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

ITA 6315/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3791 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 23-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Keywords: Unexplained cash credit; Bogus Share capital; Gift; Income from undisclosed sources; Principle of natural justice; Question of law; Difference of opinion; Accommodation entries; Retraction; TDS
• Section: 143(3); 133A; 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NOS.6315 & 6316/M/2017 ASSESSMENT YEARS: 2013-14 & 2014-15 DCIT 12(2)(1), ROOM NO.223, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20 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) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAKESH JOSHI, A.R. REVENUE BY : SHRI D.G. PANSARI, D.R. DATE OF HEARING : 13.06.2019 DATE OF PRONOUNCEMENT : 08.08.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN PREFERRED BY THE ASS ESSEE AGAINST THE ORDERS EVEN DATED 03.07.2017 OF THE COM MISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEARS 2013-14 & 2014-15. 2. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE D ELETION OF RS.2,68,00,000/- BY LD. CIT(A) WHICH WAS ADDED BY T HE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT ON THE GROUND THAT ASSESSEE HAS NOT PROVED THE IDEN TITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS. ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 2 3. THE FACTS IN BRIEF ARE THAT THE AO ON THE BASIS OF INFORMATION COLLECTED DURING THE COURSE OF SURVEY U NDER SECTION 133A OF THE ACT CONDUCTED ON THE ASSESSEE AND ON T HE BASIS OF ADMISSION OF ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY SHRI DINESH JAIN OBSERVED THAT THE LOANS OF RS.2,68,00,0 00/- UNSECURED LOANS RAISED BY THE ASSESSEE FROM FOLLOWI NG PARTIES ARE BOGUS: SR NO NAME OF THE PARTY PAN F.Y. AMOUNT (RS.) 1 ATHARV BUSINESS PRIVATE LIMITED AAACF9430A 2012-2013 25,00,000 2 CASPER ENTERPRISES P LTD AAA CO7955M 2012 - 2013 35,00,000 3 DUKE BUSINESS P LTD V AABCJ6245N 2012-2013 23,00,000 4 DUKE BUSINESS P LTD AABCJ6245N 2012-2013 25,00,000 5 NAKSHATRA BUSINESS P LTD AABCH4279G 2012-2013 10,00,000 6 NAKSHATRA BUSINESS P LTD AABCH4279G 2012-2013 20,00,000 7 NAKSHATRA BUSINESS P LTD AABCH4279G 2012-2013 30,00,000 8 OLIVE OVERSEAS P LTD AACCR4512K 2012-2013 15,00,000 9 OLIVE OVERSEAS P LTD AACCR4512K 2012-2013 30,00,000 10 SUMUKH COMMERCIAL PVT LTD AACCC7400M 2012-2013 25,00,000 11 SUMUKH COMMERCIAL PVT LTD AACCC7400M 2012-2013 20,00,000 12 SUMUKH COMMERCIAL PVT LTD AACCC7400M 2012-2013 10,00,000 TOTAL 2,68,00,000 ACCORDINGLY, THE AO ISSUED SHOW CAUSE NOTICE TO TH E ASSESSEE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS FAILI NG WHICH WHY THE SAME SHOULD NOT BE ADDED TO THE INCOME OF THE A SSESSEE ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 3 WHICH WAS REPLIED BY THE ASSESSEE VIDE WRITTEN SUBM ISSION DATED 22.03.2016 WHEREIN THE ASSESSEE CONTROVERTED THE AL LEGATION OF THE AO BY SUBMITTING THAT THE STATEMENT GIVEN BY SH RI PRAVIN KUMAR JAIN DURING SEARCH STOOD RETRACTED. THE ASSES SEE SUBMITTED THAT STATEMENT OF SHRI DINESH KUMAR JAIN A DIRECTOR OF THE ASSESSEE COMPANY RECORDED DURING SURVEY ON T HE ASSESSEE WAS ALSO RETRACTED. THEREFORE SUCH AN ADMISSIONS BY THE DIRECTOR OF THE ASSESSEE COMPANY AND SHRI PRAVIN KUMAR JAIN COULD NOT BE A BASIS FOR ADDITION IN THE HANDS OF THE ASSESS EE AS THE SAME STOOD RETRACTED. THE ASSESSEE ALSO STATED THAT DU RING SURVEY AS WELL AS IN THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS NOT PROVIDED ANY CROSS EXAMINATION OF SHRI PRAVIN KUMAR JAIN. THE ASSESSEE FILED COPY OF ITRS, BANK STATEMENTS, BALAN CE SHEETS AND CONFIRMATIONS OF THE LENDERS TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTIONS. IT WAS ALSO CONTENDED BY THE ASSESSE E THAT SHRI PRAVIN KUMAR JAIN HAS NOWHERE STATED THE NAME OF TH E ASSESSEE IN HIS STATEMENT RECORDED UNDER SECTION 132(4) OF T HE ACT WHICH IN ANY CASE HAS NO LEGAL SANCTITY AND THEREFORE ANY ADDITION BASED UPON THE RETRACTED STATEMENT IS WRONG AND AGA INST THE PROVISIONS OF THE LAW AS NO CORROBORATING OR INCRIM INATING MATERIALS WAS FOUND DURING SURVEY ON THE ASSESSEE. HOWEVER, THE AO REJECTED THE CONTENTIONS RAISED BY THE ASSES SEE AND TREATED THE UNSECURED LOANS RAISED OF RS.2,68,00,00 0/- AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE ACT AND MADE ADDITION TO THE INCOME OF THE ASSESSEE IN THE ASSE SSMENT FRAMED. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) ALL OWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE HAS PROVED ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 4 ALL THE THREE INGREDIENTS AS CONTEMPLATED BY SECTIO N 68 OF THE ACT AS THE ASSESSEE HAS FILED BEFORE THE AO BANK ST ATEMENTS , ITRS, LEDGER CONFIRMATIONS, PAN NUMBERS OF THE LEND ERS, BANK STATEMENT OF THE ASSESSEE AND FORM 16 AS REGARDS TD S DEDUCTED FROM INTEREST PAYMENTS. THE LD. CIT(A) ALSO OBSERV ED THAT THE AO WITHOUT CARRYING OUT ANY INVESTIGATION OR PROOF MERELY RELIED ON THE STATEMENT OF SHRI PRAVIN KUMAR JAIN GIVEN DU RING THE COURSE OF SEARCH WHICH WAS RETRACTED LATER ON AND ALSO THE STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY W HO ALSO RETRACTED THE SAID STATEMENT AND THUS DELETED THE E NTIRE ADDITION. 5. AT THE OUTSET, THE LD. COUNSEL OF THE ASSESSEE S UBMITTED BEFORE THE BENCH THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL I N ASSESSEES OWN CASE IN ITA NO.5886 & 5887/M/2017 A.Y. 2011-12 & 2012- 13 VIDE ORDER DATED 14.03.2019. THE LD. A.R. SUBMI TTED THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL AND THE LENDERS ARE ALSO COMMON THEREFORE THE APPEAL OF THE REVENUE MAY BE DISMISSED BY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH OF THE TRIBUNAL. 6. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE O RDER OF AO AND GROUNDS OF APPEAL. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD AND PARTICULARLY THE DECISION OF THE CO-ORDI NATE BENCH OF THE TRIBUNAL AS REFERRED TO ABOVE, WE OBSERVE THAT THE IDENTICAL ISSUE WAS DECIDED BY THE CO-ORDINATE BENCH OF THE T RIBUNAL IN ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 5 ASSESSEES OWN CASE BY DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. THE OPERATIVE PART IS REPRODUCED AS UNDE R: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE WRITTEN SUBMISSION S FILED BY THE LD. A.R. AND THE LD. D.R. ALONG WITH VARIOUS CASE LAWS REFERRED AND RELIED BY BOTH THE PARTIES. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE COMPANY WAS FORMED AND CONSTITUTED ON 15.09.2010 AND IT HAS TAKEN OVER BUSINESS OF M/S. D .N.H SPINNERS A PARTNERSHIP FIRM ON GOING CONCERN BASIS. THERE WAS A SURVEY ACTION UNDER SECTION 133A OF THE ACT ON THE ASSESSEE ON 25.03.2014. DURING THE COURSE OF S URVEY A STATEMENT UNDER SECTION 131 OF THE ACT WAS RECORDED OF SHRI DINESH JAIN ON 26.03.2014 WHO IS DIRECTOR OF THE ASSESSEE COMPANY WHEREIN THE SURVEY TEAM INFORMED H IM THAT VARIOUS UNSECURED LOANS TAKEN BY THE ASSESSEE FROM SEVEN ENTITIES CON TROLLED BY SHRI PRAVIN KUMAR JAIN WHO HAS ADMITTED BEFORE THE INVESTIGATION WING IN THE COURSE OF SEARCH PROCEEDINGS THAT HE AND HIS ASSOCIATED CONCERNS WER E PROVIDING ACCOMMODATION ENTRIES. SHRI DINESH JAIN, DIRECTOR OF THE ASSESSE E COMPANY ADMITTED THAT THEY HAVE TAKEN THESE ENTRIES FROM SHRI PRAVIN KUMAR JAIN AND ASSOCIATES. ACCORDING TO THE ASSESSEE THE STATEMENT OF SHRI DINESH JAIN WAS RECO RDED UNDER PRESSURE. HOWEVER, LATER ON SHRI PRAVIN KUMAR JAIN RETRACTED HIS STATE MENT AND LIKEWISE SHRI DINESH JAIN ALSO RETRACTED HIS STATEMENT ON 29.03.2014 WITHIN T HREE DAYS FROM THE DATE OF RECORDING THE SAME. IN THIS CASE DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS FILED COPIES OF BANK STATEMENT, ITRS, CONFIRMATIONS, PAN NUMBERS OF THE LENDERS ETC. AND THUS THE ASSESSEE HAS FULLY DI SCHARGED THE ONUS CAST UPON IT AND THUS THE ADDITION UNDER SECTION 68 CAN NOT BE M ADE IN THE SAID CIRCUMSTANCES QUA THE UNSECURED LOANS RAISED BY THE ASSESSEE. TH E AO HAS MERELY RELIED ON THE STATEMENT OF SHRI DINESH JAIN WHO IS DIRECTOR IN TH E ASSESSEE COMPANY BY IGNORING THE FACT THAT THE STATEMENT GIVEN BY THE SAID DIREC TOR STANDS RETRACTED AFTER THREE DAYS FROM THE RECORDING OF THE SAME. AFTER PERUSIN G THE ORDER OF LD. CIT(A) WHO HAS DEALT WITH THE FACTS IN GREAT DETAIL AND ALSO DISCUSSED THE VARIOUS DECISIONS WHEREIN IT HAS BEEN HELD THAT NO SUCH ADDITION CAN BE MADE UNDER SECTION 68 WHERE THE ASSESSEE HAS FILED ALL THE NECESSARY EVID ENCES BEFORE THE AO WHEN AO HAS NOT MADE ANY FURTHER ENQUIRY TO TO PROVE OTHERW ISE. THE ALLEGATION OF THE AO THAT ASSESSEE HAS NOT PROVED IDENTITY AND CREDITWO RTHINESS OF THE LENDERS AND GENUINENESS OF THE TRANSACTIONS IS WITHOUT ANY BASI S AS STATED ABOVE. THE ASSESSEE FILED THE NECESSARY EVIDENCES IN THE FORM OF LOAN C ONFIRMATIONS, BALANCE SHEETS AND PROFIT AND LOSS 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 THE ASSESSEE IN THEIR RESP ECTIVE BALANCE SHEETS. ENTIRE TRANSACTIONS WERE ROUTED THROUGH THE BANKING CHANNE LS AND THUS THE ASSESSEE HAS DISCHARGED THE PRIMARY ONUS OF PROVING THE IDENTITY , CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. ANOTHER ALLEGATIO N OF THE AO IS THAT ASSESSEE HAS FAILED TO PRODUCE THE PARTIES AND HENCE QUESTION OF PROVIDING CROSS EXAMINATION DOES NOT ARISE WHICH IS WITHOUT MERIT AS THE ASSESS EE HAS DISCHARGED ITS ONUS BY PROVIDING ALL THE BASIC DOCUMENTARY EVIDENCES BEFOR E THE AO WHO JUST RELYING ON THE STATEMENT OF SHRI PRAVIN KUMAR JAIN TREATED TH E LOAN TRANSACTIONS AS UNEXPLAINED CREDIT IN THE BOOKS OF THE ASSESSEE. O N THE ISSUE THAT THESE LENDERS ARE SHOWING LOW INCOME OR LOSSES IN THE RETURN OF I NCOME FILED, WE OBSERVE THAT IN THE BALANCE SHEETS THE SAID LOAN ADVANCED BY THE LE NDER WERE DULY REFLECTED AND THUS THERE IS NO INCOME IN THE PARTICULAR YEAR HAS NO RELEVANCE AND THERE WERE ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 6 SUFFICIENT SOURCES. UNDER THESE CIRCUMSTANCES, WE, AFTER TAKING INTO CONSIDERATION CONTENTIONS M, SUBMISSIONS AND WRITTEN SUBMISSIONS OF BOTH THE PARTIES AND AFTER ANALYZING THE VARIOUS CASE LAWS RELIED UPON BY THE RIVAL PARTIES , ARE OF THE VIEW THAT ORDER PASSED BY THE LD. CIT(A) IS WELL REASON ED AND THERE IS NO REASONS TO DEVIATE FROM THE FINDINGS OF THE LD CIT(A) AND THER EFORE SAME IS BEING UPHELD BY DISMISSING THE APPEAL OF THE REVENUE. 8. SINCE THE FACTS OF THE CASE BEFORE US ARE IDENTI CAL TO THE FACTS OF THE CASE AS DECIDED BY THE CO-ORDINATE BEN CH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN WHICH THE CO-ORD INATE BENCH OF THE TRIBUNAL HAS HELD THAT THE ASSESSEE HAS FILE D ALL THE NECESSARY EVIDENCES BEFORE THE AO AND AO HAS NOT CA RRIED OUT ANY FURTHER INVESTIGATION TO FIND OUT THE TRUTH. TH E BENCH FURTHER HELD THAT THE ASSESSEE HAS PROVED THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTIONS. WE, THEREFORE, RESPECTFULLY FOLLOWIN G THE SAME UPHOLD THE ORDER OF LD. CIT(A) AND GROUND RAISED BY THE REVENUE IS DISMISSED. 9. THE ISSUE RAISED IN 2 ND GROUND OF APPEAL IS AGAINST THE DELETION OF INTEREST OF RS.77,43,963/- BY LD. CIT(A ) AS MADE BY THE AO TOWARDS INTEREST ON THE SAID BOGUS UNSECURED LOANS. SINCE WE HAVE ALREADY DECIDED THE GROUND NO.1 IN FA VOUR OF THE ASSESSEE THEREFORE IN VIEW OF OUR DECISION ON GROUN D NO.1, WE HOLD THAT INTEREST PAID TO LENDERS AFTER DEDUCTION OF TDS IS GENUINE AND THE SAME HAS RIGHTLY BEEN ALLOWED BY TH E LD. CIT(A). ACCORDINGLY, WE UPHOLD THE ORDER OF LD. CI T(A) ON THIS ISSUE BY DISMISSING THE GROUND RAISED BY THE REVENU E. ITA NO.6316/M/2017 10. THE ISSUE RAISED IN GROUND NO.1 IS AGAINST THE DELETION OF ADDITION OF RS.9,84,00,000/- BY LD. CIT(A) AS MADE BY THE AO AGAINST UNSECURED CASH CREDIT UNDER SECTION 68 OF T HE ACT ON THE ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 7 GROUND THAT ASSESSEE HAS NOT PROVED THE IDENTITY AN D CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTIONS. 11. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS AL LOTTED 16,40,000/- SHARES TO THREE PARTIES AS PER DETAILS AS UNDER: SR. NO NAME OF PARTY NO. OF SHARE ALLOTTED TOTAL . AMOUNT RECEIVED 1 ALKEN MANAGEMENT AND FINANCE SERVICES PVT. LTD 5,80,000 3,48,00,000 2 SIGNORA FINANCE PVT. LTD 7,25,000 4,35,00,000 3 SMIRK FINANCE PVT. LTD 3,35,000 2,01,00,000 TOTAL 16,40,000 9,84,00,000 12. THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ON THE BASIS OF INFORMATION GATHERED DURING THE COURSE OF SURVEY CONDUCTED UNDER SECTION 133A OF THE ACT ON THE ASSE SSEE AND ALSO ON THE BASIS OF STATEMENTS OF SHRI DINESH KUMA R JAIN WHO WAS ONE OF THE PROMOTERS/DIRECTORS OF THE ASSESSEE COMPANY, MENTIONING THEREIN THAT THE SAID DIRECTOR SHRI DINE SH KUMAR JAIN HAS ACCEPTED THAT ASSESSEE IS BENEFICIARY OF H AWALA ACCOMMODATION ENTRIES OF UNSECURED LOANS AND SHARE CAPITAL FROM VARIOUS DUMMY CONCERNS RELATED TO SHRI PRAVIN KUMAR JAIN WHO ALSO DURING THE COURSE OF SEARCH OPERATION ON HIM AND HIS ASSOCIATED CONCERNS ADMITTED THAT HE WAS ENGAGE D IN THE BUSINESS OF PROVIDING BOGUS HAWALA PURCHASE ENTRIES , BOGUS UNSECURED LOANS AND SHARE CAPITAL ETC. THE ASSESSE E REPLIED TO THE SHOW CAUSE NOTICE BY SUBMITTING THAT STATEMENT GIVEN BY SHRI DINESH KUMAR JAIN DURING THE COURSE OF SURVEY ON ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 8 25.03.2014 STOOD RETRACTED VIDE LETTER DATED 14.01. 2016 AND THEREFORE NO ADDITION COULD BE MADE ON THE BASIS OF SAID STATEMENT WHICH HAS NO LEGAL SANCTITY. FURTHER, IT WAS ALSO STATED BEFORE THE AO THAT THE REVENUE IS RELYING ON THE STATEMENT OF SHRI PRAVIN KUMAR JAIN BUT NEITHER THE STATEMENT OF SHRI PRAVIN KUMAR JAIN HAS BEEN PROVIDED TO THE ASSESSEE IN THE COURSE OF SURVEY NOR IN THE ASSESSMENT PROCEED INGS. IT WAS STATED THAT THE ASSESSEE ALSO REQUESTED FOR CROSS EXAMINATION OF SHRI PRAVIN KUMAR JAIN WHICH WAS NOT PROVIDED. BES IDES, THE ASSESSEE FILED ALL THE EVIDENCES BEFORE THE AO QUA THE ALLOTMENT OF SHARE CAPITAL IN THE FORM OF BANK STATEMENTS, CO PIES OF ACKNOWLEDGMENT OF ITRS, CONFIRMATIONS, PAN NUMBERS, BANK STATEMENT OF THE INVESTORS AND ALSO OF THE ASSESSEE ETC. HOWEVER, THE AO TREATED THE SHARE CAPITAL AND SHARE PREMIUM OF RS.9,84,00,000/- AS UNEXPLAINED CASH CREDIT FOR THE REASON THAT THE ASSESSEE HAS FAILED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTIONS AND THUS ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 13. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) DE LETED THE SAME BY OBSERVING AND HOLDING AS UNDER: 5.5 I HAVE CAREFULLY PERUSED THE FACTS OF THE CASE , APPELLANTS SUBMISSION AND THE ASSESSMENT ORDER. IT IS NOTED THAT THE A.O. HAS HELD THAT THE APPELLANT HAS INTRODUCED INCOME FROM UNDISCLOSED SOURCES BROUGHT UNDER THE GARB OF UNEXPLAINED CASH CREDIT OF RS. 9,84,00,0007- AND HE NCE 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. 9,84,00,000/- TO THE 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 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 A M OF THE OPINION THAT ONCE THE ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 9 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 PRE-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. 5.6 ON AN ANALYSIS OF THE FACTS ON RECORDS, IT IS SEEN THAT THE LOANS OF RS.9,84,00,000/- HAVE COME FROM DIFFERENT COMPANIE S. 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 ASSESSEE 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. WHILST, 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 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 CREDITWORTH INESS OF THE CREDITORS WERE NOT APPARENT. IT HAS BEEN SUBMITTED THAT THESE DETAILS CALLED FOR BY THE A.O. WERE DULY ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 10 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. 5.7 THE BOMBAY HIGH COURT IN THE CASE OF CIT V. CRE ATIVE WORLD TELEFILMS LTD. (IN I. T. A. NO. 2182 OF 2009 DECIDED ON OCTOBER 12, 2009) [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 CANNOT 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 LIKE PAN CARD, BANK ACCOUNT DETAILS OR DETAILS FROM THE BANK ERS WERE GIVEN BY THE ASSESSEE, ONUS SHIFTS UPON THE ASSESSING OFFICER AND IT IS ON HIM TO REACH THE SHAREHOLDERS TO ASCERTAIN THE TRUE FACTS. IT IS, THUS, FOR THE ASSE SSING OFFICER TO MAKE FURTHER INQUIRIES WITH REGARD TO THE STATUS OF THESE PARTIE S TO BRING ON RECORD ANY ADVERSE FINDINGS REGARDING THEIR CREDITWORTHINESS. THIS WOU LD BE MORE SO WHERE THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND HAS ISSUED THE SHARE CAPITAL TO THE PUBLIC AT LARGE, AS IN SUCH CASES THE COMPANY CANNOT BE EX PECTED TO KNOW EVERY DETAIL PERTAINING TO THE IDENTITY AND THE FINANCIAL WORTH OF THE SUBSCRIBERS. FURTHER THE INITIAL BURDEN ON THE ASSESSEE WOULD BE SOMEWHAT HE AVY IN CASE THE ASSESSEE IS A PRIVATE LIMITED COMPANY WHERE THE SHAREHOLDERS ARE FAMILY FRIENDS/CLOSE ACQUAINTANCES, ETC. IT IS BECAUSE OF THE REASON THA T IN SUCH CIRCUMSTANCE, THE ASSESSEE CANNOT FEIGN IGNORANCE ABOUT THE STATUS OF THESE PARTIES. ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 11 5.8 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 S AME, 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 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 TREATED AS A RECEIPT OF INCOME NATURE. ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 12 5.9 IT IS CLEAR FROM THE DECISION OF THE HON'BLE DE LHI HIGH COURT IN THE CASE OF OASIS HOSPITALITIES P LTD. 2011 333 ITR 119 (DEL.), THAT ONCE THE ASSESSEE FILED COPY OF PAN, ACKNOWLEDGEMENT COPY OF THE RETURN OF INCOME O F 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 DIRECTIO NS 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 5.10 IN VIEW OF THE LEGAL POSITION EMANATING FROM L EGAL 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. 9,84,00,000/- 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 ALLOWED. 14. THE LD. D.R. WHILE RELYING HEAVILY ON THE ASSES SMENT ORDER SUBMITTED THAT THE ADDITIONS MADE IN RESPECT OF SH ARE CAPITAL ISSUED BY THE ASSESSEE DURING THE YEAR TO THREE PAR TIES WERE ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 13 BASED ON THE STATEMENT OF SHRI PRAVIN KUMAR JAIN AS RECORDED DURING THE COURSE OF SEARCH OPERATION ON HIM AND HI S ASSOCIATE CONCERNS UNDER SECTION 132(4) OF THE ACT IN WHICH T HE SAID PERSON HAS ADMITTED THAT HE AND HIS ASSOCIATED CON CERNS WERE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES IN THE F ORM OF UNSECURED LOANS, BOGUS SHARE CAPITAL AND BOGUS LONG TERM CAPITAL GAIN. THE LD. D.R., SUBMITTED THAT THOUGH THE NAME OF THE ASSESSEE DID NOT APPEAR IN THE STATEMENT RECOR DED OF SHRI PRAVIN KUMAR JAIN BUT THE FACT REMAINS THAT ALL REL ATED COMPANIES OF SHRI PRAVIN KUMAR JAIN WERE ONLY PROVI DING ACCOMMODATION ENTRIES AND ASSESSEE HAS TAKEN SHARE CAPITAL ACCOMMODATION ENTRIES FROM THE SAID ENTITIES. THE FACT WAS ALSO CONFIRMED BY THE STATEMENT AS RECORDED UNDER SECTIO N 131 OF SHRI DINESH DULICHAND JAIN ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY WHOSE PREMISES WERE SURVEYED UNDER SECTION 133A OF THE ACT WHO ALSO ADMITTED THE SAME. IT IS IMMATERI AL AND OF NO SIGNIFICANCE THAT SHRI DINESH DULICHAND JAIN RETRAC TED HIS STATEMENT BY WAY OF AFFIDAVIT DATED 29.03.2014 WHEN HE ADMITTED THE SAME DURING SURVEY AS IT WAS MERE AN AFTERTHOUGHT. THE AO HAS SUFFICIENT MATERIAL IN TH E FORM OF SWORN IN STATEMENT OF THE THIRD PARTY AND ALSO THE DIRECTOR OF THE ASSESSEE AND THEREFORE THE ORDER PASSED BY LD. CIT (A) IS WRONG AS THIS WAS A CLEAR CUT CASE OF ACCOMMODATION ENTRI ES RECEIVED BY THE ASSESSEE IN THE FORM OF SHARE CAPITAL. THE LD. D.R., THEREFORE, PRAYED THAT SINCE THE INVESTORS/ALLOTTEE S OF SHARES WERE RELATED TO SHRI PRAVIN KUMAR JAIN AS HAS BEEN HELD BY THE AO IN THE ASSESSMENT ORDER, THE SAME NEEDS TO BE AF FIRMED BY THIS HONBLE TRIBUNAL BY REVERSING THE ORDER OF LD. CIT(A). ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 14 15. THE LD. A.R. VEHEMENTLY SUBMITTED BEFORE US THA T THE ORDER OF THE AO SUFFERED FROM SERIOUS AND FATAL DEFECTS A ND INFIRMITIES FOR THE REASON THAT AO HAS PASSED THE ORDER ON THE BELIEF THAT THE SHARE CAPITAL WAS ISSUED TO THE COMPANIES CONNE CTED TO SHRI PRAVIN KUMAR JAIN WHEREAS AS A MATTER OF FACT THESE COMPANIES WERE NOT RELATED AT ALL TO EITHER SHRI PRAVIN KUMAR JAIN OR HIS ASSOCIATED CONCERNS. THE LD. A.R. DREW OUR ATTENTI ON TO THE PAGE NO.127 TO 129 OF THE PAPER BOOK ON WHICH THE S TATEMENT ON OATH OF SHRI PRAVIN KUMAR JAIN IS ATTACHED. THE SA ID STATEMENT CONTAINED A COMPREHENSIVE AND EXHAUSTIVE DETAILS OF VARIOUS CONCERNS/COMPANIES/ENTITIES IN WHICH SHRI PRAVIN KU MAR JAIN WAS EITHER DIRECTOR OR CONNECTED BY WAY OF MANAGEM ENT AND CONTROL ON THE SAID ENTITIES. HOWEVER, NONE OF THE INVESTORS IN THE ASSESSEE COMPANY WERE APPEARING ON THE SAID LIS T AS IS CONTAINED ON PAGE NO.127 TO 129 REFERRED TO SUPRA. THE LD. A.R. ALSO DREW OUR ATTENTION TO THE ASSESSMENT ORDER PAS SED IN THE CASE OF M/S ALKEN MANAGEMENT AND FINANCE SERVICES PVT. LTD. ONE OF THE ALLOTTEES OF SHARES/INVESTORS UNDER SECTION 143(3) DATED 22.11.2017 COPY WHEREOF IS ATTACHED AT PAGE N O.54 TO 57 OF THE PAPER BOOK. IN THE SAID ORDER THE AO OF THE INVESTOR HAS EXAMINED THE ISSUE OF INVESTMENT WHILE FRAMING THE ASSESSMENT. SIMILARLY, A COPY OF ASSESSMENT ORDER PASSED IN THE CASE OF SMIRK COMMERCIAL PVT. LTD. IS ATTACHED AT PAGE NO.120 TO 121 WHEREIN THE INVESTMENT MADE BY THE SAID INVESTOR HA S BEEN ACCEPTED BY THE AO. SIMILARLY, THE COPY OF ASSESSM ENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT DATED 18.12. 2017 IN THE CASE OF SIGNORA FINANCE PVT. LTD. IS ATTACHED AT PA GE NO.102 TO 105 WHEREIN THE INVESTMENTS BY THE SAID COMPANY IN THE ASSESSEE WERE ACCEPTED. THE LD. A.R. ALSO DREW OUR ATTENTION TO ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 15 THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT OF SHRI PRAVIN KUMAR JAIN A COPY OF WHICH IS PLACED IN THE PAPER BOOK AT PAGE NO.127 TO 131 AND CONTENDED THAT NONE OF T HESE COMPANIES WERE APPEARING IN THE LIST OF CONCERNS/COMPANIES/ENTITIES IN WHICH SHRI PRAVIN KU MAR JAIN WAS EITHER A STAKE HOLDER OR DIRECTOR OR WHICH WERE BEING MANAGED AND CONTROLLED BY SHRI PRAVIN KUMAR JAIN AN D ASSOCIATES. THE LD. A.R. ALSO ARGUED THAT THE AO H AS ONLY ACTED ON THE BASIS OF STATEMENT OF SHRI DINESH DULICHAND JAIN A DIRECTOR IN THE ASSESSEE COMPANY WHICH WAS RECORDED UNDER SECTION 131 OF THE ACT DURING THE COURSE OF SURVEY PROCEEDINGS CONDUCTED ON THE ASSESSEE UNDER SECTION 133A OF THE ACT BY IGNORING THE FACT THAT THE SAID STATEMENT STOOD RET RACTED BY THE SAID PERSON BY WAY OF AFFIDAVIT DATED 29.03.2014. THE LD. A.R. ALSO ARGUED THAT DURING THE YEAR, THE ASSESSEE HAS ALLOTTED SHARES TO SEVEN PARTIES BY DRAWING OUR ATTENTION TO PAGE NO.7 OF THE PAPER BOOK WHICH FORMED PART OF NOTES TO FINAN CIAL STATEMENTS FOR THE YEAR ENDED 31.03.2014 WHEREAS AS A MAATER OF FACT THE ADDITIONS WERE ONLY MADE IN RESPECT OF 3 PARTIES. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS SUBMITTED ALL THE DOCUMENTS RELATING TO THE INVESTORS/ALLOTTEES OF SH ARES SUCH AS BANK STATEMENTS, ITRS, LEDGER ACCOUNTS, CONFIRMATI ONS, PAN NUMBERS OF THE LENDERS AND ALSO THE STATEMENT OF TH E ASSESSEES, SHARE APPLICATION FORMS DULY FILLED IN BESIDE THE C OPIES OF THE BALANCE SHEET. THE LD. A.R. THEREFORE CONTENDED TH AT THE ASSESSEE INSTEAD OF MAKING ANY FURTHER INVESTIGATIO NS/ENQUIRIES HAS RELIED ON THE STATEMENT MADE DURING THE SURVEY BY SHRI DINESH DULICHAND JAIN A DIRECTOR OF THE ASSESSEE CO MPANY WHICH STOOD RETRACTED AS STATED HEREINABOVE. THE L D. A.R. ALSO ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 16 SUBMITTED THAT THE DECISION OF THE HON'BLE APEX COU RT IN THE CASE OF PR. CIT VS. NRA IRON & STEEL (P.) LTD. (201 9) 103 TAXMANN.COM 48 (SC) IS NOT APPLICABLE TO THE ASSESS EES CASE AS IN THIS CASE THE AO HAS MADE ENQUIRIES BY ISSUING N OTICES UNDER SECTION 133 AND THE PARTIES WERE FOUND TO BE NON EX ISTENT WHEREAS IN THE PRESENT CASE THE FACTS ARE TOTALLY D IFFERENT AS OF THE INVESTORS WERE EXISTING AND WERE ACTIVE ON THE ROC AND INCOME TAX RECORDS AND HAVE BEEN FILING THEIR RETUR NS REGULARLY. BESIDES, THE SAID INVESTORS HAVE DULY SHOWN THE SAI D INVESTMENTS IN THEIR BALANCE SHEET WHICH WERE EXAMI NED BY THE TAX AUTHORITIES DURING THE COURSE OF ASSESSMENT PRO CEEDINGS IN THEIR RESPECTIVE CASES AND IN ALL THE THREE CASES THE ASSESSMENTS WERE FRAMED UNDER SECTION 143(3) OF THE ACT. THE LD. A.R., THEREFORE, PRAYED THAT THE ORDER OF LD. C IT(A) IS VERY REASONED AND SPEAKING ONE WHICH HAS BEEN PASSED AFT ER FOLLOWING A SERIES OF DECISIONS INCLUDING THE ONES AS HAVE BEEN PASSED BY THE HONBLE BOMBAY HIGH COURT AND THEREF ORE THE APPEAL FILED BY THE REVENUE DESERVED TO BE DISMISSE D. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT DURING THE YEAR, THE ASSESSEE ALLOTTED SHARES TO SEVEN PARTIES OUT OF WHICH THE AO MADE AN ADDITION IN RES PECT OF THREE COMPANIES BY STATING THE SAME TO BE RELATED TO SHRI PRAVIN KUMAR JAIN. DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE ASSESSEE FILED ALL THE NECESSARY EVIDENCES IN THE F ORM OF SHARE APPLICATION FORMS, ALLOTMENT RETURNS, COPY OF BANK STATEMENTS OF THE INVESTORS, COPY OF THE BALANCE SHEET OF THE IN VESTORS, THEIR CONFIRMATIONS ETC. ALONG WITH ITR COPIES. HOWEVER, THE AO DID NOT CARRY OUT ANY FURTHER INVESTIGATIONS TO FIND OU T THE TRUTH. IT ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 17 IS ALSO UNDISPUTED THAT THE CORRESPONDING INVESTMEN T ENTRIES WERE DULY APPEARING IN THE RESPECTIVE BALANCE SHEET S OF THESE INVESTORS AND WERE EXAMINED BY THE RESPECTIVE AOS D URING ASSESSMENT PROCEEDINGS AND WERE ACCEPTED IN THE ASS ESSMENT FRAMED U.S 143(3) OF THE ACT. THE AO HAS RELIED O N THE STATEMENT OF SHRI PRAVIN KUMAR JAIN RECORDED UNDER SECTION 132(4) OF THE ACT, COPY WHEREOF IS FILED AT PAGE NO .127 TO 131 WHICH CONTAINED AN EXHAUSTIVE LIST OF CONCERNS/COMPANIES/ENTITIES IN WHICH SHRI PRAVIN KU MAR JAIN WAS EITHER SHAREHOLDER/DIRECTOR OR CONNECTED WITH T HE MANAGEMENT AND CONTROL OF THE SAID CONCERNS. WE FI ND THAT NONE OF THESE THREE INVESTORS WHO BOUGHT SHARE CAPI TAL IN THE ASSESSEE COMPANY WERE APPEARING IN THE SAID STATEME NT OF SHRI PRAVIN KUMAR JAIN AND THEREFORE WE DO NOT FIND ANY MERIT IN THE CONCLUSION DRAWN BY THE AO THAT ALL THESE THREE ENT RIES WERE RELATED TO SHRI PRAVIN KUMAR JAIN. FURTHER, WE NOT E THAT THE AO HAS NOT MADE ANY INVESTIGATION OR ENQUIRY DESPITE T HE ASSESSEE HAVING FILED ALL THE NECESSARY EVIDENCES BEFORE THE AO TO PROVE THE IDENTITIES AND CREDITWORTHINESS OF THE INVESTOR S AND GENUINENESS OF THE TRANSACTIONS. WE ALSO OBSERVE T HAT THE LD. CIT(A) HAS EXAMINED THE ISSUE IN GREAT DEPTH AND HA S RELIED ON A SERIES OF DECISIONS OF APEX COURT OF M/S. ANDMAN TI MBER INDUSTRIES CIVIL APPEAL NO.4228 OF 2006 AND THE CIT VS. LOVELY EXPORTS PVT. LTD. 216 ITR 295 (SC). THE LD CIT(A) A LSO RELIED UPON THE DECISIONS OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CREATIVE WORLD TELEFILMS LTD (2011 ) 333 ITR 100 AND DECISION OF HONBLE DELHI HIGH COURT IN OSIS H OSPITALITY PVT. LTD. 333 ITR 119( DELHI) WHILE DECIDING THE AP PEAL OF THE ASSESSEE. ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 18 17. WE FURTHER FIND THAT THE DECISION OF THE APEX C OURT IN THE CASE OF PR. CIT VS. NRA IRON & STEEL PVT. LTD. (SUP RA) IS NOT APPLICABLE TO THE ASSESSEE AS THE FACTS ARE DISTING UISHABLE IN THE CASE OF PR. CIT VS. NRA IRON & STEEL PVT. LTD. (SUP RA). THE AO HAS ISSUED NOTICES UNDER SECTION 133(6) OF THE ACT AND THE PARTIES WERE NON EXISTENT AND DID NOT REPLY WHEREAS IN THE PRESENT CASE ALL THESE INVESTORS WERE EXISTING AND ASSESSEE HAS FILED ALL THE EVIDENCES PROVING THE IDENTITIES AND CREDITWORTHINESS OF THE INVESTORS AND GENUINENESS OF THE TRANSACTION S BUT THE AO DID NOT MAKE ANY FURTHER ENQUIRIES OR INVESTIGATION S TO FIND OUT THE TRUTH AND RELIED UPON THE STATEMENTS WHICH STOO D RETRACTED. UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED VIEW THAT ORDER OF LD. CIT(A) IS CORRECT AND NEEDS TO BE UPHE LD. ACCORDINGLY, WE DISMISS THE GROUND RAISED BY THE RE VENUE BY UPHOLDING THE ORDER OF LD. CIT(A) ON THIS ISSUE. 18. THE ISSUE RAISED IN GROUND NO.2 & 3 IS AGAINST THE DELETION OF ADDITION OF RS.27,00,000/- AND INTEREST THEREON BY LD. CIT(A) AS MADE BY THE AO TOWARDS UNEXPLAINED CASH CREDIT U NDER SECTION 68 OF THE ACT. 19. THE ISSUE RAISED BY THE ASSESSEE IN THESE GROUN DS IS IDENTICAL TO ONE AS DECIDED BY US IN GROUND NO.1 & 2 OF ITA NO.6315/M/2017 (SUPRA) WHEREIN THE APPEAL OF THE RE VENUE HAS BEEN DISMISSED BY UPHOLDING THE ORDER OF LD. CIT(A) . THEREFORE, OUR FINDING ON THE SAID GROUNDS WOULD, MUTATIS MUTA NDIS, APPLY TO THESE GROUNDS AS WELL. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED AND THE ORDER OF LD. CIT(A) I S UPHELD. ITA NOS.6315 & 6316/M/2017 M/S. D.N.H. SPINNERS PVT. LTD. 19 20. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08.08.2019. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 08.08.2019. * 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 ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.