DEPUTY COMMISSIONER OF INCOME TAX 12(2)(1), MUMBAI V. M/S.D.N.H.SPINNERS PRIVATE LIMITED, MUMBAI

ITA 5886/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4533 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 15-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKASH KR AGARWAL
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Principle of natural justice; Question of law; Difference of opinion; Accommodation entries; Retraction; TDS; Set aside
• Section: 143(3); 133A; 143(1); 264; 147; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NOS.5886 & 5887/M/2017 ASSESSMENT YEARS: 2011-12 & 2012-13 DCIT 12(2)(1), ROOM NO.223, 2 ND FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 VS. M/S. D.N.H. SPINNERS PVT. LTD., 601, 602, 60, BUSINESS CLASSIC, CHINCHOLI BUNDER ROAD, MALAD (WEST), MUMBAI-400 064 PAN: AADCD 5709P (APPELLANT) (R ESPONDENT) CO NO.250/M/2018 (ITA NOS.5886/M/2017) ASSESSMENT YEAR: 2011-12 M/S. D.N.H. SPINNERS PVT. LTD., 601, 602, 60, BUSINESS CLASSIC, CHINCHOLI BUNDER ROAD, MALAD (WEST), MUMBAI-400 064 PAN: AADCD 5709P VS. DCIT 12(2)(1), ROOM NO.223, 2 ND FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAKESH JOSHI, A.R. REVENUE BY : SHRI VIKASH KR AGARWAL, D.R. DATE OF HEARING : 01.02.2019 DATE OF PRONOUNCEMENT : 14.03.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN PREFERRED BY THE REV ENUE AGAINST THE SEPARATE ORDERS DATED 01.06.2017 OF THE ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 2 COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER R EFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12 AD 2012-13 RESPECTIVELY. THE ASSESSEE HAS ALSO FILED CROSS OBJ ECTION IN THE ASSESSMENT YEAR 2011-12. ITA NO.5886/M/2017 (A.Y. 2011-12) 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE ID CIT(A) ERRED IN DELETING THE ADDITION OF RS,3,69,00 ,000/-WHICH REPRESENTS THE AMOUNT OF UNEXPLAINED CASH CREDIT TAXED U/S 68 OF T HE IT ACT, 1961,WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT SAT ISFACTORILY DISCHARGED THE PRIMARY ONUS OF PROVING THE IDENTITY OF THE CREDITORS, THEI R CREDITWORTHINESS AND THE GENUINENESS OF THE TRANSACTION. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID CIT(A) ERRED IN DELETING THE ADDITION OF RS.19,53,2 22/- ON ACCOUNT OF INTEREST EXPENSES WITHOUT APPRECIATING THE FINDINGS OF THE A O THAT THE LENDER COMPANIES HAVE BEEN USED BY THE ASSESSEE FOR INTRODUCTION OF CAPITAL INTO ASSESSEE COMPANY BY WAY OF LOAN AND THE WHOLE TRANSACTION ONLY A COL OURABLE DEVICE USED BY ASSESSEE TO MAKE THE TRANSACTION APPEAR GENUINE FOR WHICH TD S WAS DEDUCTED BY THE ASSESSEE. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. IN THE FIRST GROUND OF APPEAL, THE REVENUE HAS C HALLENGED THE DELETION OF ADDITION BY LD. CIT(A) OF RS.3,69,0 0,000/- AS MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDI TS UNDER SECTION 68 OF THE ACT. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 24.09.2011 DECLARING INCOME AT RS.9,32,66 ,230/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . THEREAFTER, THE REGULAR ASSESSMENT WAS FRAMED UNDER SECTION 143(3) ON 18.02.2014 ASSESSING THE TOTAL INCOME AT THE ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 3 RETURNED INCOME. A SURVEY WAS CONDUCTED ON THE ASSE SSEE U/S 133A OF THE ACT ON 25.3.2014 BY THE INVESTIGATION W ING OF THE DEPARTMENT BY DDIT(INV). DURING THE COURSE OF SURVE Y STATEMENT OF SHRI DINESH JAIN A DIRECTOR OF THE ASSESSEE WAS RECORDED U/S 131 OF THE ACT. DURING THE SURVEY , HE WAS INFORMED ABOUT VARIOUS UNSECURED LOANS TAKE BY THE ASSESSEE FROM V ARIOUS ENTITIES OPERATED AND CONTROLLED BY SHRI PRAVEEN K UMAR JAIN WHO IS ENGAGED IN PROVIDING ACCOMMODATION ENTRIES I N THE FORM OF UNSECURED LOANS , SHARE APPLICATION AND SALE AND PURCHASE OF SHARES ONLY WITHOUT DOING ANY BUSINESS. THE INVEST IGATION WING RECEIVED INFORMATION THAT SHRI PRAVIN KUMAR JAIN & ASSOCIATES WAS A GROUP OF COMPANIES WERE ENGAGED IN THE BOGUS TRANSACTION OF GIVING ACCOMMODATION ENTRIES IN THE FORM OF UNSECURED LOANS WHICH WERE LONG TERM CAPITAL GAIN E TC AS HE ADMITTED DURING THE COURSE OF SEARCH ON HIM AND HIS CONTROLLED ENTITIES IN THE STATEMENT RECORDED U/S 132(4) OF TH E ACT. SHRI DINESH KUMAR JAIN ADMITTED IN THE STATEMENT RECORDE D U/S 131 AFTER CONSIDERING THE STATEMENT OF SHRI PRAVEEN KUM AR JAIN ABOUT TAKING BOGUS UNSECURED LOANS FROM PRAVEEN KUM AR JAIN GROUP ENTITIES BUT LATER ON WHEN HE FOUND THAT SHRI PRAVEEN KUMAR JAIN HAS RETRACTED HIS STATEMENT , HE ALSO RE TRACTED HIS STATEMENT ON 29.3.2013 JUST THREE DAYS AFTER RECORD ING THEREOF CITING THE REASONS THAT THE SAME WAS TAKEN UNDER PR ESSURE. THEREAFTER, THE CASE OF THE ASSESSEE WAS REOPENED U NDER SECTION 147 OF THE ACT BY ISSUING NOTICE UNDER SECTION 148 DATED 14.10.2014 WHICH WAS SERVED ON THE ASSESSEE ON 18.1 0.2014. THEREAFTER, THE ASSESSEE VIDE LETTER DATED 23.09.20 15 SUBMITTED THAT THE RETURN FILED ON 24.09.2011 UNDER SECTION 1 39(1) MAY BE TREATED AS RETURN IN RESPONSE OF NOTICE UNDER SECTI ON 148 OF THE ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 4 ACT. ASSESSEE REQUESTED FOR THE REASON RECORDED BY THE AO WHICH WERE DULY SUPPLIED. THEREAFTER, THE AO ISSUE D SHOW CAUSE NOTICE TO THE ASSESSEE ON 09.03.2016 AS TO WH Y THE UNSECURED LOAN RAISED FROM VARIOUS ENTITIES RELATED TO SHRI PRAVIN KUMAR JAIN SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE WHICH WAS REPLIED BY THE ASSESSEE VIDE WRI TTEN SUBMISSIONS DATED 22.03.2016. THE ASSESSEE SUBMITT ED BEFORE THE AO THAT THE STATEMENT MADE BY THE DIRECTOR OF T HE COMPANY SHRI DINESH JAIN WAS RECORDED UNDER PRESSURE AND DU RESS WHEREIN HE STATED THAT UNSECURED LOAN OBTAINED FROM THE CONCERNS RELATED TO SHRI PRAVIN KUMAR JAIN WERE IN THE NATURE OF ACCOMMODATION ENTRIES AND HE AGREED TO OFFER THE SE LOANS AS INCOME OVER AND ABOVE THE REGULAR RETURN/ASSESSED I NCOME WHICH WERE BASED UPON THE PRESSURE ON THE SAID DIRE CTOR AND WAS NOT MADE IN THE NORMAL COURSE AND CIRCUMSTANCES . EVEN THE STATEMENT GIVEN BY SHRI PRAVIN KUMAR JAIN UNDER SECTION 132(4) WAS WITHDRAWN AND RETRACTED BY HIM AND THERE FORE HAS NO LEGAL SANCTITY. EVEN OTHERWISE, MERE ADMISSION OF THE DIRECTOR OF THE COMPANY BASED ON INCORRECT FACTS CO ULD NOT BE THE BASIS OF ADDITION IN THE HANDS OF THE ASSESSEE. THE ASSESSEE SUBMITTED THAT EVEN AT THE TIME OF SURVEY AS WELL A S IN THE CURRENT ASSESSMENT PROCEEDING, NO OPPORTUNITY OF CR OSS EXAMINATION WAS PROVIDED TO THE ASSESSEE. THE ASSE SSEE ALSO STATED THAT IT HAS FILED VARIOUS EVIDENCES CORROBOR ATING AND SUBSTANTIATING THE LOAN TRANSACTIONS SUCH AS LOAN C ONFIRMATIONS, COPIES OF ITR, BANK STATEMENTS ALONG WITH BALANCE S HEETS AND PROFIT AND LOSS ACCOUNT TO PROVE THE IDENTITY OF TH E LENDERS , GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINES S OF THE PARTIES. THE ASSESSEE SUBMITTED THAT ALL LOANS WER E RECEIVED ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 5 THROUGH ACCOUNT PAYEE CHEQUES AND ASSESSEE IS REGUL ARLY PAYING INTEREST ON THE SAME AND APPLICABLE TDS HAS BEEN DE DUCTED AND DEPOSITED IN THE GOVT. TREASURY. IT HAS DISCHARGED THE ONUS OF PROVIDING ALL THE NECESSARY DETAILS AND THUS NO ADD ITION CAN BE MADE ON THE BASIS OF RETRACTED STATEMENT. THE ASSE SSEE ALSO SUBMITTED BEFORE THE AO THAT SHRI PRAVIN KUMAR JAIN AND ASSOCIATES GIVES A GENERAL STATEMENT AND NEVER SPEC IFICALLY MENTIONED THE NAME OF THE ASSESSEE, THEREFORE, THE SAME CAN NOT BE THE BASIS FOR MAKING ADDITION IN THE HANDS OF TH E ASSESSEE. FINALLY, THE AO, NOT FINDING THE REPLY OF THE ASSES SEE AS CONVINCING AND TENABLE, ADDED RS.3,69,00,000/- AS U NEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT ON ACCOUNT OF NON PROVING THE THREE INGREDIENTS SUCH AS IDENTITY, GEN UINENESS AND CREDITWORTHINESS, IN THE ASSESSMENT FRAMED UNDER SE CTION 143(3) OF THE ACT READ WITH SECTION 147 OF THE ACT DATED 3 1.03.2016. THE AO ALSO ADDED THE INTEREST PAID BY THE ASSESSEE TO THE LENDERS TO THE TUNE OF RS.19,53,222/- BEING INTERES T PAYMENT AGAINST BOGUS UNEXPLAINED LOANS AND ADDED BACK AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT . 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) PAR TLY UPHELD THE ORDER PASSED BY THE AO BY UPHOLDING THE RE-ASSE SSMENT /REOPENING PROCEEDINGS BY THE AO WHILE ON THE MERI TS THE ADDITIONS WERE DELETED BY OBSERVING AND HOLDING AS UNDER: 6.3 I HAVE CAREFULLY PERUSED THE FACTS OF THE CASE , APPELLANTS SUBMISSION AND THE ASSESSMENT ORDER. IT IS NOTED THAT THE A.O. HAS HEL D THAT THE APPELLANT HAS INTRODUCED INCOME FROM UNDISCLOSED SOURCES BROUGHT UNDER THE GARB OF UNEXPLAINED CASH CREDIT OF RS.3,69,00,000/- AND HEN CE THIS AMOUNT OF ISSUE OF THE UNEXPLAINED CASH CREDIT WAS ASSESSED AS INCOME OF T HE APPELLANT U/S 68 OF THE ACT. THE AO HAS ADDED AN AMOUNT OF RS.3,69,00,000/- TO T HE INCOME OF THE ASSESSEE PRIMARILY ON THE BASIS OF STATEMENT OF SHRI DINESH JAIN RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS AS WELL AS STATEMENT OF SHRI PRAVIN JAIN. HOWEVER, THE STATEMENT OF SHRI DINESH JAIN DATED 26.03.2014 HAS BEEN RETRACTED BY HIM ON ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 6 29.03.2014 I.E. WITHIN A PERIOD OF THREE DAYS FROM THE DATE OF SURVEY PROCEEDINGS. IN HIS RETRACTION STATEMENT, SHRI DINESH JAIN HAS C LEARLY STATED THAT THE STATEMENT RECORDED 3 DAYS EARLIER WAS RECORDED UNDER PRESSURE AND NO RELIANCE COULD BE PLACED ON THE SAME. IN VIEW OF THE ABOVE FACTS, I AM OF THE OPINION THAT ONCE THE STATEMENT HAD BEEN RETRACTED BY SHRI DINESH JAIN AL MOST IMMEDIATELY AND SUCH RETRACTION STATEMENT WAS AVAILABLE WITH THE AO DURI NG THE COURSE OF ENTIRE ASSESSMENT PROCEEDINGS AS WELL, HE SHOULD NOT HAVE PLACED RELIANCE ON THE EARLIER STATEMENT DATED 26.03.2014 ESPECIALLY WHEN HE COULD FIND NO ADVERSE FINDINGS IN THE RETRACTION STATEMENT. IN SUCH A SCENARIO, HE SH OULD HAVE DETERMINED THE GENUINENESS OF THE TRANSACTION ON THE BASIS OF VARI OUS DOCUMENTARY EVIDENCES PRODUCED BEFORE HIM. NEEDLESS TO SAY, THE SAME WOUL D ALSO HAVE BEEN IN LINE WITH VARIOUS CBDT CIRCULARS AS SUBMITTED BY THE APPELLAN T IN HIS SUBMISSION. FURTHER, THE STATEMENT OF SHRI PRAVIN JAIN ON WHICH THE AO HAS A LSO PLACED RELIANCE UPON HAS NOT BEEN CONFRONTED TO THE ASSESSEE EVER. AS HELD BY TH E HON'BLE APEX COURT IN THE CASE OF THE M/S. ANDAMAN TIMBER INDUSTRIES CIVIL AP PEAL NO. 4228 OF 2006, PLACING RELIANCE ON SUCH A STATEMENT WOULD BE IN VI OLATION OF THE PRINCIPLES OF NATURAL JUSTICE AND HENCE NO RELIANCE COULD HAVE BE EN PLACED BY THE AO ON THE STATEMENT OF SHRI PRAVIN JAIN EITHER. THE A.O. HAD CONCLUDED THAT BASED ON THE TEST OF HUMAN PROBABILITIES IT IS CLEAR THAT THE ENTIRE TRANSACTION IS A P RE-STRUCTURED TRANSACTION AND A COLORABLE DEVICE USED BY THE ASSE SSEE COMPANY TO INTRODUCE UNDISCLOSED INCOME UNDER THE GARB OF UNEXPLAINED CA SH CREDIT. THE AR HAS CONTENDED THAT THE A.O. HAD MISSED THE CRUCIAL FACT THAT THE APPLICANT COMPANY IS REGULARLY DOING THE BUSINESS AND HAS FILED ITS TAX RETURNS ON REGULAR BASIS. THE TAXES ARE PAID BY IT ON THE INCOME SO EARNED. IN THE LIGH T OF OBSERVATIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS (P) LTD. REPORTED IN 216 CTR 295, THE ONUS ON THE APPELLANT HAS BEEN DULY DISCHA RGED. THE PECULIAR FACTS OF THE CASE MAY HAVE CAUSED SUSPICION IN THE MIND OF THE A .O. BUT THERE IS NO EVIDENCE OR OTHER MATERIAL TO HOLD THAT THE APPELLANT HAD ROUTE D ITS OWN MONEY. 6.4. ON AN ANALYSIS OF THE FACTS ON RECORDS, IT IS SEEN THAT THE LOANS OF RS.3,69,00,0007- HAVE COME FROM DIFFERENT COMPANIES . IT IS NOTED THAT THE LOAN CREDITORS ARE EXISTING COMPANIES AND HAVE CONFIRMED THAT THEY HAD GIVEN THE LOANS TO THE ASSESSEE COMPANY. THE NEXT ASPECT IS CREDITW ORTHINESS. THE ASSESSEE HAS FILED COPY OF PAN CARD, BANK STATEMENT, BALANCE SHE ET AND P&L ACCOUNT ETC. OF LOAN CREDITORS. IT EMERGES OUT FROM THE RECORD THAT THE LOAN CREDITORS HAVE DULY RECORDED THE INVESTMENTS IN THEIR BOOKS OF ACCOUNTS. THUS, T HE LOAN CREDITORS HAD DEMONSTRATED THESE BALANCE IN THEIR BALANCE SHEETS IN THE SHAPE OF INVESTMENT AS WELL LOAN AND ADVANCES. THE NEXT ISSUE IS ABOUT THE GENUINENESS OF THE TRANSACTION. THE ASSESSEE HAS PRODUCED THE DETAILS OF BANK ACCOU NT. THE UNSECURED LOAN MONEY HAS BEEN RECEIVED THROUGH BANKING CHANNEL. THERE IS NO CASH TRANSACTION WHICH COULD COMPEL ONESELF TO ASSUME THAT THE TRANSACTION S WERE NOT GENUINE. THE ONUS CAST UPON THE ASSESSES UNDER SECTION 68 OF THE ACT IS TO SATISFY THE DEPARTMENT ABOUT THE TRUE IDENTITY OF AN INVESTOR, ITS CREDITW ORTHINESS AND GENUINENESS OF A TRANSACTION WAS EXPLAINED BY THE SUPREME COURT IN C IT VS. LOVELY EXPORTS (P) LTD., 216 CTR 295. WHILE, THE A.O. ACTED LEGITIMATELY IN ENQUIRING INTO THE MATTER, THE INFERENCES DRAWN BY HIM WERE NOT JUSTIFIED AT ALL I N THE CIRCUMSTANCES OF THE CASE. THE OBJECTIVE OF SECTION 68 IS TO AVOID INCLUSION O F AMOUNT WHICH ARE SUSPECT. THEREFORE, THE EMPHASIS IS ON GENUINENESS OF ALL TH E THREE ASPECTS, IDENTITY, CREDITWORTHINESS AND THE TRANSACTION. WHAT IS PECUL IAR IN THE PRESENT CASE IS WHEN ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 7 THE ASSESSMENT WAS BEING COMPLETED THE A.O. HAS NOT MADE MUCH INVESTIGATION, WHICH WOULD HAVE ESTABLISHED THAT THE IDENTITY OF T HE LOAN CREDITORS, THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHI NESS OF THE CREDITORS WERE NOT APPARENT. IT HAS BEEN SUBMITTED THAT THESE DETAILS CALLED FOR BY THE A.O. WERE DULY FILLED BY THE APPELLANT. EVEN OTHERWISE, THE DETAIL S OF LOAN CREDITORS PARTICULARS WERE AVAILABLE WITH THE A.O. IN THE FORM OF BALANCE SHEE TS INCOME TAX RETURNS, PAN DETAILS ETC. WHILE ARRIVING AT THE CONCLUSION THAT HE DID, THE A.O. DID NOT CONSIDER IT WORTHWHILE TO MAKE ANY FURTHER ENQUIRY. THERE IS NO FINDING TO THE EFFECT AS TO HOW THE ALLEGED UNACCOUNTED CASH/MONEY OF THE ASSESSEE COMPANY WAS ROUTED THROUGH VARIOUS LEVELS AND IT FINALLY REACHED TO THE ASSESS EE. THERE IS NO EVIDENCE OR MATERIAL ON RECORD TO SHOW THAT THE SAID AMOUNT REP RESENTING UNSECURED LOANS MOVED FROM THE ASSESSEE AND REACHED TO THE ASSESSEE . THE ASSESSEE COMPANY HAS RECEIVED THE MONEY THROUGH BANKING CHANNELS AND THE APPLICANTS HAD SHOWN THE SAID AMOUNT AS INVESTMENT IN THEIR BOOKS OF ACCOUNT . THE MONEY ROUTED THROUGH BANKING CHANNELS AND THROUGH ACCOUNT PAYEE CHEQUES/ BANK DRAFT, UNDISPUTED GIVEN BY THE PARTY. EVEN, THE SOURCE OF THE LOANS WAS FOU ND IN THE BANK ACCOUNT OF THE LOAN CREDITORS NOT BY ANY CASH DEPOSIT; BUT THROUGH ACCOUNT PAYEE CHEQUES. THEREFORE, WHEN ALL THESE DOCUMENTARY EVIDENCE ARE CONSIDERED THERE APPEARS NOT MUCH BASIS FOR ANY ADDITION. 6.5 THE BOMBAY HIGH COURT IN THE CASE OF CIT V. CR EATIVE WORLD TELEFILMS LTD. (IN I T. A. NO. 2182 OF 2009 DECIDED ON OCTOBER 12, 200 9) [2011] 333 ITR 100 HAS HELD THAT :- THE RELEVANT PORTION OF THIS ORDER IS REPRODUCED BE LOW: IN THE CASE IN HAND, IT IS NOT DISPUTED THAT THE A SSESSEE HAD GIVEN THE DETAILS OF NAME AND ADDRESS OF THE SHAREHOLDER, THE IR PA/GIR NUMBER AND HAD ALSO GIVEN THE CHEQUE NUMBER, NAME OF THE BANK. IT WAS EXPECTED ON THE PART OF THE ASSESSING OFFICER TO MAKE PROPER IN VESTIGATION AND REACH THE SHAREHOLDERS. THE ASSESSING OFFICER DID NOTHING EXC EPT ISSUING SUMMONS WHICH WERE ULTIMATELY RETURNED BACK WITH AN ENDORSE MENT NOT TRACEABLE. IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER OUGHT TO HAVE FOUND OUT THEIR DETAILS THROUGH PAN CARDS, BANK ACCOUNT DETAILS OR FROM THEIR BANKERS SO AS TO REACH THE SHAREHOLDERS SINCE ALL THE RELEVANT MA TERIAL DETAILS AND PARTICULARS WERE GIVEN BY THE ASSESSEE TO THE ASSES SING OFFICER. IN THE ABOVE CIRCUMSTANCES, THE VIEW TAKEN BY THE TRIBUNAL CANNO T BE FAULTED. NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THE APPE AL. IN THE RESULT, THE APPEAL IS DISMISSED IN LIMINE WITH NO ORDER AS TO C OSTS.' THE HON'BLE BOMBAY HIGH COURT THUS CLEARLY HELD THA T ONCE DOCUMENTS CARD, BANK ACCOUNT DETAILS OR DETAILS FROM THE BANKERS WERE GI VEN BY THE ASSESSEE, ONUS SHIFTS UPON THE ASSESSING OFFICER AND IT IS ON HIM TO REAC H THE SHAREHOLDER TO ASCERTAIN THE TRUE FACTS. IT IS, THUS, FOR THE ASSESSING OFFI CER TO MAKE FURTHER INQUIRIES WITH REGARD TO THE STATUS OF THESE PARTIES TO BRING ON R ECORD ANY ADVERSE FINDINGS REGARDING THEIR CREDITWORTHINESS. THIS WOULD BE MOR E SO WHERE THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND HAS ISSUED THE SHARE CAP ITAL TO THE PUBLIC AT LARGE, AS IN SUCH CASES THE COMPANY CANNOT BE EXPECTED TO KNOW E VERY DETAIL PERTAINING TO THE IDENTITY AND THE FINANCIAL WORTH OF THE SUBSCRIBERS . FURTHER THE INITIAL BURDEN ON THE ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 8 ASSESSEE WOULD BE SOMEWHAT HEAVY IN CASE THE ASSESS EE IS A PRIVATE LIMITED COMPANY WHERE THE SHAREHOLDERS ARE FAMILY FRIENDS/C LOSE ACQUAINTANCES, ETC. IT IS BECAUSE OF THE REASON THAT IN SUCH CIRCUMSTANCE, TH E ASSESSEE CANNOT FEIGN IGNORANCE ABOUT THE STATUS OF THESE PARTIES. 6.6 THE JUDGMENT OF THE SUPREME COURT IN THE CASE O F CIT V. P. MOHANAKALA [2007] 291 ITR 278 IS ALSO RELEVANT ON THE FACTS OF THE CA SE. IN THAT CASE, THE ASSESSEE HAD RECEIVED FOREIGN GIFTS FROM ONE COMMON DONOR. THE P AYMENTS WERE MADE TO THEM BY INSTRUMENTS ISSUED BY FOREIGN BANKS AND CREDITED TO THE RESPECTIVE ACCOUNTS OF THE ASSESSEES BY NEGOTIATIONS THROUGH BANK IN INDIA . THE EVIDENCE INDICATED THAT THE DONOR WAS TO RECEIVE SUITABLE COMPENSATION FROM THE ASSESSEES. THE ASSESSING OFFICER HELD THAT THE GIFTS THOUGH APPARENT WERE NO T REAL AND ACCORDINGLY TREATED ALL THOSE AMOUNTS WHICH WERE CREDITED IN THE BOOKS OF A CCOUNT OF THE ASSESSEE, AS THEIR INCOME APPLYING SECTION 68 OF THE ACT. THE AS SESSEE DID NOT CONTEND THAT EVEN IF THEIR EXPLANATION WAS NOT SATISFACTORY THE AMOUN TS WERE NOT OF THE NATURE OF INCOME. THE COMMISSIONER OF INCOME-TAX (APPEALS) CO NFIRMED THE ASSESSMENT. ON FURTHER APPEAL, THERE WAS A DIFFERENCE OF OPINION B ETWEEN THE TWO MEMBERS OF THE APPELLATE TRIBUNAL AND THE MATTER WAS REFERRED TO T HE VICE PRESIDENT WHO CONCURRED WITH THE FINDINGS AND CONCLUSIONS OF THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME-TAX (APPEALS). ON APPEAL, TH E HIGH COURT RE-APPRECIATED THE EVIDENCE AND SUBSTITUTED ITS OWN FINDINGS AND C AME TO THE CONCLUSION THAT THE REASONS ASSIGNED BY THE TRIBUNAL WERE IN THE REALM OF SURMISES, CONJECTURE AND SUSPICION. ON APPEAL TO THE SUPREME COURT, THE COUR T WHILE REVERSING THE DECISION OF THE HIGH COURT HELD THAT THE FINDINGS OF THE ASS ESSING OFFICER, COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUNAL WERE BASED ON THE MATERIAL ON RECORD AND NOT ON ANY CONJECTURES AND SURMISES. THAT THE MONEY CAME BY WAY OF BANK CHEQUES AND WAS PAID THROUGH THE PROCESS OF BANKING TRANSACTION AS NOT BY ITSELF OF ANY CONSEQUENCE. THE HIGH COURT MISDIRECTED ITSELF AND ERRED IN DISTURBING THE CONCURRENT FINDINGS OF FACT. WHILE DOING SO, THE LE GAL POSITION CONTAINED IN SECTION 68 OF THE ACT WAS EXPLAINED BY THE SUPREME COURT BY ASSESSING THAT A BARE READING OF SECTION 68 OF THE ACT SUGGESTS THAT (I) THERE HA S TO BE CREDIT OF AMOUNTS IN THE BOOKS LTD. MAINTAINED BY THE ASSESSEE; (II) SUCH CR EDIT HAS TO BE A SUM OF MONEY DURING THE PREVIOUS YEAR ; AND (III) EITHER (A) THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF SUCH CREDITS FOUND I N THE BOOKS, OR (B) THE EXPLANATION OFFERED BY THE ASSESSEE, IN THE OPINION OF THE ASSESSING OFFICER, IS NOT SATISFACTORY. IT IS ONLY THEN THAT THE SUM SO CREDI TED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR . THE EXPRESSION 'THE ASSESSEE OFFERS NO EXPLANATION' MEANS THE ASSESSEE OFFERS NO PROPER, REASONABLE AND ACCEPTABLE EXPLANATION AS REGARDS THE SUMS FOUND CR EDITED IN THE BOOKS MAINTAINED BY THE ASSESSEE. THE OPINION OF THE ASSESSING OFFIC ER FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFAC TORY IS REQUIRED TO BE BASED ON PROPER APPRECIATION OF MATERIAL AND OTHER ATTENDING CIRCUMSTANCES AVAILABLE ON THE RECORD. THE OPINION OF THE ASSESSING OFFICER IS REQ UIRED TO BE FORMED OBJECTIVELY WITH REFERENCE TO THE MATERIAL ON RECORD. APPLICATI ON OF MIND IS THE SINE QUA NON FOR FORMING THE OPINION. IN CASES WHERE THE EXPLANA TION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE OF THE SUMS FOUND CREDI TED IN THE BOOKS IS NOT SATISFACTORY THERE IS, PRIMA FACIE, EVIDENCE AGAINS T THE ASSESSEE, VIZ., THE RECEIPT OF MONEY. THE BURDEN IS ON THE ASSESSEE TO REBUT THE SAME, AND, IF HE FAILS TO REBUT IT, IT CAN BE HELD AGAINST THE ASSESSEE THAT IT WAS A R ECEIPT OF AN INCOME NATURE. THE ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 9 BURDEN IS ON THE ASSESSEE TO TAKE THE PLEA THAT EVE N IF THE EXPLANATION IS NOT ACCEPTABLE, THE MATERIAL AND ATTENDING CIRCUMSTANCE S AVAILABLE ON RECORD DO NOT JUSTIFY THE SUM FOUND CREDITED IN THE BOOKS BEING T REATED AS A RECEIPT OF INCOME NATURE. 6.7 IT IS CLEAR FROM THE DECISION OF THE HON'BLE DE LHI HIGH COURT IN THE CASE OF OASIS-HOSPITALITIES P LTD. 2011 333 HR 119 (DEL.), THAT ONCE THE ASSESSEE FILED COPY OF PAN, ACKNOWLEDGEMENT COPY OF THE RETURN OF INCOM E OF THE INVESTING COMPANY, THEIR BANK ACCOUNTS STATEMENTS FOR THE RELEVANT PER IOD; THEN EVEN IF THE PARTIES WERE NOT PRODUCED IN SPITE OF THE SPECIFIC EJECTION S OF THE ASSESSING OFFICER, THE ADDITION COULD NOT BE SUSTAINED AS THE PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEE BY PRODUCING THE PAN, BALANCE SHEET, COPY OF THE AC KNOWLEDGEMENT COPY OF RETURN OF THE APPLICANTS ETC.. IN THE INSTANT CASE, THERE IS NO DISPUTE ABOUT THE IDENTITY OF THE CREDITOR COMPANIES, WHO HAD GIVEN THE LOAN MONE Y AND THE SOURCE OF THE LOAN WAS ALSO FOUND IN THE RESPECTIVE BANK ACCOUNTS OF T HE INVESTING COMPANIES AND THERE WAS NO TRACE OF CASH DEPOSIT IN THE BANK ACCO UNTS OF THE INVESTING COMPANIES, THEN, THE ACTION OF THE ASSESSING OFFICER WITHOUT M AKING FURTHER DETAILED ENQUIRY TO ESTABLISH THAT THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT WERE ATTRACTED IN THE PRESENT CASE IS DIFFICULT TO SUSTAIN IN APPEAL. THE ASSESSING OFFICER HAS MADE ADDITION ON SOME DOUBTS AND SUSPICION BUT HAS NOT E STABLISHED ANY DIRECT OR INDIRECT LINK OF ASSESSEE'S OWN MONEY FLOWING OUT A ND THEN AGAIN RECEIVED BY THE ASSESSEE IN THE FORM OF LOANS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FOLLOWING DETAILS WERE FILED BY THE ASSESSEE BEFORE THE LD. A.O.:- I) BANK STATEMENT OF THE LENDER COMPANIES II) ITR, ACKNOWLEDGEMENT OF THE LENDER COMPANIES III) LEDGER CONFIRMATION IV) PAN NUMBER OF THE LENDER COMPANIES V) BANK STATEMENT OF THE ASSESSEE COMPANY VI) FORM 16A BEING THE TDS CERTIFICATE 6.8 IN VIEW OF THE LEGAL POSITION EMANATING FROM LE GAL PRECEDENTS AS DISCUSSED ABOVE AND HAVING REGARD TO THE FACTS OF THE CASE, I T IS NOTED THAT WHEN REQUISITE DOCUMENTS SUCH AS PAN, BANK ACCOUNTS, BALANCE SHEET ETC. WERE AVAILABLE WITH THE A.O., TO ESTABLISH THAT NO CASH TRANSACTIONS WERE I NVOLVED IN THE BANK ACCOUNTS OF THE INVESTING COMPANIES THEN WITHOUT FURTHER PROBE TO PROVE THE CONTRARY THE ADDITION U/S 68 IN THE HAND OF THE ASSESSEE CANNOT BE MADE. THERE IS NO ADVERSE FINDING GIVEN BY THE AO FOR ANY OTHER LENDERS. THU S, IN MY OPINION, THE AO HAS NOT DONE ANYTHING TO CONTROVERT THE EVIDENCES FILED BY THE ASSESSEE IN THIS REGARD, WHEREAS THE APPELLANT HAD DISCHARGED THE PRIMARY ON US OF PROVING THE GENUINENESS OF THE LOAN TRANSACTIONS BY PROVIDING THE VARIOUS D OCUMENTARY EVIDENCES AS DISCUSSED ABOVE. IN VIEW OF THE THIS DISCUSSION ON THE FACTS OF THE CASE AND HAVING REGARD TO THE DECISIONS OF COURTS AND JUDICIAL PREC EDENTS AS NOTED ABOVE, THE ADDITION MADE BY THE A.O. OF THE UNEXPLAINED CASH C REDIT OF RS.3,69,00,000/- UNDER SECTION 68 OF THE INCOME ACT 1961 CANNOT BE SUSTAIN ED IN APPEAL AND IS DIRECTED TO BE DELETED. ACCORDINGLY THIS GROUND OF APPEAL IS A LLOWED. ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 10 6. THE LD. D.R., VEHEMENTLY SUBMITTED BEFORE THE BE NCH THAT THE ORDER PASSED BY THE LD. CIT(A) IS TOTALLY WRONG AND WAS PASSED WITHOUT CONSIDERING THE RATIO LAID DOWN BY V ARIOUS JUDICIAL FORUMS/COURTS. THE LD. D.R. SUBMITTED THA T ASSESSEE RAISED A SUM OF RS.3.69 CRORES FROM 9 PRIVATE COMPA NIES RELATED TO SHRI PRAVIN KUMAR JAIN GROUP WHO WERE PART OF HA WALA RACKET WHICH CAME TO LIGHT UPON A SEARCH ON THE SAID PERS ON AND HIS ASSOCIATED CONCERNS THAT THE ENTIRE BUSINESS BEING RUN AND OPERATED BY THE PRAVIN KUMAR JAIN GROUP WAS ONLY B OGUS AND THEY WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIE S IN THE FORM OF UNSECURED LOAN, SHARE APPLICATION MONEY AND LONG TERM CAPITAL GAIN ETC. SHRI PRAVEEN KUMAR JAIN ADMITTED DURING THE RECORDING OF STATEMENT U/S 132(4) OF THE ACT. NEVER THELESS THE SAID STATEMENT WAS RETRACTED LATER ON BUT THAT WAS ONLY AFTER THOUGH. THE LD. D.R. SUBMITTED THAT LD. CIT(A) ALLO WED RELIEF TO THE ASSESSEE ON THE BASIS THAT SHRI DINESH JAIN, DI RECTOR OF THE ASSESSEE COMPANY RETRACTED HIS STATEMENT DATED 26.0 3.2014 ON 29.04.2014 ON THE GROUND THAT STATEMENT WAS GIVEN U NDER DURESS AND PRESSURE. THE LD. D.R. FURTHER STATED A CCORDING TO THE LD CIT(A), THE AO SHOULD NOT HAVE PLACED RELIAN CE ON THE STATEMENT DATED 26.03.2014 AS SHRI DINESH JAIN HAS RETRACTED HIS STATEMENT. THE LD. D.R. SUBMITTED THAT ACCORDI NG TO LD. CIT(A) THE STATEMENT OF SHRI PRAVIN KUMAR JAIN WA S NOT CONFRONTED TO SHRI DINESH JAIN, THE FACT THAT THE A SSESSEE HAS BEEN REGULARLY DOING BUSINESS AND FILING RETURNS OF INCOME AND RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS PVT. LTD. 216 CTR 295. THE L D DR CONTENDED THAT MERE FACT THAT ALL THE LENDER COMPAN IES WERE REGISTERED COMPANIES AND HAVE BEEN FILING THEIR RET URNS OF ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 11 INCOME REGULARLY BEFORE THE INCOME TAX AS WELL AS ROC OR FILED CONFIRMATIONS, PANS, BANK STATEMENTS AND ANNUAL AUD ITED ACCOUNTS ETC WOULD NOT MADE THE BOGUS TRANSACTIONS AS GENUINE ONES. THE LD DR ARGUED THAT FINDINGS OF THE LD. C IT(A) THAT AO HAS NOT CONDUCTED ANY ENQUIRY DESPITE ASSESSEE HAVI NG FILED VARIOUS DOCUMENTS SUCH AS PANS, CONFIRMATION LETTER S, COPIES OF BANK STATEMENTS, COPY OF ITRS ETC IS NOT OF ANY LEG AL SIGNIFICANCE AS PRAVEEN KUMAR JAIN GROUP WAS A HAWALA OPERATOR. THE LD DR ALSO TRIED TO REBUT THE OBSERVATION OF THE LD CIT( A) THAT AO HAS NOT MADE ANY ENQUIRY DURING THE COURSE OF ASSESSMEN T REGARDING IDENTITY OF THE LENDERS, GENUINENESS OF T HE TRANSACTIONS AND CREDITWORTHINESS OF THE PARTIES AN D ALSO THAT NO CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNTS OF THE ASSESSEE. ONCE THE PARTIES ASSESSEE AS WELL AS THE PERSONS W HO GAVE BOGUS UNSECURED LOANS ADMITTED ON OATH IN THEIR RES PECTIVE STATEMENTS THAT THE ENTRIES WERE BOGUS, NO FURTHER ENQUIRY OR INVESTIGATION ARE REQUIRED. THE LD. D.R. ALSO AR GUED THAT THE RETRACTION CAN NOT BE MERELY ACCEPTED WITHOUT ASSE SSEE GIVING ANY REASONS FOR RETRACTION. THE LD. D.R. SUBMITTE D THAT IT IS THE DUTY OF ASSESSEE TO PROVE THAT STATEMENT RECORDED W AS BY FORCE OR COERCIVE WHEREAS SUCH FACTS WERE PUT FORWARD BY THE ASSESSEE IN THE RETRACTION FILED. THE LD. D.R. RELIED IN DE FENCE OF HIS ARGUMENT ON PARAM ANAND BUILDERS PVT. LTD. VS INCOM E TAX OFFICER (1996) 59 ITD 29 (MUM) WHEREIN IT WAS HELD THAT ALLEGATION OF COERCION AND PRESSURE CAN NOT BE ACCE PTED WHEN INDEPENDENT WITNESSES WERE THERE. THE LD. D.R. ALS O RELIED ON HOTEL KIRAN V. ACIT (PUNE) (2002) 82 ITD 453 (PUNE TRIBUNAL) WHEREIN THE PUNE BENCH HAS HELD THAT ADMISSION OF A PERSON IS GOOD PIECE OF EVIDENCE AND CAN BE USED AGAINST THE PERSON AS ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 12 THE PERSON MAKING STATEMENT STOPS THE OTHER PARTY F ROM MAKING FURTHER INVESTIGATION. THE LD. D.R. FURTHER RELIED ON THE FOLLOWING DECISIONS: 1. KANTILAL C. SHAH VS. ACIT 14 TAXMAN.COM 108 (ITA T- ALBD.) 2. CIT VS LEKH RAJ DHUNNA (2012) 20 TAXMANN.COM 554 (P&H) THE LD. D.R. SUBMITTED THAT THE DECISIONS RELIED U PON BY THE LD CIT(A) ARE DISTINGUISHABLE ON FACTS NAMELY ( I) CIT VS. CREATIVE WORLD TELE FILMS LTD ( 2011) 333 ITR 100 ( BORN-HIGH COURT); CIT VS. P. MOHANAKALA 291 ITR 278;(II) CIT VS. OASIS HOSPITALITIES PVT. LTD. 333 ITR 119. THE LD. D.R. HEAVILY RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF M/S. JANSAMPARK ADVERTISING & MARKETING P LTD. 56 TAXMAN 286 WHEREIN THE HONBLE COURT HELD THAT LD. CIT(A) SHOU LD HAVE MADE PROPER ENQUIRY IF AO FAILS TO MAKE ENQUIRIES. THE LD. D.R. SUBMITTED THAT LD. CIT(A) MERELY RELIED UPON THE FA CT THAT ASSESSEE FILED BANK STATEMENT, ITRS, PAN NUMBER, CONFIRMATIONS, BANK STATEMENT AND FORM NO.16A FOR T DS DEDUCTION. THE LD. D.R. CONTENDED THAT MERE FILING ALL THESE DOCUMENTS WOULD NOT PROVE THE IDENTITY, GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE LENDERS AU TOMATICALLY. THE LD. D.R. RELIED ON THE FOLLOWING DECISIONS IN D EFENSE OF HIS ARGUMENTS : 1. NEMI CHAND KOTHARI VS. CIT 264 ITR 253 2. CIT VS. KORLAY TRADING CO. LTD. 238 ITR 820 (KOLKAT A HC) FINALLY, THE LD. D.R. PRAYED BEFORE THE BENCH THAT IN VIEW OF THE DETAILED SUBMISSIONS , ARGUMENTS AND RATIO L AID DOWN BY ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 13 THE VARIOUS DECISIONS, AND ALSO THE WRITTEN SUBMISS IONS , THE ORDER PASSED BY THE LD. CIT(A) MAY BE REVERSED. 7. THE LD. A.R., ON THE OTHER HAND, WHILE OPPOSING THE ARGUMENTS OF THE LD. D.R. VEHEMENTLY SUBMITTED THAT THE APPELLATE ORDER WAS PASSED BY THE LD. CIT(A), AFTER GIVING A DETAILED FINDING AND REASONING AND AFTER TAKING IN TO ACCOUNT VARIOUS DECISIONS OF HONBLE JURISDICTIONAL HIGH C OURT AND OTHER JUDICIAL FORUMS, IS AS PER LAW AND THEREFORE DOES N OT REQUIRE ANY INTERFERENCE FROM THE HON'BLE TRIBUNAL. THE LD. A. R. VEHEMENTLY SUBMITTED BEFORE US THAT ASSESSEE HAS FILED ALL THE NECESSARY EVIDENCES BEFORE THE AO DURING THE COURSE OF RE-ASS ESSMENT PROCEEDINGS BUT AO HAS NOT MADE ATTEMPT TO MAKE AN Y FURTHER ENQUIRY/INVESTIGATION AND HAD JUST ACTED ON THE BAS IS OF SUSPICION AND CONJECTURES THAT SHRI PRAVIN KUMAR JA IN AND ASSOCIATES WERE PROVIDING BOGUS ENTRIES WHEREAS IN THE STATEMENT OF SHRI PRAVIN KUMAR JAIN NOWHERE ASSESSE ES NAME HAS BEEN MENTIONED. MOREOVER, THE EVIDENCES FILED IN THE FORM OF BANK STATEMENTS, ITRS, LOAN CONFIRMATIONS, PAN N UMBERS AND FORM NO.16A ALL COLLECTIVELY PROVED THAT ALL THESE LOAN TRANSACTIONS WERE GENUINE AND DULY REFLECTED BY THE LENDERS COMPANIES IN THEIR BOOKS OF ACCOUNTS. THE LD. A.R. SUBMITTED THAT AO HAS MERELY RELIED ON THE SUSPICION OF SHRI PRAVIN KUMAR JAIN AND ASSOCIATED COMPANIES WERE ENGAGED IN THE ACCOMMODATION ENTRIES AND ASSESSEE IS A BENEFICIARY OF THAT. THE AOS CONCLUSION IS WITHOUT ANY VERIFICATION OR ESTABLISHING THAT CASH AMOUNT HAS CHANGED HAND BETWEEN THE ASSES SEE AND THE LENDER COMPANIES. THE LD. A.R. HEAVILY RELIED ON THE ORDER OF ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 14 LD. CIT(A) AND THE FOLLOWING DECISIONS IN DEFENSE O F HIS ARGUMENTS : 1. PCIT VS. VIDHATA TOWER LTD. 819 ITR 2015 (BOM.- HC) 2. RELIANCE CORPORATION VS. ITO (ITA NO.1069 TO 1071/M/2017 (MUM) 3. ITO VS. SHREEDHAM CONSTRUCTIONS P. LTD. ITA NO.3754 AND 3756/M/2017 (MUM) 4. CONCEPT COMMUNICATION LTD. VS. DCIT (ITA NO.3026/M/2016) FINALLY, THE LD. A.R. SUBMITTED THAT IN VIEW OF TH E FACTS OF THE CASE OF THE ASSESSEE AND VARIOUS JUDICIAL PRONO UNCEMENTS AS CONSIDERED BY THE LD. CIT(A) AND AS BROUGHT BEFORE THE BENCH DURING THE COURSE OF HEARING, THE ORDER OF LD. CIT( A) DOES NOT REQUIRE ANY INTERFERENCE AS HE HAS RIGHTLY DELETED THE ADDITION WHICH WAS MADE SOLELY ON THE BASIS OF A STATEMENT W HICH HAS BEEN RETRACTED JUST 3 DAYS AFTER RECORDING THEREOF AND IN VIEW OF THE FACT THAT DESPITE ASSESSEE DISCHARGING ITS ONUS BY FILING ALL THE NECESSARY EVIDENCES , THE AO HAS NOT DONE ANYTH ING TO DISBELIEVE AND DISAPPROVE THE EVIDENCES FILED BY TH E ASSESSEE BY CONDUCTING ANY INVESTIGATION/ENQUIRY DURING THE ASS ESSMENT PROCEEDINGS. THEREFORE, THE ORDER OF LD. CIT(A) MA Y BE CONFIRMED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE WR ITTEN SUBMISSIONS FILED BY THE LD. A.R. AND THE LD. D.R. ALONG WITH VARIOUS CASE LAWS REFERRED AND RELIED BY BOTH THE P ARTIES. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE COMPANY WAS FORMED AND CONSTITUTED ON 15.09.2010 AND IT HAS TAKEN OVER BUS INESS OF M/S. D.N.H SPINNERS A PARTNERSHIP FIRM ON GOING CON CERN BASIS. THERE WAS A SURVEY ACTION UNDER SECTION 133A OF THE ACT ON THE ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 15 ASSESSEE ON 25.03.2014. DURING THE COURSE OF SURVE Y A STATEMENT UNDER SECTION 131 OF THE ACT WAS RECORDED OF SHRI DINESH JAIN ON 26.03.2014 WHO IS DIRECTOR OF THE AS SESSEE COMPANY WHEREIN THE SURVEY TEAM INFORMED HIM THAT V ARIOUS UNSECURED LOANS TAKEN BY THE ASSESSEE FROM SEVEN EN TITIES CONTROLLED BY SHRI PRAVIN KUMAR JAIN WHO HAS ADMITT ED BEFORE THE INVESTIGATION WING IN THE COURSE OF SEARCH PROC EEDINGS THAT HE AND HIS ASSOCIATED CONCERNS WERE PROVIDING ACCOM MODATION ENTRIES. SHRI DINESH JAIN, DIRECTOR OF THE ASSESSE E COMPANY ADMITTED THAT THEY HAVE TAKEN THESE ENTRIES FROM SH RI PRAVIN KUMAR JAIN AND ASSOCIATES. ACCORDING TO THE ASSESS EE THE STATEMENT OF SHRI DINESH JAIN WAS RECORDED UNDER PR ESSURE. HOWEVER, LATER ON SHRI PRAVIN KUMAR JAIN RETRACTED HIS STATEMENT AND LIKEWISE SHRI DINESH JAIN ALSO RETRAC TED HIS STATEMENT ON 29.03.2014 WITHIN THREE DAYS FROM THE DATE OF RECORDING THE SAME. IN THIS CASE DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FILED COPIE S OF BANK STATEMENT, ITRS, CONFIRMATIONS, PAN NUMBERS OF THE LENDERS ETC. AND THUS THE ASSESSEE HAS FULLY DISCHARGED THE ONUS CAST UPON IT AND THUS THE ADDITION UNDER SECTION 68 CAN NOT B E MADE IN THE SAID CIRCUMSTANCES QUA THE UNSECURED LOANS RAIS ED BY THE ASSESSEE. THE AO HAS MERELY RELIED ON THE STATEMEN T OF SHRI DINESH JAIN WHO IS DIRECTOR IN THE ASSESSEE COMPANY BY IGNORING THE FACT THAT THE STATEMENT GIVEN BY THE SAID DIREC TOR STANDS RETRACTED AFTER THREE DAYS FROM THE RECORDING OF TH E SAME. AFTER PERUSING THE ORDER OF LD. CIT(A) WHO HAS DEALT WITH THE FACTS IN GREAT DETAIL AND ALSO DISCUSSED THE VARIOUS DECISIO NS WHEREIN IT HAS BEEN HELD THAT NO SUCH ADDITION CAN BE MADE UND ER SECTION 68 WHERE THE ASSESSEE HAS FILED ALL THE NECESSARY E VIDENCES ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 16 BEFORE THE AO WHEN AO HAS NOT MADE ANY FURTHER ENQ UIRY TO TO PROVE OTHERWISE. THE ALLEGATION OF THE AO THAT ASS ESSEE HAS NOT PROVED IDENTITY AND CREDITWORTHINESS OF THE LENDER S AND GENUINENESS OF THE TRANSACTIONS IS WITHOUT ANY BASI S AS STATED ABOVE. THE ASSESSEE FILED THE NECESSARY EVIDENCES IN THE FORM OF LOAN CONFIRMATIONS, BALANCE SHEETS AND PROFIT AND L OSS ACCOUNTS, ITRS, BANK STATEMENTS AND PAN CARDS OF THE LENDERS. THE LENDERS COMPANIES WERE FILING THEIR ITR AND ROC RET URNS REGULARLY AND HAVE DULY SHOWN THE AMOUNT LENT TO TH E ASSESSEE IN THEIR RESPECTIVE BALANCE SHEETS. ENTIRE TRANSAC TIONS WERE ROUTED THROUGH THE BANKING CHANNELS AND THUS THE AS SESSEE HAS DISCHARGED THE PRIMARY ONUS OF PROVING THE IDENTITY , CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. ANOTHER ALLEGATION OF THE AO IS THAT ASSESSEE HAS FAILED TO PRODUCE THE PARTIES AND HENCE QUESTION OF PROVIDING CROSS EXAMI NATION DOES NOT ARISE WHICH IS WITHOUT MERIT AS THE ASSESSEE HA S DISCHARGED ITS ONUS BY PROVIDING ALL THE BASIC DOCUMENTARY EVI DENCES BEFORE THE AO WHO JUST RELYING ON THE STATEMENT OF SHRI P RAVIN KUMAR JAIN TREATED THE LOAN TRANSACTIONS AS UNEXPLAINED CREDIT IN THE BOOKS OF THE ASSESSEE. ON THE ISSUE THAT THESE LE NDERS ARE SHOWING LOW INCOME OR LOSSES IN THE RETURN OF INCOM E FILED, WE OBSERVE THAT IN THE BALANCE SHEETS THE SAID LOAN AD VANCED BY THE LENDER WERE DULY REFLECTED AND THUS THERE IS NO INC OME IN THE PARTICULAR YEAR HAS NO RELEVANCE AND THERE WERE SUF FICIENT SOURCES. UNDER THESE CIRCUMSTANCES, WE, AFTER TAKI NG INTO CONSIDERATION CONTENTIONS M, SUBMISSIONS AND WRIT TEN SUBMISSIONS OF BOTH THE PARTIES AND AFTER ANALYZING THE VARIOUS CASE LAWS RELIED UPON BY THE RIVAL PARTIES , ARE O F THE VIEW THAT ORDER PASSED BY THE LD. CIT(A) IS WELL REASONED AN D THERE IS NO ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 17 REASONS TO DEVIATE FROM THE FINDINGS OF THE LD CIT( A) AND THEREFORE SAME IS BEING UPHELD BY DISMISSING THE AP PEAL OF THE REVENUE. 9. THE ISSUE RAISED IN GROUND NO.2 IS AGAINST THE D ELETION OF ADDITION OF RS.19,53,222/- BY LD. CIT(A) AS MADE BY THE AO ON ACCOUNT OF INTEREST PAID ON THE UNSECURED LOANS WHI CH WERE TREATED AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. 10. SINCE WE HAVE ALREADY DECIDED THE GROUND NO.1 I N FAVOUR OF THE ASSESSEE, THEREFORE IN VIEW OF OUR DECISION DE LETING THE ADDITION MADE BY THE AO UNDER SECTION 68 OF THE ACT IN RESPECT OF UNSECURED LOANS, WE HOLD THAT THE INTEREST PAID TO THE LENDERS AFTER DEDUCTION OF TDS AT SOURCE IS GENUINE AND SAM E HAS BEEN RIGHTLY ALLOWED BY THE LD. CIT(A).THE GROUND RAISED BY THE CIT(A) IS DISMISSED. 11. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ITA NO.5887/M/2017 (A.Y. 2012-13) 12. THE ISSUES INVOLVED IN THE PRESENT APPEAL ARE I DENTICAL TO THE ONES AS DECIDED BY US IN ABOVE ITA NO.5886/M/2 017 FOR A.Y. 2011-12. THEREFORE, OUR DECISION IN ITA NO.5 886/M/2017 FOR A.Y. 2011-12 WOULD , MUTATIS MUTANDIS, APPLY TO THIS APPEAL AS WELL. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. CO NO.250/M/2018 (A.Y. 2011-12) 13. SINCE WE HAVE DISMISSED THE APPEAL OF THE REVEN UE , THE CO OF THE ASSESSEE NEEDS NO ADJUDICATION AND IS DISMIS SED. ITA NOS.5886 & 5887/M/2017 CO NO.250/M/2018 M/S. D.N.H. SPINNERS PVT. LTD. 18 IN THE RESULTS TWO APPEALS OF THE REVENUE AND CO OF THE ASSESSEE ARE DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 14.03.2019. SD/- SD/- ( RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14.03.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.