ITO WD 5(3)(2), MUMBAI V. SHREEJI MULTITRADE P.LTD, MUMBAI

ITA 1530/MUM/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8697 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 05-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SAMRUDDHI MALI
• Keywords: Unexplained cash credit; Onus to prove; Set aside
• Section: 68; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “G” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA No. 1530/MUM/2017 Assessment Year: 2012-13 Income Tax Officer Ward 5(3)(2), Room No. 526, 5 th floor, Aayakar Bhavan, M.K. Road, Mumbai-20 Vs. M/s Shreeji Multitrade Pvt. Ltd., 4 th floor, Rukmani Niwas, 69, JSS Road, Opera House, Mumbai-400 004. PAN No. AABCH 8303 D Appellant Respondent Revenue by : Mr. Hoshang B. Irani, DR Assessee by : Ms. Samruddhi Mali, AR Date of Hearing : 27/04/2022 Date of pronouncement : 10/06/2022 ORDER PER OM PRAKASH KANT, AM This appeal by the Revenue is directed against order dated 24/11/2016 passed by the Ld. Commissioner of Income-Tax (Appeal)-10, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2012-13, raising following grounds: 1. "Whether, on the facts and circumstances of the case and in the law, the Ld. CIT(A) has erred in allowing the appeal of the assessee without considering the I.T. Act and onus to prove the genuineness of the transaction." "Whether, on the facts and circumstances of the case and in the law, the Ld. CIT(A) has erred in allowing relief to the assessee despite the failure of the transaction, identity of the cash creditor and creditworthiness of the creditor." 2. Briefly stated facts of the case are that during the year under consideration a sum of received by the assessee company on 04/05/2011 from M/s Innovative Spinning and Knitting Private Limited. During scrutiny proceedings, the Assessing Officer statement found this sum and out of the same, the assessee Garandiose Jewelry however submitted ₹1,40,00,000/- was transferred and recorded against Glitters marketing Private Limited ( Innovative Spinning M/s Shreeji Multitrade Pvt. Ltd. assessee without considering the provisions of section 68 of the I.T. Act and onus to prove the genuineness of the transaction." "Whether, on the facts and circumstances of the case and in the law, the Ld. CIT(A) has erred in allowing relief to the assessee despite the failure of the assessee to prove the genuineness of the transaction, identity of the cash creditor and creditworthiness of the creditor." stated facts of the case are that during the year under consideration a sum of ₹2,00,00,000/-was shown to have been ed by the assessee company on 04/05/2011 from M/s Innovative Spinning and Knitting Private Limited. During scrutiny Assessing Officer on verification of the bank statement found this sum as received on 04/05/2011 , the assessee transferred ₹1,99,75,000/ Jewelry Private Limited on same date however submitted that in books of account was transferred and recorded against Private Limited (i.e. associate concern of M/s ng and Knitting Private Limited M/s Shreeji Multitrade Pvt. Ltd. ITA NO. 1530/M/2017 2 provisions of section 68 of the I.T. Act and onus to prove the genuineness of the transaction." "Whether, on the facts and circumstances of the case and in the law, the Ld. CIT(A) has erred in allowing relief to the assessee assessee to prove the genuineness of the transaction, identity of the cash creditor and creditworthiness of stated facts of the case are that during the year under was shown to have been ed by the assessee company on 04/05/2011 from M/s Innovative Spinning and Knitting Private Limited. During scrutiny on verification of the bank 4/05/2011 through RTGS 1,99,75,000/- to M/s Private Limited on same date. The assessee the credit of was transferred and recorded against to M/s Aqua i.e. associate concern of M/s Private Limited), which was further transferred to M/s Mumbai Gems and diamonds Private Limited (i.e. an associate concern o the parties, the Assessing Officer of the Income-Tax Act, 1961 (in short ‘the Act’) notices returned back available”. The Assessing Officer the assessee to produce the principal officer of the M/s Innovative Spinning and Knitting Private Limited, however the assessee failed to produce the same. In view of the creditworthiness of the parties who provided some of to the assessee could not be established and genuineness of the transaction also could not be proved and therefore he added the sum of ₹2.00 crores as unexplained cash credit due to failure on the part of the assessee in discharging his the Act, relying on the decision of the Hon’ble Punjab and Haryana M/s Shreeji Multitrade Pvt. Ltd. to M/s Mumbai Gems and diamonds Private Limited (i.e. an associate concern of the assessee). For verification of Assessing Officer issued notice under section 133(6) Act, 1961 (in short ‘the Act’), however those returned back by the postal authority with the remark “not Assessing Officer vide letter dated 05/03/2015 asked the assessee to produce the principal officer of the M/s Innovative Spinning and Knitting Private Limited, however the assessee failed to produce the same. In view of the Assessing Officer s of the parties who provided some of to the assessee could not be established and genuineness of the transaction also could not be proved and therefore he added the crores as unexplained cash credit due to failure on the the assessee in discharging his onus in terms of section 68 of relying on the decision of the Hon’ble Punjab and Haryana M/s Shreeji Multitrade Pvt. Ltd. ITA NO. 1530/M/2017 3 to M/s Mumbai Gems and diamonds Private . For verification of issued notice under section 133(6) , however those by the postal authority with the remark “not 05/03/2015 asked the assessee to produce the principal officer of the M/s Innovative Spinning and Knitting Private Limited, however the assessee failed Assessing Officer, the identity & s of the parties who provided some of ₹2.00 crores to the assessee could not be established and genuineness of the transaction also could not be proved and therefore he added the crores as unexplained cash credit due to failure on the in terms of section 68 of relying on the decision of the Hon’ble Punjab and Haryana High Court in the case of 219 ITR 185. 3. On further appeal, the assessee submitted CIT(A) that director of M/s Innovative spinning and knitting Private Limited Sh Pushpesh Kumar newspapers and therefore he could not be produced. The Ld. CIT(A) deleted the addition observing as under: “4.2. I have carefully considered the facts of the case and the submissions of the Id.AR. I have also gone through the decisions relied on by the AO and the ld.AR. As crores was shown as advance balance sheet entry under Current the year-end). Thus, there is no doubt about this to be given to M/s Mumbai Gems and Diamonds P Ltd as per directions and in view M/s Mumbai Gems and Diamonds P Ltd to M/s Aqua Glitters Marketing P Ltd. With regard to Rs. 60 lakhs the amount was adjusted in the accounts of M/s Baid against payment of Rs. 80 lakhs on copy of M/s Baid Electronics Distribution P Ltd assessee company. Therefore credit for this amount also to be Since these transfer of credits have taken place with M/s Shreeji Multitrade Pvt. Ltd. High Court in the case of Blowell Auto P Ltd Vs CIT reported in On further appeal, the assessee submitted CIT(A) that director of M/s Innovative spinning and knitting Private Pushpesh Kumar Baid was absconding as per the newspapers and therefore he could not be produced. The Ld. CIT(A) deleted the addition observing as under: have carefully considered the facts of the case and the submissions Id.AR. I have also gone through the decisions relied on by the AO and the ld.AR. As seen from the facts of the case an amount of Rs. 1.40 crores was shown as advance against goods under trade payable in the balance sheet entry under Current Liabilities (outstanding amount at end). Thus, there is no doubt about this transaction and credit to be given to M/s Mumbai Gems and Diamonds P Ltd as per directions and in view of the fact that certain sales were also made by Mumbai Gems and Diamonds P Ltd to M/s Aqua Glitters Marketing regard to Rs. 60 lakhs the amount was adjusted in the accounts of M/s Baid Electronics Distribution P Ltd as journal entry st payment of Rs. 80 lakhs on 6/6/2011 as seen from the ledger copy of M/s Baid Electronics Distribution P Ltd found in the books of assessee company. Therefore credit for this amount also to be Since these transfer of credits have taken place with the directions of M/s Shreeji Multitrade Pvt. Ltd. ITA NO. 1530/M/2017 4 Blowell Auto P Ltd Vs CIT reported in On further appeal, the assessee submitted before the Ld. CIT(A) that director of M/s Innovative spinning and knitting Private was absconding as per the newspapers and therefore he could not be produced. The Ld. CIT(A) have carefully considered the facts of the case and the submissions Id.AR. I have also gone through the decisions relied on by the AO seen from the facts of the case an amount of Rs. 1.40 nder trade payable in the Liabilities (outstanding amount at transaction and credit to be given to M/s Mumbai Gems and Diamonds P Ltd as per internal of the fact that certain sales were also made by Mumbai Gems and Diamonds P Ltd to M/s Aqua Glitters Marketing regard to Rs. 60 lakhs the amount was adjusted in the Electronics Distribution P Ltd as journal entry 6/6/2011 as seen from the ledger found in the books of assessee company. Therefore credit for this amount also to be given. the directions of M/s Innovative Spinning and Knitting P Ltd. credit for Rs.2 cores to be given in the hands of M/s Innovative Spinning and Knitting P Ltd. With regard to the AO's reservation that the appellant was not having sufficient funds to make such Id.AR that balance in the bank account is not required since the adjustment is only through 4. Before as the Ld. counsel containing pages 1to 107 which on Pushpesh Kumar Baid, i.e. director of M/ and Knitting Private Limited etc. submitted that all the documents in support of nature and source of the transaction has already been submitted and the credit is by way of a bank transactions and therefore, Ld. CIT(A) has correctly deleted the addition. 5. On the contrary, the as to the entity from the payment of bank account of the assessee. He submitted that the director of M/s Innovative Spinning M/s Shreeji Multitrade Pvt. Ltd. Innovative Spinning and Knitting P Ltd. credit for Rs.2 cores to be hands of M/s Innovative Spinning and Knitting P Ltd. With regard to the AO's reservation that the appellant was not having sufficient funds to make such payments, I'm in full agreement with the balance in the bank account is not required since the adjustment is only through book entry as per internal directions. Ld. counsel of the assessee has filed a paper book s 1to 107 which interalia include newspaper reports Kumar Baid, i.e. director of M/s Innovative Spinning Private Limited etc. The Ld. counsel submitted that all the documents in support of nature and source of the transaction has already been submitted and the credit is by way of a bank transactions and therefore, Ld. CIT(A) has correctly deleted the addition. y, the Ld. DR submitted that it was not verifiable as to the entity from the payment of ₹2.00 crores was received in the bank account of the assessee. He submitted that the director of M/s Innovative Spinning and Knitting Private Limited was not even M/s Shreeji Multitrade Pvt. Ltd. ITA NO. 1530/M/2017 5 Innovative Spinning and Knitting P Ltd. credit for Rs.2 cores to be hands of M/s Innovative Spinning and Knitting P Ltd. With regard to the AO's reservation that the appellant was not having payments, I'm in full agreement with the balance in the bank account is not required since the book entry as per internal directions.” of the assessee has filed a paper book include newspaper reports Innovative Spinning of the assessee submitted that all the documents in support of nature and source of the transaction has already been submitted and the credit is by way of a bank transactions and therefore, Ld. CIT(A) has correctly DR submitted that it was not verifiable crores was received in the bank account of the assessee. He submitted that the director of M/s Private Limited was not even produced during the accounts or income tax return et before the lower authorities. justified in deleting the addition. 6. We have heard rival submissio dispute and perused the relevant material on record. The assessee in its books of accounts has shown receipt of Innovative Spinning assessee has shown this another two entities. All these three entities were not found at the addresses provided by the assessee Assessing Officer invoking section 133(6) of the the assessee also failed to produce the director of M/s innovative spinning and knitting Private Limited. Even during proceedings, the assessee failed to produce him before the authorities. In our opinion, by way of merely M/s Shreeji Multitrade Pvt. Ltd. ced during the appellate proceeding also nor any audited accounts or income tax return etc. of said concern have been authorities. Therefore, the Ld. CIT(A) is not justified in deleting the addition. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The assessee in its books of accounts has shown receipt of ₹2.00 crores from M Innovative Spinning and Knitting Private Limited. Further the assessee has shown this amount as transferred in the name of another two entities. All these three entities were not found at the addresses provided by the assessee, during verification by the invoking section 133(6) of the Act. On being asked, failed to produce the director of M/s innovative spinning and knitting Private Limited. Even during proceedings, the assessee failed to produce him before the authorities. In our opinion, by way of merely stating that said person M/s Shreeji Multitrade Pvt. Ltd. ITA NO. 1530/M/2017 6 proceeding also nor any audited of said concern have been filed Ld. CIT(A) is not n of the parties on the issue in dispute and perused the relevant material on record. The assessee crores from M/s Private Limited. Further the s transferred in the name of another two entities. All these three entities were not found at the during verification by the . On being asked, failed to produce the director of M/s innovative spinning and knitting Private Limited. Even during appellate proceedings, the assessee failed to produce him before the lower that said person was absconding and therefore Assessing Officer is not sufficient to discharge of the Act. It is the onus creditworthiness of the person from whom credit is shown t been received and also to establish genuineness of the transaction. In the facts and circumstances of the case, the assessee has failed to substantiate with evidences to explain all the three ingredients of section 68 of the Act deleting the addition. Accordingly CIT(A) on the issue in dispute and uphold the order of the Assessing Officer. The ground of the appeal of the accordingly allowed. 7. In the result, the appeal of the Order pronounced in the open Court on 10 Sd/- (RAHUL CHAUDHARY JUDICIAL MEMBER M/s Shreeji Multitrade Pvt. Ltd. nding and therefore he could not be produced before the is not sufficient to discharge onus under section 68 onus on the assessee to explain the identity and creditworthiness of the person from whom credit is shown t been received and also to establish genuineness of the transaction. circumstances of the case, the assessee has failed to substantiate with evidences to explain all the three ingredients of Act, therefore the Ld. CIT(A) is not justified in deleting the addition. Accordingly, we set aside the order of the Ld. CIT(A) on the issue in dispute and uphold the order of the . The ground of the appeal of the accordingly allowed. In the result, the appeal of the Revenue is allowed. ounced in the open Court on 10/06/2022. Sd/ RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT M/s Shreeji Multitrade Pvt. Ltd. ITA NO. 1530/M/2017 7 he could not be produced before the under section 68 on the assessee to explain the identity and creditworthiness of the person from whom credit is shown to have been received and also to establish genuineness of the transaction. circumstances of the case, the assessee has failed to substantiate with evidences to explain all the three ingredients of IT(A) is not justified in we set aside the order of the Ld. CIT(A) on the issue in dispute and uphold the order of the Ld. . The ground of the appeal of the Revenue is allowed. /06/2022. Sd/- OM PRAKASH KANT) MEMBER Mumbai; Dated: 10/06/2022 Dragon Legal/Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// M/s Shreeji Multitrade Pvt. Ltd. of the Order forwarded to : BY ORDER, (Sr. Private Secretary ITAT, Mumbai M/s Shreeji Multitrade Pvt. Ltd. ITA NO. 1530/M/2017 8 Sr. Private Secretary) ITAT, Mumbai