LOKESH DEVILAL JAIN, MUMBAI V. ITO 22 (2)(3), MUMBAI

ITA 4674/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3876 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 10-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LOKESH JAIN IN PERSON
• Keywords: Bogus purchase; Accommodation entries; Bogus loan
• Section: 208; 68

Judgement Text

, , ! IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER . 4674 / / 2019 (%. 2012-13 ) ITA NO.4674/MUM/2019(A.Y 2012-13) MR. LOKESH DEVILAL JAIN, C-WING-3302, OBEROI EXQUISTE, ABA-KARMAKAR ROAD, BEHIND WESTIN HOTEL, OFF. WESTERN EXPRESS HIGHWAY, GOREGAON (E) , MUMBAI 400 063 PAN:AAIPJ-4065-E ...... ' / APPELLANT % VS. INCOME TAX OFFICER-22(2)(3), 311, PIRAMAL CHAMBER, LALBAUG, MUMBAI 400 012 ..... ()/ RESPONDENT '*/ APPELLANT BY : SHRI LOKESH JAIN ASSESSEE IN PERSON ()*/ RESPONDENT BY : MS. SMITA VERMA %+) / DATE OF HEARING : 27/07/2021 ,-. +) / DATE OF PRONOUNCEMENT : 08/10/2021 / ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-34, MUMBAI [ I N SHORT THE CIT(A)] DATED 25/04/2019 FOR ASSESSMENT YEARS 2012-13. 2. SHRI LOKESH JAIN (ASSESSEE APPEARING IN PERSON) SUBMITTED THAT HE IS ENGAGED IN RETAIL SALE OF GOLD AND SILVERY JEWELLER Y. THE ASSESSEE HAD TAKEN LOAN OF RS.20,00,000/- FROM M/S. FASTLINE MULTITRA DE PVT LTD. THE LOAN WAS TAKEN THROUGH BANKING TRANSACTION IN JANUARY, 2012 AND THE SAME WAS REPAID 2 ITA NO.4674/MUM/2019(A.Y 2012-13) TO M/S. FASTLINE MULTITRADE PVT LTD. BY WAY OF CHEQ UE IN MARCH, 2013. ON REPAYMENT OF LOAN THE ACCOUNT OF THE ASSESSEE WAS DEBITED ON 26/03/2013. IN SUPPORT OF HIS CONTENTION THE ASSESSEE PLACED ON RE CORD BANK STATEMENT OF HDFC BANK. THE ASSESSEE FURTHER SUBMITTED THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE E NQUIRIES REGARDING THE LOAN TRANSACTION FROM M/S. FASTLINE MULTITRADE PVT LTD. THE ASSESSEE HAD WRITTEN TO THE AFORESAID COMPANY. THE SAID COMPANY VIDE LETTER DATED 05/03/2015 CONFIRMED GENUINENESS OF THE TRANSACTION . THE ASSESSEE PLACED ON RECORD A COPY OF THE REPLY DATED 05/03/2015 FROM M /S. FASTLINE MULTITRADE PVT LTD. 3. PER CONTRA, MS. SMITA VERMA REPRESENTING THE DEP ARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER AND FILED WRITTEN SUBMI SSIONS. THE SAME ARE REPRODUCED HEREUNDER: WITH REFERENCE TO THE ABOVE, I AM SUBMITTING THE CASE LAWS RELIED BY ME IN THE ABOVE- MENTIONED APPEAL FILED BY THE ASSESSEE. IN THIS CAS E, LOAN FROM ONE COMPANY M/S FASTLINE TRADING PVT. LTD. WAS ADDED U/S 68 BY THE ASSESSING OFFICER, ON THE GROUND THAT THIS COMPANY IS A SHELL COMPANY AND NOT INVOLVED IN ANY GENUINE BUSINESS ACTIVITY BUT ENGAGED IN PROVIDING ACCOMMODATION ENTRY IN FORM OF LOANS, SHARE CAPITAL AND BOGUS PURCHASES. THIS COMPANY WAS FLOATED BY PRAVEEN KUMA R JAIN, WHO IN THE SWORN STATEMENT U/S 132(4) HAS ADMITTED BEFORE THE DEPART MENT THAT ALL THE 70 CONCERNS ARE SHELL ENTITIES AND ARE NOT DOING ANY BUSINESS. ALL THE DIRECTORS OF THESE COMPANIES WERE FOUND TO BE THE THE DUMMY DIRECTORS AND ALSO ADMITT ED BEFORE THE DEPARTMENT THAT THEY USE TO SIGN THE DOCUMENTS FOR NOMINAL CONSIDERATION GIVEN BY SHRI PRAVEEN KUMAR JAIN. BOOKS OF ACCOUNTS OF ALL SUCH SHELL COMPANIES ARE U NDER THE CONTROL OF SHRI PRAVEEN KUMAR JAIN. THE ASSESSEE HAS SUBMITTED THAT THE LOAN HAS BEEN R AISED THROUGH BANKING CHANNELS. ALSO, IT WAS CONTENDED THAT ALL THE DOCUMENTARY EVI DENCE TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS IS ALSO SUBMITTED. THE CONFIRMATION AND BANK ACCOUNT STATEMENT HAD BEEN EXAMINED BY THE ASSESSING OFFICE R AND, HE HAS OBSERVED IN PARA 4.5 THAT THE BANK STATEMENT OF THE LENDER INDICATES THA T THE ENTITY IS A SHELL ENTITY. IN VIEW OF THE ABOVE CONTENTION RAISED BY THE ASSES SEE, PLEASE RECORD MY SUBMISSION POINT WISE ALONG WITH THE CITATION AND GIST OF THE CASE LAWS ON WHICH I AM PLACING RELIANCE:- LOAN IS RAISED AND SUBSEQUENTLY REPAID THROUGH BANKING CHANNEL 3 ITA NO.4674/MUM/2019(A.Y 2012-13) THE PAYMENT THROUGH BANKING CHANNEL IS NOT SACROSAN CT IN SUCH TIME OF TRANSACTIONS WHERE CIRCUMSTANTIAL EVIDENCES ARE AGAINST THE ASSE SSEE. RELIANCE IS PLACED ON THE DECISION OF ITAT, JAIPUR IN CASE OF M/S KANCHWALA GEMS VS. JCIT ITA NO. '134/JP/2002 DATED 10/12/2003 AFFIRMED BY THE HON'B LE SUPREME COURT IN THE CASE OF M/S KANCHWALA GEMS VS JCIT(2006) 206 CTR(SC ) 585, 288 ITR 10(SC) HAS HELD THAT EVEN PAYMENT BY ACCOUNT PAYEE CHEQUE IS NOT SU FFICIENT TO ESTABLISH THE GENUINENESS OF THE PURCHASES. ALSO RELIANCE IS PLAC ED ON THE DECISION OF KOLKATA HIGH COURT IN THE CASE OF CIT VS PRECISION FINANCE LTD. [1994] 208 ITR 465 CA L DATED 14/06/1993, WHEREIN IT WAS HELD THAT PAYMENT THROUGH BANKING CH ANNEL IS NOT SACROSANCT AND IT WOULD NOT MAKE AN OTHERWISE NON-G ENUINE TRANSACTION GENUINE. THE BANK ACCOUNT STAEMENT OF M/S FASTLINE TRADERS P VT. LTD., IT WAS OBSERVED THAT THE RS. 20 LAKHS CAME FROM ATHARVA BUSINESS PVT. LTD (IT IS ALSO PKJ GROUP OF COMPANY) AND ON THE SAME DAY ON 16/01/2012 , IT IS GIVEN TO ASSESSE E. THE WHOLE MODUS OPERANDI OF M/S FASTLINE TRADE PVT. LTD. IS THAT THEY ISSUED CHEQUE S AFTER ACCEPTING CASH FROM THE PARTY AND TAKE BACK THE LOAN BY CHEQUE BY PAYING CASH TO THE SAID PARTY. THIS CASH IS SIPHONED OFF TO THE VARIOUS COMPANIES OF THEIR GROUP. ASSESSEE HAS PAID INTEREST TO ALL OTHER LENDER EXCE PT THIS CO. M/S FASTLINE TRADES PVT. LTD., EVEN THOUGH THE LOAN AMOUNT WAS USED FOR 15 MONTHS. ALSO, ONCE THE CREDIT IS FOUND TO BE NOT GENUINE, THERE WILL NOT BE ANY DEVIATION IN THE FINDINGS, IF THE LOAN IS REPAID IN SUBSEQUENT YEARS. ALL NECESSARY DOCUMENTS ARE PRODUCED BEFORE THE A O AND CIT(A) FOR ESTABLISHING THE IDENTITY, GENUINENESS, AND CREDIT WORTHINESS OF THE LOAN TRANSACTIONS. THE LD. DEPARTMENTAL REPRESENTATIVE TO FURTHER SUPP ORT HER SUBMISSIONS PLACED RELIANCE ON VARIOUS DECISIONS, INCLUDING: 1) PAVAN KUMAR M. SANGHVI VS. ITO,ITA NO.2447/AHD/2016 DATED 17/05/2017 2) UNITED METAL AND WIRES LTD. VS. CIT[2019] ITA NO.73 36/MUM/2016 DATED 01/03/2019. 3) DCIT VS. SMT PHOOLWATI DEVI [2009] I314 ITR AT 1(DE LHI) 4) PR. CIT(CENTRAL)-1 VS. NRA IRON & STEEL PVT. LTD. C IVIL APPEAL NO OF 2019 [ARISING OUT OF SLP(CIVIL NO.29855 OF 2018) SUPREME COURT DECISION DATED 05 TH MARCH 2019. 4. SUBMISSIONS MADE BY RIVAL SIDES HEARD, ORDERS OF AUTHORITIES BELOW EXAMINED. AN ADDITION OF RS.20,00,000/- HAS BEEN MA DE BY THE ASSESSING OFFICER IN THE HANDS OF THE ASSESSEE STATING IT TO BE A BOGUS LOAN TRANSACTION. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE AS SESSING OFFICER HAS 4 ITA NO.4674/MUM/2019(A.Y 2012-13) SUSPECTED THE TRANSACTION TO BE BOGUS PRIMARILY FOR THE REASON THAT THE ASSESSEE HAD TAKEN LOAN FROM M/S. FASTLINE MULTITRA DE PVT LTD. A CONCERN BELONGING TO PRAVIN KUMAR JAIN GROUP. DURING THE C OURSE OF SEARCH STATEMENT OF ONE PRANJAL BAPNA UNDER SECTION 132(4) OF INCOM E TAX ACT,1961 ( IN SHORT 'THE ACT') WAS RECORDED, WHEREIN HE HAD ADMITTED TH AT M/S. FASTLINE MULTITRADE PVT LTD. IS NOT CARRYING OUT ANY GENUINE BUSINESS A CTIVITY AND IS ONLY PROVIDING ACCOMMODATION ENTRIES. THE ASSESSING OFFICER HAS FURTHER SUSPECTED THE TRANSACTION TO BE BOGUS AS ON THE LOAN AMOUNT N O INTEREST WAS PAID BY THE ASSESSEE ON REPAYMENT OF LOAN. 5. THE ASSESSEE HAS FURNISHED BANK STATEMENT INDICA TING THAT THE LOAN WAS TAKEN BY THE ASSESSEE FROM M/S. FASTLINE MULTITRAD E PVT LTD. THROUGH BANKING CHANNEL ON 16/01/2012 I.E. DURING THE PERIOD RELEVA NT TO THE ASSESSMENT YEAR UNDER APPEAL. THE SAID LOAN WAS REPAID BY THE ASSE SSEE THROUGH CHEQUE AND THE AMOUNT WAS DEBITED FROM THE ACCOUNT OF ASSESSEE ON 26/03/2013 I.E. LOAN WAS REPAID IN THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR. THE ASSESSEE HAS FILED CONFIRMATION FROM M/S. FASTLINE MULTITRADE PV T LTD. ADMITTING THE GENUINENESS OF AFORESAID LOAN TRANSACTION. A PERUS AL OF THE AFORESAID COMMUNICATION FURTHER REVEALS THAT THE STATEMENT MA DE BY SHRI P.K.JAIN DURING THE COURSE OF SEARCH WAS SUBSEQUENTLY RETRACTED. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD REPAID THE LOAN AMOUNT. IT IS NOT THE CASE OF REVENUE THAT THE ASSESSEE AFTER HAVING ACCEPTED LOAN HAS NEV ER REPAID THE LOAN. TAKING INTO CONSIDERATION ENTIRETY OF FACTS, I FIND NO RE ASON TO SUSTAIN THE ADDITION OF RS.20,00,000/- 6. THE LD. DEPARTMENTAL REPRESENTATIVE HAS VOCIFERO USLY ARGUED THAT THE LOAN TRANSACTION IS BOGUS AND HAS PLACED RELIANCE O N VARIOUS DECISIONS. IN SO 5 ITA NO.4674/MUM/2019(A.Y 2012-13) FAR AS THE CASE LAWS RELIED UPON BY THE LD. DEPARTM ENTAL REPRESENTATIVE I FIND THE SAME TO BE DISTINGUISHABLE ON FACTS AND HENCE, WOULD NOT SUPPORT THE CASE OF REVENUE. ONCE THE ASSESSEE HAS REPAID LOAN AMOU NT THE ADDITION IS NOT SUSTAINABLE. CONSEQUENTLY, THE IMPUGNED ORDER IS QUASHED AND APPEAL BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY THE 8 TH DAY OF OCTOBER, 2021 SD/- (VIKAS AWASTHY) / JUDICIAL MEMBER / MUMBAI, 0%/ DATED 08/10/2021 VM , SR. PS (O/S) COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT , 2. () / THE RESPONDENT. 3. 1) ( )/ THE CIT(A)- 4. 1) CIT 5. 23 ()% , . . . , / DR, ITAT, MUMBAI 6. 345 67 / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI