INCOME TAX OFFICER 15(1)(3), MUMBAI V. M/S.CELEBRITY LIFESPACE PRIVATE LIMITED, MUMBAI

ITA 6301/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2057 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 18-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN K SINGH
• Keywords: Unexplained cash credit; Income from undisclosed sources; Search and seizure; Principle of natural justice; Opportunity of cross examination; Corroborative evidences; Accommodation entries; Retraction
• Section: 143(3); 13; 131; 132; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, AM & SHRI PAWAN SINGH, JM ./ I.T.A. NO. 6301/MUM/2017 ( / ASSESSMENT YEARS : 2014-15) ITO 15(1)(3) ROOM NO. 15-B, GROUND FLOOR, AAYAKAR BHAVAN, MK ROAD, MUMBAI / VS. M/S. CELEBRITY LIFESPACE PVT LTD., A-306, RUNWAL HEIGHTS COMMERCIAL COMPLEX, NIRMAL LIFESTYLE LBS ROAD MULUND(W) MUMBAI. ./ ./ PAN/GIR NO. : AAFCC0759E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI CHAUDHARY ARUN K SINGH / RESPONDENT BY : SHRI J.P. BAIRAGRA / DATE OF HEARING 29/11/2019 !'# / DATE OF PRONOUNCEMENT 05/12 /2019 / O R D E R PER R C SHARMA (AM): THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) FOR THE A.Y 2014-15 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE ACT. ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 2 - 2. THE ONLY GRIEVANCE OF THE REVENUE RELATE TO DELE TING ADDITION MADE ON ACCOUNT OF UNSECURED LOAN AND INTE REST PAID THEREON AMOUNTING TO RS. 16,14,410/-. AS MANY AS 5 GROUNDS OF APPEAL HAS BEEN TAKEN, BUT THE CRUX OF T HE ISSUE REVOLVES AROUND ADDITION MADE BY A.O ON ACCOUNT OF UNSECURED LOANS FROM SIX PARTIES. 3. RIVAL CONTENTIONS HAVE BEEN HEAD AND RECORD PERU SED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A COMPANY E NGAGED IN THE BUSINESS OF PROPERTY DEVELOPERS. THE RETURN OF INCOME FOR THE YEAR UNDER APPEAL WAS FILED ON 28.11.2014 D ECLARING NIL TOTAL INCOME. ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED BY THE A.O ON 27.12.2016 DETERMINING INCO ME AT RS. 1,75,00,000/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. AO OBSERVED THAT AS PER THE INFORMATION RECEIVED FROM INVESTIGATION WING OF THE IT DEPARTMENT A SEARCH ACTION U/S 132 OF THE ACT WAS CONDUCTED IN THE CASE OF MR. PRAVIN KUMAR JAIN & GR OUP ON 03.10.2013. AS PER THE SAID INFORMATION, THE AS SESSEE COMPANY REPORTED TO HAVE RECEIVED UNSECURED LOANS AMOUNTING TO RS. 1,75,00,000/- AS UNDER SR. NO. NAME OF PARTY AMOUNT 1 DUKE BUSINESS PVT LTD., 50,00,000 ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 3 - 2. PRAGATI GEMS PVT LTD., 35,00,000 3. FALAK TRADING COMPANY PVT LTD., 25,00,000 4. P SAJI TEXTILES LTD., 10,00,000 5. SHYAM ALCOHOL AND CHEMICALS LTD., 15,00,000 6 SHIPRA FABRICS PVT LTD., 40,00,000 3.1 THE A.O ALLEGED THAT ALL THE ABOVE PERSONS WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES BY WAY OF SHARE CAPITAL OR UNSECURED LOANS TO VARIOUS PARTIES AND THE ASSESSEE WAS ONE OF SUCH BENEFICIARIES WHO OBTAINED ACCOMMODATION ENTRIES AS REGARDS UNSECURED LOANS FR OM THEM. BASED ON THE ABOVE FACTS, THE AO CONCLUDED T HAT THE ABOVE LOANS OBTAINED BY THE ASSESSEE WERE NOT GENUI NE AND MADE AN ADDITION OF RS. 1,75,000/- U/S 68 OF THE IT ACT & REDUCING THE VALUE OF INVENTORY BY RS. 16,14,410/- AS THE INTEREST PAID ON THE ABOVE LOANS WHICH WAS INCLUDED IN WORK IN PROGRESS AND WAS SUBSEQUENTLY CARRIED FORWA RD. 4. BY THE IMPUGNED ORDER THE CIT(A) DELETED THE ADD ITION BY OBSERVING AS UNDER: I HAVE CONSIDERED THE SUBMISSIONS FILED BY THE ASSE SSEE AND THE AO'S FINDINGS IN THE ASSESSMENT ORDER. A SEARCH AND SEIZURE ACTION U/S.132 OF THE I.T. ACT, 1961 WAS CA RRIED OUT IN ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 4 - THE CASE OF SHIERAV.EEN KUMAR JAM, GAUTAM JAIN AND VIPUL VIDUR BHATT AND THEIR OTHER RELATED ENTITIES AND TH E ASSESSEE HAS TAKEN/MADE TRANSACTIONS WITH MR. VIPUL VIDUR BHATT AND HIS GROUP CONCERNS. THE AO CONCLUDED THAT THE ABOVE LOA NS WERE NOT GENUINE, MERELY RELYING UPON THE STATEMENTS OF SHR. PRAVEEN KUMAR JAM AND SHRI GAUTAM JAIN RECORDED BY THE DEPARTMENT U/S 132 OF THE INCOME TAX ACT, 1961 ON 1ST OCTOBER, 2013 AND SHRI VIPUL VIDUR BHATT, RECORDED BY THE DEPARTMENT U/S 132 OF THE INCOME TAX ACT, 1961 ON 09 FEBRUARY, 2016. THE APPELLANT POINTED OUT THAT THROUGH SERIAL NO 5, 6 & 7 OF THE REPLY TO 0 NO. 15 POSED TO VIPUL BHATT, HE HAS CATEGORICALLY STATED THAT THE ABOVE LENDER COMPANIES HAVE GIVEN B OGUS UNSECURED LOAN ENTRIES ONLY TO ONE M/S MORAJ BUILDI NG CONCEPTS PRIVATE LIMITED. IT WAS NEVER AN AVERMENT OF MR VIPUL BHATT THAT HE HAD PROVIDED ACCOMMODATION LOAN ENTRIES TO THE ASSESSEE THROUGH THE ABOVE LENDER COMPANIES. MOREOVER, MR VIPUL BHATT HAS RETRACTED HIS STATEMENT BY AN AF FIDAVIT MADE ON 02ND SEPTEMBER, 2016. IT IS SETTLED LAW THA T WHEN THERE ARE TWO CONTRADICTORY STATEMENT OF A PERSON, THE RE TRACTING STATEMENT IS TO BE ACCEPTED UNLESS IT IS PROVIDED O THERWISE BY BRINGING IN CORROBORATIVE EVIDENCES. THE AO, IN THI S CASE, HAS MERELY RELIED UPON THE STATEMENT OF MR VIPUL BHATT (WHICH WAS ALREADY BEEN RETRACTED) AND DID NOT MAKE ANY INQUIR IES WITH THE LENDER COMPANIES TO ESTABLISH THE GENUINENESS OF TH E TRANSACTION. THE LAR ALSO SUBMITTED A COPY OF THE AFFIDAVIT DATE D 15TH MAY, 2014 MADE BY SHRI PRAVEEN JAM, WHEREIN HE HAS RETRA CTED HIS EARLIER STATEMENTS RECORDED BY THE INCOME TAX DEPAR TMENT BETWEEN 1ST OCTOBER, 2013 TO 9TH OCTOBER, 2013. HE HAS CATEGORICALLY AFFIRMED THAT HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH WERE UNDER DURESS AND COERCION. HE FURTHER STATED THAT HIS ENTIRE BUSINESS HAS BEEN COMPLETELY LEGAL AND NOTHING INCRIMINATING HAS BEEN FOUND IN THE COURSE OF SEARCH TO ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 5 - ESTABLISH THE FACT THAT HE WAS IN THE BUSINESS OF P ROVIDING THE ACCOMMODATION ENTRIES. THE LAR HAS ALSO CONTENDED THAT AN OPPORTUNITY OF C ROSS EXAMINATION WAS NOT GRANTED TO THE ASSESSEE IN CASE OF CIT V ASHISH INTERNATIONAL HIGH COURT OF BOMBAY (ITA NO 4 299 OF 2009) THE JURISDICTIONAL THE HONBLE BOMBAY HIGH COURT HA S HELD THAT THE TRIBUNAL HAS RECORDED A FINDING OF FACT THAT THE AS SESSEE HAD DISPUTED THE CORRECTNESS OF THE STATEMENT OF THE DI RECTOR OF M/S. THAKKAR AGRO INDUSTRIAL CHEM SUPPLIES P. LTD. AND A DMITTEDLY THE ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO CROSS EXA MINE THE CONCERNED DIRECTOR WHOSE STATEMENT WAS RELIED UPON BY THE DIRECTOR. IN CASE OF HEIRS AND LRS OF LATE LAXMANBHAI S. PATE L V. CIT 22 CTR 0138 (GUJ) THE LEGAL EFFECT OF THE STATEMENT RECORD ED BEHIND THE BACK OF THE ASSESSEE AND WITHOUT FURNISHING THE COP Y THEREOF TO THE ASSESSEE OR WITHOUT GIVING AN OPPORTUNITY OF CR OSS- EXAMINATION, IF THE ADDITION IS MADE, THE SAME IS R EQUIRED TO BE DELETED ON THE GROUND OF VIOLATION OF THE PRINCIPLE S OF NATURAL JUSTICE. THIS IS CLEARLY STATED BY THE HON'BLE SUPR EME COURT IN THE CASE OF KISHINCHANDCHELLARAM VS. CIT (SUPRA) WH EREIN IT IS STATED THAT BEFORE THE IT AUTHORITIES COULD RELY UP ON IT, THEY WERE BOUND TO PRODUCE IT BEFORE THE ASSESSEE SO THAT THE ASSESSEE COULD CONTROVERT THE STATEMENTS CONTAINED IN IT BY ASKING FOR AN OPPORTUNITY TO CROSS-EXAMINE. THE JURISDICTIONAL MUMBAI ITAT IN THE CASE OF SMT. JYOTI D. SHAH (SUPRA) HAS HELD THAT SHRI MUKESH CHOKSI HAD ISSUED A GENERAL STATEMENT, AND THEREFORE A GENERAL STATEMENT GIVEN BY MUKESH CHOKSI CANNOT BY APPLIED TO EACH AND EVERY C ASE. THE ADDITIONS MADE WERE DELETED AS THERE WAS NO DIR ECT EVIDENCE AGAINST THE ASSESSEE. NEITHER THE STATEMEN T OF MUKESH CHOKSI WAS PROVIDED TO THE ASSESSEE NOR ANY OPPORTUNITY FOR CROSS EXAMINATION OF MUKESH CHOKSI WAS PROVIDED. VARIOUS COURTS HAVE HELD AND REITERATED T HE PRINCIPLE THAT ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 6 - WHERE THE ASSESSEE IS NOT GRANTED AN OPPORTUNITY OF CROSS EXAMINATION OF THE PERSON WHOSE STATEMENT HAS BEEN RELIED UPON DURING THE COURSE OF ASSESSMENT, WHICH COULD HAVE H ELD THE ASSESSEE TO REBUT THE STATEMENTS, THE ADDITION MADE BASIS THE STATEMENT IS NOT CORRECT AS THERE IS A VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE. THIS PRINCIPLE HAS BEEN SETTLED TI ME AND AGAIN BY THE HIGHER COURTS. SECTION 68 OF THE ACT CASTS THE RESPONSIBILITY UPON THE ASSESSEE TO PROVE THE IDENTITY OF THE CREDITORS, CAPACITY OF TH E CREDITORS AND GENUINENESS OF THE LOAN. THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THE IDENTITY OF THE CASH CREDITORS, THEIR CREDIT WORTHI NESS AND THE GENUINENESS OF TRANSACTION BY FURNISHING EVIDENCE L IKE THEIR IT. DETAILS, MODE OF PAYMENT, ETC. ONCE THE ASSESSEE HA S DISCHARGED THE OBLIGATION OF ESTABLISHING THE IDENTITY, CREDITWOR THINESS OF THOSE PARTIES AS WELL AS GENUINENESS OF THE TRANSACTION, THE ONUS NOW SHIFTS ON THE AO. IT IS NOTED THAT THE A.O HAS NOT TAKEN A NY STEPS TO IDENTIFY THE CREDITWORTHINESS OF THE LENDER COMPANIES AS WEL L AS GENUINENESS OF THE LOAN GIVEN. THE AO HAS MERELY RE LIED ON THE STATEMENTS OF SHRI PRAVEEN KUMAR JAM SHRI GAUTAM JA IN AND SHRI VIPUL BHATT IGNORING THE FACT THAT THESE STATE MENTS WERE LATER RETRACTED BY THEM. THE AO OBSERVED THAT THE A SSESSEE COMPANY MIGHT HAVE EXCHANGED CASH WITH THE LENDER C OMPANIES FOR THE ACCOUNT PAYEE CHEQUES IS TOTALLY BASED ON C ONJECTURES AND SURMISES. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO PROVE THAT THE CASH CREDIT IN THE BOOKS OF THE ASSESSEE COMPANY RE PRESENT ITS INCOME FROM UNDISCLOSED SOURCES. THEREFORE, IT CANN OT BE CHARGED AS THE ASSESSEE'S INCOME IN THE ABSENCE OF ANY MATERIA L TO INDICATE THAT THEY BELONG TO THE ASSESSEE. THE AO HAS TO TAK E COGNIZANCE OF THE EVIDENCE FILED BY THE ASSESSEE COMPANY LIKE, INCOME TAX DETAILS, PAN, BANK ACCOUNT, MODE OF PAYMENT (BY ACC OUNT PAYEE CHEQUES), LOAN CONFIRMATION, ETC UNLESS PROVI DED OTHERWISE. THE HON'BLE GUJARAT HIGH COURT IN THE CA SE OF MURLIDHAR LAHORIMAL V. CIT 280 ITR 512 HAS HELD THA T 'AN ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF CREDIT IN THE BOOKS, ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 7 - BUT HE CANNOT BE ASKED TO PROVE THE SOURCE OF THE S OURCE'. UNDER THE CIRCUMSTANCES AND FACTS OF THE CASE, THE AO HAS NOT PLACED ANY EVIDENCE ON RECORD TO SUPPORT ITS CLAIM THAT TH E TRANSACTION WAS ACCOMMODATED EXCEPT MERELY RELYING ON THE RETRACTED STATEMENT AND HAS TAKEN NO ACTION TO REBU T THE EVIDENCES PRODUCED BY THE ASSESSEE. ON THE OTHER HA ND, THE ASSESSEE HAS PROVIDED ALL THE DOCUMENTS TO PROVE TH E GENUINENESS OF THE TRANSACTION ENTERED INTO. IN CIT V. ORISSA CORPORATION P. LTD. [1986] 159 ITR 78 (SC), THE HON'BLE SUPREME COURT HELD THAT ONCE THE PRIMARY ON US OF ESTABLISHING THE GENUINENESS OF THE TRANSACTION IS DONE BY THE ASSESSEE BY FURNISHING THE DETAILS LIKE NAME, A DDRESS, PAN, CONFIRMATION, COPY OF TAX RETURN, ETC, IT WAS THE D UTY OF THE AO TO VERIFY THE GENUINENESS OF THESE TRANSACTIONS BY STRICTLY ENFORCING THE PROVISIONS OF SECTION 131 OF THE ACT IF AT ALL THOSE CREDITORS WERE REQUIRED TO BE PRODUCED BEFORE HIM. THE ENTIRE TRANSACTION HAS BEEN THROUGH THE BANKING CHANNELS O NLY AND THEREFORE, THE AO SHOULD HAVE VERIFIED THE TRANSACT ION WITH RELEVANT BANKS AND SHOULD HAVE MADE FURTHER INQUIRI ES IN THIS REGARD, WHICH HE FAILED TO DO SO. THE AO HAS NOT ES TABLISHED THE CASE OR BOUGHT ANY MATERIAL ON RECORD TO EVEN REMOT ELY RECORD THAT THE MONEY ORIGINALLY BELONGED TO THE ASSESSEE AND IT WAS AN ADJUSTMENT ENTRY. THE ASSESSEE IN FACTS HAS GONE TO ESTABLISH THAT THE LENDER COMPANIES HAD ENOUGH BANK BALANCE & BEFORE GRANTING THE LOANS AND NO CASH WAS DEPOSITED BY THE LENDER COMPANIES WHILE GRANTING THE LOANS. I HAVE ALSO PER USED THE DECISIONS CITED BY THE ASSESSEE IN ITS SUBMISSIONS. THE AO HAS NOT DISCHARGED HIS ONUS OF REBUTTING THE DOCUMENTS SUB MITTED BY THE ASSESSEE BY RECOURSING TO THE MEANS OF INITIATING I NQUIRES WITH THE LENDER PARTIES OR ISSUING SUMMONS AND PRODUCING THE PARTY FOR CROSS EXAMINATION OR PROVING THAT THE TRANSACTION WAS AN ADJUSTMENT ENTRY AND THAT THE CASH HAD EXCHANGED HANDS. THE ASSESSEE ALSO SUBMITTED THE DETAILS OF CONFIRMA TION OF LOANS OF ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 8 - ALL THE PARTIES WITH THEIR INCOME TAX ACKNOWLEDGEME NTS OF THE RETURN FILED AND FINANCIAL STATEMENTS AND BANK STAT EMENTS. ON A PERUSAL OF THE BANK STATEMENT, IT IS NOTED THAT NO CASH HAVE BEEN DEPOSITED PRIOR OR SUBSEQUENT TO THE AMOUNTS LENT T O THE ASSESSEE. THERE WAS SUFFICIENT CREDITWORTHINESS OF THE LENDIN G COMPANIES AND BANK BALANCE BEFORE LENDING THE MONIES TO THE ASSES SEE. THE AO HAS NOT CONSIDERED THESE EVIDENCES FILED BY THE ASS ESSEE AND SIMPLY RELIED ON THE STATEMENTS OF SHRI PRAVEEN KUM AR JAM, SHRI GAUTAM JAIN AND MR. VIPUL BHATT OF WHICH THE S TATEMENTS OF SHRI PRAVEEN KUMAR JAIN AND MR. VIPUL WERE RETRACTE D BY THEM LATER WITHOUT INDEPENDENTLY VERIFYING ANY FACTS OF THE MA TTER. THE FACTS IN THE CASE OF M/S. KOMALAGROTECH PVT, LT D. VS ITO WARD 2(1), ITA NO. 437 / HYD /2016, (HYD) WERE AS UNDER THE ASSESSE COMPANY IS ENGAGED IN THE BUSINESS OF T RADING IN PULSES AND GRAINS.-ON 28.07.2008 IT INITIALLY FILED ITS RE TURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ADMITTING A TOTAL I NCOME OF RS. 7,89,900. THE ASSESSMENT WAS REOPENED AND WAS COMPL ETED UNDER SECTION, 143(3) R.W.S. 147 ON 30.03.2015 DETERMININ G TOTAL INCOME AT RS. 82,89,890. THE ADDITION MADE AND AGITATED IN TH IS APPEAL IS THE ADDITION MADE U/S 68 OF THE ACT TO THE TUNE OF RS. 75,00,000. THE ASSESSING OFFICER HAS OBSERVED THAT DURING FINANCIA L YEAR 2006- 07, THE APPELLANT COMPANY HAD RECEIVED A SUM OF RS.75,00,000 AS SHARE CAPITAL INCLUDING PREMIUM. AS PER THE ASSESSING OFFICER THE ENTIRE SUM WAS RECEIVED FROM CERTAIN COMPANIES MANAGED BY ONE MR. PRAVEEN KUMAR JAIN WHO HAS ADMITTED THAT THIS MONEY WAS ROUTED THROUGH BOGUS S HARE APPLICATIONS. ACCORDING TO THE ASSESSING OFFICER, T HE SAID SUM OF PS. 75,00,000 REPRESENTED THE AMOUNTS RECEIVED FROM SHE LL COMPANIES. THEREFORE, THE ASSESSING OFFICER HAD ADDED THE ENTI RE SUM OF RS. 75,00,000 AS UNEXPLAINED CREDIT U/S 68 OF THE ACT. ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 9 - THE HON'BLE ITAT HELD THAT LD. CIT(A) FAILED TO NOT E THAT THE LEARNED ASSESSING OFFICER MERELY RELIED ON THE INFORMATION RECEIVED FROM DGIT (INVESTIGATIONS), MUMBAI TO REOPEN THE ASSESSM ENT AND NEITHER THE ASSESSMENT ORDER NOR THE REASONS COMMUN ICATED INDICATE THAT THE ASSESSING OFFICER HAD APPLIED HIS MIND TO THE ISSUE AND THEREFORE THE ENTIRE REASSESSMENT PROCEED INGS ARE INVALID, WITHOUT JURISDICTION, HAS NO LEGS TO STAND AND HENCE MUST BE QUASHED. THE LD. CIT(A) FAILED TO NOTE THAT THE ENTIRE EVIDENCE AND PROOF FOR THE RECEIPT OF RS. 75 LAKHS BY WAY OF SHARE APPLICATION MONEY AND PREMIUMS WERE FILED WHICH HAS NOT BEEN DISPATCHED BY ANY OF THE AUTHORITIES AND THEREFORE THE CIT(A) FELL INTO ERROR IN CONFIRMING THE ADDITION OF RS. 75 LAK HS. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 75 LAKHS U/ S. 68 OF THE I. T. ACT, 1961. THE LD. CIT(A) AT PAGE 7.2 OF THE ORDER ERRED IN HOLDING THAT THE ASSESSEE FAILED TO PRODUCE MR. PRAVEEN KUM AR JAIN FOR CROSS EXAMINATION WHO WAS A WITNESS FOR THE DEPARTMENT AN D FAILED TO NOTE THAT IT WAS NOT THE DUTY OF THE APPELLANT TO PRODUC E ANY PERSON TO SUBSTANTIATE THE CLAIM OF THE DEPARTMENT AND THEREF ORE THE ADDITION OF RS. 75 LAKHS IS TO BE DELETED. THE LD. CIT('A) FAILED TO NOTE WHILE CONFIRMING THE ADDITION OR PS. 75 LAKHS THAT THE ENTIRE ENQUIRY BY DGIT (INV.), MUMBAI AND THE INFORMATION RECEIVED BY THE ASSESSING OFFICER ABOUT MR. PRAVEEEN KUMAR JAIN WAS USED AGAINST THE APPELLANT WITHOUT GIVING A COPY OF THE EVIDENCE/STATEMENT RECEIVED FROM THE DGIT (INV.), M UMBAI, THUS VIOLATING THE PRINCIPLES OF NATURAL JUSTICE AND ON THIS GROUND ALONE, THE ENTIRE ASSESSMENT MOST BE QUASHED AND MORE SO T HAT ADDITION OF RS. 75 LAKHS BY THE CIT(A). THE HONORABLE TRIBUNAL CONSIDERED VARIOUS JUDGMENTS AND FINALLY CAME TO THE FOLLOWING CONCLUSION: '9. 1. A PLAIN READING OF THE ASSESSMENT ORDER DEMO NSTRATE THAT THE A. 0. MERELY WENT BY THE INVESTIGATION DONE BY THE OFFICE OF D.G.L (INVESTIGATION), MUMBAI. NO ENQUIRIES OR INVESTIGAT ION WAS CARRIED ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 10 - OUT. NO EVIDENCE TO CONTROVERT THE CLAIMS OF THE AS SESSEE WAS BROUGHT ON RECORD BY THE A. 0. EVEN THE STATEMENT OF MR. PR AVEEN KUMAR WAS NOT SUPPLIED. NOTHING IS ON RECORD ABOUT THE RESULT OF INVESTIGATIONS DONE BY DGIT (INV.), MUMBAI. THE PAPERS FILED BY TH E ASSESSEE DO DEMONSTRATE, THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTION. THE ADDITION IS MAD E MERELY ON SURMISES AND CONJECTURES. 9.2. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT THE ADDITION MADE UNDER SCION 68 OF THE ACT IS IN BAD IN LAW. IN THE RESULT, REOPENING OF THE ASSESSMENT IS4SHED AND THE ADDITIO N IS ALSO DELETED ON MERITS.' THE HONBLE MUMBAI ITAT IN CASE OF MIS. ENRICH ENTE RPRISES PVT. LTD. V. ITO WARD 4(1)(4) ITA NO. 4930 / MUM / 2015 QUASHED THE REOPENING OF THE ASSESSMENT WHERE THE FACTS WERE SI MILAR LIKE IN THE CASE OF THE ASSESSEE. HAVING CONSIDERED ALL OF THE ABOVE, I AM OF THE VIE W THAT THE ASSESSEE HAS DISCHARGED HIS ONUS OF ESTABLISHING TH E GENUINENESS OF THE TRANSACTION AND THE ONUS WAS ON THE DEPARTMENT. THE AO HAS NOT DISCHARGED HIS DUTIES AND PROVED OTHERWISE EXCE PT FOR RELYING ON THE STATEMENTS OF SHRI PRAVEEN KUMAR JAM, SHRI G AUTAM JAIN AND MR. VIPUL BHATT OF WHICH THE STATEMENTS OF SHRI PRAVEEN KUMAR JAIN AND MR. VIPUL WERE RETRACTED BY THEM LAT ER. THE AG HAS NOT GRANTED THE-OPPORTUNITY OF CROSS EXAMINATIO N OF ALL THE THREE PARTIES ON WHOSE STATEMENT HE HAS RELIED UPON. THE AO ALSO FAILED TO MAKE ANY FURTHER INQUIRIES WITH THE LENDER COMPANIE S TO ESTABLISH THE GENUINENESS OF THE TRANSACTION AND ALSO FAILED TO CONSIDER THE VARIOUS EVIDENCES FILED BY THE ASSESSEE TO PROVE TH E IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOANS. THE AO HAS NOT POINTED OUT ANY DEFECT / DEFICIENCIES IN THE EVIDEN CES ADDUCED BY THE ASSESSEE. ALL THESE CLEARLY ESTABLISHES THAT TH E PRINCIPLE OF NATURAL LAW AND JUSTICE IS VIOLATED AND ADDITION HA S BEEN MADE U/S. 68 OF THE ACT BY SIMPLY RELYING ON THE STATEME NTS OF THIRD PARTIES WHICH ARE NOT SUPPLIED TO THE ASSESSEE AS W ELL AS NO ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 11 - CROSS EXAMINATION IS CONDUCTED TO ESTABLISH THE COR RECTNESS OF THE SAME. IN LIGHT OF THE SAME, THE AO'S CONSIDERATION THAT THE LOAN ARE NOT GENUINE IS NOT CORRECT. THESE GROUNDS OF APPEAL ARE ALLOWED. 4.1 ADDITION MADE BY DISALLOWING CLAIM OF INTEREST OF RS. 16,14,410/- WAS ALSO ALLOWED BY CIT(A) AFTER FOLLOW ING OBSERVATIONS THE AO COMPUTED DISALLOWANCE OF RS. 16,14,410/- ON THE LOANS GRANTED TO THE ABOVE LENDER PARTIES. HAVING CONCLUDED THE ABOVE THAT THE LOANS ARE NOT TO BE CO NSIDERED AS IN GENUINE, I HEREBY ALLOW THE INTEREST PAID ON THE SAME TO THE SAID LENDER PARTIES AND DELETE THE ADDITION MADE BY THE A.O. THIS GROUND OF APPEAL IS ALLOWED. 5. AGAINST THE ABOVE ORDER OF THE CIT(A) THE REVENU E IS IN FURTHER APPEAL BEFORE US. 5.1. AT THE OUTSET, LD. AR PLACED ON RECORD ORDER O F THE TRIBUNAL IN THE CASE OF GROUP CONCERNS M/S. MANBA F INANCE LTD IN ITA NO.1448, 1449 & 1461/MUM/2017 DATED 15/10/2018 FOR THE A.YRS.2013-14, 2010-11 AND 2011- 12 WHEREIN UNDER SIMILAR FACTS AND CIRCUMSTANCES, THE TRIBUNAL HAVE CONFIRMED THE ORDER OF CIT(A) FOR DEL ETING SIMILAR ADDITIONS MADE BY THE AO DURING THE COURSE OF VERY SAME SEARCH. ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 12 - 5.2. LD. AR ALSO RELIED ON THE FINDINGS RECORDED BY CIT(A) TO THE EFFECT THAT LOAN WAS GENUINE AND WAS REPAID IN NEXT FINANCIAL YEAR. HE ALSO INVITED OUR ATTENTION TO TH E OBSERVATION OF CIT(A) TO THE EFFECT THAT THE PARTIE S FROM WHOM LOAN WAS TAKEN HAD SUFFICIENT CREDITWORTHY 5.3. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER PASSED BY THE AO AND CONTENDED THAT CIT(A) WAS NOT JUSTIFI ED IN DELETING ADDITION SO MADE. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOU ND FROM RECORD THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT. A.O HAS INCORPOR ATED THE FACT OF LOAN TAKEN FROM THREE COMPANIES IN PARA 4.1 AND 4.2 OF THE ORDER ACCORDING TO WHICH, ASSESSEE COMPA NY HAS TAKEN LOAN FROM 3 COMPANIES AMOUNTING TO RS. 1,10,00,000/- ON THE BASIS OF INFORMATION RECEIVED FROM THE DDIT (INV)-I, MUMBAI IN RESPECT OF SEARCH AND SEIZU RE ACTION TAKEN PLACED IN THE GROUP OF SHRI PRAVIN KUM AR JAIN AND SHRI GAUTAM JAIN AND OTHER (SURAT DIAMOND CONCERNS) AND FURTHER LOAN TAKEN FROM THREE OTHER ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 13 - COMPANIES OF RS. 65,00,000/- AS PER THE INFORMATION RECEIVED FROM DDIT (INV), UNIT-7(4). THE A.O HAS INCORPORATED THE FACT OF VARIOUS DOCUMENTS FILED BY THE ASSESSEE IN RESPECT OF LOANS TAKEN IN PART 4.5 OF T HE ASSESSMENT ORDER I.E LOAN CONFIRMATIONS, BANK STATE MENT OF LENDER PARTIES, LEDGER COPY ETC. AO REJECTED ASSESS EES CONTENTION AND MADE THE ADDITION. 6.1 FROM THE RECORD, WE FOUND THAT IN RESPECT OF SH OW CAUSE NOTICE AS MENTIONED IN PARA 7.4 OF THE ASSESS MENT ORDER, ASSESSEE HAS RELIED ON ALL THE DOCUMENTS AND EVIDENCES FILED IN RESPECT OF THESE LOAN PARTIES AN D ALSO SUBMITTED THAT THE THREE PERSONS ON WHOSE STATEMENT S DEPARTMENT HAS RELIED HAVE NOT MENTIONED NAME OF TH E ASSESSEE IN THEIR STATEMENTS. A.O HAS NOT ACCEPTED THE RELIANCE PLACED BY ASSESSEE ON VARIOUS JUDGMENTS WH ICH WERE SUBMITTED BEFORE THE A.O. THE A.O HAS RELIED ON PROVISIONS OF SEC. 292C OF THE ACT, WHICH RAISES A PRESUMPTION AGAINST THE PERSONS IN WHOSE CASE SEARC H IS CONDUCTED. HOWEVER, IN THE CASE OF ASSESSEE, NO SE ARCH OR SURVEY HAS TAKEN PLACE. 6.2 BY THE IMPUGNED ORDER THE LD. CIT(A) HAS DELETE D ADDITION AFTER THREADBARE DEALING WITH ALL THE CONT ENTIONS OF ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 14 - THE A.O. ON PAGE NO. 6 OF THE ORDER, THE LD. CIT(A ) HAS INCORPORATED VARIOUS DECISIONS OF HONBLE ITAT, HIG H COURT AND SUPREME COURT RELIED ON BY THE ASSESSEE ON THE GROUND OF NOT ALLOWING CROSS EXAMINATION OF PARTIES WHOSE STATEMENT AO IS RELYING ON PARTICULARLY THE JUDGMEN T OF HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES V. CIT, 281 CTR 241 ALONG WITH FOLLOWING DECISIONS. 1. H.R. METHA VS. ACIT, 387 ITR 561 (BOM HC) 2. C VASANTLAL & CO. VS. CIT, 45 ITR 206 (SC) 3. KISHINCHAND CHELLARAM VS. CIT, 125 ITR 713 (SC) 4. CIT VS. ASHISH INTERNATIONAL, ITA NO. 4299 OF 20 09. 5. CIT VS. ASHWANI GUPTA, 322 ITR 396 (BOM) 6.3 IT WAS CONTENTED BY LD. AR THAT IN THE STATEME NT OF SHRI VIPUL VIDUR BHATT, HE HAS REPLIED REGARDING U NSECURED LOANS TO ONLY ONE PARTY M/S MORAJ BUILDING CONCEPTS PVT LTD., AND HE HAS NOWHERE MENTIONED THE NAME OF THE ASSESSEE COMPANY. SHRI VIPUL VIDUR BHATT HAS RETRA CTED THE STATEMENT ON 02.09.2016 BY MAKING AN AFFIDAVIT BEFORE NOTARY PUBLIC. SIMILARLY, SHRI PRAVIN KUMAR JAIN H AS ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 15 - RETRACTED HIS STATEMENT ON 15.05.2014 BY MAKING AN AFFIDAVIT BEFORE NOTARY PUBLIC. ON PAGE NO. 8, LD. CIT(A) HAS RELIED ON SUBMISSION MADE BY ASSESSEE THAT THE AO S HOULD NOT HAVE RELIED ON THE THREE ORIGINAL STATEMENTS MA DE BY SHRI VIPUL VIDUR BHATT AND SHRI PRAVIN KUMAR JAIN RECORDED DURING THE COURSE OF SEARCH WHEN THEY RETR ACTED THEIR STATEMENTS AND IN SUBSTANCE TWO CONTRADICTORY STATEMENTS MADE BY THESE PERSONS ARE AVAILABLE. TH EN THE A.O SHOULD RELY ON THE RETRACTION STATEMENT. 6.4 LD. AR RELIED ON THE DECISION OF HONBLE SUPREM E COURT IN THE CASE OF M/S. MEHTA PARIKH & CO., REPOR TED IN 30 ITR 181, WHEREIN IT WAS HELD THAT ONCE A STATEME NT GIVEN ON OATH IS RETRACTED, AO HAS TO EXAMINE THAT PERSON AGAIN AND IF THAT IS NOT DONE, HE CANNOT RELY ON ORIGINAL STATEMENT MADE BY THAT PERSON. 7. FROM THE RECORD, WE ALSO FOUND THAT ON PAGE NO. 10 ONWARDS, LD. CIT(A) HAS INCORPORATED VARIOUS DOCUME NTS FILED BY ASSESSEE IN RESPECT OF EACH PARTY FROM WHO M LOAN IS TAKEN. THE LD. CIT(A) HAS ALSO INCORPORATED FROM T HE BALANCE SHEET OF THESE LOAN PARTIES THAT THEY HAVE THE CREDITWORTHINESS AS THEIR SHARE CAPITAL AND RESERVE S ARE ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 16 - MUCH MORE OUT OF WHICH LOANS ARE GIVEN TO ASSESSEE COMPANY. 7.1 IT IS ALSO CLEAR FROM THE RECORD THAT ALL THE L OANS TAKEN DURING THE YEAR WERE REPAID IN NEXT FINANCIAL YEAR. THEREFORE NO ADDITION CAN BE MADE. FOR THIS PURPOSE WE RELY ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. SKYLARK BUILD IN ITA NO. 616 OF 2016 DATED 24.10.2018, 2018-TIOL-2323-HC-MUM-IT. 7.3 FURTHER MORE LD. CIT(A) HAS INCORPORATED VARIOU S JUDGMENTS ON PAGE NO. 18 OF THE ORDER ACCORDING TO WHICH BY FILING VARIOUS DOCUMENTS THE CREDITWORTHINESS OF LENDER PARTIES IS ESTABLISHED. LD. CIT(A) HAS INCORPORATE D THE SUBMISSION GIVEN BY ASSESSEE IN RESPONSE TO SHOW CA USE NOTICE ISSUED BY A.O ON PAGE NO. 19 OF HIS ORDER. LD. CIT(A) HAS GIVEN FINDINGS STARTING FROM PAGE NO. 20 OF HIS ORDER AND RELIED ON VARIOUS JUDGMENTS. THE FINAL FINDING S ARE AT PAGE NO. 25 OF THE ORDER. DETAILED FINDING SO RECOR DED BY CIT(A) HAS NOT BEEN CONTROVERTED BY LD. DR BY BRING ING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NO T FIND ANY REASON TO INTERFERE IN THE FINDINGS SO RECORDED BY CIT(A) WHICH ARE AS PER MATERIAL ON RECORD. ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 17 - 7.5. WE HAD ALSO CAREFULLY GONE THROUGH THE ORDER O F THE CO-ORDINATE BENCH IN THE CASE OF GROUP CONCERN M/S. MANBA FINANCE LTD. DATED 05/10/2010, WHEREIN UNDER SIMILA R FACTS AND CIRCUMSTANCES, THE TRIBUNAL HAVE CONFIRME D THE ORDER OF CIT(A) FOR DELETING THE ADDITION SO MADE A FTER HAVING THE FOLLOWING PRECISE OBSERVATION:- 41. WE HAVE CAREFULLY CONSIDERED THIS PROPOSITION. WE NOTE THAT THE ID. COUNSEL OF THE ASSESSEE HAS REFERRED TO SEVERAL CASE LAWS I N THIS REGARD THAT WHEN THE ASSESSEE HAS SUPPLIED ALL THE DOCUMENTS THE ONUS IS DISCHARGED. IN THIS REGARD, THE ID. COUNSEL OF THE ASSESSEE HAS PLACED RELIANCE UPON THE SEVERAL CASE LAWS INCLUDING THAT FROM HON'BLE DELHI HIGH COURT IN THE CASE OF GANGESHWAN METAL PVT. LTD. (SUPRA), CIT V. VARINDER RAWLEY (20 14) 366 ITR 232 (P&H), HON'BLE GUJARAT HIGH COURT DECISION IN THE CASE OF CIT V. SACHITEL COMMUNICATIONS P. LTD. (2014) 227 TAXMAN 219 (MAG) AND OTHERS. 42. IN OUR CONSIDERED OPINION, THESE CASE LAWS DULY SUPPORT THE PROPOSITION CANVASSED BY THE ASSESSEE. IN OUR CONSIDERED OPINIO N, THE A.O. HAS NOT BROUGHT ON RECORD ANY COGENT, ADVERSE MATERIAL TO REBUT THE CREDIBILITY OF THE CORPORATE ENTITY FROM WHOM LOAN HAS BEEN TAKEN. AS ALREADY PO INTED OUT BY US AS ABOVE, THAT THESE CORPORATE ENTITIES WERE FOUND BY THE A.O . TO HAVE ACQUIRED FUNDS BY BORROWALS AND ACCEPTANCE OF SHARE CAPITAL AND SHARE PREMIUM. THIS BY ITSELF CANNOT LEAD TO PRESUMPTION THAT THESE SOURCES ARE B OGUS WITHOUT ANY ENQUIRY. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE ID. DR'S REQUEST THAT THIS ISSUE BE AGAIN REMITTED TO THE FILE OF THE A.O . TO MAKE FURTHER NECESSARY ENQUIRIES CANNOT BE ENTERTAINED. THE DECISION OF TH E HON'BLE KARNATAKA HIGH COURT REFERRED BY THE ID. DR WAS ON A DIFFERENT SET OF FACTS, WHEREIN, THE HON'BLE KARNATAKA HIGH COURT ON THE FACTS AND CIRCU MSTANCES OF THE CASE HAD UPHELD THE CERTAIN DIRECTION OF THE ITAT, IN THE PR ESENT CASE, AS POINTED OUT HEREINABOVE, IN OUR CONSIDERED OPINION, THE ASSESSE E HAS DISCHARGED ITS ONUS. AS NOTED ABOVE, THE A.O. HAS NOT BROUGHT ON REQUIRE D COGENT MATERIAL TO REBUT THE DOCUMENTARY EVIDENCE SUBMITTED BY THE ASSESSEE NOR HE MADE ANY ENQUIRY. AS NOTED ABOVE, THE ASSESSEE HAS GIVEN ALL THE NECE SSARY EVIDENCE INCLUDING THE ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 18 - CONFIRMATION LETTERS, BANK STATEMENT, FINANCIAL STA TEMENTS OF THE CORPORATE ENTITIES. HENCE, IN OUR CONSIDERED OPINION, THE IDENTITY, CR EDITWORTHINESS, GENUINENESS OF THE TRANSACTION HAS BEEN PROVED BY THE ASSESSEE AND THE ONUS CAST UPON THE ASSESSEE HAS BEEN DISCHARGED. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, WE FIND THAT THE ID. CIT(A) HAS PASS ED A WELL REASONED ORDER SUPPORTED BY APPROPRIATE CASE LAWS DULY REBUTTING A LL THE FINDINGS OF THE A.O. HENCE WE UPHOLD THE ORDER OF THE ID. CIT(A). 7.6. WE FOUND THAT FACTS AND CIRCUMSTANCES DURING T HE YEAR UNDER CONSIDERATION ARE PARIMATERIA, THEREFORE , RESPECTFULLY FOLLOWING ORDER OF THE TRIBUNAL IN CAS E OF GROUP CONCERN, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING THE IMPUGNED ADDITION. 8. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . THIS ORDER PRONOUNCED IN OPEN COURT ON 0 5/12/2019 SD/ - (PAWAN SINGH) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 05/12/2019 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT ITA NO . 6301//MUM/2017. M/S. CELEBRITY LIFESPACE PVDST LTD., MUMBAI. - 19 - 2. / THE RESPONDENT. 3. &'( ) / THE CIT(A) 4. ) ( ) / CONCERNED CIT 5. ,-. //'( , '(# / DR, ITAT, MUMBAI 6. .12 3 / GUARD FILE. / BY ORDER, , / //TRUE COPY// 1. / ( ASST. REGISTRAR) $% / ITAT, MUMBAI