The ITO, Ward-11(4), Ahmedabad V. Shri Shamshender Lohia, Ahmedabad

ITA 2607/AHD/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5797 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 20-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: G C PIPARA
• Keywords: Unexplained cash credit; Salary income; Accommodation entries
• Section: 80C; 133A; 68

Judgement Text

, ,L ,L,L ,L- -- -,E ,E,E ,E- -- -LH* LH*LH* LH* IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER !# I.T.A. NO.2607/AHD/2011 ( / ASSESSMENT YEAR :2008-09) INCOME TAX OFFICER, WARD-11(4), AHMEDABAD. # VS. SHRI SHAMSUNDER LOHIA 166, NEW CLOTH MARKET, O/S. RAIPUR GATE, RAIPUR, AHMEDABAD - 380002 $ # % & # PAN/GIR NO. : ABCPL 8286 G ( !$' / APPELLANT ) .. ( ($' # RESPONDENT ) !$') # APPELLANT BY : SHRI RAHUL KUMAR, SR. DR ($'*) / RESPONDENT BY : SHRI G.C. PIPARA, AR + ,*-. / DATE OF HEARING 05/04/2017 /012*-. / DATE OF PRONOUNCEMENT 31/05/2017 3# O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XVI, AHMEDABAD, DATED 12/08/2011 FOR THE ASSESSMENT YEAR (AY) 2008-09. 2. REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEA L: THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.34,42,014/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT. HE HAS ALSO ERRED IN LAW AND ON FACTS IN DELET ING THE DISALLOWANCE OF RS.1,01,818/- INTEREST PAID TO DEPOSITORS. ITA NO. 2607/AH D/2011 ITO VS. SHRI SHAMSUNDER LOHIA ASST.YEAR 2008-09 - 2 - 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE ASSESSEE IS ENGAGED IN BUSINESS OF TRADING OF C LOTH IN THE NAME OF STYLE OF M/S. AMBICA SALES AGENCY. DURING THE YE AR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN BUSINESS INCOM E OF RS.2,98,783/-. THE ASSESSEE HAS ALSO SHOWN SALARY INCOME OF RS.1,5 0,000/- AND CAPITAL GAIN OF RS.3,47,567/- AND OTHER SOURCE OF INCOME OF RS.45,067/- DURING THE YEAR UNDER CONSIDERATION. AFTER DEDUCTION OF RS .1,00,000/- UNDER SECTION 80C OF THE ACT AND DEDUCTION OF RS.10,219/- UNDER SECTION 80D OF THE ACT, THE NET INCOME WORKED OUT TO RS.7,31,19 8/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSEE HAS FURNISHED CONFIRMATION FROM THE FOLLOWING DEPOSITOR S:- S. N. NAME OF THE PARTY OPENING BALANCE (RS.) ADDITION (RS.) ADDL. INTEREST (RS.) PAYMENT (RS.) CLOSING BALANCE (RS.) 1. AMRESH RAMDINESH SHARMA 6,15,351 90,000 24,621 24,621 6,80,730 2. ARVIND RANJEET SHARMA 5,16,356 75,000 24,081 24,081 5,67,275 3. DIPIKA MANGALBHAI SHAH 0 5,04,636 0 0 5,04,636 4. MANJULA SHIVSHANKAR MISHRA 3,11,514 1,57,945 17,482 17,482 4,51,977 5. RAJNI BIRENDRA PANDEY 6,20,194 90,000 29,464 29,464 6,80,730 6. VISHWANATH RAMREKHA SHARMA 2,07,676 30,000 10,766 10,766 2,26,910 7. ROHIT PRAHALAD PATEL 2,00,000 23,342 2,404 2,404 2,20,938 TOTAL 24,71,091 9,70,923 1,08,818 1,08,818 33,33,196 ITA NO. 2607/AH D/2011 ITO VS. SHRI SHAMSUNDER LOHIA ASST.YEAR 2008-09 - 3 - IN THIS CONNECTION, IT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, THAT THERE WAS SURVEY IN THE CASE OF SHRI LALITKUMAR SHARMA & OTHERS ON 31/08/2009. DURING THE COURSE OF SURVEY A STATEMENT OF SHRI RAMDINESH SHARMA WAS RECORDED ON OATH. IN THE STATEMENT RECORDED, SHRI RAMDINESH SHARMA HAS CATEG ORICALLY ADMITTED THAT HE WAS MANAGING BUSINESS AFFAIRS/BANK ACCOUNTS ETC. OF 61 PERSONS. MOREOVER THE BANK PASSBOOKS, BLANK C HEQUES DULY SIGNED ETC. HAVE ALSO BEEN FOUND WHICH WERE IMPOUND ED DURING THE COURSE OF SURVEY. IT WAS ALSO STATED THAT HE HI MSELF HAS OPENED THE BANK ACCOUNTS IN THE NAME OF VARIOUS PERSONS, O PERATED THE BANK ACCOUNTS AND ALSO DEPOSITED THE CASH INTO THEI R ACCOUNTS AND ISSUED CHEQUES TO THE VARIOUS PERSONS. THE NAMES OF THE ABOVE PERSONS FROM WHOM YOU HAVE OBTAINED THE DEPOSIT ARE APPEARED IN THE LIST OF 61 PERSONS. IN VIEW OF THE ABOVE, THE DETAILED SHOW CAUSE NOTIC E WAS ISSUED TO THE ASSESSEE ON 25.11.2010. IT WAS NECESS ARY VERIFIED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS TRANSACT ION, IN THE BACKGROUND OF THE EVIDENCES FOUND DURING THE COURSE OF SURVEY IN THE CASE OF SHRI LALITKUMAR SHARMA & OTHER AND PART ICULARLY, IN VIEW OF THE STATEMENT RECORDED ON OATH OF SHRI RAMD INESH SHARMA. THEREFORE, THE ASSESSEE WAS REQUESTED TO PRODUCE TH E 7 PERSONS, IN ORDER TO VERIFY THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF TRANSACTION. FURTHER, VIDE ABOVE SHOW CAUSE NOTICE DATED ITA NO. 2607/AH D/2011 ITO VS. SHRI SHAMSUNDER LOHIA ASST.YEAR 2008-09 - 4 - 23.12.2010, THE ASSESSEE WAS ALSO REQUESTED TO FURN ISH THE AGE WISE ANALYSIS OF THE OPENING BALANCE STANDING IN THE NAM E OF THE ABOVE 7 DEPOSITOR. THE HEARING WAS FIXED ON 02.12.2010 & 27.12.2010, I N THE ABOVE SHOW CAUSE NOTICE, IT WAS ALSO SPECIFICALLY M ENTIONED THAT IN CASE WAS FAILURE TO PRODUCE THE PERSONS AND TO FURN ISH THE AGE WISE ANALYSIS, THE AMOUNT OF RS.9,70,923 /- CREDITED THE DURING THE YEAR, AND THE ENTIRE AMOUNT OF INTEREST OF RS.1,08,818/- INCLUDING INTEREST ON OPENING BALANCE AMOUNTING TO RS.24,71,091/- WILL BE TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. IN RESPONSE TO THE ABOVE SHOW CAUSE NOTICE SHRI NIR MAL JAIN, ATTENDED ON BEHALF OF THE ASSESSEE ON 07.12.2010 AN D FURNISHED THE WRITTEN REPLY. FURTHER REPLY WAS ALSO FURNISHED ON 21.12.2010. IN THE SAID REPLY, IT IS SUBMITTED THAT THE COPY OF ST ATEMENT OF SHRI LALITKUMAR SHARMA & OTHERS HAS NOT BEEN ENCLOSED. T HE ABOVE CONTENTION OF THE ASSESSEE IS NOT CORRECT DURING TH E COURSE OF SURVEY THE STATEMENT OF SHRI RAMDINESH SHARMA WAS R ECORDED AND COPY OF THE SAID STATEMENTS HAS BEEN HANDED OVER TO SHRI NIRMAL JAIN, A.R. OF THE ASSESSEE. THE ORDER SHEET ENTRY D ATED 07.12.2010 HAS BEEN MADE WHICH IS SIGNED BY SHRI NIRMAL JAIN. IT WAS FURTHER SUBMITTED THAT NO ADDITION CAN BE MADE ON THE BASIS OF STATEMENT RECORDED OF THE THIRD PARTY. THE LOANS HAVE BEEN AC CEPTED AND REPAID TO THE SAID PARTIES EITHER DURING THE YEAR O R IN SUBSEQUENT ITA NO. 2607/AH D/2011 ITO VS. SHRI SHAMSUNDER LOHIA ASST.YEAR 2008-09 - 5 - YEARS. THE COMPLETE ADDRESS AS WELL AS PAN THE PROV IDED, ALL ARE ASSED TO TAX. THEREFORE, GENUINENESS OF LOAN SHOULD NOT BE DOUBTED. AS REGARD, TO PRODUCE THE PARTIES, IT IS SUBMITTED THAT THE ASSESSEE HAVE NO GOOD RELATION WITH THE SAID PARTIE S NOW AND THEREFORE, IT WILL BE NOT COMFORTABLE TO PRODUCE TH E PARTIES. FURTHER, IT WAS SUBMITTED THAT 'IF FOR A MOMENT YOUR VERSION IS ACCEPTED THEN ALSO IT CANNOT BE ACCEPTED THAT THESE PERSON C ANNOT HAVE SUBSTANTIAL INCOME/ASSETS TO GIVE LOAN FOR EARNING INTEREST. EVEN IF CERTAIN ENTRIES ARE FOUND TO BE NON GENUINE, IT WIL L NOT LEAD THE ENTIRE TRANSACTION AS NON GENUINE SINCE EVERY PERSO N WILL BE INVESTING HIS MONEY IN ONE WAY OR ANOTHER. THEREFOR E, MERELY BASED ON STATEMENT RECORDED OF THIRD PARTY, NO ADDI TION SHOULD BE MADE FOR THE SAKE OF JUSTICE.' THE ABOVE VERSION OF THE ASSESSEE IS NOTHING BUT TH E ADMISSION OF FACT THAT THE DEPOSITORS HAVE NOT SUBS TANTIAL INCOME/ASSETS TO ADVANCES THE LOAN FOR EARNING INTE REST AND CERTAIN ENTRIES ARE NON GENUINE. REGARDING DISALLOWANCE OF INTEREST IT IS SUBMITTED THAT THE INTEREST PAID AND TDS HAS BEEN DEDUCTED AND CLAIMED BY THE DEPOSITORS AND THEREFORE, THE DISALLOWANCE SHOULD N OT BE MADE TO AVOID DOUBLE TAXATION. ITA NO. 2607/AH D/2011 ITO VS. SHRI SHAMSUNDER LOHIA ASST.YEAR 2008-09 - 6 - THE SUBMISSION MADE BY THE ASSESSEE HAS BEEN CAREFU LLY GONE THROUGH. HOWEVER, THE SAME IS NOT FOUND ACCEPT ABLE. THE MAIN CONTENTION OF THE ASSESSEE THAT THE ASSESSING OFFICER, IS RELYING UPON THE STATEMENT RECORDED DURING THE SURV EY OF SHRI RAMDINESH SHARMA. THE ABOVE CONTENTION OF THE ASSES SEE IS NOT CORRECT. IN THIS CONNECTION, IT IS WORTHWHILE TO ME NTION HERE THAT A SURVEY U/S 133A OF THE ACT WAS CARRIED OUT IN THE C ASE OF SHRI LALIT S. SHARMA & OTHERS (SHRI LALIT S. SHARMA, MANOJ R. SHARMA, ARVIND R. SHARMA, SMT. RAJNI B. PANDEY AND SHRI DIN ESH K. AGARWAL) ON 31/08/2009 AT THE OFFICE PREMISES, 115 P.B. PARIKH TOWER, KANKARIA, AHMEDABAD. DURING THE COURSE OF SU RVEY PROCEEDINGS IT WAS NOTICED THAT ONE SHRI RAMDINESH RANJIT SHARMA WAS MANAGING THE BUSINESS AFFAIRS/BANK ACCOUNTS ETC . OF ALL THE ABOVE PERSONS AND PERSONS OTHER THAN ABOVE SOME OF WHOM WERE HIS CLOSE RELATIVES/FRIENDS AS CLAIMED BY HIM. DURI NG THE COURSE OF SURVEY PROCEEDINGS IT WAS FURTHER ADMITTED BY HIM T HAT HE HIMSELF HAD OPENED THE BANK ACCOUNTS IN THE NAME OF ALL THE ABOVE PERSONS AND OPERATED THE BANK ACCOUNTS HIMSELF IN THE NAME OF THESE PERSONS, DEPOSITED CASH INTO THEIR BANK ACCOUNTS AN D ISSUED CHEQUES TO VARIOUS PERSONS. THE MODUS OPERANDI OF T HE BUSINESS CARRIED ON AT 115, P.B. PAREKH TOWER, KANKARIA, AHM EDABAD HAS BEEN EXPLAINED BY SHRI RAMDINESH SHARMA. HE HAS CAT EGORICALLY ADMITTED THAT OPENED ALL THE BANK ACCOUNTS IN THE N AME OF THESE PERSONS. THE CHEQUE BOOKS ISSUED BY THE BANK WERE K EPT IN HIS CUSTODY. HE USED TO AVAIL THE SIGNATURE OF THE CONC ERNED PERSONS ON ITA NO. 2607/AH D/2011 ITO VS. SHRI SHAMSUNDER LOHIA ASST.YEAR 2008-09 - 7 - BLANK CHEQUES AND KEPT THEM IN HIS CUSTODY. HE RECE IVED CASH FROM THE PERSONS WHO WERE IN NEED OF ACCOMMODATION ENTRI ES FOR UNSECURED LOANS. THE CASH SO RECEIVED WAS DEPOSITED IN ONE OF THE BANK ACCOUNT OF THE ABOVE PERSONS. AFTER DEPOSITING THE CASH, THE CHEQUE WAS ISSUED TO THE CONCERNED PARTIES. THE CON CERNED PARTIES WOULD SHOW IT AS UNSECURED LOAN IN THEIR BOOKS OF T HE ACCOUNT. THE ASSESSEE HAS ALSO RECEIVED UNSECURED LOAN FROM THE PARTIES WHO HAVE BEEN ACCOMMODATION ENTRY. IN THE ABOVE BACKGRO UND THE UNDERSIGNED WAS OF VIEW THAT THE TRANSACTION ARE SU SPICIOUS AND FURTHER VERIFICATION IS NECESSARY REGARDING GENUINE NESS OF THE TRANSACTION. IN THE ABOVE BACKGROUND WHICH HAS ALSO BEEN MENTIONED IN THE SHOW CAUSE NOTICE, THE UNDERSIGNED HAS ASKED THE ASSESSEE TO PRODUCE THE PERSONS FROM WHOM THE LOANS HAVE BEEN OBTAINED. THEREFORE, THE ONLY FILING CONFIRMATION A ND COPY OF RETURN OF INCOME DOES NOT PROVE THE GENUINENESS OF TRANSACTION IN THE BACKGROUND OF ADVERSE MATERIALS AVAILABLE WITH THE DEPARTMENT, THE IMPORTANT EVIDENCES FOUND DURING THE COURSE OF SURVEY ARE COPY OF RETURNS OF THE DEPOSITORS, BANK PASSBOOK AN D BLANK CHEQUE BOOK. THEREFORE, INSTEAD OF MENTIONING CONTROVERSY IN THE STATEMENT, THE ASSESSEE SHOULD PRODUCE THE PERSONS AND PROVE THAT THE FACTS MENTIONED IN THE STATEMENTS OF SHRI RAMDI NESH SHARMA AND EVIDENCES FOUND ARE NOT PREVAILING IN THE CASE OF DEPOSITORS FROM WHOM THE ASSESSEE HAS OBTAINED HUGE LOAN. THE GENUINENESS OF THE TRANSACTION CAN ONLY BE PROVE AFTER VERIFYIN G THE DEPOSITORS BANK ACCOUNTS AND CREDIT ENTRIES IN THE SAID BANK A CCOUNT IS ITA NO. 2607/AH D/2011 ITO VS. SHRI SHAMSUNDER LOHIA ASST.YEAR 2008-09 - 8 - GENUINE SO THAT THE DEPARTMENT CAN ESTABLISHED THAT THERE IS NO GENUINE CASH CREDIT VIS A VIS THE ASSESSEE CAN PROV E THAT THERE WAS A GENUINE CASH CREDIT. THIS IS ONLY REASON TO ASK T HE ASSESSEE TO PRODUCE THE DEPOSITORS. HOWEVER, THE ASSESSEE FAILS TO AVAIL THE OPPORTUNITY ACCORDED TO IT. IN THE ABOVE BACKGROUNDS AND MATERIALS AVAILABLE WI TH THE DEPARTMENT THE ONUS IS CAST UPON THE ASSESSEE TO PR ODUCE THE PERSONS AND THE ASSESSEE CANNOT ABSOLVE HIMSELF FRO M THE ONUS CAST UPON HIM. THE MERE FILING OF CONFIRMATION AND COPY OF RETURN OF INCOME OF DEPOSITORS DOES NOT SERVED THE PURPOSE UN LESS AND UNTIL THE FACTS IS VERIFIED FROM THE DEPOSITORS. THEREFOR E, THE ASSESSEE HAS NOT FULFILLED THE ONUS CAST UPON HIM. THE AMPLE OPPORTUNITIES HAVE BEEN GIVEN TO THE ASSE SSEE TO PRODUCE THE PERSONS. BECAUSE, IN THE ABOVE BACKGROU ND AND MATERIALS AVAILABLE WITH THE DEPARTMENT, IT IS NECE SSARY TO VERIFY THE DEPOSITORS IN RESPECT OF ACCOMMODATION ENTRIES HAVE BEEN RECEIVED OR NOT FROM THE SAID DEPOSITORS. HOWEVER, THE ASSESSEE FAILS TO PRODUCE THE DEPOSITORS. THEREFORE, IT IS E STABLISHED BEYOND DOUBT THAT THERE IS NO GENUINE CASH CREDIT AND THER EBY THE CASH CREDIT REMAINS UNEXPLAINED. THEREFORE, THE AMOUNT D EPOSITED DURING THE YEAR AMOUNTING TO RS.9,70,923/- IS TREAT ED AS UNEXPLAINED CASH CREDIT AND THE SAME IS ADDED TO TH E TOTAL INCOME OF THE ASSESSEE U/S 68 OF THE ACT. FURTHER THE ASSE SSEE HAS ALSO NOT ITA NO. 2607/AH D/2011 ITO VS. SHRI SHAMSUNDER LOHIA ASST.YEAR 2008-09 - 9 - FURNISHED THE AGE WISE ANALYSIS OF THE OPENING BALA NCE OF RS.24,71,091/- STANDING IN THE NAME OF THE ABOVE DE POSITORS. THEREFORE, THE SAME IS TREATED AS RECEIVED DURING THE YEAR AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPL AINED CASH CREDIT. MOREOVER, SINCE THERE IS NO GENUINE CASH CR EDIT IN THE NAME OF THE ABOVE 7 DEPOSITORS, THE ENTERED INTEREST AMO UNTING TO RS.1,08,818/- IS ALSO DISALLOWED. WE, THEREFORE, SE T ASIDE THE FINDINGS OF THE LEARNED CIT(A) AND ALLOW REVENUES APPEAL. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 31/05/2017 SD/- SD/- ( ) 4 5 ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 31/05/2017 PRITI YADAV, SR.PS ITA NO. 2607/AH D/2011 ITO VS. SHRI SHAMSUNDER LOHIA ASST.YEAR 2008-09 - 10 - !'# $#! # COPY OF THE ORDER FORWARDED TO : 1. !$' / THE APPELLANT 2. ($' / THE RESPONDENT. 3. 67- + 8- / CONCERNED CIT 4. + 8- 4!5 / THE CIT(A)-XVI, AHMEDABAD. 5. 9:;-67 !.!672 ! / DR, ITAT, AHMEDABAD 6. ;<=, # GUARD FILE. % & / BY ORDER, (9-- //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 31/05/2017 (DICTATION-PAD 1 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 31/05/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER