOUNTS O F THE LENDERS FROM WHERE THE RESPECTIVE LOANS HAD BEEN ADVANCED TO THE ASSESSEE COMPANY. ALSO, SHRI CHETAN R. SHAH HAD VIDE HIS LET TER DATED 01.01.2016 SUBMITTED DURING THE COURSE OF THE ASSESSMENT PROCE EDINGS THAT THE SURRENDER MADE DURING THE COURSE OF THE SURVEY PROC EEDINGS WAS BEING WITHDRAWN BY HIM. IN THE BACKDROP OF THE AFORESAID, WE SHALL NOW DELIBERATE ON THE EVIDENTIARY VALUE OF A STATEMENT OF AN ASSESSEE RECORDED DURING THE COURSE OF THE SURVEY ACTION CON DUCTED UNDER SEC.133A, AND AS TO WHETHER THE SAME ON A STANDALON E BASIS CAN JUSTIFY ADDITION IN THE HANDS OF AN ASSESSEE, OR NOT. A PER USAL OF SEC.133A(3)(III) OF THE ACT WHICH VESTS POWER WITH AN INCOME TAX AUT HORITY TO RECORD THE STATEMENT OF ANY PERSON IN THE COURSE OF SURVEY PRO CEEDINGS, READS AS UNDER: '(III) RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THIS ACT.' ACCORDINGLY, IT IS EVIDENT THAT AN INCOME TAX AUTHO RITY IN THE COURSE OF THE SURVEY PROCEEDINGS CONDUCTED UNDER SEC.133A CAN REC ORD THE STATEMENT OF ANY PERSON WHICH COULD BE USEFUL OR RELEVANT TO ANY PROCEEDING UNDER THE ACT. HOWEVER, WE FIND THAT THE PHRASEOLOGY OF S EC.133A(3)(III) IS ENTIRELY DIFFERENT AS IN COMPARISON TO PROVISIONS O F SEC.132(4) OF THE ACT, WHEREIN THE AUTHORIZED OFFICER CAN EXAMINE ANYBODY ON OATH , AND SUCH STATEMENT MAY BE USED AS EVIDENCE IN ANY PROCEEDING S UNDER THE ACT. AS THE STATEMENT RECORDED UNDER SEC. 133A(3)(III) OF THE ACT IS NOT RECORDED ON OATH, TH EREFORE, AS HAD CONSISTENTLY BEEN HELD BY VARIOUS COURTS THE SAME H AS NO EVIDENTIARY VALUE IN ABSENCE OF ANY CORROBORATIVE EVIDENCE. IN SUM AND SUBSTANCE, THE STATEMENT RECORDED UNDER SEC. 133A CAN BE USED TO CORROBORATE A STATE OF FACT, HOWEVER, THE SAME ON A STANDALONE BA SIS CANNOT JUSTIFIABLY LEAD TO DRAWING OF ANY INFERENCES. TO SUM UP, A STA TEMENT RECORDED UNDER SEC.133A IS SIMPLY AN INFORMATION WHICH CAN B E USED FOR ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 17 CORROBORATIVE PURPOSE FOR DECIDING ANY ISSUE IN FAV OUR OR AGAINST THE ASSESSEE. IN FACT, WE FIND THAT THE EVIDENTIARY VAL UE OF A STATEMENT RECORDED UNDER SEC. 133 A OF THE ACT HAS BEEN SUBJECTED TO JUDICIAL SCRUTINY AND THE HON BLE COURTS HAD CONCLUDED THAT THE SAME HAS NO EVIDENTIARY VALUE IN THE ABSENCE OF ANY CORROBORATI VE EVIDENCE. OUR AFORESAID VIEW IS FORTIFIED BY THE ORDER OF A COORD INATE BENCH OF THE ITAT, DELHI IN THE CASE OF MAHESH OHRI VS. ACIT (ITA NO.4 109 OF 2009, DATED 08.03.2013) (DEL). THE TRIBUNAL IN ITS AFORESAID OR DER HAD OBSERVED THAT AS THE SURVEY OFFICIALS ARE NOT AUTHORIZED TO RECOR D THE STATEMENT ON OATH, THEREFORE, THE STATEMENT TAKEN DURING THE COURSE OF THE SURVEY PROCEEDINGS IS SIMPLY AN INFORMATION WHICH CAN BE U SED FOR CORROBORATIVE PURPOSE FOR DECIDING ANY ISSUE IN FAVOUR OR AGAINST THE ASSESSEE. IT WAS OBSERVED BY THE TRIBUNAL AS UNDER : ' A PAR T F R O M T HI S ST A T EM ENT , T HE R EV EN U E HA S N OT BR O U GHT AN YT HIN G ON RECORD IN SUPPORT OF ITS CONCLUSION THAT THE ASSESSEE HAS UNDISCLOSED INCOME. DURING THE COURSE OF SURVEY, TH E OFFICER COULD RECORD THIS STATEMENT OF A PERSON UNDER SUB-SECTION (3) (I II) OF SECTION 133A OF THE INCOME-TAX ACT, 1961. THIS CLAUSE AUTHORISE THE AUTHORITY TO RECORD THE STATEMENT OF ANY PERSON WHICH MAY BE USEFUL F O R OR R ELEV ANT T O ANY PR OCE EDINGS UN DER T HE ACT . HOWEV ER , THE OF F ICER IS NOT A U T H O R I S E D T O RECORD THE STATEMENT ON OATH AND HENCE THE STATEMENT TAKEN DURING THE COURSE OF SEARCH HAS NO EVIDENTIARY VALU E. IT IS SIMPLY AN INFORMATIONWHICH CAN BE USED FOR CORROBORATION PURP OSE FOR DECIDING ANY ISSUE IN FAVOUR OR AGAINST THE ASSESSEE. THIS ISSUE HAS COME UP BEFORE THE HON BLE KERALA HIGH COURT I N T H E C A S E O F P A U L M A T H E W S A N D S O N S ( S U P R A ) A N D T H E C O U R T H A S M A D E T H E F OLLOWING OBSERVATIONS (PAGE 108): ' S E C T IO N 1 3 3 A (3 ) (I I I ) E N A B LE S T H E A U TH O R I TY T O R E C O R D TH E S TA TE M E N T O F A N Y P ERSON WHICH MAY BE USEFUL FOR, OR RELEVANT TO, ANY PROCEEDING UNDER THE ACT. SECTI ON 133A, HOWEVER, ENABLES THE INCOME -TAX AUTHORITY ONLY TO RECORD A N Y STATEMENT OF ANY PERSON WHICH MAY BE USEFUL, BUT DO ES NOT AUTHORISE TAKING ANY SWORN STATEMENT. ON THE OTHER HAND, WE FIND THAT SUCH A P O W E R T O E X A M IN E A P E R S O N O N O A TH IS S PE C IF IC A LLY C O N F E R R ED ON TH E A U TH O R I S E D O F F IC E R ONLY UNDER SECTION 132(4) OF THE IN COME-TAX ACT IN THE COURSE OF ANY SEARCH OR SEIZUR E. THUS, THE INCOME -TAX ACT, WHEN EVER IT THOUGHT FIT AND NECESSARY TO CONFER SUCH POWER TO EXAMINE A PERSON ON OATH, THE SAME HAS BEEN EXPRESSLY P ROVIDED WHEREAS SECTION 133A DOES NOT EMPOWER ANY INCOME -TAX OFFICER TO E X AM IN E ANY PE RS ON OATH. THUS , IN C ON TRAD IS TINCTIO N TO TH E PO WER UND ER SE C TION 133 A, SE CTION 132 (4 ) O F TH E IN C OM E - TA X AC T ENAB LES THE AU TH OR ISED OFFICER TO EXAMINE A PER SON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMI NATION CAN ALSO BE USED IN EVIDENCE UNDER THE INCOME -TAX ACT. ON THE OTHER HAND, WHATEVER STATEMENT IS RECORDED UNDER SECTION 133A OF THE INCOME- TAX ACT IT IS NOT GIVEN ANY EVIDENTIARY VAL UE OBVIOUSLY FOR THE R E AS ON THA T THE OF F IC ER IS N O T AU TH O R ISED TO ADM IN IS TER OA TH AND TO TAKE ANY S WOR N S TA TEM EN T WHICH A LON E HAS E V IDEN TIAR Y VA LU E AS C ON TEMP LA TED U NDE R LAW . THEREFORE, THERE ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 18 IS MUCH FARCE IN THE ARGUMENT OF LEARNED COUNSEL FO R THE A P P E L L A N T T H A T T H E S T A T E M E N T E L I C I T E D D U R I N G T H E S U R V E Y O P E R A T I O N H A S N O EVIDENTIARY VALUE A ND THE INCOME-TAX OFFICER WAS WELL AWARE OF THIS.' 9. SIMILARLY, THE H ONBLE MADRAS HIGH COURT HAS ALSO CONCLUDED THAT STATEMENT RECORDED DURING THE COURSE OF SURVEY HAS NO EVIDENTIARY VALUE. THE SPECIAL LEAVE P E T I T I O N AG A I N ST T H E D EC I S I O N O F T H E H O N B L E M A D R A S H I G H C O U R T H A S AL S O B E E N D I S M I S S E D B Y T H E H O N B L E S U P R E M E C O U R T ON S EPT EMBER 20, 2 012. W E H AVE EXAMI NED THE RECORD AND WE DO NOT F I N D A N Y O T H E R M A T E R I A L C O L L E C T E D B Y T H E SURVEY TEAM AND USED BY THE ASSESSING OFFICER FOR MAKING THE ADDITION OF RS. 2 C R O R E S . T H E C O N T E N T I O N S O F T H E L E A R N E D D E P A R T M E N T A L R E P R E S E N T A T I V E O N T H E STRENGTH OF THE HON BLE KARNATAKA HIGH COURT DECISION IS THAT THE DEPAR TMENT WAS PREVENTED BY THE ASSESSEE TO CONDUCT FURTHER INQUIR Y AND, THEREFORE, THE ASSESSEE C A N N O T T A K E A S O M E R S A U L T S U B S E Q U E N T L Y . W E D O N O T F I N D ANY FORCE IN THE SUBMISSIONS OF T HE LEARNED DEPARTMENTAL REPRESENTATIVE BECAUSE THE DEPARTMENT IS MANAGED BY T R AINED REV ENUE OF F ICIALS. THEY H AV E T HE KNOWLEDGE A BO U T T HEIR AUTHORITIES WHILE TAKING STATEMENT DURING THE COURSE OF SURVEY. THE B OARD HAS ALSO ISSUED GUIDELINES ADVISING THE SURVEY TEAM NOT TO TAKE VOL UNTARY DISCLOSURE UNLESS INCRIMINATING MATERIAL WAS COLLECTED. IN THE CASE OF T.P. INDRAKUMAR (SUPRA), THE ASSESSING OFFICER SPECIFICA LLY LAY HIS HANDS ON UNEXPLAINED GIFTS, IN THAT SITUATION THE ASSESSEE H AD MODE VOLUNTARY DISCLOSURE AND FILED A REVISED RETURN. IN THE PRESE NT CASE, THE DEPARTMENT FAILED TO COLLECT ANY MATERIAL DURING TH E COURSE O F SURVEY AND THE ASSESSING OFFICER IS SIMPLY HARPING UPON THE STATEM ENT OF THE ASSESSEE, E XT R ACT E D S U PR A. A CC OR D ING T O T HE A U T H OR IT AT IV E PR ON O U NC E ME NT OF T HE H O N B LE SUPREME COURT IN THE CASE OF S. KHADER KHAN SON (SUPRA) AS WELL AS THE HON BLE K E R A L A H I G H C O U R T T H I S S T A T E M E N T D O E S N O T C A R R Y A N Y E V I D E N T I A R Y V A L U E A N D , THEREFORE, NO ADDITION IS SUSTAINABLE ON THE STRENG TH OF THIS STATEMENT. IN VIEW OF THE ABOVE DISCUSSION, WE FIND FORCE IN THE FIRST GROUND OF APPEAL RAISED BY THE ASSESSEE AND DELETE THE ADDITION OF R S. 2 CRORES.' ALSO, A SIMILAR VIEW HAD BEEN TAKEN BY THE HON'BLE HIGH COURT OF KERALA IN THE CASE OF PAUL MATHEWS & SONS VS. CIT (2003) 263 ITR 101 (KER). IN THE AFORESAID CASE, IT WAS OBSERVED BY THE HON BLE HIGH COURT THAT AS THE STATEMENT ELICITED DURING THE COURSE OF THE SURVEY OPERATIONS IS NOT RECORDED ON OATH, THEREFORE, THE SAME HAS NO EVIDENTIARY VALUE. FURTH ER, THE HON'BLE SUPREME COURT IN ITS JUDGMENT IN THE CASE OF CIT VS. S. KHA DER KHAN SON (2013) 352 ITR 480 (SC), WHILE UPHOLDING THE VIEW OF THE HON BLE HIGH COURT OF MADRAS, HAD HELD, THAT AS A STATEMENT RECORDED IN THE COURSE OF THE SURVEY PROCEEDINGS DOES NOT CARRY ANY EVIDENTIARY VALUE, THEREFORE, NO ADDI TION IS SUSTAINABLE ON THE STRENGTH OF THE SAID STATEMENT. A SIMILAR VIEW HAD ALSO BEEN TAKEN BY THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. DHINGRA METAL WORKS (2010) 328 ITR 384 (DEL). IN THE AFOREMENTIONED CASE, IT W AS OBSERVED BY THE HON BLE HIGH COURT THAT A STATEMENT OF AN ASSESSEE TO HAVE EVIDENTIARY VALUE SHOULD HAVE BEEN RECORDED ON OATH. IT WAS OBSERVED BY THE HIGH COURT THAT THOUGH AN ADMISSION WAS AN EXTREMELY IMPORTANT PIECE OF EVIDE NCE, IT COULD NOT BE SAID TO ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 19 BE CONCLUSIVE AND IT WAS OPEN TO THE PERSON WHO MAD E THE ADMISSION TO SHOW THAT IT WAS INCORRECT. IN THE BACKDROP OF THE AFORE SAID JUDICIAL PRONOUNCEMENTS, IT CAN SAFELY BE CONCLUDED THAT THE STATEMENT RECORDED DURING THE COURSE OF THE SURVEY PROCEEDINGS HAS NO EVIDENTIARY VALUE AND THE SAME CAN ONLY BE USED FOR CORROBORATIVE PURPOSES FOR DECIDING AN ISSUE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. NOW IN THE CASE BEFORE US, WE FIND THA T THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS HAD PLACED ON RECORD SUFFICIENT DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE AUTHENTICITY OF THE LO AN TRANSACTIONS VIZ. (I) CONFIRMATIONS OF THE LENDERS; (II) COPIES OF THE RE TURNS OF INCOME FOR A.Y. 2013-14 OF THE LENDER PARTIES; (III) COPIES OF THE ANNUAL A UDITED ACCOUNTS FOR A.Y. 2013-14 OF THE LENDERS PARTIES; AND (IV) COPY OF THE BANK S TATEMENTS OF THE LENDERS. ALSO, AS OBSERVED BY US HEREINABOVE, THE ASSESSEE WHILE F ILING THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION HAD NOT CONSIDERED THE UNSECURED LOANS AS ITS INCOME. IN FACT, SHRI CHETAN R. SHAH, DIRECTOR OF T HE ASSESSEE COMPANY HAD VIDE HIS LETTER DATED 01.01.2016 THAT WAS SUBMITTED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS CATEGORICALLY WITHDRAWN HIS STATEMENT THAT WAS RECORDED DURING THE COURSE OF THE SURVEY PROCEEDING S. IN THE BACKDROP OF THE AFORESAID FACTS, WE ARE OF THE CONSIDERED VIEW THAT NOW WHEN SHRI. CHETAN R. SHAH, DIRECTOR OF THE ASSESSEE COMPANY HAD WITHDRAW N HIS STATEMENT THAT WAS RECORDED IN THE COURSE OF THE SURVEY PROCEEDINGS, A ND HAD IN THE COURSE OF THE ASSESSMENT PROCEEDINGS PLACED ON RECORD SUPPORTING DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE AUTHENTICITY OF THE LOAN TRANSACTI ONS UNDER CONSIDERATION, THEREFORE IT WAS INCUMBENT UPON THE A.O TO CONCLUSI VELY PROVE ON THE BASIS OF CORROBORATIVE MATERIAL THAT THE ASSESSEE HAD AS A M ATTER OF FACT OBTAINED ACCOMMODATION ENTRIES IN THE GARB OF THE AFORESAID LOAN TRANSACTIONS AND HE COULD NOT HAVE SIMPLY DRAWN ADVERSE INFERENCES ON T HE BASIS OF THE AFORESAID STATEMENT RECORDED IN THE COURSE OF THE SURVEY PROC EEDINGS. AS OBSERVED BY US HEREINABOVE, A STATEMENT RECORDED IN THE COURSE OF THE SURVEY PROCEEDINGS CAN ONLY BE USED FOR CORROBORATIVE PURPOSES FOR DECIDIN G ANY ISSUE IN FAVOUR OR AGAINST THE ASSESSEE. HOWEVER, IN THE CASE BEFORE U S, WE FIND THAT THE A.O HAD SIMPLY HARPED ON THE ADMISSION MADE BY SHRI CHETAN R. SHAH, DIRECTOR OF THE ASSESSEE COMPANY IN HIS STATEMENT RECORDED UNDER SE C.133A AND HAD ABSOLUTELY FAILED TO PLACE ON RECORD ANY DOCUMENTAR Y EVIDENCE WHICH DESPITE WITHDRAWAL OF THE AFORESAID STATEMENT WOULD HAVE CO RROBORATED THE FACTS WHICH WERE STATED BY HIM. IN OUR CONSIDERED VIEW, AS A S TATEMENT RECORDED UNDER SEC.133A HAS NO EVIDENTIARY VALUE IN ABSENCE OF ANY CORROBORATIVE EVIDENCE, THEREFORE, THE SAME ON A STANDALONE BASIS COULD NOT HAVE JUSTIFIED DRAWING OF ADVERSE INFERENCES AS REGARDS THE AUTHENTICITY OF T HE LOAN TRANSACTIONS, SPECIFICALLY WHEN THE ASSESSEE HAD DECLINED TO ACT UPON THE SAME AND HAD PLACED ON RECORD SUPPORTING DOCUMENTARY EVIDENCE TO PROVE THE AUTHENTICITY OF THE SAID TRANSACTIONS. IN FACT, WE FIND THAT THE CB DT IN ITS LETTER NO. F.NO.286/2/2003, IT (INV-II), DATED 10.03.2003 HAD OBSERVED THAT INSTANCES HAVE COME TO ITS NOTICE THAT IN CERTAIN CASES THE A SSESSES WERE FORCED TO CONFESS UNDISCLOSED INCOME IN THE COURSE OF THE SEA RCH & SEIZURE AND SURVEY OPERATIONS. IT WAS NOTICED BY THE BOARD THAT AS SUC H BASELESS DISCLOSURES WOULD BE DIVORCED FROM THE ACTUAL FACTS AND WOULD NOT BE BACKED BY ANY CREDIBLE EVIDENCE, THEREFORE, THE ASSESSES AT THE TIME OF FI LING THEIR RETURNS OF INCOME WOULD RETRACT FROM THE SAME. ACCORDINGLY, THE BOARD TAKING COGNIZANCE OF THE SAID GROUND REALITIES HAD IN ITS AFORESAID CIRCULAR EMPHASISED THAT THE OFFICIALS IN THE COURSE OF THE SEARCH & SEIZURE PROCEEDINGS AND SURVEY OPERATIONS SHOULD FOCUS AND CONCENTRATE ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 20 INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NO T LIKELY TO BE DISCLOSED BY THE ASSESSEE BEFORE THE DEPARTMENT, AND NO ATTEMPT SHOU LD BE MADE TO OBTAIN CONFESSION AS REGARDS THE UNDISCLOSED INCOME. THE S AID CBDT CIRCULAR READS AS UNDER: 'I NST ANCES HAV E COM E T O T HE NOT ICE OF T HE B OAR D WHER E ASSES SEE S HAV E CLAIMED THAT THEY HAVE BEEN FORCED TO CONFE SS THE UNDISCLOSED INCOME DURING THE COURSE OF THE SEARCH & SEIZURE AN D SURVEY O P E R A T I O N S . S U C H CONFESSIONS, IF NOT BASED UPON CRED IBLE EVIDENCE, AR E LATER RETRACTED BY THE CONCERNED ASSESSEE S WHILE FILING RETURNS OF INCOME. IN THESE CIRCUMSTANCES, CONF ESSIONS DUR ING THE COUR SE OF SEAR CH & SEIZUR E AND SURVEY OPER AT IONS DO NOT SERVE ANY USEFUL P URPOSE. IT IS, THEREFORE, ADVISED THAT THERE SHOULD BE FOCUS AND C ONCENTRATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INF ORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE DISCLOSED BEF ORE T HE INCOME TAX DEPART MENT S. SIMILAR LY, WHILE R ECOR DING ST AT EMENT DURING THE COURSE OF SEARCH, SEIZURES AND SURVEY OPERATIONS NO ATTEMP T SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME. AN Y ACTION ON THE CONTRARY SHALL BE VIEWED ADVERSELY. FURTHER, IN RESPECT OF PENDING ASSESSMENT PROCEEDIN GS ALSO, ASSESSING OFFICERS SH O UL D R E LY U P O N T H E EV I DE NC E S/ MAT ER I A LS GAT HER E D D UR ING T HE C O UR SE OF SEARCH/SURVEY OPERATIONS OR THEREAFTER WHILE FRAMING THE RELEVANT ASSESSMENT ORDERS.' ON THE BASIS OF OUR AFORESAID OBSERVATIONS, WE ARE OF A STRONG CONVICTION THAT IN THE CASE BEFORE US, THE MERE ADMISSION OF U NDISCLOSED INCOME BY THE ASSESSEE IN THE COURSE OF THE SURVEY PROCEEDING S, WHICH WE ARE AFRAID IS IN ITSELF NOT FREE FROM DOUBTS AND DEBATE AND IN FACT HAD BEEN WITHDRAWN, THUS COULD NOT HAVE BEEN ACTED UPON BY T HE REVENUE IN ISOLATION FOR DRAWING OF ADVERSE INFERENCES AND MAK ING EXORBITANT ADDITIONS IN THE HANDS OF THE ASSESSEE DE HORS ANY CORROBORATIVE MATERIAL. IN SUM AND SUBSTANCE, WE ARE OF A CONSIDE RED VIEW THAT THE HEAVY RELIANCE PLACED BY THE A.O ON THE RETRACTED S TATEMENT OF SHRI CHETAN R. SHAH, DIRECTOR OF THE ASSESSEE COMPANY TH AT WAS RECORDED IN THE COURSE OF THE SURVEY PROCEEDINGS CONDUCTED ON 2 5.03.2014, IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL COULD NOT HAV E BEEN ACTED UPON BY THE REVENUE FOR DRAWING ADVERSE INFERENCES IN THE H ANDS OF THE ASSESSEE. 9. WE SHALL NOW ADVERT TO THE CONTENTION OF THE REV ENUE THAT THE CIT(A) HAD ERRED IN TREATING THE LOANS AGGREGATING TO RS.1 0,91,50,000/- AS GENUINE, DESPITE THE FACT THAT THE SAID LOANS WERE RECEIVED FROM DUMMY COMPANIES/ENTITIES MANAGED AND CONTROLLED BY SHRI P RAVEEN KUMAR JAIN, AN INFAMOUS ACCOMMODATION ENTRY PROVIDER. AS IS DIS CERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES, SEARCH AND SEIZURE ACTION WAS CONDUCTED ON SHRI PRAVEEN KUMAR JAIN, AN INFAMOUS ACCOMMODATI ON ENTRY PROVIDER. AS CLAIMED BY THE REVENUE, SHRI. PRAVEEN KUMAR JAIN HAD IN HIS STATEMENT RECORDED UNDER SEC.132(4) ADMITTED BEFORE THE INVESTIGATION WING THAT HE WAS CONTROLLING AND OPERATING VARIOUS DUMMY CONCERNS/COMPANIES THROUGH WHICH HE HAD PROVIDED A CCOMMODATION ENTRIES TO VARIOUS PERSONS. AS OBSERVED BY US HEREI NABOVE, IT IS A FACT BORNE FROM THE ORDERS OF THE LOWER AUTHORITIES THAT SHRI PRAVEEN KUMAR ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 21 JAIN HAD RETRACTED FROM HIS AFORESAID STATEMENT BY FILING AN AFFIDAVIT ALLEGING THAT AS THE SEARCH OPERATIONS HAD CONTINUE D AT LENGTH FOR 9 DAYS, THEREFORE, IT HAD TAKEN A TOLL ON HIS MENTAL FACULT IES. BE THAT AS IT MAY, WE FIND THAT IT IS NOT THE CASE OF THE REVENUE BEFORE US THAT THE AFORESAID PERSON HAD AT ANY STAGE IN HIS STATEMENT RECORDED D URING COURSE OF THE SEARCH PROCEEDINGS EVER ALLEGED THAT HE HAD PROVIDE D ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY. WE SHALL IN THE BA CKDROP OF THE AFORESAID FACTS EMERGING FROM THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN RECORDED UNDER SEC.132(4) OF THE ACT, WHICH THEREAF TER IS STATED TO HAVE BEEN RETRACTED BY HIM, THEREIN DELIBERATE ON THE EV IDENTIARY VALUE OF THE SAME INSOFAR THE CASE OF THE ASSESSEE BEFORE US IS CONCERNED. AS OBSERVED BY US HEREINABOVE, ONE OF THE MATERIAL ASP ECT WHICH HAD WEIGHED IN THE MIND OF THE A.O WHILE CONCLUDING THA T THE ASSESSEE HAD OBTAINED ACCOMMODATION ENTRIES FROM THE AFOREMENTIO NED COMPANIES WHICH WERE STATED TO BE OPERATED AND CONTROLLED BY SHRI PRAVEEN K. JAIN, WAS THE STATEMENT OF THE SAID PERSON RECORDED UNDER SEC. 132(4) OF THE ACT. AS OBSERVED BY US HEREINABOVE, IT HAS THROUGHO UT BEEN THE CLAIM OF THE ASSESSEE THAT THE AFORESAID PERSON HAD NEVER ST ATED THAT HE HAD PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE. APA RT THEREFROM, IT WAS ALSO SUBMITTED BY THE ASSESSEE BEFORE THE A.O THAT AS SHRI PRAVEEN KUMAR JAIN HAD RETRACTED FROM HIS STATEMENT THAT WA S RECORDED DURING THE COURSE OF THE SEARCH PROCEEDINGS, HENCE NO COGN IZANCE OF THE SAME COULD THEREAFTER BE DRAWN. IN FACT, THE ASSESSEE IN ORDER TO FORTIFY ITS CLAIM THAT IT HAD RAISED GENUINE LOANS FROM THE AFOREMENT IONED COMPANIES HAD IN THE COURSE OF THE ASSESSMENT PROCEEDINGS PLACED ON THE RECORD OF THE A.O SUFFICIENT DOCUMENTARY EVIDENCE TO SUPPORT THE SAME. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF TH E CASE IN THE BACKDROP OF THE SETTLED POSITION OF LAW, AND BEFORE PROCEEDI NG ANY FURTHER MAY HEREIN OBSERVE THAT IN THE CASE BEFORE US THE STATE MENT OF SHRI PRAVEEN KUMAR JAIN, WHICH HAD THEREAFTER BEEN RETRACTED BY HIM (THOUGH NOT ACCEPTED BY THE REVENUE) HAD BEEN HEAVILY RELIED UP ON BY THE A.O FOR ARRIVING AT A CONCLUSION THAT THE ASSESSEE HAD IN T HE GARB OF UNSECURED LOANS RAISED ACCOMMODATION ENTRIES FROM THE AFOREME NTIONED 9 PARTIES. IN SUM AND SUBSTANCE, WE ARE CONFRONTED WITH A SITU ATION WHERE A STATEMENT OF A THIRD PARTY WHICH HAD BEEN RETRACTED IS BEING ACTED UPON BY THE REVENUE FOR DRAWING OF ADVERSE INFERENCES AN D CHARACTERISING THE LOAN TRANSACTIONS UNDER CONSIDERATION AS BOGUS/SHAM . ON A PERUSAL OF SUB-SECTION (4) OF SEC.132 OF THE ACT, AN AUTHORISE D OFFICER MAY, DURING THE COURSE OF THE SEARCH OR SEIZURE, EXAMINE ON OAT H ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS O F ACCOUNT, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATI ON MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDINGS UNDER THE AC T. ACCORDINGLY, IT CAN SAFELY BE GATHERED THAT THE STATEMENT RECORDED IN T HE COURSE OF THE SEARCH PROCEEDINGS UNDER SEC.132(4) 'MAY' THEREAFTE R BE USED IN EVIDENCE IN ANY PROCEEDINGS UNDER THE ACT. IT IS TH US ABUNDANTLY CLEAR THAT THE A.O IS VESTED WITH A DISCRETION TO USE A S TATEMENT RECORDED UNDER SEC.132(4) AS AN EVIDENCE IN THE COURSE OF ANY PROC EEDINGS UNDER THE INCOME TAX ACT . IN OUR CONSIDERED VIEW, THE CIT(A) HAS RIGHTLY CONCLUDED THAT THE WORD 'MAY' CLEARLY SUGGESTS THAT THE STATEMENT RECORDED UNDER SEC. 132(4) MAY THEREIN BE REBUTTED SUBSEQUENTLY IF THE ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 22 ASSESSEE IS ABLE TO PROVE WITH DOCUMENTARY EVIDENCE THAT THE FACTS EARLIER STATED WERE NOT CORRECT. IN FACT, WE ARE PE RSUADED TO SUBSCRIBE TO THE VIEW OF THE CIT(A) THAT THOUGH A STATEMENT RECO RDED UNDER OATH IS AN IMPORTANT PIECE OF EVIDENCE HOWEVER, ADDITION/DI SALLOWANCE CANNOT BE MADE SOLELY ON THE BASIS OF SUCH STATEMENT IN THE A BSENCE OF ANY CORROBORATIVE EVIDENCE SUPPORTING THE SAME. AS A MA TTER OF FACT, IN A CASE WHERE A STATEMENT HAD BEEN RETRACTED BY THE AS SESSEE, IT BECOMES ALL THE MORE ONEROUS ON THE PART OF THE A.O TO CORR OBORATE THE STATEMENT RECORDED IN THE COURSE OF THE SEARCH PROCEEDINGS ON THE BASIS OF SUPPORTING EVIDENCE. AS HAD BEEN OBSERVED BY VARIOU S COURTS, A STATEMENT RECORDED UNDER SEC.132(4) IS TREATED AS A PIECE OF EVIDENCE IN THE PROCEEDINGS UNDER THE ACT, AS LONG AS THE SAME IS NOT RETRACTED. HOWEVER, IN CASE THE ASSESSEE RETRACTS THE STATEMEN T, THE EVIDENTIARY VALUE OF THE SAID STATEMENT SUFFERS A SERIOUS DENT. ACCORDINGLY, THE MANDATE ENVISAGED UNDER SUB-SECTION (4) OF SEC.132 OF USING THE STATEMENT AS EVIDENCE IN ANY PROCEEDINGS UNDER THE ACT GETS HONOURED ONLY WHEN THERE IS NO OTHER VERSION OF THE ASSESSEE VIS-A-VIS THE SAID STATEMENT. TO SUM UP, A STATEMENT RECORDED UNDER SE C.132(4) HAS THOUGH AN EVIDENTIARY VALUE, HOWEVER, THE SAME CANN OT BE ASCRIBED THE STATUS OF A PROVEN FACT. IN OUR CONSIDERED VIEW, A RETRACTED STATEMENT UNDER SEC.132(4) OF THE ACT WOULD REQUIRE SOME CORR OBORATIVE MATERIAL FOR THE A.O TO PROCEED AND MAKE ADDITIONS ON THE BA SIS OF THE FACTS STATED IN SUCH STATEMENTS. NOW, IN THE CASE BEFORE US, WE ARE SEIZED WITH A SITUATION WHERE THE REVENUE HAS SOUGHT TO DRAW AD VERSE INFERENCES IN THE HANDS OF THE ASSESSEE BY ACTING UPON A STATEMEN T RECORDED UNDER SEC.132(4) OF A THIRD PARTY , WHICH AS OBSERVED BY US HEREINABOVE IN ITSELF IS FOUND TO HAVE BEEN RETRACTED. WE CANNOT R EMAIN OBLIVIOUS OF THE FACT THAT NOW WHEN A STATEMENT RECORDED UNDER SEC.1 32(4) OF THE ACT, WHICH HAD THEREAFTER BEEN RETRACTED, (THOUGH NOT AC CEPTED BY THE DEPARTMENT) WOULD REQUIRE SOME CORROBORATIVE MATERI AL FOR THE A.O TO MAKE ADDITIONS ON THE BASIS OF SUCH STATEMENT IN TH E HANDS OF THE PERSON WHOSE STATEMENT IT IS, THEREFORE, OBVIOUSLY, A MUCH HIGHER BURDEN WOULD BE CAST UPON THE REVENUE AT THE TIME OF USING SUCH STATEMENT FOR DRAWING OF ADVERSE INFERENCES IN THE HANDS OF A THIRD PART Y . ADMITTEDLY, AN ADMISSION RECORDED IN A STATEMENT UNDER SEC.132(4) IS A VITAL PIECE OF EVIDENCE, BUT IT CANNOT BE SAID THAT IT IS CONCLUSI VE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS IN CORRECT. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HON'BLE SU PREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCT COMPANY LTD. VS. STATE OF KERALA 91 ITR 18 (SC). ALSO, A SIMILAR VIEW HAD BEEN TAKEN BY THE HON'BLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF CIT VS. NARESH K. AGG ARWAL (2014) 369 ITR 171 (AP). IN THE SAID CASE, IT WAS OBSERVED BY THE HON BLE HIGH COURT THAT A STATEMENT RECORDED UNDER SUB-SECTION ( 4) OF SEC.132 SHALL BE TREATED AS A PIECE OF EVIDENCE IN THE PROCEEDING S UNDER THE ACT, AS LONG AS THE SAID STATEMENT IS NOT RETRACTED. ALSO, A SIMILAR VIEW HAD BEEN TAKEN BY THE HON'BLE HIGH COURT DELHI IN THE CASE O F CIT VS. SUNIL AGGARWAL (2015) 379 ITR 367 (DEL). IN THE AFOREMENT IONED CASE, IT WAS OBSERVED BY THE HON BLE HIGH COURT THAT A RETRACTED STATEMENT UNDER SEC.132(4) OF THE ACT WOULD REQUIRE SOME CORROBORAT IVE MATERIAL FOR THE A.O TO PROCEED TO MAKE ADDITIONS ON THE BASIS OF SU CH STATEMENT. WE FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 23 PRODUCE CO. LTD. VS. STATE OF KERALA& ANR. (1973) 9 1 ITR 18 (SC), HAD OBSERVED, THAT AN ADMISSION IS AN EXTREMELY IMPORTA NT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT WAS OBSERVED BY THE HON BLE APEX COURT THAT IT WAS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT WAS INCORRECT. RELYING ON THE AFORESAI D JUDGMENT OF THE HON BLE APEX COURT, WE FIND, THAT A COORDINATE BENCH OF THE TRIBUNAL VIZ. ITAT, MUMBAI IN THE CASE OF TRIBHUVANDAS BHIMJI ZAV ERI, ITA NO. 2250 & 2251/MUM/2013, DATED 04.11.2015, HAD DRAWN AN ANALO GY AND HAD OBSERVED THAT THOUGH AN ADMISSION MADE IN A STATEME NT RECORDED UNDER SEC.132(4) IS AN EXTREMELY IMPORTANT PIECE OF EVIDE NCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AS IT IS OPEN TO THE PER SON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT. WE FURTHER FIND THAT THE HON'BLE HIGH COURT OF GUJARAT IN DCIT (INVESTIGATION) VS. N ARENDRA GARG & ASHOK GARG (AOP) (ITA NO. 1531 & 1532 OF 2007, DATED 28.0 7.2016), HAD HELD, THAT AS THE ASSESSEE HAD RETRACTED FROM HIS STATEME NT RECORDED UNDER SEC.132(4), WHICH THOUGH WAS NOT ACCEPTED BY THE RE VENUE, THEREFORE, IT WAS INCUMBENT ON THE PART OF THE A.O TO HAVE SUPPOR TED THE ADDITION MADE ON THE BASIS OF THE DISCLOSURE MADE BY THE ASS ESSEE IN HIS AFORESAID STATEMENT ON THE BASIS OF EVIDENCE COLLEC TED DURING THE COURSE OF THE SEARCH PROCEEDINGS. IT WAS OBSERVED BY THE H ON BLE HIGH COURT THAT THE A.O CANNOT PROCEED ON PRESUMPTION UNDER SE C. 132(4) OF THE ACT AND THERE MUST BE SOMETHING MORE THAN BARE SUSPICIO N TO SUPPORT THE ASSESSMENT OR ADDITION. WE FIND THAT THE HON BLE HIGH COURT IN THE AFOREMENTIONED CASE HAD OBSERVED THAT EVEN IN A CAS E WHERE THE RETRACTION OF THE DISCLOSURE MADE BY THE ASSESSEE I N HIS STATEMENT RECORDED UNDER SEC.132(4) IS NOT ACCEPTED BY THE RE VENUE, EVEN THEN, THE ADDITION/DISALLOWANCE HAS TO BE BASED BY THE RE VENUE ON THE BASIS OF EVIDENCE COLLECTED DURING THE COURSE OF THE SEARCH PROCEEDINGS. ACCORDINGLY, ON THE BASIS OF OUR AFORESAID DELIBERA TIONS, WE ARE OF THE CONSIDERED VIEW THAT MERELY ON THE BASIS OF ADMISSI ON AN ASSESSEE CANNOT BE SADDLED WITH ADDITIONS UNLESS AND UNTIL S OME CORROBORATIVE EVIDENCE IS FOUND IN SUPPORT OF SUCH ADMISSION. 10. WE SHALL NOW ADVERT TO THE FACTS OF THE CASE BE FORE US IN THE BACKDROP OF THE AFORESAID SETTLED POSITION OF LAW. ADMITTEDL Y, AS OBSERVED BY US HEREINABOVE, THE A.O HAD DRAWN ADVERSE INFERENCES I N THE HANDS OF THE ASSESSEE ON THE BASIS OF THE STATEMENT OF SHRI PRAV EEN KUMAR JAIN, THAT WAS RECORDED UNDER SEC. 132(4) OF THE ACT, DESPITE THE FACT THAT THE SAID PERSON HAD THEREAFTER RETRACTED FROM HIS AFORESAID STATEMENT ON THE BASIS OF AN AFFIDAVIT FILED WITH THE DEPARTMENT. WE ARE UNABLE TO PERSUA DE OURSELVES TO SUBSCRIBE TO THE VIEW TAKEN BY THE A.O THAT DESPITE ABSENCE OF ANY CORROBORATIVE EVIDENCE WHICH WOULD SUBSTANTI ATE THAT THE ASSESSEE HAD OBTAINED ANY ACCOMMODATION ENTRIES IN THE GARB OF UNSECURED LOANS FROM THE AFOREMENTIONED 9 COMPANIES , IT WAS TO BE SO PRESUMED MERELY ON THE BASIS OF THE AFORESAID STAND ALONE STATEMENT (WHICH TOO HAD BEEN RETRACTED) OF THE AFOREMENTIONE D PERSON VIZ. SHRI PRAVEEN KUMAR JAIN. WE FIND THAT THOUGH SEARCH PROC EEDINGS UNDER SEC.132 WERE CONDUCTED IN THE CASE OF SHRI PRAVEEN KUMAR JAIN, HOWEVER, THERE IS NOTHING DISCERNIBLE FROM THE ORDE RS OF THE LOWER AUTHORITIES WHICH WOULD REVEAL THAT ANY MATERIAL EVIDENCING THAT THE ASSESSEE AS A BENEFICIARY HAD OBTAINED ACCOMMODATIO N ENTRIES FROM THE ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 24 SAID PERSON HAD SURFACED OR WAS UNEARTHED DURING TH E COURSE OF THE SAID PROCEEDINGS. ALSO AS OBSERVED BY US HEREINABOVE, TH ERE IS NOTHING DISCERNIBLE FROM THE RECORDS WHICH WOULD REVEAL THA T THE AFORESAID PERSON HAD EVER ALLEGED THAT HE HAD PROVIDED ANY ACCOMMODA TION ENTRIES TO THE ASSESSEE COMPANY. WE ALSO CANNOT REMAIN OBLIVIOUS O F THE FACT THAT IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE THE STATE MENT OF THE AFOREMENTIONED THIRD PARTY VIZ. SHRI PRAVEEN K. JAIN COULD NOT BE USED IN ISOLATION FOR DRAWING OF ADVERSE INFERENCES IN T HE HANDS OF THE ASSESSEE. APART THEREFROM, WE FIND THAT AS IS DISCE RNIBLE FROM THE ASSESSMENT ORDER, THOUGH THE ASSESSEE HAD SOUGHT A CROSS- EXAMINATION OF SHRI PRAVEEN KUMAR JAIN, WHOSE STATEMENT WAS BE ING HEAVILY RELIED UPON BY THE A.O FOR DRAWING OF ADVER SE INFERENCES IN ITS HANDS, HOWEVER, THE SAME WAS NOT ALLOWED TO HIM. IN OUR CONSIDERED VIEW, THE AFORESAID FAILURE ON THE PART OF THE A.O TO ALLOW A CROSS- EXAMINATION OF THE AFOREMENTIONED PARTY VIZ. SHRI P RAVEEN KUMAR JAIN IS IN ITSELF A FLAGRANT VIOLATION OF THE BASIC TENETS OF THE PRINCIPLE OF NATURAL JUSTICE. OUR AFORESAID VIEW IS FORTIFIED BY THE JUD GMENT OF THE HON BLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTR IES VS. COMMISSIONER OF CENTRAL EXCISE (2015) 281 CTR 241 ( SC). IN THE SAID CASE, IT WAS OBSERVED BY THE HON BLE APEX COURT THAT NOT ALLOWING THE ASSESSEE TO CROSS-EXAMINE THE WITNESSES WHOSE STATE MENTS WERE MADE THE BASIS FOR PASSING THE IMPUGNED ORDER BY THE ADJ UDICATING AUTHORITY AMOUNTED TO A SERIOUS FLAW, WHICH BEING FOR VIOLATI ON OF THE PRINCIPLES OF NATURAL JUSTICE RENDERED THE SAID ORDER AS NULLITY. WE FIND THAT THE CIT(A) WHILE DISPOSING OFF THE OBJECTION OF THE ASSESSEE T HAT THE A.O HAD ERRED IN NOT ALLOWING CROSS-EXAMINATION OF SHRI. PRAVIN K UMAR JAIN, HAD INTER ALIA OBSERVED, THAT NOW WHEN IT WAS HELD BY HIM THA T THE A.O WITHOUT BRINGING ANY CORROBORATIVE MATERIAL ON RECORD WAS I N ERROR IN RELYING ON THE STATEMENT OF THE AFOREMENTIONED PERSON, THEREFO RE, THE ASSESSEE WAS NOT PREJUDICED IN ANY MANNER BY THE ACTION OF THE A .O IN NOT AFFORDING AN OPPORTUNITY TO HIM IN CROSS- EXAMINING THE SAID PER SON. APART THEREFROM, WE FIND THAT THE CIT(A) HAD OBSERVED THAT NEITHER T HE ASSESSEE HAD IN THE COURSE OF THE APPELLATE PROCEEDINGS REQUESTED THAT THE A.O BE DIRECTED TO GRANT CROSS-EXAMINATION OF SHRI. PRAVEEN KUMAR JAIN , NOR THE FAILURE TO PROVIDE SUCH CROSS-EXAMINATION WOULD RENDER THE ASS ESSMENT ORDER AS VOID. AS THE ASSESSEE HAS NOT ASSAILED BEFORE US TH E AFORESAID OBSERVATIONS OF THE CIT(A), THEREFORE, WE REFRAIN F ROM ADVERTING TO THE SAME. WE THUS IN TERMS OF OUR AFORESAID OBSERVATION S ARE OF THE CONSIDERED VIEW THAT THE CIT(A) HAD RIGHTLY CONCLUD ED THAT THE RELIANCE PLACED BY THE A.O ON THE STATEMENT OF SHRI PRAVEEN K. JAIN, WHICH IN THE BACKDROP OF THE AFORESAID RETRACTION IS IN ITSELF N OT FREE FROM DOUBTS AND DEBATES, COULD NOT HAVE BEEN SUMMARILY ACTED UPON B Y THE A.O IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL FOR DRAWING O F ADVERSE INFERENCES IN THE HANDS OF THE ASSESSEE. IN FACT, WE FIND THAT THERE IS NO WHISPER IN THE ASSESSMENT ORDER AS TO HOW AND ON WHAT BASIS TH E A.O HAD SOUGHT TO DISLODGE THE AUTHENTICITY OF THE AFORESAID LOAN TR ANSACTIONS BY REFERRING TO THE STATEMENT OF SHRI PRAVEEN KUMAR JAIN. ACCORDING LY, ON THE BASIS OF OUR AFORESAID DELIBERATIONS WE ARE OF THE CONSIDERE D VIEW THAT THE CIT(A) HAD RIGHTLY CONCLUDED THAT IN THE ABSENCE OF ANY CO RROBORATIVE MATERIAL THE A.O COULD NOT HAVE PROCEEDED WITH AND MADE ADDI TIONS ON THE BASIS OF THE RETRACTED STATEMENT OF SHRI PRAVEEN KUMAR JA IN. ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 25 11. WE SHALL NOW ADVERT TO THE MATERIAL WHICH HAD B EEN PLACED ON RECORD BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PRO CEEDINGS TO SUBSTANTIATE THE AUTHENTICITY OF THE LOAN TRANSACTI ONS UNDER CONSIDERATION. ALSO, WE SHALL DELIBERATE UPON THE OBSERVATIONS OF THE A.O ON THE BASIS OF WHICH HE HAD DECLINED TO ACCEPT HIS AFORESAID CLAIM . AS IS DISCERNIBLE FROM THE ORDERS OF THE LOWER AUTHORITIES, THE ASSES SEE IN ORDER TO DRIVE HOME ITS CLAIM THAT IT HAD RAISED GENUINE LOANS FRO M THE AFOREMENTIONED 9 PARTIES HAD PLACED ON RECORD SUPPORTING DOCUMENTARY EVIDENCE VIZ. (I) CONFIRMATIONS OF THE LENDERS; (II) COPIES OF THE RETURNS OF INCOME FOR A.Y. 2013- 14 OF THE LENDER PARTIES; (III) COPIES OF THE ANNUAL AUDITED ACCOUNTS FOR A.Y . 2013-14 OF THE LENDERS PARTIES; AND (IV) COPY OF THE BANK STATEMENTS OF TH E LENDERS FROM WHERE THE LOANS WERE ADVANCED TO THE ASSESSEE COMPANY. AS A MATTER OF FACT, THE CIT(A) HAD SPECIFICALLY REFERRED TO THE DOCUMEN TARY EVIDENCE PLACED ON RECORD BY THE ASSESSEE ON A PARTY WISE BASIS, AS UNDER : 'A. M/S ATHARV BUSINESS P. LTD. THE APPELLANT HAS S UBMITTED THE C O P Y OF CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR , COPY OF ACKNOWLEDGEMENT OF R ET UR N OF INCOME OF R ELEV AN T ASSESSM ENT YEAR , COPY OF ANNUAL AUDIT ED A C C O U N T S O F R E L E V A NT A S S E S S M E N T Y E A R , C O P Y O F R E L EV AN T P A G E S O F B A N K STATEMENT OF THEM AND ITSELF TO ESTABLISH THAT THE TRANSACTIONS WERE CARR IED OUT THROUGH PROPER BANKING CHANNEL. B. M/S JOSH TRADING P LTD- THE APPELLANT HAS SUBMIT TED THE COPY OF CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR, C OPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME OF RELEVANT ASS ESSMENT YEAR , COPY OF ANNUAL AUDITED ACCOUNT S OF RELEVANT ASSESSMENT YEAR, COPY OF RELEVANT PAGES OF BANK STATEMENT OF THEM AND ITSELF T O ESTABLISH THAT THE TRANSACTIONS WERE CARRIED OUT THROUGH PROPER BANKIN G CHANNEL. C. M / S C A S P E R E N T E R PR I S E S P . LT D . T H E AP P E L L A N T H A S S U B M I T T E D T H E C O P Y O F CONFIRMATION LETT ER FOR RELEVANT ASSESSMENT YEAR, COPY OF ACKNOWLEDGEMENT OF R ET UR N OF INCOM E OF RELEV ANT ASSESSMENT YEAR , COPY OF ANNUAL AUDITED ACC O U N T S O F R E L E V A N T A S S E S S M E N T Y E A R , C O P Y O F R E L E V A N T P A G E S O F B A N K STATEMENT OF THEM AND ITSELF TO ESTABLISH THAT THE TRANSACTIONS WERE CARRIED OUT THROUGH PROPER BANKING CHANNEL. D. M/S OLIVE OVERSEAS P.LTD. THE APPELLANT HAS SUBM ITTED THE C O P Y O F CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR, C OPY OF ACKNOWLEDGEMENT OF R ET UR N OF INCOME OF R ELEV AN T ASSESSM ENT YEAR , COPY OF ANNUA L AUDIT ED A C C O U N T S O F R E L E V A N T A S S E S S M E N T Y E A R , C O P Y O F R E L E V A N T P A G E S O F B A N K STATEMENT OF THEM AND ITSELF TO ESTABLISH THAT THE TRANSACTIONS WERE CARRIED OUT THROUGH PROPER BANKING CHANNEL. E. M/S PRAGATI GEMS P LTD- THE APPELLANT HAS SUBMIT TED THE C O P Y O F CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR, C OPY OF ACKNOWLEDGEMENT OF R ET UR N OF INCOME OF R ELEV AN T ASSESSM ENT YEAR , COPY OF ANNUA L AUDIT ED A C C O U N T S O F R E L E V A N T A S S E S S M E N T ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 26 Y E A R , C O P Y O F R E L E V A N T P A G E S O F B A N K STATEMENT OF THEM AND ITSELF TO ESTABLISH THAT THE TRANSACTIONS WERE CARRIED OUT THROUGH PROPER BANKING CHANNEL. F. M/S SUM U KH CO MM ER CIAL P LT D - THE A PPELL A NT HAS SU BMIT T ED T HE COPY OF CONFIRMATION LETTER FOR RELEVANT ASSESSM ENT YEAR, COPY OF ACKNOWLEDGEMENT OF R ET UR N OF INCOME OF R ELEV AN T ASSESSMENT YEAR , COPY OF ANNUA L AUDIT ED A C C O U N T S O F R E L E V A N T A S S E S S M E N T Y E A R , C O P Y O F R E L E V A N T P A G E S O F B A N K STATEMENT OF THEM AND ITSELF TO ESTABLISH THAT THE TRANSACTIONS WERE CARRIED OUT THROUGH PROPER BANKING CHANNEL. G. M/S VIRAJ MERCANTILE P. LTD. THE APPELLANT HAS S UBMITTED T H E C O P Y O F CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR, COPY OF ACKNOWLEDGEMENT OF R ET UR N OF INCOME OF R ELEV AN T ASSESSMENT YEAR , COPY OF ANNUA L AUDIT ED A C C O U N T S O F R E L E V A N T A S S E S S M E N T Y E A R , C O P Y O F R E L E V A N T P A G E S O F B A N K STATEMENT OF THEM AND ITSELF TO ESTABLISH THAT THE TRANSACTIONS WERE CARRIED OUT THROUGH PROPER BANKING CHANNEL. H. M/S LUNKAD TEXTILE P LTD- THE APPELLANT HAS SUBM ITTED THE C O P Y O F CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR, C OPY OF ACKNOWLEDGEMENT OF. RET URN OF INCOME OF RELEVANT A SSESSMENT YEAR , COPY OF ANNUAL AUDITED AC C O U N T S O F R E L E V A N T ASSESS M E N T Y E A R , C O P Y O F R E L E V A N T P A G E S O F B A N K STATEMENT OF THEM AND ITSELF TO ESTABLISH THAT THE TRANSACTIONS WERE CARR IED OUT THROUGH PROPER BANKING CHANNEL. I. M/S FALAK TRADING P LTD- THE APPELLANT HAS SUBMI TTED THE C O P Y O F CONFIRMATION LETTER FOR RELEVANT ASSESSMENT YEAR, C OPY OF ACKNOWLEDGEMENT OF R ET UR N OF INCOME OF RELEV ANT ASSESSMENT YEAR , COPY OF ANNUA L AUDIT ED A C C O U N T S O F R E L E V A N T A S S E S S M E N T Y E A R , C O P Y O F R E L E V A N T P A G E S O F B A N K STATEMENT OF THEM AND ITSELF TO ESTABLI.SH THAT THE TRANSACTIONS WERE CARRIED OUT THROUGH PROPER BANKING CHANNEL' WE FIND THAT THE ASSESSEE BY PLACING ON RECORD THE AFORESAID DOCUMENTARY EVIDENCE HAD DISCHARGED THE PRIMARY ON US THAT WAS CAST UPON IT TO PROVE THE AUTHENTICITY OF THE LOAN TRANS ACTIONS ENTERED INTO WITH THE AFOREMENTIONED 9 PARTIES UNDER CONSIDERATION. H OWEVER, THE VERACITY OF THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY TH E A.O ON THE BASIS OF GENERALISED OBSERVATION THAT THE FINANCIALS OF THE AFOREMENTIONED CONCERNS/ENTITIES REVEALED THAT DESPITE HIGH TURNOV ER PRACTICALLY NO TAX WAS PAID BY THEM (IN MANY CASES REFUND WAS CLAIMED) , AND THERE WERE HIGH AMOUNT OF SUNDRY CREDITORS, LOANS AND ADVANCES , DEBTORS AND INVESTMENTS. ON THE BASIS OF HIS AFORESAID GENERALI ZED OBSERVATIONS, WE FIND THAT THE A.O HAD DRAWN ADVERSE INFERENCES AS R EGARDS THE CREDITWORTHINESS OF THE AFOREMENTIONED PARTIES. IN OUR CONSIDERED VIEW, THE AFORESAID CASUAL APPROACH ADOPTED BY THE A.O, W ITHOUT EVEN PUTTING UP ANY EFFORT TO REFER TO THE SPECIFIC FINANCIALS O F THE SAID CONCERNS/ENTITIES AS WAS PLACED ON RECORD BY THE ASSESSEE CANNOT BE A CCEPTED. IN FACT, WE ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 27 FIND THAT THE A.O HAD FAILED TO PUT UP ANY EFFORT T O DISLODGE THE AUTHENTICITY OF THE LOAN TRANSACTIONS BY PLACING ON RECORD ANY M ATERIAL WHICH COULD PROVE TO THE CONTRARY. AS IS DISCERNIBLE FROM THE A SSESSMENT ORDER, THE A.O HAD AS A MATTER OF FACT DEDICATED HIS ENTIRE EF FORTS FOR DEMONSTRATING THE FACTS WHICH HAD EMERGED IN THE COURSE OF THE SE ARCH PROCEEDINGS CONDUCTED ON SHRI PRAVEEN KUMAR JAIN, AND ALSO THE MODUS OPERANDI THAT WAS ADOPTED BY HIM FOR PROVIDING ACCOMMODATION ENTRIES. WE ARE AFRAID THAT THE GENERAL OBSERVATIONS OF THE A.O THA T THE CREDITWORTHINESS OF THE LENDERS AND THE GENUINENESS OF THE TRANSACTI ON ARE NOT FOUND TO BE SATISFACTORY IS NOT BACKED BY ANY SUPPORTING DOCUME NTARY EVIDENCE. AS OBSERVED BY US HEREINABOVE, THE A.O HAD FAILED TO R EBUT THE MATERIAL WHICH WAS PLACED ON RECORD BY THE ASSESSEE TO SUBST ANTIATE THE IDENTITY AND CREDITWORTHINESS OF THE LENDERS, AND ALSO THE G ENUINENESS OF THE TRANSACTION UNDER CONSIDERATION. IN FACT, WE FIND T HAT THE ASSESSEE HAD BEEN ABLE TO SUBSTANTIALLY PROVE THE AUTHENTICITY O F THE LOAN TRANSACTIONS ON THE BASIS OF THE DOCUMENTARY EVIDENCE PLACED ON RECORD BY HIM. AS OBSERVED BY US HEREINABOVE, THE A.O HAD NOT EVEN SO UGHT TO VERIFY THE AUTHENTICITY OF THE AFORESAID LOAN TRANSACTIONS BY ISSUING ANY NOTICES UNDER SEC.133(6) OF THE ACT. IN OUR CONSIDERED VIEW , IN CASE THE A.O WOULD HAD ANY DOUBTS AS REGARDS EITHER THE IDENTITY AND CREDITWORTHINESS OF THE AFORESAID LENDERS OR THE GENUINENESS OF THE LOAN TRANSACTIONS, THEN HE WOULD HAVE MADE NECESSARY VERIFICATIONS BY EITHE R SUMMONING THE DETAILS IN EXERCISE OF THE POWERS VESTED WITH HIM U NDER SEC.133(6) OR DIRECTING THE ASSESSEE TO FURNISH FURTHER DOCUMENTA RY EVIDENCE. HOWEVER, WE FIND THAT THE A.O NEITHER CARRIED OUT A NY VERIFICATIONS ON HIS OWN NOR DIRECTED THE ASSESSEE TO CLARIFY ANY FURTHE R ASPECTS PERTAINING TO THE AUTHENTICITY OF THE LOAN TRANSACTIONS UNDER CON SIDERATION. AS REGARDS THE OBSERVATION OF THE A.O THAT THE ASSESSEE HAD NO T PRODUCED THE PARTIES, WE FIND, THAT THERE IS NOTHING DISCERNIBLE FROM THE RECORDS FROM WHERE IT COULD BE GATHERED THAT HE HAD EVER DIRECTE D THE ASSESSEE FOR DOING THE NEEDFUL. IN FACT, IN OUR CONSIDERED VIEW, NOW WHEN THE ASSESSEE IN DISCHARGE OF THE PRIMARY ONUS THAT WAS CAST UPON IT TO SUBSTANTIATE THE AUTHENTICITY OF THE LOAN TRANSACTI ONS HAD PLACED ON RECORD SUFFICIENT DOCUMENTARY EVIDENCE WHICH HAD NO T BEEN REBUTTED BY THE A.O, THEREFORE, MERELY FOR THE REASON THAT THE SAID LENDERS HAD NOT APPEARED BEFORE HIM WOULD EVEN OTHERWISE NOT JUSTIF Y CHARACTERISING THE SAID LOAN TRANSACTIONS AS BOGUS/SHAM. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF COMMISSIONER OF INCOME TAX-8 VS. M/S ORCHID INDUSTR IES PVT. LTD. (2017) 397 ITR 136 (BOM). IN THE AFORESAID CASE, IT WAS OB SERVED BY THE HON BLE HIGH COURT THAT NOW WHEN THE ASSESSEE HAD PLACE D ON RECORD DOCUMENTARY EVIDENCE TO SUPPORT THE GENUINENESS OF THE TRANSACTIONS UNDER CONSIDERATION, THEREFORE, ONLY BECAUSE THE C REDITORS HAD NOT APPEARED BEFORE THE A.O WOULD NOT JUSTIFY DRAWING O F ADVERSE INFERENCES AS REGARDS THE AUTHENTICITY OF THE SAID TRANSACTION S. AS REGARDS THE OBSERVATION OF THE A.O THAT A PERUSAL OF THE BANK A CCOUNTS OF THE LENDERS REVEALED THAT THE SAME ONLY CONTAINED RTGS/TRF ENTR IES, WE FIND OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT THE SAID FACT IN ITSELF PROVES THAT NO CASH WAS INTRODU CED IN BANK ACCOUNTS OF THE SAID LENDERS PRIOR TO ADVANCING OF THE LOANS TO THE ASSESSEE. WE ARE PERSUADED TO SUBSCRIBE TO THE VIEW TAKEN BY THE CIT (A) THAT THE A.O HAD ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 28 ALSO NOT BROUGHT ON RECORD ANY EVIDENCE WHICH WOULD SUGGEST THAT THE ASSESSEE HAD PAID CASH TO THE LENDERS IN LIEU OF LO ANS RECEIVED FROM THEM. APART THEREFROM, WE ARE ALSO OF THE CONSIDERE D VIEW THAT THE FACT THAT THE ASSESSEE COMPANY HAD PAID INTEREST ON THE LOANS RAISED FROM THE AFOREMENTIONED PARTIES AFTER DEDUCTION OF TAX AT SO URCE ALSO SUBSTANTIATES THE AUTHENTICITY OF THE LOAN TRANSACTIONS. ALSO, TH E FACT THAT THE SAID LOANS HAD BEEN REPAID BY THE ASSESSEE TO THE AFOREMENTION ED LENDERS FORTIFIES THE VERACITY OF THE SAID LOAN TRANSACTIONS. OUR AFO RESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF PCIT VS. M/S SKYLARK BUILD (ITA NO. 616 OF 2016; DT. 24. 10.2018). IN THE AFORESAID CASE, THE HON BLE HIGH COURT TAKING COGNIZANCE OF THE SUBSEQUENT DEVELOPMENT OF REPAYMENT OF THE LOANS BY THE ASSESSEE TO THE LENDERS, HAD OBSERVED THAT THE SAID FACT PROVED THE AUTHENTICITY OF THE LOAN TRANSACTIONS. 12. WE SHALL NOW ADVERT TO THE RELIANCE PLACED BY T HE REVENUE ON THE ORDER OF THE ITAT, AHMEDABAD IN THE CASE OF PAVANKU MAR M. SANGHVI VS. ITO (ITA NO. 2447/AHD/2016) (AHD). IT IS THE CL AIM OF THE ASSESSEE THAT INVOLVING IDENTICAL FACTS, THE TRIBUNAL IN THE AFOREMENTIONED CASE HAD CONCLUDED THAT GENUINENESS OF LOAN TRANSACTIONS CAN NOT BE ESTABLISHED MERELY ON THE BASIS OF DOCUMENTS FILED BY THE ASSES SEE AND FURTHER PROBE IS REQUIRED TO BE CARRIED OUT FOR ARRIVING AT THE ACTUAL FACTS. WE HAVE PERUSED THE AFORESAID ORDER OF THE ITAT, AHMED ABAD, AND ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE AF ORESAID CLAIM OF THE REVENUE. A PERUSAL OF THE AFORESAID ORDER REVEALS T HAT THE SAME IS DISTINGUISHABLE ON FACTS. AS IS DISCERNIBLE FROM TH E SAID ORDER, IT WAS OBSERVED BY THE TRIBUNAL THAT A PERUSAL OF THE BANK ACCOUNT OF THE LENDER PARTY VIZ. M/S NATASHA ENTERPRISES REVEALED THAT AF TER THE LOAN OF RS.10,00,000/- WAS ADVANCED TO THE ASSESSEE THE BAL ANCE IN THE BANK ACCOUNT REMAINED AT A MEAGRE FIGURE OF RS.13,717/- ONLY. ON A SIMILAR FOOTING, IT WAS NOTICED BY THE TRIBUNAL THAT ON VAR IOUS OTHER DATES ALSO AFTER THE AMOUNTS WERE ADVANCED FROM THE BANK ACCOU NT OF THE LENDER THE CLOSING BALANCE OF THE RESPECTIVE DAYS WOULD REMAIN BETWEEN FEW THOUSANDS OF RUPEES. FURTHER, IT WAS OBSERVED, THAT THOUGH THE LENDER HAD SHOWN A SUBSTANTIAL TURNOVER OF 122.92 CRORES, BUT THERE WAS NO CLOSING STOCK. ALSO, CERTAIN PECULIAR FACTS AS REGARDS THE MEAGRE EXPENSES INCURRED BY THE LENDERS WERE ALSO NOTICED, WHICH TH US DID NOT INSPIRE ANY CONFIDENCE AS REGARDS THE GENUINENESS OF THE BUSINE SS TRANSACTIONS OF THE SAID RESPECTIVE CONCERNS. SIMILARLY, IT WAS OBS ERVED THAT THE FACTS INVOLVED IN THE CASE OF THE OTHER LENDER PARTY VIZ. M/S MOHIT INTERNATIONAL ALSO DID NOT REVEAL ANY DIFFERENT STORY. TO SUM UP, IN THE AFOREMENTIONED CASE, IT WAS CONCLUSIVELY PROVED ON THE BASIS OF TH E FACTS BORNE FROM THE RECORDS THAT THE LENDERS WERE NOT CARRYING OUT ANY GENUINE BUSINESS. WE ARE AFRAID THAT IN THE CASE BEFORE US NEITHER SUCH FACTS ARE BORNE OUT FROM THE RECORDS, NOR ANY EFFORT HAS BEEN MADE BY THE LD . D.R TO ESTABLISH THAT THE LENDERS IN THE CASE BEFORE US ALSO HAD A SIMILA R STATE OF AFFAIRS. WE ARE OF THE CONSIDERED VIEW THAT AS THE FACTS INVOLV ED IN THE CASE OF THE ASSESSEE BEFORE US ARE NOT SHOWN TO BE SIMILAR AS A GAINST THOSE WHICH WERE THERE IN THE CASE BEFORE THE ITAT, AHMEDABAD, IN THE CASE OF PAVANKUMAR M. SANGHVI VS. ITO (2017) 165 ITD 260 (A HD), THEREFORE, THE SAME BEING DISTINGUISHABLE ON FACTS WOULD NOT A SSIST THE CASE OF THE ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 29 REVENUE BEFORE US. ON THE BASIS OF OUR AFORESAID OB SERVATIONS, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE BY PLACING ON RECORD SUFFICIENT DOCUMENTARY EVIDENCE HAD DISCHARGED THE PRIMARY ON US THAT WAS CAST UPON IT TO PROVE THE IDENTITY AND THE CREDITWORTHIN ESS OF THE PARTIES, AND ALSO THE GENUINENESS OF THE TRANSACTION UNDER CONSI DERATION. AS OBSERVED BY US HEREINABOVE, THE A.O HAD FAILED TO DISLODGE T HE DOCUMENTARY EVIDENCE THAT WAS PLACED ON RECORD BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS TO SUBSTANTIATE THE AUTHENTI CITY OF THE LOAN TRANSACTIONS UNDER CONSIDERATION. WE ARE OF THE CON SIDERED VIEW THAT AS THE ASSESSEE BY PLACING ON RECORD THE AFORESAID SUP PORTING DOCUMENTARY EVIDENCE HAD DISCHARGED THE PRIMARY ONUS THAT WAS CAST UPON IT TO PROVE THE AUTHENTICITY OF THE LOAN TRANSACTIONS, TH EREFORE, IT WAS INCUMBENT ON THE PART OF THE A.O TO HAVE DISPROVED THE SAID CLAIM OF THE ASSESSEE BY PLACING ON RECORD DOCUMENTARY EVIDENCE PROVING TO THE CONTRARY. HOWEVER, AS THE A.O IN THE CASE BEFORE US HAD FAILED TO DISLODGE THE DOCUMENTARY EVIDENCE PLACED ON RECORD BY THE ASSESSEE IN SUPPORT OF ITS CLAIM AS REGARDS THE AUTHENTICITY OF THE LOAN TRANSACTIONS, AND HAD ONLY TAKEN RECOURSE TO CERTAIN GENERAL OBSE RVATIONS, WITHOUT SPECIFICALLY REFERRING TO THE MATERIAL PLACED ON RE CORD BY THE ASSESSEE, WE ARE AFRAID THAT HE BY SO DOING HAD ABSOLUTELY FAILE D TO DISCHARGE THE ONUS AS WAS SHIFTED UPON HIM TO DISPROVE THE AUTHENTICI TY OF THE LOAN TRANSACTIONS UNDER CONSIDERATION. IN FACT, WE FIND THAT THE A.O INSTEAD OF PLACING ON RECORD ANY DOCUMENTARY EVIDENCE WHICH WO ULD DISPROVE THE AUTHENTICITY OF THE LOAN TRANSACTIONS UNDER CONSIDE RATION, HAD FOCUSSED PRIMARILY ON THE FACTS AND THE MODUS OPERANDI OF FU NCTIONING OF SHRI. PRAVEEN KUMAR JAIN AS HAD EMERGED IN THE COURSE OF THE SEARCH PROCEEDINGS CONDUCTED ON HIM. WE ARE AFRAID THAT TH E ADVERSE INFERENCES DRAWN BY THE A.O AS REGARDS THE AUTHENTICITY OF THE LOAN TRANSACTIONS UNDER CONSIDERATION WITHOUT ANY ATTEMPT TO DISLODGE THE DOCUMENTARY EVIDENCE PLACED ON RECORD BY THE ASSESSEE TO SUPPOR T ITS CLAIM, CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. OUR AFORE SAID VIEW IS FORTIFIED BY THE ORDER OF THE ITAT 'C' BENCH, MUMBAI, IN THE CAS E OF ITO 20(2)(5), MUMBAI VS. SMT. PRATIMA ASHAR (2019) 107 TAXMANN.CO M 135 (MUM), WHEREIN A SIMILAR VIEW WAS TAKEN. AT THIS STAGE, WE MAY HEREIN OBSERVE THAT SIMILAR ADVERSE INFERENCES AS REGARDS THE AUTH ENTICITY OF THE LOAN TRANSACTIONS THAT WERE DRAWN BY THE A.O. IN THE CAS E OF A SISTER CONCERN OF THE ASSESSEE COMPANY VIZ. M/S MANBA FINANCE LTD. , WERE ON APPEAL DELETED BY THE CIT(A). ON FURTHER APPEAL BY THE REV ENUE, THE ORDER PASSED BY THE CIT(A) WAS UPHELD AND THE APPEAL OF T HE REVENUE WAS DISMISSED VIDE ORDER PASSED BY A COORDINATE BENCH O F THE TRIBUNAL VIZ. DY. CIT-CC-7(2), MUMBAI VS. M/S MANBA FINANCE LTD., (ITA NOS. 1448, 1449 & 1467/MUM/2017, DATED 05.10.2018) (COPY PLACE D ON RECORD). AS IS DISCERNIBLE FROM THE AFORESAID ORDER OF THE TRIB UNAL, IN THAT CASE TOO ON THE BASIS OF INFORMATION THAT THE SAID CONCERN HAD IN THE GARB OF LOANS OBTAINED ACCOMMODATION ENTRIES FROM CERTAIN CONCERN S WHICH WERE MANAGED AND CONTROLLED BY THE SHRI PRAVEEN KUMAR JA IN, SURVEY ACTION WAS CONDUCTED ON THE SAID CONCERN ON 25.03.2014. IN THE COURSE OF THE SURVEY ACTION, THE DIRECTOR OF THE SAID CONCERN HAD IN HIS STATEMENT RECORDED UNDER SEC. 133A DURING THE COURSE OF THE S URVEY PROCEEDINGS HAD ADMITTED THAT THE ASSESSEE COMPANY HAD RECEIVED ACCOMMODATION ENTRIES. HOWEVER, THE AFORESAID CONCERN DID NOT OFF ER THE AMOUNT OF THE ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 30 AFORESAID UNSECURED LOANS FOR TAX IN ITS RETURN OF INCOME. ACCORDINGLY, THE A.O RELYING UPON TWO ASPECTS VIZ. (I) THAT, THE DIR ECTOR OF THE ASSESSEE COMPANY IN ITS STATEMENT RECORDED IN THE COURSE OF THE SURVEY PROCEEDINGS HAD ADMITTED THAT IT HAD RAISED BOGUS U NSECURED LOANS; AND (II) THAT, THE LENDER CONCERNS WERE MANAGED AND CO NTROLLED BY SHRI PRAVEEN KUMAR JAIN, AN INFAMOUS ACCOMMODATION ENTRY PROVIDER, HELD THE LOANS AS UNEXPLAINED CASH CREDITS U/S. 68 OF TH E ACT. WE FIND THAT THE TRIBUNAL WHILE UPHOLDING THE ORDER OF THE CIT(A), H AD OBSERVED, THAT THE A.O HAD NOT BROUGHT ON RECORD ANY ADVERSE MATERIAL TO REBUT THE CREDIBILITY OF THE CORPORATE ENTITIES FROM WHICH LO ANS WERE RAISED BY THE ASSESSEE. ALSO, IT WAS OBSERVED BY THE TRIBUNAL THA T THE ASSESSEE HAD PLACED ON RECORD SUPPORTING DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE AUTHENTICITY OF THE LOAN TRANSACTIONS VIZ. CONFIRMA TION LETTERS, BANK STATEMENTS, FINANCIAL STATEMENTS OF THE LENDER PART IES, AND THUS HAD DISCHARGED THE ONUS THAT WAS CAST UPON IT. IT WAS F URTHER OBSERVED BY THE TRIBUNAL THAT NO ADVERSE INFERENCES COULD HAVE BEEN DRAWN BY THE A.O WITHOUT MAKING ANY INQUIRY BY ISSUING NOTICES UNDER SEC. 133(6) OR SUMMONS UNDER SEC. 131 OF THE ACT. AS REGARDS THE A DMISSION OF THE UNDISCLOSED INCOME BY THE DIRECTOR OF THE ASSESSEE COMPANY IN HIS STATEMENT RECORDED IN THE COURSE OF THE SURVEY PROC EEDINGS, IT WAS OBSERVED BY THE TRIBUNAL THAT A DISCLOSURE OBTAINED IN THE COURSE OF SURVEY DE HORS CORROBORATIVE EVIDENCE CANNOT BE A C ONCLUSIVE PROOF FOR MAKING AN ADDITION IN THE HANDS OF THE ASSESSEE. AC CORDINGLY, THE TRIBUNAL ON THE BASIS OF HIS AFORESAID OBSERVATIONS HAD IN THE CASE OF THE AFOREMENTIONED SISTER CONCERN OF THE ASSESSEE COMPANY WHEREIN IDENTICAL FACTS WERE INVOLVED, HAD UPHELD THE ORDER OF THE CIT(A) AND THEREIN CONCLUDED THAT THE A.O IN THE ABSENCE OF TH E CORROBORATIVE EVIDENCE WAS NOT JUSTIFIED IN TREATING THE LOANS RE CEIVED BY THE ASSESSEE BEFORE THEM AS UNEXPLAINED CASH CREDIT UNDER SEC. 6 8 OF THE ACT. 13. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION AND AR E OF THE CONSIDERED VIEW, THAT THE CIT(A) AFTER DELIBERATING AT LENGTH ON THE ISSUE UNDER CONSIDERATION HAD RIGHTLY CONCLUDED THAT AS THE ASS ESSEE HAD DISCHARGED THE ONUS THAT WAS CAST UPON IT UNDER SEC.68 OF THE ACT, THE REFORE, THE A.O WAS NOT JUSTIFIED IN TREATING THE LOANS RECEIVE D FROM THE AFOREMENTIONED PARTIES AS UNEXPLAINED CASH CREDITS UNDER SEC.68 OF THE ACT. WE THUS NOT FINDING ANY INFIRMITY IN THE WELL REASONED ORDER OF THE CIT(A) TO THE EXTENT HE HAD DELETED THE ADDITION OF RS.10,91,50,000/- UPHOLD THE SAME. THE GROUNDS OF APPEAL NO. (I) & (I I) RAISED BY THE REVENUE ARE DISMISSED. 14. WE SHALL NOW ADVERT TO THE DISALLOWANCE OF THE INTEREST EXPENDITURE OF RS.70,49,112/- THAT WAS CLAIMED BY THE ASSESSEE TO HAVE BEEN PAID TO THE AFOREMENTIONED 9 LENDER PARTIES. WE FIND THAT T HE AFORESAID CLAIM OF EXPENSE OF THE ASSESSEE WAS DISALLOWED BY THE A.O, FOR THE REASON, THAT THE LOAN TRANSACTIONS UNDER CONSIDERATION HAD BEEN HELD BY HIM TO BE BOGUS. NOW, AS WE HAVE CONCLUDED THAT THE ASSESSEE HAD RAISED GENUINE LOANS FROM THE AFOREMENTIONED PARTIES, THER EFORE, THE CONSEQUENTIAL DISALLOWANCE BY THE A.O OF THE INTERE ST PAID TO THE SAID LENDERS BY TREATING THE LOAN TRANSACTIONS AS BOGUS SHALL ACCORDINGLY STAND VACATED. ACCORDINGLY THE ORDER OF THE CIT(A), DELET ING THE DISALLOWANCE OF ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 31 INTEREST EXPENSE OF RS.70,49,112/- IS UPHELD. THE G ROUND OF APPEAL NO. (III) RAISED BY THE REVENUE IS DISMISSED. 14. IN THIS CASE, THE LD.CIT(A) HAS RECORDED C ATEGORICAL FINDINGS IN LIGHT OF VARIOUS EVIDENCES FILED BY THE ASSESSEE , INCLUDING CONFIRMATION LETTERS FROM THE CREDITORS AND OBSERVE D THAT THE ASSESEE HAS FILED NECESSARY DETAILS, IN RESPECT OF EACH AND EVERY LOAN CREDITORS TO ESTABLISH THE FACT THAT TRANSACTIONS B ETWEEN THE PARTIES ARE GENUINE, WHICH ARE CARRIED OUT THROUGH PROPER BANKING CHANNEL. THE LD. CIT(A) HAS ALSO RECORDED THE FACT THAT THE ASSESSEE HAS PAID INTEREST ON SAID LOANS AFTER DEDUCTING NECESS ARY TDS APPLICABLE AS PER LAW. HE, FURTHER, STATED THAT THE LD. AO WAS NEVER BROUGHT ON RECORD ANY EVIDENCES TO PROVE THAT THE A SSESEE HAD PAID CASH TO THE LOAN CREDITORS IN LIEU OF LOANS RECEIVE D FROM THEM. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSE HAS REPAID SAI D LOANS IN SUBSEQUENT FINANCIAL YEARS THROUGH PROPER BANKING C HANNEL. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE L D.CIT(A) HAS RIGHTLY APPRECIATED THE FACT THAT IN LIGHT OF VARIO US EVIDENCES FILED BY THE ASSESSEE BEFORE REACHING TO THE CONCLUSION THA T UNSECURED LOANS TAKEN FROM THOSE PARTIES ARE GENUINE TRANSACT IONS, WHICH ARE SUPPORTED BY THE NECESSARY EVIDENCES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ERROR IN FINDINGS RECORDED BY THE LD.CIT(A) AND HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LD.CIT(A) AND DIRECT THE LD. AO TO DELETE ADDITIONS MADE TOWARDS UNSECURED LOANS TAKEN FROM THOSE PARTIES AND CONSEQ UENT ADDITIONS MADE TOWARDS INTEREST PAID ON SAID LOANS. 15. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ITA NO.5781/MUM/2017 CHETAN R.SHAH (HUF) 32 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 /01 /2020 SD/- (C.N.PRASAD) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOU NTANT MEMBER MUMBAI ; DATED: 10 /01/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//