ANITA RINKU PATODIA, MUMBAI V. ACIT CEN CIR 3(2), MUMBAI

ITA 1913/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2722 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 17-03-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR LD
• Keywords: Unexplained cash credit; Search and seizure; Source of fund; Accommodation entries; Bogus loan; Reassessment proceedings
• Section: 133(6); 147; 68; 148; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1913/MUM/2017 ( / ASSESSMENT YEAR:2007-08) SMT. ANITA RINKU PATODIA 605, BUSINESS CLASSIC CHINCHOLI BUNDER ROAD MALAD (W), MUMBAI-400 064. / VS. A CIT - CEN TRAL CIRCLE - 3(2) MUMBAI. => ./ ./PAN/GIR NO. AKRPP-7593-E ( >@ /APPELLANT ) : ( AB>@ / RESPONDENT ) >@C / APPELLANT BY : NONE AB>@C / RESPONDENT BY : SHRI MANOJ KUMAR - LD. DR DATE OF HEARING : 27/08/2019 DATE OF PRONOUNCEMENT : 27/08/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. BY WAY OF THIS APPEAL FOR ASSESSMENT YEAR 2007-0 8, THE ASSESSEE HAS CHALLENGED THE QUANTUM ADDITION OF RS.90 LACS M ADE U/S 68 BY LEARNED ASSESSING OFFICER WHILE FRAMING ASSESSMENT U/S 143( 3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 ON 16/03/2015. THE ADDITIONS HAVE ALREADY BEEN CONFIRMED BY LD. COMMISSIONER OF INCOM E-TAX (APPEALS)-51, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-51/IT 82/2015- 2 16 ORDER DATED 15/12/2016. THE ASSESSEE HAS ALSO CONTE STED THE REASSESSMENT PROCEEDINGS ON LEGAL GROUNDS. 2. NONE HAS APPEARED FOR ASSESSEE. A PERUSAL OF THE ORDER SHEET ENTRIES REVEALS THAT ASSESSEE HAS FAILED TO APPEAR ON VARIO US EARLIER OCCASIONS. THEREFORE, LEFT WITH NO OPTION, THE APPEAL IS PROCE EDED WITH EX-PARTE QUA THE ASSESSEE. 3.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE S CASE FOR YEAR UNDER CONSIDERATION WAS REOPENED PURSUANT TO RECEIPT OF C ERTAIN INFORMATION FROM ADIT (INVESTIGATION), MUMBAI WHEREIN IT TRANSPIRED THAT THE ASSESSEE STOOD BENEFICIARY OF BOGUS LOANS WHICH CAME TO LIGHT DURI NG SEARCH AND SEIZURE OPERATIONS IN THE CASE OF SHRI PRAVIN KUMAR JAIN AN D HIS GROUP ON 01/10/2013. THE GROUP, THROUGH NETWORK OF VARIOUS C ONCERNS, WAS FOUND TO BE ENGAGED IN PROVIDING ACCOMMODATION ENTRIES AND A SSESSEE WAS IDENTIFIED AS ONE SUCH BENEFICIARY OF BOGUS UNSECUR ED LOANS TO THE EXTENT OF RS.90.00 LACS FROM 3 ENTITIES AS PER THE FOLLOWING DETAILS: - NO. NAME OF THE ENTITY WHO HAS GIVEN THE UNSECURED LOAN AMOUNT (RS.) 1. M/S. JPK TRADING CO.(P) LIMITED 10,00,000/- 2. M/S. MOHIT INTERNATIONAL 30,00,000/- 3. M/S. NATASHA ENTERPRISES 50,00,000/- TOTAL 90,00,000/ - CONSEQUENTLY, THE CASE WAS REOPENED BY ISSUE OF NOT ICE U/S 148 ON 21/03/2014 AND THE ASSESSEE WAS DIRECTED TO ADDUCE EVIDENCES IN SUPPORT OF THE TRANSACTIONS. ALTHOUGH THE ASSESSEE DEFENDED THE CLAIM, HOWEVER, UPON PERUSAL OF FINANCIAL STATEMENT OF THE 3 ENTITI ES, LEARNED AO REACHED A CONCLUSION THAT THE ENTITIES WERE BOGUS VENDORS. TH E FINANCIAL STATEMENT OF THESE CONCERNS HAS BEEN MADE A PART OF THE QUANTUM ASSESSMENT ORDER. 3 THIS IS COUPLED WITH THE FACT THAT THE HUSBAND OF T HE ASSESSEE, DURING SEARCH OPERATION U/S 132 IN THEIR OWN GROUP ON 11/0 8/2014 ACCEPTED THE FACT OF OBTAINING BOGUS UNSECURED LOANS FROM ENTITI ES RUN BY SHRI PRAVIN KUMAR JAIN. ACCORDINGLY, THE AMOUNT OF RS.90 LACS W AS TREATED AS BOGUS AND NON-GENUINE AND ADDED TO THE INCOME OF THE ASSE SSEE WHILE FRAMING THE ASSESSMENT. 3.2 THE ASSESSEE CONTESTED THE REASSESSMENT PROCEED INGS ON LEGAL GROUNDS AS WELL AS QUANTUM ADDITION ON MERITS BEFOR E LEARNED FIRST APPELLATE AUTHORITY, HOWEVER, WITHOUT ANY SUCCESS VIDE IMPUGN ED ORDER DATED 15/12/2016. THE LD. CIT(A) CONFIRMED THE ADDITIONS, ON MERITS, BY OBSERVING AS UNDER: - 11. I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMIS SIONS AND CONTENTIONS OF THE APPELLANT, AS ALSO THE ORDER OF THE AO. IT IS SEEN THAT THE LD. A O HAS DISCUSSED THE ISSUE OF BOGUS LOANS OF RS.90,00,000/-`FROM FOUR DIFFERENT PARTIES AT LENGT H IN THE BODY OF THE ORDER AND HAS PASSED A VERY DETAILED AND SPEAKING ORDER. THE RELEVANT DISC USSION IS APPEARING ON PAGE 3 TO 14 OF THE ASSESSMENT ORDER. IN THE SAID ORDER THE AO HAS ALSO REPRODUCED THE BALANCE SHEET AND P&L ACCOUNT OF THESE CONCERNS NAMELY, M/S. MOHIT INTERN ATIONAL, M/S NATASHA ENTERPRISES, M/S JPK TRADING (I) PVT LTD AND VARIOUS INCONSISTENCIES THE REIN. FROM THE PERUSAL OF THESE BALANCE SHEETS, IT IS CLEAR THAT THERE ARE HARDLY ANY FIXED ASSETS WITH THESE COMPANIES EVEN THOUGH THERE IS SIGNIFICANT TURNOVER. FURTHER THERE ARE HARDLY A NY EXPENSES IN THE P & L ACCOUNT IN THESE COMPANIES AND IT IS NOT CLEAR AS TO HOW COULD THEY RUN THEIR AFFAIRS WITH SUCH MEAGER EXPENSES. BESIDES THERE ARE OTHER INCONSISTENCIES LIKE THERE WAS NO CLOSING STOCK, AUDIT FEES PAID WAS VERY LOW WHICH RAISES DOUBTS ABOUT THE VERY EXISTENCE OF THESE COMPANIES AND THE GENUINENESS OF TRANSACTIONS. MOST OF ALL SHRI PRAVIN JAIN MAIN PER SON OF GROUP HAD ADMITTED THAT HE WAS PROVIDING ONLY ACCOMMODATION THROUGH HIS GROUP CONC ERNS INCLUDING THESE FOUR COMPANIES. THE ASSESSEE IN THIS REGARD HAS ARGUED THAT THEIR TRANS ACTIONS WERE MADE THROUGH CHEQUES THROUGH PROPER BANKING CHANNELS. HOWEVER PAYMENT THROUGH CH EQUE ALONE DOES NOT DECIDE THE GENUINENESS OF TRANSITIONS. RELIANCE IN THIS REGARD IS PLACED ON THE CASE KACHWAL GEMS V/S CIT (2007) 288 ITR 10(SC), WHEREIN IT WAS HELD THAT MER E PAYMENTS BY ACCOUNT PAYEE CHEQUES IS NOT SACROSANCT AND IS NOT SUFFICIENT TO ESTABLISH T HE GENUINENESS OF THE TRANSACTION. FURTHER, RELIANCE IS PLACED ON C VASANTILAL CO V/S CIT (1962 ) 45 ITR 206(SC), CHATURBHUJ PANAUJ AIR 1969 (SC) AND SUMATI DAYAL VS CIT (1995) 214 ITR 80 1(SC) WHEREIN IT HAS BEEN HELD THAT EVEN STRICT RULES OF EVIDENCE DO NOT APPLY TO THE P ROCEEDINGS UNDER THE INCOME TAX ACT AND THE REAL TEST WITH REGARD TO GENUINENESS OF THE TRANSAC TION IS 'PREPONDERANCE OF PROBABILITIES' AND NOT 'BEYOND REASONABLE DOUBT'. IT IS AN UNDISPUTED FACT THAT THE ACCOMMODATION ENTRIES TAKEN FROM THESE FOUR PARTIES REMAINED UNVERIFIED. AS STA TED ABOVE, DURING THE ASSESSMENT PROCEEDINGS THE AO HAD ISSUED QUERY LETTERS UNDER S ECTION 133(6) OF THE ACT TO THE ABOVE MENTIONED LOAN CREDITORS BUT THE SAME WERE RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS THAT 'THE PARTY IS NOT AVAILABLE. THEREAFTER THE A O ASKED THE ASSESSEE TO PRODUCE THESE PARTIES 4 BUT THE ASSESSEE EXPRESSED HIS INABILITY IN DOING S O. FURTHER THE BALANCE SHEETS OF THESE LOAN CREDITORS WERE NOT SHOWING ANY FIXED ASSETS RAISING DOUBTS ABOUT THEIR EXISTENCE AND DOING BUSINESS. THEIR SOURCES OF INCOME WERE MEAGER AND T HEREFORE THESE CONCERNS COULD NOT HAVE GIVEN HUGE LOAN OF RS.90,00,000/- TO THE ASSESSEE. INFACT THE TRANSACTIONS ITSELF APPEAR TO BE CIRCULAR IN NATURE AND A COLORABLE IN DEVICE AS HEL D BY SUPREME COURT IN CASE MCDOWELLS CO. LTD. 154 ITR. THE ASSESSEE HAS ALSO ARGUED THAT THE LOANS HAVE ALREADY BEEN RETURNED/REPAID BY THE ASSESSEE TO RESPECTIVE CONCERNS IN THE YEAR 2010. HOWEVER, EVEN IF THE ASSESSEE HAS RETURNED, IT WILL NOT MATERIALLY CHANGE THE POSITIO N AS THE ISSUE IS SOURCE OF LOAN AND WHETHER THE SAME WAS EXPLAINED AND NOT REPAYMENT AS SUCH. 12. IN VIEW OF THE ABOVE FACTS AND LEGAL POSITION, THE STAND TAKEN BY THE AO TO TREAT THE LOANS AND ADVANCES OF RS.90,00,000/- AS UNEXPLAINED CASH CREDITS U/S. 68 OF THE ASSESSEE FOR THE RELEVANT YEAR UNDER CONSIDERATION APPEARS TO BE COR RECT AND JUSTIFIED. CONSEQUENTLY, THESE GROUNDS TAKEN UP BY THE ASSESSEE ARE HEREBY DISMISS ED. AGGRIEVED THE ASSESSEE IS UNDER APPEAL BEFORE US. T HE LD. DR HAS SUPPORTED THE STAND TAKEN BY LOWER AUTHORITIES. 4. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF LOWER AUTHORITIES AND RELEVANT MATERIAL ON RECORD. SO FAR AS THE LEGALITY OF REASSESSMENT PROCEEDINGS IS CONCERNED, WE FIND THAT LD. AO WAS C LINCHED WITH SPECIFIC INFORMATION AS TO ESCAPEMENT OF INCOME IN THE HANDS OF THE ASSESSEE AND THEREFORE, THE REASSESSMENT PROCEEDINGS WERE RIGHTL Y TRIGGERED AGAINST THE ASSESSEE. 5. SO FAR AS THE ADDITIONS, ON MERITS, ARE CONCERNE D, WE FIND THAT THE ONUS CASTED UPON ASSESSEE TO PROVE THE 3 INGREDIENT S VIZ. IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S REMAINED UNFULFILLED. THE HUSBAND OF THE ASSESSEE HAS ADMITTED TO HAVE OB TAINED BOGUS UNSECURED LOANS FROM THE GROUP CONCERNS RUN BY SHRI PRAVIN KUMAR JAIN. NOTHING ON RECORD WOULD INSPIRE US TO TAKE A DIFFER ENT VIEW IN THE MATTER. 6. IN THE RESULT, THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2019. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 5 MUMBAI; DATED : 27/08/2019 SR.PS:-JAISY VARGHESE 78 98 / COPY OF THE ORDER FORWARDED TO : 1. >@ / THE APPELLANT 2. AB>@ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. O P A Q , Q , / DR, ITAT, MUMBAI 6. P ST / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.