ITO 25(2)(2), MUMBAI V. BELA SURESH AGARWAL, MUMBAI

ITA 26/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9998 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 02-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Accommodation entries
• Section: 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.26/M/2017 ASSESSMENT YEAR: 2007-08 THE ITO, OFFICE OF THE ITO 25(2)(2), R.NO.507, C-10, 5 TH FLOOR, PRATYAKSHA KAR BHAVAN, BANDRA KURLA COMPLED, BANDRA (E), MUMBAI - 400051 VS. M/S. BELA SURESH AGARWAL, MILLENIUM MARBLES PVT. LTD SERVICE ROAD, NEAR AIRPORT, W.E. HIGHWAY, VILE PARLE EAST, MUMBAI 57 PAN: ACKPA0372M (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : MS. DINKLE HARIYA, A.R. REVENUE BY : SHRI T.A. KHAN, D.R. DATE OF HEARING : 12.06.2017 DATE OF PRONOUNCEMENT : 30.06.2017 O R D E R PER D.T. GARASIA, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 06.10.2016 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2007-08. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.33,00,000/- ON ACCOUNT OF ACCOMMODATION ENTRIES RELATING TO UNSECURED LOANS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID. CIT (A) HAS ERRED IN NOT CONSIDERING THAT THE ADDITION WAS MADE ON THE BASIS OF INFORMATION RECEIVED FROM THE DGIT(INV.) WHICH HAS BEEN GATHERED DURING SEARCH OPERATION U/S 132 OF THE I.T. ACT WITH REGARD TO AC COMMODATION ENTRIES TAKEN BY THE ASSESSEE FROM A FIRM WHICH WAS A CONCERN OWNED AND OPERATED BY SHRI RAJENDRA JAIN. ITA NO.26/M/2017 M/S. BELA SURESH AGARWAL 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE ID. CIT (A) HAS ERRED IN NOT CONSIDERING THE STATEMENTS RECORDE D DURING SEARCH OPERATION WHEREIN IT IS ADMITTED THAT LOANS MADE BY THE ASSES SEE FROM THEIR FIRMS WAS NOT GENUINE BUT WERE ONLY ACCOMMODATION ENTRIES. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ID. CIT (A) HAS ERRED IN CONSIDERING THAT THE SOURCE OF RECEIPT THR OUGH BANKING CHANNELS WERE GENUINE AND ITS CREDITS WERE REFLECTED IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ID. CIT (A) HAS ERRED IN CONSIDERING THAT THE BOOKS OF ACCOUNTS MAI NTAINED BY THE ASSESSEE WERE GENUINE AND THAT THE LOAN CONFIRMATION AND PAYMENT THROUGH BANKING CHANNELS REPRESENTED A CORRECT AND COMPLETE FINANCIAL STATUS OF THE ASSESSEE. 6. THE APPELLANT PRAYS THAT THE ORDER OF LD.CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . THE APPELLANT CRAVES LEAVE TO AMEND OR TO ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 3. THE SHORT FACTS OF THE CASE ARE AS UNDER: THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) RECEIVED AN INFORMATION FROM THE DGIT, MUMBAI THAT THE ASSESSEE RECEIVED ACCOMMODATION ENTRIES IN THE NATURE OF BOGUS UNSECURED LOAN OF RS.33,00,000/- FROM M/S SPARSH EXPORTS P. L TD. BASED ON THE SAID INFORMATION, THE AO REOPENED THE ASSESSMENT BY WAY OF ISSUE OF NOTICE U/S.148 OF I.T. ACT. THE AO HAS OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS RECEIVED THE LOAN OF RS.33,00,000/- FROM THE COMPAN Y M/S SPARSH EXPORTS PVT. LTD. M/S SPARSH EXPORTS PVT. LTD. IS NOT A FIN ANCE COMPANY OR NBFC REGISTERED WITH THE RBI. THE COMPANY DOES NOT HAVE CAPITAL OR RESERVES OR FUNDS TO ADVANCE SUCH A HIGH VALUE LOAN. THE ASSESS EE HAS ALSO FAILED TO PRODUCE THE PARTY DURING THE ASSESSMENT PROCEEDINGS . THE AO HAS CONCLUDED THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENE SS AND CREDITWORTHINESS OF THE ABOVE PARTY. THEREFORE THE AO HAS DISALLOWED TH E CONTENTION OF THE ASSESSEE AND ADDED BACK THE AMOUNT OF RS.33,00,000/ - TO HIS INCOME. 4. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS ALLOWED THE ITA NO.26/M/2017 M/S. BELA SURESH AGARWAL 3 APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: 5.9 AFTER CONSIDERING THE TOTALITY OF FACTS, THE R IVAL SUBMISSIONS, THE APPLICABLE LAW AND ON THE BASIS OF DISCUSSIONS MENTIONED ABOVE , I HAVE COME TO THE CONCLUSION THAT NATURE AND SOURCE OF CREDIT IN THE BOOKS OF AC COUNT OF APPELLANT STANDS EXPLAINED. CONSEQUENTLY, ADDITION U/S 68 CANNOT BE SUSTAINED. THEREFORE, A.O. IS DIRECTED TO DELETE THE ADDITION OF RS.33,00,000/-. THIS GROUND OF APPEAL IS ALLOWED. 5. THE LD. D.R. SUBMITTED BEFORE ME THAT THE STATEM ENT OF SHRI RAJENDRA JAIN WHO WAS GIVING ACCOMMODATION ENTRIES TO THE AS SESSEE WAS RECORDED DURING THE SEARCH OPERATION IN WHICH HE ADMITTED TH AT THEY ARE ISSUING ACCOMMODATION BILLS OR UNSECURED LOANS. THEREFORE, PURCHASES OR UNSECURED LOANS MADE BY ASSESSEE FROM M/S SPARSH EXPORTS P. L TD. IS NOT GENUINE BUT ONLY ACCOMMODATION ENTRY WAS PROVIDED BY SHRI RAJEN DRA JAIN GROUP. THEREFORE, DOCUMENT INCLUDING LOAN CONFIRMATION AND PAYMENT THROUGH BANKING CHANNEL DO NOT PROVE THE GENUINENESS. 6. THE LD. A.R. MS. DINKLE HARIYA HAD RELIED UPON T HE DECISION OF ITAT, MUMBAI IN THE CASE OF M/S. RELIANCE CORPORATION IN ITA NOS.1069 TO 1071/M/2017 DECIDED ON 12.04.2017 WHEREIN THE TRIBU NAL HAS HELD THAT THE ORAL STATEMENT OF A THIRD PARTY RECORDED BY SEARCH AUTHORITIES WHICH WAS NEVER PLACED TO BE CONFRONTED BY ASSESSEE AND NO DOCUMENT ARY EVIDENCE WAS SUPPLIED TO ASSESSEE, COULD NOT BE CONSIDERED IN MA KING ADDITION U/S. 68 ON ACCOUNT OF ALLEGED ACCOMMODATION ENTRIES. MOREOVER , SHE RELIED UPON THE ORDER OF THE LD. CIT(A). 7. HAVING HEARD BOTH THE PARTIES, I FOUND FROM THE ORDER OF THE LD. CIT(A) THAT THE LD. CIT(A) HAS DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS EXPLAINED AND PROVED THE NATURE AND SOURCE OF CREDI T IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. DURING THE COURSE OF HEARING, THE AS SESSEE HAS SUBMITTED THE NAME AND ADDRESS OF THE CREDITORS, AMOUNT BORROWED, MODE OF RECEIPT, LOAN CONFIRMATION ALONG WITH BANK STATEMENT AND COPY OF THE RETURN, COPY OF PAN CARD, ACKNOWLEDGEMENT OF RETURN FOR A.Y. 2007-08 OF LOAN CREDITOR AND AFFIDAVIT FROM DIRECTOR OF LOAN CREDITOR. THE LD. CIT(A) VERIFYING THE ABOVE ITA NO.26/M/2017 M/S. BELA SURESH AGARWAL 4 DOCUMENTS HAD ALLOWED THE APPEAL OF THE ASSESSEE. MOREOVER, IN THIS CASE, THE ASSESSEE HAS TAKEN A LOAN AND LOAN HAS BEEN REPAID WITHIN ONE AND A HALF YEAR THROUGH BANKING CHANNEL. THEREFORE, WE ARE OF THE VIEW THAT LD. CIT(A) IS JUSTIFIED IN HIS ORDER. 8. I FIND THAT THIS CASE IS FULLY COVERED BY THE DE CISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF DCIT V. ROHINI BUILDERS - 256 ITR 360 WHEREIN IT IS HELD AS UNDER: THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF DY. CIT VS ROHINI BUILDERS - [256 ITR 360] IS HELD THAT ALL THE LOANS WERE RECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES AND THE REPAYMENT OF LOANS HA VE ALSO BEEN MADE BY ACCOUNT PAYEE CHEQUES ALONG WITH INTEREST IN RELATI ON TO THOSE LOANS AND THAT THE ASSESSING OFFICER HAVING ALLOWED THE INTEREST CLAIM ED/PAID BY THE ASSESSEE IN RELATION TO THE CASH CREDITS CANNOT TREAT THE CASH CREDITS AS NOT GENUINE. IT HELD THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS WHICH LAY ON IT IN TERMS OF SECTION 68 BY PROVING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES, GIR NOS./PAN NOS. AND COPIES OF ASSESSMENT ORDERS WHERE VER READILY AVAILABLE AND THAT IT HAS ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUNTS WERE RECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES D RAWN FROM THE BANK ACCOUNTS OF THE CREDITORS. IT HELD THAT THE ASSESSEE IS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS BECAUSE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF TH E CREDITS IN ITS BOOKS OF ACCOUNTS BUT NOT THE SOURCE OF THE SOURCE. 9. FURTHER, IT IS SUPPORTED BY THE JUDGMENT OF HON BLE GAUHATI HIGH COURT IN THE CASE OF NAMICHAND KOTHARI VS. CIT 264 ITR 254 (GAU). DURING THE COURSE OF HEARING, THE LD. D.R. DID NOT PRODUCE ANY EVIDENCE CONTRARY TO THE FINDING OF LD. CIT(A). ACCORDINGLY, I CONFIRM THE ORDER OF THE LD. CIT(A). 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.2017. SD/- (D.T. GARASIA) JUDICIAL MEMB ER MUMBAI, DATED: 30.06.2017. * KISHORE, SR. P.S. ITA NO.26/M/2017 M/S. BELA SURESH AGARWAL 5 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.