ANIL CHHAGANLAL JAIN, MUMBAI V. ASST CIT 18(1), MUMBAI

ITA 369/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1342 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 17-01-2017
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAVDR
• Keywords: Search and seizure; Source of fund; Accommodation entries; Retraction
• Section: 133(6); 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.369 /MUM /2017 ASSESSMENT YEAR-2013-14 ANIL CHHAGANLAL JAIN, ROOM NO.13, 02 ND FLOOR, BHAGWAN BHAVAN, 15, DADI SANTUK LANE, JSS ROAD, CHIRA BAZAR, MUMBAI-400002 / VS. ACIT-18(1), 04 TH FLOOR, EARNEST HOUSE, MUMBAI PAN NO. AAAPJ7018F ( / ASSESSEE) ( / REVENUE) ITA NO.370/MUM /2017 ASSESSMENT YEAR-2013-14 ANIL CHHAGANLAL JAIN (HUF), ROOM NO.13, 02 ND FLOOR, BHAGWAN BHAVAN, 15, DADI SANTUK LANE, JSS ROAD, CHIRA BAZAR, MUMBAI-400002 / VS. ACIT-18(1), 04 TH FLOOR, EARNEST HOUSE, MUMBAI PAN NO. AAFHA8889L ( / ASSESSEE) ( / REVENUE) ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 2 / ASSESSEE BY SHRI PRAKASH JOTWANI / REVENUE BY SHRI RAJESH KUMAR YADAV-DR / DATE OF H EARING : 11/04/2017 / DATE OF ORDER: 13/04/2017 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THESE TWO APPEALS ARE BY THE DIFFERENT ASSESSEE AGAINST THE IMPUGNED ORDERS BOTH DATED 05/12/2016 O F THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. FIRST, WE SH ALL TAKE UP APPEAL IN ITA NO.369/MUM/2017, WHEREIN, GROUND RAISED PERTAINS TO CONFIRMING THE ADDITION MADE U// S 68 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), OF RS.,1,77,00,000/-, BEING LOAN RECEIVED FROM ENCEE SECURITIES PVT. LTD. 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI PRAKASH JOTWANI, ADVANCED ARGUMENTS WHICH IS IDENTICAL TO THE GROUND RAISED. IT WAS CONTENDED TH AT THE ASSESSEE RECEIVED UNSECURED LOAN OF THE IMPUGNED AM OUNT FROM ENCEE SECURITIES PVT. LTD. THE ASSESSING OFFI CER ASKED THE ASSESSEE TO SUBMIT THE LOAN CONFIRMATION, BANK STATEMENT AND RETURN OF ENCEE SECURITIES PVT. LTD. TO PROVE THE GENUINENESS OF THE LOAN, WHICH AS PER THE ASSES SEE WERE DULY FILED BEFORE THE ASSESSING OFFICER. IT WAS PLE ADED THAT THE ASSESSEE IS NOT EXPECTED TO PROVE THE SOURCE OF SOURCE OF THE LOAN AMOUNT BUT DULY DISCHARGED THE ONUS CAS TE ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 3 UPON THE ASSESSEE. IT WAS ASSERTED THAT CONFIRMATI ON OF LOAN, CREDITWORTHINESS OF THE PARTY AND GENUINENESS OF THE LOAN WAS DULY EXPLAINED BEFORE THE ASSESSING OFFICE R. IT WAS EMPATHETICALLY EXPLAINED/CLAIMED THAT THE IMPUGNED AMOUNT WAS NOT A SHARE APPLICATION MONEY RATHER IT WAS A SIMPLICITOR A LOAN. ON A QUERY FROM THE BENCH WITH RESPECT TO ANY ADDITION, IF ANY, HAS BEEN MADE IN THE CASE OF ENCEE SECURITIES PVT. LTD.. IT WAS EXPLAINED THAT ADDITI ON HAS BEEN MADE IN THE CASE OF ENCEE SECURITIES PVT. LTD. AND THE APPEAL IS PENDING BEFORE THE LD. COMMISSIONER OF IN COME TAX (APPEAL) BY FURTHER ADDING THAT IT IS A CASE OF DOUBLE ADDITION OF THE SAME AMOUNT. IT WAS CLAIMED THAT IT IS UP TO THE DEPARTMENT TO CHOOSE AS IN WHOSE HANDS ADDITION HAS TO BE MADE. THE LD. COUNSEL FURTHER ASSERTED THAT N O QUESTION WAS PUT TO THE ASSESSEE WITH RESPECT TO EN CEE SECURITIES PVT. LTD. AS THE ASSESSEE WAS NEITHER CO NFRONTED WITH THE ALLEGED STATEMENT OF THE DIRECTOR OF ENCEE SECURITIES PVT. LTD.. IT WAS PLEADED THAT SHARE AP PLICATION MONEY HAS NOTHING TO DO WITH THE ASSESSEE. THE CRUX OF THE ARGUMENT IS THAT ENCEE SECURITIES PVT. LTD. NEVER D ENIED OF GIVING LOAN TO THE ASSESSEE AND THE LOANS ARE STILL LIVE AND THE CONCERNED PARTIES DULY CONFIRMED THAT THE LOANS ARE GENUINE AND THE ASSESSEE IS NOT PROVE THE SOURCE OF SOURCE OF THE IMPUGNED AMOUNT. OUR ATTENTION WAS INVITED T O VARIOUS PARAS OF THE ASSESSMENT ORDER AS WELL AS TH E IMPUGNED ORDER ALONG WITH THE CONTENTS OF THE STATE MENT. IT WAS ALSO ASSERTED THAT IN REPLY TO THE SHOW CAUSE N OTICE, ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 4 THE ASSESSEE EXPLAINED ITS POSITION AND THE ALLEGED STATEMENT, WHICH WAS RECORDED UNDER DURESS AND THRE AT WAS RETRACTED WITHIN A REASONABLE TIME BY SHRI HARI SH SHARMA. PLEA WAS ALSO RAISED THAT THE ASSESSEE WAS NEVER EXAMINED/CONFRONTED WITH RESPECT TO THE STATEMENT O F SHRI SHIRISH SHAH. PLEA WAS ALSO RAISED THAT THE STATEM ENT OF SHRI SHIRISH SHAH WAS NEVER PROVIDED TO THE ASSESSE E IN SPITE OF REQUEST OF THE ASSESSEE. A STRONGLY PLEA W AS RAISED EVEN IT IS PRESUMED THAT ENCEE SECURITIES PVT. LTD. GOT THE MONEY THROUGH SHARE APPLICATION FROM SOME PERSONS, HOW IT CAN BE ADDED U/S 68 OF THE ACT IN THE HANDS OF T HE PRESENT ASSESSEE. 2.1. ON THE OTHER HAND, THE LD. DR, SHRI RAJESH KUMAR YADAV, STRONGLY DEFENDED THE ADDITION MADE IN THE HANDS OF THE PRESENT ASSESSEE BY CLAIMING THAT THE WHOLE ISSUE IS ARRANGED TRANSACTION GIVEN IN THE FORM OF LOAN TO THE ASSESSEE, THEREFORE, THE ADDITION WAS ARGUED TO BE RIGHTLY MADE. OUR ATTENTION WAS INVITED TO PARA 3.2 , 5.1 AND 7.1 OF THE IMPUGNED ORDER. IT WAS PLEADED THAT IT W AS A COLOURABLE DEVICE AND THE LOAN WAS NOTHING BUT THE MONEY OF THE ASSESSEE ITSELF. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE, AN INDIVIDUAL DECLARED TOTAL INCOME OF RS.40,05,590/- IN HIS RETURN ON 05/09/2013. DURING SCRUTINY PROCEEDINGS, IT WAS NOTICED BY THE ASSESSI NG ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 5 OFFICER THAT THE ASSESSEE HAS TAKEN UNSECURED LOAN OF RS.1,77,00,000/- FROM M/S. ENCEE SECURITIES PVT. LT D. THE ASSESSEE WAS ASKED TO FILE LOAN CONFIRMATION, BANK STATEMENTS AND RETURN OF INCOME OF M/S. ENCEE SECUR ITIES PVT. LTD. TO PROVE THE GENUINENESS OF THE LOAN. AS PER THE REVENUE, AT THE SAME TIME, THE ASSESSING OFFICER RE CEIVED INFORMATION FROM THE AHMADABAD INVESTIGATION WING, WHEREIN, A SEARCH AND SEIZURE OPERATION WAS CONDUCT ED ON AMRAPALI GROUP, AHMADABAD. IN POST SEARCH INVESTIG ATION, IT WAS FOUND THAT THE GROUP WAS INVOLVED IN ARRANGI NG ACCOMMODATION ENTRIES OF SHARE CAPITAL AND BOGUS LO NG TERM CAPITAL GAIN THROUGH A MUMBAI BASED OPERATOR I .E. SHRI SHIRISH SHAH, WHO WAS ALSO SUBSEQUENTLY SEARCH ED. THE STATEMENT OF SHRI SHIRISH SHAH WAS RECORDED, WH EREIN, HE ADMITTED THAT HE PROVIDES ACCOMMODATION ENTRIES THROUGH COMPANIES CONTROLLED AND MANAGED BY HIM. SO ME OF THE COMPANIES OF SHRI SHIRISH SHAH INCLUDES M/S PARINITA INDUSTRIES LTD., SHRI GANESH SPINNERS LTD. , M/S VISHESH INFOTECH LTD., M/S CHANNEL GUIDE LTD., M/S MOHAN INDUSTRIES LTD, M/S EMPOWER INDIA LTD., M/S EMPORISH PROJECTS LTD., M/S SANGUINE MEDIA LTD., M/ S YANTRA NATURALS LTD. ETC. THE LD. ASSESSING OFFICER FURTHER OBSERVED THAT THE SHARE PREMIUM HAS BEEN PAID TO M/ S. ENCEE SECURITIES PVT. LTD. BY FEW SHARE HOLDERS, WH ICH ARE SUMMARIZED AS UNDER:- ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 6 SHAREHOLDER NAME NO. OF EQUITY SHARES AMOUNT PER SH ARE AADHAR VENTURE INDIA LTD. 57000 10 SANGUINE MEDIA LIMITED 114000 10 EMPORIS PROJECTS LTD. 82500 10 YANTRA NATURAL RESOURCES LTD. 82500 10 SPECIALITY PAPER LIMITED 1,80,5000 10 AS PER THE REVENUE, THE STATEMENT OF SHRI HARISH SHARMA WAS RECORDED, WHEREIN, IT WAS CLAIMED THAT H E CATEGORICALLY STATED THAT HE WAS NOT AWARE ABOUT TH E BUSINESS ACTIVITIES OF M/S ENCEE SECURITIES PVT. LT D. BEFORE THIS TRIBUNAL, THE LD. DR HEAVILY RELIED UPON THE S TATEMENT TENDERED BY SHRI HARISH SHARMA, THEREFORE, IT IS OU R BOUNDED DUTY TO ANALYZE THE SAME, CONSEQUENTLY, THE CONTENTS OF THE STATEMENT ARE REPRODUCED HEREUNDER: - Q1. PLEASE IDENTIFY YOURSELF AND CONFIRM THAT OATH HAS BEEN ADMINISTERED TO YOU AND YOU HAVE ALSO BEEN MAD E AWARE OF CONSEQUENCE OF GIVING'FALSE STATEMENT UNDE R OATH. ANS. I AM HARISH MADANLAL SHARMA AGED 38 YEARS, SON OF MR. MADANLAL DHANRAJ SHARMA, RESIDING AT ROOM NO. 8, SOMJI BLDG. 198, NORTH BLOCK STREET, NR. GOL DEVI MANDIR, MUMBAI - 400004. MY NATIVE PLACE IS VILLAGE- KHIWANDI, TAHSILSUMERPUR, DISTRICT- PALI, RAJASTHAN , PIN CODE - 306901. I CAN READ, WRITE AND UNDERSTAND HIN DI AND ENGLISH. MY MOBILE NUMBER IS 9324015206. I CONFIRM THAT OATH HAS BEEN ADMINISTERED TO ME AND I HAVE ALSO BE MADE AWARE OF THE C6NSEQUENCES OF GIVING FALSE STATEMENT UNDER OATH .I FURTHER SUBMIT THAT I AM PH YSICALLY FIT AND IN GOOD POSITION TO DEPOT STATEMENT ON OATH. Q2. PLEASE STATE YOUR EDUCATIONAL QUALIFICATIONS, AND CONFIRM THAT YOU CAN READ, WRITE AND UNDERSTAND ENGLISH,. ANS. I AM 12TH COMMERCE PASS IN 1995 WITH SSCVGANJ HIGH SCHOOL, DIST. SIROHI, RAJASTHAN. YES, I CONFIRM THAT I CAN READ, WRITE AND UNDERSTAND ENGLISH. ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 7 Q3. PLEASE STATE YOUR SOURCES OF INCOME & ANNUAL APPROXIMATE INCOME FROM EACH SOURCE, YOUR PAN & OFF ICE OF THE A.O. WHERE YOU AND OTHER MEMBERS OF YOUR FAMILY ARE ASSESSED TO TAX. ANS. MY SOURCE OF INCOME IS DIRECTOR'S REMUNERATION FROM THE COMPANIES M/S MILTON GENERIC PVT. LTD. AND ENCE E SECURITIES PVT. LTD. IN WHICH I AM A DIRECTOR AND I RECEIVED COMMISSION INCOME FROM M/S MILTON PHARMA. MY PAN IS BKUPS7104Q. I DO NOT KNOW WHERE I AM FILING RETURN. I AM FILING RETURN FOR LAST 15 YEARS. MY RETURN IS FILED BY SHRI SURES H JAIN, CA. MY WIFE IS SMT. DIMPLE HARISH SHARMA (BEFOR E MARRIAGE DIMPLE JETHALAL SHARMA). Q4. PLEASE EXPLAIN IN DETAIL THE BUSINESS AND OTHER INC OME GENERATING ACTIVITIES IN WHICH YOU OR YOUR FAMILY M EMBERS ARE INVOLVED. ANS I THROUGH MILTON GENERIC PVT. LTD., IN WHICH I AM A DIRECTOR ENGAGED IN THE PHARMACEUTICAL DISTRIBUTORS HIP. THE OPERATIONS OF MILTON GENERIC PVT. LTD. ARE SPREAD OV ER MAHARASHTRA. OUR COMPANY IS TRADING IN GOODS OF RANBA XY, LABORATE, CIPLA, AND OTHER COMPANIES. THE TURNOVER OF THE COMPANY IS APPROXIMATE 20-25 CRORES FOR LAST FINANCIAL YEAR. THE BUSINESS OF M/ S ENCEE SECURITIES PVT. LTD. IS YET TO BE COMMENCED AS WE HAVE NOT RECEIVED C&F AGENCY. Q5. WHEN ENCEE SECURITIES PVT. LTD. WAS REGISTERED. ANS. THE COMPANY WAS REGISTERED IN THE YEAR OF 1994. Q6. WHO HAS REGISTERED THE COMPANY M/S ENCEE SECURITIES PVT. LTD. ANS. SIR, I DO NOT KNOW WHO HAS REGISTERED THE COMPANY . Q7. WHO HELP YOU TO REGISTER THE COMPANY M/S ENCEE SECURITIES PVT. LTD ANS. SIR, I HUMBLY SAY THAT I DO NOT KNOW. Q8. FOR WHAT PURPOSE YOU HAVE FORMED THE COMPANY M/ S ENCEE SECURITIES ' PVT. LTD.. ANS. SIR, I HAVE BEEN MADE SHAREHOLDER OF M/S ENCEE SECURITIES PVT. - LTD. AND LATER ON MADE DIRECTOR IN THE YEAR 2011. THERE IS NO REAL BUSINESS ACTIVITY IN THE COMPANY. I AM NOT AWARE ABOUT THE PURPOSE. Q9. HOW MUCH CAPITAL YOU HAVE INVESTED TO ESTABLISH M/S ENCEE SECURITIES PVT. LTD. ANS. I DO NOT REMEMBER HOW MUCH CAPITAL I HAVE INVESTED. Q10. WHEN YOU BECAME THE DIRECTOR OF THE COMPANY. ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 8 ANS. I BECAME DIRECTOR OF THE COMPANY IN YEAR 2011. Q11. HOW MUCH REMUNERATION YOU HAVE RECEIVED FROM M/S ENCEE SECURITIES PVT. LTD. ANS. I HAVE NOT RECEIVED ANY REMUNERATION FROM THE AB OVE COMPANY. Q12. WHERE IS REGISTERED OFFICE OF M/S ENCEE SECURITIES PVT. LTD. . ANS. I CONFIRM THAT IT IS AT ROOM NO. 8, 1ST FLOOR, S ONEJI BUILDING, KUMBHARWADA, MUMBAI - 400004 AND INCIDENTALLY MY RESIDENTIAL ADDRESS IS SAME I.E ROOM NO. 8, 1ST FLO OR, SONEJI BUILDING, KUMBHARWADA, MUMBAI - 400004, I AM STAYIN G WITH MY FAMILY IN THE SAID PREMISES FROM 1994 ONWARDS WH ICH BELONGS TO SHRI CHAGANLAL BHIKAMCHAND JAIN WHO IS F ATHER OF SHRI ANIL C. JAIN. Q13. WHETHER ANY RENT PAYMENT IS MADE BY M/S ENCEE SECURITIES PVT. LTD. FOR THIS OFFICE PREMISES. ANS. SIR, I AM NOT AWARE. Q14. IT MEANS YOUR RESIDENTIAL ADDRESS IS MENTIONED AS REGISTERED ADDRESS OF COMPANY. PLEASE CONFIRM THERE IS NO COMPANY BUSINESS ACTIVITY IN PREMISES MENTIONED IN ANSWER NUMBER ANS. SIR, I AM STAYING WITH MY FAMILY AT ROOM NO.8, 1 ST FLOOR, SONEJI BUILDING, KUMBHARWADA, MUMBAI-40004, I CONFIRM THAT THERE IS NO BUSINESS ACTIVITY OF COMPANY A T SAID PREMISES. THERE IS NO STAFF WORKING FOR COMPANY . I MYSELF AND OTHER DIRECTOR SHRI NIKHIL KUMAR JAIN, ONL Y SIGNING THE BOOKS OF ACCOUNTS AND STATUTORY DOCUMENTS. Q9. I AM SHOWING YOU THE ROC STATEMENT WHEREIN THE AUTHORIZED CAPITAL OF COMPANY M/S ENCEE SECURITIES PVT. LTD. IS RS. 75 LACS AND PAID UP CAPITAL OF RS. 60.96 LACS . THE TOTAL NUMBER OF SHAREHOLDER ARE 13 INCLUDING YOU AND YOUR OTHER DIRECTOR. PLEASE CONFIRM. ANS. YES, I HAVE BEEN SHOWN ROC STATEMENT. I CONFIRM THAT AUTHORIZED CAPITAL OF COMPANY M/S ENCEE SECURI TIES PVT. LTD. IS RS. 75 LACS AND PAID UP CAPITAL OF RS. 60.9 6 LACS . THE TOTAL NUMBER OF SHAREHOLDER ARE 13 INCLUDING ME AND MY OTHER DIRECTOR. Q16. I AM SHOWING YOU THE DETAILS OF 13 SHAREHOLDERS ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 9 INCLUDING YOU AND SHRI NIKHIL KUMAR JAIN. PLEASE CO NFIRM. ANS. YES, I HAVE BEEN SHOWN LIST OF 13 SHAREHOLDERS APPEARING IN ROC DOCUMENT. I FURTHER CONFIRM THAT EXCE PT SHRI NIKHIL KUMAR JAIN AND SHANTILAL BHIKAMCHAND JAIN, I DO NOT KNOW AND NEITHER MET REST OF THE 10 SHAREHOLDERS IN AG M OR OTHERWISE. Q17. AS A DIRECTOR YOU SHOULD BE KNOWING YOUR SHAREHOLDERS BECAUSE YOURS IS NOT PUBLICALLY LISTED COMPANY. THIS IS CLOSELY HELD COMPANY. WHY ONE SHOULD INVEST IN YOUR COMPANY WITHOUT KNOWING FINANCIAL AND BACKGROUND OF YOUR COMPANY: ANS. SIR, I AM 'DIRECTOR OF COMPANY SINCE 2011 AND I CONFIRM THAT I DO NOT KNOW ANY OF 10 OTHER SHAREHOLDERS LIST IS SHOWN TO ME AS BELOW. I. B. JHANWAR 86 CO. PVT. LIMITED.. II. SUJLA TIE-UP PVT. LIMITED. III. BHAWANI VANIJA PVT. LIMITED. IV. TRISURI DISTRIBUTORS PVT. LTD. V. AADHAAR VENTURES INDIA LIMITED. VI. SANGUINE MEDIA LIMITED. VII. SPECIALITY PAPERS LIMITED. VIII. RAJESH KAMAT. IX. EMPORIS PROJECTS LIMITED. X. YANTRA NATURAL RESOURCES LIMITED. THE ENCEE SECURITIES PVT. LTD IS CONTROLLED AND MAN AGED BY SHRI ANIL C. JAIN. Q18. PLEASE EXPLAIN IN DETAILS BUSINESS ACTIVITY OF M/S ENCEE SECURITIES PVT. LTD. ANS. SIR, I AM BASICALLY WORKING WITH MILTON GENERIC PVT. LTD. AS A DIRECTOR. WHEREIN I MYSELF, SHRI ANIL C. JAIN, SHRI NIKHIL KUMAR JAIN AND SHRI ARUN D. VAISHNAV ARE SHAREHOLDE RS. I DERIVE DIRECTOR'S REMUNERATION ABOUT 50-55 THOUSAND PER MONTH. I LOOK AFTER DAY, TO DAY ACTIVITY OF DISTRIBUTORSHIP. SIR, THERE IS NO REAL BUSINESS ACTIVITY OF M/S ENCEE SECURITIES PVT. LTD. THE COMPANY CONTROLLED AND MANAGED BY SHRI ANIL C. JAIN AND ON HIS INSTRUCTION MYSELF SIGNS DOCUMENT AS ASKED. ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 10 Q19. M/S ENCEE SECURITIES PVT. LTD. HAS RECEIVED SHARE PREMIUM AMOUNT FROM 10 COMPANIES 4 MENTIONED IN Q . NO. 17 OF WHICH FEW ARE COINCIDENTALLY COMPANY MANAGED AND CONTROLLED BY PRAVIN KUMAR JAM S/O SHRI HUKMI CHAND JAIN WHO WAS SEARCHED BY MUMBAI INVESTIGATION WING IN 2013 FOR GIVING ACCOMNODATION ENTRIES OF BOGUS UNSECURED LOANS AND ARRANGING ACCOMMODATION ENTRY OF SHARE CAPITAL. PLEASE CONFIRM THAT YOU KNO W SHRI PRAVIN KUMAR JAIN WHO HAS ARRANGED ACCOMMODATION ENTRY OF SHARE CAPITAL IN ENCEE SECURITIES PUT. LTD . ANS. SIR, I DO NOT KNOW PRAVIN KUMAR JAIN PERSONALLY OR OTHERWISE. I FURTHER CONFIRM THAT I DO NOT KNOW OTHER 10 COMPANIES DIRECTORS PERSONALLY OR OTHERWISE. THE ENCEE SECURITIES PVT. LTD. IS CONTROLLED AND MANAGED BY SHRI ANIL C. JAM. Q20. PLEASE EXPLAIN WHAT DO YOU MEAN BY ACCOMMODATION ENTRIES AND EXPLAIN THE MODUS EMPLOYED FOR GIVING V ARIOUS TYPES OF ACCOMMODATION ENTRIES. ANS. SIR, I AGAIN CONFIRM THAT I DO NOT KNOW WHAT IS ACCOMMODATION ENTRIES AND WHAT IS MODUS EMPLOYED FO R GIVING VARIOUS TYPES OF ACCOMMODATION ENTRIES. SIR, I AGAIN REPEAT THAT THE ENCEE SECURITIES PVT. LTD. IS CONTROLLED A ND MANAGED BY SHRI ANIL C. JAM. THE ENCEC SECURITIES PVT. LTD. IS CONTROLLED AND MANAGED BY SHRI ANIL C. JAM. THEY MIGHT BE KNOWING OTHER 10 ABOVE MENTIONED SHAREHOLDERS. Q21. WHO LOOKS AFTER BOOKS OF ACCOUNT, DAY TO DAY BANKIN G TRANSACTION OF UNSECURE LOANS RECEIPT AND UNSECURED LOAN TO ADVANCE TO VARIOUS PARTY ALSO INTEREST RECEIVED AND INTEREST PAYMENT. PLEASE PRODUCE BOOKS OF ACCOUNTS OF M/S ENCEE SECURITIES PVT. LTD. ANS. I AM NOT IN POSSESSION OF BOOKS OF ACCOUNTS THEY ARE NOT KEPT MY RESIDENTIAL ADDRESS I.E ROOM NO. 8, SOMJI BLDG., 198, NORTH BLOCK STREET, NR. GOL DEVI MANDIR, MUMBAI -40 0004. IT MIGHT BE KEPT AT OFFICE OF MILTON GENERIC' PVT. LTD. THE INFORMATION ABOUT BOOKS OF ACCOUNTS KNOWN TO AC COUNTANT SHRI N.B. TRIVEDI AND SHRI ANIL C. JAIN. Q22. THERE IS A RESERVES AND SURPLUS OF RS. 3,97,26,295/- AS ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 11 ON 31.03.2013. PLEASE PROVIDE DETAILS. ANS. SIR, I DO NOT KNOW THE FINANCIALS OF THE COMPANY AL THOUGH I AM SIGNING ALL FINANCIAL DOCUMENT AS A DIRECTOR. SHRI ANIL C. JAIN WHO CONTROL AND MANAGE ENCEE SECURITIES PVT. L TD. KNOWS ABOUT IT. Q23. THE ENCEE SECURITIES PVT. LTD. HAS PROVIDED LONG TE RM LOANS AND ADVANCES O/S AS ON 31.03.2013 IS RS. 4,57,60,000/, PLEASE PROVIDE DETAILS OF IT LIKE TO WHOM LOANS WAS ADVANCED, ON WHAT CONDITION LOANS WA S ADVANCED, WHAT SECURITIES YOU HAVE TAKEN TO ADVANCE D THE LOAN, WHETHER BOARD RESOLUTION HAVE PASSED TO GIVE ADVANCE. PLEASE EXPLAIN. ANS. SIR, I ONCE AGAIN REPEAT THAT I DO NOT KNOW TH E FINANCIALS OF THE COMPANY, ALTHOUGH I AM SIGNING ALL FINANCIAL DOCUME NT AS A DIRECTOR. SHRI ANIL C. JAIN. WHO CONTROL AND MANAGE ENCEE SECURITIES PVT. LTD. KNOWS ABOUT ALL TRANSACTIONS OF LOANS GIVEN BY EMCEE SECURITIES PVT. LTD. Q24. M/S ENCEE SECURITIES PVT. LTD. HAS ADVANCED LOAN OF RS. 54 LACS TO M/S MILTON GENEXT PROP. M/S ANIL CHAGANL AL JAIN HUF AND RS. 187 LACS TO M/S MILTON PHARMA PROP. SHRI ANIL C. JAIN IN KY. 2012-13. PLEASE CONFIRM. ANS. I HAVE SIGNED CHEQUES' ALONGWITH SHRI NIKHIL KUMAR JAIN ON BEHEST OF OUR OWNER SHRI ANIL C. JAIN. I HA VE ALSO SIGNED FOR OTHERS LOANS GIVEN ON BEHEST OF SHRI ANI L C. JAIN. Q25. IN INDIVIDUAL CAPACITY YOU HAVE ADVANCED LOAN OF RS . 17.13 LACS TO M/S MILTON GENEXT PROP. M/S ANIL CHAGANLAL JAIN, HUF AND RS. 5.34 LACS TO M/S MILTON PHARMA PR OP. SHRI ANIL C. JAIN IN VARIOUS FINANCIAL YEARS TILL 31.03.2013. PLEASE CONFIRM AND EXPLAIN SOURCE OF UN SECURED LOAN GIVEN. PLEASE PRODUCE YOUR BANK STATEMENT. ANS. SIR, I DO NOT KNOW TRANSACTION OF MY BANK ACC OUNT AS I MERELY SIGNED VARIOUS CHEQUES. I DO NOT HAVE BANK STATEMENT AT PRESENT BUT I WILL PRODUCE IN DUE COUR SE. Q26. HAVE YOU RECEIPT ANY INTEREST INCOME APART FROM BANK INTEREST. ANS. SIR, I DO NOT KNOW. ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 12 Q27. WHAT RELATION YOU AND SHRI ANIL C. JAIN HAVE WITH OTHER SHAREHOLDER OF ENCEE SECURITIES PVT. LTD. LE SHRI SHANTILAL BHIKAMCHAND JAIN. ANS. SIR, SHRI SHANTILAL BHIKAMCHAND JAIN IS UNCLE OF SHRI ANIL C.. JAIN. Q28. DO YOU WANT TO STATE ANYTHING ELSE. ANS. NO SIR. 2.3. WE NOTE THAT IN THE AFORESAID STATEMENT, SHRI HARISH SHARMA, HAS TENDERED THAT HE WAS GETTING DIR ECTORS REMUNERATION FROM M/S MILTON GENERIC PVT. LTD. AND M/S ENCEE SECURITIES PVT. LTD. HE DULY EXPLAINED THE NA TURE OF OPERATION OF M/S MILTON GENERIC PVT. LTD. AS IS EVI DENT FROM REPLY TO QUESTION NO.4 (PAGE-41 OF THE PAPER BOOK) AND IN REPLY TO QUESTION NO. 6 & 7 WITH RESPECT TO REGISTR ATION OF M/S ENCEE SECURITIES PVT. LTD., HE SPECIFICALLY DEN IED THAT HE WAS NOT AWARE ABOUT THE REGISTRATION OF THE COMP ANY. IN REPLY TO QUESTION NO.11 WITH RESPECT OF RECEIPT OF REMUNERATION FROM M/S ENCEE SECURITIES PVT. LTD. HE SPECIFICALLY TENDERED THAT HE WAS NOT GETTING ANY REMUNERATION FROM THE SAID COMPANY. IN REPLY TO QUE STION NO.18 WITH RESPECT TO DETAILS OF BUSINESS ACTIVITIE S OF M/S ENCEE SECURITIES PVT. LTD., MR. SHARMA TENDERED THA T HE IS BASICALLY WORKING WITH M/S MILTON GENERIC PVT. LTD. , WHERE HE IS LOOKING AFTER DAY TO DAY ACTIVITY OF DISTRIBU TORSHIP AND WAS NOT AWARE WITH RESPECT TO REAL BUSINESS ACTIVIT Y OF M/S ENCEE SECURITIES PVT. LTD.. IN REPLY TO QUESTION NO .20 WITH ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 13 RESPECT TO ACCOMMODATION ENTRIES, HE SPECIFICALLY D ENIED THAT HE WAS NOT AWARE WHAT ACCOMMODATION ENTRIES AR E? IN REPLY TO QUESTION NO.21 WITH RESPECT TO BOOKS OF AC COUNTS AND BANKING TRANSACTION OF UNSECURED LOAN RECEIPT, HE SAID THAT HE WAS NOT IN POSSESSION OF SUCH BOOKS OF ACCO UNTS. IN REPLY TO PROVIDING LONG TERM LOANS AND ADVANCES BY M/S ENCEE SECURITIES PVT. LTD., HE SPECIFICALLY DENIED THE SAME. IT IS ALSO NOTED THAT IN THE AFORESAID STATEMENT, I T IS EVIDENTLY CLEAR THAT NOTHING IS OOZING OUT ON THE B ASIS OF WHICH ADDITION CAN BE MADE IN THE HANDS OF THE PRES ENT ASSESSEE, MORE SPECIFICALLY WHEN, THE AFORESAID STA TEMENT WAS RETRACTED BY SHRI HARISH SHARMA WITHIN A REASON ABLE TIME. THIS ASPECT WAS CONFRONTED TO THE LD. DR, WHE REIN, HE ADMITTED THAT THE STATEMENT WAS RETRACTED BY HIM. IN SUCH A SITUATION, THE AUTHENTICITY OF THE STATED IS UNDE R CLOUD AND CANNOT BE CONSIDERED AS SOLE BASIS OF ADDITION. THE RETRACTION LETTER DATED 23/02/2016 SUPPORTED BY AN AFFIDAVIT IS AVAILABLE AT PAGE 71 TO 78 OF THE PAPE R BOOK. IN THE AFFIDAVIT, IT HAS BEEN SPECIFICALLY STATED THAT HE RECEIVED THE COPY OF THE STATEMENT RECORDED ON 08/01/2016 AN D 19/02/2016, WHICH WAS RECORDED UNDER DURESS AND UND ER PRESSURE AND HE WAS FORCED TO SIGN THE STATEMENT. T HE AFFIDAVIT IS SELF SPEAKING. THE CONTENTS OF THE SAM E ARE REPRODUCED HEREUNDER:- FROM HARISH M.SHARMA, ROOM NO. 8,1 T FLOOR ,SOMJI BLDG, NORTH BROOK STREET, 198, 3RD KHUMBHARWADA, ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 14 MUMBAI 400004. DATED:23 RD FEB 2016 . TO, ASSTT.COMM. OF INCOME TAX 18(1) MUMBAI. SUB: FILING OF AFFIDAVIT OF RETRACTION. DEAR SIR, I AM FURNISHING HEREWITH THE AFFIDAVITS OF RETRACTI ON COPIES DATED12/01/16 AND DATED 23/02/16 FOR STATEME NT TAKEN ON 08/01/16 IN THE CASE OF SHRI ANIL C. JAIN AND SHRI ANIL C. JAIN HUF FOR ASSTT. YEAR 2013-14. PLEASE TAKE THE SAME ON RECORD AND KINDLY ACKNOWLED GE THE SAME. THANKING YOU. HARISH M. SHARMA ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 15 ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 16 ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 17 THERE IS NO DISPUTE TO THE FACT THAT STATEMENT OF S HRI HARISH SHARMA WAS RECORDED BY THE LD. ACIT, WHICH W AS RETRACTED BY HIM ON 23/02/2016 (PAGE-71 OF THE PAPE R BOOK). SUCH RETRACTION WAS DULY SUPPORTED BY AFFID AVITS (PAGES 72 TO 78 OF THE PAPER BOOK). FROM PAGE-72 ( PARA- 3), IT HAS BEEN SPECIFICALLY, AFFIRMED/TENDERED THA T THE STATEMENT WAS RECORDED UNDER DURESS UNDER THREAT ON 08/01/2016 BY LD. ACIT AND MR. SHARMA WAS COERCED T O SIGN THE STATEMENT. IN ANOTHER AFFIDAVIT (PAGE-78 O F THE PAPER BOOK) IN PARA-6, IT HAS BEEN MENTIONED THAT T HE ASSESSEE WAS THREATENED BY POLICE ACTION/ARREST ETC AND THE INITIAL PAPERS WERE TORN OFF AND THE ASSESSEE W AS FORCED TO SIGN CERTAIN TIGHT PAPERS, PREPARED BY TH E ACIT. IN SUCH A SITUATION, THE AUTHENTICITY OF THE STATEM ENT COMES UNDER CLOUDS. THUS, IN THE LIGHT OF THE FOREG OING DISCUSSION, ONE CLEAR FACT IS OOZING OUT THAT THE S TATEMENT RECORDED BY THE OFFICER AND RETRACTED BY SHRI HARIS H SHARMA CANNOT BE THE SOLE BASIS OF MAKING THE ADDIT ION IN THE HANDS OF THE PRESENT ASSESSEE. 2.4. IT IS ALSO NOTED THAT THE ASSESSEE FILED THE AUDITED ACCOUNT FOR THE YEAR ENDING 31/03/2013 (PAG E TO 2 TO 39 OF THE PAPER BOOK), WHICH WAS MADE AVAILABL E BEFORE THE LD. ASSESSING OFFICER AS WELL AS BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL). IT IS ALSO NOT ED THAT M/S ENCEE SECURITIES PVT. LTD. DULY CONFIRMED OF GI VING LOAN TO THE ASSESSEE. M/S ENCEE SECURITIES PVT. LT D. DULY ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 18 FILED THE RETURN (PAGE 79 TO 88 OF THE PAPER BOOK), WHICH WAS ALSO AVAILABLE WITH THE LD. ASSESSING OFFICER A ND LD. COMMISSIONER OF INCOME TAX (APPEAL), WHEREIN, THE L OAN TO THE PRESENT ASSESSEE WAS CLAIMED TO BE GIVEN. THE BENCH ASKED THE LD. REPRESENTATIVE, WHETHER ANY ADDITION HAS BEEN MADE IN THE CASE OF M/S ENCEE SECURITIES PVT. LTD. THE BENCH WAS INFORMED THAT YES ADDITION HAS BEEN M ADE AND THE APPEAL IS PENDING BEFORE THE LD. COMMISSION ER OF INCOME TAX (APPEAL). AT THIS STAGE, THE LD. COUNSEL FOR THE ASSESSEE ASSERTED THAT IT IS CLEAR CUT CASE OF DOUB LE ADDITION AS THE DEPARTMENT WAS UNCERTAIN WHETHER TH E ADDITION OF THE SAME AMOUNT IS TO BE MADE IN THE HA NDS OF THE PRESENT ASSESSEE OR IN THE CASE OF M/S ENCEE SECURITIES PVT. LTD. THE CASE OF THE REVENUE IS THA T IN THE HANDS OF M/S ENCEE SECURITIES PVT. LTD., THE SHARE APPLICATION MONEY HAS BEEN CAMOUFLAGED AND OWN MONE Y HAS BEEN USED IN THE FORM OF SHARE APPLICATION MONE Y. IN SUCH A SITUATION, WE ARE OF THE VIEW, THAT ADDITION CAN BE MADE, IF FOUND TO BE OTHERWISE, IN THE HANDS OF M/S ENCEE SECURITIES PVT. LTD. BUT IN THE CASE OF THE ASSESSE E LOAN WAS RECEIVED FROM M/S ENCEE SECURITIES PVT. LTD., W HICH IS STILL LIVE, THEREFORE, ADDITION CANNOT BE MADE IN T HE HANDS OF THE PRESENT ASSESSEE. EVEN OTHERWISE, THE ASSESS EE IS NOT EXPECTED TO PROVE THE SOURCE OF SOURCE AS HAS B EEN HELD IN VARIOUS DECISIONS FROM HON'BLE APEX COURT A S WELL AS HON'BLE HIGH COURTS. IF THE DEPARTMENT IS APPREH ENSIVE OF CERTAIN FOUL PLAY/NON-GENUINENESS OF THE AMOUNT IN THE ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 19 FORM OF SHARE APPLICATION MONEY THEN THE MATTER MAY BE EXTENSIVELY EXAMINED AND ADDITION COULD HAVE BEEN M ADE IN THE HANDS OF THE M/S ENCEE SECURITIES PVT. LTD. ADMITTEDLY, THE DEPARTMENT HAS OPTION/CHOICE, WHERE , THE ADDITION HAS TO BE MADE BUT UNDER THE FACTS AVAILAB LE ON RECORD, SINCE, UNSECURED LOANS WAS TAKEN BY THE ASS ESSEE, NO ADDITION JUSTIFIABLY BE MADE IN THE HANDS OF THE PRESENT ASSESSEE, BECAUSE, THE ASSESSEE HAS NOTHING TO DO W ITH THE GENUINENESS OF THE SHARE APPLICATION MONEY AND HE M ERELY RECEIVED LOAN FROM M/S ENCEE SECURITIES PVT. LTD. T HE RELATED PARTIES CONFRONT THAT LOAN WAS GENUINE AND GIVEN TO THE ASSESSEE. IN OUR HUMBLE OPINION, NO ADDITIO N CAN BE MADE OF THE SAME AMOUNT AT TWO PLACES. 2.4. SO FAR AS, ADDITION U/S 68 OF THE ACT IS CONCERNED, BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION OF THE PROVISION OF ACT. 68. WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANAT ION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATIS FACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED), AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATIO N OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFAC TORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATIO N ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 20 (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSIN G OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME THE SUM REFERRED TO THERE IN IS RECORDED, IS A VENTURE CAPITAL FUND OR A VENTURE CAPITAL COMPANY A S REFERRED TO IN CLAUSE (23FB)OF SECTION 10 . 2.4. AS PER SECTION 68 OF THE ACT, ONUS IS UPON TH E ASSESSEE TO DISCHARGE THE BURDEN SO CASTE UPON. FIR ST BURDEN IS UPON THE ASSESSEE TO SATISFACTORILY EXPLA IN THE CREDIT ENTRY CONTAINED IN HIS BOOKS OF ACCOUNTS. TH E BURDEN HAS TO BE DISCHARGED WITH POSITIVE MATERIAL (OCEANIC PRODUCTS EXPORTING COMPANY VS CIT 241 ITR 497 (KERALA.). THE LEGISLATURE HAD LAID DOWN THAT IN TH E ABSENCE OF SATISFACTORY EXPLANATION, THE UNEXPLAINE D CASH CREDIT MAY BE CHARGED U/S 68 OF THE ACT. OUR VIEW I S FORTIFIED BY THE RATIO LAID DOWN IN HONBLE APEX CO URT IN P. MOHANKALA (2007)(291 ITR 278)(SC). A CLOSE READING OF SECTION 68 AND 69 OF THE ACT MAKES IT CLEAR THAT IN THE CASE OF SECTION 68, THERE SHOULD BE CREDIT ENTRY IN THE BOOKS OF ACCOUNT WHEREAS IN THE CASE OF 69 THERE MA Y NOT BE AN ENTRY IN SUCH BOOKS OF ACCOUNT. THE LAW IS WE LL SETTLED, THE ONUS OF PROVING THE SOURCE OF A SUM, F OUND TO BE RECEIVED/TRANSACTED BY THE ASSESSEE, IS ON HIM A ND WHERE IT IS NOT SATISFACTORILY EXPLAINED, IT IS OPE N TO THE REVENUE TO HOLD THAT IT IS INCOME OF THE ASSESSEE A ND NO FURTHER BURDEN LIES ON THE REVENUE TO SHOW THAT INC OME IS FROM ANY OTHER PARTICULAR SOURCE. WHERE THE ASSESSE E FAILED TO PROVE SATISFACTORILY THE SOURCE AND NATUR E OF SUCH ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 21 CREDIT, THE REVENUE IS FREE TO MAKE THE ADDITION. THE PRINCIPLE LAID DOWN IN GANPATI MUDALIAR (1964) 53 I TR 623/A. GOVINDA RAJULU MUDALIAR (34 ITR 807)(SC) AND ALSO CIT VS DURGA PRASAD MORE (72 ITR 807)(SC) ARE THE LANDMARK DECISIONS. THE RATIO LAID DOWN THEREIN ARE THAT IF THE EXPLANATION OF THE ASSESSEE IS UNSATISFACTORY, THE AMOUNT CAN BE TREATED AS INCOME OF THE ASSESSEE. T HE RATIO LAID DOWN IN DAULAT RAM RAWATMAL 87 ITR 349 ( SC) FURTHER SUPPORTS THE CASE OF THE ASSESSEE. IN THE CASE OF A CASH ENTRY, IT IS NECESSARY FOR THE ASSESSEE TO PRO VE NOT ONLY THE IDENTITY OF THE CREDITOR BUT ALSO THE CAPA CITY OF THE CREDITOR AND GENUINENESS OF THE TRANSACTIONS. THE ONUS LIES ON THE ASSESSEE, UNDER THE FACTS AVAILABLE ON RECORD. A HARMONIOUS CONSTRUCTION OF SECTION 106 OF THE EVI DENCE ACT AND SECTION 68 OF THE INCOME TAX ACT WILL BE TH AT APART FROM ESTABLISHING THE IDENTITY OF THE CREDITOR, THE ASSESSEE MUST ESTABLISH THE GENUINENESS OF THE TRANSACTION A S WELL AS THE CREDITWORTHINESS OF THE CREDITORS. IN CIT V S KORLAY TRADING COMPANY LTD. 232 ITR 820 (CAL.), IT WAS HEL D THAT MERE MENTION OF FILE NUMBER OF CREDITOR WILL NOT SU FFICE AND EACH ENTRY HAS TO BE EXPLAINED SEPARATELY BY THE AS SESSEE (CIT VS R.S. RATHAORE) 212 ITR 390 (RAJ.). THE HON BLE GUWAHATI HIGH COURT IN NEMI CHANDRA KOTHARI VS CIT (264 ITR 254)(GAU) HELD THAT TRANSACTION BY CHEQUES MAY NOT BE ALWAYS SACROSANCT. IN THE PRESENT APPEAL, W E NOTE THAT THE ASSESSEE HAS DULY PROVED THE IDENTITY OF T HE PARTY FROM WHERE LOAN WAS TAKEN, THEREFORE, IDENTITY IS N OT IN ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 22 DISPUTE, SINCE, THE LOAN WAS TAKEN THROUGH BANKING CHANNEL, AND THEREFORE, ITS GENUINENESS CANNOT BE DOUBTED. SO FAR AS, EXPLANATION IS CONCERNED, THE A SSESSEE DULY EXPLAINED THE SAME THAT THE LOAN WAS RECEIVED FROM M/S ENCEE SECURITIES PVT. LTD. THE TOTALITY OF FAC TS, CLEARLY INDICATES THAT THE ASSESSEE DULY DISCHARGED THE ONU S CASTE UPON THE ASSESSEE. 2.5. IT IS ALSO NOTED THAT IF THE LD. ASSESSING OF FICER WAS APPREHENSIVE ABOUT THE GENUINENESS OF THE AMOUN T, HE WAS DUTY BOUND TO EXAMINE IN THE HANDS OF THE M/ S ENCEE SECURITIES PVT. LTD. OR ITS SHARE HOLDERS. AT LEAST, THE MONEY WAS GERMINATED FROM THE HANDS OF THE SHARE HOLDERS, WHO CONTRIBUTED TO M/S ENCEE SECURITIES PV T. LTD. BUT IN THE HANDS OF THE PRESENT ASSESSEE, IT IS MER ELY A LOAN AND THIS FACT HAS NOT BEEN DENIED BY ANY OF TH E PARTY. EVEN TILL THIS DATE, M/S ENCEE SECURITIES PVT. LTD. HAS NEVER DENIED THAT LOAN WAS GIVEN TO THE PRESENT ASS ESSEE, THEREFORE, THE ASSESSEE IS NOT EXPECTED TO PROVE TH E SOURCE OF SOURCE. IN REPLY TO NOTICES, ISSUED U/S 133(6) OF THE ACT DATED 19/10/2015 TO FEW UNSECURED LOAN PARTIES INCLUDING M/S ENCEE SECURITIES PVT. LTD., THE CONFI RMATION WAS RECEIVED BY THE ASSESSING OFFICER ON 05/11/2015 IN TAPAL. THIS FACT HAS BEEN MENTIONED IN PARA 4.4 OF THE ASSESSMENT ORDER ITSELF. IN PARA 4.5 OF THE ASSESSM ENT ORDER, THE BROAD ALLEGATION HAS BEEN THRUST UPON TH E BUSINESS OF SHRI SHIRISH CHANDRAKANT SHAH, WHO WAS ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 23 DESCRIBED TO BE RECEIVING UNACCOUNTED CASH BY USING 212 COMPANIES, OWNED BY HIM, WHICH INCLUDES 16 LISTED COMPANIES. IN SUCH A SITUATION, WHETHER THE RESPONSIBILITY/ADDITION CAN BE FASTENED UPON THE AS SESSEE. THE OBVIOUS REPLY IS NO. IT IS NOTED THAT ADDITION HAS BEEN MADE IN THE CASE OF ASSESSEE BROADLY ON THE BASIS O F STATEMENT OF SHRI HARISH SHARMA, WHICH WAS RETRACTE D BY HIM, SUPPORTED BY AN AFFIDAVIT. HOWEVER, THE ASSE SSEE HAS FULFILLED THE CONDITIONS REQUIRED U/S 68 OF THE ACT. 2.6. WE HAVE ALSO PERUSED THE REPLY DATED 25/02/2016 (FILED WITH THE ACIT ON 26/02/2016 PAGE- 48 OF THE PAPER BOOK), WHEREIN, IT HAS BEEN SPECIFICAL LY MENTIONED THAT COPY OF STATEMENT TENDERED BY SHRI H ARISH SHARMA WAS NOT PROVIDED TO THE ASSESSEE. IN THIS R EPLY, THE ASSESSEE HAS DULY EMPHASIZE THAT NO ADDITION CA N BE MADE ON THE BASIS OF STATEMENT OF SHRI HARISH SHARM A AS THE ASSESSEE HAS DISCHARGED THE ONUS CASTE UPON HIM AND THE ASSESSEE HAS DULY COMPLIED WITH THE REQUIREMENT OF SECTION 68 OF THE ACT BY PROVING THE IDENTITY, CAPA CITY AND GENUINENESS OF THE TRANSACTION. THE REPLY CONTAINE D IN PARA-2 (PAGE-48) CLEARLY EXPLAINS THE POSITION OF T HE ASSESSEE. THE IDENTITY OF THE LENDER, CAPACITY AND GENUINENESS OF THE LOAN IS NOT IN DOUBT. THEREFORE, IN OUR OPINION, THE ADDITION MADE BY THE ASSESSING OFFICER IN THE HANDS OF THE PRESENT ASSESSEE IS NOT JUSTIFIED. AS MENTIONED EARLIER, IF ANY, FOUL PLAY IS FOUND THEN ADDITION ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 24 CAN BE MADE IN THE HANDS OF M/S ENCEE SECURITIES PV T. LTD. AND NOT IN THE HANDS OF THE PRESENT ASSESSEE. 2.7. IT IS ALSO NOTED THAT NOTHING PREVENTED THE L D. ASSESSING OFFICER TO RECORD THE STATEMENT OF SHARES SUBSCRIBERS OR OTHER PERSONS AND CONFRONT THE ASSES SEE, IF SOMETHING IS FOUND AGAINST THE ASSESSEE. THE PRESEN T ASSESSEE WAS NEVER EXAMINED BY THE ASSESSING OFFICE R WITH RESPECT TO THE STATEMENT TENDERED BY SHRI HARI SH SHARMA OR SHRI SHIRISH SHAH. THE PRESENT ASSESSEE W AS NEVER PROVIDED THE STATEMENT OF SHRI SHIRISH SHAH. NEITHER ANY QUERY WAS RAISED FROM THESE PERSONS WITH RESPEC T TO THE PRESENT ASSESSEE. EVEN IT IS PRESUMED THAT M/S ENCEE SECURITIES PVT. LTD. GOT THE MONEY FROM CERTAIN SHA RE APPLICANTS/SOME PERSONS, HOW ADDITION CAN BE MADE U /S 68 IN THE HANDS OF THE PRESENT ASSESSEE. IT SEEMS T HAT ADDITION HAS BEEN MADE OF THE SAME AMOUNT IN DIFFER ENCE HANDS LIKE SUBSTANTIVE ADDITION IN THE HANDS OF M/S ENCEE SECURITIES PVT. LTD. AND ON PROTECTIVE BASIS IN THE HANDS OF THE PRESENT ASSESSEE, WHICH CANNOT BE SAID TO BE JU STIFIED. TOTALITY OF FACTS AND THE CIRCUMSTANCES CLEARLY IND ICATES THAT AT LEAST THE ADDITION IN THE HANDS OF THE PRES ENT ASSESSEE CANNOT SURVIVE. EVEN NO QUESTION WAS PU T TO SHRI HARISH SHARMA AGAINST SHRI SHIRISH SHAH, WHILE RECORDING THE STATEMENT. THUS, CONSIDERING THE TOTA LITY OF FACTS, AND THE MATERIAL AVAILABLE ON RECORD, WE DON T FIND ANY JUSTIFICATION TO MAKE THE ADDITION U/S 68 OF TH E ACT IN ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 25 THE HANDS OF THE PRESENT ASSESSEE, THEREFORE, THE A PPEAL OF THE ASSESSEE IS ALLOWED. 3. NOW, WE SHALL TAKE UP APPEAL IN ITA NO.370/MUM/2017. THE LD. REPRESENTATIVES, FROM BOTH SIDES, DURING HEARING, CONTENDED THAT THE ISSUE AND THE FACTS ARE IDENTICAL. WHILE DISPOSING OFF THE APPEA L IN ITA NO.369/MUM/2017, WE HAVE FOUND THAT ADDITION MADE U/S 68 WAS NOT JUSTIFIED AND SINCE THE FACTS ARE ID ENTICAL, THEREFORE, ON THE SAME REASONING, WE DELETE THE ADD ITION MADE IN THE PRESENT APPEAL ALSO. FINALLY, BOTH THE APPEALS OF THE ASSESSEES ARE ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 11/04/2017. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) ' # / ACCOUNTANT MEMBER $ # / JUDICIAL MEMBER MUMBAI; # DATED : 13/04/2017 F{X~{T? P.S/. .. !%$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. ++ , ( %& ) / THE CIT, MUMBAI. ITA NO.369/MUM/2017 ANIL CHHAGANLAL JAIN ITA NO.370/MUM/2017 ANIL CHHAGANLAL JAIN (HUF) 26 4. ++ , / CIT(A)- , MUMBAI, 5. /01)2 , +%& %23 , / DR, ITAT, MUMBAI 6. 145 / GUARD FILE. ! / BY ORDER, */&) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI