ACIT-18(1), MUMBAI V. M/S.D.N.H.SPINNERS PRIVATE LIMITED, MUMBAI

ITA 1225/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3777 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 01-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Bogus loan
• Section: 143(3); 133A; 133(6); 201; 131; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.1225 /MUM/2018 ASSESSMENT YEAR : 2009-10 ACIT 1 8 ( 1 ), MUMBAI VS. D N H SPINNERS PRIVATE LTD., 601, 601, 60, BUSINESS CLASSIC, CHINCHOLI BUNDER ROAD, MALAD (W), MUMBAI 400 064. PAN : AADCD5709P (APPELLANT) ( RESPONDENT) APPELLANT BY : SHRI RAJESH KUMAR RESPONDENT BY : SHRI RAKESH JOSHI DATE OF HEARING : 03 .0 6 .201 9 DATE OF PRONOUNCEMENT : .06 . 201 9 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-29, MUMBAI, DATED 20.04.2016, WHICH I N TURN ARISES OUT OF THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 147 OF THE I.T. ACT, 1961 FOR A.Y. 2009-10. 2. THE ONLY EFFECTIVE ISSUE RAISED BY REVENUE IN VA RIOUS GROUNDS IS AGAINST THE DELETION OF ADDITION OF ` 65,00,000/- BY THE LEARNED CIT(A) AS MADE BY THE AO U/S 68 OF THE ACT ON ACCOUNT OF UNSECURED LO AN FROM PERSONS/ENTITIES ENGAGED IN PROVIDING ACCOMMODATION ENTRY. ITA 1225/MUM/2018 DNH SPINNER PVT. LTD. 2 3. THE FACTS IN BRIEF ARE THAT THE CASE OF THE ASSE SSEE WAS RE-OPENED U/S. 147 OF THE ACT BY ISSUE OF NOTICE U/S. 148 AFTER TH E AO RECEIVED INFORMATION FROM THE DGIT (INV), MUMBAI, THAT THE ASSESSEE IS A BENEFICIARY OF BOGUS LOAN ENTRIES FROM SHRI PRAVIN KUMAR JAIN GROUP COMP ANIES/ENTITIES. DURING THE YEAR, THE AO OBSERVED THAT THE ASSESSEE HAD TAK EN BOGUS LOANS TO THE EXTENT OF ` 65 LACS FROM PRAVIN KUMAR JAIN GROUP CONCERNS COMP RISING OF ` 20 LACS FROM M/S. M/S. OLIVE OVERSEAS PVT. LTD., ` 20 LACS FROM JASODA EXPORT, ` 10 LACS FROM MOHIT INTERNATIONAL AND ` 15 LACS FROM RYAN INTERNATIONAL. THE SAID FACT CAME TO LIGHT WHEN THE INVESTIGATION WING CONDUCTED A SEARCH ON PRAVIN KUMAR JAIN & ASSOCIATES. THE AO IN ORDER TO VERIFY THE GENUINENESS OF THE LOANS RAISED FROM THESE PARTIES ISSUED NOTICE U /S. 133(6) OF THE ACT. HOWEVER, ALL THE NOTICES WERE RETURNED UN-SERVED EX CEPT IN THE CASE OF JASODA EXPORT. THE AO TREATED THESE LOANS AS BOGUS AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE BY FRAMING ASSESSEE U/S . 143(3) R.W.S. 147 OF THE ACT. 4. IN THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT ASSESSEE HAS SUBMITTED SUFFICIENT DOCUMENTS TO PROVE THE GENUINENESS OF THE LOAN TRANSACTIONS AND, THUS, DELETED THE ADDITION. 5. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED BEFORE THE BENCH THAT THE ISSUE AT HAND IS SQUARELY COVERE D BY THE ORDER OF THE CO- ITA 1225/MUM/2018 DNH SPINNER PVT. LTD. 3 ORDINATE BENCH VIDE ORDER DATED 14.03.2019, IN ASS ESSEES OWN CASE IN ITA NOS. 5886 & 5887/MUM/2017 FOR A.YS. 2011-12 AND 201 2-13, WHEREIN THE BENCH DISMISSED THE APPEAL OF THE REVENUE BY HOLDIN G THAT ASSESSEE HAS DISCHARGED ITS ONUS BY FILING EVIDENCES IN THE FORM OF BANK STATEMENTS, INCOME TAX RETURNS, PAN OF LENDERS AND CONFIRMATION S, WHEREAS THE AO HAS MERELY RELIED ON THE STATEMENT OF SHRI DINESH KUMAR JAIN A DIRECTOR OF THE ASSESSEE COMPANY, WHOSE STATEMENT WAS RECORDED DURI NG THE COURSE OF SEARCH. THE LEARNED AR SUBMITTED THAT THE AO HAS R ELIED ON THE STATEMENT OF SHRI DINESH KUMAR JAIN, WHICH STOOD RETRACTED AFTER THREE DAYS FROM THE DATE OF RECORDING. THE LEARNED AR THEREFORE, SUBMITTED THAT THE ISSUE MAY BE DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF CO-ORDINATE BENCH BY DISMISSING THE APPEAL OF THE REVENUE. 6. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE GROUNDS OF APPEAL AND THE ASSESSMENT ORDER. 7. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDER OF THE CO- ORDINATE BENCH IN ITA NOS. 5886 & 587/MUM/2017 (SUP RA), WE OBSERVE THE IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE A SSESSEE IN THE ABOVE APPEALS. THE OPERATIVE PART OF THE SAID ORDER IS REPRODUCED AS UNDER: 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE WRITTE N SUBMISSIONS FILED BY THE LD. A.R. AND THE LD. D.R. ALONG WITH VARIOUS CA SE LAWS REFERRED AND RELIED BY BOTH THE PARTIES. THE UNDISPUTED FACTS AR E THAT THE ASSESSEE COMPANY WAS FORMED AND CONSTITUTED ON 15.09.2010 AN D IT HAS TAKEN OVER BUSINESS OF M/S. D.N.H SPINNERS A PARTNERSHIP FIRM ON GOING CONCERN ITA 1225/MUM/2018 DNH SPINNER PVT. LTD. 4 BASIS. THERE WAS A SURVEY ACTION UNDER SECTION 133A OF THE ACT ON THE ASSESSEE ON 25.03.2014. DURING THE COURSE OF SURVEY A STATEMENT UNDER SECTION 131 OF THE ACT WAS RECORDED OF SHRI DINESH JAIN ON 26.03.2014 WHO IS DIRECTOR OF THE ASSESSEE COMPANY WHEREIN THE SURVEY TEAM INFORMED HIM THAT VARIOUS UNSECURED LOANS TAKEN BY THE ASSESSEE FROM SEVEN ENTITIES CONTROLLED BY SHRI PRAVIN KUMAR JAIN WHO HAS ADMITTED BEFORE THE INVESTIGATION WING IN THE COURSE OF SEAR CH PROCEEDINGS THAT HE AND HIS ASSOCIATED CONCERNS WERE PROVIDING ACCOMMOD ATION ENTRIES. SHRI DINESH JAIN, DIRECTOR OF THE ASSESSEE COMPANY ADMIT TED THAT THEY HAVE TAKEN THESE ENTRIES FROM SHRI PRAVIN KUMAR JAIN AND ASSOCIATES. ACCORDING TO THE ASSESSEE THE STATEMENT OF SHRI DIN ESH JAIN WAS RECORDED UNDER PRESSURE. HOWEVER, LATER ON SHRI PRA VIN KUMAR JAIN RETRACTED HIS STATEMENT AND LIKEWISE SHRI DINESH JA IN ALSO RETRACTED HIS STATEMENT ON 29.03.2014 WITHIN THREE DAYS FROM THE DATE OF RECORDING THE SAME. IN THIS CASE DURING THE COURSE OF ASSESSM ENT PROCEEDINGS THE ASSESSEE HAS FILED COPIES OF BANK STATEMENT, ITRS, CONFIRMATIONS, PAN NUMBERS OF THE LENDERS ETC. AND THUS THE ASSESSEE H AS FULLY DISCHARGED THE ONUS CAST UPON IT AND THUS THE ADDITION UNDER S ECTION 68 CAN NOT BE MADE IN THE SAID CIRCUMSTANCES QUA THE UNSECURED LO ANS RAISED BY THE ASSESSEE. THE AO HAS MERELY RELIED ON THE STATEMENT OF SHRI DINESH JAIN WHO IS DIRECTOR IN THE ASSESSEE COMPANY BY IGNORING THE FACT THAT THE STATEMENT GIVEN BY THE SAID DIRECTOR STANDS RETRACT ED AFTER THREE DAYS FROM THE RECORDING OF THE SAME. AFTER PERUSING THE ORDER OF LD. CIT(A) WHO HAS DEALT WITH THE FACTS IN GREAT DETAIL AND AL SO DISCUSSED THE VARIOUS DECISIONS WHEREIN IT HAS BEEN HELD THAT NO SUCH ADD ITION CAN BE MADE UNDER SECTION 68 WHERE THE ASSESSEE HAS FILED ALL T HE NECESSARY EVIDENCES BEFORE THE AO WHEN AO HAS NOT MADE ANY FURTHER ENQU IRY TO TO PROVE OTHERWISE. THE ALLEGATION OF THE AO THAT ASSESSEE H AS NOT PROVED IDENTITY AND CREDITWORTHINESS OF THE LENDERS AND GENUINENESS OF THE TRANSACTIONS IS WITHOUT ANY BASIS AS STATED ABOVE. THE ASSESSEE FILED THE NECESSARY EVIDENCES IN THE FORM OF LOAN CONFIRMATIONS, BALANC E SHEETS AND PROFIT AND LOSS ACCOUNTS, ITRS, BANK STATEMENTS AND PAN CA RDS OF THE LENDERS. THE LENDERS COMPANIES WERE FILING THEIR ITR AND ROC RETURNS REGULARLY AND HAVE DULY SHOWN THE AMOUNT LENT TO THE ASSESSEE IN THEIR RESPECTIVE BALANCE SHEETS. ENTIRE TRANSACTIONS WERE ROUTED THR OUGH THE BANKING CHANNELS AND THUS THE ASSESSEE HAS DISCHARGED THE P RIMARY ONUS OF PROVING THE IDENTITY, CREDITWORTHINESS AND GENUINEN ESS OF THE TRANSACTIONS. ANOTHER ALLEGATION OF THE AO IS THAT ASSESSEE HAS FAILED TO PRODUCE THE PARTIES AND HENCE QUESTION OF PROVIDING CROSS EXAMINATION DOES NOT ARISE WHICH IS WITHOUT MERIT AS THE ASSESS EE HAS DISCHARGED ITS ONUS BY PROVIDING ALL THE BASIC DOCUMENTARY EVIDENC ES BEFORE THE AO WHO JUST RELYING ON THE STATEMENT OF SHRI PRAVIN KU MAR JAIN TREATED THE LOAN TRANSACTIONS AS UNEXPLAINED CREDIT IN THE BOOK S OF THE ASSESSEE. ON THE ISSUE THAT THESE LENDERS ARE SHOWING LOW INCOME OR LOSSES IN THE RETURN OF INCOME FILED, WE OBSERVE THAT IN THE BALA NCE SHEETS THE SAID LOAN ADVANCED BY THE LENDER WERE DULY REFLECTED AND THUS THERE IS NO INCOME IN THE PARTICULAR YEAR HAS NO RELEVANCE AND THERE WERE SUFFICIENT ITA 1225/MUM/2018 DNH SPINNER PVT. LTD. 5 SOURCES. UNDER THESE CIRCUMSTANCES, WE, AFTER TAKIN G INTO CONSIDERATION CONTENTIONS M, SUBMISSIONS AND WRITTEN SUBMISSIONS OF BOTH THE PARTIES AND AFTER ANALYZING THE VARIOUS CASE LAWS RELIED UP ON BY THE RIVAL PARTIES , ARE OF THE VIEW THAT ORDER PASSED BY THE LD. CIT(A) IS WELL REASONED AND THERE IS NO REASONS TO DEVIATE FROM THE FINDINGS OF THE LD CIT(A) AND THEREFORE SAME IS BEING UPHELD BY DISMISSING THE AP PEAL OF THE REVENUE. FACTS AND CIRCUMSTANCES BEING IDENTICAL IN THE INST ANT CASE VIS--VIS THE APPEALS AS DECIDED BY THE COORDINATE BENCH ABOVE AN D THERE ARE NO NEW EVIDENCES BROUGHT ON RECORD FOR THE YEAR UNDER CON SIDERATION BY THE REVENUE TO THE CONTRARY, WE, THEREFORE, RESPECTFULLY FOLLO WING THE DECISION OF THE CO- ORDINATE BENCH IN ASSESSEE OWN CASES IN EARLIER YE ARS, ARE INCLINED TO UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUND RAIS ED BY THE REVENUE 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 7 TH JUNE, 2019 SD/- SD/- (RAM LAL NEGI) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 27 TH JUNE, 2019 SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER, /TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI