DCIT CIR 15(1), MUMBAI V. HARESH D. MEHTA, MUMBAI

ITA 971/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6573 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 06-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C PATNAIK
• Assessee Lawyers: HITESH M SHAH
• Keywords: Unexplained cash credit; Onus to prove
• Section: 133(6)

Judgement Text

, ,P ,P,P ,P INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH. , MK0 ,L VH ,E IKOYU MK0 ,L VH ,E IKOYU MK0 ,L VH ,E IKOYU MK0 ,L VH ,E IKOYU BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & DR. S.T.M . PAVALAN,JUDICIAL MEMBER /. ITA NO.971/MUM/2011, ! ! ! ! / ASSESSMENT YEAR-2007-08 ACIT, CIR-15(1), R.NO.104, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI-400007 VS HARESH D. MEHTA, PROPRIETOR DO IT ASSOCIATES, 206/208, SANT SANA BHAVAN, KHUMBHARVADA, MUMBAI-400004 PAN:AAEPM0759J ( '# / ASSESSEE) ( $%'# / RESPONDENT) ' ( / REVENUE BY : SHRI K.C.PATNAIK )* ' ( / ASSESSEE BY : SHRI HITESH M. SHAH ' '' ' *+ *+ *+ *+ / DATE OF HEARING : 23-04-2014 ,-! ' *+ / DATE OF PRONOUNCEMENT : 07-05-2014 , 1961 ' '' ' 254 )1( *.* *.* *.* *.* / / / / ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM : CHALLENGING THE ORDER DATED 19.11.2010 OF THE CIT(A )-26, MUMBAI ASSESSING OFFICER (AO) HAD RAISED FOLLOWING GROUNDS OF APPEAL: 01.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,31,39,030/-MADE BY A.O. TOWARDS TR ANSPORTATION CHARGES WITHOUT APPRECIATING THE FACT THAT NOTICES ISSUED U/S 133(6) WERE RETURNED B ACK UNSERVED AND ASSESSEE FAILED TO PRODUCE ANY OF THESE PERSONS BEFORE THE AO. THE CIT(A) HAS ALSO FAILED TO TOOK NOTE OF THE FACT THAT ASSESSEE COULD NOT PRODUCE EVEN THE BASIC INFORMATION SUCH A S VEHICLE NO, DRIVERS NAME AND ROUTE OVER WHICH THESE VEHICLES WERE UTILIZED. 02.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO TOWARDS BOGUS LIABILITIES O N ACCOUNT OF UNVERIFIED UNSECURED LOANS OF RS.54,00,000/- AS NO EVIDENCE WAS PRODUCED BY THE A SSESSEE TO PROVE THE GENUINENESS AND THE CREDITWORTHINESS OF THE PERSON, FROM WHOM LOANS WER E TAKEN. THE LEARNED CIT(A) ALSO FAILED TO APPRECIATE THE FACTS WHICH HAVE BEEN BROUGHT ON REC ORD BY THE AO BY TREATING THE UNSECURED LOAN AS UNEXPLAINED CASH CREDIT U/S 68. 03.THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND AND TO MODIFY ANY OF THE GROUND OF APPEAL. 2 .ASSESSEE,A CIVIL CONTRACTOR,IS ENGAGED IN THE BUSI NESS OF LIFTING AND TRANSPORTING MUNICIPAL WASTE / REFUSE BY HIRING OUT ITS COMPACTOR TRUCKS TO THE MU NICIPAL CORPORATION OF GREATER MUMBAI (MCGM).HE FILED HIS RETURN OF INCOME ON 29.10.2007 DECLARING INCOME AT RS. 16,61,590/-.AO FINALISED THE ASSESSMENT ON 21.12.2009 U/S.143(3)OF THE ACT,DETERMINING THE INCOME OF THE ASSESSEE AT RS. 3,12,24,330/-. 2.1. FIRST GROUND OF APPEAL IS ABOUT DELETING THE ADDITI ON OF RS.2,31,39,030/-MADE BY A.O. TOWARDS TRANSPORTATION CHARGES.DURING THE ASSESSMENT PROCEE DINGS AO FOUND THAT THE ASSESSEE PAID RS.2.82 CRORES TOWARDS TRANSPORT CHARGES.HE ISSUED NOTICES U/S.133(6)OF THE ACT TO 12 PARTIES FOR MAKING FURTHER VERIFICATION ABOUT THE GENUINENESS O F THE PAYMENT.AS PER THE AO NOTICES ISSUED BY 2 ITA NOS. 971/MUM/2011 HARESH D. MEHTA HIM WERE RECEIVED BACK UNSERVED,THAT THE PARTIES WE RE NOT AVAILABLE ON THE ADDRESSES GIVEN BY THE ASSESSEE,THAT HE DID NOT PRODUCE THE PARTIES FOR EX AMINATION,THAT HE DID NOT PROVIDE BASIC DETAILS ABOUT THE VEHICLES ETC. 2.2.IN APPEAL, IT WAS SUBMITTED THAT THE AO HAD WRO NGLY DISALLOWED THE GENUINE EXPENDITURE MERELY ON THE BASIS OF UNSERVED NOTICES IGNORING THE DECIS IVE FACTORS LIKE ACTUAL PERFORMANCE OF TRANSPORTA - TION WORK,LIFTING OF WASTE, PROPER TDS PAYMENT THRO UGH ACCOUNT PAYEE CHEQUE, PROPER ADDRESSES AND CONFIRMATION OF ACCOUNT WITH PAN.THAT THE GROSS RECEIPTS FROM MCGM ON ACCOUNT OF SUPPLY OF VEHICLES FOR REFUSE FOR THE FINANCIAL YEAR WAS R S.4,67,62,320/-,THAT AS AGAINST THIS THE ASSESSEE HAD SPENT ON ACCOUNT OF TRANSPORT CHARGES (REFUSE V EHICLE PAYMENTS) TO THE TUNE OF RS.2,82, 82, 030/-,THAT PAYMENT WAS MADE TO TWELVE PARTIES AS UN DER :. AKBARALI RS. 3 5,88,420/- DOULAT Y WADANGLE RS. 29,30,920/- JANATH D MULLEN RS. 11,08,600/- PREMCHAND Y WADANGLE RS. 33,60,290/- VIREN APAI KALAM RS. 30,89,600/- ZAMIRUNISHA RS. 29,66,700/- RAJGURU TRANSPORT RS. 10,16,500/- RONAK TRANSPORT RS. 10,35,000/- JYOTSNA TRANSPORT RS. 10,12,000/- ARIHANT TRANSPORT RS. 10,07,000!- BALAJI TRANSPORT RS. 10,00,500!- DARSHAN TRANSPORT . RS. 10,23,500/- IT WAS FURTHER ARGUED THAT COMPLETE CONFIRMATION OF ACCOUNTS WERE FURNISHED DURING THE ASSESSMENT PROCEEDINGS AND RESPECTIVE TDS WAS DEDUCTED AND PAI D TO THE GOVERNMENT TREASURY AS PER THE PROVISIONS OF THE ACT,THAT THE PAYMENTS WERE MADE T HROUGH ACCOUNT PAYEE CHEQUES,THAT PRIMARY ONUS WAS DISCHARGED BY THE ASSESSEE,THAT THE AO HAD NOT DISPUTED ANY OF THE FACTS AND HAD NOT POINTED OUT ANY MATERIAL DEFECTS, DEFICIENCY OF SUC H EVIDENCES PRODUCED AND HAD NOT BROUGHT ANY COGENT MATERIAL ON RECORDS TO DISPROVE THE SAME. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE ASSESSMENT ORDER,FIRST APPELLATE AUTHORITY (FAA) HELD THAT THE ASSESSEE HAD FURNISHE D THE EVIDENCE OF DEDUCTION OF TDS TO THE EXTENT OF RS.2,95, 827/- IN RESPECT OF TOTAL PAYMEN T OF RS.2,31,39,030/- MADE TO 12 PARTIES,THAT HE HAD ALSO SUBMITTED FULL ADDRESS GIVEN BY THOSE PART IES,THAT HE HAD ISSUED A/C PAYEE CHEQUES TO SUB CONTRATORS AFTER PROPER TDS,THAT THERE WAS NO PROPR IETY TO DISALLOW ALL SUCH EXPENDITURE MERELY ON THE BASIS OF NON-SERVICE OR NON-RECEIPT OF NOTICE B Y THE PARTIES OR MERELY ON THE REASON THAT THESE PARTIES WERE NOT PHYSICALLY PRESENTED BY THE ASSESS EE,THAT ASSESSEE FURNISHED THE BASIC EVIDENCES AND HAD DISCHARGED HIS PRIMARY ONUS ABOUT THE GENUI NENESS OF PAYMENT TO THE VARIOUS PARTIES/TRANSPORTERS, IT WAS THE RESPONSIBILITY OF THE AO TO INVESTIGATE FROM THE BANK ACCOUNTS AND SEE WHETHER CHEQUE SO ISSUED WERE ACTUALLY RECEIVED BY THEM OR NOT,THTA IT WAS THE RESPONSIBILITY OF THE AO TO MAKE INQUIRIES FROM MCGM ABOUT THE GENUIN ENESS OF LIFTING OF WASTE BY THE ASSESSEE THROUGH SUCH OTHER TRANSPORTERS,THAT ON TOTAL RECEI PTS OF RS.4,67,62,320/- THE ASSESSEE HAD SHOWN NET PROFIT @ 28.59%.,THAT THERE WAS NO EVIDENCE OF INFL ATION OF EXPENDITURE,THAT IF ALL THE TRANSPORT EXPENDITURE WERE TO BE DISALLOWED THEN IT WOULD LEA D TO ABSURDITY OF THE CONCLUSION THAT SUCH WORK HAD BEEN DONE WITHOUT VEHICLE OR TRANSPORTER. 2.3. BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR) SUBMITTED THAT NONE OF THE TWELVE CONTRACTORS HAS APPEARED BEFORE THE AO, THAT LETTERS ISSUED TO THEM CAME BACK,THAT GENUINENESS OF PAYMENT COULD NOT BE VERIFIED IN ABSENCE OF THE CONTRACTORS.AUTHO RISED REPRESENTATIVE(AR) SUBMITTED THAT ASSESSEE HAD FILED CONFIRMATION LETTERS FROM ALL THE TWELVE CONTRACTORS, THAT TDS WAS DEDUCTED AND DEPOSITED IN THE GOVERNMENT ACCOUNT, THAT PROOF OF TDS WAS PR ODUCED BEFORE THE AO, THAT ALL THE VEHICLES WERE REGISTERED WITH THE RTO, THAT AS PER THE CONTR ACT GIVEN BY THE MUNICIPAL CORPORATION VEHICLES WERE TO BE REGISTERED WITH STATE TRANSPORT AUTHORIT IES, THAT NO DISALLOWANCE WAS MADE IN THE YEAR 2005-06 AND 2006-07 FOR THE PAYMENTS MADE TO THE CO NTRACTORS, THAT THE PAYMENTS WERE MADE BY CHEQUES,THAT AO HAD DISALLOWED THE ENTIRE EXPENDITU RE CLAIMED BY THE ASSESSEE, THAT GP SHOWN BY 3 ITA NOS. 971/MUM/2011 HARESH D. MEHTA THE ASSESSEE IN EARLIER YEARS WAS ACCEPTED BY THE D EPARTMENT, THAT GP, AS A RESULT OF ADDITION, WOULD BE AT 53%.HE REFERRED TO PAGE 37 AND 49 OF THE PAPE R BOOK. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.IT IS NOT DISPUTED THAT THE ASSESSEE HAD FURNISHED PROOF OF ACTUAL PERFORMA NCE OF TRANSPORTATION WORK,LIFTING OF WASTE, PAYMENTS OF TDS,FULL ADDRESSES OF THE PARTIES,CONFI RMATION OF ACCOUNT WITH PAN AND MODE OF PAYMENT. BY GIVING SUCH DETAILS, IN OUR OPINION, AS SESSEE HAD DISCHARGED ITS INITIAL BURDEN OF PROOF. IF AO HAD DOUBT ABOUT THE GENUINENESS OF TRANSACTIO N OR PAYMENT,HE SHOULD HAVE MADE FURTHER INQUIRIES AND SHOULD HAVE CONFRONTED THE ASSESSEE W ITH THE RESULT OF SUCH INQUIRIES.ASSESSEE WAS AWARDED CONTRACT BY MCGM FOR LIFTING SOLID WASTE AN D WAS PAID FOR IT BY THE CORPORATION.IT HAD HIRED SUB-CONTRACTORS TO CARRY OUT JOB ASSIGNED BY THE MUNICIPAL CORPORATION.AS PER THE TERMS OF CONTRACT ASSESSEE HAD TO GET THE VEHICLES USED FOR LIFTING WASTAGE WITH RTO. INQUIRY WITH RTO/ MCGM WOULD HAVE BROUGHT TRUTH IN LIGHT. IT IS TRUE THAT LETTER ISSUED BY THE AO REMAINED UNSERVED, BUT THAT FACTOR ALONE SHOULD NOT RESULT IN ADDITION OF RUPEES MORE THAN TWO CRORES.NON SERVICE OF NOTICES ISSUED BY THE AO WAS THE STARTING POINT TO INVESTIGATE THE MATTER FURTHER.BUT,THE AO CHOSE TO STOP THERE AND IGNORED THE DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE. IN THESE CIRCUMSTAN -CES,WE ARE OF THE OPINION THAT THE ORDER OF THE FA A DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. THEREFORE,CONFIRMING HIS ORDER WE DECIDE GROUND NO. 1 AGAINST THE AO. 3. NEXT GROUND OF APPEAL IS ABOUT DELETION OF ADDITION ,MADE BY THE AO U/S.68 OF THE ACT,ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS SHOWN BY THE ASSESSE E IN THE BALANCE SHEET,AMOUNTING TO RS. 54 LAKHS. ACCORDING TO THE AO,THE ASSESSEE HAD SHOWN L OAN OF RS.68,62,626/-IN THE NAME OF 9 PARTIES.OUT OF ALL THESE EXCEPT ANKUR DOSHI, SANGIT A ANIL PAREKH, HANSUKHLAL MEHTA, ASSESSEE COULD NOT ESTABLISH THE CAPACITY, GENUINENESS AND P ROPER IDENTITY OF FOLLOWING SIX CREDITORS: SL..NO. NAME AMOUNT 1. M/S MUKTI EXPORTS RS. 18,00,000/- 2 . SAMIR JAYANTILAL SHAH RS. 6,00,000/- 3 JAYANTILAL P. SHAH R S. 16,25,000/- 4 VIJAY D. SHAH RS. 1,00,000/- 5 SHANTIHEN S. SHAH RS . 9,75,000/- 6 CHARMV A. MEHTA RS. 3.00,000/- 3.1. IN APPEAL IT WAS CONTENDED THAT ALL THE SIX PARTIES WERE GENUINE, CAPABLE OF GIVING LOANS AND THEY WERE REGULAR INCOME-TAX PAYEES,THAT THE ASSESS EE HAD PRODUCED SOME OF THE CREDITORS FOR PERSONAL VERIFICATION BEFORE THE AO,THAT ALL THE RE QUIRED DETAILS;LIKE COPY OF PAN CARD, COPY OF RETURN OF INCOME BALANCE SHEET WITH ALL THE ANNEXUR ES,COPY OF BANK A/C ;WERE FURNISHED FOR SCRUTINY OF THE AO,THAT HE HAD NOT ESTABLISHED AS TO HOW ALL THESE GENUINE PARTIES WERE BOGUS-ONE,THAT ASSESSEE HAD RECEIVED ALL THE LOANS THROUGH BANKING CHANNEL,THAT THERE WAS NO EVIDENCE THAT BEFORE ISSUE OF CHEQUE THERE WAS A CASH DEPOSIT IN THE BAN K ACCOUNTS OF THE CREDITORS,THAT THE XEROX COPY OF RETURN OF INCOME COPY OF BALANCE SHEET, COPY OF BANK STATEMENT OF ALL THE CREDITORS IN THE FORM OF PAPER BOOK WAS HANDED OVER. 3.2. FAA,AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE AND THE ASSESSMENT ORDER HELD THAT THE AO HAD MERELY DOUBTED THE VERACITY OF BANKING ACCOU NTS OF THE CREDITORS WITHOUT CORROBORATING HIS FINDINGS AND WITHOUT FURTHER SUBSTANTIATING HIS REA SONING,THAT HE SIMPLY PRESUMED SOMETHING WHICH WOULD HAVE BEEN RELEVANT FOR FURTHER INVESTIGATION OR INQUIRY BUT MERELY ON THE BASIS OF SUCH POINTS, GENUINENESS OF CLAIM OF ANY SUCH ASSESSEE COULD NOT HE REJECTED.IN RESPECT OF M/S MUKTI EXPORTS (ME),HE HELD THAT THE AO HAD MADE THE ADDITION ON T HE GROUND THAT PARTY WAS NOT PRODUCED AND SUMMONS ISSUED TO IT WERE RECEIVED UNSERVED,THAT ME HAD SUBMITTED THE COPY OF RETURN OF INCOME, PROFIT & LOSS A/C, BALANCE SHEET AND ITS BANK A/C., THAT THE AO AHD ACCEPTED THE VERACITY OF SUCH DOCUMENTS BUT HAD MERELY NOTED THAT NET PROFIT SHOW N BY THIS PARTY WAS ONLY OF RS.1,55,769/-. FAA FURTHER HELD THAT THE FINDING GIVEN BY THE AO WAS N OT CORRECT BECAUSE OF THE OBVIOUS REASON THAT TAXABLE INCOME OF ANY PESON COULD BE LOWER BUT THAT ITSELF WAS NOT A GROUND TO MAKE SUCH ADDITION WHEN THE LOAN AMOUNT WAS GENERATED FROM BUSINESS AC TIVITIES AND DULY REFLECTED IN THE ACCOUNTS AND IN BANKING CHANNEL IN THE BACKGROUND OF BUSINESS AC TIVITIES,THAT ONUS WAS ON AO TO ESTABLISH 4 ITA NOS. 971/MUM/2011 HARESH D. MEHTA BEYOND DOUBT THAT ME WAS NOT A GENUINE PARTY AND EX PLANATION WAS NOT ACCEPTABLE,THAT AO HAD ACCEPTED THE FACT THAT ME HAD SOLD OUT DIAMONDS TO THE EXTENT OFRS.L,07,95,15,143/- AND THERE WAS A RECEIPT OF INTEREST OF RS.46,31,212/-,THAT THE GENU INENESS OF THE TRANSACTIONS OR CAPABILITY OF ME OR ITS IDENTIFICATION COULD NOT BE DOUBTED MERELY ON T HE BASIS OF NON SERVICE OF SUMMONS,THAT ADDITION MADE IN RESPECT OF ME EXPORTS WAS BASELESS. IN THE MATTER OF SAMIR JAYANTILAL SHAH,FAA HELD THA T HE HAD APPEARED BEFORE THE AO AND HAD ACCEPTED HIS LOAN IN A VERY SPEAKING MANNER AND THA T TOO BY GIVING ADDITIONAL DETAILS OF LOANS ON VARIOUS DATES,THAT THERE WAS NO PROPRIETY ON THE PA RT OF THE AO TO PRESUME THAT THERE WAS NO GENUINE LOAN TRANSACTIONS ON THE GROUND THAT ONLY F EW YEARS AGO SHRI JAYANTILAL SHAH HAD MET THE ASSESSEE,THAT THE BUSINESS RELATIONS AND BUSINESS N EED OR BUSINESS TRANSACTIONS AND PERSONAL RELATIONSHIP WAS NOT WITHIN THE DOMAIN OF AO TO PRE SUME OTHERWISE THAN ACCEPTING THE REALITY UNLESS SOME MORE EVIDENCE WAS THERE IN HIS POSSESSI ON PROVING OTHERWISE. SIMILARLY IN THE CASE OF VIJAY D.SHAH,FAA HELD THAT HE HAD EXPRESSLY EXPLAINED TO THE AO ABOUT HIS LOAN GIVEN TO THE ASSESSEE,THAT THERE WAS NO VA LID FOR THE AO TO DOUBT AND MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE,THAT THE CREDITOR HAD GIV EN DETAILS AND EVIDENCES,THAT MERELY ON THE BASIS OF STATEMENT THAT HIS HANK ACCOUNT WAS OPERATED BY HIS FATHER GENUINENESS OF LOAN COULD NOT HE DOUBTED. WITH REGARD TO LOAN APPEARING IN THE NAME OF SHANTI BEN S. SHAH,FAA HELD THAT THE FINDINGS OF THE AO WAS BASELESS BECAUSE THE RETURN OF INCOME AND OT HER DETAILS SUBMITTED BY HER HAD BEEN ACCEPTED BY THE AO,THERE WAS NO CORROBORATION OF FACT THAT S HANTIBEN SHAH WAS NOT GENUINE PERSON OR NOT CAPABLE OF GIVING SUCH LOAN,THAT SHE WAS REGULARLY FILING RETURN OF INCOME FROM TIME TO TIME AND SHE WAS HAVING GENUINE SOURCE OF INTEREST INCOME FROM T HE BANK AND OTHER PARTIES,THAT THERE WAS A OPENING CAPITAL OF RS.19,42,095/- OUT OF SUCH CORRO BORATED FUNDS SHE HAD GIVEN LOAN OF RS.9,75, 000/-AND SAME WAS DULY REFLECTED IN HER BALANCE SHE ET,THAT IT WAS BASELESS TO PRESUME OTHERWISE BY REFERRING THE DEPOSITS OF MONEY IN BANK ACCOUNT WIT HOUT ESTABLISHING FURTHERMORE ABOUT THE IN - GENUINENESS OF THE TRANSACTIONS OR INCAPABILITY OF GIVING SUCH LOAN.IN THE CASE OF CHARMI A. MEHTA, FAA HELD THAT HER LOAN COULD NOT BE DOUBTED BECAUSE IT WAS VERY VISIBLE FROM THE BANK ACCOUNT THAT ON 27.05.2006 THERE IS A DEPOSIT OF MONEY THROUGH A /C PAYEE CHEQUE NO. 243967 AND THEREAFTER ON 29.05.2006 CHEQUE HAD BEEN ISSUED TO THE ASSESSEE,T HAT THE GENUINENESS OF LOAN COULD NOT HE DOUBTED MERELY ON THE GROUND THAT ACCOUNT WAS IN JO INT NAME AND THERE WAS A CASH DEPOSIT OF RS. 18,000/- OR RS.50,000/- ON 06.04.2005 AND 09.08.200 8,THAT CHARMI A. MEHTA WAS FILING RETURNS OF INCOME REGULARLY WITH ITO WARD 15(1),THAT UNLESS SO ME CLINCHING EVIDENCE OR CONTRARY FACTS WERE IN POSSESSION OF THE AO,GENUINENESS OF CREDITORS IN QUESTION COULD NOT BE DISCARDED OR DISBELIEVED. 3.3. DEPARTMENTAL REPRESENTATIVE(DR) SUBMITTED THAT CRED ITWORTHINESS OF THE PARTIES ADVANCING LOAN TO THE ASSESSEE WAS NOT PROVED,THAT SUMMONS WERE NO T SERVED, THAT THE STATEMENTS OF THE CREDITORS WERE RECORDED, THAT THE CREDITORS WERE DEPOSITING C ASH IN THEIR ACCOUNTS AND WERE ADVANCING LOANS TO THE ASSESSEE BY CHEQUES, THAT FAA HAD DECIDED TH E ISSUE IN FAVOUR OF THE ASSESSEE ON THE BASIS OF THE TRANSACTIONS ROUTED THROUGH THE BANKS, THAT BAN K TRANSACTION AND FILING OF RETURN WERE NOT CONCLUSIVE PROOF OF CREDITWORTHINESS OF THE PARTIES .AR SUBMITTED THAT ASSESSEE HAD PROVED THE GENUINENESS OF THE LOANS BEYOND DOUBT. 3.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT AO HAD MADE ADDITION U/S.68 OF THE ACT WITHOUT ANY REASONA BLE BASIS.FAA HAS ANALYSED MATTER OF EACH AND EVERY CREDITOR AND HAS GIVEN REASONS AS TO WHY THE LOANS ADVANCES HAVE TO BE TREATED GENUINE.WE FIND THAT ASSESSEE HAD PRODUCED DETAILS LIKE COPY O F PAN CARD, COPY OF RETURN OF INCOME,BALANCE SHEET WITH ALL THE ANNEXURES AND COPY OF BANK A/CS. BEFORE THE AO.IF HE HAD DOUBT ABOUT THESE EVIDENCES HE SHOULD HAVE MADE FURTHER INVESTIGATION .IT IS TRUE THAT ONLY A COPY OF RETURN CANNOT PROVE GENUINENESS OF LOAN ADVANCED.BUT,BY PRODUCING AN EVIDENCE IN HIS FAVOUR,ASSESSEE HAD DISCHARGED HIS INITIAL ONUS.IF AO HAD DOUBT ABOUT T HE LOANS HE SHOULD HAVE MADE FURTHER INQUIRES.IN THE CASE OF ME THERE WAS NO DOUBT ABOUT THE CAPACIT Y OF ADVANCING LOAN.TWO OF THE CREDITORS NOT ONLY HAD APPEARED BEFORE THE AO,BUT HAD ALSO ADMITT ED OF GIVING LOAN TO THE ASSESSEE.AO HAS NOT POINTED OUT ANY ABNORMALITY IN THEIR STATEMENTS.IN THESE CIRCUMSTANCES,THERE WAS NO REASON TO MAKE ADDITION FOR THE SUMS APPEARING IN THEIR NAMES.FROM THE ORDER OF THE FAA IT IS CLEAR THAT SHANTIBEN 5 ITA NOS. 971/MUM/2011 HARESH D. MEHTA SHAH AND CHARMI A MEHTA HAD CAPACITY OF ADVANCING L OANS TO THE ASSESSEE AND THEY WERE REGULAR TAX PAYEES.THUS, FAA HAS CONCLUSIVELY PROVED THAT I DENTITY OF THE CREDITORS,GENUINENESS OF THE TRANSACTION AND CAPACITY TO ADVANCING LOAN CANNOT B E DOUBTED.CONSIDERING THE REASONED ORDER PASSED BY THE AO,WE ARE OF THE OPINION THAT IT IS N OT SUFFERING FROM ANY LEGAL OR FACTUAL INFIRMITY. THEREFORE,CONFIRMING HIS ORDER WE DISMISS GROUND NO .2 FILED BY THE AO. AS A RESULT APPEAL FILED BY THE AO STANDS DISMISSED. 0*1 )* VF/KDKJH VF/KDKJH VF/KDKJH VF/KDKJH 2 3 UK UKUK UK 4 4 4 4 ' * 56. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH MAY,2014 . / ' ,-! 8 9 7 EBZ EBZEBZ EBZ ] ] ] ] 201 4 - ' . : SD/- SD/- ( MK MKMK MK0 00 0 ,L VH ,E IKOYU ,L VH ,E IKOYU ,L VH ,E IKOYU ,L VH ,E IKOYU / DR. S.T.M.PAVALAN) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 9 /DATE: 07.05.2014. SK / / / / ' '' ' $*; $*; $*; $*; < < < <;!* ;!*;!* ;!* / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / '# 2. RESPONDENT / $%'# 3. THE CONCERNED CIT(A)/ = > , 4. THE CONCERNED CIT / = > 5. DR H BENCH, ITAT, MUMBAI / ;?. $* ,P ,P,P ,P , . . . 6. GUARD FILE/ . 0 %;* %;* %;* %;* $* $*$* $* //TRUE COPY// / / BY ORDER, @ / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI