Addition u/s 68 unsustainable as documentary evidences furnished not proved to be defective

DCIT Vs Jayesh R. Thakkar (ITAT Ahmedabad)

ITAT Ahmedabad held that addition towards unexplained cash credit under section 68 of the Income Tax Act rightly deleted by CIT(A) as documentary evidences proving identity, creditworthiness of the parties and genuineness of the transaction were not proved to be defective by revenue.

Facts- The assessee is an individual and engaged in 3 separate business activities namely Share Trading business, Construction business, and Transportation business under different names and styles. The assessee in the business of share trading has shown the receipt of interest-free unsecured loans from different entities.

AO disagreed with the contention of the assessee and held that the assessee failed to explain the source of the sum credited in his books and accordingly treated the entire sum of Rs. 7,80,19,000/- as unexplained cash credit under section 68 of the Act.

CIT(A) deleted the addition made by AO in part for Rs. 6,73,19,000/-. Being aggrieved, revenue has preferred the present appeal.

Conclusion- Held that in our considered view the identity, creditworthiness of the parties and genuineness of the transaction were established by the assessee based on the documentary evidence but the revenue without pointing out any defect in such documents has decided the issue against the assessee based on the commission report. As such it is the onus upon the revenue to disprove the materials/documents submitted by the assessee in support of the transactions in dispute based on cogent reasons. But the same has not been done by the revenue in the objective manner. Likewise, it is also a fact on records that the revenue has taken some statements from the 3^rd party which were not provided to the assessee for the rebuttal. It is the settled law that the third-party statement cannot be used against the assessee until and unless the opportunity of cross-examination is afforded to the assessee. In view of the above facts and after considering the necessary details discussed above, we do not find any reason to interfere in the finding of the learned CIT-A.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This is an appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax, CIT(A)-4, Vadodara, in the proceeding u/s 250 vide dated 03/09/2015 passed for the assessment year 2011-12.

2. The Revenue has raised the following grounds of appeal:

“l. On the facts and in the circumstances of the case and in law, the Ld.CIT(Appeals) erred in deleting the additions of Rs.67319000/-out of total additions of Rs.78019000/- made u/s. 68 of the Income tax Act, 1961 without appreciating the findings of AO and not considering the fact that the assessee has failed to establish the identity and creditworthiness of the cash creditors as well as the genuineness of transactions during the assessment proceedings.”

2. The appellant craves leave to add to, amend or alter the above grounds as may be deemed necessary.

Relief claimed in appeal

It is prayed that the order of the CIT (Appeals) be set aside and that of the Assessing Officer be restored.”

3. The only issue raised by the revenue is that the learned CIT(A) erred in deleting the addition of unexplained cash credit in the form of unsecured loans for Rs. 6,73,19,000/- under section 68 of the Act.

4. The facts in brief are that the assessee is an individual and engaged in 3 separate business activities namely Share Trading business, Construction business and Transportation business under different name and style. The assessee, for each business activity, is also maintaining separate books of accounts. The assessee in the business of share trading has shown receipt of interest free unsecured loans from different entities detailed as under:

4.1. With respect to the first 13 parties, the assessee to prove the identity, genuineness and credit worthiness before the AO has furnished following documentary evidence:

a. PAN of all the companies.

b. Acknowledgements of returns filed for assessment year 2011-12.

c. Computation of income for the assessment year 2011-12 and Audited Annual Accounts for the year under consideration.

d. Copy of Bank Statements of all the parties evidencing to have advanced loan to the assessee.

e. Confirmations stating that monies have been advanced to the assessee.

f. Copies of Ledger Accounts of all the above parties.

g. Copy of various ROC Documents showing the existence and identity of the parties and

h. Affidavits of Directors of all the parties to prove Identity and genuineness of the loan.

4.2. Likewise, the assessee with respect to parties appearing at serial Nos. 14 & 15 in the table above namely Jain Trading company and SK Enterprises, has furnished PAN, confirmation letters and RTGS details through which amount was credit in his bank account.

4.3 The assessee on the strength of the above documentary evidence contended that he has discharged the onus cast upon him under section 68 of the Act by furnishing the proof of identity, genuineness of transactions and credit worthiness of the parties. If the party does not respond to the notices or they were not found available at the time of enquiry conducted by the department is beyond his control, therefore no adverse inference should be made. The assessee further contended that he is liable to explain the source of amount credited in his books only and he cannot be expected to establish the source of source. In the show cause notice, there is reference made to statement of one Shri Kumar Raichand Madan who in the statement identified one Shri Shirish Chandrakant Shah as bogus entry operator, but the above-named persons are not party to the transactions in dispute. Therefore, the statement given by a third party cannot be unlisted and that too without affording the opportunity of cross examination.

4.4. However, the AO disagreed with the contention of the assessee and held that the assessee failed to explain the source of the sum credited in his books and accordingly treated the entire sum of Rs. 7,80,19,000/- as unexplained cash credit under section 68 of the Act. The reasoning/view of the AO for holding the credit from each party mentioned in the above reproduced table as unexplained credit are placed at pages 25 to 43 of assessment order. However, on close perusal of the same, the reasoning of the AO can be briefly summarized as under:

(a) Notices under section 133(6) of the Act were issued to all the parties but no response.

(b) Commission under section 131(1)(d) of the Act was appointed to carry out enquiries from the parties but they were not found available at the given address.

(c) The parties were showing merger income in comparison to the amount advanced to the assessee.

(d) Their bank accounts got credited just before making transfer of fund to the assessee.

(e) The DDIT (Mum) in the commission report under section 131(1)(d) reported that the parties appearing at serial No. 2 to 10 in the above table are identified by Shri Kumar Raichand Madan as the concerns belonging to entry provider Shri Shrish Chandrakant Shah (SCS). Shri Kumar Raichand Madan also admitted that he as well as the present assessee was working as associate for SCS. The parties at serial No. 2 to 10 were also subject to search proceedings carried out in the case of SCS group of companies.

(f) The commission under section 131(1)(d) of the Act was appointed at the party namely Ethan Construction Pvt Ltd. The DDIT reported that at the given address, the dummy director namely Shri Kiran Soni is residing who along with another director stated that they were working as director on payroll of the present assessee. Shri Kiran J Soni has also given the address of the other party and when notice issued on the new address, the notice was received by Shri Kumar Raichand Madan.

4.5 In view of the above, thus, the AO made an addition of Rs. 7,80,19,000/- to the total income of the assessee under the provision of section 68 of the Act.

5. The aggrieved assessee preferred an appeal before the learned CIT(A). The assessee before the learned CIT(A) reiterated his contentions made during the assessment proceeding that he has provided all the possible documentary evidence to prove the identity and creditworthiness of creditors, genuineness of transactions. The AO has brushed aside all the documentary evidence and treated the amount of unsecured loan as unexplained credit which is not justified.

5.1. The learned CIT(A) after considering the facts in totality deleted the addition made by the AO in part for Rs. 6,73,19,000/- by observing as under:

“3.3.6. In the light of aforementioned judicial decisions and with these materials on record and under these circumstances, it was not material that some of the directors were not located at the given addresses and that in the wake of the material before the Assessing Officer, the onus had shifted on to the Assessing Officer to prove, if it disputed, as it did, the genuineness of the loans extended to the assessee. The other observation of the Assessing ‘Officer that since the creditors had paid small amounts as tax against their individual assessments, it would demonstrate that the loans advanced to the assessee were not genuine, is also unacceptable. In my considered opinion, the Assessing Officer has adopted an erroneous approach on the aspects of genuineness of the transaction in issue and the creditworthiness of the creditors who lent money to assessee. As noticed above, the first aspect, i.e., identity of the creditors was established before the AO beyond any doubt. It will have to be kept in mind that section 68 of the I.T. Act only sets up a presumption against the assessee whenever unexplained credits are found in the books of account of the assessee. It cannot but be gainsaid that the presumption is rebuttable. In refuting the presumption raised, the initial burden is on the assessee. This burden, which is placed on the assessee, shifts as soon as the assessee establishes the authenticity of transactions as executed between the assessee and its creditors. It is no part of the assessee’s burden to prove either the genuineness of the transactions executed between the creditors and the sub- creditors nor is it the burden of the assessee to prove the creditworthiness of the sub-creditors. These principles have been set by various judicial authorities including jurisdictional High Court as held in the cases of Apex Therm Packaging (P.) Ltd.(Supra) and Sachitel Communications (P.) Ltd.(Supra) as well as by Hon’ble ITAT in the case of Sarjan Corporation (Supra).

3.3.7. In the light of the above principle, let us examine as to whether the genuineness of the transactions and the creditworthiness of their creditors has been sufficiently proved by the appellant before the Assessing Officer. The Ld. Authorized Representative has made detailed submissions in respect of all the creditors which are not reproduced here for the sake of brevity. However, from that discussion made in para 3.2.1 above, it transpires as under:-

(i) The fact that there was sufficient balance available with the creditors when cheques have been issued to the assessee company was established.

(ii) It was also established that the funds available at the relevant point in time were not infused into the bank accounts of the creditors by way of cash but were in fact credited to their account again by way of cheques largely on account of business transactions with other parties.

(iii) The bank accounts as well as returns filed by the creditors who were assessable to tax along with their PANS were also available with the Assessing Officer. The directors of the companies have also filed affidavits regarding address and loans given to the appellant, which were submitted before the Assessing Officer

(iv) The assessee in turn had received the monies by way of cheques in respect of which credits were made in their books of account.

(iv) The creditors had also placed on record business details with third parties.

(v) The identity of the third parties were also available in the bank statements.

(vi) From the assessment order, it transpires that the AO has presumed adversely about the creditworthiness of the loan creditors on the basis of erroneous and incorrect appreciation of facts. He has commented adversely on the basis of low income declared by the creditors in their returns of income and not on the basis of available funds at the time of issue of cheques to the assessee.

With this material on record, in my view, as far as the assessee was concerned, it had discharged initial onus placed on it. In the event the AO still had a doubt with regard to the genuineness of the transactions in issue, or as regards the creditworthiness of the creditors, he had to discharge the onus which had shifted on to it, A bald assertion by the Assessing Officer that the credits were a circular route adopted by the assessee to plough back its own undisclosed income into its accounts, can be of no avail. The AO was required to prove this allegation. An allegation by itself which is based on assumption will not pass muster in law. The Assessing Officer was required to bridge the gap between the suspicions and proof in order to bring home this allegation. In my considered view, the Assessing Officer ought to have analyzed the material before him rather than be burdened by the fact that some of the directors have business connections in the creditors. If the Assessing Officer had any doubt about the material placed on record, which was largely bank statements of the creditors and their Income-tax returns, he could have gathered the necessary information from the sources to which the said information was attributable to. No such exercise had been conducted by the Assessing Officer. In any event what the Assessing Officer lost track of was that it was dealing with the assessment of the company, i.e., the recipient of the loan and not that of its directors and shareholders or that of the sub-creditors. If it had any doubts with regard to their creditworthiness, the revenue could always bring it to tax in the hands of the creditors and/or sub-creditors as held by Apex Court in the cases of Lovely Exports (P.) Ltd. [2008] 216 CTR 195(SC) and in the case of Divine Leasing & Finance Ltd. [2008] 299 ITR 268 (Del.). I also agree with the Ld.AR that once the identity of the creditors has been proved as well as their creditworthiness and all payments are received by account payee cheques from the bank accounts whose statements have abo been furnished to demonstrate that sufficient balances were available in the account before issue of cheques addition of such loans cannot be made in the bands of the assessee in view of the settled legal position enunciated by the Apex Court in the case of CIT VS Orissa Corporation P. Ltd. [1986] 159 ITR 78(SC). Hon’ble Gujarat High Court is the cases of Apex Therm Packaging (P) Ltd (Supra), Sachitel Communications (P) Ltd. (Supra) and Dy. CIT v. Rohini Builders (2002) 256 ITR 360 (G)) as well as by Hon’ble ITAT in the case of Sarjan Corporation (Supra). From the assessment order, it transpires that the AO has presumed adversely about the creditworthiness of the loan creditors on the basis of erroneous and incorrect appreciation of facts. He has commented adversely about the affairs of the appellant merely on the basis of report of the DDIT (Inv) that the assessee is the “key person” behind all companies who have advanced loans to the appellant. The said authority has also alleged that the money of the assessee is reintroduced under the garb of “interest free unsecured loans” without proving when and how the money of the appellant was transferred into creditors’ bank accounts. Investigation authorities also failed to establish as to how and when the assessee was able to generate such huge undeclared amounts. Following other important facts of the case deserve mention here:-

A. As per the information received by the Assessing Officer from those officers to who commission under section 131(1)(d) were issued by him, no responsible person to answer the queries of the Inspectors was available at the addresses of any of the creditors. This gave rise to strong suspicion in the minds of investigating officers as well as in the mind of Assessing Officer that the unsecured loans are not genuine. Though the bank statements of all the creditors were available with these authorities, they did not consider it proper to make further Investigation about the source of deposits in these bank accounts which were mainly clearing entries with details of third parties. No statement of any such party was recorded. Similarly, after having doubts about the whereabouts of the creditor companies, no attempt was made to make enquiry from the offices of ROC.

B. In para 11.1 and 11.2 of the assessment order, Assessing Officer has mentioned that commission under section 131(1)(d) was issued to DDIT(Inv.), Mumbai on 22.02.2014 and a list of ten companies, assessed at Mumbai, was given to him for enquiry. From the reply of DDIT, referred by the Assessing Officer in these para, it transpires that these companies are part of some “Shah scam group”. It also transpires that nine out of these ten companies were also searched. by the department and these were centralized with Central Circle-12, Mumbai, However, no adverse finding from Assessing Officer of Central Circle-12, Mumbai was reported about the assessee. In para 9 at page 8 of assessment order it is mentioned as under:

“As understood from him, the assessee Shri Jayesh Thakkar and his company M/s Prabhav Industries was also a part of Sirish shah and actively involved in the scam. It is believed the assessee and his company was also searched at the time of search proceedings held in the month of April 2013. The Prabhav Industries is centralized with Central Crcle1(1), Ahmedabad.”

These comments of the Assessing Officer clearly demonstrate that there was no clinching evidence against the appellant that he has routed his money under the garb of unsecured loans from 15 creditors. The Assessing Officer is not sure that the appellant was searched or not. He has send the Remand Report as present Assessing Officer which means that the case is still with me and that he is not in possession of any incriminating material against the assessee even after the searches in “Shiris Shah Group”. Moreover, the assessee is an individual and his company has not accepted the unsecured loans. The present appeal is in respect of assessee and not his company. Even if there is material against the company, that cannot be legally used against the assessee unless it is proved that the said Prabhay Industries was a sham or paper company, which is not the case of the Assessing Officer. Thus, even after the searchs in the cases of creditors, Assessing Officer has not been able to demonstrate that the assessee has routed his own money under the garb of unsecured loans from 15 creditors and under these circumstances, in absence of any concrete evidence against the appellant, it is not justified on the part of the Assessing Officer to make addition of entire amount of unsecured loans under section G of the Act.

C. The date of assessment order is 27.03.2014. In the case of the assessee’ on 26.10.2012, detailed statements of the assessee were recorded by the DDIT(Inv.), Baroda in about 30 pages. However, no question was asked about these unsecured loans/creditors. There is no cognizance of these statements in the body of assessment order. There is no discussion of any modus operandi in these statement as has been apprehended by the Assessing Officer in the assessment order. This also shows that the presumption of the Assessing Officer about the (non) genuineness of these loans is based on half cooked. one-sided reports of the officers to whom commission under section 131(1)(d) was issued by the Assessing Officer.

D. Other objection of the AO is that all creditors have shown meager Incomes in their returns of income that proves that the loans are not genuine and in fact assessee has obtained “accommodation entries”/routed his own unaccounted money. This approach of the AO is clearly against the spirit of aforementioned judicial decisions as well as in contravention to the facts of the present case.

E. The assessment of the appellant for A.Y. 2007-08 was finalized u/s. 143(3) on 30.12.2009 determining total loss at Rs.2,47129/- after making addition on account of agricultural rent of Rs.9,64,000/- and on account of unsecured loan of Rs.66,000/- totaling to Rs.10,30,000/-. Again for A.Y. 2010-11, assessment was finalized by the Assessing Officer under section 143(3) of the Act. The Return of Income was fed by the assessee declaring total income of 83704700 The assessment u/s 143(3) was finalized on 12.03.2013 determining total income of Rs 19,54,700/- after making routine addition of Rs.150,000/- on account of unexplained expenditure and Rs.1,00,000 on account of low house hold withdrawal. Thus, there is no whisper of generation of unaccounted income by the appellant even up to AY. 2010-11, and the Assessing Officer has not been able to pinpoint in the present assessment as to during which period appellant has been able to generate huge. amount of undisclosed income as has been alleged by the Assessing Officer that appellant has routed his own unaccounted money under the garb of unsecured loans.

3.3.8 Considering the detailed facts of the case, written submissions of the AR and ratio of the judicial decisions cited above, it is held that the assessee bad proved beyond any doubt the identity, creditworthiness and genuineness of the loans amounting to Rs. 5,50,00,000/- in respect of first 13 creditors mentioned in the table in para 3.3.1. above and addition made by the Assessing Officer under section 68 is held to be not justified. Therefore, the same is directed to be deleted. In respect of M/s Jain Trading Co. and M/s. S.K. Enterprise from whom appellant received Rs. 99,00,000/- and Rs. 8,00,000/-, it is seen that even during Remand proceedings, appellant could not furnish requisite details as well as confirmations from those parties! I agree with the Assessing Officer that in absence of confirmation and documentary evidences to establish the genuineness of transaction as well as creditworthiness of the depositors, the assessee has failed to prove the genuineness of loans amounting to Rs 1,07,00,000/- Accordingly, addition to that extent is upheld. As a result, the appellant shall get relief of Rs.6,73,19,000/-. This Ground of appeal is partly allowed as above.”

6. Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us.

7. The learned DR before us submitted that the parties who has given loan to the assessee were not traceable as evident from the commission report. According to the learned DR, there is no possibility that the lender will not come forward to take the money back from the assessee and they will also not charge any interest on the loan given to the assessee. As per the learned DR the loan transaction was not as per the prevailing market practices. All the parties who have given loans to the assessee were bogus as the same were not found available as on the date of the commission visited the premises of the lenders. The learned DR vehemently supported the order of the AO.

8. On the other hand, the learned AR before us filed a paper book running from pages 1 to 556 and contended that the assessee has discharged the onus imposed under section 68 of the Act by furnishing all the necessary details. The revenue has not pointed out any defect in the documentary evidence submitted by the assessee. According to the learned counsel for the assessee, there cannot be any adverse inference against the assessee merely on the reasoning that loan parties were not available at the premises especially in the circumstances where no defect of whatsoever was pointed out by the revenue in the supporting documents filed by the assessee. The learned AR before us vehemently supported the order of the learned CIT-A.

9. We have heard the rival contentions of both the parties and perused the materials available on record. Undisputedly, the assessee during the year under consideration has shown receipts of unsecured loan of Rs. 7,80,19,000/- from the 15 different companies/concern based in Kolkata and Mumbai and other places. The dispute before us is with respect to sum credited from 13 parties for an amount aggregating to Rs. 6,73,19,000/-only. The issue on hand has bearing on the provisions of section 68 of the Act. The provision of section 68 of the Act suggests that if there is any sum credited in books of account maintained for the any previous year then the assessee is required to offer proper and reasonable explanation regarding nature and sources of such credit to the satisfaction of the AO. Thus, the primary onus lies with the assessee to explain the source of credit in the books. Over the period, the courts have laid down that the assessee to discharge its onus is required to furnish evidence with respect to identity of the creditor, genuineness of transaction and credit worthiness of the creditor. If the assessee failed to discharge the primary onus cast or the explanation and evidence submitted by the assessee, are not found satisfactory by the AO then the sum credited in the books shall be deemed as income of the assessee. The Hon’ble Supreme Court in case of CIT vs. P. Mohanakala reported in 291 ITR 278 while dealing with scope of provision of section 68 of the Act held that “the opinion of the AO that the explanation furnished by the assessee as not satisfactory is required to be based on proper appreciation of materials and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion.” In other words, once the assessee submits the primary evidence with regard to identity and credit worthiness of creditor and the genuineness of the transaction, the onus shifts on the AO to consider the materials provided and make independent inquiry in order to find out genuineness of the evidence or bring material contrary to facts explained by the assessee. The AO cannot reject the primary evidence furnished by the assessee without appreciating the facts available on record or without bringing contrary material to form the belief that primary document or explanation furnished by the assessee is not satisfactory.

9.1 Undeniably, the assessee at the time of assessment proceedings in support of genuineness of credit of interest free unsecured loan has furnished certain documentary evidence which at cost of repetition are illustrated as under:

a. PAN of all the companies.

b. Acknowledgements of returns filed for assessment year 2011-12.

c. Computation of income for assessment year 2011-12 and Audited Annual Accounts for the year under consideration.

d. Copy of Bank Statement of all the parties evidencing to have advanced loan to the assessee.

e. Confirmations stating that monies have been advanced to the assessee.

f. Copy of Ledger Accounts of all the above parties.

g. Copy of various ROC Documents showing the existence and identity of the parties and

h. Affidavits of Directors of all the parties to prove Identity and genuineness of the loan.

9.2 From the above-mentioned list of documentary evidence, it is discernable that the assessee has provided sufficient documents such as PAN, copies of ITR-V and various ROC forms to establish the identity of the creditor. Similarly, the assessee also provided sufficient documents in the form of confirmation letter from creditor, affidavit from their director, bank statement showing amount debited in the creditor’s bank account and credited in assessee’s bank through RTGS to establish genuineness of transaction. Likewise, the creditworthiness of the creditor is also discernable from their balance sheet and bank statements though they were declaring lower income in the IT return but have fund in the form of share capital reserve and loans liability.

9.3. However, the AO did not accept the genuineness of loans credited in the books of the assessee because notices issued to loans parties for independent inquiry have not been responded. Thereafter, commission appointed under section 131(1)(d) of the Act at each creditor’s parties. The DDIT(Inv) in its report under section 131(1)(d) submitted that the creditor parties were not found at their given address or on address available at MCA portal.

9.4. Now the question arises, whether the documentary evidence provided by the assessee should be brushed aside for the reason that they did not respond to notices issued under section 133(6) of the Act or not found when income tax official visited at their address or on the basis of commission report alleging that the creditor parties were managed by entry provider. At this juncture, we are inclined to refer to the order of the ITAT Mumbai in the case of Chemicon Engineering Consultant (P.) Ltd. vs. ACIT reported in 142 taxmann.com 297 who has taken, in somewhat similar facts and circumstances, the following view:

“32. Further in our considered view, after the assessee had discharged its burden by furnishing the above documents in support of the source of source of funds, in compliance with proviso to Section 68 of the Act, then the onus of disproving or finding defects in these documents shifted to the Revenue. It was then the duty of the Revenue to bring on record cogent material/evidence, which would show that the source of source of funds was unreliable or not genuine, which we find has not been done by them. The Ld. AR pointed out that the Ld. CIT(A) only made generalized observations regarding the alleged modus operandi based on which certain unscrupulous persons were providing accommodation entries. Inviting our attention to Para 3.2.21 to 3.2.25 of the impugned appellate order, he showed us that the averments made by the Ld. CIT(A) was general in nature, wherein he tacitly shirked his responsibility of looking into the documents and finding any fault therein. According to Ld. CIT(A), furnishing of corporate information pertaining to shareholders viz., bank statements, annual accounts, source of source of fund details and other paperwork cannot be treated as justifiable evidence and therefore the Ld. CIT(A) held that the assessee failed in its endeavor to discharge its onus under section 68 of the Act. This averment of the Ld. CIT(A) is found to be ludicrous. We note that, although the Ld. CIT(A) has observed that, the documents have been properly maintained and that there is no cash trail, and that all the source of source companies maintained regular books of account, financial statements and regularly filed their tax returns, but the Ld. CIT(A) rejected it by simply alleging it to be a window dressing and even went on to say that ‘if’ dug deeper, it shall be found that they are not real companies. In our considered view, such an observation the Ld CIT(A) ought not to have made, because such an observation itself implies that he has not investigated about the source companies and in any case, if he nursed such a suspicion, he [Ld. CIT(A)] enjoying co-terminus powers as that of AO ought to have dug deeper/enquired/investigated and thus should have brought on record evidence to substantiate the allegation or his adverse assumption of these companies. According to us, the Ld. CIT(A) could not have abdicated from his duty, if he harbored a suspicion that, what was apparent was not real. It is further noted that the Ld. CIT(A) was unable to point out any defect in the documents furnished by the assessee to discharge the burden to prove the “source of source” as required as per proviso to section 68 of the Act and that of the shareholders. Therefore, his conclusion that the source of source of funds qua Rs. 6,22,05,000/- were unexplained or represented unaccounted monies of the assessee cannot be sustained Hence, the impugned action of the Ld. CIT(A) confirming addition of Rs. 6,22,05,000/- cannot be countenanced.”

9.5. Based on the above, we hold that the report of the commission cannot be taken as sacrosanct/gospel truth for taking any adverse view against the assessee without pointing out any specific defect in the documentary evidence furnished by the assessee during the assessment proceedings which have been elaborately discussed in the preceding paragraph. In our considered view the identity, creditworthiness of the parties and genuineness of the transaction were established by the assessee based on the documentary evidence but the revenue without pointing out any defect in such documents has decided the issue against the assessee based on the commission report. As such it is the onus upon the revenue to disprove the materials/documents submitted by the assessee in support of the transactions in dispute based on cogent reasons. But the same has not been done by the revenue in the objective manner. Likewise, it is also a fact on records that the revenue has taken some statements from the 3^rd party which were not provided to the assessee for the rebuttal. It is the settled law that the third-party statement cannot be used against the assessee until and unless the opportunity of cross-examination is afforded to the assessee. In view of the above facts and after considering the necessary details discussed above, we do not find any reason to interfere in the finding of the learned CIT-A. Hence the ground of appeal of the revenue is hereby dismissed.

10. In the result, the appeal filed by the revenue is hereby dismissed.

Order pronounced in the open court on 16-10-2023