Appeal details
Counselvise Citation
[2020] 110 COUNSELVISE.COM (IT) 8405 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
24-06-2020
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
G
Assessment Year
2016-2017
Appeal Filed On
06-11-2019
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL G, BENCH MUM BAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.6832/MUM/2019 ( ASSESSMENT YEAR: 2016-17 ) GARWARE SYNTHETICS LIMITED MANISH TEXTILE IND. PREMISES OPP. GOLDEN CHEMICALS PENKAR PADA, POST MIRA THANE-401 104 VS. ACIT,CIRCLE-15(1)(2) AAYKAR BHAWAN M.K.ROAD MUMBAI-400 020 PAN/GIR NO. A AACG4208M ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI HARIDAS BHAT, AR REVENUE BY SHRI V.VINOD KUMAR, JCIT -DR DATE OF HEARING 24/02 /2020 DATE OF PRONOUNCEME NT 24 /0 6 /2020 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)24, MU MBAI, DATED 23/08/2019 AND IT PERTAINS TO ASSESSMENT YEAR 2016- 17. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE INCOME TAX OFFICER, CIRCLE 15(1)(2), MUMBAI (THE AO.) ER RED IN ADDING UNSECURED LOANS OF RS.1,23,00,000/- AS UNEXPLAINED CASH CREDITS U/S 68 OF THE IT ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE INCOME TAX OFFICER, CIRCLE 15(1)(2), MUMBAI (THE AO.) ERRED IN ADDING RS.15,00,000/- BEING THE DIFFERENCE IN THE AMOUNT OF LOAN TAKEN DURING T HE YEAR AND AMOUNT APPEARING IN BANK STATEMENT AS CASH CREDITS US 68 O F THE IT ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE INCOME TAX OFFICER, CIRCLE 15(1)(2), MUMBAI (THE AO.) ERRED IN DISALL OWING RS.13,83,200/- ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 2 BEING THE INTEREST EXPENSE CLAIMED BY THE ASSESSEE IN RESPECT OF THE LOANS TAKEN FROM CERTAIN PARTIES. 4. WITHOUT PREJUDICE TO THE ABOVE, THE AO ERRED IN DISALLOWING ALL THE INTEREST PAID CONSIDERING THE SAME AS INTEREST ON L OANS DISALLOWED U/S 68, IGNORING THE FACT THAT ONLY RS.7,00,000/- IS TH E INTEREST ON SUCH LOANS. THE APPELLANT THEREFORE PRAYS THAT THE DISALLOWANCE IF MADE SHOULD BE RESTRICTED TO RS.7,00,00/- ONLY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF NYLON M ONOFILAMENTS, NYLON BRISTLES, NYLON RODS, NYLON TUBES ETC., HAS F ILED ITS RETURN OF INCOME FOR AY 2016-17 ON 27/03/2018, DECLARING TOTA L INCOME AT RS.23,65,050/-. THE CASE HAS BEEN SELECTED FOR SCRU TINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. AO NO TICED THAT THE ASSESSEE HAS TAKEN UNSECURED LOANS FROM FOUR PARTIE S AS LISTED IN HIS ASSESSMENT ORDER AT PARA 5.5 AMOUNTING TO RS.2. 58 CRORES AND ACCORDINGLY, HE HAS CALLED UPON THE ASSESSEE TO FUR NISH NECESSARY DETAILS, INCLUDING NAME AND ADDRESS, PAN NUMBER ALO NG WITH CONFIRMATION FROM THE PARTIES TO PROVE THE IDENTITY , GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE PARTIES. IN RESPONSE, THE ASSESSEE HAS FILED DETAILS OF CREDITORS ALONG WITH THEIR NAME, ADDRESS, PAN ETC,. IN ORDER TO VERIFY GENUINENESS AND CREDITWORTHINESS OF THE SAID LOANS, INFORMATION U/S 133(6) OF THE I.T.ACT, 1961 WAS CALLED FROM THE CREDITORS, FOR WH ICH M/S GARWARE FINANCE CORPORATION LTD. HAS FILED DETAILS SOUGHT F OR BY THE LD. AO, VIDE LETTER DATED 05/12/2018. INSOFAR AS, OTHER THR EE PARTIES NAMELY M/S ARYA GLOBAL SHARES AND SECURITIES PVT.LTD, M/S KYRA LANDSCAPES LTD. AND M/S VENUS PORTFOLIO & FINANCE P VT.LTD. NONE HAVE RESPONDED TO NOTICES ISSUED BY THE LD. AO. ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 3 4. THEREAFTER, THE LD. AO HAS CALLED UPON THE ASSES SEE TO EXPLAIN AS TO WHY, UNSECURED LOANS TAKEN FROM THREE PARTIES AMOUNTING O RS.1.23 CRORES AND THE DIFFERENCE IN AM OUNT TAKEN FROM M/S GARWARE FINANCE CORPORATION LTD. AMOUNTING TO R S.15 LACS AND IN TOTAL A SUM OF RS.1.38 CRORES CANNOT BE TREATED AS UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE I.T.ACT. IN RESPONSE, THE ASSESSEE HAS FILED CONFIRMATION LETTE R FROM ALL THE PARTIES, BUT COULD NOT FILE ANY OTHER DETAILS, INCL UDING FINANCIAL STATEMENTS AND THEIR ITR COPIES. THE LD. AO WAS NOT CONVINCED WITH THE EXPLANATION FURNISHED BY THE ASSESSEE, INSOFAR AS, LOANS TAKEN FROM THREE PARTIES AMOUNTING TO RS.1.23 CRORES, ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FILE NECESSARY DETAILS I N ORDER TO PROVE THE IDENTITY, GENUINENESS OF TRANSACTIONS AND CREDITWOR THINESS OF THE PARTIES. INSOFAR AS, LOAN TAKEN FROM THE M/S GARWAR E FINANCE CORPORATION PVT. LTD, THE LD. AO HAS OBSERVED THAT ALTHOUGH, THE ASSESSEE HAS FILED NECESSARY DETAILS, BUT AS PER TH E CONFIRMATION FILED BY THE PARTY, THERE IS A DIFFERENCE OF RS.15 LACS IN THE LOANS SHOWN TO HAVE TAKEN FROM THE PARTY AND ACCORDINGLY, MADE ADDITIONS TOWARDS DIFFERENCE OF RS.15 LACS U/S 68 OF THE I.T. ACT, 1961. THE AO, WHILE, DOING SO HAS TAKEN SUPPORT FROM THE REPO RT OF INVESTIGATION WING, MUMBAI, AS PER WHICH M/S. ARYA GLOBAL SHARES & SECURITIES PVT.LTD. IS A SHELL COMPANY, WHICH IS EN GAGED IN PROVIDING ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARIES. THE REFORE, HE OPINED THAT UNSECURED LOANS TAKEN FROM ABOVE THREE PARTIES IS NON GENUINE IN NATURE AND ACCORDINGLY, MADE ADDITIONS O F RS.1.38 CRORES U/S 68 OF THE ACT. SIMILARLY, THE LD. AO HAS MADE A DDITIONS OF RS.13,83,200/- BEING CORRESPONDING INTEREST PAYMEN T CLAIM TO HAVE MADE TO ABOVE PARTIES BY THE ASSESSEE, ON THE GROUN D THAT WHEN, THE LOAN ITSELF IS NON GENUINE, CORRESPONDING INTER EST PAYMENT ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 4 CANNOT BE CONSIDERED AS GENUINE EXPENDITURE AND ACC ORDINGLY, MADE ADDITIONS TOWARDS INTEREST EXPENSES U/S 68 OF THE I.T.ACT, 1961. THE RELEVANT FINDINGS OF THE LD. AO ARE AS UN DER:- 5.2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSEE VIDE THIS OFFICE LETTER DATED 24-19-2018 WAS ASKED TO SUBMIT THE DETAILS OF ABOVE SAID LOANS TAKEN DURING THE YEAR ALONG WITH THE BANK STA TEMENT. IN RESPONSE TO THE SAME, THE ASSESSEE HAS FILED THE NAME, ADDRESS PAN, AMOUNT, ETC IN THE FORM OF STATEMENT. 5.3 TO VERIFY THE GENUINENESS AND CREDIT WORTHINE SS OF THE ABOVE SAID LOANS, INFORMATION U/S 133(6) OF THE IT ACT DATED 22-11-20 18 WAS CALLED FROM THE ABOVE PARTIES. HOWEVER, NOTICES ISSUED TO THE FOLLOWING P ARTIES WERE EITHER RETURNED UNSERVED OR NOT REPLIED BY THE PARTIES CONCERNED, T HE DETAILS OF WHICH ARE AS UNDER:- SR.NO. NAME OF THE PARTY AMOUNT REMARKS 1 ARYA GLOBAL SHARES & SECURITIES PVT.LTD. 43,00,000 RETURNED UN- SERVED 2 KYRA LANDSCAPES LTD. 73,00,000 RETURNED UNSERVED 3 VENUS PORTFOLIO & FINANCE PVT.LTD. 7,00,000 NO RESPONSE TOTAL 1,23,00,000 5.4 SINCE THERE IS NO RESPONSE FROM THE ABOVE SAI D PARTIES, THE ASSESSEE, VIDE THIS OFFICE LETTER DATED 01-12-2018 WAS ASKED TO SH OW CASE, WHY THE ABOVE SAID LOANS SHOULD NOT BE TREATED AS UNEXPLAINED CASH CRE DITS U/S 68 OF THE IT ACT AND ADDED TO YOUR INCOME. IN RESPONSE TO THE SAME, THE ASSESSEE HAS E-FILED SINGLE PAGE CONFIRMATIONS OF THE ABOVE SAID PARTIES, HOWEV ER, NO OTHER DETAILS VIZ., COPY OF RETURN OF INCOME, BANK STATEMENTS, LEDGER C ONFIRMATIONS, ETC. HAS BEEN FILED TO SUBSTANTIATE THE ABOVE SAID UNSECURED LOAN S TAKEN RECEIVED. 5.5 FURTHER, MS GARWARE FINANCE CORPORATION LTD., VIDE ITS LETTER DATED 05/12/2018 HAS FILED THE COPIES OF RETURN OF INCOME AND ITS FINANCIALS ALONG WITH BANK STATEMENT. HOWEVER, LEDGER CONFIRMATIONS HAS N OT BEEN FILED TO SUBSTANTIATE THE OUTSTANDING LOANS AS ON THE DATE O F 31/03/2016. THEREFORE, THE BANK STATEMENTS HAS BEEN VERIFIED, WHEREIN IT WAS F OUND THAT DURING THE YEAR THE M/S. GARWARE FINANCE CORPORATION LTD., HAS GIVEN LO AN TO THE ASSESSEE COMPANY TO TUNE OF RS.1,20,00,000/-. HOWEVER, AS PE R ASSESSEE RECORDS, THE LOAN RECEIVED DURING THE YEAR IS SHOW AS RS.1,35,00 ,000/-. THE DIFFERENCE OF RS.15,00,000/- IS UNEXPLAINED. 5.6 SINCE THERE IS NO RESPONSE FROM THE ASSESEE NOR ANY DETAILS TO PROVE THE GENUINENESS AND CREDIT WORTHINESS OF THE CREDITOR H AS BEEN FILED, THE ASSESEE WAS ONCE GAIN AN OPPORTUNITY VIDE THIS OFFICE LETT ER DATED 09-12-2018, BY ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 5 BRINGING THE ABOVE FACTS TO THE NOTICE AND SINCE TH E MATTER IS GETTING BARRED BY LIMITATION OF TIME ON 31-12-2018, THE ASSESSEE WAS ASKED TO SHOW CAUSE IN THE ABSENCE OF ANY DETAILS, THE GENUINENESS AND CREDIT WORTHINESS OF THE ABOVE SAID PARTIES CANNOT BE PROVED, THEREFORE, WAS ASKED TO P RODUCE THE PARTIES BY12-12- 2018, FAILING WHICH ASSESSMENT WILL BE COMPLETED BA SED ON THE MATERIAL AVAILABLE ON RECORD WITHOUT ANY FURTHER OPPORTUNITY . HOWEVER, THE ASSESSEE HAS NOT FILED ANY REPLY TO THE SAID SHOW CAUSE. 5.7 SINCE, THESE ENTRIES OF LOANS ARE APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND IT IS ASSESEE, WHO IS CLAIMING THEM TO BE UNSECURED LAONS, THE ONUS IS ON THE ASSESSEE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE ALLEGED LENDERS AND GENUINENESS OF THE TRANSACTION. PRECISE LY FOR THIS, ASSESSEE WAS REPEATEDLY ASKED TO FURNISH DOCUMENTS LIKE LOAN CON FIRMATIONS, COPIES OF RETURNS OF INCOME AND OTHER FINANCIAL DOCUMENTS AND PRODUCE THE PARTIES. IT WAS ONLY AFTER SEVERAL REMINDERS, ADJOURNMENTS AND A LAPSE O F SUFFICIENT TIME THAT THE ASSESSEE FURNISHED ONLY DETAIL OF UNSECURED LOANS R ECEIVED IN A CHART FORM AND SINGLE CONFIRMATION LETTER. ASSESSEE HAS NOT PUT FO RTH ANY PLAUSIBLE REASONS AS TO WHY LEDGER CONFIRMATION OF THESE THREE PARTIES W ERE NOT FILED, NOR IT SOUGHT ANY FURTHER OPPORTUNITY TO FILE THESE DETAILS. IT IS TH EREFORE CONCLUDED THAT THE ASSESSEE HAS NO CONFIRMATION FROM THE SAID PARTIES AGAINST THE CREDITS APPEARING IN ITS BOOKS OF ACCOUNT. 5.8 IN ALL THE ABOVE CASES, ASSESSEE HAS NOT FILED ANY LEDGER CONFIRMATIONS, COPIES OF THE ITRS, OR THE BANK STATEMENT. THE PRIM ARY ONUS TO ESTABLISH THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE TR ANSACTIONS IN RESPECT OF THE ALLEGED UNSECURED LOANS, APPEARING AS CREDITS IN TH E BOOKS OF ACCOUNT OF THE ASSESEE IS ON THE ASSESSEE. HOWEVER, SINCE ASSESSEE HAS NOT FILED ANY EVIDENCE WHATSOEVER, IN SUPPORT OF ITS CLAIM, THE S AID CREDITS REMAIN UNEXPLAINED. 5.9 THE CASE OF THE ASSESEE NEEDS TO BE FURTHER A PPRECIATED IN A SITUATION, WHERE ASSESSEE IS SHOWING UNSECURED LOANS FROM 6 PA RTIES. OUT OF WHICH 1 PARTY HAS FILED THE COPY OF RETURN AND BANKS STATEM ENT, THAT TOO SHOWING THE DIFFERENCE AS COMPARED TO ASSESSEE BOOKS OF ACCOUNT . IN CASE, THESE LOANS WERE EXPLAINABLE ASSESSEE MUST HAVE SUBMITTED PROP ER LOAN CONFIRMATIONS CONTAINING ALL THE REQUIRED DETAILS LIE LEDGER CONF IRMATION, BANK STATEMENTS, ROI, ETC OF THE LENDERS. THESE ARE NOT RANDOM LOANS OR L OANS TAKEN FROM ONE OR TWO PARTIES, WHO MAY NOT BE IN TOUCH WITH THE ASSESSEE OR ASSESSEE MAY HAVE SPOILED FINANCIAL RELATION SO AS TO OBTAIN THE LOAN CONFIRMATION IN THEIR TOTALITY. SUCH HUGE AMOUNT OF LOANS FROM 3 PARTIES, IF GENUIN E, MUST BE SUPPORTED WITH PROPER DOCUMENTATION, WHICH CLEARLY INDICATES THAT THE ONUS CAST UPON BY THE SECTION 68 OF THE I.T.ACT, 1961 HAS NOT BEEN DISCHA RGED BY THE ASSESSEE. 5.10 FURTHER, IT IS NOT OUT OF PLACE TO MENTION H ERE THAT INQUIRIES HAS RECENTLY BEEN CONDUCTED BY THE INVESTIGATION WING, MUMBAI WH ICH HAS REVEALED THAT M/S ARYA GLOBAL SHARES & SECURITIES PVT. LTD. IS A BOGU S COMPANY THAT HAS BEEN USED BY THE ENTRY OPERATORS TO PROVIDE ACCOMMODATIO N ENTRIES TO VARIOUS BENEFICIARIES . SHRI DEEPAK RATHOD, DIRECTOR OF M/S ARYA GLOBAL SHARES & SECURITIES PVT. LTD HAS STATED IN HIS STATEMENT RECORDED ON OA TH ON 21-06-2018 ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 6 BEFORE THE DDIT (INV.) UNIT VIII(2), MUMBAI THAT HE IS WORKING AS A TEMPO DRIVER AND HAS NO IDEA OF THE OPERATIONS OF THE COMPANY. H E ALSO STATED THAT HE DOES NOT EVEN KNOW ABOUT THE DIRECTORSHIP FO THE COMPANY . HE HAS JUST EVEN HIS CREDENTIALS (PAN, RATION CARD, PHOTO ETC.) AND SIGN S CERTAIN DOCUMENTS FOR WHICH HE GETS SOME AMOUNT AS INCOME. IN EFFECT , HE IS A DUMMY DIRECTOR AND THE COMPANY HAS BEEN CREATED TO PROVIDE ACCOMMODATI ON ENTRIES. 5.11 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, IT IS ESTABLISHED THAT THE CREDITS IN THE FORM OF ALLE GED UNSECURED LOANS APPEARING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AMOUNTING TO RS.1,23,00,000/- FROM THE ABOVE MENTIONED THREE PARTIES AND THE DIFFERENCE FO UND IN THE BOOKS OF M/S GARWARE FINANCE CORPORATION LTD. OF RS.15,00,000/- TOTALING TO RS.1,38,00,000/- REMAINED UNEXPLAINED CASH CREDITS AND THEREFORE, BR OUGHT TO TAX U/S 68 OF THE INCOME TAX ACT, 1961. FURTHER, SINCE THE LOANS AGGR EGATING TO RS.1,38,00,000/- FROM 3 PARTIES ARE HELD AS UNEXPLAINED CASH CREDIT, THE CORRESPONDING INTEREST CLAIMED BY THE ASSESSEE OF RS.13,83,200/- IS ALSO H EREBY DISALLOWED AS BOGUS CLAIM AND ADDED BACK TO THE TOTAL INCOME OF THE ASS ESSEE. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE INCOME TAX AT, 1961 ARE INITIA TED SIMULTANEOUSLY FOR CONCEALMENT OF PARTICULARS OF INCOME. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE HAS PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE, T HE LD. CIT(A), THE ASSESSEE HAS FILED DETAILED WRITTEN SUBMISSIONS ALO NG WITH CERTAIN JUDICIAL PRECEDENTS, WHICH HAS BEEN REPRODUCED AT P ARA 4.1 ON PAGES 6 TO 8 OF LD.CIT(A) ORDER. THE SUM AND SUBSTA NCE OF ARGUMENTS OF THE ASSESSEE BEFORE THE LD.CIT(A) ARE THAT UNSECURED LOANS TAKEN FROM ABOVE PARTIES ARE GENUINE, WHICH A RE SUPPORTED BY NECESSARY EVIDENCES, INCLUDING CONFIRMATION FROM TH E PARTIES. IT WAS FURTHER SUBMITTED THAT MERELY FOR THE REASONS THAT PARTIES DID NOT RESPOND TO 133(6) NOTICES ISSUED BY THE LD. AO, NO ADVERSE INTERFERENCE COULD BE DRAWN AGAINST THE ASSESSEE, W HEN THE ASSESSEE HAS DISCHARGED PRIMARY ONUS CAST UPON U/S 68 OF THE I.T.ACT, 1961. THE LD.CIT(A) AFTER CONSIDERING RELE VANT SUBMISSIONS OF THE ASSESSEE AND ALSO, BY RELIED UPON CERTAIN JU DICIAL PRECEDENTS, INCLUDING THE DECISION OF HONBLE DELHI HIGH COURT, IN THE CASE OF CIT VS JANSAMPARK ADVERTISING & MARKETING PVT.LTD. (ITA 525/204) (DEL.), HAS CONFIRMED ADDITIONS MADE BY THE LD. AO TOWARDS ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 7 UNSECURED LOANS TAKEN FROM FOUR PARTIES ALONG WITH INTEREST PAYMENT CLAIMS TO HAVE MADE TO THEM, ON THE GROUND THAT TH E ASSESSEE HAS FAILED TO FURNISH NECESSARY EVIDENCES TO ESTABLISH IDENTITY OF HIS CREDITORS, CAPACITY OF CREDITORS TO ADVANCE MONEY A ND GENUINENESS OF TRANSACTION. THE RELEVANT FINDINGS OF THE LD.CIT (A) ARE AS UNDER:- 5.2.3 I HAVE PERUSED THE DOCUMENTS ON RECORD AND THE FACTUAL MATRIX OF THE CASE. BEFORE I PROCEED TO DECIDE ON THE MATTER, IT IS IMPERATIVE TO LOOK AT SECTION 68 OF THE ACT, WHICH IS REPRODUCED HEREUNDER FOR RE ADY REFERENCE AND ANALYSIS:- 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS O F AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HI M IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITE D MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. PROVIDED THAT WHERE THE ASSESEE IS A COMPANY (NOT B EING ACCOMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED) AND THE SU M SO CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATION OFFERED BY SU CH ASSESSEE COMPANY SHALL BE DEEMED TO BE NOT SATISFACTORY, UNLESS- (A)THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATION AB OUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSIN G OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY. AS PER SECTION 68 OF THE AC, ONUS IS UPON THE APPEL LANT TO DISCHARGE THE BURDEN SO CAST UPON. FIRST BURDEN IS UPON THE APPELLANT TO SATISFACTORILY EXPLAIN THE CREDIT ENTRY CONTAINED IN HIS BOOKS OF ACCOUNTS. TH E BURDEN HAS TO BE DISCHARGED WITH POSITIVE MATERIAL. THIS HAS BEEN OB SERVED IN OCEANIC PRODUCTS EXPORTING COMPANY V CIT 241 ITR 497 (KERALA). THE L EGISLATURE HAD LAID DOWN THAT IN THE ABSENCE OF SATISFACTORY EXPLANATION THE UNEXPLAINED CASH CREDIT MAY BE CHARGED U/S 68 OF THE ACT. THIS VIEW IS FORTIFIE D BY THE RATIO LAID DOWN IN HONBLE APEX COURT IN P. MOHANKALA (2007) (291 ITR 278 (SC). THE LAW IS WELL SETTLED, THE ONUS OF PROVING THE SOURCE OF A SUM, F OUND TO BE RECEIVED/TRANSACTED, IT IS OPEN TO THE REVENUE TO H OLD THAT IT IS INCOME OF THE APPELLANT AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT INCOME IS FROM ANY OTHER PARTICULAR SOURCE. IT IS NECESSARY FOR TH E APPELLANT TO PROVE NOT ONLY IDENTITY OF THE CREDITOR BUT ALSO THE CAPACITY OF T HE CREDITOR AND GENUINENESS OF THE TRANSACTIONS. THE ONUS LIES ON THE APPELLANT, U NDER THE FACTS AVAILABLE ON RECORD. A HARMONIOUS CONSTRUCTION OF SECTION 106 OF THE EVIDENCE ACT AND SECTION 68 OF THE INCOME TAX ACT WILL BE THAT APART FROM ESTABLISHING THE IDENTITY OF THE CREDITOR, THE APPELLANT MUST ESTABLISH THE G ENUINENESS OF THE TRANSACTION AS WELL AS THE CREDITWORTHINESS OF THE CREDITORS. IN THIS CASE, THE APPELLANT WAS REQUIRED TO EXPLAIN THE UNSECURED LOANS AND PROVE THE GENUINENESS AND CREDITWORTHINESS OF THE L ENDER PARTY. HOWEVER, THE APPELLANT HAS FAILED TO FURNISHED ALL THE REQUISITE DOCUMENTS TO PROVE THE SAME ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 8 EXCEPT FOR SUBMITTING THE LOAN CONFIRMATION. ON THE CONTRARY, THE AO ISSUED NOTICE U/S 133() OF THE ACT WHICH WERE UN-SERVED OR NOT REPLIED TO. THIS CLEARLY SHOWS THAT THE BONAFIDENESS AND GENUINENESS OF THE TRANSACTION DOES NOT GET ESTABLISHED. 5.2.4 ON A PERUSAL OF THE ASSESSMENT ORDER IT APP EARS THAT THE AO, BASIS THE REPORT OF THE INVESTIGATION WING, MUMBAI, HAS ALSO NOTED THAT M/S. ARYA GLOBAL SHARES & SECURITIES PVT.LTD. WAS A BOGUS COMPANY AN D WAS USED TO PROVIDE ACCOMMODATION ENTRIES BY THE ENTRY PROVIDERS. 5.2.5 THE LAW IS WELL SETTLED THAT THE ONUS OF P ROVIDING THE SOURCE OF A SUM, FOUND TO BE RECEIVED/TRANSACTED BY THE ASSESSEE, IS ON HIM AND WHERE IT IS NOT SATISFACTORILY EXPLAINED, IT IS OPEN TO THE REVENUE TO HOLD THAT IT IS INCOME OF THE APPELLANT AND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT INCOME IS FROM ANY OTHER PARTICULAR SOURCE. WHERE THE APPELLANT FA ILED TO PROVE SATISFACTORILY THE SOURCE AND NATURE OF SUCH CREDIT, THE REVENUE IS FR EE TO MAKE THE ADDITION. THE PRINCIPLE LAID DOWN IN GANPATI MUDALIAR (1964) 53 I TR 632/A. GOVINDARAJULY MUDALIAR (34 ITR 807)(SC) AND ALSO CIT V DURGA PRAS AD MORE (72 ITR 807) (SC) ARE THE LANDMARK DECISIONS. THE RATIO LAID DOW N THEREIN ARE THAT IF THE EXPLANATION OF THE ASSESSEE IS UNSATISFACTORY, THE AMOUNT CAN BE TREATED AS INCOME OF THE ASSESSEE. 5.2.6 THE DELHI HIGH COURT IN THE CASE OF PRINCIPLE CIT V. BIKRA SINGH ITA NO.55/2017 HAS HELD THAT WHERE THE TRANSACTIONS HER EIN DO NOT INSPIRE CONFIDENCE AS BEING GENUINE AND ARE SHROUDED N MYST ERY, AS TO WHY SO-CALLED CREDITORS WOULD LEND SUCH HUGE UNSECURED, INTEREST FREE LOANS-THAT TOO WITHOUT ANY AGREEMENT. IN THE ABSENCE OF THE SAME, THE CRED ITORS FAIL THE TEST OF CREDITWORTHINESS AND THE TRANSACTIONS FAIL THE TEST OF GENUINENESS. IN THIS CASE, THE ASSESSEE HAS BEEN ABLE TO SUBMIT ONLY ITS OWN DOCUMENTS LIKE BANK ACCOUNT, LEDGER, ETC AND HAS NOT PRELIMINARY D ISCHARGED THE OBLIGATION OF ESTABLISHING THE GENUINENESS OF THE TRANSACTION AND THE CREDITWORTHINESS OF THE LENDER PARTIES. THE HON.CALCUTTA HIGH COURT IN CIT VS PRECISION FIN ANCE PVT.LTD. (1994) 208 ITR 465 (CAL.) LAID DOWN THAT THE ASSESSEE IS EXPEC TED TO ESTABLISH:- 1. IDENTITY OF HIS CREDITOR; 2. CAPACITY OF CREDITORS TO ADVANCE MONEY; AND 3. GENUINENESS OF TRANSACTION AS TO THE ISSUE OF GENUINENESS OF TRANSACTION, IT W AS FURTHER HELD IN THE ABOVE DECISION THAT THE TRANSACTION IS NOT GENUINE, SIMPL Y BECAUSE SOME, OUT OF MANY, OF THE TRANSACTIONS ARE BY CHEQUE. WHERE CERTAIN SU M OF MONEY CLAIMED BY THE ASSESSEE TO PROVE, BY COGENT AND PROPER EVIDENCE, T HAT THEY ARE THE GENUINE BORROWINGS FOR THE REASON THAT THE FACTS ARE EXCLUS IVELY WITHIN THE ASSESSEE KNOWLEDGE. IN CIT VS. OASIS HOSPITALITIES PVT.LTD. 333 ITR 119 (DELHI) IT WAS HELD BY THE HON. COURT THAT THE INITIAL ONUS IS UPON THE ASSESSEE T O ESTABLISH THREE THINGS NECESSARY TO OBVIATE THE MISCHIEF OF SECTION 68. TH OSE ARE (I) IDENTITY OF THE INVESTOR; (II) THEIR CREDITWORTHINESS /INVESTMENTS; AND (III) GENUINENESS OF THE TRANSACTION. ONLY WHEN THESE THREE INGREDIENTS ARE ESTABLISHED PRIMA FACIE, THE DEPARTMENT IS REQUIRED TO UNDERTAKE FURHER EXERCISE . ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 9 THE APPELLANT HAS NTO BEEN ABLE TO PROVE THE GENUIN ENESS AND CREDITWORTHINESS OF THE TRANSACTION OF THE TRANSACTION. MOREOVER, IT COULD NTO PRODUCE THE PARTY FOR VEIFIFCAITON. IN THIS CASE OF CIT VS JANSAMPARK ADV ERTISISNG & MARKETING PVT.LTD. (ITA 525/2014) (DEL.), THE ADDITIONS HAVE BEEN MADE U/S 68 IN RESPECT OF THE SHARE CAPITAL RECEIVED BY THE ASSESSEE FROM VARIOUS COMPANIES AND DURING THE COURSE OF INVESTIGATION, IT WAS FOUND THAT THE SHAR E CAPITAL HAS BEEN RECEIVED FROM THREE ENTRY OPERATORS, WHO ARE ALLEGEDLY IN TH E BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. NOTICES ISSUED U/S 131 TO TH ESE PARTIES WERE RETURNED UNDELIVERED BY THE POSTAL AUTHORITIES WITH THE REMA RK LEFT/NO SUCH PERSON. UNDER THESE CIRCUMSTANCES, THE HONBLE HIGH COURT TOOK A VIEW THAT THE ASSESSEE FAILED TO DISCHARGE THE BURDEN TO PROVE THE CREDIT WORTHINESS AS WELL AS THE GENUINENESS OF THE TRANSACTION. 5.2.7 HAVING REGARD TO THE FACTS OF THE CASE AND J UDICIAL PRECEDENTS, I AM OF THE VIEW THAT THE AO HAS RIGHTLY ADDED THE LOAN BORROWE D OF RS.1,23,00,000 AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. THIS GRO UND OF APPEAL IS DISMISSED. 5.3 GROUND 2-ADDITION OF RS.15,00,000 U/S 68 5.3.1. OF THE PARTIES FROM WHOM THE LOAN WAS TAKEN BY THE APPELLANT, AS DETAILED IN THE ABOVE GROUND, M/S GARWARE FINANCE C ORPORATION LIMITED FILED THE COPIES OF RETURN OF INCOME AND FINANCIALS ALONG WIT H THE BANK STATEMENT IN RESPONSE TO THE NOTICE ISSUED U/S 133(6) OF THE ACT . NO LOAN CONFIRMATION WAS FILED. THE AO PERUSED THE BANK STATEMENT AND NOTED THAT LOAN OF RS.1,20,00,000 WAS ADVANCED BY THIS PARTY TO THE APPELLANT, HOWEVE R, THE APPELLANT REFLECTED THE SAME AT RS.1,35,00,000. ACCORDINGLY, THE AO MADE AN ADDITION OF RS.15,00,000 AS UNEXPLAINED CASH CREDITED U/S 68 OF THE ACT. 5.3.2 I HAVE PERUSED THE FACTS OF THE CASE AND SU BMISSIONS FILED BY THE APPELLANT. THERE APPEARS TO BE DISCREPANCY IN THE O PENING AND THE CLOSING BALANCE OF THE LOAN CONFIRMATIONS FILED BY THE GARW ARE FINANCE AND THE APPELLANT. IT IS WORTHY TO NOTE HERE THAT BOTH THES E ARE PART OF THE SAME GROUP ENTITIES AND HENCE, THE DISCREPANCY, IF ANY, IN THE LOAN BALANCE OUGHT TO HAVE BEEN RECONCILED OR EXPLAINED FOR DURING THE COURSE OF THE ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS. THE APPELLANT HAS FAILED TO DISCHARGE ITS DUTY OF PROVIDING THE CORRECTNESS OF THE LOAN AMOUNT AND THE VERACITY IN THE LEDGER CONFIRMATION FILED VIS-A-VIS THE AMOUNTS APPEARING IN THE BOOKS OF THE APPELLANT. IN THESE CIRCUMSTANCES, I AGREE WITH THE ADDITION MADE BY TH E AO AND UPHOLD THE SAME. THIS GROUND OF APPEAL IS DISMISSED. 5 .4 GROUND 3-DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 1,3,83,200 5.4.1 HAVING HELD IN GROUND 2 ABOVE THAT THE LOAN TAKEN BY THE APPELLANT IS AN ACCOMMODATION ENTRY AND DISALLOWABLE U/S 68 IT IS C ONSEQUENTLY IMPLIED THAT THE INTEREST THEREON ALSO TAKES THE COLOUR OF THE ACCOM MODATION ENTRY AND HENCE, THE SAME IS RIGHTLY DISALLOWED BY THE LD. AO. I FIN D NO INFIRMITY IN THIS ADDITION AND ACCORDINGLY, UPHOLD THE SAME. THIS GROUND OF AP PEAL IS DISMISSED . ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 10 6. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE L D.CIT(A) HAS ERRED IN CONFIRMED ADDITIONS MADE BY THE LD. AO TOW ARDS UNSECURED LOANS AND CONSEQUENT INTEREST U/S 68 OF THE I.T.ACT ,1961, IGNORING ALL EVIDENCES FILED BY THE ASSESSEE, INCLUDING CONFIRMA TION LETTERS FROM THE CREDITORS ONLY FOR THE REASONS THAT CERTAIN PAR TIES WERE NOT RESPONDED TO NOTICES ISSUED BY THE LD. AO U/S 133(6 ) OF THE I.T.ACT, 1961. THE LD. AR, FURTHER, SUBMITTED THAT THE ASSES SEE HAS DISCHARGED ITS ONUS BY THE FILING NECESSARY EVIDENC ES, INCLUDING CONFIRMATION LETTERS FROM THE PARTIES TO PROVE IDEN TITY OF THE PARTIES. THE ASSESSEE HAS ALSO FILED DETAILS OF LOANS TAKEN THROUGH PROPER BANKING CHANNELS ALONG WITH INTEREST PAYMENT. THE L D.CIT(A) HAS DISBELIEVED ALL EVIDENCES FILED BY THE ASSESSEE, ON LY ON THE GROUND THAT THE PARTIES HAVE NOT RESPONDED TO THE NOTICES, IGNORING LEGAL POSITION THAT NON APPEARANCE OF THE PARTIES CANNOT BE ATTRIBUTED TO THE ASSESSEE TO DRAW AN ADVERSE INFERENCE, WHEN THE ASSESSEE HAS DISCHARGED ITS ONUS. IN SUPPORT OF HIS ARGUMENTS, H E HAS RELIED UPON FOLLOWING JUDICIAL PRECEDENTS. 1. SANGHVI RELATY PVT.LTD. VS DEPUTY COMMISSIONER O F INCOME TAX BOMBAY TRIBUNAL ITA NO.3018MUM/2017, 3019/MUM/2014M 2020-/ MUM/2017 (2017) 51 CCH 0041 MUM TRIB(2017) 60 ITR (TRIB) 015 0 (MUMBAI) 2. ASSISTANT COMMISSIONER OF INOCME TAX VS SHREEDHA M BUILDERS BOMBAY TRIUBNAL ITA NO.5589/MUM/2017(2018) 53 CCH 0212 MU M TRIB. 3. KISHNCHAND CHELLARAM VS COMMISSIONER OF INCOME T AX SUPREME COURT OF INDIA (1980) 125 ITR 0713 (1980) 4 TAXMAN 0029 4. DEPUTY COMMISSIONER OF INCOME TAX VS ROHINI BUIL DERS HIGH COURT OF GUJRAT TAX APPEAL NO.65 OF 2001 (2001) 69 CCH 0287 GUJ HC (2003) 182 CTR 0373, (2002) 256 ITR 0360 (2003) 127 TAXMA N 0523 5. H.R.MEHTA VS ASSISTANT COMMISSIONER OF INCOME TA X HIGH COURT BOMBAY ITA NO.58 OF 2001 JUN 30, 2016 96 CCH 0049 MUM HC ( 2006) 289 CTR 0561 (BOM) 6. COMMISSIONER OF INCOME TAX VS ASHWANI GUPTA HIG H COURT OF DELHI IT APPEAL NO.1264 OF 2008 FEB 16, 2010 (2010) 78 CCH 0 179 DELHC 322 ITR 0396 (2010) 191 TAXMAN 0051 ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 11 7. COMMISSIONER OF INCOME TAX VS K. BUVAENDRAAN & O RS. HIGH COURT OF MADRAS TAX CASE (APPEALS) NOS. 26633K TO 2665 OF 20 06 DC 14, 2006(2006) 74 CCH 1028 CHEN HC (2008) 303 ITR 0235 8. DEPUTY COMMISSIONER OF INCOME TAX VS BAIRAGRA BU ILDERS PVT.LTD. (2017) 51 CCH 0107 MUM TRIB. 9. COMMISSIONER OF INCOME TAX VS SAHIBGNJ ELECTRIC CABLES P. LTD. (1978) 46 CCH 0212 KOLHC (1978) 115 ITR 0408 7. THE LD. DR, ON THE OTHER HAND STRONGLY SUPPORTIN G ORDER OF THE LD.CIT(A) SUBMITTED THAT IT IS A CLEAR CASE OF TAKI NG ACCOMMODATION ENTRIES FROM ENTRY PROVIDERS, WHICH IS PROVED FROM THE FACT THAT THE INVESTIGATION WING OF INCOME TAX DEPARTMENT HAS BRO UGHT OUT MODUS OPERANDI OF ENTRY PROVIDERS AS PER WHICH, M/S ARYA GLOBAL SHARES & SECURITIES PVT.LTD. IS A SHELL COMPANY WHICH IS ENG AGED IN PROVIDING ACCOMMODATION ENTRIES. THE LD. DR, FURTHER SUBMITTE D THAT THE LD. AO, AS WELL AS, THE LD.CIT(A) HAVE APPRAISED FACTS IN RIGHT PROSPECTIVE, IN LIGHT OF PROVISIONS OF SECTION 68 O F THE ACT, AND CAME TO THE CONCLUSION THAT PURPORTED UNSECURED LOANS TA KEN FROM ABOVE PARTIES ARE NON GENUINE TRANSACTIONS WITHIN AMBIT O F SECTION 68 OF THE I.T.ACT, 1961. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CAREFULLY CONSIDERED CASE LAWS RELIED UPO N BY BOTH THE PARTIES. THE LD. AO HAS MADE ADDITIONS TOWARDS UNSE CURED LOANS TAKEN FROM FOUR PARTIES AMOUNTING TO RS.1.38 CRORES , ON THE GROUND THAT PURPORTED LOANS HAVE FAILED THE TEST OF GENUIN ENESS AS ENUMERATED UNDER THE PROVISIONS OF SECTION 68 OF TH E I.T.ACT, 1961. THE LD. AO HAD ALSO ADDED CONSEQUENT INTEREST PAYME NT AMOUNTING TO RS.13,83,200/- TO ABOVE FOUR PARTIES, ON THE GRO UND THAT WHEN, LOAN ITSELF IS BOGUS IN NATURE, THEN CONSEQUENT INT EREST PAYMENT CANNOT BE CONSIDERED AS GENUINE EXPENDITURE. THE LD . AO HAS ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 12 INVOKED PROVISIONS OF SECTION 68 OF THE I.T.ACT, 19 61 TO DRAW AN ADVERSE INFERENCE AGAINST THE ASSESSEE TO MAKE ADDI TIONS TOWARDS SAID UNSECURED LOANS. AS PER PROVISIONS OF SECTION 68 OF THE I.T.ACT, 1961, WHERE ANY SUM FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN ANY FINANCIAL YEAR, FOR WHICH THE ASSES SEE OFFERS NO EXPLANATION OR EXPLANATION OFFERED BY THE ASSESSEE, IN THE OPINION OF THE LD. AO IS NOT SATISFACTORY, THEN SUM FOUND CRED ITED MAY BE TREATED AS INCOME OF THAT PREVIOUS YEAR. AS PER PR OVISIONS OF SECTION 68 OF THE ACT, THE INITIAL ONUS IS ON THE ASSESSEE TO PROVE THE CREDIT FOUND IN HIS BOOKS OF ACCOUNTS TO THE SATISFACTION OF THE LD. AO. IN ORDER TO COME OUT OF THE CLUTCHES OF SAID PROVISION S, THE ASSESSEE SHALL PRODUCE NECESSARY EVIDENCES TO PROVE IDENTITY OF THE CREDITORS, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF THE CREDITORS. ONCE, THE INITIAL BURDEN IS DISCHARGED BY THE ASSES SEE, THEN THE BURDEN SHIFTS TO THE REVENUE TO PROVE THAT CREDIT F OUND IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS INCOME OF THE ASSESS EE DERIVED FROM UNDISCLOSED SOURCE OF INCOME. 9. IN THIS LEGAL BACK GROUND, IF YOU EXAMINE THE CA SE OF THE ASSESSEE, IN LIGHT OF PROVISIONS OF SECTION 68 OF T HE I.T. ACT, 1961, ONE HAS TO EXAMINE, WHETHER THE ASSESSEE HAS DISCHA RGED ITS INITIAL ONUS CAST UPON IN THE RELEVANT PROVISIONS OF THE AC T OR NOT. IN THIS CASE, ON PERUSAL OF DETAILS AVAILABLE ON RECORD, TH ERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS FILED PRIMARY EVIDENCES RELATING TO UNSECURED LIONS TAKEN FROM FOUR PARTIES , INCLUDING NAME AND ADDRESS OF THE PARTIES AND PAN NUMBERS AND ALSO IT HAS FILED CONFIRMATION LETTERS FROM THE CREDITORS. THE ASSESS EE HAS ALSO FILED NECESSARY EVIDENCES TO PROVE THAT SAID LOANS HAVE B EEN TAKEN THROUGH PROPER BANKING CHANNELS AND ALSO, NECESSARY INTEREST ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 13 PAYMENT HAS BEEN MADE AFTER DEDUCTING APPLICABLE TD S AS PER LAW. FURTHER, INSOFAR AS, ADDITIONS MADE BY THE LD. AO T OWARDS M/S.GARWARE FINANCE CORPORATION PVT.LTD. AMOUNTING TO RS.15 LACS, THE LD. AO HAS DRAWN ADVERSE INFERENCE, ONLY ON THE BASIS OF BANK STATEMENT FILED BY THE ASSESSEE FOR THE RELEVANT FI NANCIAL YEAR TO COME TO THE CONCLUSION THAT THE ASSESSEE HAS TAKEN LOAN TO THE TUNE OF RS.1.20 CRORES, WHEREAS AS PER THE LETTER OF CON FIRMATION, THE LOAN HAS BEEN SHOWN AT RS.1.35 CRORES. BUT, FACT REMAINS THAT ON PERUSAL OF CONFIRMATION LETTER FILED BY THE ASSESSEE, WE FI ND THAT THE ASSESSEE HAVING A RUNNING ACCOUNT WITH GARWARE FINA NCE CORPORATION PVT.LTD., WHICH INCLUDES OPENING BALANC E AND TRANSACTIONS DURING THE YEAR. FURTHER, ALL THE TRAN SACTIONS HAVE BEEN MADE THROUGH PROPER BANKING CHANNELS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. AO HAS ARRIVED AT WRON G CONCLUSIONS, ON THE BASIS OF BANK STATEMENT, IGNORING OTHER EVID ENCES FILED BY THE ASSESSEE, INCLUDING CONFIRMATION LETTER FROM THE PA RTIES. AS REGARDS, LOANS TAKEN FROM M/S ARYA GLOBAL SHARES & SECURITIE S PVT.LTD., WE FIND THAT AS PER CONFIRMATION LETTER OF THE CREDITO R, THE LOAN HAS BEEN PAID BY CHEQUE ON 23/10/2015. SIMILARLY, THE ASSESE E HAS OBTAINED CONFIRMATION LETTER FROM M/S KYRA LANDSCAPES LTD., AS PER WHICH THE LOAN HAS BEEN TAKEN THROUGH CHEQUES STARTING FROM 2 6/10/2015 TO 08/12/2015. LIKEWISE, LOAN TAKEN FROM M/S VENUS POR TFOLIO & FINANCE PVT. LTD, THE ASSESSEE HAS TAKEN LOAN IN TH E PREVIOUS FINANCIAL YEAR AND DURING THE CURRENT FINANCIAL YEA R, THE LOAN HAS BEEN REPAID THROUGH CHEQUES ALONG WITH INTEREST PAY MENT OF RS. 7 LACS. ALL THESE EVIDENCES ARE PART OF DOCUMENTS FI LED BEFORE THE LD. AO, AS WELL AS THE LD.CIT(A). THE ASSESSEE HAS ALSO FILED OTHER DETAILS, INCLUDING COMPANY MASTER DATA DOWNLOADED F ROM MINISTRY OF CORPORATE AFFAIRS, AS PER WHICH ALL THE COMPANIES ARE HAVING ACTIVE ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 14 STATUS, AND COMPANIES HAVE FILED THEIR FINANCIAL ST ATEMENTS UP TO 31/03/2017. FROM THE ABOVE, IT IS VERY CLEAR THAT T HE ASSESSEE HAS FILED NECESSARY EVIDENCES, IN ORDER TO PROVE THE ID ENTITY OF THE CREDITORS, THE GENUINENESS OF TRANSACTIONS AND CRED ITWORTHINESS OF THE PARTIES. 10. IN LIGHT OF ABOVE LEGAL AND FACTUAL BACK GROUND , IF YOU SEE THE FACTS OF PRESENT CASE, IT IS UNDOUBTEDLY CLEAR THAT THE ASSESSEE HA S DISCHARGED ITS INITIAL BURDEN CAST UPON, IT UNDER T HE PROVISIONS OF 68 OF THE I.T. ACT, 1961. ONCE, INITIAL BURDEN CAST UP ON ON THE ASSESSEE HAS BEEN DISCHARGED BY FILING NECESSARY EVIDENCES, THEN THE BURDEN SHIFTS TO THE REVENUE TO PROVE THAT THE CREDITS FOU ND IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS INCOME EARNED FROM UNDI SCLOSED SOURCE OF INCOME. IN THIS CASE, THE LD. AO HAS PRIMARILY R ELIED UPON THE FACT THAT THE PARTIES HAVE NOT RESPONDED TO NOTICE ISSUE D U/S 133(6) OF THE I.T.ACT, 1961 TO DRAW A CONCLUSION AGAINST THE ASSESSEE THAT THE PURPORTED LOANS TAKEN FROM THOSE PARTIES ARE NON GE NUINE IN NATURE, IGNORING LEGAL POSITION THAT NON APPEARANCE OF THE PARTIES TO THE PROCEEDINGS BEFORE THE LD. AO CANNOT BE A SOLE GROU ND FOR TAKING ADVERSE INFERENCE AGAINST THE ASSESSEE, MORE PARTIC ULARLY, WHEN THE ASSESSEE HAS FILED NECESSARY EVIDENCES TO PROVE LOA NS TAKEN FROM ABOVE PARTIES. THIS LEGAL POSITION IS SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS LOVELY EXPORTS PVT.LTD. (2008) (2016 CTR 195) (SC), WHERE THE HON BLE SUPREME COURT CLEARLY HELD THAT IF, THE SHARE APPLICATION M ONEY IS RECEIVED BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDER S, THE NAMES ARE GIVEN TO THE LD. AO, THEN THE DEPARTMENT IS FRE E TO PROCEED TO REOPEN THEIR INDIVIDUAL ASSESSMENT IN ACCORDANCE WI TH LAW, BUT THE SUM FOUND CREDITED IN ITS BOOKS CANNOT BE REGARDED AS UNDISCLOSED ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 15 INCOME OF THE ASSESSEE. THIS LEGAL PROPOSITION IS F URTHER STRENGTHEN BY THE DECISION OF HONBLE BOMBAY HIGH COURT, IN TH E CASE OF CIT VS GOA SPONGE & POWER LTD.(SUPRA), WHERE THE HONBLE H IGH COURT BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS LOVELY EXPORTS PVT.LTD (SUPRA) HELD THAT ONCE, T HE AUTHORITIES HAVE GOT ALL THE DETAILS, INCLUDING NAME AND ADDRES S OF THE SHAREHOLDERS, THEIR PAN / GIR NUMBER, SO ALSO, THE NAME OF THE BANK FROM WHICH THE ALLEGED INVESTORS RECEIVED MON EY AS SHARE APPLICATION MONEY, THEN IT CANNOT BE TURNED AS BOGU S. THE ITAT, MUMBAI, IN THE CASE OF SANGVI REALTORS PVT.LTD. VS DCIT(2017) (60 ITR (TRIB.) 150 HELD THAT WHEN, THE ASSESSEE HAS FU RNISHED ALL RELEVANT DETAILS IN ORDER TO DISCHARGE BURDEN OF PR OOF PLACED UPON IT U/S 68 OF THE ACT, THEN ADDITIONS MADE U/S 68 IS NO T JUSTIFIED. IN YET ANOTHER DECISION OF ITAT, MUMBAI ACIT VS SREEDHAM BUILDERS (2018) 53 CCH 2012 IT WAS HELD THAT ADDITIONS ON AC COUNT OF UNSECURED LOANS CANNOT BE MADE, WHERE THE ASSESSEE HAS DISCHARGED ITS PRIMARY ONUS OF PROVIDING COMPLETE D ETAILS, IN RESPECT OF LOAN TRANSACTIONS. THE ITAT, MUMBAI IN THE CASE OF DCIT VS BAIRAGRA BUILDERS PVT.LTD.(2017) 51 CCH 107 HAS HEL D THAT THE LD. AO HAS PROCEEDED TO MAKE ADDITIONS, MERELY ON THE B ASIS OF INVESTIGATION DONE BY THE OFFICE OF DG INVESTIGATIO N, WITHOUT CONDUCTING ANY INDEPENDENT ENQUIRIES TO ASCERTAIN N ATURE OF TRANSACTION AND ALSO WITHOUT CHALLENGING THE CLAIMS OF THE ASSESSEE THAT LOANS TAKEN FROM ABOVE PARTIES WERE GENUINE, I N CONTRAVENTIONS OF SETTLED LEGAL POSITION OF LAW. FROM THE RATIOS O F ABOVE CASES, IT IS VERY CLEAR THAT ONCE, THE INITIAL BURDEN WAS DISCHA RGED BY FILING NECESSARY EVIDENCES, THEN THE ADDITIONS CANNOT BE M ADE U/S 68 OF THE ACT, MERELY FOR THE REASONS THAT THE PARTIES HA VE NOT RESPONDED TO NOTICES ISSUED BY THE LD. AO U/S 133(6) OF THE I .T.ACT, 1961. IF THE ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 16 LD. AO IS NOT SATISFIED WITH DETAILS FILED BY THE A SSESSEE, THEN HE IS FREE TO PROCEED AGAINST CREDITORS IN ACCORDANCE WIT H LAW, BUT SUM SO FOUND CREDITED IN THE BOOKS OF ACCOUNTS OF THE ASSE SSEE CANNOT BE RECORDED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE I .T.ACT, 1961. 11. IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOL LOWING THE JUDICIAL PRECEDENTS DISCUSSED HEREINABOVE, WE ARE OF THE CON SIDERED VIEW THAT THE LD. AO, AS WELL AS THE LD.CIT(A) WERE ERRE D IN MAKING ADDITIONS TOWARDS UNSECURED LOANS TAKEN FROM FOUR P ARTIES, ALONG WITH CONSEQUENT INTEREST PAYMENT U/S 68 OF THE I.T. ACT, 1961. HENCE, WE DIRECT THE LD. AO TO DELETE ADDITIONS MAD E TOWARDS UNSECURED LOANS AMOUNTING TO RS.1.38 CRORES AND CON SEQUENT INTEREST PAYMENT OF RS.13,83,200/-. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. 13. BEFORE PARTING, WE SHALL DEAL WITH PROCEDURAL A SPECT OF PROUNCEMENT OF ORDER AS PRESCRIBED UNDER RULE 34(4) OF INCOME TAX (APPELLATE TRIBUNAL) RULES 1963. AS PER RULE 34(4), NO ORDER SHALL BE PRONOUNCED AFTER EXPIRY OF 90 DAYS FROM THE DATE OF HEARING. THIS APPEAL WAS HEARD ON 24/02/2020 AND ORDINARILY, THE ORDER SHALL BE PRONOUNCED ON OR BEFORE 22/05/2020. BUT, THIS ORDER COULD NOT BE PRONOUNCED ON OR BEFORE 22/05/2020, DUE TO THE FACT THAT THE GOVT. OF INDIA HAS IMPOSED NATIONWIDE LOCKDOWN FROM 25/03 /2020 AND THE SAME HAS BEEN EXTENDED TIMT TO TIME UP TO 31/05/202 0 AND BECAUSE OF THIS THE OFFICE WAS CLOSED UP TO 21/05/2020. FUR THER, IF THE ABOVE LOCKDOWN PERIOD IS EXCLUED FOR THE PURPOSE OF LIMIT ATION, THEN THE ORDER CAN BE PRONOUNCED ON OR BEFORE 17/07/2020. FU RTHER, WHETHER LOCKDOWN PERIOD CAN BE EXCLUDED OR NOT HAS BEEN EXH ASTIVELY DEALT ITA NO.6832/MUM/2019 GARWARE SYNTHETICS LTD., 17 BY THE CO-ORDINATE BENCH OF ITAT, MUMBAI, IN THE CA SE OF DCIT VS JSW LIMITED, IN ITA NO. 6264/MUM/2018, DATED 14/05/ 2020, WHERE IT WAS HELD THAT DUE TO CORONA VIRUS PANDAMIC, THE PERIOD OF LIMITATION AUTOMATICALLY GETS EXTENDS TILL SUCH PERIOD THE LOC KDOWN IS IN FORCE. WE, THEREFORE, ARE OF THE OPINION THAT CONSIDERING THE PREVAILING SITUATION AND ALSO, BY RESPECTFULLY FOLLOWING THE D ECISION OF CO- ORDINATE BENCH IN THE CASE OF DCIT VS. JSW LIMITED (SUPRA), THE ORDER PRONOUNCED IN THE MONTH OF JUNE 2020, IS WELL WITHIN THE TIME ALLOWED UNDER RULE 34(4) OF INCOME TAX (APPELLATE T RIBUNAL) RULES 1963. THIS ORDER IS PRONOUNCED AS PER RULE 34(4) OF INCOM E TAX (APPELLATE) TRIBUNAL RULES, 1963, BY NOTICE TO PART IES ON THIS 24/06/2020 SD/- (RAVISH SOOD) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 24/06/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//
