ITO 18(2)(4), MUMBAI V. NEMICHAND LALCHAND JAIN, MUMBAI

ITA 159/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5900 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Assessee Lawyers: RAJESH SANGHAVI
• Keywords: Accommodation entries; Documents seized
• Section: 143(3); 133(6); 143(1); 68; 132

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE HONBLE SHRI S HAMIM YAHYA, AM & HONBLE SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO . 159/MUM/2017 ( / ASSESSMENT YEAR: 20 07 - 08 ) ITO 1 8(2)(4 ) 303, 3 RD FLOOR, EARNEST HOUSE, NCPA MART, MUMBAI - 400 021 . / VS. SHRI NEMICHAND LALCHAND JAIN, 229, 3 RD FLOOR, COPPER BLDG, PRINCESS STREET, MUMBAI - 400 002 ./ ./ PAN/GIR NO. A ABPJ3915C ( / APPELLANT ) : ( / RESPONDENT ) C.O. N O . 100 /MUM / 2018 ( / ASSESSMENT YEAR: 20 07 - 08 ) SHRI NEMICHAND LALCHAND JAIN, 229, 3 RD FLOOR, COPPER BLDG, PRINCESS STREET, MUMBAI - 400 002 / VS. ITO 18(2)(4) 303, 3 RD FLOOR, EARNEST HOUSE, NCPA MART, MUMBAI - 400 021. ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI RAJAT MITTAL , DR / RESPONDENTBY : SHRI RAJESH SANGHAVI, AR / DATE OF HEARING : 26/11 /201 8 / DATE OF PRONOUNCEMENT : 17/12/2018 2 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT A PPEAL AS WELL AS CROSS OBJECTION HAVE BEEN FILED BY THE REVENUE AS WELL AS ASSESSEE ARE AGAINST THE ORDER OF COMMISS I ONER OF INCOME TAX (APPEALS) - 2 9, MUMBAI DATED 29.07.16 FOR AY 2007 - 08 . 2. SINCE, THE FACTS RAISED IN THIS APPEAL AS WELL AS C.O. FILED BY THE REVENUE AND THE ASSESSEE ARE IDENTICAL, THEREFORE FOR THE SAKE OF CONVENIENCE; THEY ARE CLUBBED, HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. FIRST OF ALL WE TAKE UP APPEAL IN ITA NO. 159 /MUM /201 7 FILED BY REVENUE FOR AY 2007 - 08 ON THE GROUNDS MENTIONED HEREIN BELOW: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 75,00,000/ - MADE BY THE AU UNDER 3 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , SECTION 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNSECURED LOAN FROM THE PERSON EGAGED IN PROVIDING THE ACCOMMODATION ENTRY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN IGNORING THE FACT THAT A SEARCH ACTION UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE CASE OF SHRI BHANWAR LAL JAIN AND VARIOUS COMPANIES OPERATED BY HIM AND HE WAS FOUND TO BE AN ENTRY OPERATOR WITHOUT ANY GENUINE BUSINESS ACTIVITY. 3. ON THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN IGNORING THE FACT THAT ALL TRANSACTIONS ENTERED WITH SHRI BHANWAR LAL JAIN AND VARIOUS CONCERNS OPERATED AND CONTROLLED BY HIM WERE IN NATURE OF ACCOMMODATION ENTRIES. 4. FOR THE ABOVE MENTIONED REASON AND ANY OTHER REASONS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER OF THE CIT(A) BE QUASHED AND THAT OF THE A.O. BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND, WHIC H MAY BE NECESSARY. 4 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , 4 . AS PER THE FACTS OF THE PRESENT CASE, THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 30.07.2007 DECLARING TOTAL INCOME OF RS. 6,45,027/ - AND THE SAME WAS PROCESSED U/S 143(1) OF THE I.T. ACT. LATER ON, ASSESSMENT U/S 143(3) WAS COMPLETED ASSESSING THE TOTAL INCOME OF RS. 6,45,030/ - . SUBSEQUENTLY, A SEARCH ACTION WAS CONDUCTED ON SHRI BHANWARLAL JAIN GROUP OF CASES BY DGIT(INV), MUMBAI ON 03.10.13 AND DURING THE COURSE OF SEARCH ACTION, INCRIMINATING DOCUMENTS WERE SEIZED FROM BHANWARLAL JAIN AND SEVERAL OTHER PERSONS IN WHOSE NAMES FIRMS WERE BEING RUN AND STATEMENT U/S 132(4) WAS RECORDED. ON THE BASIS OF DOCUMENTS SEIZED DURING THE COURSE OF SEARCH, MUMBAI INVESTIGATING WING INTIMATED THAT ASSESSEE HAD TAKEN ACCOMMODATION EN TRIES FROM BHANWARLAL JAIN GROUP DURING THE YEAR UNDER CONSIDERATION IN THE FORM OF UNSECURED LOANS FROM THEIR BENAMI CONCERNS. CONSEQUENTLY, THE CASE WAS REOPENED AND ORDER OF ASSESSMENT U/S 143(3) R.W.S 147 OF THE I.T. ACT WAS PASSED THEREBY MAKING ADDIT IONS U/S 68 OF THE I.T. ACT. 5 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. NOW BEFORE US, THE REVENUE AS WELL AS ASSESSEE HAVE PR EFERRED THEIR RESPECTIVE APPEAL/ CROSS OBJECTION . FIRSTLY WE ARE DEALING WITH THE APPEAL FILED BY THE REVENUE. GROUND NO. 1 TO 3 5 . THESE GROUNDS RAISED BY THE REVENUE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN DELETING THE MADE BY THE AO U/S 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF UNSECURED LOAN FROM THE PERSON ENGAGED IN PROVIDING THE ACCOMMODATION ENTRY, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 6 . WE HAVE HEARD COUNSEL S FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. 6 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT (A) HAS DEALT WITH THE ABOVE GROUNDS RAISED B Y THE REVENUE IN PARA NO. 5 OF ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A) IS CONTAINED IN PARA NO. 5.2 TO 5.2.2 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 5.2 THE SUBMISSIONS OF THE APPEL LANT HAS BEEN CAREFULLY CONSIDERED. THE APPELLANT HAS PROVIDED INFORMATION TO SUBSTANTIATE THE GENUINENESS OF THE LOAN. THE DETAILS PROVIDED BY THE APPELLANT ARE THE INCOME TAX RETURN ACKNOWLEDGEMENT OF M/S DAKSH DIAMONDS, ACCOUNT CONFIRMATION OF M/S DAKSH DIAMONDS, BANK STATEMENT OF BOTH THE APPELLANT AND M/S DAKSH DIAMOND, AUDITED FINANCIAL STATEMENT, DETAILS OF REPAYMENT OF LOAN TO M/S DAKSH DIAMOND. THE A O HAS NOT SAID THAT THESE ARE BOG US DOCUMENTS. IN FACT, HE HAS NOT COMMENTED ON THE VERACITY OF THES E DOCUM ENTS. ACCORDING TO THE APPELLANT, HE HAD PROVED THE IDENTITY, CREDI TWORTHINESS A ND GENUINENESS OF THE LOAN BY SUBMITTING ALL THE RELEVANT DOCUMENTS. TH E TRANSACTIONS OF BOTH THE LOAN RECEIVED AND THE REPAYMENT OF THE LOAN HAVE P ASSED THROUGH BANKING CHANNELS WHICH IS EVIDE NCED FROM THE BANK ACCOUNT STATE MENTS OF BOTH THE PARTIES. THERE IS NO 7 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , EVIDENCE OF ANY CASH BEING PAID BY THE APPELLANT TO THE PARTY WHICH HAS GIVEN THE LOAN. THE APPELLANT HAD ASKED FOR COPY OF T HE STATEMENT OF SHRI BHANWAR LAL J AIN ON WHICH THE AO HAS PLACED COMPLETE RELIANCE BUT THE SAME WAS DENIED TO HIM. THE AG HAD ISSUED NOTICE U/S 133(6) TO M/ S. DAKSH DIAMOND CALLING FOR CERTAI N DETAILS. THE PROPRIETOR OF M/S DAKSH DIAMONDS, SHRI. RITESH SIROYA REPLIED T O THE NOTICE WITH ALL NECESSARY D OCUMENTS. THE APPELLANT OFFERED TO PRODUCE THE PARTY BEFORE THE A G FOR EXAMINATION BUT THE AO WAS SILENT ON THAT. THE AO HAS MERELY RELIED UPON THE STATEME ENT GIVEN BY SHRI. BHANWAR LAL JAIN AND THE MODUS OPERANDI AND THE AFFAIRS OF BHANWARLAL J AIN GROUP TO MAKE THE ADDITION. IN FA CT, THE EXTRACT OF THE STATEMENT REPRODUCED BY THE AO IN THE ASSESSM ENT ORDER OF SHRI. BHANWAR LAI JAIN D OES NOT SPEAK ABOUT PROVIDING ACCOMMODATION ENTRIES FOR THE LOANS. THEREFORE , THERE CAN BE NO INFERENCE DRAWN FRO M THE STATEMENT THAT SHRI. BANWARLA J AIN OR THE CONCERNS OPERATED BY HIM, PROVIDE ENTRIES FOR LOANS. NEITHER MR. BHAWARLAL JAIN NOR MR. RITESH SI ROYA HAS TAKEN THE NAME OF THE APPELLANT AT ANY POI NT OF TIME TO STATE THAT THEY HAD GIVEN AN ACCOMMODATION ENT RY FOR LOAN TO HIM W HATEVER INFERENCES THE AO HAS DRAWN HAVE NO CONNECTION WHATSOEVER WITH TH E LO A N TAKEN BY THE APPELLANT. THE AO HAS NOT CO NTROVERTED THE EVIDENCES PRODUCE D BY THE ASSESSEE NOR HAS HE BROUGHT ANY 8 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , EVIDENCE TO SUPPORT HIS VIEW THAT THE LOAN TAKEN IS A MERE ACCOMMODATION ENTRY AND IS NOT GENUINE. 5.2.1. THE LOAN GIVEN BY M/S. D A KSH DIAMOND ARE REFLECTED IN THE BALANCE SHEET. THE LOAN WAS RECEIVED ON TWO DATES: RS. 25 LAKSH ON 08/03/2007 AND RS. 50 LAKHS ON 23/03/2007. THE APPELLANT HAS REPAI D THE L OAN IS AS UNDER: TRANSACTION DATE AMOUNT DEL SITED (RS.) 26.07.2007 15,00,000/ - 31.07.2007 5,00,000/ - 31,07,2007 3,00,000/ - 01.08.2007 18,00,000/ - 07.08.2007 10,00,000/ - 22.08,2008 5,00,000/ - 10.07.2009 14,00 000/ - 15.07.2009 5 ,00,000/ - 5.2.2. ALL THESE TRANSACTIONS ARE REFLECTED IN THE BANK STATEMENTS OF BOTH THE PARTIES. THE TRANSACTIONS HAVE PASSED THROUGH THE BANKING CHANNELS, BOTH THE PARTIES HAVE CO NFIRMED THE TRANSACTIONS, THE GE NUINENESS OF THE TRANSACTIONS HAS BEEN ESTABLISH ED AND THE CREDITWORTHINESS OF T HE LENDER IS ALSO ESTABLISHED. IN VIEW OF THIS, THE LOAN TAKEN BY THE APPELLANT OF RS. 75 LAKHS IS HELD TO BE GENUINE. THE AD DITION MADE ON THIS COUNT IS DIR ECTED TO BE DELETED. THIS GROUND OF APPEAL IS ALLOWED. 9 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , AF TER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS ORDERS PASSED BY THE REVENUE AUTHORITIES, WE FIND THAT LD. CIT(A) HAD APPRECIATED THE DETAILS PROVIDED BY THE ASSESSEE WHICH LEADS TO PROVE THE GENUINENESS OF LOANS. THE ASSESSEE HAD PROVIDED INCOME TAX RETURN ACKNOWLEDGEMENT OF M/S DAKSH DIAMONDS, ACCOUNT CONFIRMATION, BANK STATEMENT OF THE ASSESSEE AS WELL AS M/S DAKSH DIAMOND, AUDITED FINANCIAL STATEMENT, DETAILS OF REPAYMENT OF LOAN. THE LD. CIT( A) WHILE APPRECIATING THAT THE ASSESSEE HAD PROVED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF LOANS HAD TAKEN INTO CONSIDERATION THAT THE TRANSACTIONS OF BOTH THE LOAN RECEIVED AND THE REPAYMENT OF THE LOAN HAD PASSED THROUGH BANKING CHANNELS. AT TH E SAME TIME, THE AO HAD NOT LED ANY EVIDENCE THAT ANY CASH WAS PAID BY THE ASSESSEE TO THE PARTIES WHO HAD GIVEN THE LOAN. FROM THE RECORDS, WE ALSO NOTICED THAT THE STATEMENT OF BHANWAR LAL JAIN ON WHICH THE AO HAS PLACED COMPLETE RELIANCE WAS NOT GIVEN T O THE ASSESSEE. THE PROPRIETOR OF M/S DAKSH DIAMONDS, SHRI. RITESH SIROYA REPLIED TO THE NOTICE ISSUED BY THE AO U/S 133(6) OF THE I.T. ACT AND OFFERED TO PRODUCE THE PARTY BEFORE THE AO FOR EXAMINATION. ON THE CONTRARY, THE AO MERELY RELIED UPON THE 10 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , STATE MENT GIVEN BY SHRI. BHANWAR LAL JAIN AND THE MODUS OPERANDI AND THE AFFAIRS OF BHANWARLAL JAIN GROUP TO MAKE THE ADDITION. LD. CIT(A) CORRECTLY APPRECIATED THE FACT THAT FROM THE EXTRACT OF THE STATEMENT REPRODUCED BY THE AO IN THE ASSESSMENT ORDER OF SHR I. BHANWAR LAI JAIN, IT DOES NOT SPEAK ABOUT PROVIDING ACCOMMODATION ENTRIES FOR THE LOANS. THEREFORE, THERE CAN BE NO INFERENCE DRAWN FROM THE STATEMENT THAT SHRI. BANWARLA JAIN OR THE CONCERNS OPERATED BY HIM, PROVIDE ENTRIES FOR LOANS. APART FROM THE A BOVE, IT WAS ALSO NOTICED THAT NEITHER MR. BHAWARLAL JAIN NOR MR. RITESH SIROYA HAD TAKEN THE NAME OF THE ASSESSEE AT ANY POINT OF TIME TO STATE THAT THEY HAD GIVEN AN ACCOMMODATION ENTRY FOR LOAN TO HIM. EVEN OTHERWISE THE LOAN WERE REPAID BY THE ASSESSE E AND THE DETAILS OF SUCH REPAYMENT ARE RECORDED IN PARA 5.2.1 OF THE ORDER OF LD. CIT(A). APART FROM THAT, ALL THE TRANSACTIONS WERE REFLECTED IN THE BANK STATEMENTS OF BOTH THE PARTIES. THE TRANSACTIONS HAD PASSED THROUGH THE BANKING CHANNELS, BOTH THE PARTIES HAD CONFIRMED THE TRANSACTIONS, THE GENUINENESS OF THE TRANSACTIONS HAS BEEN ESTABLISHED AND THE CREDITWORTHINESS OF THE 11 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , LENDER WAS ALSO ESTABLISHED. THUS CONSIDERING ALL THOSE FACTS, LD. CIT(A) HAD RIGHTLY DELETED THE ADDITIONS. WE HAVE ALSO CO NSIDERED THE DECISION RELIED UPON BY THE ASSESSEE WHEREIN ALSO, THE COORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 7079/MUM/16 IN THE CASE OF ACIT VRS. DILIP CHIMANLAL GANDHI AND IN CASE ITA NO. 1069 TO 1071/MUM/17 IN THE CASE OF M/S RELIANCE CORPORATION VRS. ITO HAD DELETED THE ADDITIONS UNDER THE IDENTICAL CIRCUMSTANCES. MOREOVER, N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD. CIT(A). THEREFORE, WE SEE NO REASON S TO INT ERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD.CIT(A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THESE GROUND RAISED BY THE REVENUE STANDS DISMISSED . 12 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , GROUND NO. 4 & 5 7 . THESE GROUNDS RAISED BY THE REVENUE ARE GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. N OW WE TAKE UP C.O. NO. 100/MUM/2018 FILED BY ASSESSEE . 8 . SINCE WE HAVE ALREADY DE CIDED THE APPEAL FIL ED BY REVENUE IN ITA NO. 159/MUM/2017 ON MERITS AND UPHELD THE DELETION OF ADDITIONS. THEREFORE IN VIEW OF OUR FINDINGS, IN ITA NO. 159/MUM/2017 , THE PRESENT C.O. FILED BY THE ASSESSEE BECOMES INFRUCTUOUS. 9 . IN THE NET RESULT , THE APPEAL AS WELL AS CROSS OBJECTION FILED BY THE R EVENUE AND ASSESSEE STANDS DISMISSED WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH DEC , 20 1 8 SD/ - SD/ - ( SHAMIM YAHYA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 17 .12 .201 8 SR.PS . DHANANJAY 13 I.T.A. NO. 159/MUM/2017 AND C.O. NO. 100/MUM/2018 SHRI NEMICHAND LALCHAND JAIN , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI