ACIT 32 1 MUMBAI, MUMBAI V. RAMESH VIRJI SHAH, MUMBAI

ITA 4328/MUM/2024

AI Insights

The case revolves around an appeal by the Assistant Commissioner of Income Tax against Ramesh Virji Shah concerning the Assessment Year 2012-2013. The primary issue was the addition of INR 1,94,00,000 to the Assessee's income, which the Assessing Officer claimed were accommodation entries from Abijah Real Estate Pvt. Ltd., a company involved in providing bogus entries. The CIT(A) allowed the Assessee's appeal, finding that the amount represented sale proceeds from shares and not accommodation entries. The Tribunal agreed with the CIT(A), noting that the Assessee had discharged the burden of proof under Section 68 of the Act by providing substantial documentary evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361121 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2012-2013
• Other Referred Cases: Sudhir Kumar Sharma (HUF) Vs. Commissioner of Income Tax-III, Ludhiyana, Shri Arunkumar J. Muchhala Vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Reassessment proceedings; Onus to prove; Accommodation entries; Bogus
• Section: 147; 148; 143(3); 68; 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No.4328/MUM/2024 (Assessment Year: 2012-2013) Assistant Commissioner of Income Tax 32(1), Mumbai 252, 2nd Floor, Kautilya Bhavan, BKC, Bandra East, Mumbai – 400 051. Maharashtra. .…………. Appellant Ramesh Virji Shah, Mumbai 8/505, Jupiter Swami Narayan Mandir, Vile Parle East, Mumbai - 400057. Maharashtra. [PAN:AAEPS9305A] Vs …………. Respondent Appearance For the Appellant/Department For the Respondent/Assessee : : Shri R. R. Makwana Shri S. C. Tiwari Date Conclusion of hearing Pronouncement of order : : 12.03.2025 20.05.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Revenue is directed against the order, dated 28/06/2024, passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had allowed the appeal of the Assessee against the Assessment Order, dated 30/11/2019, passed under Section 143(3) read with Section 147 of the Act for the Assessment Year 2012-2013. 2. The Revenue has raised following grounds of appeal : “1. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was Justified in deleting the addition made by ITA No.4328/Mum/2024 Assessment Year 2012-2013 2 the AO despite of certain payments in the name of Ramesh V Shah appearing in the bank statement of Abijah Real Estate P Ltd, a company controlled by Shri Shirish C Shah, the main person engaged in providing bogus accommodation entries? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition made by the AO despite of assessee having being received accommodation entry of Rs. 19400000/- in the F.Y. 2011-12 from Abijah Real Estate P Ltd., which is engaged in providing bogus accommodation entries and despite assessee's failure to prove the loans received during the year is genuine? 3. Whether on the forts and circumstances of the case and in law, the Ld.CIT(A) was justified in ignoring the decision of the Hon'ble Supreme Court of India in the case of Sudhir Kumar Sharma (HUF) Vs. Commissioner of Income Tax-III, Ludhiyana and Hon'ble Bombay High Court in the case of Shri Arunkumar J. Muchhala Vs. CIT, (2017) 85 taxmann.com 306 (Bombay), 2017-TIOL-1666-HC-MUM-IT, in which the addition made by AO u/s 68 of the Income Tax Act on similar issue was confirmed?” 3. The relevant facts as emerging from record are that return filed by the Assessee for the Assessment Year 2012-2013 on 28/09/2012 declaring total income of INR.19,16,960/- was processed under Section 143(1) of the Act. Subsequently, information was received by the Assessing Officer from Deputy Commissioner of Income Tax - Central Circle Unit 2(2), Mumbai, vide letter dated 12/07/2017, to the effect that the Assessee has taken accommodation entries from Abijah Real Estate Private Ltd. which was an entity controlled and managed by Mr. Shirish C. Shah – an accommodation entry provider. On perusal of the bank statements of the Abijah Real Estate Private Ltd., the Assessing Officer noted that the following payments were made to the Assessee which were credited to the bank account of the Assessee: Date Banker’s Name Type of Transfer Amount (INR) 20-03-2012 Yes Bank RTGS 21,00,000.00 20-03-2012 Yes Bank RTGS 15,00,000.00 20-03-2012 Yes Bank RTGS 27,00,000.00 20-03-2012 Yes Bank RTGS 37,00,000.00 ITA No.4328/Mum/2024 Assessment Year 2012-2013 3 26-03-2012 Yes Bank RTGS 10,00,000.00 27-03-2012 Yes Bank RTGS 60,00,000.00 30-03-2012 Yes Bank RTGS 24,00,000.00 Total Payment 1,94,00,00.00 4. Accordingly, notice under Section 148 of the Act initiating reassessment proceedings under Section 147 of the Act was issued to the Assessee on 20/03/2019 after recording reasons for reopening assessment. In response to the aforesaid notice, the Assessee filed return of income on 12/04/2019 declaring income of INR.19,16,960/- and requested for reasons recorded for reopening the assessment. Thereafter, the reasons recorded for reopening the assessment were provided to the Assessee and vide letter, dated 12/07/2019, the Assessee filed objections to the same. The Assessing Officer disposed off the said objection vide Order, dated 15/10/2019, and proceeded to pass Assessment Order under Section 143(3) read with Section 147 of the Act on 30/11/2019 making (a) addition of INR.1,94,00,000/- under Section 68 of the Act in respect of the payments received from Abijah Real Estate Private Ltd. and (b) a further addition of INR.3,88,000/- (computed @ 2% of INR.1,94,00,000/-) under Section 68 of the Act holding the same to be payment made for obtaining the aforesaid bogus accommodation entries. 5. Being aggrieved, the Assessee preferred appeal before the CIT(A). It was submitted before the CIT(A) that the Assessee had not received any accommodation entries from Abijah Real Estate Private Ltd. and that the aggregate payment of INR.1,94,00,000/- received from Abijah Real Estate P. Ltd. represented sale proceeds received by the Assessee on sale of shares held by the Assessee. While objecting to reasons recorded for reopening the assessment, the Assessee had placed before the Assessing Officer documentary evidence to support the aforesaid contention. However, the Assessing Officer had omitted to consider the said objections to reassessment and the ITA No.4328/Mum/2024 Assessment Year 2012-2013 4 documentary evidence under the pretext of applying the judgment in the case of Raymond Woollen Mills Ltd. 236 ITR 34. Further, it was recorded by the Assessing Officer that notice issued under Section 133(6) of the Act on 30/10/2019 to Abijah Real Estate Pvt. Ltd. at its registered address was not complied with. In this regard, it was submitted that the Assessee had already furnished to the Assessing Officer affidavit, dated 7/06/2019, sworn by Mr. Manoj Kumar Tak, the Director of Abijah Real Estate Pvt. Ltd. which was supported by the following documents: (a) Copy of the Agreement for Sale of Shares entered between Abijah Real Estate Pvt. Ltd and the Assessee on 24.09.2011. (b) Confirmation of Accounts, dated 01/04/2012, from Abijah Real Estate Pvt. Ltd. evidencing the transfer of shares and payment of sale consideration through banking channel (c) Copy of DP Account of Abijah Real Estate Pvt. Ltd of the relevant period with IndiaNivesh Securities Pvt. Ltd. where the shares sold by the Assessee were received by Abijah Real Estate Pvt. Ltd. (d) Copy of the Abijah Real Estate Pvt. Ltd. Bank Statement with Yes Bank from where the payments were made to the Assessee (e) Copy of Financial Statements of Abijah Real Estate Private Limited with the Return of Income (f) Copy of the DP Accounts of the Assessee for the relevant period with Cosmos Cooperative Bank Ltd, Pune and Inventure Growth and Securities Ltd from where the shares were transferred by the Assessee 6. The above submission found favor with the CIT(A) and therefore, the CIT(A) deleted the addition made by the Assessing Officer and allowed the appeal preferred by the Assessee. 7. Being aggrieved, the Revenue has preferred the present appeal on the grounds reproduced in Paragraph 2 above. 8. The primary contention advanced by the learned Departmental ITA No.4328/Mum/2024 Assessment Year 2012-2013 5 Representative that the CIT(A) has granted relief to the Assessee without appreciating the correct facts. Placing reliance upon the Assessment Order, dated 30/11/2019, the Learned Departmental Representative submitted that Assessee had taken accommodation entries and had failed to discharge onus cast upon the Assessee to prove the identity and creditworthiness of the payee and the genuineness of the transaction. Reliance has also placed upon judgment of (a) the Hon’ble Supreme Court of India in the case of Sudhir Kumar Sharma (HUF) Vs. Commissioner of Income Tax –III, Ludhiyana: [2016] 69 taxmann.com 219 (SC), dated 15/01/2016 and (b) the Hon’ble Bombay High Court in the case of Shri Arunkumar J. Muchhala Vs. CIT, [2017] 85 taxmann.com 306 (Bombay), dated 24/08/2017. It was vehemently contended that the CIT(A) has merely reproduced the submission and the judgments relied upon by the Assessee without recording any independent findings. 9. Per contra the Learned Authorized Representative appearing before us submitted that the Assessee had discharge onus cast upon the Assessee under Section 68 of the Act and had furnished all necessary documents and details. It is only after considering the same that the CIT(A) had granted relief to the Assessee. It was further submitted that the Assessee had explained that the payments being examined were received by the Assessee as consideration for transfer of shares and the same was supported by documentary evidence including the affidavit given by the Director of the Purchaser (i.e. Abijah Real Estate Private Limited). Even though all the documents were placed before the Assessing Officer, the Assessing Officer had incorrectly concluded that the Assessee had taken accommodation entry of loan and had failed to discharge onus of proof in terms of Section 68 of the Act. 10. We have heard both the sides and have perused the material on ITA No.4328/Mum/2024 Assessment Year 2012-2013 6 record including the order passed by the authorities below and the documents placed before us as part of the paper-book filed by the Assessee. 11. It is evident that the Assessing Officer had initiated reassessment proceedings on the belief that Assessee had taken unsecured loans from entities controlled by Mr. Shirish C. Shah. It is also evident that at the stage of filing objections to the reasons recorded for reopening assessment, the Assessee had, vide Letter dated 12/07/2019, taken a clear stand that the aggregate payment of INR.1,94,00,000/- received by the Assessee represented consideration for sale of shares and not unsecured loan. In support, the Assessee had furnished the documents listed in paragraph 5 above. It was stated in the objections filed that the transaction was undertaken in ordinary course and the payments were admittedly received through banking channel. We find that there was no doubt regarding the identity of the payee (i.e. Abijah Real Estate Private Limited). Along with Letter, dated 02/11/2019, the Assessee had placed before the Assessing Officer the Income Tax Return Acknowledgement for the Assessment Year 2012-2013 of Abijah Real Estate Private Limited (containing details about PAN, jurisdictional assessing officer, and address) as well as the Financial Statements and Bank Account Statement of Abijah Real Estate Private Limited. The Assessee had also filed affidavit of sworn by the director of Abijah Real Estate Private Limited which read as under: “I, Mr Manoj Kumar Tak, Director of Abijah Real Estate Private Limited a company incorporated under the Companies Act, 1956 having its registered office at Gala G-3 Sainath Ind. Estate, BPX Road, Bhayander East, Near Masjid Thane - 401105, do solemnly affirm and state as follows:- 1. That I am the Director of the above company from the Financial Year 2017-18 and continue to be as Director of the said company till date. ITA No.4328/Mum/2024 Assessment Year 2012-2013 7 2. That the Abijah Real Estate Private Limited has made the following transactions with Ramesh V. Shah as per the books of accounts and documents thereon. Share, Purchase Agreement dated 24/09/2011 was signed with Ramesh V. Shah for purchase of 10,51,487 (Ten Lac Fifty One Thousand Four Hundred Eighty Seven Shares) of Avance Tech. Ltd., Purchase of 3,45,000 (Three Lac Forty Five Thousand Shares) of Prabhav Industries Ltd. and 13,00,000 (Thirteen Lacs Shares) of face value of Rs.1 of Mahan Industries Ltd. at lump sum price of Rs. 1,94,00,000 (Rupees One Crore Ninety Four Lac Only). 13,00,000 shares of Mahan Industries Ltd. of Face Value of Rs. 1/- become 1,30,000 shares of Face Value of Rs.10/- on 09/03/2012 due to the consolidation of shares. Accordingly 1,30,000 shares of Mahan Industries Ltd. were transferred on 02/04/2012 to our DP account. Payment against Share Purchased was made as under: Date Banker’s Name Type of Transfer Amount 20-03-2012 Yes Bank RTGS 21,00,000.00 20-03-2012 Yes Bank RTGS 15,00,000.00 20-03-2012 Yes Bank RTGS 27,00,000.00 20-03-2012 Yes Bank RTGS 37,00,000.00 26-03-2012 Yes Bank RTGS 10,00,000.00 27-03-2012 Yes Bank RTGS 60,00,000.00 30-03-2012 Yes Bank RTGS 24,00,000.00 Total Payment 1,94,00,00.00 I also confirm that Shares Purchased were duly transferred to our DP A/c No. 1204940000061823 with Indianivesh Securities Pvt. Ltd. by Ramesh V. Shah. The above contents are true and correct to the best of my knowledge and belief.” 12. We note that in Paragraph 4.1 of the Assessment Order, the Assessing Officer had taken note of the above facts and had recorded the factum of the Assessee having filed the documents specified in paragraph 5 above. However, the Assessing Officer rejected the submissions of the Assessee and the documents furnished in support of the transaction which supported the stand taken by the Assessee that the payment of INR.1.94 Crores received by the Assessee represented consideration for sale of shares which ITA No.4328/Mum/2024 Assessment Year 2012-2013 8 was received from Abijah Real Estate Private Limited. The Assessing Officer concluded that the Assessee had taken loans from Abijah Real Estate Private Limited and had failed to discharge the onus cast upon the Assessee under Section 68 of the Act to prove identity and creditworthiness of the lender and the genuineness of the transaction. In appeal preferred by the Assessee, the CIT(A) deleted the addition made under Section 68 of the Act. We concur with the conclusion drawn by the CIT(A) in view of the following. On perusal of record, we find that the Assessing Officer had made the addition on the basis of incorrect understanding that the Assessee had taken accommodation entries of loan from Abijah Real Estate Private Limited. The documents furnished by the Assessee clearly showed that Assessee had received consideration of INR.1.94 Crores from Abijah Real Estate Private Limited on sale of shares. While the Assessee had placed before the Assessing Officer all the documents specified in Paragraph 5 above, the Assessing Officer failed to bring on record any material or documents to challenge the veracity of the aforesaid documents/details. There is nothing on record to suggest that the Assessee had taken loan from Abijah Real Estate Private Limited. Even in the grounds raised in the present appeal the Revenue has continue to take a stand that the Assessee had taken accommodation entry on INR.1.94 Crores and that the Assessee had failed to prove genuineness of the loan transaction. On the other hand, on perusal of record we find that the Assessee had placed before the Assessing the following documents to support the nature and source of credit of INR.1.94 Crores reflected in the books of account of the Assessee in terms of Section 68 of the Act - (a) Copy of the Agreement for Sale of Shares entered between Abijah Real Estate Pvt. Ltd and the Assessee on 24.09.2011; (b) Copy of DP Account of Abijah Real Estate Pvt. Ltd of the relevant period with IndiaNivesh Securities Pvt. Ltd. where the shares sold by the Assessee were received by Abijah Real Estate Pvt. Ltd.; (c) Copy of ITA No.4328/Mum/2024 Assessment Year 2012-2013 9 the DP Accounts of the Assessee for the relevant period with Cosmos Cooperative Bank Ltd, Pune and Inventure Growth and Securities Ltd from where the shares were transferred by the Assessee; (d) Copy of the Abijah Real Estate Pvt. Ltd. Bank Statement with Yes Bank from where the payments were made to the Assessee; (e) Copy of Financial Statements of Abijah Real Estate Private Limited with the Return of Income; and (f) Confirmation of Accounts, dated 01/04/2012, from Abijah Real Estate Pvt. Ltd. evidencing the transfer of shares and payment of sale consideration through banking channel. Additional, the Assessee had also furnished affidavit, dated 7/06/2019, sworn by Mr. Manoj Kumar Tak, the Director of Abijah Real Estate Pvt. Ltd. wherein it was deposed by the said director that consideration of INR.1.94 Crores paid to the Assessee was consideration for shares sold by the Assessee to Abijah Real Estate Pvt. Ltd. Therefore, in view of the aforesaid, we hold that the finding returned by the Assessing Officer that the Assessee had failed to discharge burden of proof in terms of Section 68 of the Act is contrary to the material on record. The Assessee had discharged the primary onus cast upon the Assessee under Section 68 of the Act by placing on record relevant documents/details in support of the contention that the Assessee had received consideration of INR.1.94 Crores from sale of shares. 13. During the course of hearing reliance was placed on behalf of the Revenue upon the judicial precedent in the case of Sudhir Kumar Sharma HUF (supra) and in the case of Arunkumar J. Muchhala (supra). On perusal of the same it emerges that, in both the cases, the assessee had failed to file confirmations/documents in support of the transaction being scrutinized in those cases. Whereas in the present case, the Assessee has filed documents/details specified in Paragraph 5 above to discharge the primary onus cast upon the Assessee in terms of Section 68 of the Act. In our view, the ITA No.4328/Mum/2024 Assessment Year 2012-2013 10 Assessing Officer was required to bring on record any material/details to controvert the claim of the Assessee and/or to challenge the veracity of the documents filed by the Assessee. Since the Revenue has failed to do so, we do not find any reason to interfere with the order passed by the CIT(A). 14. In view of above, the decision of CIT(A) deleting addition (a) of INR.1,94,00,000/- in respect of the alleged accommodation entry of unsecured loan and (b) addition of INR.3,88,000/- in respect of alleged commission paid for taking the aforesaid accommodation entry, is confirmed. Thus, the conclusion drawn by the CIT(A) and deletion of aggregate addition of INR.1,97,88,000/- is confirmed, albeit, for different reasons stated hereinabove. Ground No. 1 to 3 raised by the Revenue are dismissed. 15. In result, the appeal preferred by the Revenue is dismissed. Order pronounced on 20.05.2025. Sd/- Sd/- (Renu Jauhri) Accountant Member (Rahul Chaudhary) Judicial Member मुंबई Mumbai; िदनांक Dated :20.05.2025 Milan, LDC ITA No.4328/Mum/2024 Assessment Year 2012-2013 11 आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. आयकर आयुƅ/ The CIT 4. Ůधान आयकर आयुƅ / Pr.CIT 5. िवभागीय Ůितिनिध ,आयकर अपीलीय अिधकरण ,मुंबई / DR, ITAT, Mumbai 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, सȑािपत Ůित //True Copy// उप/सहायक पंजीकार /(Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, मुंबई / ITAT, Mumbai "