IN INCOME TAX APPELLATE TRIBUNAL BENCH, MUMBAI ,BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. No.1913/Mum/2017 Assessment Year:2007-08) Smt. Anita Rinku Patodia ACIT-Central Circle-3(2) 605, Business Classic / Mumbai. Chincholi Bunder Road Vs. Malad (W), Mumbai-400064../ /PAN/GIR No. AKRPP-7593-E (Appellant) : (Respondent) Appellant by : None AB /Respondent by : Shri Manoj Kumar- Ld. DR Date of Hearing : 27/08/2019 Date of Pronouncement : 27/08/2019 / ORDER Manoj Kumar Aggarwal (Accountant Member): - 1. By way of this appeal for Assessment Year 2007-08, assessee has challenged quantum addition of Rs.90 Lacs made u/s 68 by learned Assessing Officer while framing assessment u/s 143(3) read with Section 147 of Income Tax Act, 1961 on 16/03/2015. additions have already been confirmed by Ld. Commissioner of Income-Tax (Appeals)-51, Mumbai, [in short referred to as CIT(A) ], Appeal No. CIT(A)-51/IT 82/2015- 2 16 order dated 15/12/2016. assessee has also contested reassessment proceedings on legal grounds. 2. None has appeared for assessee. perusal of order sheet entries reveals that assessee has failed to appear on various earlier occasions. Therefore, left with no option, appeal is proceeded with ex-parte qua assessee. 3.1 Facts on record would reveal that assessee s case for year under consideration was reopened pursuant to receipt of certain information from ADIT (Investigation), Mumbai wherein it transpired that assessee stood beneficiary of bogus loans which came to light during search and seizure operations in case of Shri Pravin Kumar Jain and his group on 01/10/2013. group, through network of various concerns, was found to be engaged in providing accommodation entries and assessee was identified as one such beneficiary of bogus unsecured loans to extent of Rs.90.00 Lacs from 3 entities as per following details: - No. Name of entity who has given Amount (Rs.) unsecured loan 1. M/s. JPK Trading Co.(P) Limited 10,00,000/- 2. M/s. Mohit International 30,00,000/- 3. M/s. Natasha Enterprises 50,00,000/- TOTAL 90,00,000/- Consequently, case was reopened by issue of notice u/s 148 on 21/03/2014 and assessee was directed to adduce evidences in support of transactions. Although assessee defended claim, however, upon perusal of financial statement of 3 entities, learned AO reached conclusion that entities were bogus vendors. financial statement of these concerns has been made part of quantum assessment order. 3 This is coupled with fact that husband of assessee, during search operation u/s 132 in their own group on 11/08/2014 accepted fact of obtaining bogus unsecured loans from entities run by Shri Pravin Kumar Jain. Accordingly, amount of Rs.90 Lacs was treated as bogus and non-genuine and added to income of assessee while framing assessment. 3.2 assessee contested reassessment proceedings on legal grounds as well as quantum addition on merits before learned first appellate authority, however, without any success vide impugned order dated 15/12/2016. Ld. CIT(A) confirmed additions, on merits, by observing as under: - 11. I have considered facts of case, submissions and contentions of appellant, as also order of AO. It is seen that Ld. AO has discussed issue of bogus loans of Rs.90,00,000/-`from four different parties at length in body of order and has passed very detailed and speaking order. relevant discussion is appearing on page 3 to 14 of assessment order. In said order AO has also reproduced balance sheet and P&L account of these concerns namely, M/s. Mohit International, M/s Natasha Enterprises, M/s JPK Trading (I) Pvt Ltd and various inconsistencies therein. From perusal of these balance sheets, it is clear that there are hardly any fixed assets with these companies even though there is significant turnover. Further there are hardly any expenses in P & L account in these companies and it is not clear as to how could they run their affairs with such meager expenses. Besides there are other inconsistencies like there was no closing stock, audit fees paid was very low which raises doubts about very existence of these companies and genuineness of transactions. Most of all Shri Pravin Jain main person of group had admitted that he was providing only accommodation through his group concerns including these four companies. assessee in this regard has argued that their transactions were made through cheques through proper banking channels. However payment through cheque alone does not decide genuineness of transitions. Reliance in this regard is placed on case Kachwal Gems V/s CIT (2007) 288 ITR 10(SC), wherein it was held that mere payments by account payee cheques is not sacrosanct and is not sufficient to establish genuineness of transaction. Further, reliance is placed on C Vasantilal Co V/s CIT (1962) 45 ITR 206(SC), Chaturbhuj Panauj AIR 1969 (SC) and Sumati Dayal Vs CIT (1995) 214 ITR 801(SC) wherein it has been held that even strict rules of evidence do not apply to proceedings under Income Tax Act and real test with regard to genuineness of transaction is "Preponderance of probabilities" and not 'beyond reasonable doubt'. It is undisputed fact that accommodation entries taken from these four parties remained unverified. As stated above, during assessment proceedings AO had issued query letters under section 133(6) of Act to above mentioned loan creditors but same were returned by postal authorities with remarks that 'the party is not available . Thereafter AO asked assessee to produce these parties 4 but assessee expressed his inability in doing so. Further balance sheets of these loan creditors were not showing any fixed assets raising doubts about their existence and doing business. Their sources of income were meager and therefore these concerns could not have given huge loan of Rs.90,00,000/- to assessee. Infact transactions itself appear to be circular in nature and colorable in device as held by Supreme court in case McDowell s Co. Ltd. 154 ITR. assessee has also argued that loans have already been returned/repaid by assessee to respective concerns in year 2010. However, even if assessee has returned, it will not materially change position as issue is source of loan and whether same was explained and not repayment as such. 12. In view of above facts and legal position, stand taken by AO to treat loans and advances of Rs.90,00,000/- as unexplained cash credits u/s. 68 of assessee for relevant year under consideration appears to be correct and justified. Consequently, these grounds taken up by assessee are hereby dismissed. Aggrieved assessee is under appeal before us. Ld. DR has supported stand taken by lower authorities. 4. We have carefully considered orders of lower authorities and relevant material on record. So far as legality of reassessment proceedings is concerned, we find that Ld. AO was clinched with specific information as to escapement of income in hands of assessee and therefore, reassessment proceedings were rightly triggered against assessee. 5. So far as additions, on merits, are concerned, we find that onus casted upon assessee to prove 3 ingredients viz. identity, creditworthiness and genuineness of transactions remained unfulfilled. husband of assessee has admitted to have obtained bogus unsecured loans from group concerns run by Shri Pravin Kumar Jain. Nothing on record would inspire us to take different view in matter. 6. In result, appeal stands dismissed. Order pronounced in open court on 27th August, 2019. Sd/- Sd/- (Saktijit Dey) (Manoj Kumar Aggarwal) / Judicial Member / Accountant Member 5 Mumbai; Dated : 27/08/2019 Sr.PS:-Jaisy Varghese 7 9 /Copy of Order forwarded to : 1 Appellant 2. Respondent 3. CIT(A) 4. CIT concerned 5. DR, ITAT, Mumbai 6. Guard File / BY ORDER, / (Dy./Asstt.Registrar) , / ITAT, Mumbai. Anita Rinku Patodia v. ACIT-Central Circle-3(2) Mumbai