DCIT 12(1)(2), MUMBAI V. BAIRAGRA BUILDERS P. LTD, MUMBAI

ITA 4691/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9748 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 18-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Search and seizure; Accommodation entries; Retraction
• Section: 131; 68; 37; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NOS.4691 & 4692/MUM/2015 ASSESSMENT YEARS : 2007-08 & 2012-13 DCIT 12(1)(2) MUMBAI VS. BAIRAGRA BUILDERS P LTD., 14 GOKUL RESIDENCY, THAKUR VILLAGE, KANDIVALI (W) MUMBAI 400 101 PAN AAACB4848E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUMAN KUMAR RESPONDENT BY : SHRI J P BAIRAGRA DATE OF HEARING : 12.09 .2017 DATE OF PRONOUNCEMENT : 14 .0 9 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: THESE APPEALS HAVE BEEN FILED BY THE REVENUE AGAINS T TWO SEPARATE ORDERS OF THE CIT(A)-20, MUMBAI, BOTH DATED 04.06.2 015, FOR A.YS 2007-08 AND 2012-13. 2. WE SHALL FIRST DEAL WITH THE APPEAL IN ITA 4691/ MUM/2015 FOR A.Y. 2007-08. BOTH THE PARTIES AGREED THAT THE ISSUES I NVOLVED IN BOTH THE APPEALS ARE COMMON WITH IDENTICAL FACTS AND, HENCE, WHATEVE R VIEW IS TAKEN IN A.Y. 2007-08 SHALL APPLY TO A.Y. 2012-13 ALSO. ITA NO.4691 & 4692/MUM/2015 BAIRAGRA BUILDERS PVT. LTD. 2 3. THE GROUNDS TAKEN BY THE REVENUE FOR A.Y. 2007-0 8 READ AS UNDER: '1. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT(A) WAS RIGHT IN DELETING THE ADD ITION MADE U/S 68 OF THE ACT TO THE TUNE OF RS. 40,00,000/- ON ACCOUN T OF UNEXPLAINED UNSECURED LOAN I TAKEN FROM JAVDA INDIA IMPEX LIMI TED AND LEXUS INFOTECH LTD. ?' '2. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT(A) WAS RIGHT IN DELETING THE DIS ALLOWANCE OF INTEREST MADE U/S F 37 (I) OF THE INCOME TAX ACT, 1961 OF RS. 45,134/- WHICH IS PAID ON THE LOAN TAKEN FROM THE A BOVE TWO COMPANIES?' '3. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT(A) WAS RIGHT IN IGNORING THE FIN DINGS OF THE INVESTIGATION WING OF THE DEPARTMENT THAT MR. PRAVE EN KR. JAIN AND HIS GROUP HAD FLOATED MANY COMPANIES AND ENTITIES W ITH DUMMY DIRECTORS/PROPRIETORS, AND THESE COMPANIES WERE PRO VIDING BOGUS ENTRIES FOR UNSECURED LOAN TO THE COMPANIES IN LIEU OF CASH?' '4. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT(A) WAS RIGHT IN IGNORING THE FAC T THAT EVIDENCES WERE FOUND DURING SEARCH PROCEEDINGS IN THE CASE OF MR. PRAVEEN KUMAR JAIN THAT THE ASSESSEE HAS TAKEN ACCOMMODATIO N ENTRIES OF UNSECURED LOAN FROM THE ABOVE THREE PARTIES?' '5. WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT(A),WAS RIGHT IN IGNORING THE FAC T THAT SUMMONS U/S 131 ISSUED TO THE DIRECTORS OF THE AFORESAID CO NCERNS DURING THE COURSE OF ASSESSMENT PROCEEDINGS COULD NOT BE SERVE D, AND THEREBY, GENUINENESS OF THE ALLEGED LOAN TRANSACTIO NS AND CREDITWORTHINESS OF THE LOANEE COULD NOT BE ESTABLI SHED AND HENCE THE ASSESSEE COULD NOT DISCHARGE THE ONUS RESTING O N HIM?' 4. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES T O THE DELETION OF THE ADDITION OF 40 LACS MADE BY THE ASSESSING OFFICER U /S. 68 OF THE I.T. ACT AND CONSEQUENTLY, THE DELETION OF THE ADDITION MADE BY THE ASSESSING OFFICER IN ITA NO.4691 & 4692/MUM/2015 BAIRAGRA BUILDERS PVT. LTD. 3 RESPECT OF THE INTEREST THEREON AMOUNTING TO ` 45,134/-. THE BRIEF FACTS OF THE CASE ARE THAT ON THE BASIS OF THE INFORMATION R ECEIVED FROM THE DGIT (INVESTIGATION), MUMBAI, THE ASSESSING OFFICER NOTE D THAT THE ASSESSEE WAS ONE OF THE BENEFICIARIES OF ACCOMMODATION ENTRIES G IVEN BY SHRI PRAVEEN KUMAR JAIN. A SEARCH AND SEIZURE ACTION U/S. 132 O F THE I.T. ACT HAD BEEN CONDUCTED IN THE CASE OF SHRI PRAVEEN KUMAR JAIN AN D FROM THE STATEMENTS OF SHRI PRAVEEN KUMAR JAIN AND HIS ASSOCIATES IT WAS K NOWN THAT THE ASSESSEE IS ONE OF THE BENEFICIARIES OF THE ACCOMMODATION ENTRI ES PROVIDED BY THEM. ON THE BASIS OF SPECIFIC INFORMATION THAT ACCOMMODATIO N ENTRIES OF ` 20 LACS EACH HAD BEEN MADE TO THE ASSESSEE ON ACCOUNT OF LOANS A DVANCED TO IT BY M/S JAVDA INDIA IMPEX LTD. (HEREINAFTER REFERRED TO AS JAVDA) AND M/S. LEXUS INFOTECH LIMITED (HEREINAFTER REFERRED TO AS LEXUS) ON 15 TH FEB 2007 AND 31 ST JAN, 2007 RESPECTIVELY, THE ASSESSING OFFICER INITI ATED PROCEEDINGS U/S. 147. IN A STATEMENT OF SHRI NILESH PARMAR, ONE OF THE AS SOCIATE OF SHRI PRAVEEN KUMAR JAIN STATED THAT BOTH JAVDA AND LEXUS WERE AM ONG THE THIRTY-THREE COMPANIES CONTROLLED BY SHRI PRAVEEN KUMAR JAIN THR OUGH DUMMY DIRECTORS. THE ASSESSING OFFICER ALSO NOTED THAT SHRI PRAVEEN KUMAR JAIN AND HIS ASSOCIATES IMMEDIATELY FILED RETRACTION STATEMENTS VIDE AFFIDAVITS ON THE SAME DAY. ALL THE STAMP PAPERS WHICH HAVE BEEN USED TO F ILE THE AFFIDAVITS HAVE BEEN PURCHASED FROM THE SAME VENDOR ON THE SAME DAY , NOTARIZED BY THE SAME ADVOCATE AND FILED IT IN THE OFFICE OF CBDT. THE ASSESSING OFFICER DID NOT ACCEPT THE RETRACTION AND TOOK A VIEW IGNORING ALL THE EVIDENCES FILED BY ITA NO.4691 & 4692/MUM/2015 BAIRAGRA BUILDERS PVT. LTD. 4 THE ASSESSEE SPECIFICALLY THE FACT THAT THE ASSESSE E HAS RECEIVED THE SAID LOAN THROUGH CHEQUE AND THE SAID LOAN HAS BEEN RETURNED BY THE ASSESSEE IN THE NEXT YEAR THROUGH CHEQUE. THUS, THE ASSESSING OFFI CER MADE THE ADDITION OF THE SUM OF ` 40 LACS AS UNPROVED CASH CREDIT U/S. 68 OF THE I.T . ACT AND CORRESPONDINGLY DISALLOWED THE INTEREST AMOUNTING T O ` .45,134/- ON THE SUM OF ` 40 LACS. WHILE MAKING THE ADDITION U/S. 68, THE A SSESSING OFFICER RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF CIT VS. DURGA PRASAD MORE 82 ITR 540. AGGRIEVED THE ASSESSEE WENT IN AP PEAL BEFORE THE CIT(A). 5. BEFORE THE CIT(A), THE ASSESSEE FILED ALL THE D OCUMENTARY EVIDENCES WHICH WERE PRODUCED BEFORE THE ASSESSING OFFICER CONSISTI NG OF THE COPIES OF CONFIRMATION OF THESE LOANS, COPIES OF BANK ACCOUNT S FROM WHICH LOAN HAD BEEN ADVANCED, THE LIST OF DIRECTORS OF THE TWO COM PANIES AND COPIES OF THE ACKNOWLEDGMENT OF RETURN FILED BY THESE COMPANIES. THE ASSESSEE ALSO FURNISHED COPY OF WRITTEN SUBMISSIONS DATED 15.03.2 015 AS WELL AS AFFIDAVIT OF SHRI PRAVEEN KUMAR JAIN RETRACTING HIS STATEMENT. THE CIT(A) AFTER GOING THROUGH THE SUBMISSIONS DELETED THE ADDITION MADE B Y THE ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS ALONG WITH T HE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT DURING THE IMPUGN ED ASSESSMENT YEAR, THE ASSESSEE HAD TAKEN UNSECURED LOANS FROM THE FOLLOWI NG TWO PARTIES: ITA NO.4691 & 4692/MUM/2015 BAIRAGRA BUILDERS PVT. LTD. 5 SR. NO. NAME OF THE PARTY AND ADDRESS PAN LOAN TAKEN (RS.) RATE OF INTEREST 1. JAVDA INDIA IMPEX LIMITED CS-1, SILVER ANKLET, YARI ROAD, VERSOVA, MUMBAI 400 061 AAACA7065L 20,00,000 9% 2. LEXUS INFOTECH LTD. 626, PANCHRATNA, OPERA HOUSE, MUMBAI 400 002 AAACL4646G 20,00,000 9% WHEN THE ASSESSING OFFICER ASKED THE ASSESSEE TO PR OVE THE GENUINENESS OF THESE LOANS, THE ASSESSEE SUBMITTED THE FOLLOWING D OCUMENTS: A . COPY OF ACKNOWLEDGMENT OF INCOME TAX RETURN FILED FOR A.Y. 2007-08. B. COPY OF PAN OF THE PARTIES C. COPY OF BANK STATEMENT OF THE PARTIES FROM WH ERE THE CHEQUE IS ISSUED. D. LIST OF DIRECTORS OF THE PARTIES E. COPY OF ANNUAL REPORT OF THE PARTIES FOR FINAN CIAL YEAR 2006-07. F. COPY OF LOAN CONFIRMATION FROM THE PARTIES. THE ASSESSING OFFICER TREATED THESE LOANS TO BE NON -GENUINE AND MADE ADDITION U/S 68 OF THE I.T ACT ON THE BASIS OF THE STATEMENT OF SHRI NILESH PARMAR, ONE OF THE ASSOCIATE OF SHRI PRAVEEN KUMAR JAIN, DIRECTOR OF MOHIT INTERNATIONAL AND ONE OF THE DUMMY DIRECTOR OF SOME OF THE COMPANIES OF SHRI PRAVEEN KUMAR JAIN. ALTHOUGH SAID STATEMENT H AS BEEN IMMEDIATELY RETRACTED BY HIM BY FILING A AFFIDAVIT WITH THE CBD T, THE CIT(A) HAS DELETED THE SAID ADDITION AS IN HIS OPINION THE ASSESSEE HA S DULY DISCHARGED HIS ONUS ITA NO.4691 & 4692/MUM/2015 BAIRAGRA BUILDERS PVT. LTD. 6 AS LAID DOWN ON IT U/S. 68 OF THE I.T.ACT. IT WAS ALSO NOTED BY THE CIT(A) THAT THE ASSESSEE HAS PROVED THE IDENTITY, CREDIT WORTHI NESS AS WELL AS GENUINENESS OF THE TRANSACTIONS AND, THEREFORE, NO ADDITION U/S. 68 CAN BE MADE. 7. THE LEARNED AR BEFORE US RELIED ON THE ORDER OF THE CIT(A) AND HAS ALSO POINTED OUT THAT THE LOAN RECEIVED BY THE ASSE SSEE HAS BEEN RETURNED TO THE RESPECTIVE PARTIES THROUGH CHEQUES AND IN NONE OF THE CASE THE RESPECTIVE PARTY HAS DEPOSITED ANY CASH. HE RELIED ON THE FOL LOWING TRIBUNAL DECISIONS: ARCELI REALTY LTD VS. ITO [ITA NO. 6492/MUM/2016 DA TED 21.04.2017(MUMBAI)] M/S KOMAL AGROTECH PVT. LTD. VS. ITO [ITA NO.437/HY D/2016 DATED 25.11.2016 (HYDERABAD)] SUDHANSHU SURESH PANDHARE VS. ITO [ITA NO.5185/MUM/ 2012 DATED 05.10.2016 (MUMBAI)] DILSA DISTRIBUTORS COMBINES VS. ITO [ITA NO.5849/MU M/2011 DATED 06.09.2013(MUMBAI)] AIM PROPERTIES & INVESTMENTS PVT. LTD VS. ITO [ITA NO. 7426/MUM/2012 DATED 04.12.2013 (MUMBAI] HE FURTHER PLACED RELIANCE ON THE FOLLOWING JUDGMEN TS: NEMI CHAND KOTHARI VS. CIT [2004] 136 TAXMAN 213 (G AU) VIJAY KUMAR TALWAR VS. CIT [2011]330 ITR 1 (SC) 8. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PRINCIPAL C IT VS. BIKRAM SINGH ITA ITA NO.4691 & 4692/MUM/2015 BAIRAGRA BUILDERS PVT. LTD. 7 55/2017 & CIT VS. JANSAMPARK ADVERTISING & MARKETIN G PVT. LTD. IN ITA 525/2014 9. WE HAVE GONE THROUGH THE ORDERS RELIED UPON BY T HE LEARNED DR. WE NOTED THAT THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF BIKRAM SINGH, THE ASSESSEE COULD NOT DISCHARGE THE ONUS AS LAID D OWN BY SECTION 68 OF THE ACT. SIMILARLY, IN THE CASE OF CIT VS. JANSAMPARK ADVERTISING & MARKETING PVT. LTD. (SUPRA), THE ADDITIONS HAVE BEEN MADE U/S. 68 IN RESPECT OF THE SHARE CAPITAL RECEIVED BY THE ASSESSEE FROM VARIOUS COMPA NIES AND DURING THE COURSE OF INVESTIGATION, IT WAS FOUND THAT THE SHAR E CAPITAL HAS BEEN RECEIVED FROM THREE ENTRY OPERATORS, WHO ARE ALLEGEDLY IN TH E BUSINESS OF PROVIDING ACCOMMODATION ENTRIES. NOTICES ISSUED U/S. 131 TO THESE PARTIES WERE RETURNED UNDELIVERED BY THE POSTAL AUTHORITIES WITH THE REMARK LEFT/ NO SUCH PERSON. UNDER THESE CIRCUMSTANCES, THE HONB LE HIGH COURT TOOK A VIEW THAT THE ASSESSEE FAILED TO DISCHARGE THE BURD EN TO PROVE THE CREDIT WORTHINESS AS WELL AS THE GENUINENESS OF THE TRANSA CTIONS. 10. BUT IN THE IMPUGNED CASE, WE NOTED THAT THE ASS ESSEE HAS SUBMITTED ALL THE EVIDENCES INCLUDING THE CONFIRMATION OF THE CREDITORS. THIS IS NOT A CASE WHERE THE CREDITORS HAVE NOT GIVEN CONFIRMATIO NS RATHER THEY HAVE DULY CONFIRMED TO GIVING LOAN TO THE ASSESSEE, THE LOANS WERE RECEIVED AND RETURNED THROUGH BANKING CHANNELS. THE ASSESSEE HA S ALSO SUBMITTED COPIES OF BANK ACCOUNTS. THE LENDER HAS NOT DEPOSITED CAS H INTO BANK ACCOUNT. THE ITA NO.4691 & 4692/MUM/2015 BAIRAGRA BUILDERS PVT. LTD. 8 ASSESSEE HAS DULY DISCHARGED THE ONUS WITH REGARD T O IDENTITY OF THE LENDER, CREDIT WORTHINESS OF THE PARTY AND ALL SUPPORTING E VIDENCES AS REQUIRED U/S. 68 OF THE I.T.ACT. THEREFORE, IN OUR OPINION THE D ECISIONS RELIED UPON BY THE DR DOES NOT ASSIST THE REVENUE TO THE FACTS OF THE PRESENT CASE. 11. WE HAVE ALSO GONE THROUGH THE DECISIONS RELIED UPON BY THE LEARNED AR. WE NOTED THAT THIS TRIBUNAL IN SIMILAR CIRCUMS TANCES IN THE CASE OF KOMAL AGROTECH PVT. LTD. VS. ITO IN ITA NO. 437/HYD/2016 VIDE ITS ORDER DATED 25.11.2016 HAS HELD AS UNDER: A PLAIN READING OF THE ASSESSMENT ORDER DEMONSTRATE S THAT THE AO MERELY WENT BY THE INVESTIGATION DONE BY THE OFFICE OF D.G.I (INVESTIGATION), MUMBAI. NO ENQUIRIES OR INVESTIGAT ION WAS CARRIED OUT. NO EVIDENCE TO CONTROVERT THE CLAIMS OF THE AS SESSEE WAS BROUGHT ON THE RECORD BY THE AO. EVEN THE STATEMENT OF SHRI PRAVEEN KUMAR WAS SUPPLIED. NOTHING IS ON RECORD AB OUT THE RESULT IF INVESTIGATIONS DONE BY DGIT (LNV), MUMBAI. THE P APERS FILED BY THE ASSESSEE DO DEMONSTRATE THE IDENTITY, CREDITWOR THINESS AND GENUINENESS OF THE TRANSACTION. THE ADDITION IS MAD E MERELY ON SURMISES AND CONJECTURES. IN VIEW OF THE ABOVE, WE HOLD THAT THE ADDITION MAD E UNDER SECTION 68 OF THE ACT IS BAD IN LAW. WE NOTED THAT IN THE SAID CASE ALSO LOAN HAD BEEN R ECEIVED FROM JAVDA INDIA IMPEX LTD. 12. BEING CONSISTENT WITH THE VIEW TAKEN BY THIS CO -ORDINATE BENCH IN THE CASE OF KOMAL AGROTECH PVT. LTD. (SUPRA), AND IN VI EW OF THE FACTS AND ITA NO.4691 & 4692/MUM/2015 BAIRAGRA BUILDERS PVT. LTD. 9 CIRCUMSTANCES, WE DO NOT FIND ANY ILLEGALITY OR INF IRMITY IN THE ORDERS OF THE CIT(A). IT IS ACCORDINGLY, CONFIRMED FOR BOTH THE YEARS UNDER APPEAL. 12. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH DAY OF SEPTEMBER, 2017. SD/- SD/- (PAWAN SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 14 TH SEPTEMBER, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, B BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI