DCIT Vs Jainam Investments (ITAT MUMBAI)
Under this issue the revenue has challenged the deletion of disallowance of Rs.4,71,19,785/- on of sale shares of M/s. Mahavir Advanced Remedies. The Ld. Representative of the revenue has argued that the CIT(A) has wrongly deleted the disallowance of Rs.4,71,19,785/-, therefore, the finding of the CIT(A) is not justifiable, hence, is liable to be set aside.
On appraisal, we noticed that the CIT(A) has relied upon the decision of the Hon’ble Calcutta High Court in the case of M/s. Classic Growers Ltd. Vs. CIT (ITA. No. 129 of 2012 (Calcutta), and the decision of the Hon’ble Supreme Court in the case of Chuharmal Vs. CIT (1998) 172 ITR 250, CIT Vs. Emerald Commercial Ltd. (2002) 120 taxman 282 (Calcutta) and in the case of Dhaeshwari Cotton Mills Vs. CIT (1954) 26 ITR 775 and in the case of CIT Vs. Anirudh Narayan Agrawal (2013) 38 taxmann.com 367 (All) and various decision of the Hon’ble Courts mentioned above. Moreover, no law contrary to the law relied by the CIT(A) has been produced before us. There is no cogent and convincing evidence on record to hold this fact that the business loss in the impugned scrip is bogus. It is also not apparent on record that the appellants name was appearing in any of the SEBI investigation in the impugned scrip. No evidence on record to which it can be assumed that the appellant had connived with any entry operator for executing the share transaction. What adverse information was received from the wing of Calcutta/investigation wing Mumbai against the assessee is not apparent on record. The evidence adduced by the assessee was not rebutted by the AO. AO also took the contradictory stand by taxing the profit on the penny stock but disallowed the loss. No proper opportunity was given to the assessee to cross-examination of the witness as well as to rebut the other evidence on record. Taking into account of all the facts and circumstances mentioned above, we are of the view that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, this issue is decided in favour of the assessee against the revenue.
FULL TEXT OF THE ITAT JUDGEMENT
The above mentioned appeals have been filed by the revenue against the different order passed by the Commissioner of Income Tax (Appeals)-50, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Ys.2011-12 & 2016-17.
ITA. NO.4286/Mum/2019:-
2. The revenue has filed the present appeal against the order dated 09.04.2019 passed by the Commissioner of Income Tax (Appeals)-50, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2011-12.
3. The revenue has raised the following grounds: –
“1. Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in deleting the addition of Rs.24.35 Crore made under section 68 of the Income Tax Act without appreciating the finding that Shri Bhanwarlal Jain is engaged in the business of accommodation entries and hence AO was correct in concluding that the assessee was a beneficiary of the accommodation loans.
The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.
The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary.”
4. The brief facts of the case are that the assessee filed its return of income on 12.09.2011 declaring total income to the tune of Rs. Nil for the A.Y. 2011-12. The return was processed u/s 143(1) of the I. T. Act, 1961. Thereafter, the case of the assessee was reopened u/s 148 of the Act. The reasons for reopening of the assessment was given to the assessee. The assessee received the accommodation entry in form of bogus unsecured loans from Bhanwarlal Jain Group run entities during the previous year in consideration. The assessee filed the objection vide letter dated 17.05.2018. The AO rejected the objections by virtue of order dated 01.06.2018. The AO completed the assessment by making an addition of Rs.24.35 crores u/s 68 of the Act treating the loans received by the appellant as bogus thereby assessing the total income of the appellant at Rs.9,24,88,940/- vide order dated 13.12.2018. Thereafter, the assessee was not satisfied and filed an appeal before CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us.
ISSUE NO.1
5. Under this issue the revenue has challenged the deletion the addition of Rs.24.35 crore made u/s 68 of the Act. The Ld. Representative of the revenue has argued that the Bhanwarlar Jain Group was engaged in providing the accommodation entry but the CIT(A) has wrongly allowed the claim of the assessee, therefore, the finding of the CIT(A) is not justifiable, hence, is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has strongly relied upon the order passed by the CIT(A) in question. Before going further, we deem it necessary to advert the finding of the CIT(A) on record: –
“13.0 I have considered the facts of the case, submissions of the Appellant, the observations of the AO contained in the assessment order and the other materials available on record on this issue.
13.1 I have noted that this is not a new issue in the case of the Appellant and for the subsequent assessment years in the Appellant’s own case, the matter relating to the loan entries from the Bhanwarlal Jain Group of entities had travelled up-to the Hon‘ble ITAT, Mumbai based on the same facts and circumstances.
13.2 I have gone through the assessment order passed by the AO and noted sat the AO had relied upon the same material and advanced similar was sent as had been in the latter assessment years. The AO had not brought on record any new material, argument, contention or fact in the present assessment order, under challenge.
13.3 It is a material fact on record that relevant to the A.Y. 2012-13, an addition of Rs. 24.75 crores was made by the AO u/s.68 of the Act for loans received by the Appellant from various parties belonging to the Bhanwarlal Jain Group. The Appellant preferred an Appeal before CIT(A), who had vide order No. CIT(A)-30/19(2)/559/15-16 deleted the addition made u/s.68 of the Act on account of loan entries taken from the various concerns of Shri Bhanwarlal Jain and other related additions. The Department preferred an Appeal before the Hon’ble ITAT and the Hon‘ble ITAT, Mumbai, „G‘ Bench, had vide its order dated 10.08.2018 in I.T.A. No.6099/Mum/2016 dismissed the Appeal of the Department and upheld the order of CIT(A), which had deleted the addition made by the AO u/s 68 of the Act.
13.4 For the A.Y. 2013-14, an addition of Rs.34.35 crores was made by the AO u/s. 68 of the Act for loans received by the Appellant from various parties belonging to the Bhanwarlal Jain group. The Appellant preferred an Appeal before CIT(A), who had vide order No. CIT(A)-47/E10046/2012-13 deleted the addition made u/s.68 of the Act and other connected additions. The Department preferred an Appeal before the Hon‘ble ITAT and the Hon‘ble ITAT, Mumbai, „F‘ Bench, vide its order dated 16.01.2019 in ITA No.5637/Mum/2017 dismissed the Appeal of the Department and upheld the order of CIT(A) deleting the addition made by the AO. In this judgment, the Hon‘ble ITAT had discussed the order of the Hon‘ble ITAT in the case of the Appellant for the A.Y. 2012-13 and had also referred to the order passed by the Ld. CIT(A). The relevant portion of the said judgment of Hon’ble ITAT Mumbai being comprehensive and detailed the same is reproduced, as under:
“we have heard both the parties and we have also perused the Ss well as the orders passed by revenue placed on record as by the Coordinate Bench of Hon’ble ITAT in ITA No. 6099/Mum/16 for AY 2012-13 in assessee’s own case. The operative portion of the order of Hon’ble ITAT passed in ITA No. 6099/Mum/16 for AY 2012-13 contained in para no. 2 to 27, which are reproduced below:
2. The assessee is engaged in the business of share trading. During the year under consideration, the assessee has taken loan of Rs. 24.75 crores from various persons. The Revenue carried out search and seizure operations in the case of Mr. Bhanwarlal Jain and his group concerns on 3.10.2013 and the said search revealed that they are engaged in providing accommodation entries in the form of unsecured loans, bogus sale bills etc., to the interested parties. It was noticed that the assessee has taken the above said loan of Rs. 24.75 crores from the following persons belonging to Mr. Bhanwarlal Jain group.
Sr.No. Name of the hawala parties Bill amount 1. Aastha Impex 30000000 2. Balaji Impex 10000000 3. Impex Gems 5000000 4, Mayur Exports 15000000 5. Malhar Exports 5000000 6. Marvin Enterprises 10000000 7. Mehul Gems Pvt Ltd 20000000 8. Minal Gems 5000000 9. Manas Gems Pvt Ltd 10000000 10. Mother Exports 5000000 11. Mouli Gems 5000000 12. Mohit Enterprises 37500000 13. | Navakar Diamonds 5000000 14. Prime Star 2000000 15. – Roshan Gems Pvt Ltd 20000000 16. Sonam Gems Pvt Ltd – 50000000 17. Navkar Diamond 10000000 Total 247500000
Hence the revenue carried out Survey operation in the hands of the essee on 16-10-2014. Subsequently, the return of income filed by the, assessee was taken up for scrutiny. Since Bhanwarlal Jain had that he and his group of companies are providing only accommodation entries, the AO took the view that the assessee has introduced its unaccounted cash through the bogus loans stated above.
submitted that the lender companies belonged to Bhanwarial Jain Group and the directors themselves have confirmed that the transactions entered by their group are bogus. These concerns have adopted Circulatory method to transfer funds through many layers with the objective to give colour of genuineness to the transactions. He submitted that the modus operandi adopted by this group has been Cleary established by the revenue and the same methodology has been adopted by all the lenders. K was also proved that the directors of various companies are only employees of Shri Bhanwarial Jain. This group ensured that the transactions are arranged in a perfect manner in order to avoid even slightest of doubt. He submitted that the search team has, however, unearthed the bogus nature of all transactions, which has also been confirmed by Shri Bhanwarial jain and other persons.
6. The Ld D.R submitted that the appellate authorities are also duty bound to conduct necessary enquiries, if there ts any deficiency in the enquiry conducted by the AO, as held by Hon’ble Delhi High Court in the case of jansampark Advertising @ Marketing (P) Lid (ITA §25/2014 dated 11-03-2015). He further submitted that the Hon’ble Delht High Court has highlighted in the case of Pr. CIT Vs. Bikram Singh (ITA 55/2017 dated 25-08.2017) there is constant use of deception of loan entries to bring unaccounted money into banking channels and the device of loan entries continues to plague the legitimate economy of our Country. The Hon’ble Delhi High Court found in the above said case that the loan transactions did not inspire confidence as being genuine and are shrouded in mystery and accordingly confirmed the addition made by the AO u/s 68 of the Act.
7. The Ld D.R further submitted that the discharge of initial onus by the assessee alone will not disentitle the AO to make additions u/s 68 of the Act. He can make further verification to satisfy himself that the transactions are genuine. For this proposition, the Ld DR placed reliance on the decision rendered by Hon’ble Punjab & Haryana High Court in the case of CIT vs. Bhan and sons (2005) 273 ITR 206). The Ld DR submitted that the findings of search officials conclusively prove that the loan transactions are bogus. Accordingly, he submitted that mere furnishing of particulars is not enough in the peculiar facts of the present case. Accordingly, he submitted that the Ld CIT(A) not have brushed aside the findings of search officials. In this if appeal the Ld D.R placed reliance on the decision rendered by Hon‟ble Calcutta High Court in the case of CIT vs. Precision Finance Ltd(1994) (208 ITR 465). He submitted that the tax authorities are entitled to look into the surrounding circumstances and human probabilities in order to ascertain the genuineness of transactions. He further submitted that they are also entitled to look into the substance by overlooking the form. For these propositions, the Ld CIT-DR relied upon the decisions rendered by Hon’ble Supreme Court in the case of Sumati Dayal (214 ITR 80) (SC) and Durga Prasad More (82 ITR 540 (SC).
8 The Ld CIT-DR then took us through the financial statements relating to various lenders in order to show that they shared common addresses. He also took us through the copies of bank statements relating to the lenders in order to show to us that the moneys were transferred to the bank account of the lenders from some other account immediately before lending the same to the assessee. He submitted that all the lenders have followed same methodology of getting funds from some other accounts and then lending the same to the assessee. All the lenders have shared common addresses. The search officials have also shown that the directors of various companies are employees of Shri Bhanwarlal Jain, meaning thereby all the lender companies are filled with dummy directors. All these factors strengthen the admission made by Shri Bhanwarlal Jain that he and his group of companies are engaged in _ providing accommodation entries only.
9. Accordingly the Ld D.R submitted that the order passed by Ld CIT(A) should be reversed. Alternatively, he suggested that the matter may be restored to the file of the AO for examining it afresh by conducting further enquiries.
10. The Ld A.R submitted that the assessing officer has made the addition u s 68 of the Act. He submitted that the assessee is required to discharge the initial onus placed upon it u/s 68 of the Act. He submitted that the assessee has furnished all the documents in order to prove the identity and creditworthiness of the creditors. All the transactions have been routed through the banking channels ana hence genuineness of the creditors is also proved. The ld A.R submitted „the revenue did not find any incriminating material during the real of survey operations conducted in the hands of the assessee that the assessee, vide its letter dated 03-03-2015, has all the documents relating to the loan creditors, viz., copy of their ITR, their financial statements and bank statements, loan confirmation letters obtained from them and thus the assessee has discharged the initial onus placed upon it u/s 68 of the Act. He submitted that the onus to disprove the claim of the assessee was accordingly shifted to the assessing officer in view of furnishing of all the details. However, the assessing officer has failed to conduct any further enquiries to disprove the claim of the assessee.
11. He submitted that the legal principles settled by various Courts have been reiterated in the decisions rendered in the case of Bhan & sons (supra) and Precision Finance Company (supra), which were relied upon by the Ld CIT-DR. However the facts prevailing in those cases are different and hence those decisions are not applicable to the facts of the present case. He submitted that, in those cases, either the assessee did not discharge initial onus placed upon him or the assessing officer has not disproved the claim of the assessee. The Ld A.R submitted that, in the instant case, the assessee has discharged the initial onus by proving the three main ingredients, viz., the identity of the creditor, the creditworthiness of the creditor and genuineness of transactions by furnishing all the materials. He submitted that the assessing officer has not found fault with these materials and further did not conduct any further enquiries to disprove the various evidences furnished by the assessee. The Ld A.R further submitted that the Survey officials have recorded a statement from Shri Hemal Jhaveri, a key person of the assessee, during the course of survey. He was specifically asked on the admission made by Shri Bhanwarlal Jain. However, Shri Hemal Jhaveri has specifically stated that the admission made by Shri Bhanwarlal Jain do not indicate that the loans taken by the assessee are not genuine. The Ld A.R further submitted that Shri Bhanwarlal Jain and his group of companies are engaged in diamond trading business and existence of common address in diamond trade is not uncommon and hence adverse inference should not have been drawn _on those facts. He submitted that it is quite common to induct trusted employees as directors of the company and the said fact should not militate against the assessee. Accordingly, he submitted that the Ld CIT(A) was justified in deleting the addition made by the AO u/s 68 of the Act and also the consequential additions. The Ld A.R submitted that the assessing officer has mainly placed on the report given by the search officials, who conducted the salt EB ales the hands of Shri Bhanwarlal Jain. which consisted of certain documents and sworn statements recorded from him and the, employees. The assessing officer, however, did not confront those materials and sworn statements with the assessee. He submitted that the assessee, vide its letter dated 13-03-2015 (copy placed at page 89 of the paper book), has requested the AO to furnish copies of information, statements, reports or any document on which the AO has placed reliance. Further the assessee has also requested the AO to allow reasonable opportunity to give submissions and explanations on those materials. The assessee has also specifically asked for an opportunity to confront and cross examine the parties who gave the Statements. The assessee again made similar request in its letter dated 19-03-2015. The Ld A.R submitted that the AO, however, did not furnish the copies of documents and also did not allow the opportunity to cross examine the parties who gave adverse statements.
13. The La A.R submitted that the assessing officer is not entitled to rely upon the documents collected behind the back of the assessee. In this regard, the Ld A.R placed his reliance on the decision rendered by Hon’ble Supreme Court in the case of KishinchandChellaram vs. CIT (1980125 ITR 713). He further submitted that the assessing officer has not provided opportunity to cross examine the parties who gave adverse statements. He submitted that the Hon’ble Supreme Court has held in the case of Andaman Timber Industries vs. CIT (Civil Appeal No.4228 of 2006 dated 02-09-2015) that, not allowing cross examination of witnesses by the adjudicating authority will result in violation of natural justice, when the said authority is placing reliance on those statement of the witnesses. Accordingly, the Hon’ble Supreme court held that the order passed by the authority nullity. The relevant observations made by Hon’ble Supreme Court are extracted below:
“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 in as much 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 aforesaid two SSCS…”
AR further submitted that the assessee, vide its letter dated 115 (Placed at pages 90 -93 of paper book) has specifically requested the AO to issue summons to the loan creditors. The relevant submissions made by the assessee are extracted below:
“11. As informed earlier, all the loan creditors have been examined by _ the Investigation wing of the Income tax department and they have confirmed the transactions with our client. Ideally the appearance of the creditors before the Investigation wing and confirming the – transactions should conclude the matter beyond anyone’s doubt. If, however, you wish to make independent inquiries, we request you to issue summons to the loan creditors and call for their confirmations so as to once again establish the case of our client.”
However, the AO did not make any further enquiries at all nor did he issue summons to the loan creditors. Accordingly he submitted that the AO was not entitled to make addition u/s 68 of the Act under these facts as held by Hon’ble Supreme Court in the case of Orissa Corporation (P) Ltd (159 ITR 78)(SC).
15. The Ld A.R submitted that the assessee has repaid most of the loans and the same has been noted down by the Ld CIT(A) in paragraph 6.3.32 of his order. The Ld A.R further submitted the statements given by Shri Bhanwarlal Jain has been claimed to have been retracted. He submitted that the co-ordinate bench of the Tribunal has rendered its decision in the case of M/s Vama International (ITA No.7315, 7316 & 7317/Mum/2016 dated 15-022018), wherein the issue was related to the disallowance of purchases made from M/s Bhanwarlal Jain Group. In the said decision, the Tribunal has recorded that the statements have been retracted by them subsequently. The co-ordinate bench has further held that the purchases could not be treated as bogus simply relying on the statements given in the case of Bhanwarlal Group. Accordingly the La | A.R submitted that the AO could not have placed reliance on the statements given by Shri Bhanwarlal Jain and others.
16.We have heard rival contentions and perused the record. We also notice that the Ld CIT(A) has deleted the additions by making detailed observations. For the sake of convenience, we extract below the operative portion of the order passed by Ld CIT(A):
he “ty have carefully considered the issues brought out by the AO in the impugned assessment order and also the submissions made by the AR of the appellant. From the material, the AO has brought out in the body of the assessment order, his case against the appellant, which is summarized as under:
a. Shri Bhanwarlal Jain, in whose case a search action was conducteq in 2013 by the Investigation Wing, had been found to be running q hawala racket through a clutch of benami concerns, run with the help of dummy Directors / Partners /Proprietors, who were simply employees of the said Shri Jain and were paid nominal salaries.
b. Through the said benami concerns, hawala of two types were being given – (1) hawala for purchase of diamonds; and (2) hawala for unsecured loans.
c. Hawala entries were provided against unaccounted cash provided by the beneficiaries.
d. For the hawala services, so rendered by him, Shri Bhanwarlal Jain used to charge from the beneficiaries a certain percentage as commission.
e. In his statement, made under section 132(4), Shri Bhanwarlal Jain had admitted to the said hawala racket and also the existence of dummy/benami entities, through which the said racket was being run.
f. Dummy Directors / Partners / Proprietors had also admitted to being part of the hawala racket run by Shri Bhanwarlal Jain.
g. Names of entities, from whom the impugned loans of Rs. 24.75 crore were shown to have been obtained by the appellant, figured in the data base of entities and entries compiled by the Investigation Wing, therefore, these loans, the appellant had shown fh in its s books of account, were suspect.
h. Though the appellant had provided confirmations and other supporting evidence in respect of the impugned credits; in view of the jaragraph 4.18 of the. assessment order, the Assessing Officer claims that in their respective statements, recorded u/s 132(4) all Directors/ Proprietors/Partners of the alleged benami entities run by Shri Bhanwarlal Jain have admitted to being dummies, business in whose names was actually being run by Shri Bhanwarlal Jain.
b. In the very next sub-paragraph 4.19, the Assessing Officer goes on to name 13 individuals (LunkaranParasmal Kothari, Anil Khicha, Rajesh Chopra, RiteshSiroya, Rohit Birawat, Basant D Jain, Shreyansh L Jain, Bharat Omprakash Jain, Mahavir Mangalchand Jain, RamnivasChoyal, Gautam Kumot, Rajesh Chopra and Atul Ladda). – According to the Assessing Officer, these. persons were dummy Directors/Partners/Proprietors, used by Shri Bhanwarlal Jain in running his hawala racket. However, no details of the evidence, if any collected from these persons regarding their role in the alleged hawala racket, has been mentioned.
C. When it comes to detailing the adverse material, if any, the Assessing Officer, in sub-paragraph 4.23 of the impugned assessment order, refers to statements made by only three individuals (LunkaranParasmal Kothari, Anil Khicha and RiteshSiroya), who had reportedly admitted to being dummy Proprietors/Partners/Directors in benami concerns of the said Shri Bhanwarlal Jain. However, FIR, and mentioned anywhere in the assessment order whether these names are the there in the 17 parties from whom n the appellant has taken the loans, which are treated as non-genuine borrowings by the my, AO.
6.3.3 Certain conclusions are obvious. One, the Assessing Officer himself is not so clear about facts and has referred to mostly the material facts which are not relevant to the case. Two, the Assessing Officer has not referred to any adverse material in the cases of loan creditors that are being dubbed by him to be benamis of Shri Bhanwarlal Jain.
6.3.4 Hence, it is to be inferred that the quality of evidence, specific to the appellant is but poor and not fully relied upon. This flaw is further magnified as the adverse material if any (report of the Investigation Wing and alleged confessional statements of Shri Bhanwarlal Jain and others) have never been brought on record by making them available to the appellant From the impugned assessment order it is seen that though the Assessing Officer appears to have taken the view that the impugned loan creditors are mere entry providers and that the impugned loan entries have been obtained by the appellant against payments made to the said entry providers in cash, no specific material has been brought on record to show that creditors, from whom the impugned loans of @ 24.75 crore were taken are entry providers and that entries for the loans in question have actually been obtained against payments made by the appellant in cash outside regular books of account. There is no evidence brought on record for payment of any commission or fee having been made by the appellant to the alleged hawala givers. All this goes to support the contentions of the appellant that Assessing Officer has. passed the order on the basis of mere conjectures and surmises, without bothering to bring any concrete material on record.
6.3.5 Survey Action u/s 133A of the Act at the appellant premises: Material, brought on record by the appellant before the Assessing Officer in the course of assessment proceedings clearly shows that about a year after search action of 2013 in the case of Shri Bhanwarlal Jain, the appellant was surveyed by the Investigation Wing on 16-10-2014. The survey party found that the impugned loans of * 24.75 crore from the aforesaid 17 entities were incorporated in the Pare 6 of account of the appellant. Statement on oath of Shri Hemal Jhaveri, Key Person, was recorded on the 16th, the 17th and the 18th of October, 2014. Shri Hemal Jhaveri maintained that these loans were genuine and were not part of any hawala. He claimed that no commission whatsoever had been paid to Shri Bhanwarlal Jain; that interest had been paid to the creditors; and, that TDS had regularly been deducted and paid into the Government Treasury. The officers conducting the survey showed Shri Jhaveri an alleged confessional statement of 09-10-2013 made by Shri Bhanwartal Jain, admitting hawala operations through benami entities. Shri Hemal Jhaveri did not dispute the said statement of a third party but he asserted that the statement in question had been retracted by Shri Bhanwarlal Jain; and, the same could not be used against him. Relevant portions from the statement of Shri Hemal Jhaveri are reproduced as below:
Q. No. 28 In answer to Q No. 16 Shri. Bhanwar Lal Jain has accepted and reaffirmed the modus operandi of activities of all the concerns managed and controlled by him. From his reply it is apparent that all the concerns operated and managed by him are indulged in providing accommodation entries. It has further been accepted by you that unsecured loans in M/s Jainam Investment has also come from same concerns of M s Bhanwar Lal Jain. In view of same please explain as to why transaction between M s Jainam Investments and these concerns of Shri. Bhanwar Lal Jain should not be treated as merely accommodation entry.
Ans. I cannot comment on modus operandi as stated by Mr. Bhanwarlal Jain in answer to question .16 in. the said statement. But, it is observed from the question and answer that the issue covered therein is about goods and payments for those goods. It does not refer to any loans given by them. You had shown me earlier statement of Shri. Bhanwarlal Jain wherein he has admitted that he has given loans to some builders. These loans are not considered to be accommodation entries. There is no base for any adverse inference for treating loans received by Ms. Jainam Investments as not genuine.
Q.29 It is important to emphasize that in his statement he has explained how entries are given to parties in addition to diamond traders and how the whole chain of transaction is completed. Further it has been accepted by him that all the transactions done by his concerns follow the same modus operandi which amounts to only accommodation entries. In view of same, please explain as to why transaction between M s Jainam Investments and these concerns of Sh. Bhanwar Lal Jain should not be treated as merely accommodation
Ans. As stated by me in reply to earlier question, there ts no base for that presumption to treat loans received by M/S. Jainam Investment ay merely accommodation entry.
Q.30 As it has been stated by Shri. Bhanwar Lal Jain that all trading activity done by his concerns are nothing but only accommodation entries. It simply clarifies the fact that there is no real trading activity going on in these concerns. It simply explains that balance sheet which explains source of loan doesn’t prove credit worthiness of concerns. In view of this please explain why the unsecured loan taken by M/s Jainam Investments from the group concerns of Shri Bhanwarlal Jain should not be treated as just accommodation entry? Ans. In view of my reply to earlier question I can’t comment on this.
Q.31 Please go through the Q. No 29 to 34 of Shri. Bhanwar Lal Jain. In this statement Shri. Bhanwar Lal Jain has admitted that concerns operated by him has certain transactions which are not recorded in regular books of accounts. These transactions had not been routed through banks but through angdiya account in cash. Shri. Bhanwar Lal Jain had also admitted that he used to record these transactions in separate parallel books in electric form as well as and in physical form. During the course of search u/s 132 on 03.10.2013 these parallel books of accounts were seized and Shri Bhanwar Lal Jain has also explained in detail the codes under which these accounts were maintained. In post search investigation, these accounts were deciphered wherein your name against transactions through angadiya channel were also recorded. During the course of survey in your premise in the books of accounts of M/s Jainam Investments same entries have been found. In view of above, please, explain as to why transaction between M/ s Jainam Investments and these Ans. I have gone through the content. I reaffirm that my loan transactions with various entities of Shri Bhanwar Lal Jain are not accommodation entries.
Q.32 Please furnish logical argument to contravene the statement of Shri. Bhanwar Lal Jain who is operator of the loan giving concern and who himself has accepted that all transactions done by concerns are merely accommodation entries. In view of my reply to earlier questions I can’t comment on this.
Q.34 In view of the above questions and your reply to the same, why the amount of Rs.116,16,00,000/ -should not be treated as your undisclosed income in various financial years as below?
