SATWANT KAUR SALUJA,BILASPUR V. ITO-2(1), BILASPUR, BILASPUR

CO 11/RPR/2024

AI Insights

The case involves an appeal by the Income Tax Officer against the order of the Commissioner of Income-Tax (Appeals), which had favored the assessee, Satwant Kaur Saluja. The primary issues revolved around the treatment of certain financial transactions as unexplained cash credits and expenditures under various sections of the Income Tax Act, 1961. The Tribunal examined the validity of the reassessment proceedings initiated against the assessee and the subsequent additions made to her income. The Tribunal found that the reassessment was valid but required further examination of the loan transaction's genuineness through cross-examination of the involved parties.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469767 (ITAT-RAIPUR)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-10-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 22-10-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 04-06-2024
• Other Referred Cases: M/s. Global Realcon Pvt. Ltd. Mumbai Vs. ACIT(Central)-1 Indore, JCIT vs. M/s. Shalimar Housing and Finance Limited, M/s. Tirupati Construction, Ujjain vs. DCIT, Ujjain, ACIT vs. Pramod Kumar Sethi, Shri Sanjay Shukla, Indore vs. ACIT, Central Circle-2, Indore, Raymond Woollen Mills Ltd. Vs. ITO & Ors., M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: R.B DOSHI; CARRYING OUT CROSS; CARRYING OUT CROSSEXAMINATION
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Reassessment proceedings; Unexplained cash credit; Unexplained expenditure; Bonafide belief; Principle of natural justice; Search and seizure; Accommodation entries; Assessment record; Revision of order; Bogus
• Section: 147; 143(3); 68; 133(6); 69C; 69A; 2(A); 20

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश सूद, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 187/RPR/2024 CO No.11/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2013-14 The Income Tax Officer-2(1), Bilaspur (C.G.) .......अपीलाथȸ / Appellant बनाम / V/s. Satwant Kaur Saluja Riya Apartment, Tikrapara, Bilaspur (C.G.)-495 001 PAN : AEYPS1338D ……Ĥ×यथȸ / Respondent Assessee by : Shri R.B Doshi, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 22.10.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 28.10.2024 2 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the revenue is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 30.01.2024, which in turn arises from the order passed by the A.O under Sec. 147 r.w.s.144B of the Income-tax Act, 1961 (in short ‘the Act’) dated 29.09.2021 for the assessment year 2013-14. The revenue has assailed the impugned order on the following grounds of appeal: “1. \"Whether on the facts and in the circumstance of the case, and in law, the Id. CIT(A) was justified in deleting the additions of Rs.20,00,000/- treating the unsecured loan as unexplained credits u/s 68 of the Income Tax Act, 1961?\" 2. \"Whether on the facts and in the circumstance of the case, and in law, the Id. CIT(A) was justified in deleting the additions of Rs.4,82,318/- treating the cash repayment of loan as unexplained expenditure u/s 69C of the Income Tax Act, 1961?\" 3. \"Whether on the facts and in the circumstance of the case, and in law, the Id. CIT(A) was justified in allowing the appeal of the assessee on the issue of cash deposits in bank account treated as unexplained money u/s 69A of the Income Tax Act for Rs.22,96,000/-?\" 4. \"Whether on the facts and in the circumstance of the case, and in law, the Id. CIT(A) was justified without any discussion in the body of the appellate order in allowing the appeal of the assessee for Rs.22,96,000/- u/s 69C of the Act?\" 5. Any other ground which may be adduced at the time of hearing.” 3 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 2. Also, the assessee is before me as a cross-objector for the aforementioned year by raising the following grounds: “1. The reassessment order is illegal inasmuch as notice issued by AO u/s.148 is illegal, ab initio void. The AO reopened the assessment without application of mind. The reassessment proceeding and/consequent reassessment order illegal and not sustainable. 2. The initiation of reassessment is illegal and invalid inasmuch as approval granted u/s 151 is not in accordance with provisions of law. Consequently, reassessment proceedings and the reassessment order are illegal and liable to be quashed. 3. The cross objector reserves the right to add, amend or alter any of the ground/s of cross objection.” 3. Dr. Priyanka Patel, Ld. Departmental Representative (for short ‘DR’), at the threshold submitted that the present appeal involves a delay of 31 days. Elaborating on the reasons leading to the delay, the Ld. DR has filed before me an application dated 30.04.2024 of the ITO-2(1), Bilaspur, wherein it is stated that the delay in filing of the appeal had occasioned for the reason that the office of the Pr. Commissioner of Income Tax-1, Raipur was overloaded with other limitation matters during the month of March, 2024 i.e., filing and processing of 125 orders of the Tribunal with limitation of filing/non-filing of appeal before the Hon'ble High Court of Chhattisgarh on 22.03.2024; processing of 47 nos. of cases in filing/non-filing of appeal before the Id. ITAT with limitation of filing appeals on different dates of March, 2024; and preparation of 52 in revisionary proceedings u/ss. 263/264 of the Income Tax Act, 1961 with limitation lapsing on 31.03.2024. 4 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 For the sake of clarity, the reasons stated by the A.O in his letter dated 30.04.2024 are culled out as under (relevant extract): “2. In this connection, kindly find herewith the authorization u/s 253(2) of I.T. Act, 1961 in two copies along with statement of facts and grounds of appeal in original with a request that an appeal may be accepted in the case Ms. Satwant Kaur Saluja, Bilaspur in e-filing mode as per the direction of the letter of the Pr. CCIT, Bhopal (MP & CG) vide his letter F.No. Pr. CCIT/MP&CG/ Tech/2022-23 dated 31.03.2023 and letter F.No. Pr.CCIT/ MP&CG/Misc/Tech/2022-23 dtd. 03.02.2023 in Id.CIT(A),NFAC order in DIN No. ITBA/NFAC/S/ 250/2023-24/1060256524(1) dated 30.01.2024 for A.Y. 2013-14. It is further to submit to allow filing of the appeal with condonation of delay, as the limitation of filing of appeal in this case was 29.03.2024. In this regard, I have been apprised that due to the fact that the office of the Pr. Commissioner of Income Tax-1, Raipur was overloaded with the other limitation matter during the month of March, 2024 like filing and processing of 125 nos. of orders of the Id. ITAT, with limitation of filing/non-filing of peal before the Hon'ble High Court of Chhattisgarh on 22.03.2024, processing of 47 nos. of cases in filing/non-filing of appeal before the Id. ITAT with limitation of filing appeals on different dates of March, 2024, preparation of orders in 52 nos. of revisionary proceedings u/s 263/264 of the Income Tax Act, 1961 with limitation on 31.03.2024.” 4. Shri R.B Doshi, Ld. Authorized Representative (for short ‘AR’) for the assessee did not raise any objection to the seeking of condonation of delay by the revenue. 5. Considering the fact that the delay involved in filing of the appeal had occasioned due to justifiable reasons and the same is not inordinate, I condone the same. 5 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 6. Succinctly stated, the assessee had e-filed her return of income for A.Y.2013-14 on 24.03.2014, declaring an income of Rs.1,43,220/-. The A.O, based on the information that had surfaced in the course of search & seizure and survey proceedings carried on several entities controlled by Shri Sharad Kumar Darak, an infamous entry operator, which revealed that the assessee was one of the beneficiary who had received accommodation entry of Rs.20 lacs from M/s. Jayant Security and Finance Ltd., i.e. a paper/shell company controlled by Shri Sharad Kumar Darak (supra), issued notice u/s. 133(6) of the Act to the assessee and called upon her to explain the nature of the aforesaid transaction. As the assessee despite sufficient opportunity had failed to furnish the requisite details as were called for by the A.O u/s. 133(6) of the Act, therefore, he initiated proceedings u/s. 147 of the Act. Notice u/s. 148 of the Act, dated 31.03.2021 was issued to the assessee. 7. The assessee during the assessment proceedings on being queried about the nature of transaction of receipt of Rs.20 lacs from M/s. Jayant Security and Finance Ltd., a paper/shell company that was controlled and managed by Shri Sharad Kumar Darak (supra), vide her reply dated 12.10.2020, inter alia, filed a confirmation of M/s. Jayant Security and Finance Ltd. loan of having advanced a loan Rs.20 lacs during the subject year to the assessee. As the assessee had despite persistent reminders not filed her return of income in compliance to notice u/s.148 of the Act, therefore, the A.O vide his notice/questionnaire issued u/s.142(1) of the Act, 6 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 dated 09.02.2021 called upon her to furnish the return of income in compliance to the aforesaid notice. Also, the assessee was called upon to place on record supporting documentary evidence to substantiate the identity and creditworthiness of the lender company and genuineness of the transaction of receipt of loan of Rs.20 lacs from M/s. Jayant Security and Finance Ltd. Referring to the assessee’s claim of having paid interest of Rs.1,72,110/- on the subject loan to M/s. Jayant Security and Finance Ltd. (supra), the A.O directed her to place on record, viz. (i) evidence of actual payment of interest to the lender in the subsequent years; and (ii) evidence of deduction of tax at source on the interest paid to the lender, alongwith evidence of its deposit in the government treasury. Further, the A.O in order to verify the authenticity of the loan that the assessee had claimed to have received from M/s. Jayant Security and Finance Ltd., issued a notice u/s. 133(6) of the Act, dated 09.02.2021 to the said lender company which, however, remained uncompiled with. Also, another reminder notice issued u/s. 133(6) of the Act to the aforementioned concern was also not complied with and met the same fate. 8. The assessee finally filed her return of income in response to notice u/s. 148 of the Act on 08.03.2021, and requested for a copy of the “reasons to believe”, based on which, reassessment proceedings were initiated in her case, which were made available by the A.O vide his letter dated 04.08.2021. Susbequently, the assessee filed objections to the reopening of her case on 7 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 05.08.2021 which, thereafter, were disposed off by the A.O vide his order dated 01.09.2021. 9. The A.O, based on his exhaustive deliberations held the amount of Rs.20 lacs received by the assessee from M/s. Jayant Security and Finance Ltd. as an unexplained cash credit u/s. 68 of the Act. 10. The A.O, further observed that the assessee had during the year made cash deposits of Rs.36,96,000/- in her bank account No. 32284032327 with State Bank of India. On being queried, the assessee at the fag end of the assessment proceedings, in an attempt to explain the source of the cash deposits in question placed on record a cash flow statement. The A.O., on a perusal of the cash flow statement, observed that the assessee had claimed to have received cash amounting to Rs.14 lacs on sale of a property. The A.O, considering the fact that the assessee had substantiated her aforesaid claim by placing on record a copy of the purchase/sale deed, held the cash deposits of Rs.14 lacs (out of Rs.36.96 lacs) as having been sourced out of explained sources. However, the A.O did not find favor with the explanation of the assessee as regards the balance amount of cash deposits of Rs.22.96 lacs [Rs.36.96 lacs (-) Rs.14 lacs)], and held the same as having been sourced from the assessee’s unexplained money u/s. 69A of the Act. 11. The A.O, further observed, that the assessee had claimed to have made a cash repayment of Rs.4,82,318/- towards her home loan account 8 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 No.20049094187 with Allahabad Bank, Branch: Vyapar Vihar, Ring Road, Bilaspur. As the explanation of the assessee regarding the source of the aforesaid cash repayment of Rs.4,82,318/- (supra) did not find favor with the A.O, therefore, he held the same as an unexplained expenditure incurred by the assessee u/s. 69C of the Act. 12. Accordingly, the A.O vide his order passed u/s. 147 r.w.s. 144B of the Act, dated 29.09.2021 after, inter alia, making the aforesaid additions, determined the income of the assessee at Rs.49,21,538/-. 13. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) who found favor with the contentions advanced by the assessee and allowed the appeal. For the sake of clarity, the observation of the CIT(Appeals) are culled out as under: “4.2 I have gone through the assessment order and record available. The case revolves around the assessee receiving an unsecured loan of Rs. 20,00,000/- from M/s Jayant Security & Finance Ltd during the financial year 2012-13. The AO has raised concerns about the genuineness of this transaction, considering M/s Jayant Security & Finance Ltd as a shell company involved in providing accommodation entries. The assessee filed the income tax return for the assessment year 2013-14 on 24/03/2014 through the e-filing portal, Search and seizure proceedings were conducted concerning entities controlled by Shri Sharad Kumar Darak. It was revealed that the assessee received Rs. 20,00,000/- from M/s Jayant Security & Finance Ltd during A.Y. 2013-14 as an accommodation entry. Due to the failure of the assessee to provide a satisfactory response to the notice issued under section 133(6), the AO deemed that the assessee had not fully disclosed material facts. Consequently, the assessment was reopened under section 147. The case was transferred to NaFAC for assessment. The assessee responded to various notices and questionnaires, providing details and explanations related to the accommodation 9 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 entry and other issues. A Show Cause Notice (SCN) along with a proposed Draft Assessment Order (DAO) was issued to the assessee, requiring a response to proposed additions. The assessee furnished replies, providing documentation related to the purchase deed, agreement with the builder, and details of the accommodation entry, the unsecured loan of Rs. 20,00,000/- from M/s Jayant Security & Finance Ltd. The assessee was asked to provide evidence of the identity and creditworthiness of the lender and the genuineness of the transaction. The AO explained suggesting that M/s Jayant Security & Finance Ltd is a shell company controlled by Shri Sharad Kumar Darak, involved in providing accommodation entries. Statements from directors of M/s Jayant Security & Finance Ltd indicated their lack of knowledge about the company's activities. The financial characteristics of the company were consistent with typical shell companies. Email exchanges and statements of Shri Sharad Kumar Darak indicated his involvement in providing accommodation entries and charging a commission for such services. The assessee contested the reopening of the case, cross- examination requests, and defended M/s Jayant Security & Finance Ltd as a genuine company. The AO noticed cash repayments of Rs. 4,82,318 made during the financial year 2012-13. The assessee was asked to explain the source of these cash repayments and provide supporting documents. The assessee furnished an explanation at the end of the assessment proceedings, along with a cash flow statement. The AO expresses dissatisfaction with the explanation, citing concerns about the nature of transaction, particularly an unsecured loan and its subsequent withdrawal in cash. Due to the dubious nature of transactions, the pattern of deposits and withdrawals, and the overall effort by the assessee to correlate cash movements, the AO rejects the provided explanation. The AO concludes that since the assessee failed to explain the source of cash repayments, the amount of Rs. 4,82,318 was treated as unexplained expenditure under Section 69C of the Income Tax Act. An addition of Rs. 4,82,318 was made to thee assessee’ s income. 4.3 As regards, ‘the: Genuineness of Mis Jayant Security.» -& Finance Ltd is concerned, IN THE INCOME TAX APPELLATE. TRIBUNAL, INDORE BENCH, INDORE IT(SS)A'No.170:to” 174/Ind/2020 Assessment Years? 2012-13 & 2014-15 to 2017-18 M/s. Global Realcon Pvt. Ltd. ‘Mumbai Vs. ACIT(Central)- -1 Indore (Appellant) in its order dated\" 26.04.2022. The Hon'ble ITAT gave the following judgment: “4.14 We also find that in the similar circumstances, the additions made by some assessing officers in the case of the respective 10 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 assesses, in respect of the loans taken by such assesses from various companies of Shri Sharad Darak, u/s. 68 of the Act, have been deleted by this Coordinate Bench itself and as also, by the Coordinate ‘G’ Bench of Mumbai. We find that Coordinate ‘G’ Bench Mumbai, in its Order pronounced on 01/06/2021 in the case of JCIT vs. M/s. Shalimar Housing and Finance Limited in Appeal No. ITA 4079/Mum/2019, in which the similar issue of cash credits accepted by the assessee from various companies of Shri Sharad Darak such as East West Finvest India Limited, Jayant Security and Finance Ltd., Jay Jyoti India Pvt. Ltd., Octagon Media Matrix Pvt. Ltd. and Purvi Finvest Ltd. was before the Hon'ble Bench has held that all these lending companies were existing companies and were having capacity to grant the loan to the assessee. We also find that this Bench in the case of MAs. Tirupati Construction, Ujjain vs. DCIT, Ujjain in Appeal No. ITA/522/Ind/2014 vide is Order dated 14/07/2016 has held that the loan transactions carried out by the assessee with East West Finvest India Limited, Jayant Securities and Finance Ltd. and KK Patel Finance Limited, companies controlled by Shri Sharad Darak were genuine. Further, this Bench in the case of ACIT vs. Pramod Kumar Sethi as reported in (2019) 34 ITJ 39 (Trib.Indore) and again in the case of Shri Sanjay Shukla, Indore vs. ACIT, Central Circle-2, Indore as reported in 2022 (4) TMI 385-ITAT, Indore has also upheld the action of the CIT(A) in deleting the additions made by the AO in the assessee’s income on account of loans taken by the respective assessees from the various companies controlled by Shri Sharad Darak. In the case of Shri Pramod Kumar Sethi (supra) this Bench has held the loan transactions carried out by the assessee in that appeal with Trimurti Finvest Pvt. Lt Purvi Finvest Pvt. Ltd., KK Patel Finance Ltd. and East West Finvest India Ltd. as genuine loan transactions whereas, in the case of Shri Sanjay Shukla (supra), this Bench has held the loan, transactions carried out by that assessee with Mrs. Jayant Securities and Finance Limited and M/s. Jay Jyoti India Pvt.Ltd. as genuine. 11.4.15. Thus, in terms of the findings given above and as also, the legal authorities cited by us. at para (11.4:23) and (114.24) Supra, we are of the considered view. that in respect of all the above named eight loan creditors, by furnishing’ the documentary evidences as discussed hereinabove, the assessee could be able to fully discharge its onus of proving all the three ingredients as contemplated u/s. 68 of the Act viz.(i) identity of the creditor; (ii) genuineness of the loan transactions; and (iii) creditworthiness of the loan-creditor beyond all doubts. Accordingly, in our considered view, the entire additions u/s. 68 as well as u/s. 69C of the Act, made by the AO, vide para (8) of his Order, in respect of all the loan transactions carried out by the assessee company with (i) M/s. Jayant Security and Finance Ltd.; (ii) M/s. Jay Jyoti India Pvt. Ltd.; 11 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 (iii) M/s. Octagon Media Matrix Pvt. Ltd.; (iv) M/s. Rajwadi Retails Trade Systems Pvt. Ltd.; (v) M/s. Ranjit Securities Ltd.; (vi) M/s. Suzlon Securities Pvt. Ltd.; (vii) M/s. East West Finvest India Pvt. Ltd.; and (viii) M/s. Zyka Merchandise Pvt. Ltd. for A.Y. 2012-13, A.Y. 201415, AY. 2015-16, A.Y. 2016-17 and A.Y. 2017-18 are not justified and consequently, the AO is hereby directed to delete the same. 11.4.16 In the result, we find no substance in the action of the Id. CIT(A) in confirming the additions made by the AO vide para (8) of his Order and accordingly, to such extent, we hereby set-aside the findings given by the Id. CIT(A). In our considered view, none of the additions made by the AO vide para (8) of his assessment order are sustainable. Consequently, the Assessee’s Ground Nos. 3(a) to 3(f) for A.Y. 2012-13 & AY. 2014-15 and Ground Nos. 2(a) to 2(e) for A.Y. 2015-16, A.Y.2016-17and A.Y. 2017-18 are Allowed. 12. Ground No. 3 of the Assessee for A.Y. 2017-18. 12.1 Through the Ground No.3 taken for-A.Y. 2017-18, the assessee has challenged the action of the Id. CIT(A) in upholding the AO’s action for invoking the provisions of s.115BBE of the Act in respect of disallowance of interest on unsecured loans. 12.2 Before us, the counsel of the-assessee has not pressed this Ground and therefore, the same is hereby Dismissed. 13. In the result, the appeals of the assessee are partly allowed. 4.4 Since the jurisdictional ITAT has decided. this issue in favour of the appellant, by stating “in the case of Shri Sanjay Shukla (supra), this Bench has held the loan transactions carried. out’ by, that-assessee with: M/s.Jayant Securities and Finance Limited and M/s: Jay Jyoti India. Pvt. ‘Ltd. as genuine” respectfully following them it is held that unsecured loan of Rs. 20,00,000/- from ‘M/s Jayant-Security & Finance Ltd during the financial year 2012-13 is a genuine transaction and hence the addition made by AO is deleted. The ground of appeal is allowed. 5. As regards, the re-payment of Rs. 4,82,318 made during the financial year 2012-13 made by AO u/s 69C is concerned. In the cash flow statement for the FY 2012-13 submitted by assessee, the following has been explained:” 14. The revenue being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the Tribunal. 12 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 15. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 16. As Shri R.B Doshi, the Ld. AR has assailed the validity of the jurisdiction that was assumed by the A.O for initiating proceedings u/s. 147 of the Act, on the ground that the “reasons to believe” were recorded by the A.O based on misconceived facts and without any independent application of mind, therefore, I shall first deal with the same. 17. In the present case, the proceedings u/s. 147 of the Act were initiated by the ITO, Ward-2(2), Bilaspur based on the following “reasons to believe”: 13 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 14 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 15 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 The Ld. AR, at the threshold submitted that the initiation of proceedings u/s. 147 of the Act in itself was based on misconceived and incorrect facts. Elaborating on his contention, the Ld. AR submitted that the A.O while initiating proceedings u/s. 147 of the Act, had wrongly observed that the assessee during the year under consideration i.e. A.Y.2013-14 had taken accommodation entry of Rs. 20 lac in the form of LTCG of scrips of M/s. Jayant Security and Finance Ltd., a paper/shell company that was controlled and managed by Shri Sharad Kumar Darak, an infamous entry operator. The Ld. AR submitted that the amount of Rs.20 lac (supra) was received by the assessee from M/s. Jayant Security and Finance Ltd. (supra) as a loan and not as LTCG of the scrips of the aforesaid entity. The Ld. AR in order to fortify his aforesaid contention had drawn my attention to the confirmation of M/s. Jayant Security and Finance Ltd., Page 124 of APB, wherein the latter had certified of having advanced on 16.04.2012 a loan of Rs.20 lac to the assessee on which interest of Rs.1,72,110/- i.e. @ 9% per annum was paid/accrued during the subject year. Carrying his contention further, the Ld. AR submitted that there was no material before the A.O, based on which, he could have observed that the amount of Rs.20 lac was received by the assessee as LTCG of the scrips of M/s.Jayant Security and Finance Ltd. The Ld. AR based on his aforesaid contention, submitted that as the very basis for initiating proceedings u/s. 147 of the Act was found to be factually incorrect, therefore, the A.O had wrongly assumed jurisdiction 16 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 and framed the assessment in her case which, thus, was liable to be struck down. 18. Apropos the merits of the case, the Ld. AR relied on the order of the CIT(Appeals). Elaborating on his contention, the Ld. AR submitted that the CIT(Appeals), had observed that the lender company, viz. M/s. Jayant Security and Finance Ltd. had been held by the ITAT, Indore while disposing off the appeal in the case of M/s. Global Realcon Pvt. Ltd. Mumbai Vs. ACIT (Central)-1, Indore, IT(SS)A No.170 to 174/Ind/2020, dated 26.04.2022, as a genuine concern. The Ld. AR submitted that the Tribunal in its aforesaid order, had observed, that as the loan transaction that was, inter alia, carried out between the assessee company before them and M/s. Jayant Security and Finance Ltd. was a genuine transaction, therefore, there was no justification for the A.O to have held the same as an unexplained cash credit u/s. 68 of the Act. The Ld. AR had taken me through the observations of the Tribunal as had been culled out by the CIT(Appeals) in the body of his order. Also, a copy of the aforesaid order of the ITAT, Indore had been placed on my record at Page 140 to 213 of APB. Further, the Ld. AR in his attempt to substantiate the creditworthiness of the lender company had taken me through its financial statements a/w. bank statements, Page 126 to 128 of APB. The Ld. AR submitted that as the lender company had substantial revenue from operations of Rs.11.32 crore (approx.) during the year under consideration, and further had sufficient funds available with it to source 17 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 the loan transaction in question, therefore, there was no justification for the A.O to have summarily brushed aside the said documentary evidence that was placed on his record by the assessee while discharging the onus that was cast upon her as regards proving the authenticity of the subject loan transaction. 19. Dr. Priyanka Patel, the Ld. Departmental Representative (for short ‘DR’) relied on the assessment order. Apropos the Ld. AR’s claim that the assessee had based on perverse observations initiated proceedings u/s. 147 of the Act, the Ld. DR rebutted the same. Elaborating on her contention, the Ld. DR submitted that as concrete information was shared by the DDIT (Inv), Unit-II, Kolkata with the A.O which, inter alia, revealed that the assessee as a beneficiary had received an accommodation entry of Rs.20 lac from M/s. Jayant Security and Finance Ltd. (PAN: AAACJ4848G), a paper/shell company that was controlled by Shri Sharad Kumar Darak, an infamous entry operator who was engaged in the business of providing accommodation entries, therefore, the A.O taking cognizance of the said substantial material before him had validly initiated proceedings u/s. 147 of the Act. 20. Rebutting the Ld. AR’s contention that the A.O had wrongly observed in the “reasons to believe” that the amount of Rs.20 lac was received by the assessee as an accommodation entry towards LTCG of scrips of M/s. Jayant 18 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 Security and Finance Ltd., the Ld. DR submitted that the same was based on the information that was received by the A.O from DDIT (Inv.), Unit-II, Kolkata. Elaborating on her contention, the Ld. DR submitted that the fact which is borne out from the record is that the assessee had received an amount of Rs. 20 lac as accommodation entry from M/s. Jayant Security and Finance Ltd., a paper/shell company that was controlled by Shri Sharad Kumar Darak, an infamous entry operator. Carrying her contention further, the Ld. DR submitted that the A.O based on the aforesaid information received from the DDIT (Inv.), Unit-II, Kolkata, had prior to initiating reassessment proceedings u/s 147 of the Act issued a notice u/s. 133(6) of the Act to the assessee, wherein the assessee was called upon to explain the nature of the transaction of receipt of Rs. 20 lac from Jayant Security and Finance Ltd. but the assessee had failed to file any reply. The Ld. DR submitted that as held by the Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd. Vs. ITO & Ors. (1999) 236 ITR 34 (SC), what is required at the stage of initiation of reassessment proceedings is to only see whether there was any prima facie some material on the basis of which, the department could reopen the case. The Ld. DR relied on the Hon’ble Apex Court judgment, and submitted that the sufficiency or correctness of the material is not a thing to be considered at the stage of reopening. The Ld. DR took us through the aforesaid judicial pronouncement, and reiterated that the Hon’ble Apex Court in its order had emphasized that at the stage of 19 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 initiation of proceedings u/s. 147 of the Act, the final decision as to whether there is suppression of material facts by the assessee is not to be arrived at, but what is material is that there should be prima facie material based on which the department could reopen the case. The Ld. DR, submitted that as the A.O had received information from the Investigation Wing, as per which the name of the assessee (alongwith her PAN No.) had figured as a beneficiary of an accommodation entry of Rs.20 lac from M/s. Jayant Security and Finance Ltd., a paper/shell company, which was being run by Shri Sharad Kumar Darak, an infamous entry operator, therefore, the A.O had sufficient material available with him to arrive at a bonafide belief that the income of the assessee chargeable to tax had escaped assessment, and thus, validly initiated proceedings u/s. 147 of the Act.. 21. Apropos the merits of the case, the Ld. DR submitted that as the ITAT, Indore in the case of M/s. Global Realcon Pvt. Ltd. Mumbai Vs. ACIT (Central)-1, Indore, IT(SS)A No.170 to 174/Ind/2020 (supra), had only expressed its view as regards the genuineness of the loan transaction which the lender company, i.e. M/s. Jayant Security and Finance Ltd., had entered into with the assessee company before them, viz. M/s. Global Realcon Pvt. Ltd., thus, the same by no means would lead to discharge of the onus that was cast upon the present assessee to prove the authenticity of the loan transaction in question, specifically when concrete information about the 20 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 receipt of the said amount as an accommodation entry by the assessee was shared by the Investigation Wing, Kolkata with the A.O. 22. I have heard the Ld. Authorized Representatives of both the parties in the backdrop of the orders of the lower authorities. Apropos the Ld. AR’s claim, that the A.O had initiated proceedings u/s. 147 of the Act based on an incorrect and perverse observation that the amount of Rs.20 lac (supra) was received by the assessee from M/s. Jayant Security and Finance Ltd. (supra) towards LTCG on scrips of M/s. Jayant Security and Finance Ltd., while the fact was that the said amount was received as a loan from the said company; therefore, the proceedings initiated on the basis of said wrong factual observation cannot be sustained and is liable to be struck down, I am unable to concur with the same. As observed by me hereinabove, it is borne from the record that information was received by the A.O from DDIT(Inv)., Unit-II, Kolkata that the assessee had received an accommodation entry of Rs.20 lac from M/s. Jayant Security and Finance Ltd., i.e. a paper/shell company which was controlled by Shri Sharad Kumar Darak, an infamous entry provider. Ostensibly, the information shared by the DDIT (Inv.), Unit-II, Kolkata revealed that the companies controlled by Shri Sharad Kumar Darak (supra) were providing accommodation entries in multi-facet forms, viz. (i) LTCG on sale of shares; (ii) short term capital loss on sale of shares; (iii) share capital; and (iv) loans and advances. Although, there is no denying the fact that the A.O in the “reasons to believe”, had 21 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 observed, that the assessee had during the subject year taken accommodation entry in the form of LTCG of Rs.20 lac of scrips of M/s. Jayant Security and Finance Ltd., a paper/shell company that was managed and controlled by Shri Sharad Kumar Darak, had initiated proceedings u/s. 147 of the Act. I am of a firm conviction that as the A.O had received information from the DDIT (Inv.), Unit-II, Kolkata that the assessee as a beneficiary had obtained accommodation entry of Rs. 20 lac from M/s. Jayant Security and Finance Ltd., i.e. a paper/shell company which was controlled by Shri Sharad Kumar Darak, an infamous entry provider, therefore, there was sufficient material available with him to arrive at a bonafide belief that the assessee’s income of Rs.20 lac (supra) chargeable to tax had escaped assessment. As the formation of the bonafide belief about the escapement of income of the assessee by the A.O has a clear nexus with the material available on record, therefore, the proceedings u/s. 147 of the Act initiated by him cannot be held as invalid. I, say so, for the reason that it is not a case that the A.O merely on receipt of the aforesaid information from the DDIT (Inv.), Unit-II, Kolkata had initiated proceedings u/s. 147 of the Act. Rather, the A.O prior to initiating proceedings u/s 147 of the Act, had issued notice u/s. 133(6) of the Act to the assessee and called upon her to explain the nature of the transaction of receipt of Rs.20 lac (supra) from M/s. Jayant Security and Finance Ltd., but the assessee had remained non- co-operative and had failed to provide the requisite details. I am of the view 22 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 that as the A.O had sufficient material before him, which revealed that the name of the assessee (alongwith her PAN No.) had figured as a beneficiary of an accommodation entry of Rs.20 lacs received from M/s. Jayant Security and Finance Ltd., i.e. a paper/shell company which was being controlled and managed by Shri Sharad Kumar Darak, an infamous entry provider, therefore, no infirmity can be attributed to the initiation of the proceedings u/s. 147 of the Act by the A.O. My aforesaid view is fortified by the judgment of the Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd. Vs. ITO & Ors, (supra). The Hon’ble Apex Court, had in its aforesaid order, emphasized that what is required at the stage of initiation of reassessment proceedings is to only see whether there was prima facie some material on the basis of which, the department could reopen the case. As the A.O in the present case had sufficient information available with him, i.e. information shared by DDIT (Inv.), Unit-II, Kolkata that the name of the assessee (alongwith PAN No.) had figured in the list of the benefiaries who had received accommodation entries from M/s. Jayant Security and Finance Ltd., a paper/shell company which was being run by Shri Sharad Kumar Darak, an infamous entry operator, therefore, in my view, the initiation of proceedings u/s. 147 of the Act based on the said material available with him had validly been carried out. Accordingly, I uphold the validity of the proceedings initiated by the A.O u/s 147 of the Act. The Grounds of cross 23 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 objection No.1 & 2 raised by the assessee being devoid and bereft of any merit are dismissed. 23. In the result, the cross-objection filed by the assessee in CO No.11/RPR/2024 is dismissed in terms of the aforesaid observations. 24. Apropos the merits of the addition of Rs.20 lac made u/s. 68 of the Act, I have given thoughtful consideration to the contentions advanced by the Ld. Authorized Representatives of both the parties in the backdrop of the observations of the lower authorities. Ostensibly, the assessee in the course of the assessment proceedings, while discharging the primary onus that was cast upon her to establish the authenticity of the t loan transaction, had filed before the A.O the confirmation of the lender company, Page 124 of APB; copy of return of income, audited financial statements of the lender company, Page 125 to 127 of APB; copy of the bank statement of the lender company, Page 128 of APB; copy of company’s master data from MCA portal (showing active status of the lender company), Page 129 of APB; and copy of the certificate of incorporation of the lender company, i.e. incorporated on 22.06.1994, Page 130 of APB. As the aforesaid documentary evidence was filed by the assessee in discharge of the primary onus that was cast upon her to prove the genuineness of the loan transaction, therefore, the onus was thereafter shifted upon the A.O to dislodge the same based on documentary evidence proving to the contrary, which I find had not been 24 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 done by him. On a careful perusal of the assessment order, I find that the A.O had summarily supported the adverse inferences drawn by him by referring to the information that was shared with him by the ADIT (Inv.), Bhopal that M/s. Jayant Security and Finance Ltd., i.e. the lender company, was one of the paper/shell companies that were controlled and managed by Shri Sharad Kumar Darak who was engaged in the nefarious activity of providing accommodation entries to various beneficiaries. Also, he had drawn support from the statement of Shri Sharad Kumar Darak (supra) recorded u/s. 132(4) of the Act, wherein he had admitted that he was engaged in the business of providing accommodation entries to various persons in lieu of cash. 25. Although, the A.O in the assessment order had observed that the name of the assessee (along with PAN) as a beneficiary of accommodation entry of Rs.20 lac, had figured in the list of beneficiaries that was received by his office vide email dated 19th March alongwith a list of paper/shell companies that were controlled by Shri Sharad Kumar Darak (supra), but it is the Ld. AR’s claim that the said details were not confronted to the assessee. Rather, the Ld. AR had submitted that the assessee in the course of the assessment proceedings had admitted of having received unsecured loan of Rs.20 lacs from the lender company, viz. M/s. Jayant Security and Finance Ltd. On a perusal of the assessment order, I find that the A.O had further observed that S/shri Rupesh Garg and Vineet Puranik, directors of 25 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 M/s. Jayant Security and Finance Ltd., had in their respective statements expressed their unawareness of the address and financial activities of the aforesaid lender company. The A.O based on the facts collated by him during the assessment proceedings, had observed as under: “1. They were not holding any responsibility in this company. 2. They only used to sign the documents related to the company without having any information or knowledge about it. 3. They became Director only for the sake of money and were practically not holding any responsibility in the company. 4. They were signing the financial documents of the company without having any sound knowledge of the affairs and financial activities of the company. 5. From their answers, it is clear that they were not even aware of the contents of the documents signed by him. 6. They signed these documents without having any knowledge of the activities or decisions of the company. 7. They used to sign blank cheques and documents without having any knowledge of the financial transactions. 8. Even after being a director, they failed to spell the name of a single employee of the company. In fact Directors were not aware of any staff of the company and had not even met the person for whom they had signed the cheques.” Apart from that, the A.O had observed that as in the course of search and survey proceedings/post search enquiries carried out in the case of certain other beneficiaries, viz M/s Krishna Devcon Ltd., M/s Navkar Finvest Ltd., and M/s MP Agro Nutri Foods Ltd, the directors of the said entities had admitted that the amounts that were received from the aforesaid company, viz. M/s. Jayant Security and Finance Ltd. that was projected by them as 26 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 unsecured loans was in fact accommodation entries and, thus, the said fact further fortified his view as regards the ingenuineness of the loan claimed by the assessee company to have been received from the aforementioned lender company, viz. M/s. Jayant Security and Finance Ltd. It was observed by the A.O, as under: “(e) Further, during the course of search and survey proceedings/post search enquiries pertaining to Krishna Devcon Ltd., Navkar Finvest Ltd. and MP Agro Nutri Foods Ltd., the Directors of these entities admitted that the amounts taken by these companies from M/s Jayant Security and Finance Ltd as unsecured loans were accommodation entries. (f) Further, the registered office of M/s Jayant Security and Finance Ltd at D/107, Rise Tower I, Bhayali Canal Road, Vadodara was also covered under survey proceedings u/s. 133A of the Income Tax Act, 1961. In his statement u/s. 131, Shri Vijay bhai Thakkar (who looks after the said premise) showed complete ignorance about the directors of the company and the business activities carried out by the company. It is evident from the above-mentioned facts that M/s Jayant Security Private Limited is a shell company which exists only on paper and did not carry out any actual business activities (g) During the search/survey proceedings, an email account [e-mail] was found. Certain documents were extracted from the email account. These emails were correspondence made by Sh. Sharad Darak with some middlemen / brokers who were involved with Shri Sharad Darak in the practice of converting unaccounted money into share capital and unsecured loans through accommodation entries. The emails contain details of transactions arranged by the brokers through companies of Shri Sharad Darak to various beneficiaries. When confronted with these emails, Shri Sharad Darak admitted in his statement dated 16/05/2018 u/s 132(4) of the Act that he is a broker and gives entries from his companies by cheques/ RTGS to various beneficiaries against the cash received by him through various persons. He also admitted that he charges commission for providing such entries. He has made a categorical admission of this practice in replies to the questions asked to him during his statement 27 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 recorded on 16/05/2018 u/s 132(4) of the Income Tax Act, 1961. Seizure of various evidences from the residence of Shri Sharad Darak during search and seizure proceedings and his categorical admission have proved that companies of Shri Sharad Darak including Jayant Security and Finance Ltd., are involved in providing accommodation entries of unsecured loans/advances and share capital. By such practices, Shri Sharad Darak and his companies have aided and abetted concealment of income and tax evasion by unscrupulous persons. (h) Sh. Sharad Darak explained that the brokers supply him with cash and this cash was returned to the beneficiaries in form of share capital and unsecured loans from his companies via banking modes (cheque/RTGS) and in turn he profits some percentage of the cash as commission for arranging such accommodation entries. He further stated that since these loan transactions were carried out through him he had received commission for the same. (i) Further, Extracts of an email and its attachment sent by one broker Shri Manoj Khandelwal from email accounts [e-mail] to the email account [e-mail] on 09.07.2016 were perused: This e- mail contained an attachment titled \"DARAK Jl.xlsx\". This attachment contains tabular information under various column headings such as \"COMPANY\", \"NAME OF PARTY\", \"INTT AMT\" AND \"SC 20%\". Names mentioned under the column heading \"COMPANY\" are companies run by Shri Sharad Kumar Darak and his family members. For example, \"JAYANT\" stands for \"Jayant Security and Finance Ltd\", names mentioned under the column heading \"NAME OF PARTY\" are the persons related to Shri Manoj Khandelwal. Amounts mentioned under column heading \"INTT AMT\" are interest amount on unsecured loan. Amounts mentioned under column heading \"SC 20%\" is the service charge taken by Shri Sharad Kumar Darak for offering services to Shri Manoj Khandelwal. (j) From perusal of above-mentioned email attachments, it became evident that various companies run by Shri Sharad Kumar Darak had given unsecured loans to the persons related with Shri Manoj Khandelwal in lieu of cash receipts of the same amount. Shri Sharad Darak and his family members had provided accommodation entries of unsecured loans to beneficiaries seeking accommodation entries, through companies controlled by them, in lieu of cash given by such beneficiaries. A cash commission was charged for facilitating such entries. 28 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 (k) During search and seizure operations, email exchanges between the email account of Shri Sharad Darak [e-mail] and other email account [e-mail] were found. Extracts of the email exchanges between the account of Shri Vijay Mishra and the account of Shri Sharad Darak were analysed and it was found that these email attachments contained information in a tabular form under the column headings \"Date\", \"Name\", \"Payment in\", \"Amount Paid\", \"Amount Receipt\" and he categorically admitted that these documents contained the details of the accommodation entries of loan given by his companies and the repayment of such loans by the borrowers. These details were maintained date-wise and meticulously in a table. He explained that the column header \"Name\" contained the names of borrowers to whom his companies had given loans. He clarified that the amounts mentioned under the column heading \"Amount Receipt\" were the amounts of cash received by him through Shri Vijay Mishra from the various beneficiaries of entries of loan and their names were mentioned against this column. It is clear that he/his company gave entry of loan by cheque against this cash. The column headed \"Payment in\" gave the names of companies in whose account the loan repayment from the borrowers/ beneficiaries of entries was received by cheque. The \"Amount Paid\" column gave the figures of the repaid loan amount received by his companies from such borrowers. The column titled \"Balance\" shows the amount that Shri Sharad Darak had to pay to Shri Vijay Mishra. Thus, it was clearly admitted by Shri Sharad Darak that the figures mentioned in the column \"Amount Receipt\" were the cash amounts received by his companies from the entities/ persons named in the table. Further, the financial statements of M/s Jayant Security Private Limited were examined and it was found that it has the characteristics of typical shell companies such as Nominal Equity of Promoters, Investment in unlisted equities and loans and advances, Minimal fixed assets, Nominal general and administrative expenses and Nominal or no operating income and profits etc.” Although, the assessee in the course of the assessment proceedings had tried to dislodge the aforesaid adverse inferences which the A.O had sought 29 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 to draw for treating the subject loan transaction as bogus, I find that the same did not find favor with him. 26. At this stage, it would be relevant to point out, that as observed by me hereinabove, the A.O vide an email dated 19th March, had received information regarding the beneficiaries of accommodation entries a/w. relevant enclosures and list of paper companies that were controlled by Shri Sharad Kumar Darak, as per which the assessee (along with PAN) was one of the beneficiary who had received an accommodation entry of Rs.20 lacs. For the sake of clarity, the observation of the A.O at Page 5 of his order is culled out as under: “…The name (along with PAN) of the assessee was also specifically mentioned in the information regarding beneficiaries of accommodation entries, as per which she had obtained an accommodation entry of Rs.20,00,000/- from M/s. Jayant Security & Finance Ltd. one of the shell companies controlled by Shri Sharad Kumar Darak. (b) Vide email dated 19 March and relevant enclosures, a list of paper companies controlled by Sharad Darak, along with the beneficiaries who made transactions with such paper companies had been provided. As per this list, the assessee was a beneficiary of an amount of Rs.20,00,000/- from M/s. Jayant Security & finance Ltd.” In my view, the aforesaid factual position jeopardizes the assessee’s claim of having raised a genuine loan from the aforementioned lender company, viz. M/s. Jayant Security and Finance Ltd. Apart from that, the non-compliance of the notices that were issued by the A.O to the lender company u/s. 133(6) of the Act, i.e on two occasions, further raises serious doubts as regards the 30 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 authenticity of the loan transaction under consideration. Accordingly, the aforementioned details/information that the A.O had pressed into service to dislodge the authenticity of the loan transaction in the course of the assessment proceedings, thus, shifted the onus back upon the assessee to prove to the contrary. As the assessee could have disproved the aforesaid adverse inferences arrived at by the A.O by seeking cross-examination of the lender company, viz. M/s. Jayant Security and Finance Ltd., therefore, I find that she had requested the A.O to facilitate the same, which, however, I find was by the latter. The A.O, observed that as the assessee had furnished copy of the assessment order that was passed by the A.O u/s. 147 r.w.s. 143(3) of the Act, dated 13.09.2021 in the case of M/s. Jayant Security and Finance Ltd., therefore, it proved that she was not only in touch with the lender company but even had access to its assessment records, therefore, her request for cross-examination was merely an eye wash with a purpose to delay the assessment proceedings. 27. Apart from that, the A.O had observed that it was not a case that the loan raised by the assessee from the aforementioned lender was being held as ingenuine solely on the basis of the statement of Shri Sharad Kumar Darak; or on the basis of information received from ADIT (Inv.), Bhopal, but the said conclusion was being arrived at because the assessee was not able to prove the genuineness of the loan transaction. For the sake of clarity, the observation of the A.O to the said effect is culled out as under: 31 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 “(c) The assessee has stated that it may be allowed a cross examination of the concerned persons. In this regard, it is pertinent to mention that vide her reply dated 20/09/2021, she has furnished a copy of the assessment order passed u/s. 147 r.w.s 143 (3) of the Act on 13/09/2021 in the case of M/s Jayant Security and Finance Ltd. When the assessee is in touch with this company and even has access to the assessment order passed in the case of the company, then such request for cross examination is only an eyewash and just a ploy to delay the assessment proceedings. Moreover it is not the case that the transaction of unsecured loan is being considered as non genuine only on the basis of the statements of Shri Sharad Kumar Darak or on the basis of the report of the ADIT ( Inv), Bhopal. Rather it is being so considered because the assessee has not been able to prove it otherwise.” 28. I have given thoughtful consideration to the aforesaid observation of the A.O, wherein he had declined the assessee’s request for allowing a cross- examination of the lender company, viz. M/s. Jayant Security and Finance Ltd., and am unable to persuade myself to concur with the same. I am of the considered view that the A.O was obligated to have facilitated to the assessee a cross-examination of the aforementioned lender company, as the statement of its directors was, inter alia, pressed into service by him both for initiating proceedings u/s 147 of the Act as well as for drawing adverse inferences as regards the authenticity of the loan transaction. My aforesaid view is supported by the judgment of the Hon’ble Supreme Court in the case of M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II, C.A No.4228 of 2006 (SC) dated 02.09.2015. In the aforesaid case the Tribunal had upheld the rejection by the lower authorities of the assessee/appellant’s request for allowing a cross-examination of the 32 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 dealers whose statements were relied upon by the adjudicating authority while passing its order by observing as under: “6. The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material which would not be in the possession of the appellant themselves to explain as to why their ex factory prices remain static. Since we are not upholding and applying the ex factory prices, as we find them contravened and not normal price as envisaged under section 4(1), we find no reason to disturb the Commissioners orders.” On appeal, the Hon’ble Apex Court was of the view that the failure on the part of the adjudicating authority to allow to the assessee an opportunity to cross-examine the aforementioned persons whose statements were made the very basis of the impugned order was a serious flaw which rendered the order as nullity inasmuch as it amounted to violation of the principles of natural justice. It was observed by the Hon’ble Apex Court that though the assessee had requested for an opportunity to cross-examine the aforementioned persons but the said requests were turned down by the adjudicating authority. Considering the fact that the Tribunal had upheld the orders of the lower authorities which had turned down the assessee’s request for a cross-examination, the Hon’ble Apex Court held the order of the Tribunal as totally untenable. Referring to the observations of the Tribunal that cross-examination of the persons concerned would not serve any purpose, the Hon’ble Apex Court was of the view that it was not for the Tribunal to have taken recourse to any guess work as to for what purposes 33 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 would have been served by the assessee appellant by carrying out cross- examination. For the sake of clarity, the observations of the Hon’ble Apex Court are culled out as under: “We have heard Mr. Kavin Gulati, learned senior counsel appearing for the assessee, and Mr. K. Radhakrishnan, learned senior counsel who appeared for the Revenue. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross- examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter 34 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal.” 29. Considering the aforesaid judgment of the Hon’ble Apex Court, I am of the view that the A.O remained under a statutory obligation to have facilitated a cross-examination of the aforesaid lender company which, inter alia, was pressed into service by the department for drawing of adverse inferences as regards the authenticity of the subject loan transaction. The assessee could have dispelled the material that the A.O acted upon to disprove the authenticity of the loan transaction only if she was provided an opportunity to cross-examine the lender company which had allegedly referred the name of the assessee as a beneficiary of an accommodation entry. Although, there is no denying the fact that it was the assessee who had filed with the A.O copy of the assessment order passed u/s. 147 r.w.s. 143(3) of the Act, dated 13.09.2021 in the case of the lender company, which revealed that she was in touch with the latter and even had access to its assessment record, but then the same could not have formed a basis for 35 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 declining her request for seeking a cross-examination of the aforesaid persons, specifically when adverse inferences were sought to be drawn as regards the authenticity of the loan which she had received from the said company based on their statements. As regards the observation of the A.O that the genuineness of the loan transaction was not being dislodged on the basis of statement of Shri Sharad Kumar Darak (supra) or on the basis of information received from ADIT (Inv.), Bhopal, therefore, there was no requirement for examination of the lender company, I am unable to comprehend the said observation. My view is fortified by the judgment of the Hon’ble Apex Court in M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II (supra), wherein the Hon’ble Court while holding the order of the Tribunal that had upheld the declining of the assessee’s request for cross-examination for the reason that the same would not serve any purpose; had held, that it was not for the Tribunal to have taken recourse to any guess work as to for what purposes would have been served by the assessee appellant by carrying out cross-examination. 30. In my view, the fact that the name of the assessee had figured as one of the beneficiaries of accommodation entry of Rs.20 lac from M/s. Jayant Security and Finance Ltd., i.e. the lender company, which in turn was based on the statement of Shri Sharad Kumar Darak (supra) as well as information received from ADIT (Inv.) Bhopal, therefore, the assessee was vested with a statutory right to dispel the same by seeking cross-examination of the said 36 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 person, which I am afraid had wrongly been declined by the A.O. As the very declining of the assessee’s request for seeking cross-examination of the aforementioned lender company clearly militates against the mandate of law, therefore, the adverse inferences as regards the authenticity of the loan transaction, as had been drawn by the A.O, cannot be summarily accepted. Accordingly, in all fairness, the matter requires to be restored to the file of the A.O with a direction to facilitate the cross examination of Shri Sharad Kumar Darak (supra) and also, any other person/persons on whose statements adverse inferences as regards the authenticity of the loan transaction in question have been drawn in the case of the assessee. 31. Before parting, I shall deal with the Ld. AR’s claim that as the ITAT, Indore in the case of M/s. Global Realcon Pvt. Ltd. Mumbai Vs. ACIT (Central)-1, Indore, IT(SS)A No.170 to 174/Ind/2020 (supra), and other orders of Co-ordinate Benches of the Tribunal, had held, that the loan received by the respective assessees before them from M/s. Jayant Security and Finance Ltd. were found to be genuine, therefore, on the said count itself the adverse inferences drawn by the A.O as regards the authenticity of the loan transaction in question in the present case is liable to be vacated, I am unable to concur with the said claim of the Ld. AR. I, say so, for the reason that as per the mandate of Section 68 of the Act, as the assessee is statutorily obligated to put forth an explanation as regards the “nature” and “source” of the sum credited in its books of account, therefore, the said 37 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 statutory obligation cannot be dispensed with merely on the basis that the a loan transaction between the same lender company and a third party had been held to be genuine by the Co-ordinate Benches of the Tribunal. As the facts of every case stands on an independent footing, therefore, the Ld. AR’s contention that no adverse inferences qua the loan transaction in question could have been drawn, for the reason that the loan transaction between the lender and a third party had been accepted as genuine by the co-ordinate benches of the Tribunal do not find favor with me. Thus, the Ground of appeal No.1 raised by the revenue is allowed for statistical purposes in terms of the aforesaid observations. 32. I shall now deal with the grievance of the department that the CIT (Appeals) had erred in vacating the addition of Rs.4,82,318/-, that was made by the A.O by treating the cash payment by the assessee towards home loan account during the year under consideration as an unexplained expenditure u/s. 69C of the Act. 33. As observed by me hereinabove, the assessee had furnished with the A.O copy of her home loan account No.20049094187 with Allahabad Bank, Vyapar Vihar, Ring Road, Bilaspur, which revealed cash repayments of Rs.4,82,318/- during the subject year. On being queried, the assessee submitted ad at the fag end of the assessment proceedings placed on the AO’s record a cash flow statement. As source of the cash repayment of 38 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 housing loan was not sufficiently explained by the assessee who had claimed that the same was sourced out of an unsecured loan of Rs.20 lac, therefore, the A.O in the backdrop of the dubious pattern of deposits and withdrawals had rejected the assessee’s explanation and added the aforementioned amount of Rs.4,82,318/- by treating the same as an unexplained expenditure u/s. 69C of the Act. 34. On a perusal of the order of the CIT(Appeals), I find that he had summarily relied upon the cash flow statement that was filed by the assessee, and without giving any cogent reason had hushed through the matter, and observed, that as the assessee had sufficiently explained the source of the repayment of Rs.4,82,318/-, therefore, the addition made by the A.O was liable to be vacated. The CIT(A) had observed as under: “5. As regards the re-payment of Rs.4,82,318/- made during the financial year 2012-13 made by the A.O u/s. 69C is concerned. In the case flow statement for FY 2012-13 submitted by the assessee, the following has been explained. 39 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 35. I have thoughtfully considered the aforesaid issue in the backdrop of the contentions advanced by the Ld. Authorized Representatives of both the parties. After perusing the observation of the CIT(Appeals), I am of a firm conviction that he had without properly dealing with the facts vacated the addition of Rs.4,82,318/- (supra) without bringing on record any reason for dislodging the view taken by the A.O. Considering the fact that the CIT(Appeals) had by way of a non-speaking order vacated the aforesaid addition, I am of the view that the matter in all fairness requires to be restored to his file with a direction to re-adjudicate the same after affording a reasonable opportunity of being heard to the assessee. Thus, the Ground of appeal No.2 raised by the revenue is allowed for statistical purposes in terms of the aforesaid observations. 36. Apropos the grievance of the department that the CIT(Appeals) was not justified in vacating the addition of Rs. 22,96,000/- made by the A.O u/s. 69C of the Act without any discussion on the said issue by way of a speaking order, I am of the view that the said claim of the revenue is in itself based on incorrect observation. I, say so, for the reason that there is no whisper in the body of the CIT(Appeals)’s order as regards the deletion of addition of Rs.22.96 lacs (supra) that was made by the A.O u/s. 69A of the Act. As the aforesaid issue does not emanate from the order of the CIT(Appeals), therefore, there is no occasion for me to deal with the said grievance of the department, which, in my view, is in itself based on 40 ITO-2(1), Bilaspur Vs. Satwant Kaur Saluja ITA No. 187/RPR/2024 CO. No.11/RPR/2024 misconceived observations. Accordingly, I refrain from dealing with the Grounds of appeal Nos. 3 & 4 raised by the revenue for the reason that the same does not emanate from the order passed by the CIT(Appeals). 37. In the result, the appeal of the revenue in ITA No.187/RPR/2024 is partly allowed for statistical purposes in terms of the aforesaid observations. 38. Resultantly, the appeal of the revenue is partly allowed for statistical purposes while for the cross-objection filed by the assessee is dismissed in terms of the aforesaid observations. Order pronounced in open court on 28th day of October, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 28th October, 2024. ***##SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "